<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-K
<TABLE>
<C> <S>
(MARK ONE) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
/X/ EXCHANGE ACT OF 1934 [FEE REQUIRED]
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
</TABLE>
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER: 1-3562
------------------------
UTILICORP UNITED INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 44-0541877
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification
No.)
</TABLE>
3000 Commerce Tower, 911 Main, Kansas City, Missouri 64105
(Address of principal executive offices)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (816) 421-6600
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
<TABLE>
<CAPTION>
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
- ----------------------------------------------------------- -----------------------------------------------------------
<S> <C>
Common Stock, par value $1.00 per share New York, Pacific and Toronto Stock Exchanges
Preference Stock, no par value, $2.05 Series New York Stock Exchange
Convertible Subordinated Debentures, New York Stock Exchange
6 5/8%, due July, 2011
8 7/8% Cumulative Monthly Income Preferred Securities, New York Stock Exchange
Series A, due June 30, 2025
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/ No / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. /X/
The aggregate market value of the voting stock held by nonaffiliates of the
registrant on February 12, 1996, was $1,366,366,442.
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
TITLE OUTSTANDING (AT FEBRUARY 12, 1995)
- ------------------------------------------------------ ------------------------------------------------------
<S> <C>
Common Stock, par value $1.00 per share 46,122,074
- --------------------------------------------------------------------------------------------------------------
Documents Incorporated by Reference Where Incorporated
1996 Joint Proxy Statement and Prospectus Part 3
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
INDEX
<TABLE>
<CAPTION>
PAGE NO.
-------------
<S> <C> <C>
PART 1
Item 1 Business.......................................................................... 3
Item 2 Properties........................................................................ 12
Item 3 Legal Proceedings................................................................. 16
Item 4 Submission of Matters to a Vote of Security Holders............................... 16
PART 2
Item 5 Market for Registrant's Common Equity and Related Stockholder Matters............. 17
Item 6 Selected Financial Data........................................................... 18
Item 7 Management's Discussion and Analysis of Financial Condition and Results of
Operation........................................................................ 18
Item 8 Financial Statements and Supplementary Data....................................... 34
Item 9 Changes in and Disagreements With Accountants on Accounting and Financial
Disclosure....................................................................... 60
PART 3
Item 10 Directors and Executive Officers of the Registrant................................ 60
Item 11 Executive Compensation............................................................ 60
Item 12 Security Ownership of Certain Beneficial Owners and Management.................... 60
Item 13 Certain Relationships and Related Transactions.................................... 60
PART 4
Item 14 Exhibits, Financial Statements Schedules, and Reports on Form 8-K................. 61
INDEX TO EXHIBITS
SIGNATURES
</TABLE>
2
<PAGE>
PART 1
ITEM 1. BUSINESS.
UtiliCorp United Inc. (the company) is an energy company which consists of
electric and natural gas utility operations, natural gas gathering, marketing
and processing and independent power projects managed through four business
groups. The business groups are UtiliCorp Energy Delivery (UED) consisting
primarily of transmission and distribution utility operations, UtiliCorp Power
Services (UPS) consisting primarily of electricity generation and independent
power projects, UtiliCorp Energy Resources (UER) consisting of gas marketing,
processing and gathering and electricity marketing, and UtiliCorp Marketing
Services consisting of appliance repair and service contracts, gas marketing and
other energy related products and services. The presentation of information in
this report is prepared where applicable using identified industry segments as
shown on page 56 of this Annual Report on Form 10-K. The company was formed in
1985 under the laws of the State of Delaware from Missouri Public Service
Company.
The company had approximately 1.2 million utility customers and 4,700
employees at December 31, 1995. The company's electric utility operations are in
the states of Missouri, Kansas, Colorado, West Virginia and the Canadian
province of British Columbia. The company's gas utility operations are in the
states of Missouri, Kansas, Colorado, Iowa, Nebraska, Minnesota, Michigan and
West Virginia. Aquila Energy Corporation (AEC), a wholly-owned subsidiary of the
company, markets natural gas in 45 states and Ontario, Canada. AEC's 82% owned
subsidiary Aquila Gas Pipeline Corporation (AGP) owns and operates 10 natural
gas gathering systems and four natural gas processing plants in Texas and
Oklahoma. The company owns interests primarily through its UtilCo Group
subsidiary in 17 independent power projects in seven states and Jamaica.
The company has various international businesses in Australia, Canada, the
United Kingdom and New Zealand. These businesses are managed through the
business groups as discussed in the segment section. The international
operations of the company are summarized in the table below.
<TABLE>
<CAPTION>
COUNTRY COMPANY NAME OWNERSHIP % BUSINESS LINE
- ---------------- ------------------------------------ -------------------- ------------------------------------
<S> <C> <C> <C>
Australia UtiliCorp Australia Holding Limited UtiliCorp owns 100% Manages United Energy Limited
(UAHL)
Australia Power Partnership Limited (PPL) UAHL owns 49.9% Holding company
Australia United Energy Limited PPL owns 100% Electric distribution utility
Canada UtiliCorp British Columbia Limited UtiliCorp owns 100% Owns West Kootenay Power
(UBC)
Canada West Kootenay Power Limited UBC owns 100% Electric utility
United Kingdom UtiliCorp U.K., Inc. (UKI) UtiliCorp owns 75% Holding company
United Kingdom UtiliCorp U.K., Limited (UKL) UKI owns 100% Owns United Gas and minority
interests in other U.K. gas
marketers
United Kingdom United Gas Limited UKL owns 100% Gas marketing company
New Zealand UtiliCorp South Pacific Inc. (USP) UtiliCorp owns 100% Holding company
New Zealand UtiliCorp N.Z., Inc. USP owns 79% Owns minority interests in WEL
Energy Ltd. and Power New Zealand
Ltd., electric distribution
companies
</TABLE>
PROPOSED MERGER WITH KANSAS CITY POWER &AND LIGHT COMPANY (KCPL)
On January 19, 1996, the company, KCPL and KC United Corp. (KCU) entered
into an Agreement and Plan of Merger (the Merger Agreement) which provides for a
strategic business combination of the company and KCPL in a "merger-of-equals"
transaction (the Transaction). Pursuant to the Merger Agreement, the company and
KCPL will merge with and into KCU (which may be renamed at the discretion of the
company and KCPL), a corporation formed for the purpose of the Transaction.
Under the terms of the Merger Agreement, each share of the company's common
stock will be
3
<PAGE>
exchanged for 1.096 shares of KCU common stock and each share of KCPL common
stock will be exchanged for one share of KCU common stock. Based on the number
of shares of the company's common stock and KCPL's common stock outstanding on
the date of the Merger Agreement, the company' s common shareholders will
receive about 45% of the common equity of KCU and KCPL's common shareholders
will receive about 55%.
The Transaction is designed to qualify as a pooling of interests for
accounting and financial reporting purposes. Under this method of accounting,
the recorded assets and liabilities of the company and KCPL would be carried
forward to the consolidated financial statements of KCU at their recorded
amounts. The income of KCU would include the combined income of the company and
KCPL as though the Transaction occurred at the beginning of the accounting
period. The Prior periods would be combined and presented as those of KCU.
The Transaction will create a diversified energy company with total combined
sales of over $3.5 billion and over $6.5 billion in total assets, serving about
2.5 million customers in the United States, Canada, the United Kingdom, New
Zealand, Australia, China and Jamaica. The business of the combined companies
will consist of electric utility operations, gas utility operations and various
non-utility enterprises including independent power projects, and gas marketing,
gathering and processing operations.
The Transaction is subject to approval from each company's shareholders and
a number of regulatory authorities. The regulatory approvals process is expected
to take about 12 to 18 months. The Merger Agreement includes termination
provisions which may require certain payments to the party to the Transaction
under certain circumstances, including a payment of $58 million if the
Transaction is terminated by a party and within two and one-half years following
such termination, the terminating party agrees to consummate or consummates
certains business combination transactions.
ENERGYONE BRAND/STRATEGY
In May 1995, the company officially launched the EnergyOne brand. EnergyOne
is a unifying name for the products and services provided to the company's
customers. Prior to the EnergyOne brand launch, the company marketed its
products and services using the local utility division name or separate
subsidiary name. Now most company products and services carry the EnergyOne
brand. EnergyOne is an integral part of the company's strategy to bring brand
awareness and value added services to the industry and thereby create a platform
for customer growth outside existing service territories. A sample of these
value added services is shown below:
<TABLE>
<CAPTION>
PRODUCT & SERVICE CATEGORY DESCRIPTION PRODUCT & SERVICE NAME
- ----------------------------------- ----------------------------------- ----------------------------------------------
<S> <C> <C> <C>
Supply Solutions Assessing customers' energy needs - AdvisorOneSM Service
and providing customized solutions - Fuel and Power Management Services
Utility Solutions Helping customers design, finance, - Hot SpotSM Service
build and maintain generating - Power Services
facilities - Special Utility Services
- Perfect PowerSM Services
Technology & Equipment Solutions Designing, developing and - ProfileOneSM Service
installing emerging and proven - Productivity & Efficiency Services
technologies to lower customer Environmental Energy Services
energy costs -
</TABLE>
In addition to developing a new portfolio of products and services in 1995,
the company invested in its marketing infrastructure and sales organization to
support and sell EnergyOne products and services.
4
<PAGE>
REGULATION
The company's consolidated utility businesses are regulated by the following
commissions:
<TABLE>
<CAPTION>
STATE/JURISDICTION COMMISSION
- ------------------------------ --------------------------------------------------------------
<S> <C>
Kansas Kansas Corporation Commission
Michigan Michigan Public Service Commission
Missouri Public Service Commission of the State of Missouri
Minnesota Minnesota Public Utilities Commission
Iowa Iowa State Utilities Board
West Virginia Public Service Commission of West Virginia
Colorado Public Utilities Commission of the State of Colorado
Federal Federal Energy Regulatory Commission
British Columbia, Canada British Columbia Utilities Commission
</TABLE>
There is no state regulatory body in Nebraska. Each municipality served by
the company regulates rates and services. AGP's pipeline volumes and rates are
regulated by the Texas Railroad Commission.
Set out below is a summary of recent rate case activity of the company.
<TABLE>
<CAPTION>
GRANTED
REQUESTED -----------------------------------
-------------------------------------- AMOUNT
AMOUNT (IN EFFECTIVE
JURISDICTION TYPE (IN MILLIONS) % INCREASE DATE MILLIONS) % INCREASE DATE
- ---------------- ------------ ------------- ------------ --------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Nebraska Gas $ 5.2 10.0% 8/95 Pending Pending Pending
Michigan Gas 10.5 N/A 10/95 " " " " " "
Kansas Gas 5.1 7.6 12/95 " " " " " "
Electric
Missouri Wholesale .6 N/A 11/95 " " " " " "
</TABLE>
ENVIRONMENTAL
The company is subject to various environmental regulations including air
quality standards and emission limitations, clean water criteria pertaining to
certain facilities and the handling and disposal of hazardous substances.
Compliance with existing regulations, and those which may be promulgated in the
future, can result in considerable capital expenditures and operation and
maintenance expense. A discussion of the environmental matters of the company
follows.
MANUFACTURED GAS PLANTS:
The company owns or once operated 29 former manufactured gas plants (MGPs)
which may, or may not, require some form of environmental remediation. The
company has contacted appropriate federal and state agencies and is in the
process of determining what, if any, specific cleanup activities may be needed
at these sites.
As of December 31, 1995, the company has spent approximately $7.0 million
for investigating and remediating its MGP sites. The company currently estimates
that it will spend a minimum of approximately $6.2 million over the next several
years on the company's identified MGP sites. These amounts could change
materially based upon further investigations, the actions of environmental
agencies and the financial viability of other responsible parties. Additionally,
the ultimate liability may be significantly affected if the company is held
responsible for parties not financially able to contribute to these costs. Based
on prior experience, available facts and existing law, the company has recorded
a liability of $6.2 million representing its estimate of the amount of
environmental costs currently expected to be incurred.
5
<PAGE>
PRICE RISK MANAGEMENT ACTIVITIES
The company utilizes certain types of fixed-price contracts in connection
with its natural gas, natural gas liquids, and power marketing businesses. These
contracts include contracts that commit the company to purchase or sell natural
gas and other commodities at fixed prices in the future (i.e., fixed-price
forward purchase and sales contracts), futures and options contracts traded on
the NYMEX and swaps and other types of financial instruments traded in the
over-the counter financial markets.
The availability and use of these types of contracts allow the company to
manage and hedge its fixed-price purchase and sales commitments, to provide
fixed-price commitments as a service to its customers and suppliers (i.e., price
risk intermediation services), to reduce its exposure relative to the volatility
of cash market prices, to take advantage of carefully selected arbitrage
opportunities through open positions and to protect its investment in storage
inventories. In addition, by utilizing exchange for physical transactions, or
EFP's, allowed by the NYMEX, which enable the company to take delivery of, or
sell, a physical quantity of natural gas in exchange for a futures position, the
company is able to secure additional sources of physical natural gas supply, or
create additional markets for existing supply, through the use of natural gas
futures contracts. The company's domestic natural gas trading activities are
referred to herein as price risk management activities and are reflected in the
accompanying financial statements using the mark-to-market method of accounting.
The company's foreign gas marketing, domestic non-trading gas, natural gas
liquids and power marketing businesses are accounted for on the accrual method.
Although the company generally attempts to balance its fixed-price physical
and financial purchase and sales contracts in terms of contract volumes and the
timing of performance and delivery obligations, net open positions often exist
or are established due to the origination of new transactions and the company
assessment of, and response to, changing market conditions. Additionally, the
company will at times create a net open position or allow a net open position to
continue when it believes, based upon competitive information gained from its
energy marketing activities, that future price movements will be consistent with
its net open position. To the extent that the company has a net open position,
company is exposed to the risk that fluctuating market prices may adversely
impact its financial position or results of operations.
In addition to the risk associated with price movements, credit risk is also
inherent in the company's risk management activities. Credit risk relates to the
risk of loss resulting from the nonperformance of a counterparty of its
contractual obligations. The company maintains credit policies with regard to
its counterparties that the company believes significantly minimize overall
credit risk. These policies include the thorough review of potential
counterparties' financial condition, collateral requirements under certain
circumstances, monitoring of net exposure to each counterparty and the use of
standardized agreements which allow for the netting of positive and negative
exposures associated with each counterparty.
COMPETITION
DOMESTIC UTILITY OPERATIONS:
ELECTRIC
The electric industry has increasingly become more competitive as federal
and state regulators and legislators continue taking steps toward deregulation.
The anticipation of reduced regulation triggered some dramatic events in 1995.
Five major utility mergers were announced, including three that affect
competitors close to or next to the company's service territories. Other
utilities have implemented cost reduction programs and organizational changes in
preparation for greater competition. The company began looking at its strengths
and opportunities in respect to future increased competition two years ago when
the company brought together approximately 100 employees from around the company
to work on a strategic plan that would be the foundation to reposition and
6
<PAGE>
reshape the company. In 1995 the company began centralizing business support
functions that previously were performed separately in the operating divisions
and building its resources and capacity to take advantage of opportunities
brought about as competition increases.
The company currently accounts for the economic effects of regulation in
accordance with the provisions of Statement of Financial Accounting Standards
(SFAS) No. 71 "Accounting for the Effects of Certain Types of Regulation," and
accordingly has recorded certain costs as regulatory assets in the financial
statements. The company expects that its rates will continue to be based on
historical costs for the foreseeable future. If the company discontinued
applying SFAS No. 71, it would be required to make adjustment to the carrying
value of certain assets.
GAS
The competitive forces affecting the company's electric operations are also
affecting the company's gas operations. In addition, as competing electric
utilities reduce costs it becomes more difficult to obtain new customers through
fuel switching opportunities and in certain cases the increased competition may
result in customer losses. The Federal Energy Regulatory Commission (FERC) Order
636 shifted gas supply responsibilities from traditional pipeline company
sources to distribution utilities and allows customers to bypass the company's
system by directly connecting to a transportation pipeline. The company has
addressed increased competition and industry changes in several ways. First, the
company's natural gas is priced competitively in the company's respective
service territories relative to alternative energy sources. Second, the company
established in 1993 a central gas procurement function designed to take
advantage of opportunities created by FERC Order 636. Besides offering low cost
natural gas, the company offers its customers a wide range of energy solutions
to meet customer demands.
ENERGY RELATED:
Energy related businesses consist of the two business units of Aquila Energy
Corporation (AEC). AEC has many competitors in the markets its serves, including
other marketing companies, gas pipelines, distribution companies and alternative
fuels. AEC's ability to compete successfully and grow in this environment is
contingent upon performance and pricing of the natural gas markets.
SEASONAL VARIATIONS OF BUSINESS
The company's utility and independent power project businesses are weather
sensitive. The company has both summer and winter peaking utility assets to
reduce dependence on a single peak season. The table below shows peak times for
its consolidated utility businesses.
<TABLE>
<CAPTION>
JURISDICTION PEAK
- ------------------------------------ ------------------------------------
<S> <C>
Gas utility operations November through March
Missouri electric July and August
Kansas electric July and August
Colorado electric July and August
West Virginia electric November through March
British Columbia, Canada electric November through March
</TABLE>
FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
Segment information for the three years ended December 31, 1995 appears on
page 56.
7
<PAGE>
I. ELECTRIC OPERATING STATISTICS
The following table summarizes the sales, volume and customers of the
company's electric transmission and distribution businesses.
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Sales (in millions)
Residential.......................................... $ 252.4 $ 245.8 $ 236.8 $ 212.5 $ 173.6
Commercial........................................... 161.1 157.3 156.2 148.3 102.0
Industrial........................................... 77.3 75.1 76.0 73.3 46.4
Other................................................ 86.9 78.8 77.9 73.7 57.4
--------- --------- --------- --------- ---------
Total.............................................. $ 577.7 $ 557.0 $ 546.9 $ 507.8 $ 379.4
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Volumes (MWH)
Residential.......................................... 3,678 3,512 3,536 3,176 2,735
Commercial........................................... 2,676 2,611 2,528 2,367 1,672
Industrial........................................... 1,927 1,897 1,921 1,800 1,197
Other................................................ 2,264 2,099 1,939 1,748 1,468
--------- --------- --------- --------- ---------
Total.............................................. 10,545 10,119 9,924 9,091 7,072
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Customers
Residential.......................................... 374,701 367,943 360,429 354,086 346,434
Commercial........................................... 55,266 54,444 53,475 52,748 51,765
Industrial........................................... 324 321 302 301 302
Other................................................ 4,575 3,706 3,678 3,691 3,634
--------- --------- --------- --------- ---------
Total.............................................. 434,866 426,414 417,884 410,826 402,135
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
The company has electric operations in the states of Missouri, Kansas,
Colorado and West Virginia and in British Columbia, Canada. The company's
generation facilities are outlined on page 13. The following table shows the
overall fuel and purchased power mix, and system capability for the past five
years.
<TABLE>
<CAPTION>
SOURCE 1995 1994 1993 1992 1991
- --------------------------------------------------------------------- --------- --------- --------- --------- ---------
(MW)
<S> <C> <C> <C> <C> <C>
Coal................................................................. 875 868 864 863 858
Hydro................................................................ 205 205 205 206 206
Gas & Oil............................................................ 705 705 700 716 723
--------- --------- --------- --------- ---------
Total generation................................................... 1,785 1,778 1,769 1,785 1,787
Purchased power...................................................... 885 904 840 820 694
--------- --------- --------- --------- ---------
Total system capacity................................................ 2,670 2,682 2,609 2,605 2,481
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
Changes in fuel cost are recovered through various fuel recovery mechanisms
in Kansas and West Virginia. Changes in fuel cost in Missouri, Colorado and
British Columbia are generally absorbed.
8
<PAGE>
II. GAS OPERATING STATISTICS
The following table summarizes the sales, volume and customers of the
company's gas distribution businesses.
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Sales (in millions)
Residential................................... $ 362.2 $ 356.4 $ 380.2 $ 276.0 $ 257.6
Commercial.................................... 153.9 156.9 177.5 130.0 118.8
Industrial.................................... 45.8 66.7 89.8 76.4 90.9
Other......................................... 54.9 38.6 38.6 33.3 28.7
----------- ----------- ----------- ----------- -----------
Total....................................... $ 616.8 $ 618.6 $ 686.1 $ 515.7 $ 496.0
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Volumes (MCF)
Residential................................... 76,461 71,208 74,421 58,095 56,383
Commercial.................................... 37,282 35,952 40,232 32,239 30,861
Industrial.................................... 12,901 18,439 26,868 23,841 30,908
Transportation................................ 178,114 135,924 115,877 112,831 108,044
Other......................................... 1,827 2,420 3,672 2,683 1,928
----------- ----------- ----------- ----------- -----------
Total....................................... 306,585 263,943 261,070 229,689 228,124
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Customers
Residential................................... 713,586 698,156 661,930 535,058 519,149
Commercial.................................... 76,430 76,015 73,365 60,054 58,299
Industrial.................................... 3,790 3,878 3,874 3,622 3,666
Other......................................... 2,815 1,581 1,185 582 539
----------- ----------- ----------- ----------- -----------
Total....................................... 796,621 779,630 740,354 599,316 581,653
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
</TABLE>
The company's gas operations are primarily in the states of Missouri,
Kansas, Colorado, Nebraska, Iowa, Minnesota, Michigan and West Virginia. Except
for its West Virginia operations, the company procures natural gas through a
central gas supply department located in Omaha, Nebraska. For West Virginia the
company procures its gas relying on local supplies fed directly into its
distribution system and the spot market.
III. ENERGY RELATED OPERATING STATISTICS
A description of AEC's segments is presented below.
A. WHOLESALE ENERGY MARKETING
AEC's wholesale energy marketing business is conducted through Aquila Energy
Marketing and Aquila Gas Pipeline Corporation (AGP), collectively referred to as
Energy Marketing. Energy Marketing is a gas marketing company with a marketing,
supply and transportation network consisting of relations with more than 1,000
gas producers and 500 local distribution companies and end-users throughout the
United States and in Mexico and Canada. Through more than 350 transportation
agreements, it has over 17,500 gas receiving and delivery points available on a
network of 33 pipelines. For the five years in the period ended December 31,
1995, Energy Marketing had marketing volumes of 1,427, 1,002, 1,381, 1,589 and
1,003 MMcf/d, respectively.
In 1995, Energy Marketing began selling electricity to wholesale and other
end users similarly to how it markets natural gas. AEC expects that the
electricity marketing industry will expand rapidly as electricity futures
trading is developed and the infrastructure of this industry segment is
established. In 1995 its wholesale power sales totaled more than 135,000
megawatt hours, ranking it among the nation's 10 largest power marketers.
9
<PAGE>
B. GAS GATHERING AND PROCESSING
AEC through AGP gathers and processes natural gas and natural gas liquids.
AGP owns and operates a 3,311-mile intrastate gas transmission and gathering
network and four processing plants that extract and sell natural gas liquids.
Key operating statistics for AGP are presented in the table below.
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Natural gas throughput (MMcf/d)............................ 507 372 329 285 142
Natural gas liquids produced (000's barrels/d)............. 32 31 31 24 7
Pipeline miles operated.................................... 3,311 2,718 2,531 2,014 1,262
</TABLE>
In October 1993, 18% of AGP, or 5.4 million common shares was sold to the
public in an initial public offering. The offering resulted in a non-taxable
$47.8 million gain.
C. OIL AND GAS PRODUCTION
On September 27, 1995, substantially all of AEC's oil and gas producing
properties were sold to another company for $205 million which approximates book
value.
IV. OTHER BUSINESSES AND EQUITY INVESTMENTS
A. AUSTRALIA
On September 6, 1995, PPL, of which the company owns 49.9 percent, acquired
United Energy Limited (UE), an Australian electric distribution utility, from
the State of Victoria for approximately $1.15 billion. The company's ownership
interest cost approximately $257.9 million and was financed with
Australian-dollar-denominated bank debt through a consortium of banks.
UAHL manages UE on behalf of PPL for a fixed fee plus direct expenses and a
variable fee based on UE's profitability. UAHL's management contract with PPL
has a term of 10 years.
UE has approximately 520,000 customers and sales volume of 6,393 MWHs. UAHL
accounts for its ownership interest in PPL by the equity method. As of December
31, 1995, UAHL's investment in PPL was approximately $257.9 million.
B. NEW ZEALAND
The company has equity investments in two electric distribution utilities in
New Zealand. The company through UtiliCorp N.Z., Inc. (UNZ), a 79%-owned
subsidiary, owns 39% of WEL Energy Group Limited (WEL) and 27.5% of Power New
Zealand Limited (PNZ). PNZ is New Zealand's second largest electric distribution
utility with approximately 214,000 customers. WEL has approximately 65,000
customers. On November 30, 1995, UNZ concluded a transaction with Todd
Corporation whereby Todd sold its shares in PNZ to UNZ for $69.4 million. Todd
Corporation is a 21% shareholder in UNZ. UNZ's investment in PNZ and WEL at
December 31, 1995, was $107.1 million and $39.1 million, respectively.
In February 1995, UNZ paid $16.1 million to WEL to fully pay its capital
commitment to WEL. UNZ now participates in WEL's earnings to the full extent of
its ownership. Prior to the remaining capital call payment, UNZ's participation
in WEL's earnings was limited to 5%.
C. UNITED KINGDOM
The company has various natural gas marketing operations in the United
Kingdom through subsidiaries and equity interests. The company's principal gas
marketing operations are conducted through United Gas Limited, a subsidiary that
markets natural gas to wholesale and industrial customers. The company also has
25% ownership interests in five marketing joint ventures. See pages 27 and 54
for more information on the United Kingdom operations.
D. UTILCO GROUP
UtilCo Group invests in various independent power projects. UtilCo Group's
strategy includes investing in projects that are geographically diverse and that
use a variety of traditional fuels and
10
<PAGE>
proven generation technologies. UtilCo Group has 17 projects in seven states and
has committed to invest in a project in Jamaica. UtilCo Group's generating
projects have an aggregate capacity of 873 MW.
In May 1995, UtilCo Group and the company acquired an interest in a
co-generation plant that sells its output to a paper and pulp plant in Alabama
for $59 million.
In October 1995, UtilCo Group entered into a joint venture agreement with
Air Products and Chemicals, Inc. to develop, own, and operate generation
projects. The projects will consist of gas fired combustion turbine applications
throughout 16 states in the Midwest.
EXECUTIVE OFFICERS OF THE REGISTRANT
<TABLE>
<CAPTION>
EXECUTIVE OFFICER PROFESSIONAL EXPERIENCE
- --------------------------------------- ------------------------------------------------------------------------
<S> <C>
Richard C. Green, Jr. TITLES: Chairman of the Board of Directors, and Chief Executive Officer
AGE: 41
5-YEAR HISTORY: Chairman of the Board of Directors since February 1989
and Chief Executive Officer since May 1985. Mr. Green previously was
also President from May 1985 to February 1996.
Robert K. Green TITLES: President of the company and Chairman of the Board of Directors
and Chief Executive Officer of United Energy Limited
AGE: 34
5-YEAR HISTORY: President since February 1996. Executive Vice President
from January 1993 to February 1996. Prior to January 1993, Mr. Green
was President of the Missouri Public Service division between 1993 and
1991. Between 1991 and 1989 Mr. Green held various division officer
positions with Missouri Public Service.
B. C. Burgess TITLE: Senior Vice President, Marketing Services
AGE: 50
5-YEAR HISTORY: In present position since September 1994. Vice President
of the company from January 1994 to September 1994. Prior to January
1994, Mr. Burgess was employed by Bell Atlantic Corporation as a Vice
President between 1994 and 1993 and was employed as a Vice President
between 1993 and 1990 with Sprint Corporation.
Charles K. Dempster TITLE: Chairman of the Board of Directors and Chief Executive Officer of
UtiliCorp U.K., Inc.
AGE: 53
5-YEAR HISTORY: In present position since November 1995. Before current
position Mr. Dempster was Vice President, Energy Resources from
September 1994. From December 1995 to January 1993, Mr. Dempster was
President of Aquila Energy Corporation, a subsidiary of the company.
Prior to being employed by the company, Mr. Dempster was President of
Reliance Pipeline Company since 1987.
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
EXECUTIVE OFFICER PROFESSIONAL EXPERIENCE
- --------------------------------------- ------------------------------------------------------------------------
<S> <C>
James G. Miller TITLE: Senior Vice President, Energy Delivery
AGE: 47
5-YEAR HISTORY: In present position since September 1994. Prior
positions included various division President posts from 1983.
Harvey J. Padewer TITLE: Senior Vice President, Energy Resources and Power Services and
President of Aquita Energy Corporation.
AGE:
5-YEAR HISTORY: Present position since January 1996. From May 1995, Mr.
Padewer was Vice President, Power Services. Prior to being employed by
the company Mr. Padewer was employed by Asea Brown Boveri Power
Generation, Inc., at various officer level positions for over five
years.
James S. Brook TITLE: Vice President (Principal Accounting Officer)
AGE: 45
5-YEAR HISTORY: Present position since November 1993. Prior to current
position, Mr. Brook held various Vice President positions at Missouri
Public Service and West Kootenay Power since 1980.
Dale J. Wolf TITLE: Vice President Finance, Treasurer and Corporate Secretary
(Principal Financial Officer)
AGE: 56
5-YEAR HISTORY: Held present position for 6 years. Prior position was
Vice President, Finance and Treasurer for four years.
</TABLE>
All officers are elected annually by the Board of Directors for a term of
one year. Robert K. Green is the brother of Richard C. Green, Jr., and Avis G.
Tucker, Director, is the aunt of Richard C. Green, Jr. and Robert K. Green.
ITEM 2. PROPERTIES.
The company owns electric production, transmission and distribution systems
and gas transmission and distribution systems throughout its service
territories. The company also owns gas gathering, processing and pipeline
systems. Substantially all utility plant assets in Michigan are mortgaged under
terms pursuant to an Indenture of Mortgage and Deed of Trust dated July 1, 1951,
as supplemented. Substantially all of the company's Canadian utility plant is
mortgaged under terms pursuant to a separate indenture.
12
<PAGE>
I. UTILITY FACILITIES
The company's electric generation facilities, as of December 31, 1995, are
as follows:
<TABLE>
<CAPTION>
UNIT
YEAR CAPABILITY NET
UNIT LOCATION INSTALLED (KW NET) FUEL GENERATION
- -------------------------- ---------------------------- ------------------ ----------- --------- -----------
<S> <C> <C> <C> <C> <C>
MISSOURI
Sibley #1 Sibley 1960 52,400 Coal 278,606
Sibley #2 Sibley 1962 52,400 Coal 269,358
Sibley #3 Sibley 1969 387,900 Coal 1,993,865
Ralph Green #3 Pleasant Hill 1981 60,100 Gas 22,433
Nevada #1 Nevada 1974 18,600 Oil 70
Greenwood #1 Greenwood 1975 46,100 Oil 1,621
Greenwood #2 Greenwood 1975 44,200 Oil 2,462
Greenwood #3 Greenwood 1977 47,200 Oil 3,648
Greenwood #4 Greenwood 1979 45,700 Oil 4,328
KCI #1 Platte County 1970 12,600 Gas 1,202
KCI #2 Platte County 1970 12,600 Gas 1,573
KANSAS
Judson Large #4 Dodge City 1969 137,000 Gas/Oil 326,600
Arthur Mullergren #3 Great Bend 1963 92,000 Gas/Oil 217,036
Cimarron River #1 Liberal 1963 58,000 Gas 50,548
Cimarron River #2 Liberal 1967 14,000 Gas 720
Clifton #1 Clifton 1974 71,000 Gas
Clifton #2 Clifton 1974 2,500 Oil 23,935
Jeffrey #1 Pottawatomie County 1978 111,600 Coal 573,544
Jeffrey #2 Pottawatomie County 1980 117,600 Coal 789,712
Jeffrey #3 Pottawatomie County 1983 112,000 Coal 738,536
COLORADO
W.N. Clark #1 Canon City 1955 16,580 Coal 101,960
W.N. Clark #2 Canon City 1959 29,110 Coal 139,444
Pueblo #6 Pueblo 1949 19,000 Gas/Oil 54,573
Diesel #'s 1,2,3,4,5 Pueblo 1964 10,000 Oil
Diesel #'s 1,2,3,4,5 Rocky Ford 1964 10,000 Oil
CANADA
No. 1 Lower Bonnington, BC 1925 41,400 Hydro 331,084
No. 2 Upper Bonnington, BC 1907/1916/1940 59,400 Hydro 413,827
No. 3 South Slocan, BC 1928 53,200 Hydro 423,633
No. 4 Corra Linn, BC 1932 51,300 Hydro 339,679
----------- -----------
TOTAL 1,785,490 7,103,997
----------- -----------
----------- -----------
</TABLE>
13
<PAGE>
At December 31, 1995, the company had transmission and distribution lines as
follows:
<TABLE>
<CAPTION>
LENGTH
VOLTAGE (POLE MILES)
- ------------------------------------------------------- -----------------
<S> <C>
345 KV................................................. 58
230 KV................................................. 276
161 KV................................................. 624
138 KV................................................. 74
115 KV................................................. 924
69 KV.................................................. 1,393
34.5 KV................................................ 1,860
Less than 34.5 KV...................................... --
Overhead distribution lines............................ 16,403
Underground distribution lines......................... 2,509
</TABLE>
At December 31, 1995, the company owned substations aggregating 9,562,993
KVA.
At December 31, 1995, the company's gas utility operations had 3,188 miles
of gas gathering and transmission pipelines and 20,406 miles of distribution
mains and service lines located throughout its service territories.
II. GAS PROCESSING AND GATHERING ASSETS
AGP owns or has an interest in 14 natural gas pipeline systems with an
aggregate length of approximately 3,311 miles. These pipelines do not form an
interconnected system. Set forth below is information with respect to AGP's
pipeline systems as of December 31, 1995:
<TABLE>
<CAPTION>
GAS
THROUGHPUT AVG. DAILY GAS
CAPACITY THROUGHPUT
MILES OF (MMCF/D) (MMCF/D)
GATHERING SYSTEMS LOCATION PIPELINE (1) (1) (2)
- ------------------------------------------------------ ------------------ ----------- ------------- ---------------
<S> <C> <C> <C> <C>
Southeast Texas Pipeline System (SETPS)............... SE Texas 2,138 710 427
Mentone............................................... W. Texas 13 60 --
Gomez................................................. W. Texas 11 40 1
Menard County......................................... W. Texas 118 30 4
Maverick County....................................... W. Texas 118 20 3
Rhoda Walker.......................................... W. Texas 21 20 6
Panola County......................................... E. Texas 24 8 1
Elk City.............................................. SW Oklahoma 154 115 73
Mooreland............................................. NW Oklahoma 313 40 16
Tristar entities:
Borado-40%.......................................... S. Texas 57 40 18
Warwink-35%......................................... W. Texas 44 100 22
Benedum/Wilshire-5%................................. W. Texas 204 125 4
Brooks-Hidalgo........................................ S. Texas 96 75 9
----- ----- ---
3,311 1,383 584
Fuel and Shrinkage.................................... -- (78)
----- ----- ---
Total................................................. 3,311 1,383 506
----- ----- ---
----- ----- ---
</TABLE>
- ------------------------
(1) All capacity, volume and mileage information is approximate. Capacity
figures are management's estimates based on existing facilities without
regard to the present availability of natural gas.
(2) Excludes off-system sales with average daily volumes of 360 MMcf/d sold from
other companies' facilities.
14
<PAGE>
AGP owns or has an interest in 4 natural gas processing and treating plants
with aggregate gas throughput capacity of 495 MMcf/d. Set forth below is
information about AGP's processing plants as of December 31, 1995.
<TABLE>
<CAPTION>
NATURAL GAS
GAS THROUGHPUT LIQUIDS
PLANT CAPACITY GAS THROUGHPUT PRODUCTION GATHERING SYSTEM
- ------------------------------------------- ------------------- ------------------- ------------- ----------------------
<S> <C> <C> <C> <C>
La Grange, Texas........................... 230 213 23.0 SETPS
Somerville, Texas.......................... 25 27 2.9 SETPS
Katy, Texas (3)............................ -- 55 2.3 SETPS
Bendum Plant-5%............................ 125 4 -- Benedum/Wilshire
Elk City, Oklahoma......................... 115 73 3.4 Elk City
--- --- ---
Total...................................... 495 372 31.6
--- --- ---
--- --- ---
</TABLE>
- ------------------------
(1) All capacity and volume information is approximate. Capacity figures are
management's estimates based on existing facilities without regard to the
present availability of natural gas.
(2) Volumes from joint venture have been included at the AGP ownership interest.
(3) This plant is owned and operated by a third party from which the AGP
receives a portion of the NGLs produced from gas the AGP delivers to the
plant.
The availability of natural gas reserves to AGP depends on their development
in the area served by its pipelines and on AGP's ability to purchase gas
currently sold to or transported through other pipelines. The development of
additional gas reserves will be affected by many factors including the prices of
natural gas and crude oil, exploration and development costs and the presence of
natural gas reserves in the areas served by AGP's systems.
15
<PAGE>
III. INDEPENDENT POWER PROJECTS
Information regarding the company's UtilCo Group subsidiary's generating
projects is set forth below.
<TABLE>
<CAPTION>
TYPE OF
PROJECT & LOCATION INVESTMENT OWNED (MEGAWATTS) FUEL DATE IN SERVICE
- --------------------------------------------------- ----------- ---------- ----------- ------------- -------------------
<S> <C> <C> <C> <C> <C>
Mega Renewables G.P., 4 projects in California General 49.75% 12.2 Hydro Spring 1987(b)
partnership
Topsham Hydro Partners, Maine Leveraged 50% 13.9 Hydro October 1987
lease
Stockton CoGen Company, California General 50% 49.9 Coal March 1988(c)
partnership
Westwood Energy Properties, Pennsylvania Limited 38% 29.25 Waste coal July 1988
partnership
BAF Energy L.P., California Limited 23.1% 111 Natural Gas May 1989
partnership
Rumford Cogeneration Company L.P., Maine Limited 24.3% 75 Coal and May 1990
partnership waste wood
Koma Kulshan Associates, Washington Limited 49.75% 13.7 Hydro October 1990
partnership
Badger Creek Limited, California Limited 49.75% 46.6 Natural gas April 1991
partnership
McKittrick Limited, California Limited 49.75% 45.4 Natural gas October 1991
partnership
Live Oak Limited, California Limited 50% 45.8 Natural gas April 1992
partnership
Lockport Energy Associates, L.P., New York Limited 22.56% 168.8 Natural gas December 1992
partnership
Orlando Cogen Limited, L.P., Florida Limited 50% 120 Natural gas September 1993
partnership
Naheola Cogeneration LP, Alabama Limited 50% 81.2 Black liquor March 1993(d)
partnership solids, coal,
gas, wood
Jamaica Private Power Company, Jamaica Limited 22% 60 Diesel June 1996 Est.
liability
Company
</TABLE>
- ------------------------------
(a) Total capacity, net of power consumed in generation.
(b) Interest acquired by UtilCo Group in June 1989.
(c) Interest acquired by UtilCo Group in December 1988.
(d) Interest acquired by UtilCo Group and the company in May 1995.
ITEM 3. LEGAL PROCEEDINGS.
On June 17, 1992, a class action suit was filed in the United States
District Court for the Western District of Missouri by a stockholder against the
Company and certain unnamed employees of the Company and/or its subsidiary,
Aquila Energy Corporation. Plaintiff subsequently dismissed its claims against
all defendants except the Company. The case caption is WILLIAM ALPERN VS.
UTILICORP UNITED INC.. In this case, plaintiff alleges that the Company violated
various securities laws, including Section 10(b) of the Securities Exchange Act
of 1934, as amended, and Rule 10b-5 of the Securities and Exchange Commission,
both by making misrepresentations and omitting to state material facts in
connection with public disclosures. Plaintiff also alleges a claim under Section
11 of the Securities Act of 1933, as amended. Among other relief, plaintiff
seeks unspecified compensatory damages. The District Court has dismissed the
case by granting summary judgment to UtiliCorp. The plaintiffs have asked the
District Court to reconsider that decision and they have appealed that decision
to the United States Court of Appeals for the Eighth Circuit.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
16
<PAGE>
PART 2
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The company's common stock (par $1) is listed on the New York, Pacific and
Toronto stock exchanges under the symbol UCU. At December 31, 1995, the company
had 38,136 common shareholders of record. Information relating to market prices
of common stock and cash dividends on common stock is set forth in the table
below.
MARKET PRICE
<TABLE>
<CAPTION>
HIGH LOW CASH DIVIDENDS
--------- --------- -----------------
<S> <C> <C> <C>
1995 QUARTERS
First........................................... 29.50 26.25 .43
Second.......................................... 29.00 27.25 .43
Third........................................... 28.50 26.63 .43
Fourth.......................................... 29.63 27.50 .43
1994 QUARTERS
First........................................... 31.63 29.00 .42
Second.......................................... 31.38 28.00 .42
Third........................................... 29.75 26.25 .43
Fourth.......................................... 27.75 25.38 .43
</TABLE>
Cash dividends on the common stock of the company and its predecessor have
been paid each year since 1939.
Cash dividends on and acquisition of the company's capital stock are
restricted by provisions of the MGU Indenture and by the Preference Stock
provisions of the Certificate of Incorporation. Under the most restrictive of
these provisions, contained in the MGU Indenture, the company may not declare or
pay any dividend (other than a dividend payable in shares of its capital stock),
whether in cash, stock or otherwise, or make any other distribution, on or with
respect to any class of its capital stock, or purchase or otherwise acquire any
shares of, any class of its capital stock if, after giving effect thereto, the
sum of (i) the aggregate amount of all dividends declared and all other
distributions made (other than dividends declared or distributions made in
shares of its capital stock) on shares of its capital stock, of any class,
subsequent to December 31, 1984, plus (ii) the excess, if any, of the amount
applied to or set apart for the purchase or other acquisition of any shares of
its capital stock, of any class, subsequent to December 31, 1984, over such
amounts as shall have been received by the company as the net cash proceeds of
sales of shares of its capital stock, of any class, subsequent to December 31,
1984, would exceed the sum of the net income of the company since January 1,
1985, plus $50 million. In addition, the company may not declare such dividends
unless it maintains a tangible net worth of at least $250 million and the
aggregate principal amount of its outstanding indebtedness does not exceed 70%
of its capitalization. None of the company's retained earnings was restricted as
to payment of cash dividends on its capital stock as of December 31, 1995.
In addition, cash dividends on, and acquisition of, the company's common
stock will be restricted by provisions of the Indenture of the company dated as
of June 1, 1995 relating to its 8 7/8% Junior Subordinated Deferrable Interest
Debentures, Series A, due 2025. In the event the company elects to defer
interest on such Debentures then the company may not declare any dividend on or
acquire any shares of its capital stock during such deferral period.
17
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA.
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Sales............................................... $ 2,798.5 $ 2,398.1 $ 2,746.1 $ 2,339.0 $ 1,726.2
Income from operations.............................. 225.1 228.0 144.0 165.4 192.7
Net income.......................................... 79.8 94.4 86.4 52.9 77.6
Earnings available for common shares................ 77.7 91.4 79.5 46.0 69.8
Primary earnings per common share................... 1.72 2.08 1.95 1.32 2.37
Fully diluted earnings per common share............. 1.71 2.06 1.92 1.31 2.27
Cash dividends per common share..................... 1.72 1.70 1.62 1.60 1.54
Total assets........................................ 3,885.9 3,111.1 2,850.5 2,552.8 2,387.3
Short-term debt (including current maturities)...... 303.7 321.2 71.8 236.8 114.5
Long-term debt...................................... 1,355.4 976.9 1,009.7 890.8 928.1
Company-obligated mandarorily redeemable preferred
securities of a partnership........................ 100.0 -- -- -- --
Preference and preferred stock...................... 25.4 25.4 83.9 95.1 97.1
Common shareholders' equity......................... 946.3 906.8 851.7 661.1 660.7
Book value per common share......................... 20.59 20.24 20.27 18.66 19.18
</TABLE>
- ------------------------
(1) In 1995, the company recorded a $34.6 million pretax charge related to
impaired assets.
(2) In 1995, the company changed its method of accounting for domestic natural
gas trading operations to the mark-to-market method. This change in
accounting increased sales and income from operations by $29.8 million, net
income by $18.3 million and total assets by $201.9 million. This change in
accounting has been reflected from January 1, 1995. The pro forma effect on
prior periods is not material.
(3) In 1993, AEC, a subsidiary of the company, recorded a $69.8 million
restructuring charge against pretax earnings related to a change in
strategic direction.
(4) In 1993, AEC sold 18% of AGP in an initial public offering resulting in a
non-taxable gain of $47.8 million.
(5) In 1992, AEC recorded a $17.7 million charge against pretax earnings related
to improper payments by former employees of AER, a wholly-owned subsidiary
of Aquila.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION.
KEY EVENTS OF 1995
- In May 1995 the company launched a national marketing campaign to promote
EnergyOne, the industry's first nationwide brand for energy products and
services.
- In May 1995 UtiliCorp and its UtilCo Group subsidiary purchased a $59
million, 50% ownership interest in a partnership that owns and operates a
cogeneration facility in Alabama.
- In September 1995 the company acquired a 49.9% ownership interest in
United Energy, an Australian electric distribution utility, for
approximately $257.9 million. The company manages the utility which serves
approximately 520,000 customers in metropolitan Melbourne.
- In September 1995 UtiliCorp and Novell, Inc. announced a partnership to
jointly develop smart networking technologies to better manage energy use
by communicating over power lines.
- In September 1995 the company sold substantially all of its oil and gas
production assets for approximately $205 million cash, or about book
value.
- In the fourth quarter of 1995, the company recorded a $34.6 million pretax
provision for asset impairments and adopted a new accounting standard
regarding long-lived assets.
18
<PAGE>
- In late 1995 the company changed its accounting method for natural gas
trading activities to the mark-to-market method, effective January 1,
1995. This change increased 1995 net income by $18.3 million and primary
earnings per share by $.41.
- In January 1996 UtiliCorp and Kansas City Power & Light Company signed a
definitive agreement to merge into a new company. The merger will create a
diversified energy company with sales of more $3.5 billion and over $6.5
billion in total assets.
OVERVIEW
Except where noted, the following discussion refers to the consolidated
entity, UtiliCorp United Inc., including its three principal operating segments:
electric operations, gas operations and energy related businesses (Aquila Energy
Corporation [Aquila]). The company has other operations that effect sales and
income from operations which are discussed in the Other Businesses and Equity
Investments section. Significant events and trends are presented which have had
an effect on the operations of the company during the three-year period ended
December 31, 1995. Also presented are factors that may affect future operating
results, financial position and liquidity. This discussion should be read in
conjunction with the company's consolidated financial statements and
accompanying notes.
1995 RESULTS
UtiliCorp's 1995 earnings available for common shares were $77.7 million or
15% below earnings available in 1994. The 1995 financial results were affected
by certain adjustments recorded in the third and fourth quarters of 1995. First,
financial results were favorably affected by a change in accounting method
related to price risk management activities. This change increased net income by
$18.3 million and income from operations by $29.8 million. Second, financial
results were reduced by a provision for asset impairments that decreased net
income by $19.6 million and income from operations by $34.6 million. And third,
financial results were affected negatively by an $11 million pretax reserve
established for financial guarantees provided by the company and to certain of
its partners in United Kingdom gas marketing ventures. The reserve became
necessary due to a sharp decline in British natural gas prices. Also impacting
the 1995 financial results was higher interest expense than in 1994 due to
acquisition opportunities primarily financed through long- and short-term debt.
The company also absorbed approximately $11.5 million (pretax) of costs for
restructuring, including early retirements, severance, recruitments and
relocations.
19
<PAGE>
ELECTRIC OPERATIONS
The company's electric segment includes the electric utility operations of
Missouri Public Service, West Kootenay Power, West Virginia Power and WestPlains
Energy.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
THREE-YEAR REVIEW -- ELECTRIC OPERATIONS 1995 1994 1993
- --------------------------------------------------------------------------- ----------- ----------- -----------
DOLLARS IN MILLIONS
<S> <C> <C> <C>
Sales...................................................................... $ 577.7 $ 557.0 $ 546.9
----------- ----------- -----------
Cost of sales -- fuel and purchased power.................................. 193.1 190.7 197.3
----------- ----------- -----------
Gross profit............................................................... 384.6 366.3 349.6
----------- ----------- -----------
Expenses:
Other operating.......................................................... 116.9 101.9 97.8
Maintenance.............................................................. 35.3 38.8 38.5
Taxes, other than income taxes........................................... 51.3 50.4 48.0
Depreciation and amortization............................................ 53.7 49.9 45.9
----------- ----------- -----------
Total expenses........................................................... 257.2 241.0 230.2
----------- ----------- -----------
Income from operations..................................................... $ 127.4 $ 125.3 $ 119.4
----------- ----------- -----------
----------- ----------- -----------
Identifiable assets........................................................ $ 1,200.2 $ 1,164.6 $ 1,162.0
Capital expenditures....................................................... 69.5 81.3 87.4
-------------------------------------
Electric sales (MWH 000's)................................................. 10,545 10,119 9,924
Number of customers........................................................ 434,866 426,414 417,884
-------------------------------------
</TABLE>
SALES
Electric sales in 1995 increased $20.7 million or 4% compared to 1994 due to
more favorable weather, continued growth in the number of customers, and new
rates at West Kootenay Power effective January 1, 1995. Extremely hot summer
temperatures in 1995 benefited the company's domestic electric operations. The
electric operations in Missouri, Colorado and Kansas, which represent over 80%
of total electric sales, peak during the summer months. Sales increased $10.1
million or 2% in 1994 compared to 1993 primarily due to additional customers.
COST OF SALES
Fuel and purchased power expenses, collectively referred to as cost of
sales, increased $2.4 million or 1% in 1995 compared to 1994. The increase was
primarily due to favorable weather and increased customers discussed above,
offset by reduced fuel costs. Cost of sales decreased significantly in 1994
compared to 1993 due to lower-priced contracts for purchased power, coal and
rail transportation.
EXPENSES
Operating expenses increased $15.0 million or 15% in 1995 compared to 1994
due to additional sales staff expenses and costs of repositioning and reshaping
the businesses. In 1995, the company began centralizing business support
functions such as human resources, accounting and information technology, among
others, which previously were located in the company's individual business
units. This centralization process combined with building a sales force are the
main causes of the increase. The company expects that its repositioning and
reshaping activities will continue in 1996. The increase in depreciation and
amortization expense for all periods shown is due to additional capital
improvements made to utility assets.
20
<PAGE>
CAPITAL EXPENDITURES
The capital budget for the next five years is shown below.
<TABLE>
<CAPTION>
GENERATION TRANSMISSION DISTRIBUTION OTHER TOTAL
----------- ------------- ------------- --------- ---------
<S> <C> <C> <C> <C> <C>
1996.............................. $ 33.8 $ 20.3 $ 35.2 $ 24.8 $ 114.1
1997.............................. 69.4 14.8 31.6 26.2 142.0
1998.............................. 21.0 11.0 32.8 27.1 91.9
1999.............................. 14.4 6.7 34.1 29.4 84.6
2000.............................. 15.0 5.7 33.2 25.4 79.3
</TABLE>
ENVIRONMENTAL MATTERS
The company has been named as a potentially responsible party (PRP) at five
PCB disposal facilities. The company's combined clean-up expenditures have been
less than $1 million to date and it anticipates that future expenditures on
these sites will not be significant. The company is in compliance with sulfur
dioxide emission requirements established by the Clean Air Act Amendments of
1990. The company's environment related expenditures generally are being
recovered or deferred pending expected recovery through rates.
COMPETITION
The electric industry has increasingly become more competitive as federal
and state regulators and legislators continue taking steps toward deregulation.
The anticipation of reduced regulation triggered some dramatic events in 1995.
Five major utility mergers were announced, including three that affect
competitors close to or next to the company's service territories. Other
utilities have implemented cost reduction programs and organizational changes in
preparation for greater competition.
The company began looking at its strengths and opportunities in respect to
future increased competition two years ago when the company brought together
approximately 100 employees from around the company to work on a strategic plan
that would be the foundation to reposition and reshape the company. In 1995 the
company began centralizing business support functions that previously were
performed separately in the operating divisions and building its resources and
capacity to take advantage of opportunities brought about as competition
increases.
The company currently accounts for the economic effects of regulation in
accordance with the provisions of Statement of Financial Accounting Standards
No. 71 (SFAS No. 71), "Accounting for the Effects of Certain Types of
Regulation," and accordingly has recorded certain costs as regulatory assets in
the financial statements. The company expects that its rates will continue to be
based on historical costs for the foreseeable future. If the company
discontinued applying SFAS No. 71, it would be required to make adjustments to
the carrying value of certain assets.
21
<PAGE>
GAS OPERATIONS
The company's gas segment includes the gas utility operations of Missouri
Public Service, Kansas Public Service, Peoples Natural Gas, Northern Minnesota
Utilities, Michigan Gas Utilities and West Virginia Power.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
THREE-YEAR REVIEW -- GAS OPERATIONS 1995 1994 1993
- ----------------------------------------------------------------- ----------- ----------- -----------
DOLLARS IN MILLIONS
<S> <C> <C> <C>
Sales............................................................ $ 616.8 $ 618.6 $ 686.1
Cost of sales -- Gas purchased for resale........................ 348.9 381.1 443.4
----------- ----------- -----------
Gross profit..................................................... 267.9 237.5 242.7
----------- ----------- -----------
Expenses:
Other operating................................................ 129.8 113.7 115.7
Maintenance.................................................... 9.1 8.8 8.8
Taxes, other than income taxes................................. 26.4 23.1 23.9
Depreciation and amortization.................................. 34.3 30.1 28.6
----------- ----------- -----------
Total expenses................................................. 199.6 175.7 177.0
----------- ----------- -----------
Income from operations........................................... $ 68.3 $ 61.8 $ 65.7
----------- ----------- -----------
----------- ----------- -----------
Identifiable assets.............................................. $ 900.0 $ 819.9 $ 716.9
Capital expenditures............................................. 39.9 50.7 53.1
-------------------------------------
Gas sales (BCF).................................................. 128 128 145
Gas transportation (BCF)......................................... 178 136 116
----------- ----------- -----------
Total volume (BCF)............................................... 306 264 261
----------- ----------- -----------
Number of customers.............................................. 796,621 779,630 740,354
-------------------------------------
</TABLE>
SALES
Sales in 1995 declined by $2.0 million compared to 1994. Several factors
significantly affected sales in 1995 compared to 1994. Lower gas prices and
customers switching to transportation services decreased sales by approximately
$33.8 million. This was offset by favorable weather, a full year of operations
at the Kansas gas property acquired in September 1994 and the Missouri pipeline
system acquired in January 1995, and additional customers throughout the service
territories. Sales in 1994 compared to 1993 were lower by $67.5 million or 10%
due to unfavorable weather, lower gas prices and customer switching to
transportation services. Customer switching does not effect net income.
COST OF SALES
The cost of sales changes generally with sales, since all of the company's
gas operations contain gas cost adjustment mechanisms that pass through gas cost
changes periodically to customers.
EXPENSES
Operating expenses increased $15.9 million or 14% in 1995 compared to 1994.
This is primarily due to additional sales and repositioning and reshaping costs
discussed in the electric expenses section on page 20. In addition the 1995
expenses reflect the full year activities of the Kansas gas system and Missouri
pipeline acquisitions. Taxes and depreciation increased in 1995 over 1994
primarily due to the addition of acquired assets and capital improvements.
Expenses in 1994 were about the same as in 1993.
22
<PAGE>
CAPITAL EXPENDITURES
The capital budget for the next five years is shown below.
<TABLE>
<CAPTION>
DISTRIBUTION OTHER TOTAL
------------- --------- ---------
IN MILLIONS
<S> <C> <C> <C>
1996........................................................... $ 42.6 $ 18.5 $ 61.1
1997........................................................... 42.4 6.6 49.0
1998........................................................... 41.0 5.3 46.3
1999........................................................... 40.2 5.3 45.5
2000........................................................... 36.5 4.2 40.7
</TABLE>
ENVIRONMENTAL MATTERS
The company owns or once operated 29 former manufactured gas plants which
may or may not require some form of environmental remediation. These are
discussed in Note 14 to the Consolidated Financial Statements.
COMPETITION AND OUTLOOK
The competitive forces affecting the company's electric operations are also
affecting the company's gas operations. In addition, as competing electric
utilities reduce costs it becomes more difficult to obtain new customers through
fuel switching opportunities and in certain cases may result in customer losses.
The Federal Energy Regulatory Commission (FERC) Order 636 shifted gas supply
responsibilities from traditional pipeline company sources to distribution
utilities and allows customers to bypass the company's system by directly
connecting to a transportation pipeline.
The company has addressed increased competition and industry changes in
several ways. First, its natural gas is priced competitively in our respective
service territories relative to alternative energy sources. Second, the company
established in 1993 a central gas procurement function designed, among other
reasons, to take advantage of opportunities created by FERC Order 636. Besides
offering low cost natural gas, the company offers its customers a wide range of
energy solutions to meet customer demands and in some ways raise the standard
for its potential competitors.
23
<PAGE>
ENERGY RELATED BUSINESSES
The energy related businesses segment consists solely of the consolidated
operations of the company's Aquila Energy subsidiary, including 82%-owned Aquila
Gas Pipeline (AGP). Aquila provides natural gas risk management services and is
involved in the gathering, processing and marketing of natural gas and the sale
of natural gas liquids. Its Aquila Power subsidiary began operations to market
wholesale electricity in 1995.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
THREE-YEAR REVIEW -- ENERGY RELATED BUSINESS 1995 1994 1993
- ----------------------------------------------------------------- ----------- ----------- -----------
DOLLARS IN MILLIONS
<S> <C> <C> <C>
Sales:
Gas marketing (a).............................................. $ 835.7 $ 613.2 $ 949.3
Gas sales, transmission and processing......................... 284.7 245.7 267.9
Gas and oil production......................................... 50.6 76.9 74.8
----------- ----------- -----------
Total sales.................................................... 1,171.0 935.8 1,292.0
----------- ----------- -----------
Cost of sales:
Cost of gas marketing.......................................... 774.8 596.8 953.4
Cost of gas transmission and processing........................ 193.8 166.6 177.1
----------- ----------- -----------
Total cost of sales............................................ 968.6 763.4 1,130.5
----------- ----------- -----------
Gross profit..................................................... 202.4 172.4 161.5
----------- ----------- -----------
Expenses:
Operating and maintenance...................................... 71.2 69.4 63.8
Depreciation, depletion and amortization....................... 49.6 59.6 60.8
Provision for asset impairments................................ 13.2 -- --
Restructuring charge (b)....................................... -- -- 69.8
----------- ----------- -----------
Total expenses................................................... 134.0 129.0 194.4
----------- ----------- -----------
Income (loss) from operations, before minority interests......... $ 68.4 $ 43.4 $ (32.9)
----------- ----------- -----------
----------- ----------- -----------
Gain on sale of subsidiary stock................................. $ -- $ -- $ 47.8
Net income....................................................... 24.0 9.3 10.7
Identifiable assets.............................................. 873.1 717.1 604.2
Capital expenditures and investments............................. 144.0 113.6 94.5
-------------------------------------
Marketing volumes (million cubic feet per day)................... 1,427 1,002 1,381
Natural gas throughput (million cubic feet per day).............. 507 372 329
Natural gas liquids produced (thousand barrels per day).......... 32 31 31
Pipelines operated (miles)....................................... 3,311 2,718 2,531
Proven reserves (billion cubic feet)(c).......................... -- 162 119
Production volumes (billion cubic feet)(c)....................... 17 27 30
-------------------------------------
</TABLE>
- ------------------------
(a) Prior years have been reclassified to conform to the 1995 presentation.
Sales were previously reported net of gas cost.
(b) Includes write-off of $3.7 million related to certain assets owned by the
company on behalf of Aquila.
(c) Includes barrels of oil expressed as gas equivalent, assuming 6,000 cubic
feet of gas per barrel of oil.
24
<PAGE>
SEGMENT HIGHLIGHTS
For the years ended December 31, 1995, 1994 and 1993, Aquila reported net
income of $24.0 million, $9.3 million and $10.7 million, respectively. Net
income in 1995 as compared to 1994 and 1993 was 158% and 124% higher. The
increase in 1995 reflects significant increases in operating results, favorable
impact of a change in accounting principle and a provision for asset
impairments. Significant items affecting the comparability of Aquila's financial
results are described below.
CHANGE IN ACCOUNTING PRINCIPLE. Effective January 1, 1995, the company
changed its method of accounting for its domestic natural gas trading activities
to the mark-to-market method. Under this method, changes in the fair value of
Aquila's physical and financial transactions are reflected currently in the
Consolidated Financial Statements. Aquila's prior method recognized gains and
losses when the underlying physical commodity was sold or produced. The
accounting change increased Aquila's 1995 sales and income from operations by
$29.8 million and net income by $18.3 million. The cumulative effect on periods
prior to 1995 was not material.
PROVISION FOR ASSET IMPAIRMENTS. In 1995, AGP completed a review of the
carrying value of its assets, including the adoption of Statement of Financial
Accounting Standards No. 121 "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of" (SFAS 121), and recorded a
non-cash, pretax charge of $13.2 million.
SALE OF ASSETS. In September 1995, Aquila sold all of its oil and gas
production assets and reserves for approximately $205 million. Oil and gas
production activities had a loss of $5.0 million in 1995.
RESTRUCTURING AND SETTLEMENTS. In 1993, Aquila implemented a new business
strategy and recorded a $69.8 million restructuring charge against income for
the disposal of certain natural gas contracts, impairment of offshore assets and
other restructuring costs. In 1995 and 1994 Aquila's income from operations was
favorably affected by $5.0 million and $5.4 million related to settling certain
loss contracts more favorably than originally anticipated in 1993 when the
contracts were included in the restructuring charge.
In 1993, AGP completed an initial public offering and sale of 5.4 million
shares of its common stock, resulting in a tax-free gain of $47.8 million.
REVIEW OF OPERATIONS
Sales and cost of sales increased $235.2 million and $205.2 million,
respectively, in 1995 compared to 1994 due to a 39% increase in marketing
volumes and a 34% increase in gas pipeline throughput. Gas marketing volumes
increased due to the acquisition in January 1995 of Tristar Gas Company, which
had volumes of approximately 42 million cubic feet per day in 1995. Gas
marketing volumes also increased due to further implementation of a new strategy
developed in 1994. Sales from net trading activities added $29.8 million to
sales and income from operations in 1995. See Price Risk Management section on
page 32 for further discussion. Gas marketing sales decreased in 1994 compared
to 1993 primarily due to a strategic change at Aquila that was the result of and
followed the restructuring charge in 1993. Gas throughput volumes increased in
1995 due to expanded drilling in AGP's gathering region. In 1995 AGP constructed
a new pipeline to increase volumes that can be processed from its gathering
system. Sales and cost of sales are directly affected by the price of natural
gas and natural gas liquids.
Sales from oil and gas production activities decreased primarily due to the
sale of all production assets, which also lowered depreciation, depletion and
amortization expense in 1995. The sale resulted in no gain or loss for financial
reporting purposes.
OUTLOOK
The company has adopted a plan to provide both natural gas and electric
power commodity services to its wholesale customers from an integrated wholesale
marketing staff. This will allow the company to fully meet the needs of
customers who will have an ever-increasing portfolio of energy options from
which to choose in the future. A number of recent mergers and consolidations of
entities in the natural gas marketing industry have increased the focus on
controlling marketing share
25
<PAGE>
on a volumetric basis. The company expects the gas marketing industry to
consolidate into a few mega-marketing companies. Electric power marketing will
be impacted by the regulatory environment of the industry. It is currently
unclear as to when the various regulatory agencies will open access to all power
customers, including retail users. These regulatory decisions may have a
significant impact on the future economics of the power marketing sector.
The gas processing and gathering business will be influenced by natural gas
and oil commodity prices and the drilling activity surrounding its major
pipeline asset in Southeast Texas. Continued exploration success in this area by
oil and gas companies will bolster this unit's future. Many pipeline acquisition
opportunities also exist in this operational area.
OTHER BUSINESSES AND EQUITY INVESTMENTS
UTILCO GROUP
The table below summarizes selected financial and operating data of the
UtilCo Group subsidiary.
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
DOLLARS IN MILLIONS
<S> <C> <C> <C>
Equity in earnings (a)............................................................. $ 21.9 $ 19.2 $ 15.0
Net income (loss)(b)............................................................... (.2) 6.4 3.2
Equity investment.................................................................. 170.3 122.8 100.2
Share of project assets............................................................ 535.3 379.8 363.1
Share of project liabilities....................................................... 394.3 291.8 282.9
-------------------------------
Aggregate capacity (megawatts)..................................................... 873 792 732
Operating projects................................................................. 16 15 15
Projects under construction........................................................ 1 1 --
-------------------------------
</TABLE>
- ------------------------
(a) Includes both the company and UtilCo Group's ownership interest in a power
project.
(b) Includes a $15.4 million non-cash charge against income for an impairment of
a project investment.
UtilCo Group had a net loss of $.2 million in 1995 after recording a pretax
$15.4 million non-cash charge relating to an impairment of a project. UtilCo
Group reported net income of $6.4 million in 1994 and $3.2 million in 1993.
Equity in earnings from partnerships increased $2.7 million or 14%. The increase
was due primarily to earnings from a project acquired in May 1995, offset by an
unplanned curtailment of a project due to availability of excess hydro power in
the region. The increase in 1994 net income compared to 1993 is due to increased
sales at two projects that operated near capacity. Net income in 1993 was
reduced due to the increase in the corporate tax rate.
UtilCo Group has equity ownership interests in 17 independent power
projects, 16 of which are in commercial operation. In May 1995, the company and
UtilCo Group purchased a 50% ownership interest in an 81 MW chemical recovery
and cogeneration facility at the James River Corporation's Naheola pulp and
paper mill in Pennington, Alabama. The plant, which began operations in 1993,
suppplies the Naheola mill with all its black liquor solids processing, steam
and compressed air needs, as well as approximately 60% of the mill's electricity
needs. In October 1994, UtilCo Group agreed to acquire an equity interest in a
60-megawatt electric generating project now being built in Kingston, Jamaica. It
is scheduled to begin commercial operation in 1996. The $138 million facility
will sell its electric capacity and output to Jamaica Public Service Company
under a 20-year contract. The company will hold a 22 percent interest in the
project and expects to contribute approximately $11.6 million in equity.
In October 1995, UtilCo Group entered into a joint venture agreement with
Air Products and Chemicals, Inc. to develop, own, and operate generation
projects. The projects will consist of gas-fired combustion turbine applications
throughout the Midwest.
26
<PAGE>
Consistent with UtiliCorp's strategy of spreading risks, UtilCo Group has
invested in generating projects located in seven states and one foreign country.
Each project uses traditional fuels and proven technologies, and is a
competitive, low-cost producer of wholesale power. The projects sell their
electric output under long-term contracts with terms ranging from 15 to 40
years.
INTERNATIONAL EQUITY INVESTMENTS
AUSTRALIA
On September 6, 1995, Power Partnership Limited (PPL), of which the company
owns 49.9%, acquired United Energy Limited (UE), an Australian electric
distribution utility, from the State of Victoria for approximately $1.15
billion. The company's ownership interest cost approximately $257.9 million and
was financed primarily with Australian denominated bank debt through a
consortium of banks. UtiliCorp Australia Holdings Limited (UAHL), a wholly-owned
subsidiary of the company, manages UE on behalf of PPL. In 1995 the company's
Australian investments contributed $2.9 million to the company's net income.
NEW ZEALAND
On November 30, 1995, UtiliCorp N.Z. Inc. (UNZ), a 79%-owned subsidiary,
completed a transaction that resulted in UNZ owning approximately 27.5% of Power
New Zealand Limited (PNZ). PNZ is an electric utility distribution company that
provides service to approximately 214,000 customers. Prior to this transaction,
UNZ owned approximately 7.5% of PNZ.
In late February 1995, UNZ paid $16.1 million to WEL Energy Group Limited
(WEL) to satisfy its capital commitment to WEL. UNZ now participates in WEL's
earnings to the full extent of its ownership. Before paying the final capital
commitment, UNZ's participation in WEL's earnings was limited to 5%. UNZ held
39% of WEL at the end of 1995. WEL is an electric distribution utility serving
approximately 65,000 customers.
The company's New Zealand investments contributed $.7 million to 1995
consolidated net income. For 1994 and 1993 the results from New Zealand were not
material.
UNITED KINGDOM
Net income (loss) from the United Kingdom businesses for the three-year
period ended December 31, 1995 were $(2.5) million, $2.4 million and $.5
million, respectively. The company has several business ventures in the United
Kingdom that market natural gas to wholesale and industrial customers. United
Gas Limited (UGL) is the company's primary subsidiary. At the end of 1995, UGL
had approximately 27,000 gas marketing customers.
In addition to UGL, the company has five gas marketing joint ventures
(collectively referred to as Regional Gas Companies or RGCs) in which it is a
25% equity partner. The decline in 1995 results compared to 1994 is primarily
due to the decline in spot market prices and its effects on margins at the RGCs
and certain commitments the company or subsidiaries have with its partners. In
the fourth quarter 1995, the company reserved $11.0 million (pretax) for
probable funding requirements the company expects to make to support its
investments in RGCs and recognized $1.6 million as its share of RGC net losses.
Results in 1995 were favorably affected by a gain on the sale of one of its RGC
investments and by a favorable gas settlement. See Note 14 for further
discussion on financial commitments.
OTHER
NOVELL PARTNERSHIP
On September 13, 1995, the company and Novell, Inc. (Novell) announced a
partnership to jointly develop certain technologies and products to better
manage energy consumption in home and business environments. Under the terms of
this alliance the company and Novell will co-develop, co-own and jointly market
applications that allow customers to optimize their use of energy on a 24-hour,
real-time basis. In October an initial cash payment was made by the company to
Novell for related license
27
<PAGE>
rights. The two companies also announced the founding of the Smart Energy
Network Alliance, an open industry consortium that will provide leadership in
defining the standards for future energy programs, network management and other
smart energy network solutions.
LIQUIDITY AND CAPITAL RESOURCES
The company's cash requirements arise primarily from its growth strategy,
electric and gas utility construction programs and non-regulated investment
opportunities. UtiliCorp's ability to attract the necessary financial capital at
reasonable terms is critical to the company's overall plan. Acquisitions and
investments have been initially financed with short-term debt and later
permanently funded with various long-term debt securities or common equity,
depending on market conditions.
OPERATING CASH FLOWS
Cash flows from operating activities were $261.2 million, $229.3 million and
$289.3 million for the three-year period ended December 31, 1995, respectively.
Cash flow from operating activities increased $31.9 million between 1995 and
1994. This increase was primarily due to a net favorable increase in working
capital and other changes in assets and liabilities. Working capital accounts
were significantly affected by volume increases and higher natural gas prices
compared to the prior year. Taken together, accounts receivable including
accrued revenues less accounts payable reduced working capital by $73.5 million,
primarily due to cash being used to pay energy cost related obligations before
cash is collected from customers. Partially offsetting this use of cash was
increased net borrowings from the company's accounts receivable financing
program which provided $50.8 million of additional operating cash flow. The
change to the mark-to-market method of accounting for certain financial
instruments (more fully explained on page 32) and the provision for asset
impairments did not affect cash flows.
Cash flow from operating activities decreased $60.0 million between 1994 and
1993 due to unfavorable changes in working capital. As discussed above,
operating cash flows are affected by the timing of cash payments and accounts
receivable collections.
INVESTING CASH FLOWS
Over the past three years, cash used (provided) by the company's investing
activities was as follows:
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
IN MILLIONS
<S> <C> <C> <C>
Electric capital expenditures..................................................... $ 69.5 $ 81.3 $ 87.4
Gas capital expenditures.......................................................... 39.9 50.7 53.1
Acquired businesses:
Nebraska gas system............................................................. -- -- 99.0
Kansas gas system............................................................... -- 22.1 --
Missouri pipeline system........................................................ 78.0 -- --
Australia electric utility...................................................... 257.9 -- --
New Zealand electric utilities.................................................. 121.4 -- --
Other acquisitions.............................................................. 22.9 6.1
Oil and gas reserve development and purchases..................................... 39.3 80.4 39.1
Gas transmission and processing additions......................................... 104.7 33.2 55.4
Independent power projects........................................................ 59.0 22.2 28.8
Sale of oil and gas properties.................................................... (204.5) -- --
Sale of subsidiary stock.......................................................... -- -- (74.6)
Other............................................................................. 46.8 50.3 6.5
--------- --------- ---------
Net cash invested................................................................. $ 634.9 $ 346.3 $ 294.7
--------- --------- ---------
--------- --------- ---------
</TABLE>
28
<PAGE>
CAPITAL EXPENDITURES
The company's utility expenditures are primarily made to extend service to
new customers, upgrade existing distribution systems and pipe and make periodic
improvements to generation assets. Gas transmission and processing additions
consists of expenditures from AGP. The increase in 1995 compared to 1994 and
1993 is primarily due to construction in mid-1995 of a 30-inch pipeline to
connect AGP's gathering system to a processing plant.
BUSINESS ACQUISITIONS
In May 1995, the company and UtilCo Group paid $59 million to acquire a 50%
ownership interest in a partnership that owns and operates a chemical recovery
and cogeneration facility in Alabama. This is the company's largest single
investment in an independent power project to date. The facility sells its
electric output to a pulp and paper mill.
In January 1995, the company completed its acquisition of a 218-mile
intrastate gas pipeline and gas distribution system for $78.0 million. These
businesses now operate as UtiliCorp Pipeline Systems, Inc. (UPL), a wholly-owned
subsidiary of the company. UPL had sales of $14.3 million in 1995.
In January 1995, the company acquired Broad Street Oil & Gas Company, a gas
marketing company based in Ohio, and AGP acquired Tristar Gas Company, a Texas
gas processing, gathering and marketing firm. Broad Street Oil & Gas
concentrates on marketing natural gas to small to medium size commercial
businesses through a network of contract sales representatives. Tristar Gas
Company sold approximately 156 million cubic feet per day of natural gas in
1995. Tristar focuses its marketing efforts on Texas intrastate natural gas
markets.
In September 1994, the company spent $22.1 million cash to acquire Kansas
gas distribution and selected transmission assets from NorAm Energy Corp. The
Kansas system serves about 22,000 customers in Wichita and surrounding
communities. In February 1993, the company spent $99.0 million cash to acquire
NorAm's Nebraska gas distribution system serving approximately 124,000 customers
in 63 eastern Nebraska communities.
See page 27 for discussion of the company's international investments in
Australia and New Zealand and page 25 for disposition of oil and gas properties.
The company's operating cash flow provided approximately 41%, 66% and 98% of
the needed funds for the three years ended December 31, 1995, applying operating
cash flows to investing activities first. Additional cash needs are derived from
various financing activities discussed below.
29
<PAGE>
FINANCING CASH FLOWS
Cash inflow (outflow) related to financing activities of the company over
the last three years is presented in the table below.
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
IN MILLIONS
<S> <C> <C> <C>
COMMON STOCK ISSUES:
Various stock ownership and option plans....................................... $ 29.5 $ 2.8 $ 34.1
Issue--5.2 million shares...................................................... -- -- 144.7
Dividends...................................................................... (80.0) (77.6) (74.4)
Treasury Stock................................................................. 6.6 (6.6) --
SENIOR NOTE ISSUES:
8.45% Series................................................................... -- 99.5 --
6.0% Series.................................................................... -- -- 63.5
8.0% Series.................................................................... -- -- 123.3
6.875% Series.................................................................. 99.3 -- --
9.3% Series (retirement)....................................................... (125.0) -- --
Monthly income securities........................................................ 100.0 -- --
Mortgage bonds, Series 1......................................................... -- -- (63.5)
Australian denominated debt...................................................... 222.8 -- --
New Zealand denominated debt..................................................... 63.6 -- --
8.8% secured debentures.......................................................... -- -- 18.8
Net change in short-term debt.................................................... 106.2 112.4 (160.9)
Other long-term debt activities, net............................................. (5.8) 4.6 (24.5)
Preference stock................................................................. -- (6.8) (9.0)
--------- --------- ---------
Net cash from financing activities............................................... $ 417.2 $ 128.3 $ 52.1
--------- --------- ---------
--------- --------- ---------
</TABLE>
To supplement the company's internally generated cash flows, the company has
various short-term credit programs. A primary source of cash has been bank
borrowing from uncommitted bank lines. In addition, the company can issue
commercial paper aggregating $150 million. To support the commercial paper
program, the company has a $250 million committed revolving credit agreement
with a consortium of banks. The credit agreement expires in December 2000 and
allows the issuance of notes that bear interest at rates based on the prime rate
or various money market rates.
The company also has two accounts receivable sale programs. The level of
funding available from these programs varies depending on the level of eligible
accounts receivable, which fluctuates seasonally. Under these programs, the
company may borrow another $37 million.
On December 8, 1995, the company obtained an extended grace period for a
long-term debt to capitalization ratio covenant from its creditor on its 9.21%
senior notes. The grace period extends to June 30, 1996. The company classified
this debt as long-term as management believes it is probable that the company
will meet the covenant ratio by June 30, 1996 and for foreseeable future
periods.
FUTURE CASH REQUIREMENTS
Future cash requirements include utility plant additions, dividends, and
required redemptions of long-term securities and acquisition opportunities.
30
<PAGE>
The company's estimated required funds for capital expenditures and maturing
long-term debts are shown below for the next five years.
<TABLE>
<CAPTION>
1996 1997 1998 1999 2000
--------- --------- --------- --------- ---------
IN MILLIONS
<S> <C> <C> <C> <C> <C>
Electric...................................................... $ 114.1 $ 142.0 $ 91.9 $ 84.6 $ 79.3
Gas........................................................... 61.1 49.0 46.3 45.5 40.7
Energy related................................................ 54.6 35.6 39.5 34.2 35.9
Corporate and other........................................... 42.1 27.7 9.1 2.5 2.4
Maturing long-term debt....................................... 15.1 25.8 147.7 165.9 270.1
--------- --------- --------- --------- ---------
Total......................................................... $ 287.0 $ 280.1 $ 334.5 $ 332.7 $ 428.4
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
See the sections of this report on electric operations, gas operations and
energy related businesses for further details on capital expenditures.
The amounts shown for corporate are primarily the estimated investment in
software related projects. The company is in the process of developing new
integrated financial management, materials management and customer information
systems. These are designed to meet its expanding informational needs as it
implements the Energy One-SM- strategy.
PENDING MERGER WITH KANSAS CITY POWER & LIGHT COMPANY (KCPL)
On January 19, 1996, the company, KCPL and KC United Corp. (KCU) entered
into an Agreement and Plan of Merger (the Merger Agreement) which provides for a
strategic business combination of the company and KCPL in a "merger-of-equals"
transaction (the Transaction). Pursuant to the Merger Agreement, the company and
KCPL will merge with and into KCU (which may be renamed at the discretion of the
company and KCPL), a corporation formed for the purpose of the Transaction.
Under the terms of the Merger Agreement, each share of the company's common
stock will be exchanged for 1.096 shares of KCU common stock and each share of
KCPL common stock will be exchanged for one share of KCU common stock. Based on
the number of shares of the company's common stock and KCPL's common stock
outstanding on the date of the Merger Agreement, the company' s common
shareholders will receive about 45% of the common equity of KCU and KCPL's
common shareholders will receive about 55%.
The Transaction is designed to qualify as a pooling of interests for
accounting and financial reporting purposes. Under this method of accounting,
the recorded assets and liabilities of the company and KCPL would be carried
forward to the consolidated financial statements of KCU at their recorded
amounts. The income of KCU would include the combined income of the company and
KCPL as though the Transaction occurred at the beginning of the accounting
period. The Prior periods would be combined and presented as those of KCU.
The Transaction will create a diversified energy company with total combined
sales of over $3.5 billion and over $6.5 billion in total assets, serving about
2.5 million customers in the United States, Canada, the United Kingdom, New
Zealand, Australia, China and Jamaica. The business of the combined companies
will consist of electric utility operations, gas utility operations and various
non-utility enterprises including independent power projects, and gas marketing,
gathering and processing operations.
The Transaction is subject to approval from each company's shareholders and
a number of regulatory authorities. The regulatory approvals process is expected
to take about 12 to 18 months. The Merger Agreement includes termination
provisions which may require certain payments to the party to the Transaction
under certain circumstances, including a payment of $58 million if the
Transaction is terminated by a party and within two and one-half years following
such termination, the terminating party agrees to consummate or consummates
certains business combination transactions.
31
<PAGE>
PRICE RISK MANAGEMENT
Effective January 1, 1995, the company adopted the mark-to-market method of
accounting (MTM) for its non-price regulated gas trading business. Under MTM,
natural gas forwards, futures, swaps, options and other financial instruments
are recorded at fair value, net of future servicing costs and reserves, and
recognized as revenue upon contract execution in the Consolidated Statements of
Income. The resulting unrealized gains and losses are recorded as Price Risk
Management Assets and Liabilities in the accompanying Consolidated Balance
Sheets. The change to MTM resulted in an increase in pretax income of $29.8
million ($18.3 million after tax) for the year ended December 31, 1995 as
compared to the results under the previous accounting method. The company
previously accounted for this activity by the accrual method of accounting. The
company has not shown the pro forma effect of the adoption of MTM on prior
periods since the cumulative impact on prior period earnings was immaterial.
The impact in the current year primarily results from the effect of certain
contractual sales commitments which had been designated as hedges of a portion
of the company's natural gas reserves. As discussed in Note 4, the company sold
its oil and gas reserves in September 1995. The resulting open position of the
commitments created a change in the price risk management assets and
liabilities.
Current period changes in the assets and liabilities from risk management
activities are recognized as revenues in the Consolidated Statements of Income.
The changes in the assets and liabilities primarily result from newly originated
transactions, changes in the price of natural gas, the timing of settlements
related to these contracts and changes in the various risk reserves. The market
prices used to value these transactions reflect management's best estimate of
market prices considering various factors, including closing exchange and
over-the-counter quotations. The reserves are established for a number of risks
and costs associated with the company's future commitments, including the credit
risks of its counterparties, the time value of money, the impact of liquidating
the portfolio in an orderly manner over a reasonable period of time under
present market conditions, and other identifiable contingencies.
The company generally attempts to balance its fixed-price physical and
financial purchase and sales contracts both volumetrically and in terms of
future timing of the commitments. However, net open positions often exist or are
established due to the origination of new transactions and the company's
assessment, based upon information gained from its gas marketing activities, of
future price movements. As a result, the company is to some extent affected by
fluctuating market prices. At December 31, 1995, a price movement of $.10 per
MCF for natural gas would have impacted income from operations by approximately
$1.7 million.
The change in accounting method does not impact the company's gas marketing
activities in the U.K. or its financial instruments associated with its natural
gas liquids hedging or electricity brokering. The company enters into futures,
forwards, swaps and options in order to hedge purchase and sales commitments,
inventories and anticipated production of these products. Changes in the market
value of such transactions are deferred until the gain or loss is recognized on
the hedged commitment.
INCOME TAXES
The level of income tax expense during the three-year period fluctuated
generally with the level of pretax accounting income, except for 1993. The
effective tax rate in 1993 was significantly affected by the non-taxable gain on
the sale of subsidiary stock and the passage of the Budget Reconciliation Act of
1993 (the Act.)
As a result of the Act, the company made a retroactive adjustment to reflect
the increase in the corporate tax rate from 34% to 35%, effective January 1,
1993. The rise in the tax rate increased 1993 income tax expense approximately
$4.0 million, or $.10 per average common share. Deferred income tax liabilities
from regulated operations were also increased. However, because it is
anticipated these
32
<PAGE>
additional taxes would be recovered through rates, a regulatory asset was
established and included in deferred charges in the accompanying balance sheet.
See Note 12 to the Consolidated Financial Statements for further discussion.
The company has available approximately $88 million of alternative minimum
tax (AMT) credits. AMT credits have an indefinite life.
NEW ACCOUNTING STANDARD
In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123, "Accounting for Stock-based
Compensation" (SFAS 123). SFAS 123 requires companies to either record or
disclose pro forma information on the fair value of certain stock-based programs
including stock options and employee stock purchase plans. The company currently
provides stock options to certain employees and has an employee stock purchase
program whereby employees may purchase company common stock at a 15% discount.
Under SFAS 123, these plans will require either the recording of compensation
expense or pro forma disclosures of net income and earnings per share had the
company elected to record compensation expense. The company has not yet
evaluated the accounting and reporting implications of SFAS 123 and does not
have an estimate of additional compensation expense associated with affected
plans. SFAS 123 is required to be adopted in fiscal years beginning after
December 15, 1995.
EFFECTS OF INFLATION
In the next few years, the company anticipates that the level of inflation,
if moderate, will not have a significant effect on operations or acquisition
activity.
FORWARD-LOOKING INFORMATION
This report contains forward-looking information. Such statements involve
risks and uncertainties and there are certain important factors that could cause
actual results to differ materially from those anticipated. Some of the
important factors which could cause actual results to differ materially from
those anticipated include, but are not limited to, future national and regional
economic and competition conditions, inflation rates, regulatory changes,
weather conditions, financial market conditions, interest rates, future business
decisions, and other uncertainties, all of which are difficult to predict and
many of which are beyond the control of the company.
33
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1995 1994 1993
---------- ---------- ----------
IN MILLIONS, EXCEPT PER SHARE
<S> <C> <C> <C>
Sales........................................................................ $ 2,798.5 $ 2,398.1 $ 2,746.1
Cost of sales................................................................ 1,881.8 1,575.8 1,960.6
---------- ---------- ----------
Gross profit................................................................. 916.7 822.3 785.5
---------- ---------- ----------
Operating, administrative and maintenance expense............................ 511.6 448.8 430.9
Depreciation, depletion and amortization..................................... 145.4 145.5 140.8
Provision for asset impairments.............................................. 34.6 -- --
Restructuring charge......................................................... -- -- 69.8
---------- ---------- ----------
Income from operations....................................................... 225.1 228.0 144.0
---------- ---------- ----------
Interest expense -- long-term debt........................................... 110.2 89.5 89.0
Interest expense -- short-term debt and other interest, net.................. 3.2 6.9 1.5
Equity in earnings of investments and partnerships........................... (23.8) (18.3) (16.4)
Gain on sale of subsidiary stock............................................. -- -- (47.8)
Minority interests........................................................... 3.7 3.4 1.3
---------- ---------- ----------
Earnings before income taxes................................................. 131.8 146.5 116.4
---------- ---------- ----------
Income taxes................................................................. 52.0 52.1 30.0
---------- ---------- ----------
Net income................................................................... 79.8 94.4 86.4
---------- ---------- ----------
Preference dividends......................................................... 2.1 3.0 6.9
---------- ---------- ----------
Earnings Available for Common Shares......................................... $ 77.7 $ 91.4 $ 79.5
---------- ---------- ----------
---------- ---------- ----------
Weighted Average Common Shares Outstanding:
Primary.................................................................... 45.08 43.97 40.74
Fully diluted.............................................................. 45.47 45.18 44.27
----------------------------------
Earnings Per Common Share:
Primary.................................................................... $ 1.72 $ 2.08 $ 1.95
Fully diluted.............................................................. 1.71 2.06 1.92
----------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
34
<PAGE>
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------
1995 1994 1993
---------- ---------- ----------
DOLLARS IN MILLIONS
<S> <C> <C> <C>
Current Assets:
Cash and cash equivalents.................................................. $ 110.7 $ 67.2 $ 55.9
Funds on deposit........................................................... 41.2 44.8 14.4
Accounts receivable, net................................................... 332.2 215.6 234.6
Inventories and supplies, at average cost.................................. 112.5 134.3 101.8
Price risk management assets............................................... 26.4 -- --
Prepayments and other...................................................... 53.0 51.9 31.4
---------- ---------- ----------
Total current assets......................................................... 676.0 513.8 438.1
---------- ---------- ----------
Property, plant and equipment, net........................................... 2,279.6 2,266.4 2,159.1
---------- ---------- ----------
Investments in subsidiaries and partnerships................................. 574.4 148.5 102.7
---------- ---------- ----------
Price risk management assets................................................. 175.5 -- --
---------- ---------- ----------
Deferred charges............................................................. 180.4 182.4 150.6
---------- ---------- ----------
Total Assets................................................................. $ 3,885.9 $ 3,111.1 $ 2,850.5
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
LIABILITIES AND SHAREOWNERS' EQUITY
<TABLE>
<S> <C> <C> <C>
Current Liabilities:
Current maturities of long-term debt........................ $ 15.1 $ 138.8 $ 1.8
Short-term debt............................................. 288.6 182.4 70.0
Accounts payable............................................ 434.3 340.3 392.5
Accrued liabilities......................................... 34.8 43.1 48.4
Price risk management liabilities........................... 67.9 -- --
Other....................................................... 107.1 89.0 52.1
--------- --------- ---------
Total current liabilities..................................... 947.8 793.6 564.8
--------- --------- ---------
Long-term liabilities:
Long-term debt, net......................................... 1,355.4 976.9 1,009.7
Deferred income taxes and credits........................... 279.2 300.4 235.0
Price risk management liabilities........................... 94.6 -- --
Other deferred credits...................................... 137.2 108.0 105.4
--------- --------- ---------
Total long-term liabilities................................... 1,866.4 1,385.3 1,350.1
--------- --------- ---------
Company-obligated mandatorily redeemable preferred securities
of partnership............................................... 100.0 -- --
--------- --------- ---------
Preferred and preference stock................................ 25.4 25.4 83.9
--------- --------- ---------
Common shareowners' equity.................................... 946.3 906.8 851.7
--------- --------- ---------
Commitments and contingencies.................................
--------- --------- ---------
Total Liabilities and Shareowners' Equity..................... $ 3,885.9 $ 3,111.1 $ 2,850.5
--------- --------- ---------
--------- --------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
35
<PAGE>
CONSOLIDATED STATEMENTS OF PREFERRED AND PREFERENCE STOCK
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------
1995 1994 1993
--------- --------- ---------
DOLLARS IN MILLIONS, EXCEPT PER
SHARE
<S> <C> <C> <C>
Preference Stock, not mandatorily redeemable:
$2.05 series, 1,000,000 shares....................................................... $ 25.0 $ 25.0 $ 25.0
Preference Stock, convertible and mandatorily redeemable:
$1.775 series (2,885,000 shares outstanding at December 31, 1993).................... -- -- 58.5
Preferred Stock of Subsidiary, retractable............................................. .4 .4 .4
--------- --------- ---------
Total Preferred and Preference Stock................................................... $ 25.4 $ 25.4 $ 83.9
--------- --------- ---------
--------- --------- ---------
</TABLE>
CONSOLIDATED STATEMENTS OF COMMON SHAREOWNERS' EQUITY
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1995 1994 1993
--------- --------- ---------
DOLLARS IN MILLIONS, EXCEPT
PER SHARE
<S> <C> <C> <C>
Common Stock: authorized 100,000,000 shares, par value $1 per share, 45,965,952
shares outstanding (44,827,135 at December 31, 1994 and 42,021,160 at December 31,
1993)
Balance beginning of year........................................................ $ 44.8 $ 42.0 $ 35.4
Issuance of common stock......................................................... 1.2 2.8 6.6
--------- --------- ---------
Balance end of year................................................................ 46.0 44.8 42.0
--------- --------- ---------
Premium on Capital stock:
Balance beginning of year........................................................ 774.2 722.4 545.7
Issuance of common stock......................................................... 26.4 51.8 177.1
Other............................................................................ -- -- (.4)
--------- --------- ---------
Balance end of year................................................................ 800.6 774.2 722.4
--------- --------- ---------
Retained Earnings:
Balance beginning of year........................................................ 107.0 93.4 81.5
Net income....................................................................... 79.8 94.4 86.4
Dividends on preference stock.................................................... (2.1) (3.0) (6.9)
Dividends on common stock -- $1.72 per share in 1995, $1.70 in 1994, and $1.62 in
1993............................................................................ (77.9) (74.6) (67.1)
Reissuance of common stock....................................................... (.6) (3.2) (.5)
--------- --------- ---------
Balance end of year................................................................ 106.2 107.0 93.4
--------- --------- ---------
Treasury stock, at cost (227,587 shares at December 31, 1994)...................... -- (6.6) --
--------- --------- ---------
Currency Translation Adjustment.................................................... (6.5) (12.6) (6.1)
--------- --------- ---------
Total Common Shareowners' Equity................................................... $ 946.3 $ 906.8 $ 851.7
--------- --------- ---------
--------- --------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
36
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1995 1994 1993
--------- --------- ---------
DOLLARS IN MILLIONS
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net income....................................................................... $ 79.8 $ 94.4 $ 86.4
Adjustments to reconcile net income to net cash provided:
Depreciation, depletion and amortization....................................... 155.6 147.1 146.0
Gain on sale of subsidiary stock............................................... -- -- (47.8)
Restructuring charge........................................................... -- -- 69.8
Provision for asset impairments................................................ 34.6 -- --
Net changes in price risk management assets and liabilities.................... (39.4) -- --
Deferred taxes and investment tax credits...................................... (21.2) 65.4 (14.8)
Equity in earnings from investments and partnerships........................... (23.8) (18.3) (16.4)
Dividends from investments and partnerships.................................... 18.6 13.7 16.4
Changes in certain current assets and liabilities, net of effects of
acquisitions and restructuring --
Accounts receivable and accrued revenues..................................... (167.4) 40.6 46.8
Accounts receivable sold..................................................... 50.8 (21.5) (10.9)
Fuel and materials........................................................... 21.9 (32.6) (7.6)
Accounts payable............................................................. 93.9 (52.2) 13.9
Accrued taxes................................................................ (6.7) (7.3) 10.0
Other........................................................................ 29.7 18.4 11.4
Changes in other assets and liabilities, net................................... 34.8 (18.4) (13.9)
--------- --------- ---------
Cash provided from operating activities............................................ 261.2 229.3 289.3
--------- --------- ---------
Cash Flows From Investing Activities:
Additions to utility plant....................................................... (109.4) (132.0) (140.5)
Purchase of utility and other businesses......................................... (100.9) (28.2) (99.0)
Investments in international businesses.......................................... (379.3) -- --
Sale of subsidiary stock......................................................... -- -- 74.6
Investments in non-regulated generating assets................................... (59.0) (22.2) (28.8)
Proceeds on sale of oil and gas properties....................................... 204.5 -- --
Investments in energy related properties......................................... (144.0) (113.6) (94.5)
Other............................................................................ (46.8) (50.3) (6.5)
--------- --------- ---------
Cash used for investing activities................................................. (634.9) (346.3) (294.7)
--------- --------- ---------
Cash Flows From Financing Activities:
Issuance of common stock......................................................... 29.5 2.8 178.8
Issuance of company-obligated mandatorily redeemable preferred securities of
partnership..................................................................... 100.0 -- --
Retirements of preference stock.................................................. -- (6.8) (9.0)
Treasury stock sold (acquired)................................................... 6.6 (6.6) --
Issuance of long-term debt, net of premium paid.................................. 415.2 104.1 217.4
Retirement of long-term debt..................................................... (160.3) -- (99.8)
Short-term borrowings (repayments), net.......................................... 106.2 112.4 (160.9)
Cash dividends paid.............................................................. (80.0) (77.6) (74.4)
--------- --------- ---------
Cash provided from financing activities............................................ 417.2 128.3 52.1
--------- --------- ---------
Increase in cash and cash equivalents.............................................. 43.5 11.3 46.7
Cash and cash equivalents at beginning of year..................................... 67.2 55.9 9.2
--------- --------- ---------
Cash and Cash Equivalents at End of Year........................................... $ 110.7 $ 67.2 $ 55.9
--------- --------- ---------
--------- --------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
37
<PAGE>
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements of UtiliCorp United Inc. (the company,
a Delaware corporation) include all operating divisions and all majority-owned
subsidiaries. The company's principal lines of business are electric and gas
utility operations, gas marketing, gas processing and independent power
generation. The North American utility businesses operate in eight states and
one province of Canada. Natural gas is marketed in 45 states and the company's
gas processing operations are in Texas and Oklahoma. In addition to U.S. and
Canadian businesses, the company has various investments in Australia, the
United Kingdom, New Zealand and Jamaica. All significant intercompany accounts
and transactions have been eliminated.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. The
company's accounting policies conform to generally accepted accounting
principles which, in the case of the company's utility operations, consider the
impact of rate regulation.
MINORITY INTERESTS. Minority interests represent the minority stockholders'
proportionate share of the stockholders' equity and net income, primarily Aquila
Gas Pipeline Corporation (AGP). The company also owns majority interest in a gas
marketing company in the United Kingdom and in a company that invests in New
Zealand electric utilities.
REGULATION. The company's utility operations are subject to regulation by
various regulatory authorities. The company currently applies accounting
standards that recognize the economic effects of rate regulation and,
accordingly, has recorded regulatory assets related to the company's energy
generation, transmission and distribution operations. The table below presents
the amount of regulatory assets recorded at December 31, 1995, 1994 and 1993,
respectively.
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
DOLLARS IN MILLIONS
<S> <C> <C> <C>
Income taxes....................................................................... $ 53.7 $ 72.3 $ 66.2
Environmental liabilities.......................................................... 10.4 10.9 9.3
Debt related costs................................................................. 23.8 21.9 24.0
Regulatory accounting orders....................................................... 7.8 8.3 8.8
Demand side management programs.................................................... 8.6 5.0 3.3
Post-retirement benefits........................................................... 8.5 7.9 5.4
Purchased gas and related costs.................................................... 3.3 4.2 5.8
Other (including FERC Order No. 636)............................................... 30.3 31.6 14.8
--------- --------- ---------
Total.............................................................................. $ 146.4 $ 162.1 $ 137.6
--------- --------- ---------
--------- --------- ---------
</TABLE>
UTILITY PLANT AND DEPRECIATION. Utility plant is stated at original cost.
Repair and maintenance costs are expensed as incurred. When property is
replaced, removed or abandoned, its cost, together with the costs of removal
less salvage, is charged to accumulated depreciation.
For financial statement purposes, depreciation is provided on a
straight-line basis over the estimated lives of depreciable property by applying
composite average annual rates, ranging from 3.0% to 4.6%, as approved by
regulatory authorities.
The excess of total acquisition costs over the aggregate regulated value of
net assets acquired to date is included in utility plant ($164.7 million, net of
$32.0 million in accumulated amortization at December 31, 1995) and is being
amortized on a straight-line basis over periods ranging from 15 to 40 years.
38
<PAGE>
OIL AND GAS PROPERTIES. Oil and gas properties were accounted for using the
full cost method. Under the full cost method, all costs associated with gas and
oil property acquisition, exploration and development, including non-productive
costs, were capitalized. See Note 4 for discussion of the sale of substantially
all of the company's oil and gas production assets.
The provision for depreciation, depletion and amortization was determined
using the units of production method over the estimated lives of the producing
properties based on estimated quantities of proved reserves. Amortization per
MCF equivalent averaged $1.27, $1.44 and $1.27 in 1995, 1994 and 1993,
respectively. Gathering, processing and other energy related property is
depreciated using a composite average annual rate of 5.0%.
SALES RECOGNITION, PURCHASED GAS ADJUSTMENTS AND ENERGY ADJUSTMENT
CLAUSES. Sales are generally recognized when the products or services are
delivered, except price risk management activities. See below for price risk
management policy. Gas sales and the company's electric utility sales in Kansas
and West Virginia are subject to adjustment clauses. Differences between amounts
collected and allowable costs are recorded as over- or under-recovered gas costs
and fuel and purchased power costs in accordance with the ratemaking policies of
regulatory authorities.
Beginning with the 1995 annual financial statements, the company began to
present gas marketing sales and cost of gas separately. Previously net margin
was included in sales. The effect of this change is reflected in all periods
presented. A comparison of previously reported amounts to 1995's presentation is
presented below:
<TABLE>
<CAPTION>
1994 1993
---------- ----------
DOLLARS IN MILLIONS
<S> <C> <C>
Total sales as previously reported....................................................... $ 1,514.6 $ 1,571.6
Aquila's gas marketing sales............................................................. 596.8 953.4
Reclassification of businesses from other income, net to respective income statement
captions................................................................................ 286.7 221.1
---------- ----------
Total Sales.............................................................................. $ 2,398.1 $ 2,746.1
---------- ----------
---------- ----------
</TABLE>
Effective January 1, 1995, the company adopted the mark-to-market method of
accounting for its domestic natural gas trading activities, principally
conducted by Aquila Energy Corporation, a wholly-owned subsidiary of the
company. Under mark-to-market accounting, the company's domestic natural gas
trading contracts, including both physical transactions and financial
instruments, are recorded at fair value, net of future servicing costs and
reserves, and recognized as sales or expense upon contract execution. Changes in
the market value of this contract portfolio (resulting primarily from newly
originated transactions and the impact of price movements) are recognized as
gains or losses in the period of change. The resulting unrealized gains and
losses are recorded as price risk management assets and liabilities.
The company's prior method recognized gains and losses when the underlying
physical commodity was sold. The change was made to more fairly present the
current results of the company's operations related to this business and to
recognize that value is created and the earnings process is completed when the
contractual commitments are finalized. The effect of this change was immaterial
for prior periods and increased 1995 sales and income from operations by $29.8
million ($18.3 million after tax).
The impact in the current year primarily results from the effect of certain
contractual sales commitments which had been designated as hedges of a portion
of the company's natural gas reserves. As discussed in Note 4, the company sold
its oil and gas reserves in September 1995. The resulting open position of the
commitments created a change in the price risk management assets and
liabilities.
39
<PAGE>
ACCOUNTING FOR FINANCIAL INSTRUMENTS. As indicated above, the company
accounts for financial instruments associated with its domestic natural gas
trading activities using the mark-to-market method.
Activities for non-trading purposes consist of transactions entered into by
the company's other businesses to hedge the impact of market fluctuations on
assets, liabilities, or other contractual commitments. Changes in the market
value of these transactions are deferred until the gain or loss on the hedged
item is recognized.
INCOME TAXES. The company accounts for income taxes using the liability
method. Under this method, deferred tax assets and liabilities are determined by
applying tax regulations existing at the end of a reporting period to the
cumulative temporary differences between the tax bases of assets and liabilities
and their reported amounts in the financial statements. Deferred investment tax
credits are amortized over the lives of the related properties. No provision is
made for U.S. income taxes on undistributed earnings of the company's
international businesses ($9.5 million at December 31, 1995) because it is
management's intention to reinvest such earnings in those international
operations. Consolidated income before income taxes for the years ended December
31, 1995, 1994 and 1993, included $11.2, $9.1 and $10.7 million, respectively,
from international operations.
CASH EQUIVALENTS AND CASH FLOW INFORMATION. Cash equivalents are defined as
temporary cash investments with a maturity of three months or less. As of
December 31, 1995, 1994 and 1993, the company had cash of $77.5 million, $58.5
million and $52.2 million, respectively, held in foreign countries.
Cash payments for interest and taxes and supplemental disclosure relating to
acquisition activities are presented below:
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
DOLLARS IN MILLIONS
<S> <C> <C> <C>
Cash paid during the year for --
Interest, net of amount capitalized.............................................. $ 135.4 $ 100.3 $ 94.5
Income taxes..................................................................... 46.9 11.4 24.5
-------------------------------
Liabilities assumed in acquisitions --
Fair value of assets acquired.................................................... $ 114.0 $ 35.9 $ 106.3
Cash paid for acquisitions....................................................... 100.9 28.2 99.0
Liabilities assumed.............................................................. 13.1 7.7 7.3
-------------------------------
</TABLE>
EARNINGS PER COMMON SHARE. Primary earnings per common share are computed
on the basis of the weighted average number of common shares outstanding.
Fully diluted earnings per common share assume conversion of convertible
subordinated debentures and convertible preference stock for the periods they
were outstanding and dilutive.
CONCENTRATION OF FOREIGN OPERATIONS AND CURRENCY TRANSLATION
ADJUSTMENTS. As of December 31, 1995, 1994 and 1993, the company had 18.5%,
9.5% and 10.0%, respectively, of its assets denominated in foreign currencies.
Management believes the economies in which its international businesses operate
are stable. Changes in the value of these foreign currencies affect asset and
liability value, and income and loss contributions.
The financial statements of foreign operations have been translated into
U.S. dollars using the weighted average exchange rates for income statement
items and year-end exchange rates for balance sheet items. The resulting
translation adjustments increase or decrease common shareowners' equity.
RECLASSIFICATIONS. Certain prior year amounts in the consolidated financial
statements have been reclassified where necessary to conform to the 1995
presentation.
40
<PAGE>
NOTE 2: MERGER AND ACQUISITIONS
PROPOSED MERGER -- KANSAS CITY POWER & LIGHT COMPANY (KCPL)
On January 19, 1996, the company, KCPL and KC United Corp. (KCU) entered
into an Agreement and Plan of Merger (the Merger Agreement) which provides for a
strategic business combination of the company and KCPL in a "merger-of-equals"
transaction (the Transaction). Pursuant to the Merger Agreement, the company and
KCPL will merge with and into KCU (which may be renamed at the discretion of the
company and KCPL), a corporation formed for the purpose of the Transaction.
Under the terms of the Merger Agreement, each share of the company's common
stock will be exchanged for 1.096 shares of KCU common stock and each share of
KCPL common stock will be exchanged for one share of KCU common stock. Based on
the number of shares of the company's common stock and KCPL's common stock
outstanding on the date of the Merger Agreement, the company's common
shareholders will receive about 45% of the common equity of KCU and KCPL's
common shareholders will receive about 55%.
The Transaction is designed to qualify as a pooling of interests for
accounting and financial reporting purposes. Under this method, the recorded
assets and liabilities of the company and KCPL would be carried forward to the
consolidated financial statements of KCU at their recorded amounts. The income
of KCU would include the combined income of the company and KCPL as though the
merger occurred at the beginning of the accounting period. Prior period
financial statements would be combined and presented as KCU.
The Transaction will create a diversified energy company with total combined
sales of over $3.5 billion, over $6.5 billion in total assets and about 2.5
million customers in the United States, Canada, the United Kingdom, New Zealand,
Australia, China and Jamaica. The business of the combined companies will
consist of electric utility operations, gas utility operations and various non-
utility enterprises including independent power projects and gas marketing,
gathering and processing operations.
The Transaction is subject to approval from each company's shareholders and
a number of regulatory authorities. The regulatory approvals process is expected
to take about 12 to 18 months. The Merger Agreement includes termination
provisions which may require certain payments to the party to the Transaction
under certain circumstances, including a payment of $58 million if the
Transaction is terminated by a party and within two and one-half years following
such termination, the terminating party agrees to consummate or consummates
certains business combination transactions.
INTEREST IN AUSTRALIAN ELECTRIC UTILITY
On September 6, 1995, Power Partnership Pty Limited (PPL), of which the
company owns 49.9 %, acquired United Energy Limited (UE), an Australian electric
distribution utility, from the State of Victoria. The company paid approximately
$257.9 million for its 49.9 % ownership interest in PPL. The company manages the
operations of UE on behalf of PPL and receives an annual management fee
consisting of a base amount indexed to the consumer price index and a variable
amount based on UE's financial performance. The management agreement extends for
10 years from date of acquisition.
The company financed its ownership interest primarily through two five-year
Australian-dollar-based revolving credit facilities. See Note 10 for more
information regarding financing arrangements and interest rate swaps used for
risk management purposes.
The acquisition was recorded as a purchase and PPL's results are accounted
for using the equity method of accounting. The purchase price was allocated
based on estimated fair values at the date of the acquisition. The excess of
purchase price over the fair value of assets was approximately $634 million
including approximately $450 million related to a license fee, and is reflected
as various intangible assets on PPL's financial records. The equity investment
is included in Investments in Subsidiaries and Partnerships on the Consolidated
Balance Sheet. See Note 8 for more information regarding year-end investment
balance and equity in earnings. Pro forma unaudited results of operations for
the company, assuming the acquisition occurred at the beginning of the period,
are shown below. For the
41
<PAGE>
1994 period, the pro forma results include UE's results for the 12 months ended
June 30, 1995. UE began operations on July 1, 1994, and the 1995 amounts
represent the most comparable figures for the pro forma table.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
----------------------
1995 1994
---------- ----------
IN MILLIONS, EXCEPT
PER SHARE
<S> <C> <C>
Sales.................................................................................... $ 2,798.5 $ 2,398.1
Income from operations................................................................... 225.1 228.0
Net income............................................................................... 81.7 89.9
Earnings available for common shares..................................................... 79.6 86.9
----------------------
Primary earnings per share............................................................... $ 1.76 $ 1.98
Fully diluted earnings per share......................................................... 1.75 1.96
----------------------
</TABLE>
INTEREST IN NEW ZEALAND ELECTRIC UTILITIES
On November 30, 1995, UtiliCorp N.Z., Inc. (UNZ), a subsidiary of the
company, acquired 20.0% of the common stock of Power New Zealand Limited (PNZ),
a New Zealand electric distribution utility, from Todd Corporation for
approximately $69.4 million. This acquisition was financed through a New
Zealand-dollar-denominated credit facility. PNZ is New Zealand's second largest
electric distribution utility, serving approximately 214,000 customers. UNZ
owned 7.5% of PNZ prior to completing the transaction with Todd Corporation and
owned approximately 27.5% of PNZ as of December 31, 1995. Todd Corporation is a
21% shareholder in UNZ.
In February 1995, UNZ paid $16.1 million to WEL Energy Group Limited (WEL)
to satisfy its capital commitment. UNZ now participates in WEL's earnings to the
full extent of its ownership. Prior to the payment of the remaining capital
commitment, UNZ's participation in WEL's earnings was limited to 5%. WEL is an
electric distribution utility serving approximately 65,000 customers.
OTHER ACQUISITIONS
On May 22, 1995, the company and UtilCo Group, a wholly-owned subsidiary,
acquired a 50% interest in an independent power project in Alabama for $59
million. The project sells its generation output to a paper processing plant.
On January 5, 1995, the company purchased a 218-mile intrastate natural gas
pipeline system in Missouri from Edisto Resources Corporation for $78 million.
On January 17, 1995, the company acquired Broad Street Oil and Gas (Broad
Street), a gas marketing company, for $7.0 million. Broad Street sells natural
gas to approximately 10,000 commercial customers in nine states.
On January 17, 1995, AGP acquired Tristar Gas Company for $16.3 million in
cash. Based in Texas, Tristar gathers, processes, and markets natural gas and
natural gas liquids.
In September 1994, the company acquired the Kansas gas distribution and
selected pipeline properties of NorAm Energy Corp. (NorAm) for $23.0 million.
The Kansas system serves approximately 22,000 customers.
In February 1993, the company acquired a Nebraska gas distribution system
from NorAm for $106 million, including $21 million in working capital. The
Nebraska system serves approximately 124,000 customers.
NOTE 3: PRICE RISK MANAGEMENT
PRICE RISK MANAGEMENT ACTIVITIES. The company offers price risk management
services primarily for the commodity of natural gas. These services are provided
through a variety of financial
42
<PAGE>
instruments, including forward contracts which commit the company to purchase or
sell natural gas in the future; swap agreements, which require payments to (or
receipt of payments from) counterparties based on the differential between two
prices for the commodity specified by the swap; futures and options contracts
traded on the New York Mercantile Exchange (NYMEX); and other contractual
arrangements.
The availablity and use of these types of contracts allow the company to
manage and hedge its contractual commitments, reduce its exposure relative to
the volatility of cash market prices, take advantage of selected arbitrage
opportunities via open positions and protect its investment in storage
inventories. The company is also able to secure additional sources of physical
natural gas supply or create additional markets for existing supply through the
use of exchange for physical (EFP) transactions allowed by NYMEX. The management
of these types of transactions is referred to herein as price risk management
activities.
MARKET RISK. The company's price risk management activities involve
offering fixed price commitments into the future. At December 31, 1995, the term
of the natural gas portfolio extended to the year 2008. Although the company
generally attempts to balance its physical and financial purchase and sale
contracts in terms of quantities and contract performance, net open positions
often exist or are established due to the origination of new transactions and
the company's assessment of, and response to, changing market conditions. The
company will at times create a net open position or allow a net open position to
continue when it believes, based upon competitive information acquired from its
energy marketing activities, that future price movements will be consistent with
its net open position. To the extent that the company has an open position, it
is exposed to the risk that fluctuating market prices may adversely impact its
financial position or results from operations. The company has established
trading policies and exposure limits that are monitored and reviewed. A price
movement of $.10 per MCF for natural gas at December 31, 1995 would have
impacted income from operations by approximately $1.7 million.
MARKET VALUATION. The market prices used to value these transactions
reflect management's best estimate of market prices considering various factors
including closing exchange and over-the-counter quotations, time value of money
and price volatility factors underlying the commitments. These market prices are
adjusted to reflect the potential impact of liquidating the company's position
in an orderly manner over a reasonable period of time under present market
conditions.
The company has considered a number of risks and costs associated with the
future commitments that are included in the market valuation of the natural gas
portfolio, including credit risks associated with the financial condition of
counterparties, product location (basis) differentials and other risks which
management policy dictates. A calculation of the time value of money is also
applied to all contracts. The company continuously monitors the valuation of
identified risks and adjusts them based on present market conditions.
The counterparties in the company's portfolio consist primarily of financial
institutions, oil and gas companies and independent power producers. The
creditworthiness of the company's counterparties may impact its overall exposure
to credit risk, either positively or negatively. However, the
43
<PAGE>
company maintains credit policies with regard to its counterparties that
management believes minimizes overall credit risk. The following table displays
the mark-to-market results of the company's natural gas transactions at December
31, 1995 and the average value for the year ended December 31, 1995:
<TABLE>
<CAPTION>
PRICE RISK PRICE RISK
MANAGEMENT ASSETS MANAGEMENT LIABILITIES
-------------------------- --------------------------
AVERAGE VALUE 12/31/95 AVERAGE VALUE 12/31/95
--------------- --------- --------------- ---------
DOLLARS IN MILLIONS
<S> <C> <C> <C> <C>
Independent power producers.................................... $ 93.6 $ 187.6 $ -- $ --
Financial institutions......................................... 2.9 9.1 30.6 38.6
Oil and gas producers.......................................... .6 2.0 12.0 30.7
Gas transmission............................................... .9 2.4 4.8 19.7
Other.......................................................... 1.2 3.3 0.7 2.9
----- --------- ----- ---------
Gross value.................................................... 99.2 204.4 48.1 91.9
Reserves....................................................... -- -- 36.2 70.6
----- --------- ----- ---------
Total.......................................................... $ 99.2 $ 204.4 $ 84.3 $ 162.5
----- --------- ----- ---------
----- --------- ----- ---------
Net value...................................................... $ 41.9
---------
---------
</TABLE>
Three independent power producers comprise the majority of the Company's net
price risk management assets. The concentration of customers, which fluctuates
with changes in market conditions, may impact the company's overall exposure to
credit risk, either positively or negatively, in that the customers may be
similarly affected by changes in economic, regulatory or other conditions.
NOTE 4: RESTRUCTURINGS
AQUILA RESTRUCTURING
In the fourth quarter of 1993, the Aquila Energy subsidiary implemented a
new business strategy and recorded a $69.8 million charge against income ($45
million after tax) for disposal of selected gas sales contracts, impairment of
certain offshore assets, and other restructuring costs. Since then, Aquila has
been settling various contracts and reducing this reserve. In the first quarter
of 1995, Aquila completed its restructuring plan. The net contract settlements
were more favorable than originally anticipated in 1993, resulting in a $5.0
million and $5.4 million positive adjustment to income from operations for the
years ended December 31, 1995 and 1994.
AGP PUBLIC OFFERING
In October 1993, AGP completed an initial public offering and sale of 5.4
million shares of common stock, representing approximately 18% of its total
shares outstanding. Net proceeds of the offering were about $74.6 million and
were used to reduce short-term debt incurred for working capital purposes. This
transaction resulted in a gain of $47.8 million, recorded as non-operating
income in the Consolidated Statement of Income. Consistent with U.S. tax laws,
no income tax expense was recorded related to this gain.
SALE OF OIL AND GAS ASSETS
On September 27, 1995, the company sold assets of Aquila Energy Resources
Corporation, a wholly-owned subsidiary of Aquila Energy, for approximately $205
million in cash, which approximated their carrying value. The assets sold
consisted of substantially all of the company's oil and gas reserves.
44
<PAGE>
NOTE 5: ACCOUNTS RECEIVABLE
The components of accounts receivable, net on the Consolidated Balance
Sheets are:
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
IN MILLIONS
Accounts receivable, net........................................................ $ 405.1 $ 261.7 $ 297.1
Unbilled revenue................................................................ 95.5 71.5 76.6
Financing program............................................................... (168.4) (117.6) (139.1)
--------- --------- ---------
Total........................................................................... $ 332.2 $ 215.6 $ 234.6
--------- --------- ---------
--------- --------- ---------
</TABLE>
The company has agreements with financial institutions to sell, on a
continuing basis, up to $205 million of eligible accounts receivable on a
limited recourse basis. Fees associated with these sales were approximately (in
millions) $8.6 in 1995, $6.9 in 1994 and $5.4 in 1993 and are included in
interest expense in the accompanying Consolidated Statements of Income.
NOTE 6: PROPERTY, PLANT AND EQUIPMENT
The components of property, plant and equipment, net are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
IN MILLIONS
<S> <C> <C> <C>
Electric utility............................................................. $ 1,645.0 $ 1,578.7 $ 1,526.6
Gas utility.................................................................. 1,064.8 954.6 896.3
Gas gathering and pipeline systems........................................... 547.0 440.0 419.8
Oil and gas properties....................................................... -- 416.7 337.2
Other non-regulated plant.................................................... 106.2 88.3 80.9
Construction in process...................................................... 47.6 23.3 22.3
---------- ---------- ----------
3,410.6 3,501.6 3,283.1
Less -- depreciation, depletion and amortization............................. 1,131.0 1,235.2 1,124.0
---------- ---------- ----------
Net Property, Plant and Equipment............................................ $ 2,279.6 $ 2,266.4 $ 2,159.1
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
JOINTLY OWNED ELECTRIC UTILITY PLANT. The company holds an 8% ownership
interest in three coal-fired, approximately 600-megawatt generating units
(Jeffrey Energy Center or JEC) and leases another 8% of JEC energy output. The
JEC is operated by another utility. At December 31, 1995, electric utility plant
and accumulated depreciation included $100.8 million and $43.2 million,
respectively, related to the company's investment in JEC. The pro rata share of
JEC expenses is reflected in the Consolidated Statements of Income.
NOTE 7: ASSET IMPAIRMENTS
In 1995 the company reviewed its long-lived asset carrying value and also
adopted Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of"
(SFAS 121). In the fourth quarter of 1995, the company recorded a non-cash
charge of approximately $34.6 million for long-term asset impairments. The
assets related to this charge are summarized below:
<TABLE>
<CAPTION>
PRETAX WRITEDOWN
-----------------
IN MILLIONS
<S> <C>
Investment in an independent
power project (UtilCo Group)..................................... $ 15.4
Gas gathering systems (AGP)....................................... 13.2
Gas processing plants............................................. 6.0
-----
Total............................................................. $ 34.6
-----
-----
</TABLE>
45
<PAGE>
The impairment loss related to UtilCo Group's investment in a power project
was primarily caused by a change in the projected cash flows of the project
after considering updated projections of future energy prices. This resulted in
the write-off of the remaining investment balance.
The impairment loss relating to AGP's gas gathering systems stems from a
review of cash flows on a system-by-system basis. Prior to adoption of SFAS 121,
AGP assessed asset realization at a cash flow level higher than SFAS 121
requires. In preparing cash flow projections related to AGP's assets certain
assumptions were used. The more significant assumptions included constant
throughput flow based on 1994 actual throughput for an estimated remaining life
of 20 years. Cash flows were discounted based on AGP's weighted average cost of
capital.
The impairment loss relating to gas processing plants relate to a review
conducted after the sale of Aquila's oil and gas properties. These company-owned
plants were managed as part of Aquila's properties, but were not part of Aquila.
In assessing these plants separately under the principles of SFAS 121, the cash
flows from these assets were not sufficient to recover the carrying value of the
plants.
NOTE 8: INVESTMENTS IN SUBSIDIARIES AND PARTNERSHIPS
The consolidated financial statements include the company's investments in
electric distribution utilities in Australia (via UtiliCorp Australia Holding
Limited [UAHL]) and New Zealand (via UNZ), five U.K. gas marketing joint
ventures (via UtiliCorp U.K., Limited) and 17 power projects (via UtilCo Group)
accounted for under the equity method. For the company's international
businesses, adjustments for all significant differences between U.S. generally
accepted accounting principles and local accounting standards have been made to
the amounts included in the company's consolidated financial statements.
<TABLE>
<CAPTION>
INVESTMENT DECEMBER 31, (A) SHARE OF PRETAX
EARNINGS
------------------------------- --------------------
OWNERSHIP COUNTRY 1995 1994 1993 1995 1994
----------- ---------------- --------- --------- --------- --------- ---------
DOLLARS IN MILLIONS
<S> <C> <C> <C> <C> <C> <C> <C>
UAHL investment.......................... 49.9% Australia....... $ 257.9 $ -- $ -- $ 1.3 $ --
UNZ investments:
WEL Energy Group Ltd. (d).............. 39% New Zealand 39.1 24.3 -- 2.2 .2
PNZ.................................... 27.5% New Zealand 107.1 -- -- -- --
UtiliCorp U.K., Limited investments
(c)..................................... 25% United Kingdom -- 1.4 2.5 (1.6) (1.1)
UtilCo Group partnerships (b)(c)......... 22%-50% U.S. & Jamaica 170.3 122.8 100.2 21.9 19.2
--------- --------- --------- --------- ---------
$ 574.4 $ 148.5 $ 102.7 $ 23.8 $ 18.3
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
<CAPTION>
1993
---------
<S> <C>
UAHL investment.......................... $ --
UNZ investments:
WEL Energy Group Ltd. (d).............. --
PNZ.................................... --
UtiliCorp U.K., Limited investments
(c)..................................... 1.4
UtilCo Group partnerships (b)(c)......... 15.0
---------
$ 16.4
---------
---------
</TABLE>
- ------------------------
(a) Investment exceeds interest in the underlying company or partnership net
assets. Acquisition and transaction costs included in the investment
balances are being amortized on a straight-line basis over the remaining
lives of the related assets.
(b) Investment and share of pretax earnings include the James River project, 49%
owned by the company and 1% owned by UtilCo.
(c) Investments are aggregated. Individual investments are not significant.
(d) Prior to February 1995, the company's participation in WEL's results was
limited to 5%.
46
<PAGE>
Summarized combined financial information of unconsolidated material equity
investments is presented below.
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------
1995 1994 1993
---------- --------- ---------
DOLLARS IN MILLIONS
<S> <C> <C> <C>
Assets
Current assets................................................................. $ 336.5 $ 115.7 $ 111.2
Non-current assets............................................................. 2,785.3 855.5 881.0
---------- --------- ---------
Total assets................................................................... $ 3,121.8 $ 971.2 $ 992.2
---------- --------- ---------
---------- --------- ---------
Liabilities and Equity
Current liabilities............................................................ $ 276.5 $ 93.7 $ 92.3
Non-current liabilities........................................................ 2,125.6 694.8 735.8
Equity......................................................................... 719.7 182.7 164.1
---------- --------- ---------
Total liabilities and equity................................................... $ 3,121.8 $ 971.2 $ 992.2
---------- --------- ---------
---------- --------- ---------
Operating Results
Revenues....................................................................... $ 729.6 $ 352.8 $ 313.1
Costs and expenses............................................................. 657.3 299.7 269.2
---------- --------- ---------
Net income..................................................................... $ 72.3 $ 53.1 $ 43.9
---------- --------- ---------
---------- --------- ---------
</TABLE>
NOTE 9: SHORT-TERM DEBT
Short-term debt outstanding at December 31, 1995, 1994 and 1993 is comprised
of the following items:
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
DOLLARS IN MILLIONS
<S> <C> <C> <C>
Bank borrowing (uncommitted)................................................. $ 153.1 $ 155.4 $ 70.0
Commercial paper............................................................. 135.5 27.0 --
---------- ---------- ----------
Total........................................................................ $ 288.6 $ 182.4 $ 70.0
---------- ---------- ----------
---------- ---------- ----------
Weighted average interest rate at year end................................... 6.14% 6.20% 3.51%
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
The company has commercial paper programs aggregating $150 million. To
support the programs, the company has a revolving credit agreement with a
consortium of banks aggregating $250 million. The revolving credit agreement
allows the issuance of notes which bear interest at rates based on the prime
rate or various money market rates. The revolving credit agreement contains
restrictive covenants and the company pays an annual commitment fee of .17% on
the revolving credit agreement.
NOTE 10: LONG-TERM DEBT AND COMPANY-OBLIGATED PREFERRED SECURITIES
The company's long-term debt is summarized below.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
DOLLARS IN MILLIONS 1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
First Mortgage Bonds:
Various, 9.92%*, due 1996-2008............................................. $ 23.0 $ 23.0 $ 36.1
Senior Notes:
9.30% Series, due December 1, 1995......................................... -- 125.0 125.0
6.0% Series, due April 1, 1998............................................. 70.0 70.0 70.0
9.21% Series, due October 11, 1999......................................... 50.0 50.0 50.0
8.45% Series, due November 15, 1999........................................ 100.0 100.0 --
</TABLE>
47
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
DOLLARS IN MILLIONS 1995 1994 1993
---------- ---------- ----------
Aquila Southwest Energy 8.29% Series, due September 15, 2002............... 87.5 100.0 100.0
<S> <C> <C> <C>
6.375% Series, due June 1, 2005............................................ 100.0 -- --
8.2% Series, due January 15, 2007.......................................... 130.0 130.0 130.0
10.5% Series, due December 1, 2020......................................... 125.0 125.0 125.0
9.0% Series, due November 15, 2021......................................... 150.0 150.0 150.0
8.0% Series, due March 1, 2023............................................. 125.0 125.0 125.0
Secured Debentures of West Kootenay Power:
9.98%*, due 1995-2023...................................................... 50.3 54.0 57.9
Subordinated Debentures:
6.625%, due July 1, 2011................................................... 8.0 20.7 23.9
New Zealand Denominated Credit Facility...................................... 63.6 -- --
Australian Denominated Credit Facility....................................... 222.8 -- --
Other Notes and Obligations.................................................. 65.3 43.0 18.6
---------- ---------- ----------
Total Long-Term Debt (including current maturities).......................... $ 1,370.5 $ 1,115.7 $ 1,011.5
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
- ------------------------
*Weighted average interest rate.
The amount of long-term debt maturing in each of the next five years,
including sinking fund provisions, is as follows (in millions): 1996 -- $15.1;
1997 -- $25.8; 1998 -- $147.7; 1999 -- $165.9; and 2000 -- $270.1.
In June 1995, the company issued $100 million of 6.375% Senior Notes due in
2005. Net proceeds of $99.3 million were used to reduce short-term debt. The
Notes are the initial securities issued under a $200 million shelf registration
of debt securities.
In November 1994, the company issued $100 million of 8.45% Senior Notes due
in 1999. The net proceeds of $99.5 million were used to reduce short-term debt
incurred for construction and acquisitions, and for general corporate purposes.
In June 1995, UtiliCorp Capital L.P. (UC), a limited partnership of which
the company is the general partner, issued 4,000,000 shares of 8.875% Cumulative
Monthly Income Preferred Securities, Series A, for $100 million. The limited
partnership interests represented by the preferred securities are redeemable at
the option of UC, after June 12, 2000, at $25 per preferred security plus
accrued interest and unpaid dividends. Holders of the securities are entitled to
receive dividends at an annual rate of 8.875% of the liquidation preference
value of $25. Dividends are payable monthly and in substance are tax deductible
by the company. The securities are shown as Company-Obligated Mandatorily
Redeemable Preferred Securities of a Partnership on the Consolidated Balance
Sheet. The net proceeds were used to reduce short-term debt.
UtiliCorp South Pacific, Inc. (USP) has a $135 million New
Zealand-dollar-denominated credit facility with a consortium of banks that was
utilized to finance a portion of the investment made by UNZ. The interest rate
floats with changes in the New Zealand bank bill rate. The interest rate at
December 31, 1995, was 8.98% and matures February 28, 1998. A commitment fee of
.20% applies to the unused portion of the credit facility.
UAHL has two 5-year credit facilities ($225 million and $100 million
[Australian]) with a consortium of banks that were utilized to finance the
ownership interest in UE. The interest rate floats with changes in the
Australian bank bill rate. The weighted average interest rate at December 31,
1995 was 7.91%. A commitment fee of .20% applies to the unused portion of the
credit facility. Borrowings from this facility are considered long-term as it is
the company's intention to repay borrowed funds over periods extending beyond
one year.
48
<PAGE>
On November 6, 1995, UAHL entered into an interest rate swap agreement with
Deutsche Bank with a contractual amount of $100 million (Australian) whereby the
company exchanges variable Australian debt interest for fixed rate interest. The
fixed interest rate is 7.77% for a period extending to September 7, 1998.
On December 8, 1995, the company obtained an extended grace period for a
long-term debt to capitalization ratio covenant from its creditor on its 9.21%
senior notes. The grace period extends to June 30, 1996. The debt obligation is
classified as long-term debt in the Consolidated Balance Sheet, as management
believes it is probable that the company will meet the covenant ratio by June
30, 1996 and for the foreseeable future periods.
Substantially all of the domestic utility plant owned by the company is
subject to the lien of various mortgage indentures. The company cannot issue
additional mortgage bonds under these mortgage indentures without directly
securing the 6.0%, 8.45%, 8.2%, 9.0%, 8.0% and 6.375% Senior Notes equally as
any mortgage bond issue. Currently the company has no plans to issue mortgage
bonds.
The company executed an Indenture in 1990 (Indenture) for the issuance of
senior notes. Notes issued pursuant to the Indenture will be unsecured
obligations of the company and will rank on a parity with all other unsecured
and subordinate indebtedness of the company.
At December 31, 1995, 6.625% convertible subordinated debentures totaling
$8.0 million remained outstanding. The debentures can be converted into
approximately 340,000 shares of common stock, based on a conversion price of
$23.68, subject to an annual maximum limitation. The debentures are subordinate
to the prior payment, when due, of the principal and premium, if any, and
interest on all the company's debt outstanding, except debt that by its terms is
not senior in right of payment to the debentures.
NOTE 11: CAPITAL STOCK
As of December 31, 1995, the company was not restricted as to payment of
cash dividends.
The Board of Directors of the company (the Board) is authorized to approve
the issuance of up to 20 million shares of Class A common stock, $1.00 par
value. No shares of Class A common stock are issued or outstanding.
DIVIDEND REINVESTMENT AND COMMON STOCK PURCHASE PLAN. On February 16, 1995,
the company registered 3 million shares of common stock to initiate a new
Dividend Reinvestment and Common Stock Purchase Plan (New Plan). Under the
provisions of this New Plan, current and potential shareholders can purchase up
to $10,000 per month of the company's common stock at a five-day average market
price and without sales commissions. The New Plan allows members to reinvest
dividends into additional common stock at a 5% discount. The New Plan amends the
previous plan and all members in the previous plan automatically became members
in the New Plan.
EMPLOYEE STOCK PURCHASE PLAN. Participants have the opportunity to buy
shares of the company's common stock at a reduced price through regular payroll
deductions and/or lump sum deposits of up to 20% of the employee's base salary.
Contributions are credited to the participant's account throughout an option
period. At the end of the option period, the participant's total account balance
is applied to the purchase of common shares of the company. The shares are
purchased at 85% of the lower of the market price on the first day or the last
day of the option period. Participants must be enrolled in the Plan as of the
first day of an option period in order to participate in that option period.
RESTATED SAVINGS PLAN. A defined contribution plan, the Restated Savings
Plan (Savings Plan) covers all full-time and eligible part-time employees of the
company. Participants may generally elect
49
<PAGE>
to contribute up to 12% of their annual pay on a before- or after-tax basis
subject to certain limitations. The company generally matches contributions up
to 6%. Participants may direct their contributions into five different
investment options. All company matching contributions are in the company's
common stock. In addition, the Savings Plan also includes a stock contribution
fund whereby the company can contribute an additional amount of company common
stock to participants.
STOCK AWARDS AND STOCK OPTIONS. The company's Stock Incentive Plan provides
for the granting of common shares to certain employees as restricted stock
awards and as stock options.
Shares issued as restricted stock awards are held by the company until
certain restrictions lapse, generally on the third award anniversary. The market
value of the stock, when awarded, is amortized to compensation expense over the
three-year period.
Stock options granted under the Plan allow the purchase of common shares at
a price not less than fair market value at the date of grant. Options are
generally exercisable commencing with the first anniversary of the grant and
expire after 10 years from the date of grant.
Subject to regulatory and shareholder approval, on September 8, 1995, the
company granted up to 619,325 shares of the company's common stock to certain
key individuals at an exercise price of $27.25 per share.
The Board approved the establishment of an Employee Stock Option Plan in
1991. This Plan provides for the granting of up to 1 million stock options to
full-time employees other than those eligible to receive options under the Stock
Incentive Plan. Stock options granted under the Employee Stock Option Plan carry
the same provisions as those issued under the Stock Incentive Plan. During 1992,
options for 742,900 shares were granted to employees. The exercise price of
these options is $27.3125. No options have been issued under this Plan since
1992.
At December 31, 1995, restricted stock awards and stock options which were
exercisable totaled 165,735 shares.
Stock options as of December 31, 1995, 1994 and 1993 are summarized below:
<TABLE>
<CAPTION>
1995 1994 1993
---------------- ---------------- ----------------
SHARES
<S> <C> <C> <C>
Beginning balance......................................... 1,273,797 1,188,007 1,061,857
Granted................................................... 858,975 203,650 221,650
Exercised................................................. (11,900) (98,910) (82,400)
Cancelled................................................. (55,500) (18,950) (13,100)
---------------- ---------------- ----------------
Ending balance............................................ 2,065,372 1,273,797 1,188,007
---------------- ---------------- ----------------
---------------- ---------------- ----------------
Grant price range......................................... $17.40-$31.63 $17.40-$31.63 $17.40-$28.69
Exercise price range...................................... $ 21.88-$28.56 $ 21.50-$28.69 $ 21.50-$18.69
</TABLE>
MANDATORILY REDEEMABLE CONVERTIBLE PREFERENCE STOCK. In February 1994, the
Board authorized the redemption of all outstanding shares of the $1.775 Series
Convertible Preference Stock. During the 1994 first and second quarters,
approximately 1.3 million and 1.5 million shares of the $1.775 stock were
converted into approximately 2.7 million shares of common stock. The remaining
approximately 100,000 shares were redeemed on May 26, 1994 at a price of $21.60
per share plus accrued dividends.
50
<PAGE>
NOTE 12: INCOME TAXES
Income tax expense consists of the following components:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1995 1994 1993
--------- --------- ---------
DOLLARS IN MILLIONS
<S> <C> <C> <C>
Currently Payable:
Federal........................................................................... $ 35.4 $ 15.3 $ 23.1
Foreign........................................................................... 10.6 5.2 4.9
State............................................................................. 11.3 (1.5) (2.2)
Deferred:
Federal
Accelerated depreciation........................................................ 6.0 14.3 27.0
Alternative minimum tax......................................................... (4.7) (20.4) (23.2)
Restructuring charge............................................................ 2.8 7.9 (23.7)
Intangible drilling costs....................................................... (27.3) 15.2 10.0
Purchased gas adjustment clauses................................................ 2.8 (.6) 1.9
Federal tax rate increase....................................................... -- -- 2.7
Provision for asset impairments................................................. (12.4) -- --
Price risk management assets and liabilities.................................... 11.5 -- --
Other........................................................................... 17.7 9.8 5.1
State............................................................................. (.4) 8.2 5.7
Investment Tax Credit Amortization.................................................. (1.3) (1.3) (1.3)
--------- --------- ---------
Total Income Tax Expense............................................................ $ 52.0 $ 52.1 $ 30.0
--------- --------- ---------
--------- --------- ---------
</TABLE>
In August 1993, passage of the Budget Reconciliation Act of 1993 (the Act)
increased the statutory federal income tax rate from 34% to 35%. This tax rate
change increased income tax expense by approximately $4.0 million, of which $2.7
million represented a non-cash adjustment to increase deferred tax liabilities
as of January 1, 1993.
The company has an alternative minimum tax credit carryforward of
approximately $88 million at December 31, 1995. Alternative minimum tax credits
can be carried forward indefinitely and the company has not recorded a valuation
allowance against its tax credit carryforwards.
The principal components of the company's deferred income taxes consist of
the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------
1995 1994 1993
--------- --------- ---------
DOLLARS IN MILLIONS
<S> <C> <C> <C>
Deferred Tax Assets:
Alternative minimum tax credit carryforward...................................... $ 88.2 $ 83.5 $ 73.8
Net operating loss carryforward.................................................. -- 26.3 19.0
Restructuring charges............................................................ -- 16.0 25.0
--------- --------- ---------
Total deferred tax assets.......................................................... 88.2 125.8 117.8
--------- --------- ---------
Deferred Tax Liabilities:
Accelerated depreciation and other plant differences
Regulated...................................................................... 160.9 176.5 163.1
Non-regulated.................................................................. 140.2 168.7 128.4
Regulatory asset -- SFAS 109..................................................... 33.8 32.8 25.8
Other, net....................................................................... 32.5 27.2 13.4
--------- --------- ---------
Total deferred tax liabilities..................................................... 367.4 405.2 330.7
--------- --------- ---------
Deferred income taxes, net......................................................... $ 279.2 $ 279.4 $ 212.9
--------- --------- ---------
--------- --------- ---------
</TABLE>
51
<PAGE>
The company's effective income tax rates differed from the statutory federal
income tax rates primarily due to the following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Statutory Federal Income Tax Rate................................................... 35.0% 35.0% 35.0%
Tax effect of:
Temporary differences passed through, primarily removal costs..................... (.5) (1.3) (.8)
Investment tax credit amortization................................................ (1.0) (.9) (1.1)
Gain on sale of subsidiary stock.................................................. -- -- (14.4)
State income taxes, net of federal benefit........................................ 4.3 3.1 2.4
Federal tax rate increase......................................................... -- -- 2.3
Difference in tax rate of foreign subsidiaries.................................... 1.3 1.9 .8
Other............................................................................. .4 (2.2) 1.6
--- --- -----
Effective Income Tax Rate........................................................... 39.5% 35.6% 25.8%
--- --- -----
--- --- -----
</TABLE>
NOTE 13: EMPLOYEE BENEFITS
PENSIONS. The following table represents the funded status of the pension
plans and the amounts included in the Consolidated Balance Sheets and Statements
of Income:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------
1995 1994 1993
------------- ------------- -------------
DOLLARS IN MILLIONS
<S> <C> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation......................................... $ 143.0 $ 119.4 $ 113.5
Accumulated benefit obligation.................................... 146.9 122.6 116.5
------------- ------------- -------------
------------- ------------- -------------
Projected benefit obligation........................................ $ 183.9 $ 152.1 $ 144.6
Plan assets at fair value (primarily publicly traded common stocks
and bonds)*........................................................ 191.7 161.4 168.3
------------- ------------- -------------
------------- ------------- -------------
Excess of plan assets over the projected benefit obligation......... 7.8 9.3 23.7
Unrecognized net loss from past experience different from that
assumed............................................................ 24.1 22.0 7.2
Unrecognized net asset being recognized over 16 years............... (12.5) (13.7) (15.6)
Unrecognized prior service cost..................................... (.3) (.7) .1
------------- ------------- -------------
Pension asset included in prepayments............................... $ 19.1 $ 16.9 $ 15.4
------------- ------------- -------------
------------- ------------- -------------
Net pension expense included the following components:
Service cost...................................................... $ 5.8 $ 5.6 $ 5.3
Interest cost on projected benefit obligation..................... 12.0 11.0 10.4
Actual return on plan assets...................................... (37.6) .6 (16.9)
Regulatory adjustment............................................. .6 .5 .3
Net amortization and deferral..................................... 20.5 (16.7) 2.2
------------- ------------- -------------
Net pension expense................................................. $ 1.3 $ 1.0 $ 1.3
------------- ------------- -------------
------------- ------------- -------------
Discount rate assumed............................................... 7.17% 7.89% 7.89%
Assumed rate of return on future compensation levels................ 5.0-5.5% 5.0-5.5% 5.0-5.5%
Assumed long-term rate of return on assets.......................... 8.5-10.0% 8.5-9.0% 8.5-9.0%
</TABLE>
- ------------------------
*Includes $1.1 million of the company's convertible preference stock at December
31, 1993. No convertible preference stock was held at December 31, 1995 and
1994.
52
<PAGE>
The company has pension plans covering substantially all qualified union and
non-union employees. The benefit formulas vary and are based either on years of
service multiplied by a percentage of salary, or a flat benefit based upon years
of service.
The company's policy is to fund, at a minimum, an amount sufficient to meet
all ERISA funding requirements. In certain of its jurisdictions, the company has
recorded pension expense equal to its funding contribution, consistent with the
rate treatment allowed for this cost.
In 1995 the company changed its long-term view on pension fund asset returns
and increased its estimated return on domestic plan assets to 10%.
OTHER POST-RETIREMENT BENEFITS. The company provides post-retirement health
care and life insurance benefits to certain employees. A majority of such
retirees pay a portion of the cost of the benefits.
The following table summarizes the status of the company's post-retirement
plans for financial statement purposes and the related amount included in the
Consolidated Balance Sheets at December 31, 1995, 1994 and 1993:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------
1995 1994 1993
--------- --------- ---------
DOLLARS IN MILLIONS
<S> <C> <C> <C>
Actuarial present value of post-retirement benefit obligations:
Retirees.......................................................................... $ 23.1 $ 24.1 $ 29.5
Other fully eligible participants................................................. 6.0 7.6 9.0
Other active participants......................................................... 11.1 8.3 6.8
Plan assets at fair value......................................................... (.9) (.3) --
Unrecognized transition obligation................................................ (34.4) (36.4) (41.0)
Unrecognized net gain (loss)...................................................... 5.2 3.3 (1.8)
--------- --------- ---------
Accrued liability................................................................... $ 10.1 $ 6.6 $ 2.5
--------- --------- ---------
--------- --------- ---------
</TABLE>
The components of health care and life insurance costs are:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------
1995 1994 1993
--------- --------- ---------
DOLLARS IN MILLIONS
<S> <C> <C> <C>
Service cost............................................................................... $ .8 $ .6 $ .6
Interest cost.............................................................................. 2.7 2.9 3.4
Return on plan assets...................................................................... -- -- --
Amortization of transition obligation...................................................... 2.0 2.0 2.0
Net amortization and deferral.............................................................. (.2) -- --
--- --- ---
Net health care and life insurance costs................................................... $ 5.3 $ 5.5 $ 6.0
--- --- ---
--- --- ---
</TABLE>
The following actuarial assumptions were used in calculating the plan's
year-end funded status:
<TABLE>
<CAPTION>
1995 1994 1993
---------- ------------ ----------
<S> <C> <C> <C>
Discount rate............................................................... 7.0% 7.75% 7.75%
Health care cost trend rate................................................. 10%-6% 12.5%-6% 14%-6%
</TABLE>
The rate of change in health care cost has an effect on the projected
benefit obligation. Increasing the rate by 1% each year would have increased the
present value of the accumulated projected benefit obligation by $2.4 million
and the aggregate of the service and interest cost components by $.3 million in
1995.
Pursuant to regulatory orders or precedents, certain regulated divisions of
the company have deferred as a regulatory asset the incremental costs associated
with SFAS No. 106. At December 31, 1995, the amount deferred was $8.5 million.
53
<PAGE>
NOTE 14: COMMITMENTS AND CONTINGENCIES
COMMITMENTS. The company has various commitments for the years 1996 through
2000 relating primarily to power and gas supply commitments, fixed price sales
obligations and lease and rental commitments. A table of the company's estimated
capital expenditures and more significant estimated commitments follows.
<TABLE>
<CAPTION>
1996 1997 1998 1999 2000
--------- --------- --------- --------- ---------
DOLLARS IN MILLIONS, EXCEPT PER UNIT
<S> <C> <C> <C> <C> <C>
Capital expenditures.......................................... $ 271.9 $ 254.3 $ 186.8 $ 166.8 $ 158.3
Future minimum lease payments................................. 21.4 19.7 20.1 18.8 17.2
Purchased power obligations................................... 44.1 44.3 41.5 37.6 33.3
Coal contracts................................................ 43.1 43.3 45.0 46.8 34.3
Price ranges................................................ $12.92 to $28.84 per ton
Fixed price sales obligations (BCF)........................... 17.6 17.6 17.6 17.6 17.0
Price ranges................................................ $1.71 to $4.06 per MCF
Fixed price purchase obligations (BCF)........................ 9.2 9.1 7.3 7.3 7.3
Price ranges................................................ $2.70 to $3.20 per MCF
</TABLE>
Future minimum lease payments primarily relate to the JEC interest, peaking
turbines, coal cars, and office space. Rent expense for the years 1995, 1994 and
1993 was (in millions) $25.9, $26.4 and $25.7, respectively.
Purchased power obligations for 1996 through 2000 are estimated to provide
916; 921; 896; 856; and 628 MW, respectively.
FINANCIAL GUARANTEES AND CAPITAL COMMITMENTS. At December 31, 1995, UtilCo
Group had unconditional capital commitments to fund partnership capital in 1996
aggregating $11.6 million.
UtiliCorp U.K. Limited (a subsidiary of UtiliCorp U.K., Inc., which is a
75%-owned subsidiary of the company) is a 25% equity partner in Midlands Gas
Limited (MGL), a gas marketing joint venture with Midlands Electricity Plc (a
United Kingdom electric utility). On behalf of MGL, Midlands Electricity Plc
provided three financial performance guarantees to producers, each supported by
financial guarantees by the company for its 25% share of the contracts.
UtiliCorp U.K. Limited is also a 25% equity partner in Caledonian Gas
Limited (CGL), a gas marketing company, with Scottish Power, a United Kingdom
electric utility. As part of the agreement with Scottish Power, UtiliCorp U.K.
Limited is required to provide funds to CGL proportional to its ownership
interest, up to 2.5 million British pounds (approximately $3.9 million). No
capital calls have been made pursuant to this agreement.
Both of these joint ventures are anticipated to require additional funding
due to commitments to purchase gas under long-term contracts at prices which are
currently above market. The company is in discussion with its partners in these
two joint ventures regarding these matters. Although the company has not paid
any amounts to date, the company accrued a reserve of $11.0 million in December
1995. Based on current views of the market and the plans of the joint ventures,
the company believes that the resolution of these matters will not materially
effect the financial position or results of operations of the company.
The company or its subsidiaries have other financial guarantees related to
business activities in the United Kingdom, but management believes it is not
probable that such guarantees will be called.
ENVIRONMENTAL. The company is subject to various environmental laws,
including regulations governing air and water quality and the storage and
disposal of hazardous or toxic wastes. The company assesses, on an ongoing
basis, measures to ensure compliance with laws and regulations related to
hazardous materials and hazardous waste compliance and remediation activities.
54
<PAGE>
The company owns or previously operated 29 former manufactured gas plants
(MGPs) which may, or may not, require some form of environmental remediation.
The company has contacted appropriate federal and state agencies and is in the
process of determining what, if any, specific cleanup activities may be needed
at these sites.
As of December 31, 1995, the company has spent approximately $7.0 million
for investigating and remediating its MGP sites. The company currently estimates
that it will spend a minimum of approximately $6.2 million over the next several
years on the company's identified MGP sites. These amounts could change
materially based upon further investigations, the actions of environmental
agencies and the financial viability of other responsible parties. Additionally,
the ultimate liability may be significantly affected if the company is held
responsible for parties not financially able to contribute to these costs. Based
on prior experience, available facts and existing law, the company has recorded
a liability of $6.2 million representing its estimate of the amount of
environmental costs currently expected to be incurred.
The company has received favorable rate orders for recovery of its
environmental cleanup costs in certain jurisdictions. In other jurisdictions,
favorable regulatory precedent exists for the recovery of these costs. The
company is also pursuing recovery from insurance carriers and other potentially
responsible parties.
It is management's opinion that the ultimate resolution of these
environmental matters will not have a material adverse impact upon the financial
position or results of operations of the company.
OTHER. The company is subject to various legal proceedings and claims which
arise in the ordinary course of business operations. In the opinion of
management, the amount of liability, if any, with respect to these actions would
not materially affect the consolidated financial position of the company or its
results of operations.
NOTE 15: FAIR VALUE OF CERTAIN FINANCIAL INSTRUMENTS
Cash and cash equivalents and short-term debt are carried at cost which
approximates fair value. The fair value of long-term debt and redeemable
preference stock is estimated based on quoted market prices for the same or
similar issues or on the current rates offered for instruments of the same
remaining maturities.
Because a substantial portion of the company's operations are regulated, the
company believes that any gains or losses related to the retirement of debt or
redemption of preference stock would not have a material effect on the company's
financial position or results of operations.
<TABLE>
<CAPTION>
CARRYING AMOUNT FAIR VALUE
---------------------------------- ----------------------------------
1995 1994 1993 1995 1994 1993
---------- ---------- ---------- ---------- ---------- ----------
DOLLARS IN MILLIONS
<S> <C> <C> <C> <C> <C> <C>
Long-term debt, including current
maturities............................ $ 1,370.5 $ 1,115.7 $ 1,011.5 $ 1,473.6 $ 1,094.4 $ 1,127.9
Redeemable preference stock............ -- -- 58.5 -- -- 88.7
Note receivable........................ 21.4 22.9 24.3 21.4 22.9 24.3
Interest rate swap..................... -- -- -- (.6) -- --
Investment in convertible subordinated
notes................................. 129.7 -- -- 129.7 -- --
Investment in floating rate
subordinated debt..................... 92.7 -- -- 92.7 -- --
</TABLE>
The company enters into forwards, futures and other contracts related to its
commodity businesses. At December 31, 1995 and 1994, the company had natural gas
financial instruments with a contractual volume of 1,327 and 310 BCF,
respectively, expiring in 2008. As of December 31, 1995 and 1994 the future cash
flow requirements, net of margin deposits, related to these financial
instruments was $44.2 and $9.9 million, respectively. Financial instruments are
used to manage fluctuations in
55
<PAGE>
price on the portfolio of natural gas transactions. The estimated fair value and
cash flow requirements for these financial instruments are based on the market
prices in effect at the financial statement date and do not necessarily reflect
the company's entire trading portfolio.
NOTE 16: SEGMENT INFORMATION
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------
1995 1994 1993
---------- ------------ ----------
DOLLARS IN MILLIONS
<S> <C> <C> <C>
Sales:
Electric................................................................. $ 577.7 $ 557.0 $ 546.9
Gas...................................................................... 616.8 618.6 686.1
Energy related businesses................................................ 1,171.0 935.8 1,292.0
Other.................................................................... 433.0 286.7 221.1
---------- ------------ ----------
Total Sales.............................................................. $ 2,798.5 $ 2,398.1 $ 2,746.1
---------- ------------ ----------
---------- ------------ ----------
Depreciation, Depletion and Amortization:
Electric................................................................. $ 53.7 $ 49.9 $ 45.9
Gas...................................................................... 34.3 30.1 28.6
Energy related businesses................................................ 49.6 59.6 60.8
Other.................................................................... 7.8 5.9 5.5
---------- ------------ ----------
Total Depreciation, Depletion and Amortization........................... $ 145.4 $ 145.5 $ 140.8
---------- ------------ ----------
---------- ------------ ----------
Income (Loss) From Operations:
Electric................................................................. $ 127.4 $ 125.3 $ 119.4
Gas...................................................................... 68.3 61.8 65.7
Energy related businesses................................................ 68.4 43.4 (32.9)
Other.................................................................... (39.0) (2.5) (8.2)
---------- ------------ ----------
Total Income From Operations............................................. $ 225.1 $ 228.0 $ 144.0
---------- ------------ ----------
---------- ------------ ----------
Identifiable Assets:
Electric................................................................. $ 1,200.2 $ 1,164.6 $ 1,162.0
Gas...................................................................... 900.0 819.9 716.9
Energy related businesses................................................ 873.1 717.1 604.2
Other.................................................................... 912.6 409.5 367.4
---------- ------------ ----------
Total Assets............................................................. $ 3,885.9 $ 3,111.1 $ 2,850.5
---------- ------------ ----------
---------- ------------ ----------
Capital Expenditures:
Electric................................................................. $ 69.5 $ 81.3 $ 87.4
Gas...................................................................... 39.9 50.7 53.1
Energy related businesses................................................ 144.0 113.6 94.5
---------- ------------ ----------
Total Capital Expenditures............................................... $ 253.4 $ 245.6 $ 235.0
---------- ------------ ----------
---------- ------------ ----------
</TABLE>
56
<PAGE>
NOTE 17: SUPPLEMENTARY INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES
The table below presents the results of operations from oil and gas
producing activities. Substantially all related assets were sold in the third
quarter of 1995, as discussed in Note 4. Accordingly, all disclosures on oil and
gas activities required by Statement of Financial Accounting Standards No. 69
have been eliminated.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1995 1994 1993
--------- --------- ---------
DOLLARS IN MILLIONS
<S> <C> <C> <C>
Oil and gas sales............................................................ $ 57.5 $ 73.3 $ 78.2
--------- --------- ---------
Expenses:
Production costs........................................................... 15.9 17.5 18.9
Depreciation, depletion and amortization................................... 29.4 41.1 39.6
--------- --------- ---------
Total Expenses............................................................... 45.3 58.6 58.5
--------- --------- ---------
Results before income taxes.................................................. 12.2 14.7 19.7
Income taxes................................................................. 4.3 5.1 6.9
--------- --------- ---------
Results of Operations........................................................ $ 7.9 $ 9.6 $ 12.8
--------- --------- ---------
--------- --------- ---------
</TABLE>
NOTE 18: QUARTERLY FINANCIAL DATA (UNAUDITED)
Due to the timing of acquisitions, the effect of weather on sales, and other
factors characteristic of utility operations and energy related businesses,
financial results for interim periods are not necessarily indicative of trends
for any 12-month period.
<TABLE>
<CAPTION>
1995 QUARTERS (A) 1994 QUARTERS
------------------------------------------ ------------------------------------------
FIRST SECOND THIRD FOURTH FIRST SECOND THIRD FOURTH
--------- --------- --------- --------- --------- --------- --------- ---------
IN MILLIONS EXCEPT PER SHARE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales.................................. $ 726.3 $ 600.8 $ 607.5 $ 863.9 $ 773.5 $ 516.3 $ 491.5 $ 616.8
Income from operations................. 81.5 34.9 81.8 26.9 82.4 31.5 43.3 70.8
Net income............................. 32.2 7.2 32.9 7.5 39.0 7.4 14.5 33.6
--------------------------------------------------------------------------------------
Earnings per common share:
Primary (b).......................... $ .71 $ .15 $ .72 $ .15 $ .88 $ .15 $ .31 $ .76
Fully diluted (c).................... .70 .15 .71 .15 .85 .15 .31 .74
--------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- ---------
Cash dividend per common share......... $ .43 $ .43 $ .43 $ .43 $ .42 $ .42 $ .43 $ .43
Market price per common share:
High................................. $ 29.50 $ 29.00 $ 28.50 $ 29.63 $ 31.63 $ 31.38 $ 29.75 $ 27.75
Low.................................. 26.25 27.25 26.63 27.50 29.00 28.00 26.25 25.38
</TABLE>
- ------------------------------
(a) Restated for accounting change. See Note 1.
(b) The sum of the quarterly primary earnings per share amounts differs from
that reflected in the Consolidated Statements of Income due to the weighting
of common shares outstanding during each of the respective periods.
(c) The sum of the quarterly fully diluted earnings per share amounts differs
from that reflected in the Consolidated Statements of Income because the
company's convertible securities were anti-dilutive in certain quarterly
calculations.
57
<PAGE>
REPORT OF MANAGEMENT
The management of UtiliCorp United Inc. is responsible for the information
that appears in this annual report, including its accuracy. The accompanying
Consolidated Financial Statements were prepared in accordance with generally
accepted accounting principles. In addition to selecting appropriate accounting
principles, management is responsible for the manner of presentation and for the
reliability of the information. In fulfilling this responsibility, it is
necessary for management to make estimates based on currently available
information and judgments of current conditions and circumstances.
Through well-developed systems of internal control, management seeks to
assure the integrity and objectivity of the consolidated financial information
contained herein. These systems of internal control are designed to provide
reasonable assurance that the assets of the company are safeguarded and that the
transactions are executed to management's authorizations, and are recorded in
accordance with the appropriate accounting principles.
The Board of Directors participates in the financial information reporting
process through its Audit Committee, which selects the independent accountants
and reviews, along with management, the company's financial reporting and
internal accounting controls, policies, and practices.
Richard C. Green, Jr.
Chairman of the Board and
Chief Executive Officer
58
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF UTILICORP UNITED INC.:
We have audited the accompanying consolidated balance sheets and statements
of preferred and preference stock of UtiliCorp United Inc. and subsidiaries at
December 31, 1995, 1994 and 1993 and the related consolidated statements of
income, common shareowners' equity, and cash flows for the three years then
ended. These financial statements are the responsibility of the company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also included
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of UtiliCorp
United Inc. and subsidiaries at December 31, 1995, 1994 and 1993, and the
consolidated results of their operations and their cash flows for the years then
ended in conformity with generally accepted accounting principles.
As explained in Note 3 to the consolidated financial statements, effective
January 1, 1995, the company changed its method of accounting for price risk
management activities. As explained in Note 7 to the consolidated financial
statements, in 1995 the company changed its method of assessing the impairment
of long-lived assets.
ARTHUR ANDERSEN LLP
Kansas City, Missouri
February 6, 1996
59
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART 3
ITEMS 10, 11, 12 AND 13. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY,
EXECUTIVE COMPENSATION, SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT, AND CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information regarding these items appears in the company's joint proxy
statement and prospectus for its annual meeting of shareholders to be held May
15, 1996 and is hereby incorporated by reference in this Annual Report on Form
10-K, pursuant to General Instruction G(3) of Form 10-K. For information with
respect to the executive officers of the company, see "Executive Officers"
following Item 1 in Part 1.
60
<PAGE>
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(A) THE FOLLOWING DOCUMENTS ARE FILED AS PART OF THIS REPORT.
(1) FINANCIAL STATEMENTS:
<TABLE>
<CAPTION>
PAGE NO.
-----------
<S> <C>
Consolidated Statements of Income for the three years ended December 31, 1995................. 34
Consolidated Balance Sheets at December 31, 1995, 1994, and 1993.............................. 35
Consolidated Statements of Preferred and Preference Stock at December 31, 1995, 1994 and
1993......................................................................................... 36
Consolidated Statements of Common Shareowners' Equity for the three years ended December 31,
1995......................................................................................... 36
Consolidated Statements of Cash Flows for the three years ended December 31, 1995............. 37
Notes to Consolidated Financial Statements.................................................... 38-57
Report of Arthur Andersen LLP................................................................. 59
</TABLE>
(2) FINANCIAL STATEMENT SCHEDULE
<TABLE>
<S> <C>
Report of Independent Accountant on Financial Statement Schedule II 62
Valuation and Qualifying Accounts for the years 1995, 1994 and 1993 63
</TABLE>
All other schedules are omitted because they are not applicable or the
required information is shown in the financial statements or notes thereto.
(3) LIST OF EXHIBITS *
The following exhibits relate to a management contract or compensatory plan or
arrangement:
<TABLE>
<S> <C>
10(a)(2) UtiliCorp United Inc. Deferred Income Plan.
10(a)(3) UtiliCorp United Inc. Amended and Restated 1986 Stock Incentive Plan.
10(a)(4) UtiliCorp United Inc. Annual and Long-Term Incentive Plan.
10(a)(5) UtiliCorp United Inc. 1990 Non-Employee Director Stock Plan.
10(a)(6) Supplemental Executive Retirement Agreement dated October 13, 1988,
between the company and Dale J. Wolf.
10(a)(7) Severance Compensation Agreement.
10(a)(8) Executive Severance Payment Agreement.
10(a)(9) Temporary Contract Employee Agreement.
10(a)(10) Split Dollar Agreement.
10(a)(11) Supplemental Retirement Agreement.
10(a)(13) UtiliCorp United Inc. Life Insurance Program for Officers.
</TABLE>
- ------------------------
* Incorporated by reference to the Index to Exhibits.
(b) Reports on Form 8-K
A current report on Form 8-K dated October 25, 1995, with respect to
Item 5.
A current report on Form 8-K/A dated November 14, 1995, with respect to
Items 2 and 7.
61
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE
We have audited in accordance with generally accepted auditing standards,
the consolidated financial statements for 1995, 1994 and 1993 described on page
59 of UtiliCorp United Inc.'s Annual Report on Form 10-K, and have issued our
report thereon dated February 6, 1996. Our audits were made for the purpose of
forming an opinion on those statements taken as a whole. The Financial
Statements Schedule listed in Item 14(a)2 is presented for the purposes of
complying with the Securities and Exchange Commission's rules and is not part of
the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Kansas City, Missouri
February 6, 1996
62
<PAGE>
UTILICORP UNITED INC.
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
FOR THE THREE YEARS ENDED DECEMBER 31, 1995
(IN MILLIONS)
Allowance for doubtful accounts:
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- -------------- -------------- -------------- -------------- -------------- --------------
DEDUCTIONS
FROM RESERVES
BEGINNING ADDITIONS FOR PURPOSES
BALANCE AT PURCHASE OF A CHARGED TO FOR WHICH ENDING BALANCE
DESCRIPTION DECEMBER 31 BUSINESS EXPENSE CREATED AT DECEMBER 31
- -------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts:
1995.......... $1.8 -- 2.4 2.7 $1.5
1994.......... $4.2 -- 4.6 7.0 $1.8
1993.......... $2.6 .3 5.4 4.1 $4.2
Price Risk Management--credit and service reserves:
1995.......... $-- -- 70.6(1) -- $70.6
1994.......... $-- -- -- -- $ --
1993.......... $-- -- -- -- $ --
</TABLE>
- ------------------------
(1) Amount established in connection with change in accounting principle to the
mark-to-market method of accounting for domestic natural gas trading
activities in 1995.
63
<PAGE>
UTILICORP UNITED INC.
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- ---------------- ----------------------------------------------------------------------------------------------------
<C> <S>
*2(a) Asset Purchase Agreement between Power Partnership PTY LTD and United Energy Limited. (Exhibit 2.1
to the Company's Current Report on Form 8-K dated September 13, 1995.)
*2(b) Asset Sale Agreement between United Energy Limited and Power Partnership PTY LTD. (Exhibit 2.2 to
the Company's Current Report on Form 8-K dated September 13, 1995.)
*2(c) Share Sales Agreement Between the State of Victoria, Power Partnership PTY LTD. and the
Convenantors. (Exhibit 2.3 to the Company's Current Report on Form 8-K dated September 13, 1995.)
*3(a)(1) Certificate of Incorporation of the Company. (Exhibit 3(a)(1) to the Company's Annual Report on Form
10-K for the year ended December 31, 1991.)
*3(a)(2) Certificate of Amendment to Certificate of Incorporation of the Company. (Exhibit 4(a)(1) to
Registration Statement No. 33-16990 filed September 3, 1987.)
*3(a)(3) Certificate of Designation of the Preference Stock (Cumulative), $2.05 Series. (Exhibit 3(a)(4) to
the Company's Annual Report on Form 10-K for the year ended December 31, 1991.)
*3(a)(4) By-laws of the Company as amended. (Exhibit 3 to the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1993.)
*4(a)(1) Certificate of Incorporation of the Company. (Exhibit 4(a)(1) to the Company's Annual Report on Form
10-K for the year ended December 31, 1991.)
*4(a)(2) Certificate of Amendment to Certificate of Incorporation of the Company. (Exhibit 4(a)(1) to
Registration Statement No. 33-16990 filed September 3, 1987.)
*4(a)(3) Certificate of Designation of the Preference Stock (Cumulative), $2.05 Series. (Exhibit 4(a)(4) to
the Company's Annual Report on Form 10-K for the year ended December 31, 1991.)
*4(a)(4) By-laws of the Company as amended. (Exhibit 3 to the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1993.)
*4(b)(1) Indenture, dated as of November 1, 1990, between the Company and The First National Bank of Chicago,
Trustee. (Exhibit 4(a) to the Company's Current Report on Form 8-K, dated November 30, 1990.)
*4(b)(2) First Supplemental Indenture, dated as of November 27, 1990. (Exhibit 4(b) to the Company's Current
Report on Form 8-K, dated November 30, 1990.)
*4(b)(3) Second Supplemental Indenture, dated as of November 15, 1991. (Exhibit 4(a) to UtiliCorp United
Inc.'s Current Report on Form 8-K dated December 19, 1991.)
*4(b)(4) Third Supplemental Indenture, dated as of January 15, 1992. (Exhibit 4(c)(4) to the Company's Annual
Report on Form 10-K for the year ended December 31, 1991.)
*4(b)(5) Fourth Supplemental Indenture, dated as of February 24, 1993. (Exhibit 4(c)(5) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1992.)
*4(b)(6) Fifth Supplemental Indenture, dated as of April 1, 1993. (Exhibit 4(c)(6) to the Company's Annual
Report on Form 10-K for the year ended December 31, 1993.)
*4(b)(7) Sixth Supplemental Indenture, dated as of November 1, 1994. (Exhibit 4(d)(7) to the Company's
Registration Statement on Form S-3 No. 33-57167, filed January 4, 1995.
</TABLE>
64
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- ---------------- ----------------------------------------------------------------------------------------------------
*4(c) Twentieth Supplemental Indenture, dated as of May 26, 1989, Supplement to Indenture of Mortgage and
Deed of Trust, dated July 1, 1951. (Exhibit 4(d) to Registration Statement No. 33-45382, filed
January 30, 1992.)
<C> <S>
Long-Term debt instruments of the Company in amounts not exceeding 10 percent of the total assets of
the Company and its subsidiaries on a consolidated basis will be furnished to the Commission upon
request.
4(d)(1) Indenture, dated as of June 1, 1995, Junior Subordinated Debentures.
4(d)(2) First Supplemental Indenture, dated as of June 1, 1995, Supplement to Indenture dated June 1, 1995.
*10(a)(1) Agreement for the Construction and Ownership of Jeffrey Energy Center, dated as of January 13, 1975,
among Missouri Public Service Company, The Kansas Power & Light Company, Kansas Gas and Electric
Company and Central Telephone & Utilities Corporation. (Exhibit 5(e)(1) to Registration Statement
No. 2-54964, filed November 7, 1975.)
*10(a)(2) UtiliCorp United Inc. Deferred Income Plan. (Exhibit 10(a)(2) to the Company's Annual Report on Form
10-K for the year ended December 31, 1991.)
10(a)(3) UtiliCorp United Inc. Amended and Restated 1986 Stock Incentive Plan
*10(a)(4) UtiliCorp United Inc. Annual and Long-Term Incentive Plan. (Exhibit 10(a)(4) to the Company's Annual
Report on Form 10-K for the year ended December 31, 1994)
*10(a)(5) UtiliCorp United Inc. 1990 Non-Employee Director Stock Plan. (Exhibit 10(a)(5) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1991.)
10(a)(6) Supplemental Executive Retirement Agreement dated October 13, 1988, between the Company and Dale J.
Wolf.
10(a)(7) Form of Severance Compensation Agreement between UtiliCorp United Inc., and certain Executives of
the Company.
*10(a)(8) Executive Severance Payment Agreement (Exhibit 10 to the Company's Quarterly Report on Form 10-Q
filed for the quarter ended September 30, 1993.)
*10(a)(9) Temporary Contract Employee Agreement. (Exhibit 10(a)(10) to the Company's Annual Report on Form
10-K for the year ended December 31, 1993.)
*10(a)(10) Split Dollar Agreement dated as of June 12, 1985, between the Company and James G. Miller. (Exhibit
10(a)(10) to the Company's Annual Report on Form 10-K for the year ended December 31, 1994.)
*10(a)(11) Supplemental Retirement Agreement dated as of January 27, 1983, between the Company and James G.
Miller. (Exhibit 10(a)(11) to the Company's Annual Report on Form 10-K for the year ended December
31, 1994.)
*10(a)(12) Lease Agreement dated as of August 15, 1991, between Wilmington Trust Company, as Lessor, and the
Company, as Lessee. (Exhibit 10(a)(13) to the Company's Annual Report on Form 10-K for the year
ended December 31, 1991.)
10(a)(13) UtiliCorp United Inc. Life Insurance Program for Officers.
11 Statement regarding Computation of Per Share Earnings.
21 Subsidiaries of the Company.
23 Consent of Arthur Andersen LLP.
27 Financial Data Schedule.
</TABLE>
- ------------------------
* Exhibits marked with an asterisk are incorporated by reference as indicated
pursuant to Rule 12(b)-23.
65
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
UTILICORP UNITED INC.
By: /s/Richard
C. Green, Jr.
Richard Chairman of the Board of
C. Directors, Chief Executive Officer
Green, (Principal Executive Officer)
Jr.
Date: February 21, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<C> <S>
Chairman of the Board of Directors, Chief
By: /s/Richard C. Green, Jr. Executive Officer (Principal Executive
Richard C. Green, Jr. Officer)
Date: February 21, 1996
By: /s/Robert K. Green
Robert K. Green President and Director
Date: February 21, 1996
Vice President Finance, Treasurer and
By: /s/Dale J. Wolf Corporate Secretary
Dale J. Wolf (Principal Financial Officer)
Date: February 21, 1996
By: /s/James S. Brook
James S. Brook Vice President (Principal Accounting Officer)
Date: February 21, 1996
By: /s/John R. Baker
John R. Baker Director
Date: February 21, 1996
</TABLE>
66
<PAGE>
<TABLE>
<C> <S>
By: /s/Avis G. Tucker
Avis G. Tucker Director
Date: February 21, 1996
By: /s/Robert F. Jackson
Robert F. Jackson Director
Date: February 21, 1996
By: /s/L. Patton Kline
L. Patton Kline Director
Date: February 21, 1996
By: /s/Herman Cain
Herman Cain Director
Date: February 21, 1996
By: /s/Irvine O. Hockaday, Jr.
Irvine O. Hockaday, Jr. Director
Date: February 21, 1996
By: /s/Dr. Stanley O. Ikenberry
Dr. Stanley O. Ikenberry Director
Date: February 21, 1996
</TABLE>
67
<PAGE>
=======================================================
UTILICORP UNITED INC.
and
UMB BANK, N.A.,
Trustee
___________________
INDENTURE
Dated as of June 1, 1995
___________________
Junior Subordinated Debentures
=======================================================
<PAGE>
Reconciliation and tie between Trust Indenture Act of 1939, as
amended and Indenture, dated as of June 1, 1995
Trust Indenture
Act Section Indenture Section
SECTION 310(a) ................................ 609
(b) ................................ 608, 610
(c) ................................ Not Applicable
SECTION 311(a) ................................ 613(a)
(b) ................................ 613(b)
(c) ................................ Not Applicable
SECTION 312(a) ................................ 701, 702(a)
(b) ................................ 702(b)
(c) ................................ 702(c)
SECTION 313(a) ................................ 703(a)
(b) ................................ 703(b)
(c) ................................ 703(a), 703(b)
(d) ................................ 703(c)
SECTION 314(a) ................................ 704
(b) ................................ Not Applicable
(c) ................................ 102
(d) ................................ Not Applicable
(e) ................................ 102
SECTION 315(a) ................................ 601(a)
(b) ................................ 602, 703(a)(8)
(c) ................................ 601(b)
(d) ................................ 601(c)
(e) ................................ 514
SECTION 316(a) ................................ 502, 512, 513
(b) ................................ 508
(c) ................................ 104(e)
SECTION 317(a) ................................ 503, 504
(b) ................................ 1003
SECTION 318(a) ................................ 107
____________
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Indenture.
1
<PAGE>
TABLE OF CONTENTS*
__________
Page
RECITALS OF THE COMPANY.................................................... 1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION......................... 1
SECTION 101. Definitions............................................ 1
Act............................................................ 2
Affiliate...................................................... 2
Authenticating Agent........................................... 2
Board of Directors............................................. 2
Board Resolution............................................... 2
Business Day................................................... 2
Commission..................................................... 2
Company........................................................ 2
Company Request or Company Order............................... 3
Corporate Trust Office......................................... 3
corporation.................................................... 3
Debenture...................................................... 3
Debenture Register and Debenture Registrar..................... 3
Defaulted Interest............................................. 3
Depository..................................................... 3
Event of Default............................................... 3
Global Debenture............................................... 3
Guarantee...................................................... 3
Holder......................................................... 4
Indenture...................................................... 4
Interest....................................................... 4
Interest Payment Date.......................................... 4
Limited Partnership Agreement.................................. 4
Maturity....................................................... 4
Officers' Certificate.......................................... 4
Opinion of Counsel............................................. 4
Original Issue Discount Debenture.............................. 4
Outstanding.................................................... 4
Paying Agent................................................... 5
Person......................................................... 5
Place of Payment............................................... 5
Predecessor Debenture.......................................... 6
Preferred Securities........................................... 6
Redemption Date................................................ 6
Redemption Price............................................... 6
_________________
*NOTE: This table of contents shall not, for any purpose, be
deemed to be a part of the Identure.
i
<PAGE>
Regular Record Date............................................ 6
Responsible Officer............................................ 6
Senior Indebtedness............................................ 6
Special Record Date............................................ 7
Stated Maturity................................................ 7
Subsidiary..................................................... 7
Trustee........................................................ 7
Trust Indenture Act............................................ 7
U.S. Government Obligations.................................... 7
UtiliCorp Capital.............................................. 8
Vice President................................................. 8
SECTION 102. Compliance Certificates and Opinions................... 8
SECTION 103. Form of Documents Delivered to Trustee................. 9
SECTION 104. Acts of Holders........................................ 9
SECTION 105. Notices, Etc., to Trustee and Company.................. 11
SECTION 106. Notice to Holders; Waiver.............................. 11
SECTION 107. Conflict with Trust Indenture Act...................... 12
SECTION 108. Effect of Headings and Table of Contents............... 12
SECTION 109. Successors and Assigns................................. 12
SECTION 110. Separability Clause.................................... 12
SECTION 111. Benefits of Indenture.................................. 12
SECTION 112. Governing Law.......................................... 12
SECTION 113. Legal Holidays......................................... 13
ARTICLE TWO
DEBENTURE FORMS............................ 13
SECTION 201. Forms Generally........................................ 13
ARTICLE THREE
THE DEBENTURES............................. 14
SECTION 301. Amount Unlimited; Issuable in Series................... 14
SECTION 302. Denominations.......................................... 16
SECTION 303. Execution, Authentication, Delivery and
Dating................................................ 16
SECTION 304. Temporary Debentures................................... 18
SECTION 305. Registration, Registration of Transfer and Exchange ... 19
SECTION 306. Mutilated, Destroyed, Lost and Stolen Debentures....... 21
SECTION 307. Payment of Interest; Interest Rights Preserved......... 21
SECTION 308. Persons Deemed Owners.................................. 23
SECTION 309. Cancellation........................................... 23
SECTION 310. Computation of Interest................................ 24
ii
<PAGE>
ARTICLE FOUR
SATISFACTION AND DISCHARGE....................... 24
SECTION 401. Satisfaction and Discharge of Indenture................ 24
SECTION 402. Application of Trust Money............................. 25
SECTION 403. Satisfaction, Discharge and Defeasance of
Debentures of any Series.............................. 26
ARTICLE FIVE
REMEDIES................................ 28
SECTION 501. Events of Default...................................... 28
SECTION 502. Acceleration of Maturity; Rescission and Annulment..... 30
SECTION 503. Collection of Indebtedness and Suits for Enforcement by
Trustee............................................... 32
SECTION 504. Trustee May File Proofs of Claim....................... 32
SECTION 505. Trustee May Enforce Claims Without Possession of
Debentures............................................ 33
SECTION 506. Application of Money Collected......................... 34
SECTION 507. Limitation on Suits.................................... 35
SECTION 508. Unconditional Right of Holders to Receive
Principal,Premium and Interest........................ 35
SECTION 509. Restoration of Rights and Remedies..................... 36
SECTION 510. Rights and Remedies Cumulative......................... 36
SECTION 511. Delay or Omission Not Waiver........................... 36
SECTION 512. Control by Holders..................................... 36
SECTION 513. Waiver of Past Defaults................................ 37
SECTION 514. Undertaking for Costs.................................. 37
SECTION 515. Waiver of Stay or Extension Laws....................... 38
ARTICLE SIX
THE TRUSTEE.............................. 38
SECTION 601. Certain Duties and Responsibilities.................... 38
SECTION 602. Notice of Defaults..................................... 39
SECTION 603. Certain Rights of Trustee.............................. 40
SECTION 604. Not Responsible for Recitals or Issuance of Debentures. 41
SECTION 605. May Hold Debentures.................................... 41
SECTION 606. Money Held in Trust.................................... 41
SECTION 607. Compensation and Reimbursement......................... 41
SECTION 608. Disqualification; Conflicting Interests................ 42
SECTION 609. Corporate Trustee Required; Eligibility................ 49
SECTION 610. Resignation and Removal; Appointment of Successor...... 49
SECTION 611. Acceptance of Appointment by Successor................. 51
SECTION 612. Merger, Conversion, Consolidation or Succession to
Business.............................................. 52
SECTION 613. Preferential Collection of Claims Against Company..... 52
iii
<PAGE>
SECTION 614. Authenticating Agents.................................. 57
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY........... 59
SECTION 701. Company to Furnish Trustee Names and Addresses of
Holders............................................... 59
SECTION 702. Preservation of Information; Communications to
Holders............................................... 59
SECTION 703. Reports by Trustee..................................... 60
SECTION 704. Reports by Company..................................... 62
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, SALE OR LEASE............ 63
SECTION 801. Company May Consolidate, Etc., Only on
Certain Terms......................................... 63
SECTION 802. Successor Corporation to be Substituted................ 64
ARTICLE NINE
SUPPLEMENTAL INDENTURES........................ 64
SECTION 901. Supplemental Indentures without Consent of Holders..... 64
SECTION 902. Supplemental Indentures with Consent of Holders........ 66
SECTION 903. Execution of Supplemental Indentures................... 67
SECTION 904. Effect of Supplemental Indentures...................... 67
SECTION 905. Conformity with Trust Indenture Act.................... 68
SECTION 906. Reference in Debentures to Supplemental Indentures..... 68
ARTICLE TEN
COVENANTS............................... 68
SECTION 1001. Payment of Principal, Premium and Interest............ 68
SECTION 1002. Maintenance of Office or Agency....................... 68
SECTION 1003. Money for Debentures Payments to Be Held in Trust..... 69
SECTION 1004. Corporate Existence................................... 70
SECTION 1005. Maintenance of Properties............................. 71
SECTION 1006. Payment of Taxes and Other Claims..................... 71
SECTION 1007. Statement by Officers as to Default................... 71
SECTION 1008. Defeasance of Certain Obligations..................... 72
SECTION 1009. Distributions and Payment of Dividends................ 73
SECTION 1010. Required Capital Contributions............... 73
iv
<PAGE>
ARTICLE ELEVEN
REDEMPTION OF DEBENTURES........................ 74
SECTION 1101. Applicability of Article.............................. 74
SECTION 1102. Election to Redeem; Notice to Trustee................. 74
SECTION 1103. Selection by Trustee of Debentures to Be Redeemed.... 74
SECTION 1104. Notice of Redemption.................................. 75
SECTION 1105. Deposit of Redemption Price........................... 76
SECTION 1106. Debentures Payable on Redemption Date................. 76
SECTION 1107. Debentures Redeemed in Part........................... 76
ARTICLE TWELVE
SINKING FUNDS............................. 77
SECTION 1201. Applicability of Article.............................. 77
SECTION 1202. Satisfaction of Sinking Fund Payments with Debentures. 77
SECTION 1203. Redemption of Debentures for Sinking Fund............. 78
ARTICLE THIRTEEN
SUBORDINATION OF DEBENTURES...................... 79
SECTION 1301. Agreement of Subordination............................ 79
SECTION 1302. Limitations on Payments to Holders.................... 79
SECTION 1303. Payments in Bankruptcy................................ 80
SECTION 1304. Subrogation of Debentures............................. 81
SECTION 1305. Authorization by Holders.............................. 82
SECTION 1306. Notice to Trustee..................................... 82
SECTION 1307. Trustee's Relation to Senior Indebtedness............. 83
SECTION 1308. Acts of Holders of Senior Indebtedness................ 84
v
<PAGE>
TESTIMONIUM
SIGNATURES AND SEALS
ACKNOWLEDGMENTS
vi
<PAGE>
INDENTURE, dated as of June 1, 1995, between UTILICORP UNITED INC.,
a corporation duly organized and existing under the laws of the State of
Delaware (herein called the "Company"), having its principal office at 911 Main,
Kansas City, Missouri 64105, and UMB Bank, N.A., a national banking association
duly organized and existing under the laws of the United States, as Trustee
(herein called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of certain of its junior
subordinated debentures (herein called the "Debentures"), to be issued in one or
more series as in this Indenture provided.
All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH: For and in consideration
of the premises and the purchase of the Debentures by the Holders thereof, it is
mutually covenanted and agreed, for the equal and proportionate benefit of all
Holders of the Debentures or of series thereof, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. Definitions.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned
to them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles as applied in the United States and, except as otherwise herein
expressly provided, the term "generally accepted accounting principles"
with respect to any computation required or
<PAGE>
permitted hereunder shall mean such accounting principles as are generally
accepted at the date of such computation; and
(4) the words "herein", "hereof" and "hereunder" and other words
of similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision.
Certain terms, used principally in Article Six, are defined in that
Article.
"Act", when used with respect to any Holder, has the meaning
specified in Section 104.
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Authenticating Agent" means any Person authorized to authenticate
and deliver Debentures on behalf of the Trustee pursuant to Section 614.
"Board of Directors" means either the board of directors of the
Company or any duly authorized committee of that Board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day", means any day other than a day on which banking
institutions in the Borough of Manhattan, the City and State of New York, as the
case may be (depending on whether an office or agency of the Company is being
maintained in either such borough, city or state with respect to the
Debentures), are authorized or obligated by law to remain closed.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Securities Exchange Act of 1934, or,
if at any time after the execution of this instrument such Commission is not
existing and performing the duties now assigned to it under the Trust Indenture
Act, then the body performing such duties at such time.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor
2
<PAGE>
corporation shall have become such pursuant to the applicable provisions of this
Indenture, and thereafter "Company" shall mean such successor corporation.
"Company Request" or "Company Order" means a written request or
order signed in the name of the Company by its Chairman of the Board, its
President or a Vice President, or, if authorized by a power of attorney executed
by any of such officers, by such other person as may be authorized in such power
of attorney, and delivered to the Trustee.
"Corporate Trust Office" means the principal office of the Trustee
at which at any particular time its corporate trust business shall be
administered, which at the date hereof is The UMB Bank, N.A., 928 Grand Avenue,
Kansas City, Missouri 64106.
"corporation" includes corporations, associations, companies and
business trusts.
"Debenture" or "Debentures" has the meaning stated in the first
recital of this Indenture and more particularly means any Debenture
authenticated and delivered under this Indenture.
"Debenture Register" and "Debenture Registrar" have the respective
meanings specified in Section 305.
"Defaulted Interest" has the meaning specified in Section 307.
"Depository" means, with respect to the Debentures of any series
issuable or issued in whole or in part in the form of one or more Global
Debentures, the Person designated as Depository by the Company pursuant to
Section 301, which must be a clearing agency registered under the Securities
Exchange Act of 1934, as amended, and, if so provided pursuant to Section 301
with respect to the Debentures of a series, any successor to such Person. If at
any time there is more than one such Person, "Depository" shall mean, with
respect to any series of Debentures, the qualifying entity which has been
appointed with respect to the Debentures of that series.
"Event of Default" has the meaning specified in Section 501.
"Global Debenture" means a Debenture evidencing all or part of a
series of Debentures, issued to the Depository for such series or its nominee
and registered in the name of such Depository or nominee.
"Guarantee" means any guarantee that the Company may enter into with
UtiliCorp Capital or other Persons that operate directly or indirectly for the
benefit of holders of limited partner interests issued by UtiliCorp Capital.
3
<PAGE>
"Holder" means a Person in whose name a Debenture is registered in
the Debenture Register.
"Indenture" means this instrument as originally executed or as it
may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof
and shall include the terms of particular series of Debentures established as
contemplated by Section 301.
"Interest", when used with respect to an Original Issue Discount
Debenture which by its terms bears interest only at Maturity, means interest
payable at Maturity.
"Interest Payment Date", when used with respect to any Debenture,
means the Stated Maturity of an installment of interest on such Debenture.
"Limited Partnership Agreement" means the Amended and Restated
Agreement of Limited Partnership of UtiliCorp Capital L.P. dated as of June 12,
1995.
"Maturity", when used with respect to any Debenture, means the date
on which the principal of such Debenture or an installment of principal becomes
due and payable as therein or herein provided, whether at the Stated Maturity or
by declaration of acceleration, call for redemption or otherwise.
"Officers' Certificate" means a certificate signed by the President
or a Vice President, and by the Treasurer, an Assistant Treasurer, the Secretary
or an Assistant Secretary, of the Company, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be
an employee of or regular counsel for the Company, or may be other counsel
satisfactory to the Trustee.
"Original Issue Discount Debenture" means any Debenture which
provides for an amount less than the principal amount thereof to be due and
payable upon a declaration of acceleration of the Maturity thereof pursuant to
Section 502.
"Outstanding", when used with respect to Debentures, means, as of
the date of determination, all Debentures theretofore authenticated and
delivered under this Indenture, except:
(i) Debentures theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Debentures, or portions thereof, for whose payment or
redemption fully available funds in the necessary amount has been
irrevocably deposited with the Trustee or any Paying Agent (other
than the
4
<PAGE>
Company) in trust or set aside and segregated in trust by the
Company (if the Company shall act as its own Paying Agent) for the
Holders of such Debentures; PROVIDED that, if such Debentures are
to be redeemed, notice of such redemption has been duly given
pursuant to this Indenture or provision therefor satisfactory to the
Trustee has been made; and
(iii) Debentures which have been paid pursuant to Section 306
or in exchange for or in lieu of which other Debentures have been
authenticated and delivered pursuant to this Indenture, other than
any such Debentures in respect of which there shall have been
presented to the Trustee proof satisfactory to it that such
Debentures are held by a bona fide purchaser in whose hands such
Debentures are valid obligations of the Company;
PROVIDED, HOWEVER, that in determining whether the Holders of the requisite
principal amount of the Outstanding Debentures have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, (a) the principal
amount of an Original Issue Discount Debenture that shall be deemed to be
Outstanding for such purposes shall be the amount of the principal thereof that
would be due and payable as of the date of such determination upon a declaration
of acceleration of the Maturity thereof pursuant to Section 502, and (b)
Debentures owned by the Company or any other obligor under the Debentures or any
Affiliate of the Company or of such other obligor (unless the Company or such
other obligor or an Affiliate of the Company or such other obligor owns all
Outstanding Debentures) shall be disregarded and deemed not to be Outstanding,
except that in determining whether the Trustee shall be protected in relying
upon any such request, demand, authorization, direction, notice, consent or
waiver, only Debentures which the Trustee knows to be so owned shall be so
disregarded. Debentures so owned as described in (b) above which have been
pledged in good faith may be regarded as Outstanding if the pledgee establishes
to the satisfaction of the Trustee the pledgee's right so to act with respect to
such Debentures and that the pledgee is not the Company or any other obligor
upon the Debentures or any Affiliate of the Company or of such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of (and premium, if any) or interest on any Debentures on behalf of
the Company.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Place of Payment", when used with respect to the Debentures of any
series, means the place or places where the
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principal of (and premium, if any) and interest, if any, on the Debentures of
that series are payable as specified in or as contemplated by Section 301.
"Predecessor Debenture" of any particular Debenture means every
previous Debenture evidencing all or a portion of the same debt as that
evidenced by such particular Debenture; and, for the purposes of this
definition, any Debenture authenticated and delivered under Section 306 in
exchange for or in lieu of a mutilated, destroyed, lost or stolen Debenture
shall be deemed to evidence the same debt as the mutilated, destroyed, lost or
stolen Debenture.
"Preferred Securities" means the preferred securities issued from
time to time by UtiliCorp Capital representing limited partner interests in
UtiliCorp Capital.
"Redemption Date", when used with respect to any Debenture to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price", when used with respect to any Debenture to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture, exclusive of accrued and unpaid interest.
"Regular Record Date" for the interest payable on any Interest
Payment Date on the Debentures of any series means the date specified for that
purpose as contemplated by Section 301.
"Responsible Officer", when used with respect to the Trustee, means
any vice president, the secretary, any assistant secretary, the treasurer, any
assistant treasurer, the cashier, any assistant cashier, any trust officer or
assistant trust officer, the controller or any assistant controller or any other
officer of the Trustee, which in each case is assigned to its Corporate Trust
Department, and also means, with respect to a particular corporate trust matter,
any other officer or class of officer authorized by resolution of the board of
the Trustee, or any other officer to whom such matter is referred because of his
knowledge of and familiarity with the particular subject.
"Senior Indebtedness" of the Company means the principal of,
premium, if any, interest on and any other payment due pursuant to any of the
following, whether outstanding at the date of execution of this Indenture or
thereafter incurred, created or assumed: (a) all indebtedness of the Company
evidenced by notes, debentures, bonds, or other securities sold by the Company
for money, (b) all indebtedness of others of the kinds described in the
preceding clause (a) assumed by or guaranteed in any manner by the Company or in
effect guaranteed by the Company through an agreement to purchase, contingent or
otherwise, and (c) all renewals, extensions or refundings of indebtedness of the
kinds described in any of the preceding clauses (a) and (b);
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unless, in the case of any particular indebtedness, renewal, extension or
refunding, the instrument creating or evidencing the same or the assumption or
guarantee of the same expressly provides that such indebtedness, renewal,
extension or refunding is not superior in right of payment to or is pari passu
with the Debentures.
"Special Record Date" for the payment of any Defaulted Interest
means a date fixed by the Trustee pursuant to Section 307.
"Stated Maturity", when used with respect to any Debenture or any
installment of principal thereof or interest thereon, means the date specified
in such Debenture as the date on which the principal of such Debenture or such
installment of principal or interest is due and payable.
"Subsidiary" means a corporation more than 50% of the outstanding
voting stock of which is owned, directly or indirectly, by the Company or by one
or more other Subsidiaries, or by the Company and one or more other
Subsidiaries. For the purposes of this definition, "voting stock" means stock
which ordinarily has voting power for the election of directors, whether at all
times or only so long as no senior class of stock has such voting power by
reason of any contingency.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean or include each Person who is then a Trustee hereunder, and
if at any time there is more than one such Person, "Trustee" as used with
respect to the Debentures of any series shall mean the Trustee with respect to
Debentures of that series.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in
force at the date as of which this instrument was executed, except as provided
in Section 905.
"U.S. Government Obligations" means direct obligations of the United
States for the payment of which its full faith and credit is pledged, or
obligations of a Person controlled or supervised by and acting as an agency or
instrumentality of the United States and the payment of which is unconditionally
guaranteed by the United States, and shall also include a depository receipt
issued by a bank or trust company as custodian with respect to any such U.S.
Government Obligation or a specific payment of interest on or principal of any
such U.S. Government Obligation held by such custodian for the account of a
holder of a depository receipt; provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable to the
holder of such depository receipt from any amount received by the custodian in
respect of the U.S. Government Obligation or the specific payment of interest on
or
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principal of the U.S. Government Obligation evidenced by such depository
receipt.
"UtiliCorp Capital" means UtiliCorp Capital L.P., a Delaware limited
partnership.
"Vice President", when used with respect to the Company or the
Trustee, means any vice president or assistant vice president, whether or not
designated by a number or a word or words added before or after the title "vice
president" or "assistant vice president".
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS.
Except as otherwise expressly provided by this Indenture, upon any
application or request by the Company to the Trustee to take any action under
any provision of this Indenture, the Company shall furnish to the Trustee an
Officers' Certificate stating that all conditions precedent, if any, provided
for in this Indenture relating to the proposed action have been complied with
and an Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except that in the case
of any such application or request as to which the furnishing of such documents
is specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion need be
furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than the Certificate
provided pursuant to Section 704(4)) shall include:
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with;
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with; and
(5) a statement that no Event of Default exists under this
Indenture.
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SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.
In any case where several matters are required to be certified by,
or covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. ACTS OF HOLDERS.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in Person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company.
Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the Holders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture and (subject to Section 601) conclusive in favor of
the Trustee and the Company, if made in the manner provided in this Section.
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Without limiting the generality of the foregoing, unless otherwise
established in or pursuant to a Board Resolution or set forth or determined in
an Officers' Certificate, or established in one or more indentures supplemental
hereto, pursuant to Section 301, a Holder, including a Depository that is a
Holder of a Global Debenture, may make, give or take, by a proxy, or proxies,
duly appointed in writing, any request, demand, authorization, direction,
notice, consent, waiver or other action provided in this Indenture to be made,
given or taken by Holders, and a Depository that is a Holder of a Global
Debenture may provide its proxy or proxies to the beneficial owners of interests
in any such Global Debenture through such Depository's standing instructions and
customary practices.
(b) The fact and date of the execution by any Person of any such
instrument, writing or proxy may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument, writing or proxy acknowledged to him the execution thereof.
Where such execution is by a signer acting in a capacity other than his
individual capacity, such certificate or affidavit shall also constitute
sufficient proof of his authority. The fact and date of the execution of any
such instrument, writing or proxy, or the authority of the Person executing the
same, may also be proved in any other manner which the Trustee deems sufficient.
(c) The ownership of Debentures shall be proved by the Debenture
Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Debenture shall bind every future
Holder of the same Debenture and the Holder of every Debenture issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such action is made upon
such Debenture.
(e) If the Company shall solicit from the Holders of any series
any request, demand, authorization, direction, notice, consent, waiver or other
action, the Company may, at its option, as evidenced by an Officers'
Certificate, fix in advance a record date for such series for the determination
of Holders entitled to give such request, demand, authorization, direction,
notice, consent, waiver or other action, but the Company shall have no
obligation to do so. If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other action may be given
before or after the record date, but only the Holders of record at the close of
business on the record date shall be deemed to be Holders for the purposes of
determining whether Holders of the requisite proportion of outstanding
Debentures of that series have authorized or agreed
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or consented to such request, demand, authorization, direction, notice, consent,
waiver or other action, and for that purpose the outstanding Debentures of that
series shall be computed as of the record date; provided that no such
authorization, agreement or consent by such Holders on the record date shall be
deemed effective unless it shall become effective pursuant to the provisions of
this Indenture not later than six months after the record date.
SECTION 105. NOTICES, ETC., TO TRUSTEE AND COMPANY.
Any request, demand, authorization, direction, notice, consent,
waiver or Act of Holders or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing
to or with the Trustee upon receipt at its Corporate Trust Office, or
(2) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided)
if in writing and mailed, first-class mail postage prepaid, to the Company
addressed to it at the address of its principal office specified in the
first paragraph of this instrument or at any other address previously
furnished in writing to the Trustee by the Company.
SECTION 106. NOTICE TO HOLDERS; WAIVER.
Where this Indenture provides for notice to Holders of any event,
such notice shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to each Holder
affected by such event, at his address as it appears in the Debenture Register,
not later than the latest date, and not earlier than the earliest date,
prescribed for the giving of such notice. In any case where notice to Holders
is given by mail, neither the failure to mail such notice, nor any defect in any
notice so mailed, to any particular Holder shall affect the sufficiency of such
notice with respect to other Holders. Where this Indenture provides for notice
in any manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such waiver shall be
the equivalent of such notice. Waivers of notice by Holders shall be filed with
the Trustee, but such filing shall not be a condition precedent to the validity
of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable
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to give such notice by mail, then such notification as shall be made with the
approval of the Trustee shall constitute a sufficient notification for every
purpose hereunder.
SECTION 107. CONFLICT WITH TRUST INDENTURE ACT.
If and to the extent that any provision of this Indenture limits,
qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
SECTION 108. EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and the Table of Contents
are for convenience only and shall not affect the construction hereof.
SECTION 109. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the Company shall
bind its successors and assigns, whether so expressed or not.
SECTION 110. SEPARABILITY CLAUSE.
In case any provision in this Indenture or in the Debentures shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
SECTION 111. BENEFITS OF INDENTURE.
Nothing in this Indenture or in the Debentures, express or implied,
shall give to any Person, other than the parties hereto and their successors
hereunder and the Holders, any benefit or any legal or equitable right, remedy
or claim under this Indenture.
SECTION 112. GOVERNING LAW.
This Indenture and the Debentures shall be governed by and construed
in accordance with the laws of the State of New York.
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SECTION 113. LEGAL HOLIDAYS.
In any case where any Interest Payment Date, Redemption Date or
Stated Maturity of any Debenture shall not be a Business Day, then
(notwithstanding any other provision of this Indenture or of the Debentures)
payment of interest, if any, or principal (and premium, if any) need not be made
on such date, but may be made on the next succeeding Business Day at such Place
of Payment with the same force and effect as if made on the Interest Payment
Date or Redemption Date, or at the Stated Maturity, provided that no interest
shall accrue for the period from and after such Interest Payment Date,
Redemption Date or Stated Maturity, as the case may be except that, if such
Business Day is in the next succeeding calendar year, such payment shall be made
on the immediately preceding Business Day with the same force and effect as if
made on such date.
ARTICLE TWO
DEBENTURE FORMS
SECTION 201. FORMS GENERALLY.
The Debentures of each series shall be in substantially the form as
shall be established by or pursuant to a Board Resolution or in one or more
indentures supplemental hereto, in each case with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
this Indenture, and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the officer or officers executing such
Debentures, as evidenced by the officer's or officers' execution of the
Debentures. If the form of Debentures of any series is established by action
taken pursuant to a Board Resolution, a copy of an appropriate record of such
action shall be certified by the Secretary or Assistant Secretary of the
Company, or any other authorized officer of the Company, and delivered to the
Trustee at or prior to the delivery of the Company Order contemplated by Section
303 for the authentication and delivery of such Debentures.
The Trustee's certificates of authentication shall be in
substantially the form set forth in this Article.
The definitive Debentures shall be printed, lithographed or engraved
on steel engraved borders or may be produced in any other manner, all as
determined by the officer or officers executing such Debentures, as evidenced by
the officer's or officers' execution of such Debentures.
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ARTICLE THREE
THE DEBENTURES
SECTION 301. AMOUNT UNLIMITED; ISSUABLE IN SERIES.
The aggregate principal amount of Debentures which may be
authenticated and delivered under this Indenture is unlimited.
The Debentures may be issued in one or more series up to the
aggregate principal amount of Debentures of that series from time to time
authorized by or pursuant to a Board Resolution or pursuant to one or more
indentures supplemental hereto. There shall be established in or pursuant to a
Board Resolution, and, subject to Section 303, set forth or determined in the
manner provided, in an Officers' Certificate, or established in one or more
indentures supplemental hereto, prior to the issuance of Debentures of any
series:
(1) the title of the Debentures of the series (which shall
distinguish the Debentures of the series from all other Debentures);
(2) any limit upon the aggregate principal amount of the
Debentures of the series which may be authenticated and delivered under
this Indenture (except for Debentures authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other
Debentures of the series pursuant to Sections 304, 305, 306, 906, or 1107
and except for any Debentures which, pursuant to Section 303, are deemed
never to have been authenticated and delivered hereunder);
(3) the Person to whom any interest on a Debenture of the series
shall be payable, if other than the Person in whose name the Debenture (or
one or more Predecessor Debentures) is registered at the close of business
on the regular Record Date for such interest;
(4) the date or dates on which the principal of the Debentures of
the series is payable;
(5) the rate or rates at which the Debentures of the series shall
bear interest, if any, the date or dates from which such interest shall
accrue, the Interest Payment Dates on which such interest shall be payable
and the Regular Record Date for the interest payable on any Interest
Payment Date;
(6) the right, if any, to extend the interest payment periods and
the duration of such extension;
(7) the place or places, if any, in addition to or in the place of
the office of the Trustee in New York, New
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York, where the principal of and premium, if any, and interest, if any, on
Debentures of the series shall be payable and where such Debentures may be
registered or transferred;
(8) the period or periods within which, the price or prices at
which and the terms and conditions upon which Debentures of the series may
be redeemed, in whole or in part, at the option of the Company;
(9) the obligation, if any, of the Company to redeem or purchase
Debentures of the series pursuant to any sinking fund or analogous
provisions or at the option of a Holder thereof, and the period or periods
within which, the price or prices at which and the terms and conditions
upon which Debentures of the series shall be redeemed or purchased, in
whole or in part, pursuant to such obligation;
(10) the form of the Debentures of the series including the form of
certificate of authentication for such series;
(11) if other than denominations of $25 or any integral multiple
thereof, the denominations in which Debentures of the series shall be
issuable;
(12) if other than the principal amount thereof, the portion of the
principal amount of Debentures of the series which shall be payable upon
declaration of acceleration of the Maturity thereof pursuant to Section
502;
(13) if other than such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public or
private debts, the coin or currency, including composite currencies such
as the European Currency Unit, in which payment of the principal of (and
premium, if any) and interest, if any, on the Debentures of the series
shall be payable;
(14) if the principal of and premium, if any, or interest, if any,
on the Debentures of the series are to be payable, at the election of the
Company or a Holder thereof, in a coin or currency other than that in
which the Debentures are stated to be payable, the period or periods
within which, and the terms and conditions upon which, such election may
be made;
(15) if the amount of payments of principal of and premium, if any,
or interest, if any, on the Debentures of the series may be determined
with reference to an index based on a coin or currency other than that in
which the Debentures are stated to be payable, the manner in which such
amounts shall be determined;
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(16) any provisions permitted by this Indenture relating to Events
of Default or covenants of the Company with respect to such series of
Debentures; and
(17) if the Debentures of the series shall be issued in whole or in
part in the form of one or more Global Debentures, (i) whether beneficial
owners of interests in any such Global Debenture may exchange such
interests for Debentures of such series of like tenor and of authorized
form and denomination and the circumstances under which any such changes
may occur, if other than in the manner provided in Section 305 and (ii)
the Depository for such Global Debenture or Debentures; and
(18) any and all other terms of the series (which terms shall not
be inconsistent with the provisions of this Indenture).
All Debentures of any one series shall be substantially identical
except as to denomination and except as may otherwise be provided in or pursuant
to the Board Resolution referred to above and (subject to Section 303) set forth
in the Officers' Certificate referred to above or in any such indenture
supplemental hereto.
If any of the terms of the series, including the form of Debenture
of such series, are established by action taken pursuant to a Board Resolution,
a copy of an appropriate record of such action shall be certified by the
Secretary or an Assistant Secretary or other authorized officer of the Company,
and delivered to the Trustee at or prior to the delivery of the Company Order
contemplated by Section 303 for the authentication and delivery of such series
of Debentures.
SECTION 302. DENOMINATIONS.
The Debentures of each series shall be issuable in registered form
without coupons, except as otherwise expressly provided in a supplemental
indenture hereto, in such denominations as shall be specified as contemplated by
Section 301. In the absence of any such provisions with respect to the
Debentures of any series, the Debentures of such series shall be issuable in
denominations of $25 or in integral multiples thereof.
SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
The Debentures shall be executed on behalf of the Company by its
Chairman of the Board, its President or one of its Vice Presidents, under its
corporate seal reproduced thereon, and which need not be attested. The
Debentures of any series shall be executed by such additional officer, if any,
as shall be
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specified pursuant to Section 301. The signature of any of these officers on
the Debentures may be manual or facsimile.
Debentures bearing the manual or facsimile signature of any
individual who was at any time the proper officer of the Company shall bind the
Company, notwithstanding that such individual has ceased to hold such office
prior to the authentication and delivery of such Debentures or did not hold such
office at the date of authentication of such Debentures.
At any time and from time to time after the execution and delivery
of this Indenture, the Company may deliver Debentures of any series executed by
the Company to the Trustee for authentication, together with a Company Order for
the authentication and delivery of such Debentures, and the Trustee in
accordance with the Company Order shall authenticate and deliver such
Debentures. If the form or terms of the Debentures of the series have been
established in or pursuant to one or more Board Resolutions as permitted by
Sections 201 and 301, in authenticating such Debentures, and accepting the
additional responsibilities under this Indenture in relation to such Debentures,
the Trustee shall be entitled to receive, and (subject to Section 601) shall be
fully protected in relying upon, an Opinion of Counsel stating,
(a) if the form of such Debentures has been established by or
pursuant to Board Resolution as permitted by Section 201, that such form
has been established in conformity with the provisions of this Indenture;
(b) if the terms of such Debentures have been established by or
pursuant to Board Resolution as permitted by Section 301, that such terms
have been established in conformity with the provisions of this Indenture;
and
(c) that such Debentures, when authenticated and delivered by the
Trustee and issued by the Company in the manner and subject to any
conditions specified in such Opinion of Counsel, will constitute valid and
legally binding obligations of the Company, enforceable in accordance with
their terms, subject to bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or affecting the enforcement of
creditors' rights and to general equity principles.
If such form or terms have been so established, the Trustee shall not be
required to authenticate such Debentures if the issue of such Debentures
pursuant to this Indenture will affect the Trustee's own rights, duties,
protections or immunities under the Debentures and this Indenture or otherwise
in a manner which is not reasonably acceptable to the Trustee.
Notwithstanding the provisions of Section 301 and of the preceding
paragraph, if all Debentures of a series are not to
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be originally issued at one time, it shall not be necessary to deliver the
Officers' Certificate otherwise required pursuant to Section 301 or the Company
Order and Opinion of Counsel otherwise required pursuant to such preceding
paragraph at or prior to the time of authentication of each Debenture of such
series if such documents are delivered at or prior to the time of authentication
upon original issuance of the first Debenture of such series to be issued.
Each Debenture shall be dated the date of its authentication.
No Debenture shall be entitled to any benefit under this Indenture
or be valid or obligatory for any purpose unless there appears on such Debenture
a certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
Debenture shall be conclusive evidence, and the only evidence, that such
Debenture has been duly authenticated and delivered hereunder and is entitled to
the benefits of this Indenture. Notwithstanding the foregoing, if any Debenture
shall have been authenticated and delivered hereunder but never issued and sold
by the Company, and the Company shall deliver such Debenture to the Trustee for
cancellation as provided in Section 309 together with a written statement (which
need not comply with Section 102 and need not be accompanied by an Opinion of
Counsel) stating that such Debenture has never been issued and sold by the
Company, for all purposes of this Indenture such Debenture shall be deemed never
to have been authenticated and delivered hereunder and shall never be entitled
to the benefits of this Indenture.
SECTION 304. TEMPORARY DEBENTURES.
Pending the preparation of definitive Debentures of any series, the
Company may execute, and upon Company Order the Trustee shall authenticate and
deliver, temporary Debentures which are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Debentures in lieu of which they
are issued and with such appropriate insertions, omissions, substitutions and
other variations as the officer or officers executing such Debentures may
determine, as evidenced by their execution of such Debentures.
If temporary Debentures of any series are issued, the Company will
cause definitive Debentures of that series to be prepared without unreasonable
delay. After the preparation of definitive Debentures of such series, the
temporary Debentures of such series shall be exchangeable for definitive
Debentures of such series upon surrender of the temporary Debentures of such
series at the office or agency of the Company in a Place of Payment for that
series, without charge to the Holder. Upon
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surrender for cancellation of any one or more temporary Debentures of any series
the Company shall execute and the Trustee shall authenticate and deliver in
exchange therefor a like principal amount of definitive Debentures of the same
series and of like tenor of authorized denominations. Until so exchanged the
temporary Debentures of any series shall in all respects be entitled to the same
benefits under this Indenture as definitive Debentures of such series.
SECTION 305. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.
The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register (the register maintained in such office and in any other
office or agency of the Company in a Place of Payment being herein sometimes
collectively referred to as the "Debenture Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Debentures and of transfers of Debentures. The Trustee is
hereby appointed "Debenture Registrar" for the purpose of registering Debentures
and transfers of Debentures as herein provided.
Upon surrender for registration of transfer of any Debenture of any
series at the office or agency in a Place of Payment for that series, the
Company shall execute, and the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Debentures of
the same series, of any authorized denominations and of a like aggregate
principal amount and tenor.
At the option of the Holder, any Debenture or Debentures of any
series, other than a Global Debenture may be exchanged for other Debentures of
the same series, of any authorized denominations and of a like aggregate
principal amount and tenor, upon surrender of the Debentures to be exchanged at
such office or agency. Whenever any Debentures are so surrendered for exchange,
the Company shall execute, and the Trustee shall authenticate and deliver, the
Debentures which the Holder making the exchange is entitled to receive.
All Debentures issued upon any registration of transfer or exchange
of Debentures shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Debentures
surrendered upon such registration of transfer or exchange.
Notwithstanding the foregoing, except as otherwise specified as
contemplated by Section 301, a Global Debenture of any series shall be
exchangeable pursuant to this Section for Debentures registered in the names of
Persons other than the Depository with respect to such series or its nominee
only as provided in this paragraph. A Global Debenture shall be
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exchangeable pursuant to this Section if (x) such Depository notifies the
Company that it is unwilling or unable to continue as Depository for such series
or at any time ceases to be a clearing agency registered as such under the
Securities Exchange Act of 1934 and a successor Depository for such series is
not appointed by the Company within 90 days after the Company receives such
notice or becomes aware of such condition, as the case may be, (y) the Company
executes and delivers to the Trustee an Officers' Certificate providing that
such Global Debenture shall be so exchangeable or (z) there shall have occurred
and be continuing an Event of Default with respect to the Debentures of such
series. Debentures so issued in exchange for a Global Debenture shall be of the
same series, of like tenor, in authorized denominations and in the aggregate
having the same principal amount as the Global Debenture to be exchanged, and
shall be registered in such names as the Depository for such Global Debenture
shall direct.
Notwithstanding any other provision of this Section, a Global
Debenture may not be transferred except as a whole by the Depository to a
nominee of such Depository or by a nominee of such Depository to such Depository
or another nominee of such Depository or by such Depository or any nominee to a
successor of such Depository or a nominee of such successor.
Every Debenture presented or surrendered for registration of
transfer or for exchange shall (if so required by the Company or the Trustee) be
duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Debenture Registrar duly executed, by the
Holder thereof or his attorney duly authorized in writing.
No service charge shall be made to the Holder for any registration
of transfer or exchange of Debentures, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any registration of transfer or exchange of Debentures, other
than exchanges pursuant to Sections 304, 906 or 1107 not involving any transfer,
including any penalty for failure to provide requested tax information.
The Company shall not be required (i) to issue, register the
transfer of or exchange Debentures of any series during a period beginning at
the opening of business 15 days before the day of the mailing of a notice of
redemption of Debentures of that series selected for redemption under Section
1103 and ending at the close of business on the day of such mailing, or (ii) to
register the transfer of or exchange any Debenture so selected for redemption in
whole or in part, except the unredeemed portion of any Debenture being redeemed
in part.
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SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN DEBENTURES.
If any mutilated Debenture is surrendered to the Trustee, the
Company shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Debenture of the same series and of like tenor and principal
amount and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any
Debenture and (ii) such security or indemnity as may be required by them to save
each of them and any agent of either of them harmless, then, in the absence of
notice to the Company or the Trustee that such Debenture has been acquired by a
bona fide purchaser, the Company shall execute and upon its request the Trustee
shall authenticate and deliver, in lieu of any such destroyed, lost or stolen
Debenture, a new Debenture of the same series and of like tenor and principal
amount and bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Debenture has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Debenture, pay such Debenture.
Upon the issuance of any new Debenture under this Section, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Debenture of any series issued pursuant to this Section in
lieu of any destroyed, lost or stolen Debenture shall constitute an original
additional contractual obligation of the Company, whether or not the destroyed,
lost or stolen Debenture shall be at any time enforceable by anyone, and shall
be entitled to all the benefits of this Indenture equally and proportionately
with any and all other Debentures of that series duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Debentures.
SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
Interest on any Debenture which is payable, and is punctually paid
or duly provided for, on any Interest Payment Date shall be paid to the Person
in whose name that Debenture (or one or more Predecessor Debentures) is
registered at the close of business on the Regular Record Date for such
interest.
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Any interest on any Debenture of any series which is payable, but is
not punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the Holder
on the relevant Regular Record Date by virtue of having been such Holder, and
such Defaulted Interest may be paid by the Company, at its election in each
case, as provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Debentures of such series (or their
respective Predecessor Debentures) are registered at the close of business
on a Special Record Date for the payment of such Defaulted Interest, which
shall be fixed in the following manner. The Company shall notify the
Trustee in writing of the amount of Defaulted Interest proposed to be paid
on each Debenture of such series and the date of the proposed payment, and
at the same time the Company shall deposit with the Trustee an amount of
money equal to the aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory to the Trustee
for such deposit prior to the date of the proposed payment, such money
when deposited to be held in trust for the benefit of the Persons entitled
to such Defaulted Interest as in this Clause provided. Thereupon the
Trustee shall fix a Special Record Date for the payment of such Defaulted
Interest which shall be not more than 15 days and not less than 10 days
prior to the date of the proposed payment and not less than 10 days after
the receipt by the Trustee of the notice of the proposed payment. The
Trustee shall promptly notify the Company of such Special Record Date and,
in the name and at the expense of the Company, shall cause notice of the
proposed payment of such Defaulted Interest and the Special Record Date
therefor to be mailed, first-class mail postage prepaid, to each Holder of
Debentures of such series at his address as it appears in the Debenture
Register, not less than 10 days prior to such Special Record Date. Notice
of the proposed payment of such Defaulted Interest and the Special Record
Date therefor having been so mailed, such Defaulted Interest shall be paid
to the Persons in whose names the Debentures of such series (or their
respective Predecessor Debentures) are registered at the close of business
on such Special Record Date and shall no longer be payable pursuant to the
following Clause (2).
(2) The Company may make payment of any Defaulted Interest on the
Debentures of any series in any other lawful manner not inconsistent with
the requirements of any securities exchange on which such Debentures may
be listed, and upon such notice as may be required by such exchange, if,
after notice given by the Company to the Trustee of the proposed payment
pursuant to this Clause, such manner of payment shall be deemed
practicable by the Trustee.
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Subject to the foregoing provisions of this Section, each Debenture
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Debenture shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Debenture.
SECTION 308. PERSONS DEEMED OWNERS.
Prior to due presentment of a Debenture for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name such Debenture is registered in the Debenture
Register maintained by the Trustee as the owner of such Debenture for the
purpose of receiving payment of principal of (and premium, if any) and (subject
to Section 307) interest, if any, on such Debenture and for all other purposes
whatsoever, whether or not such Debenture be overdue, and neither the Company,
the Trustee nor any agent of the Company or the Trustee shall be affected by
notice to the contrary. All such payments so made to any such Person, or upon
such Person's order, shall be valid, and, to the extent of the sums so paid,
effectual to satisfy and discharge the liability for moneys payable upon any
such Debenture.
No holder of any beneficial interest in any Global Debenture held on
its behalf by a Depository shall have any rights under this Indenture with
respect to such Global Debenture, and such Depository may be treated by the
Company, the Trustee, and any agent of the Corporation or the Trustee as the
owner of such Global Debenture for all purposes whatsoever. Notwithstanding the
foregoing, nothing herein shall impair, as between a Depository and such holders
of beneficial interests, the operation of customary practices governing the
exercise of the rights of the Depository as holder of any Debenture.
SECTION 309. CANCELLATION.
All Debentures surrendered for payment, redemption, registration of
transfer or exchange or for credit against any sinking fund payment shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly cancelled by it. The Company may at any time deliver to
the Trustee for cancellation any Debentures previously authenticated and
delivered hereunder which the Company may have acquired in any manner
whatsoever, and all Debentures so delivered shall be promptly cancelled by the
Trustee. No Debentures shall be authenticated in lieu of or in exchange for any
Debentures cancelled as provided in this Section, except as expressly permitted
by this Indenture. All cancelled Debentures held by the Trustee shall be
disposed of as directed by a Company Order and in accordance with Securities and
Exchange Commission or other applicable regulation pertaining to retention of
cancelled securities.
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SECTION 310. COMPUTATION OF INTEREST.
Except as otherwise specified as contemplated by Section 301 for
Debentures of any series, interest, if any, on the Debentures of each series
shall be computed on the basis of a 360-day year of twelve 30-day months.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE.
This Indenture shall upon Company Request cease to be of further
effect (except as to any surviving rights of registration of transfer or
exchange of Debentures herein expressly provided for), and the Trustee, at the
expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when
(1) either (A) all Debentures theretofore authenticated and
delivered (other than (i) Debentures which have been destroyed, lost or
stolen and which have been replaced or paid as provided in Section 306 and
(ii) Debentures for whose payment money has theretofore been deposited in
trust or segregated and held in trust by the Company and thereafter repaid
to the Company or discharged from such trust, as provided in Section 1003)
have been delivered to the Trustee for cancellation; or
(B) all such Debentures not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity
within one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the
Company, or
(iv) are deemed paid and discharged pursuant to Section 403,
as applicable,
and the Company, in the case of (i), (ii), (iii) or (iv) above, has
deposited or caused to be deposited with the Trustee as trust funds in
trust for the purpose an amount of (a) money in the currency or units of
currency in which such Debentures are payable, or (b) in the case of (ii)
or (iii) above and (except as provided in an indenture supplemental
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hereto) if no Debentures of any series Outstanding are subject to
repurchase at the option of Holders (I) U.S. Government Obligations
(denominated in the same currency or units of currency in which such
Debentures are payable) which through the payment of interest and
principal in respect thereof in accordance with their terms will provide
not later than one day before the Stated Maturity or Redemption Date, as
the case may be, money in an amount, or (II) a combination of money or
U.S. Government Obligations as provided in (I) above, in each case,
sufficient to pay and discharge the entire indebtedness on such Debentures
not theretofore delivered to the Trustee for cancellation, for principal
(and premium, if any) and interest, if any, to the date of such deposit
(in the case of Debentures which have become due and payable) or to the
Stated Maturity or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums
payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge
of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture,
the obligations of the Company to the Trustee under Section 607, the obligations
of the Trustee to any Authenticating Agent under Section 614 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of clause (1) of
this Section or if money or U.S. Government Obligations shall have been
deposited with or received by the Trustee pursuant to Section 403, the
obligations of the Trustee under Section 402 and the last paragraph of Section
1003 shall survive.
SECTION 402. APPLICATION OF TRUST MONEY.
(a) Subject to the provisions of the last paragraph of Section
1003, all money or U.S. Government Obligations deposited with the Trustee
pursuant to Section 401, 403 or 1008 and all money received by the Trustee in
respect of U.S. Government Obligations deposited with the Trustee pursuant to
Section 401, 403 or 1008, shall be held in trust and applied by it, in
accordance with the provisions of the Debentures and this Indenture, to the
payment, either directly or through any Paying Agent (including the Company
acting as its own Paying Agent), to the Persons entitled thereto, of the
principal (and premium, if any) and interest, if any, for whose payment such
money has been deposited with or received by the Trustee or to make mandatory
sinking fund payments or analogous payments as contemplated by Section 401, 403
or 1008.
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(b) The Company shall pay and shall indemnify the Trustee against
any tax, fee or other charge imposed on or assessed against U.S. Government
Obligations deposited pursuant to Section 401, 403 or 1008 or the interest and
principal received in respect of such obligations other than any payable by or
on behalf of Holders.
(c) The Trustee shall deliver or pay to the Company from time to
time upon Company Request any U.S. Government Obligations or money held by it as
provided in Section 401, 403 or 1008 which, in the opinion of a nationally
recognized firm of independent certified public accountants expressed in a
written certification thereof delivered to the Trustee, are then in excess of
the amount thereof which then would have been required to be deposited for the
purpose for which such U.S. Government Obligations or money was deposited or
received. This provision shall not authorize the sale by the Trustee of any
U.S. Government Obligations held under this Indenture.
SECTION 403. SATISFACTION, DISCHARGE AND DEFEASANCE OF
DEBENTURES OF ANY SERIES.
The Company shall be deemed to have paid and discharged the entire
indebtedness on all the Outstanding Debentures of any series on the 91st day
after the date of the deposit referred to in subparagraph (e) hereof, and the
provisions of this Indenture, as it relates to such Outstanding Debentures of
such series, shall no longer be in effect (and the Trustee, at the expense of
the Company, shall at Company Request execute proper instruments acknowledging
the same), except as to:
(a) the rights of Holders of Debentures of such series to receive,
from the trust funds described in subparagraph (e) hereof, (i) payment of
the principal of (and premium, if any) and each installment of principal
of (and premium, if any) or interest, if any, on the Outstanding
Debentures of such series on the Stated Maturity of such principal or
installment of principal or interest or to and including the Redemption
Date irrevocably designated by the Company pursuant to subparagraph (i)
hereof and (ii) the benefit of any mandatory sinking fund payments
applicable to the Debentures of such series on the day of which such
payments are due and payable in accordance with the terms of this
Indenture and the Debentures of such series;
(b) the Company's obligations with respect to such Debentures of
such series under Sections 305, 306, 1002 and 1003, if the Company shall
have irrevocably designated a Redemption Date pursuant to subparagraph (i)
hereof, Sections 1101, 1104 and 1106 as they apply to such Redemption
Date;
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(c) the Company's obligations with respect to the Trustee under
Section 607; and
(d) the rights, powers, trust and immunities of the Trustee
hereunder and the duties of the Trustee under Section 402 and, if the
Company shall have irrevocably designated a Redemption Date pursuant to
subparagraph (i) hereof, Article Eleven and the duty of the Trustee to
authenticate Debentures of such series on registration of transfer or
exchange;
PROVIDED that, the following conditions shall have been satisfied:
(e) the Company has deposited or caused to be irrevocably deposited
(except as provided in Section 402(c) and the last paragraph of Section
1003) with the Trustee as trust funds in trust, specifically pledged as
security for, and dedicated solely to, the benefit of the Holders of the
Debentures of such series, (i) money, in the currency or units of currency
in which such Debentures are payable, in an amount, or (ii) (except as
provided in a supplemental indenture with respect to such series) if
Debentures of such series are not subject to repurchase at the option of
Holders, (A) U.S. Government Obligations (denominated in the same currency
or units of currency in which such Debentures are payable) which through
the payment of interest and principal in respect thereof in accordance
with their terms will provide not later than one day before the due date
of any payment referred to in clause (x) or (y) of this subparagraph (e)
money in an amount or (B) a combination thereof, sufficient, in the
opinion of a nationally recognized firm of independent certified public
accountants expressed in a written certification thereof delivered to the
Trustee, to pay and discharge (x) the principal of (and premium, if any)
and each installment of principal (and premium, if any) and interest, if
any, on the Outstanding Debentures of such series on the Stated Maturity
of such principal or installment of principal or interest or to and
including the Redemption Date irrevocably designated by the Company
pursuant to subparagraph (i) hereof and (y) any mandatory sinking fund
payments applicable to the Debentures of such series on the day on which
such payments are due and payable in accordance with the terms of this
Indenture and of the Debentures of such series;
(f) the Company has delivered to the Trustee an Opinion of Counsel
to the effect that such provision would not cause any Outstanding
Debentures of such series then listed on any national securities exchange
to be delisted as a result thereof;
(g) no Event of Default or event which with notice or lapse of time
would become an Event of Default (including by
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reason of such deposit) with respect to the Debentures of such series
shall have occurred and be continuing on the date of such deposit or
during the period ending on the 91st day after such date;
(h) the Company has delivered to the Trustee an unqualified
opinion, in form and substance satisfactory to the Trustee, of independent
counsel selected by the Company and satisfactory to the Trustee to the
effect that (i) Holders of the Debentures will not recognize income, gain
or loss for Federal income tax purposes as a result of the deposit,
defeasance and discharge and will be subject to Federal income tax on the
same amounts and in the same manner and at the same times as would have
been the case if that deposit, defeasance and discharge had not occurred
and (ii) the defeasance trust is not, or is registered as, an investment
company under the Investment Company Act of 1940;
(i) if the Company has deposited or caused to be deposited money or
U.S. Government Obligations to pay or discharge the principal of (and
premium, if any) and interest, if any, on the Outstanding Debentures of a
series to and including a Redemption Date on which all of the Outstanding
Debentures of such series are to be redeemed, such Redemption Date shall
be irrevocably designated by a Board Resolution delivered to the Trustee
on or prior to the date of deposit of such money or U.S. Government
Obligations, and such Board Resolution shall be accompanied by an
irrevocable Company Request that the Trustee give notice of such
redemption in the name and at the expense of the Company not less than 30
nor more than 60 days prior to such Redemption Date in accordance with
Section 1104; and
(j) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge
of the Debentures have been complied with.
ARTICLE FIVE
REMEDIES
SECTION 501. EVENTS OF DEFAULT.
"Event of Default", wherever used herein with respect to Debentures
of any series, means any one of the following events (whatever the reason for
such Event of Default and whether it shall be voluntary or involuntary or be
affected by operation of law or pursuant to any judgment, decree or order of any
court
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or any order, rule or regulation of any administrative or governmental body):
(1) default in the payment of any interest upon any Debenture of
that series when it becomes due and payable, and continuance of such
default for a period of 10 days; or
(2) default in the payment of the principal of (or premium, if
any, on) any Debenture of that series at its Maturity upon redemption, by
declaration or otherwise; or
(3) default in the payment of any sinking fund installment, when
and as due by the terms of a Debenture of that series; or
(4) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture (other than a covenant or
warranty a default in whose performance or whose breach is elsewhere in
this Section specifically dealt with or which has expressly been included
in this Indenture solely for the benefit of series of Debentures other
than that series), and continuance of such default or breach for a period
of 90 days after there has been given, by registered or certified mail, to
the Company by the Trustee or to the Company and the Trustee by the
Holders of at least 25% in principal amount of the Outstanding Debentures
of that series a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a "Notice of
Default" hereunder; or
(5) the entry by a court having jurisdiction in the premises of
(A) a decree or order for relief in respect of the Company in an
involuntary case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law or (B) a
decree or order adjudging the Company a bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of the Company
under applicable United States Federal or State law, appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or of any substantial part of its
property, or ordering the winding up or liquidation of its affairs, and
the continuance of any such decree or order for relief or any such other
decree or order unstayed and in effect for a period of 60 consecutive
days; or
(6) the commencement by the Company of a voluntary case or
proceeding under any applicable Federal or State bankruptcy, insolvency or
other similar law or of any other case or proceeding to be adjudicated a
bankrupt or insolvent, or the consent by it to the entry of a decree or
order for relief in respect of the Company in an involuntary
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case or proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or to the commencement of
any bankruptcy or insolvency case or proceeding against it, or the filing
by it of a petition or answer or consent seeking reorganization or relief
under any applicable Federal or State law, or the consent by it to the
filing of such petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee, sequestrator or
similar official of the Company or of any substantial part of its
property, or the making by it of an assignment for the benefit of
creditors, or the admission by it in writing of its inability to pay its
debts generally as they become due, or the taking of corporate action by
the Company in furtherance of any such action; or
(7) so long as any series of Debentures issued in connection with
the application of the proceeds from the issuance and sale of a series of
Preferred Securities of UtiliCorp Capital remain outstanding, UtiliCorp
Capital shall have dissolved, wound up its business or otherwise
terminated its existence except in connection with the distribution of
Debentures to limited partners of UtiliCorp Capital in liquidation of
their interest in UtiliCorp Capital and in connection with certain
mergers, consolidations, amalgamations, replacements, conveyances,
transfers or leases permitted by the Limited Partnership Agreement.
SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
If an Event of Default with respect to Debentures of any series at
the time Outstanding occurs and is continuing, then in every such case the
Trustee or the Holders of not less than 25% in aggregate principal amount of the
Outstanding Debentures of that series may declare the principal amount (or, if
any of the Debentures of that series are Original Issue Discount Debentures,
such portion of the principal amount of such Debentures as may be specified in
the terms thereof) of all of the Debentures of that series to be due and payable
immediately, by a notice in writing to the Company (and to the Trustee if given
by Holders), and upon any such declaration such principal amount (or specified
amount) shall become immediately due and payable.
At any time after such a declaration of acceleration with respect to
Debentures of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in this
Article provided, the Holders of a majority in principal amount of the
Outstanding Debentures of that series, by written notice to the Company and
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the Trustee, may rescind and annul such declaration and its consequences if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue interest, if any, on all Debentures of that
series,
(B) the principal of and premium, if any, on any Debentures
of that series which have become due otherwise than by such
declaration of acceleration and interest thereon at the rate or
rates prescribed therefor in such Debentures,
(C) to the extent that payment of such interest is lawful,
interest upon any overdue interest at the rate or rates prescribed
therefor in such Debentures, and
(D) all sums paid or advanced by the Trustee hereunder and
the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel; and
(2) all Events of Default with respect to Debentures of that
series, other than the non-payment of the principal of and accrued
interest on Debentures of that series which have become due solely by such
declaration of acceleration, have been cured or waived as provided in
Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
For all purposes under this Indenture, if a portion of the principal
of any Original Issue Discount Debentures shall have been accelerated and
declared due and payable pursuant to the provisions hereof, then, from and after
such declaration, unless such declaration has been rescinded and annulled, the
principal amount of such Original Issue Discount Debentures shall be deemed, for
all purposes hereunder, to be such portion of the principal thereof as shall be
due and payable as a result of such acceleration, and payment of such portion of
the principal thereof as shall be due and payable as a result of such
acceleration, together with interest, if any, thereon and all other amounts
owing thereunder, shall constitute payment in full of such Original Issue
Discount Debentures.
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SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
TRUSTEE.
The Company covenants that if
(1) default is made in the payment of any interest on any
Debenture when such interest becomes due and payable, or in any payment
required by any sinking fund with respect to that series, and such default
continues for a period of 10 days, or
(2) default is made in the payment of the principal of or premium,
if any, on any Debenture at the Maturity, upon redemption, by declaration
or otherwise, thereof,
the Company will, upon written demand of the Trustee, pay to it, for the benefit
of the Holders of such Debentures, the whole amount then due and payable on such
Debentures for principal (and premium, if any) and interest, if any, and, to the
extent that payment of such interest shall be legally enforceable, interest on
any overdue principal (and premium, if any) and on any overdue interest, at the
rate or rates prescribed therefor in such Debentures, and, in addition thereto,
such further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon such Debentures and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon such Debentures, wherever
situated.
If any Event of Default with respect to Debentures of any series
occurs and is continuing, the Trustee may in its discretion proceed to protect
and enforce its rights and the rights of the Holders of Debentures of such
series by such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights.
SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceeding relative to the Company or any other obligor upon the
Debentures or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of
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the Debentures shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Trustee shall have made
any demand on the Company for the payment of overdue principal or interest)
shall be entitled and empowered, by intervention in such proceeding or
otherwise,
(i) to file and prove a claim for the whole amount of
principal (and premium, if any) and interest owing and unpaid in
respect of the Debentures and to file such other papers or documents
as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and
counsel) and of the Holders allowed in such judicial proceeding, and
(ii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the
same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 607.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Debentures
or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
SECTION 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF DEBENTURES.
All rights of action and claims under this Indenture or the
Debentures may be prosecuted and enforced by the Trustee without the possession
of any of the Debentures or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name as trustee of an express trust, and any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Debentures in respect of which such
judgment has been recovered.
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SECTION 506. APPLICATION OF MONEY COLLECTED.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order with respect to the Debentures of any series, at
the date or dates fixed by the Trustee and, in case of the distribution of such
money on account of principal (or premium, if any) or interest, upon
presentation of the Debentures and the notation thereon of the payment if only
partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section
607;
SECOND: In case the principal and premium, if any, of the
Debentures of such series in respect of which moneys have been collected
shall not have become and be then due and payable, to the payment of
interest, if any, on the Debentures of such series in default in the order
of the maturity of the installments of such interest, with interest (to
the extent that such interest has been collected by the Trustee and to the
extent permitted by law) upon the overdue installments of interest at the
rate prescribed therefor in such Debentures, such payments to be made
ratably to the Persons entitled thereto, without discrimination or
preference;
THIRD: In case the principal or premium, if any, of the Debentures
of such series in respect of which moneys have been collected shall have
become and shall be then due and payable, to the payment of the whole
amount then owing and unpaid upon all the Debentures of such series for
principal and premium, if any, and interest, if any, with interest upon
the overdue principal and premium, if any, and (to the extent that such
interest has been collected by the Trustee and to the extent permitted by
law) upon overdue installments of interest at the rate prescribed therefor
in the Debentures of such series; and in case such moneys shall be
insufficient to pay in full the whole amount so due and unpaid upon the
Debentures of such series, then to the payment of such principal and any
premium and interest, without preference or priority of principal over
interest, or of interest over principal or premium, or of any installment
of interest over any other installment of interest, or of any Debenture of
such series over any other Debenture of such series, ratably to the
aggregate of such principal and any premium and accrued and unpaid
interest; and
FOURTH: To the payment of the remainder, if any, to the Company or
any other Person lawfully entitled thereto.
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SECTION 507. LIMITATION ON SUITS.
No Holder of any Debenture of any series shall have any right to
institute any proceeding, judicial or otherwise, with respect to this Indenture,
or for the appointment of a receiver or trustee, or for any other remedy
hereunder, unless
(1) such Holder has previously given written notice to the Trustee
of a continuing Event of Default with respect to the Debentures of that
series;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Debentures of that series shall have made written request to
the Trustee to institute proceedings in respect of such Event of Default
in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity agreeable to the Trustee against the costs, expenses and
liabilities to be incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a
majority in principal amount of the Outstanding Debentures of that series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders, or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all such
Holders.
SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM
AND INTEREST.
Notwithstanding any other provision in this Indenture, the Holder of
any Debenture shall have the right, which is absolute and unconditional, to
receive payment of the principal of (and premium, if any) and (subject to
Section 307) interest, if any, on such Debenture on the Stated Maturity or
Maturities expressed in such Debenture (or, in the case of redemption, on the
Redemption Date) and to institute suit for the enforcement of any such payment,
and such rights shall not be impaired without the consent of such Holder.
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SECTION 509. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
SECTION 510. RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Debentures in the last paragraph
of Section 306, no right or remedy herein conferred upon or reserved to the
Trustee or to the Holders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
SECTION 511. DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder of any
Debentures to exercise any right or remedy accruing upon any Default or Event of
Default shall impair any such right or remedy or constitute a waiver of any such
Event of Default or an acquiescence therein. Every right and remedy given by
this Article or by law to the Trustee or to the Holders may be exercised from
time to time, and as often as may be deemed expedient, by the Trustee or by the
Holders, as the case may be.
SECTION 512. CONTROL BY HOLDERS.
The Holders of a majority in principal amount of the Outstanding
Debentures of any series shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee, with respect to the
Debentures of such series, PROVIDED that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture, and
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(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
SECTION 513. WAIVER OF PAST DEFAULTS.
The Holders of not less than a majority in aggregate principal
amount of the Outstanding Debentures of any series affected thereby may on
behalf of the Holders of all the Debentures of such series waive any past
default hereunder with respect to such series and its consequences, except a
default
(1) in the payment of the principal of or premium, if any, or
interest, if any, on any Debenture of such series, or
(2) in respect of a covenant or provision hereof which under
Article Nine cannot be modified or amended without the consent of the
Holder of each Outstanding Debenture of such series affected.
Upon any such waiver, such default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
SECTION 514. UNDERTAKING FOR COSTS.
All parties to this Indenture agree, and each Holder of any
Debenture by his acceptance thereof shall be deemed to have agreed, that any
court may in its discretion require, in any suit for the enforcement of any
right or remedy under this Indenture, or in any suit against the Trustee for any
action taken or omitted by it as Trustee, the filing by any party litigant in
such suit of an undertaking to pay the costs of such suit, and that such court
may in its discretion assess reasonable costs, including reasonable attorneys'
fees, against any party litigant in such suit, having due regard to the merits
and good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Holder, or group of Holders, holding in
the aggregate more than 10% in principal amount of the Outstanding Debentures of
any series, or to any suit instituted by any Holder for the enforcement of the
payment of the principal of or premium, if any, or interest, if any, on any
Debenture on or after the Stated Maturity or Maturities expressed in such
Debenture (or, in the case of redemption, on or after the Redemption Date).
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SECTION 515. WAIVER OF STAY OR EXTENSION LAWS.
The Company covenants (to the extent that it may lawfully do so)
that it will not at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE SIX
THE TRUSTEE
SECTION 601. CERTAIN DUTIES AND RESPONSIBILITIES.
(a) Except during the continuance of an Event of Default with
respect to the Debentures of any series,
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions furnished
to the Trustee and conforming to the requirements of this Indenture; but
in the case of any such certificates or opinions which by any provision
hereof are specifically required to be furnished to the Trustee, the
Trustee shall be under a duty to examine the same to determine whether or
not they conform to the requirements of this Indenture.
(b) In case an Event of Default has occurred and is continuing,
the Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
(c) No provision of this Indenture shall be construed to relieve
the Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that
(1) this Subsection shall not be construed to limit the effect of
Subsection (a) of this Section;
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(2) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of a majority in principal amount of the
Outstanding Debentures of any series, determined as provided in Section
512, relating to the time, method and place of conducting any proceeding
for any remedy available to the Trustee, or exercising any trust or power
conferred upon the Trustee, under this Indenture with respect to the
Debentures of such series; and
(4) no provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder, or in the exercise of any
of its rights or powers, if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
(d) Whether or not therein expressly so provided, every provision
of this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.
SECTION 602. NOTICE OF DEFAULTS.
Within 90 days after the occurrence of any default hereunder with
respect to the Debentures of any series, the Trustee shall transmit by mail,
first class postage prepaid, to all Holders of Debentures of such series, as
their names and addresses appear in the Debenture Register, notice of such
default hereunder known to the Trustee, unless such default shall have been
cured or waived; PROVIDED, HOWEVER, that, except in the case of a default in
the payment of the principal of (or premium, if any) or interest, if any, on any
Debenture of such series or in the payment of any sinking fund installment with
respect to Debentures of such series, the Trustee shall be protected in
withholding such notice if and so long as the board of directors, the executive
committee or a trust committee of directors or Responsible Officers of the
Trustee in good faith determine that the withholding of such notice is in the
interest of the Holders of Debentures of such series; and PROVIDED, FURTHER,
that in the case of any default of the character specified in Section 501(4)
with respect to Debentures of such series, no such notice to Holders shall be
given until at least 30 days after the occurrence thereof. For the purpose of
this Section, the term "default" means any event which is, or after notice or
lapse of
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time or both would become, an Event of Default with respect to Debentures of
such series.
SECTION 603. CERTAIN RIGHTS OF TRUSTEE.
Subject to the provisions of Section 601:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties;
(b) any request or direction of the Company mentioned herein shall
be sufficiently evidenced by a Company Request or Company Order or as otherwise
expressly provided herein and any resolution of the Board of Directors may be
sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to expend or risk its
own funds or to exercise, at the request or direction of any of the Holders, any
of the rights or powers vested in it by this Indenture pursuant to this
Indenture, unless such Holders shall have offered to the Trustee reasonable
security or indemnity satisfactory to the Trustee against the costs, expenses
and liabilities which might be incurred by it in compliance with such request or
direction;
(f) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document, but
the Trustee, in its discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit, and, if the Trustee shall
determine to make such further inquiry or investigation, it shall be entitled
upon reasonable request to
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examine the books, records and premises of the Company, personally or by agent
or attorney; and
(g) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder.
(h) the permissive right of the Trustee to do things enumerated in
this Indenture shall not be construed as a duty.
SECTION 604. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF DEBENTURES.
The recitals contained herein and in the Debentures, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and neither the Trustee nor any Authenticating Agent assumes any
responsibility for their correctness. The Trustee makes no representations as
to the validity or sufficiency of this Indenture or of the Debentures. Neither
the Trustee nor any Authenticating Agent shall be accountable for the use or
application by the Company of Debentures or the proceeds thereof.
SECTION 605. MAY HOLD DEBENTURES.
The Trustee, any Authenticating Agent, any Paying Agent, any
Debenture Registrar or any other agent of the Company, in its individual or any
other capacity, may become the owner or pledgee of Debentures and, subject to
Sections 608 and 613, may otherwise deal with the Company with the same rights
it would have if it were not Trustee, Authenticating Agent, Paying Agent,
Debenture Registrar or such other agent.
SECTION 606. MONEY HELD IN TRUST.
Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed with the Company.
SECTION 607. COMPENSATION AND REIMBURSEMENT.
(a) The Company agrees
(1) to pay to the Trustee from time to time such compensation as
is agreed upon in writing, or, if no such agreement exists, reasonable
compensation for all services
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rendered by it hereunder (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust);
(2) except as otherwise expressly provided herein, to reimburse
the Trustee upon its request for all reasonable expenses, disbursements
and advances incurred or made by the Trustee in accordance with any
provision of this Indenture (including the reasonable compensation and the
expenses and disbursements of its agents and counsel, which compensation,
expenses and disbursements shall be set forth in sufficient detail),
except any such expense, disbursement or advance as may be attributable to
its negligence or bad faith; and
(3) to indemnify the Trustee for, and to hold it harmless against,
any loss, liability or expense incurred without negligence or bad faith on
its part, arising out of or in connection with the acceptance or
administration of the trust or trusts hereunder, including the costs and
expenses of defending itself against any claim or liability in connection
with the exercise or performance of any of its powers or duties hereunder.
(b) The obligations of the Company under this Section to
compensate and indemnify the Trustee and to pay or reimburse the Trustee for
expenses, disbursements and advances shall constitute additional indebtedness
hereunder. Such additional indebtedness shall be secured by a lien prior to
that of the Debentures upon all property and funds held or collected by the
Trustee as such, except funds held in trust for the benefit of the Holders of
particular Debentures.
SECTION 608. DISQUALIFICATION; CONFLICTING INTERESTS.
(a) If the Trustee has or shall acquire any conflicting interest,
as defined in this Section, with respect to the Debentures of any series, and if
the default to which such conflicting interest relates has not been cured, duly
waived or otherwise eliminated, within 90 days after ascertaining that it has
such conflicting interest, it shall either eliminate such conflicting interest,
except as otherwise provided herein, or resign with respect to the Debentures of
that series in the manner and with the effect hereinafter specified in this
Article and the Company shall promptly appoint a Successor Trustee in the manner
provided herein.
(b) In the event that the Trustee shall fail to comply with the
provisions of subsection (a) of this Section with respect to the Debentures of
any series, the Trustee shall, within 10 days after the expiration of such
90-day period, transmit by mail, first class postage prepaid, to all Holders of
Debentures of that series, as their names and addresses appear in the Debenture
Register, notice of such failure.
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(c) For the purposes of this Section, the Trustee shall be deemed
to have a conflicting interest with respect to the Debentures of any series if a
default has occurred and is continuing and:
(1) the Trustee is trustee under this Indenture with respect to
the Outstanding Debentures of any series other than that series or is
trustee under another indenture under which any other securities, or
certificates of interest or participation in any other securities, of the
Company are outstanding, unless such other indenture is a collateral trust
indenture under which the only collateral consists of Debentures issued
under this Indenture, PROVIDED that there shall be excluded from the
operation of this paragraph this Indenture with respect to the
Debentures of any series other than that series or any indenture or
indentures under which other securities, or certificates of interest or
participation in other securities, of the Company are outstanding, if
(i) this Indenture and such other indenture or indentures
are wholly unsecured and rank equally and such other indenture or
indentures (and such series) are hereafter qualified under the Trust
Indenture Act, unless the Commission shall have found and declared
by order pursuant to Section 305(b) or Section 307(c) of the Trust
Indenture Act that differences exist between the provisions of this
Indenture with respect to Debentures of that series and one or more
other series or the provisions of such other indenture or indentures
(or such series) which are so likely to involve a material conflict
of interest as to make it necessary in the public interest or for
the protection of investors to disqualify the Trustee from acting as
such under this Indenture with respect to the Debentures of that
series and such other series or under such other indenture or
indentures, or
(ii) the Company shall have sustained the burden of proving,
on application to the Commission and after opportunity for hearing
thereon, that trusteeship under this Indenture with respect to the
Debentures of that series and such other series or such other
indenture or indentures is not so likely to involve a material
conflict of interest as to make it necessary in the public interest
or for the protection of investors to disqualify the Trustee from
acting as such under this Indenture with respect to the Debentures
of that series and such other series or under such other indenture
or indentures;
(2) the Trustee or any of its directors or executive officers is
an underwriter for the Company;
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(3) the Trustee directly or indirectly controls or is directly or
indirectly controlled by or is under direct or indirect common control
with the Company or an underwriter for the Company;
(4) the Trustee or any of its directors or executive officers is a
director, officer, partner, employee, appointee or representative of the
Company, or of an underwriter (other than the Trustee itself) of the
Company who is currently engaged in the business of underwriting, except
that (i) one individual may be a director or an executive officer, or
both, of the Trustee and a director or an executive officer, or both, of
the Company, but may not be at the same time an executive officer of both
the Trustee and the Company; (ii) if and so long as the number of
directors of the Trustee in office is more than nine, one additional
individual may be a director or an executive officer, or both, of the
Trustee and a director of the Company; and (iii) the Trustee may be
designated by the Company or by an underwriter for the Company to act in
the capacity of transfer agent, registrar, custodian, paying agent, fiscal
agent, escrow agent or depository, or in any other similar capacity, or,
subject to the provisions of paragraph (1) of this Subsection, to act as
trustee, whether under an indenture or otherwise;
(5) 10% or more of the voting securities of the Trustee is
beneficially owned either by the Company or by any director, partner or
executive officer thereof, or 20% or more of such voting securities is
beneficially owned, collectively, by any two or more of such Persons; or
10% or more of the voting securities of the Trustee is beneficially owned
either by an underwriter for the Company or by any director, partner or
executive officer thereof, or is beneficially owned, collectively, by any
two or more such Persons;
(6) the Trustee is the beneficial owner of, or holds as collateral
security for an obligation which is in default (as hereinafter in this
Subsection defined), (i) 5% or more of the voting securities, or 10% or
more of any other class of security, of the Company, not including the
Debentures issued under this Indenture and securities issued under any
other indenture under which the Trustee is also trustee, or (ii) 10% or
more of any class of security of an underwriter for the Company;
(7) the Trustee is the beneficial owner of, or holds as collateral
security for an obligation which is in default (as hereinafter in this
Subsection defined), 5% or more of the voting securities of any Person
who, to the knowledge of the Trustee, owns 10% or more of the voting
securities of, or controls directly or indirectly or is under direct or
indirect common control with, the Company;
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(8) the Trustee is the beneficial owner of, or holds as collateral
security for an obligation which is in default (as hereinafter in this
Subsection defined), 10% or more of any class of security of any Person
who, to the knowledge of the Trustee, owns 50% or more of the voting
securities of the Company;
(9) the Trustee owns, on the date of default upon the Debentures
of any series or any anniversary of such default while such default upon
the Debentures issued under this Indenture remains outstanding, in the
capacity of executor, administrator, testamentary or INTER VIVOS
trustee, guardian, committee or conservator, or in any other similar
capacity, an aggregate of 25% or more of the voting securities, or of any
class of security, of any Person, the beneficial ownership of a specified
percentage of which would have constituted a conflicting interest under
paragraph (6), (7) or (8) of this Subsection. As to any such securities
of which the Trustee acquired ownership through becoming executor,
administrator or testamentary trustee of an estate which included them,
the provisions of the preceding sentence shall not apply, for a period of
two years from the date of such acquisition, to the extent that such
securities included in such estate do not exceed 25% of such voting
securities or 25% of any such class of security. Promptly after the dates
of any default upon the Debentures issued under this Indenture and
annually in each succeeding year that the Debentures issued under this
Indenture remain in default, the Trustee shall make a check of its
holdings of such securities in any of the above-mentioned capacities as of
such dates. If the Company fails to make payment in full of the principal
of (or premium, if any) or interest, if any, on any of the Debentures when
and as the same becomes due and payable, and such failure continues for 30
days thereafter, the Trustee shall make a prompt check of its holdings of
such securities in any of the above-mentioned capacities as of the date of
the expiration of such 30-day period, and after such date, notwithstanding
the foregoing provisions of this paragraph, all such securities so held by
the Trustee, with sole or joint control over such securities vested in it,
shall, but only so long as such failure shall continue, be considered as
though beneficially owned by the Trustee for the purposes of paragraphs
(6), (7) and (8) of this Subsection; or
(10) except under the circumstances described in paragraphs (1),
(3), (4), (5) or (6) of this Subsection, the Trustee shall be or shall
become a creditor of the Company.
For purposes of paragraph (1) of this Subsection, and of Section 513, the
term "series of securities" or "series" means a series, class or group of
securities issuable under an indenture pursuant to whose terms holders of one
such series may vote to direct the indenture trustee, or otherwise take action
pursuant
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to a vote of such holders, separately from holders of another such series;
provided, that "series of securities" or "series" shall not include any series
of securities issuable under an indenture if all such series rank equally and
are wholly unsecured.
The specification of percentages in paragraphs (5) to (9),
inclusive, of this Subsection shall not be construed as indicating that the
ownership of such percentages of the securities of a person is or is not
necessary or sufficient to constitute direct or indirect control for the
purposes of paragraph (3) or (7) of this Subsection.
For the purposes of paragraphs (6), (7), (8) and (9) of this
Subsection only, (i) the terms "security" and "securities" shall include only
such securities as are generally known as corporate securities, but shall not
include any note or other evidence of indebtedness issued to evidence an
obligation to repay moneys lent to a person by one or more banks, trust
companies or banking firms, or any certificate of interest or participation in
any such note or evidence of indebtedness; (ii) an obligation shall be deemed to
be "in default" when a default in payment of principal shall have continued for
30 days or more and shall not have been cured; and (iii) the Trustee shall not
be deemed to be the owner or holder of (A) any security which it holds as
collateral security, as trustee or otherwise, for an obligation which is not in
default as defined in clause (ii) above, or (B) any security which it holds as
collateral security under this Indenture, irrespective of any default hereunder,
or (C) any security which it holds as agent for collection, or as custodian,
escrow agent or depository, or in any similar representative capacity.
(d) For the purposes of this Section:
(1) The term "underwriter", when used with reference to the
Company, means every person who, within one year prior to the time as of
which the determination is made, has purchased from the Company with a
view to, or has offered or sold for the Company in connection with, the
distribution of any security of the Company outstanding at such time, or
has participated or has had a direct or indirect participation in any such
undertaking, or has participated or has had a participation in the direct
or indirect underwriting of any such undertaking, but such term shall not
include a person whose interest was limited to a commission from an
underwriter or dealer not in excess of the usual and customary
distributors' or sellers' commission.
(2) The term "director" means any director of a corporation or any
individual performing similar functions with respect to any organization,
whether incorporated or unincorporated.
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(3) The term "person" means an individual, a corporation, a
partnership, an association, a joint-stock company, a trust, an
unincorporated organization or a government or political subdivision
thereof. As used in this paragraph, the term "trust" shall include only a
trust where the interest or interests of the beneficiary or beneficiaries
are evidenced by a security.
(4) The term "voting security" means any security presently
entitling the owner or holder thereof to vote in the direction or
management of the affairs of a person, or any security issued under or
pursuant to any trust, agreement or arrangement whereby a trustee or
trustees or agent or agents for the owner or holder of such security are
presently entitled to vote in the direction or management of the affairs
of a person.
(5) The term "Company" means any obligor upon the Debentures.
(6) The term "executive officer" means the president, every vice
president, every trust officer, the cashier, the secretary and the
treasurer of a corporation, and any individual customarily performing
similar functions with respect to any organization whether incorporated or
unincorporated, but shall not include the chairman of the board of
directors.
(e) The percentages of voting securities and other securities
specified in this Section shall be calculated in accordance with the following
provisions:
(1) A specified percentage of the voting securities of the
Trustee, the Company or any other person referred to in this Section (each
of whom is referred to as a "person" in this paragraph) means such amount
of the outstanding voting securities of such person as entitles the holder
or holders thereof to cast such specified percentage of the aggregate
votes which the holders of all the outstanding voting securities of such
person are entitled to cast in the direction or management of the affairs
of such person.
(2) A specified percentage of a class of securities of a person
means such percentage of the aggregate amount of securities of the class
outstanding.
(3) The term "amount", when used in regard to securities, means
the principal amount if relating to evidences of indebtedness, the number
of shares if relating to capital shares and the number of units if
relating to any other kind of security.
(4) The term "outstanding" means issued and not held by or for the
account of the issuer. The following
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securities shall not be deemed outstanding within the meaning of this
definition:
(i) securities of an issuer held in a sinking fund relating
to securities of the issuer of the same class;
(ii) securities of an issuer held in a sinking fund relating
to another class of securities of the issuer, if the obligation
evidenced by such other class of securities is not in default as to
principal or interest or otherwise;
(iii) securities pledged by the issuer thereof as security for
an obligation of the issuer not in default as to principal or
interest or otherwise; and
(iv) securities held in escrow if placed in escrow by the
issuer thereof;
PROVIDED, HOWEVER, that any voting securities of an issuer shall be
deemed outstanding if any person other than the issuer is entitled to
exercise the voting rights thereof.
(5) A security shall be deemed to be of the same class as another
security if both securities confer upon the holder or holders thereof
substantially the same rights and privileges; PROVIDED, HOWEVER, that,
in the case of secured evidences of indebtedness, all of which are issued
under a single indenture, differences in the interest rates or maturity
dates of various series thereof shall not be deemed sufficient to
constitute such series different classes and PROVIDED, FURTHER, that,
in the case of unsecured evidences of indebtedness, differences in the
interest rates or maturity dates thereof shall not be deemed sufficient to
constitute them securities of different classes, whether or not they are
issued under a single indenture.
(f) Except in the case of a default in the payment of the
principal of (or premium, if any) or interest on any Debentures issued under
this Indenture, or in the payment of any sinking or analogous fund installment,
the Trustee shall not be required to resign as provided by this Subsection if
such Trustee shall have sustained the burden of proving, on application to the
Commission and after opportunity for hearing thereon, that (i) the default under
the Indenture may be cured or waived during a reasonable period and under the
procedures described in such application and (ii) a stay of the Trustee's duty
to resign will not be inconsistent wit the interests of the Holders. The filing
of such an application shall automatically stay the performance of the duty to
resign until the Commission orders otherwise.
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Any resignation of the Trustee shall become effective upon the
appointment of a successor trustee and such successor's acceptance of such an
appointment.
SECTION 609. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be a Trustee hereunder which shall be a
corporation organized and doing business under the laws of the United States of
America, any State thereof or the District of Columbia, authorized under such
laws to exercise corporate trust powers, having a combined capital and surplus
of at least $50,000,000 and subject to supervision or examination by Federal or
State authority. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of said supervising or
examining authority, then for the purposes of this Section, the combined capital
and surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. The
Company may not, nor may any person directly or indirectly controlling,
controlled by, or under common control with the Company, serve as Trustee. If
at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall resign promptly in the manner and with the
effect hereinafter specified in this Article.
SECTION 610. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Trustee and no appointment of
a successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 611.
(b) The Trustee may resign at any time with respect to the
Debentures of one or more series by giving written notice thereof to the
Company. If the instrument of acceptance by a successor Trustee required by
Section 611 shall not have been delivered to the Trustee within 30 days after
the giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor Trustee with
respect to the Debentures of such series.
(c) The Trustee may be removed at any time with respect to the
Debentures of any series by Act of the Holders of a majority in principal amount
of the Outstanding Debentures of such series, delivered to the Trustee and to
the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 608(a) after
written request therefor by the Company or by
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any Holder who has been a bona fide Holder of a Debenture for at least six
months, or
(2) the Trustee shall cease to be eligible under Section 609 and
shall fail to resign after written request therefor by the Company or by
any such Holder, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee with respect to all Debentures, or (ii) subject to Section 514, any
Holder who has been a bona fide Holder of a Debenture for at least six months
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the removal of the Trustee with respect to all
Debentures and the appointment of a successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, with
respect to the Debentures of one or more series, the Company, by a Board
Resolution, shall promptly appoint a successor Trustee or Trustees with respect
to the Debentures of that or those series (it being understood that any such
successor Trustee may be appointed with respect to the Debentures of one or more
or all of such series and that at any time there shall be only one Trustee with
respect to the Debentures of any particular series) and shall comply with the
applicable requirements of Section 611. If, within one year after such
resignation, removal or incapability, or the occurrence of such vacancy, a
successor Trustee with respect to the Debentures of any series shall be
appointed by Act of the Holders of a majority in principal amount of the
Outstanding Debentures of such series delivered to the Company and the retiring
Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance
of such appointment in accordance with the applicable requirements of Section
611, become the successor Trustee with respect to the Debentures of such series
and to that extent supersede the successor Trustee appointed by the Company. If
no successor Trustee with respect to the Debentures of any series shall have
been so appointed by the Company or the Holders and accepted appointment in the
manner required by Section 611, any Holder who has been a bona fide Holder of a
Debenture of such series for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the appointment of a successor Trustee with respect to the Debentures of such
series.
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(f) The Company shall give notice of each resignation and each
removal of the Trustee with respect to the Debentures of any series and each
appointment of a successor Trustee with respect to the Debentures of any series
by mailing written notice of such event by first-class mail, postage prepaid, to
all Holders of Debentures of such series as their names and addresses appear in
the Debenture Register. Each notice shall include the name of the successor
Trustee with respect to the Debentures of such series and the address of its
Corporate Trust Office.
SECTION 611. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
(a) In case of the appointment hereunder of a successor Trustee
with respect to all Debentures, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; but, on the request
of the Company or the successor Trustee, such retiring Trustee shall, upon
payment of its charges, execute and deliver an instrument transferring to such
successor Trustee all the rights, powers and trusts of the retiring Trustee and
shall duly assign, transfer and deliver to such successor Trustee all property
and money held by such retiring Trustee hereunder.
(b) In case of the appointment hereunder of a successor Trustee
with respect to the Debentures of one or more (but not all) series, the Company,
the retiring Trustee and each successor Trustee with respect to the Debentures
of one or more series shall execute and deliver an indenture supplemental hereto
wherein each successor Trustee shall accept such appointment and which (1) shall
contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor Trustee all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Debentures of that
or those series to which the appointment of such successor Trustee relates, (2)
if the retiring Trustee is not retiring with respect to all Debentures, shall
contain such provisions as shall be deemed necessary or desirable to confirm
that all the rights, powers, trusts and duties of the retiring Trustee with
respect to the Debentures of that or those series as to which the retiring
Trustee is not retiring shall continue to be vested in the retiring Trustee, and
(3) shall add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, it being understood that nothing herein or
in such supplemental indenture shall constitute such Trustees co-trustees of the
same trust and that each such Trustee shall be trustee of a trust or trusts
hereunder separate and apart from any trust or trusts hereunder administered by
any other such
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Trustee; and upon the execution and delivery of such supplemental indenture the
resignation or removal of the retiring Trustee shall become effective to the
extent provided therein and each such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers, trusts
and duties of the retiring Trustee with respect to the Debentures of that or
those series to which the appointment of such successor Trustee relates; but, on
request of the Company or any successor trustee, such retiring Trustee shall
duly assign, transfer and deliver to such successor Trustee all property and
money held by such retiring Trustee hereunder with respect to the Debentures of
that or those series to which the appointment of such successor Trustee relates.
(c) Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and trusts referred
to in paragraph (a) or (b) of this Section, as the case may be.
(d) No successor Trustee shall accept its appointment unless at
the time of such acceptance such successor Trustee shall be qualified and
eligible under this Article.
SECTION 612. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, PROVIDED such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Debentures shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Debentures so authenticated with the same
effect as if such successor Trustee had itself authenticated such Debentures.
SECTION 613. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
(a) Subject to Subsection (b) of this Section, if the Trustee
shall be or shall become a creditor, directly or indirectly, secured or
unsecured, of the Company within three months prior to a default, as defined in
Subsection (c) of this Section, or subsequent to such a default, then, unless
and until such default shall be cured, the Trustee shall set apart and hold in a
special account for the benefit of the Trustee individually,
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the Holders of the Debentures and the holders of other indenture securities, as
defined in Subsection (c) of this Section:
(1) an amount equal to any and all reductions in the amount due
and owing upon any claim as such creditor in respect of principal or
interest, effected after the beginning of such three months' period and
valid as against the Company and its other creditors, except any such
reduction resulting from the receipt or disposition of any property
described in paragraph (2) of this Subsection, or from the exercise of any
right of set-off which the Trustee could have exercised if a petition in
bankruptcy had been filed by or against the Company upon the date of such
default; and
(2) all property received by the Trustee in respect of any claims
as such creditor, either as security therefor, or in satisfaction or
composition thereof, or otherwise, after the beginning of such three
months' period, or an amount equal to the proceeds of any such property,
if disposed of, SUBJECT, HOWEVER, to the rights, if any, of the
Company and its other creditors in such property or such proceeds.
Nothing herein contained, however, shall affect the right of the
Trustee:
(A) to retain for its own account (i) payments made on account of
any such claim by any Person (other than the Company) who is liable
thereon, and (ii) the proceeds of the bona fide sale of any such claim by
the Trustee to a third Person, and (iii) distributions made in cash,
securities or other property in respect of claims filed against the
Company in bankruptcy or receivership or in proceedings for reorganization
pursuant to the Federal Bankruptcy Act or applicable State law;
(B) to realize, for its own account, upon any property held by it
as security for any such claim, if such property was so held prior to the
beginning of such three months' period;
(C) to realize, for its own account, but only to the extent of the
claim hereinafter mentioned, upon any property held by it as security for
any such claim, if such claim was created after the beginning of such
three months' period and such property was received as security therefor
simultaneously with the creation thereof, and if the Trustee shall sustain
the burden of proving that at the time such property was so received the
Trustee had no reasonable cause to believe that a default, as defined in
Subsection (c) of this Section, would occur within three months; or
(D) to receive payment on any claim referred to in paragraph (B)
or (C), against the release of any property
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held as security for such claim as provided in paragraph (B) or (C), as
the case may be, to the extent of the fair value of such property.
For the purposes of paragraphs (B), (C) and (D), property
substituted after the beginning of such three months' period for property
held as security at the time of such substitution shall, to the extent of
the fair value of the property released, have the same status as the
property released, and, to the extent that any claim referred to in any of
such paragraphs is created in renewal of or in substitution for or for the
purpose of repaying or refunding any pre-existing claim of the Trustee as
such creditor, such claim shall have the same status as such pre-existing
claim.
If the Trustee shall be required to account, the funds and property
held in such special account and the proceeds thereof shall be apportioned among
the Trustee, the Holders and the holders of other indenture securities in such
manner that the Trustee, the Holders and the holders of other indenture
securities realize, as a result of payments from such special account and
payments of dividends on claims filed against the Company in bankruptcy or
receivership or in proceedings for reorganization pursuant to the Federal
Bankruptcy Act or applicable State law, the same percentage of their respective
claims, figured before crediting to the claim of the Trustee anything on account
of the receipt by it from the Company of the funds and property in such special
account and before crediting to the respective claims of the Trustee and the
Holders and the holders of other indenture securities dividends on claims filed
against the Company in bankruptcy or receivership or in proceedings for
reorganization pursuant to the Federal Bankruptcy Act or applicable State law,
but after crediting thereon receipts on account of the indebtedness represented
by their respective claims from all sources other than from such dividends and
from the funds and property so held in such special account. As used in this
paragraph, with respect to any claim, the term "dividends" shall include any
distribution with respect to such claim, in bankruptcy or receivership or
proceedings for reorganization pursuant to the Federal Bankruptcy Act or
applicable State law, whether such distribution is made in cash, securities or
other property, but shall not include any such distribution with respect to the
secured portion, if any, of such claim. The court in which such bankruptcy,
receivership or proceedings for reorganization is pending shall have
jurisdiction (i) to apportion among the Trustee, the Holders and the holders of
other indenture securities, in accordance with the provisions of this paragraph,
the funds and property held in such special account and proceeds thereof, or
(ii) in lieu of such apportionment, in whole or in part, to give to the
provisions of this paragraph due consideration in determining the fairness of
the distributions to be made to the Trustee and the Holders and the holders of
other indenture securities with respect to their respective claims, in which
event it shall not be necessary to
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liquidate or to appraise the value of any securities or other property held in
such special account or as security for any such claim, or to make a specific
allocation of such distributions as between the secured and unsecured portions
of such claims, or otherwise to apply the provisions of this paragraph as a
mathematical formula.
Any Trustee which has resigned or been removed after the beginning
of such three months' period shall be subject to the provisions of this
Subsection as though such resignation or removal had not occurred. If any
Trustee has resigned or been removed prior to the beginning of such three
months' period, it shall be subject to the provisions of this Subsection if and
only if the following conditions exist:
(i) the receipt of property or reduction of claim, which
would have given rise to the obligation to account, if such Trustee
had continued as Trustee, occurred after the beginning of such three
months' period; and
(ii) such receipt of property or reduction of claim occurred
within three months after such resignation or removal.
(b) There shall be excluded from the operation of Subsection (a)
of this Section a creditor relationship arising from:
(1) the ownership or acquisition of securities issued under any
indenture, or any security or securities having a maturity of one year or
more at the time of acquisition by the Trustee;
(2) advances authorized by a receivership or bankruptcy court of
competent jurisdiction or by this Indenture, for the purpose of preserving
any property which shall at any time be subject to the lien of this
Indenture or of discharging tax liens or other prior liens or encumbrances
thereon, if notice of such advances and of the circumstances surrounding
the making thereof is given to the Holders at the time and in the manner
provided in this Indenture;
(3) disbursements made in the ordinary course of business in the
capacity of trustee under an indenture, transfer agent, registrar,
custodian, paying agent, fiscal agent or depository, or other similar
capacity;
(4) an indebtedness created as a result of services rendered or
premises rented; or an indebtedness created as a result of goods or
securities sold in a cash transaction, as defined in Subsection (c) of
this Section;
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(5) the ownership of stock or of other securities of a corporation
organized under the provisions of Section 25(a) of the Federal Reserve
Act, as amended, which is directly or indirectly a creditor of the
Company; and
(6) the acquisition, ownership, acceptance or negotiation of any
drafts, bills of exchange, acceptances or obligations which fall within
the classification of self-liquidating paper, as defined in Subsection (c)
of this Section.
(c) For the purposes of this Section only:
(1) the term "default" means any failure to make payment in full
of the principal of (or premium, if any) or interest on any of the
Debentures or upon the other indenture securities when and as such
principal (or premium, if any) or interest becomes due and payable;
(2) the term "other indenture securities" means securities upon
which the Company is an obligor (as defined in the Trust Indenture Act)
outstanding under any other indenture (i) under which the Trustee is also
trustee, (ii) which contains provisions substantially similar to the
provisions of this Section, and (iii) under which a default exists at the
time of the apportionment of the funds and property held in such special
account;
(3) the term "cash transaction" means any transaction in which
full payment for goods or securities sold is made within seven days after
delivery of the goods or securities in currency or in checks or other
orders drawn upon banks or bankers and payable upon demand;
(4) the term "self-liquidating paper" means any draft, bill of
exchange, acceptance or obligation which is made, drawn, negotiated or
incurred by the Company for the purpose of financing the purchase,
processing, manufacturing, shipment, storage or sale of goods, wares or
merchandise and which is secured by documents evidencing title to,
possession of, or a lien upon, the goods, wares or merchandise or the
receivables or proceeds arising from the sale of the goods, wares or
merchandise previously constituting the security, provided the security is
received by the Trustee simultaneously with the creation of the creditor
relationship with the Company arising from the making, drawing,
negotiating or incurring of the draft, bill of exchange, acceptance or
obligation;
(5) the term "Company" means any obligor upon the Debentures; and
(6) the term "Federal Bankruptcy Act" means the Bankruptcy Code or
Title 11 of the United States Code.
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SECTION 614. AUTHENTICATING AGENTS.
From time to time the Trustee, in its sole discretion, may appoint
one or more Authenticating Agents with respect to one or more series of
Debentures with power to act on the Trustee's behalf and subject to its
direction in the authentication and delivery of Debentures of such series or in
connection with transfers and exchanges under Sections 304, 305, 306, and 1107
as fully to all intents and purposes as though the Authenticating Agent had been
expressly authorized by those Sections of this Indenture to authenticate and
deliver Debentures of such series. For all purposes of this Indenture, the
authentication and delivery of Debentures by an Authenticating Agent pursuant to
this Section shall be deemed to be authentication and delivery of such
Debentures "by the Trustee". Each such Authenticating Agent shall be acceptable
to the Company and shall at all times be a corporation organized and doing
business under the laws of the United States, any State thereof or the District
of Columbia, authorized under such laws to exercise corporate trust powers,
having a combined capital and surplus of at least $50,000,000 and subject to
supervision or examination by Federal, State or District of Columbia authority.
If such corporation publishes reports of condition at least annually pursuant to
law or the requirements of such authority, then for the purposes of this Section
the combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. If at any time an Authenticating Agent shall cease to be eligible
in accordance with the provisions of this Section, such Authenticating Agent
shall resign immediately in the manner and with the effect specified in this
Section.
Any corporation into which any Authenticating Agent may be merged or
with which it may be consolidated, or any corporation resulting from any merger
or consolidation or to which any Authenticating Agent shall be a party, or any
corporation succeeding to the corporate trust business of any Authenticating
Agent, shall be the successor of the Authenticating Agent hereunder, if such
successor corporation is otherwise eligible under this Section, without the
execution or filing of any paper or any further act on the part of the parties
hereto or the Authenticating Agent or such successor corporation.
An Authenticating Agent may resign at any time by giving written
notice of resignation to the Trustee and to the Company. The Trustee may at any
time terminate the agency of any Authenticating Agent by giving written notice
of termination to such Authenticating Agent and to the Company. Upon receiving
such a notice of resignation or upon such a termination, or in case at any time
the Trustee shall have actual knowledge that any Authenticating Agent shall
cease to be eligible under this Section, the Trustee may appoint a successor
Authenticating Agent which shall be acceptable to the Company and shall mail
notice of
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such appointment to all Holders of Debentures of the series with respect to
which such Authenticating Agent will serve, as the names and addresses of such
Holders appear on the Debenture Register. Any successor Authenticating Agent,
upon acceptance of its appointment hereunder, shall become vested with all the
rights, powers and duties of its predecessor hereunder, with like effect as if
originally named as an Authenticating Agent. No successor Authenticating Agent
shall be appointed unless eligible under the provisions of this Section.
The Company agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section.
The Trustee shall incur no liability for the appointment of any
Authenticating Agent with respect to the Debentures of one or more series or for
any misconduct or negligence of such Authenticating Agent, including without
limitation, its authentication of the Debentures upon original issuance or
pursuant to Section 306. In the event the Trustee does incur liability for any
such misconduct or negligence of the Authenticating Agent, the Company agrees to
indemnify the Trustee for, and hold it harmless against, any such liability,
including the costs and expenses of defending itself against any liability in
connection with such misconduct or negligence of the Authenticating Agent.
If an appointment with respect to one or more series of Debentures
is made pursuant to this Section, the Debentures of such series may have
endorsed thereon, in addition to the Trustee's certificate of authentication, an
alternate certificate of authentication in the following form:
This is one of the Debentures of the series designated herein
referred to in the within-mentioned Indenture.
By__________________________________
As Trustee
By__________________________________
As Authenticating Agent
By__________________________________
Authorized Officer
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ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS.
The Company, will furnish or cause to be furnished to the Trustee
with respect to the Debentures of each series
(a) monthly, on each Regular Record Date, a list, in such form as
the Trustee may reasonably require, of the names and addresses of the
Holders as of such Regular Record Date, and
(b) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company of any such request, a
list of similar form and content as of a date not more than 15 days prior
to the time such list is furnished; PROVIDED, HOWEVER, that so long as
the Trustee is Debenture Registrar for any series of Debentures, no such
list shall be required to be furnished with respect to any such series.
SECTION 702. PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders contained in the most
recent list furnished to the Trustee as provided in Section 701 and the names
and addresses of Holders received by the Trustee in its capacity as Debenture
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 701 upon receipt of a new list so furnished.
(b) If three or more Holders (herein referred to as "applicants")
apply in writing to the Trustee, and furnish to the Trustee reasonable proof
that each such applicant has owned a Debenture for a period of at least six
months preceding the date of such application, and such application states that
the applicants desire to communicate with other Holders with respect to their
rights under this Indenture or under the Debentures and is accompanied by a copy
of the form of proxy or other communication which such applicants propose to
transmit, then the Trustee shall, within five business days after the receipt of
such application, at its election, either
(i) afford such applicants access to the information preserved at
the time by the Trustee in accordance with Section 702(a), or
(ii) inform such applicants as to the approximate number of Holders
whose names and addresses appear in the
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information preserved at the time by the Trustee in accordance with
Section 702(a), and as to the approximate cost of mailing to such Holders
the form of proxy or other communication, if any, specified in such
application.
If the Trustee shall elect not to afford such applicants access to
such information, the Trustee shall, upon the written request of such
applicants, mail, first class postage prepaid, to each Holder whose name and
address appear in the information preserved at the time by the Trustee in
accordance with Section 702(a) a copy of the form of proxy or other
communication which is specified in such request, with reasonable promptness
after a tender to the Trustee of the material to be mailed and of payment, or
provision for the payment, of the reasonable expenses of mailing, unless within
five days after such tender the Trustee shall mail to such applicants and file
with the Commission, together with a copy of the material to be mailed, a
written statement to the effect that, in the opinion of the Trustee, such
mailing would be contrary to the best interest of the Holders or would be in
violation of applicable law. Such written statement shall specify the basis of
such opinion. If the Commission, after opportunity for a hearing upon the
objections specified in the written statement so filed, shall enter an order
refusing to sustain any of such objections or if, after the entry of an order
sustaining one or more of such objections, the Commission shall find, after
notice and opportunity for hearing, that all the objections so sustained have
been met and shall enter an order so declaring, the Trustee shall mail, first
class postage prepaid, copies of such material to all such Holders with
reasonable promptness after the entry of such order and the renewal of such
tender; otherwise the Trustee shall be relieved of any obligation or duty to
such applicants respecting their application.
(c) Every Holder of Debentures, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the Trustee
nor any agent of either of them shall be held accountable by reason of the
disclosure of any such information as to the names and addresses of the Holders
in accordance with Section 702(b), regardless of the source from which such
information was derived, and that the Trustee shall not be held accountable by
reason of mailing any material pursuant to a request made under Section 702(b).
SECTION 703. REPORTS BY TRUSTEE.
(a) On or before July 15 in each year in which any of the
Debentures are outstanding, the Trustee shall transmit by mail, first class
postage prepaid, to the Holder, as their names and addresses appear upon the
Debenture Register, a brief report dated as of the preceding May 15, with
respect to any of the following events which may have occurred within the
previous
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twelve months (but if no such event has occurred within such period no report
need be transmitted):
(1) any change to its eligibility under Section 609 and its
qualifications under Section 608;
(2) the creation of or any material change to a relationship
specified in paragraphs (1) through (10) of subsection (c) of Section 608;
(3) the character and amount of any advances (and if the Trustee
elects so to state, the circumstances surrounding the making thereof) made
by the Trustee (as such) which remain unpaid on the date of such report,
and for the reimbursement of which it claims or may claim a lien or
charge, prior to that of the Debentures, on any property or funds held or
collected by it as Trustee if such advances so remaining unpaid aggregate
more than 1/2 of 1% of the principal amount of the Debentures outstanding
on the date of such report;
(4) any change to the amount, interest rate, and maturity date of
all other indebtedness owing by the Company, or by any other obligor on
the Debentures, to the Trustee in its individual capacity, on the date of
such report, with a brief description of any property held as collateral
security therefor, except any indebtedness based upon a creditor
relationship arising in any manner described in Section 613(b) (2), (3),
(4) or (6);
(5) any change to the property and funds, if any, physically in
the possession of the Trustee as such on the date of such report;
(6) any change to any release, or release and substitution, of
property subject to the lien of this Indenture (and the consideration
thereof, if any) which the Trustee has not previously reported;
(7) any additional issue of Debentures which the Trustee has not
previously reported; and
(8) any action taken by the Trustee in the performance of its
duties under this Indenture which it has not previously reported and which
in its opinion materially affects the Debentures or the Debentures of any
series, except any action in respect of a default, notice of which has
been or is to be withheld by it in accordance with the provisions of
Section 602.
(b) The Trustee shall transmit by mail, first class postage
prepaid, to all Holders, as their names and addresses appear in the Debenture
Register, a brief report with respect to the character and amount of any
advances (and if the Trustee
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elects so to state, the circumstances surrounding the making thereof) made by
the Trustee (as such) since the date of the last report transmitted pursuant to
Subsection (a) of this Section (or if no such report has yet been so
transmitted, since the date of execution of this instrument) for the
reimbursement of which it claims or may claim a lien or charge, prior to that of
the Debentures, on property or funds held or collected by it as Trustee and
which it has not previously reported pursuant to this Subsection, except that
the Trustee shall not be required (but may elect) to report such advances if
such advances remaining unpaid at any time aggregate 10% or less of the
principal amount of the Debentures Outstanding at such time, such report to be
transmitted within 90 days after such time.
(c) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange upon
which any Debentures are listed, with the Commission and with the Company. The
Company will notify the Trustee when any Debentures are listed on any stock
exchange.
SECTION 704. REPORTS BY COMPANY.
The Company shall:
(1) file with the Trustee, within 15 days after the Company is
required to file the same with the Commission, copies of the annual
reports and of the information, documents and other reports (or copies of
such portions of any of the foregoing as the Commission may from time to
time by rules and regulations prescribe) which the Company may be required
to file with the Commission pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934; or, if the Company is not required to
file information, documents or reports pursuant to either of said
Sections, then it shall file with the Trustee and the Commission, in
accordance with rules and regulations prescribed from time to time by the
Commission, such of the supplementary and periodic information, documents
and reports which may be required pursuant to Section 13 of the Securities
Exchange Act of 1934 in respect of a security listed and registered on a
national securities exchange as may be prescribed from time to time in
such rules and regulations;
(2) file with the Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance
by the Company with the conditions and covenants of this Indenture as may
be required from time to time by such rules and regulations;
(3) transmit by mail, first class postage prepaid, to all Holders,
as their names and addresses appear in the
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Debenture Register, within 30 days after the filing thereof with the
Trustee, such summaries of any information, documents and reports required
to be filed by the Company pursuant to paragraphs (1) and (2) of this
Section as may be required by rules and regulations prescribed from time
to time by the Commission; and
(4) furnish to the Trustee, on or before May 15 in each calendar
year in which any of the Debentures are outstanding, or on or before such
other day in each calendar year as the Company and the Trustee may from
time to time agree upon, a certificate as to his or her knowledge of the
Company's compliance with all conditions and covenants under this
Indenture. For purposes of this Subsection, such compliance shall be
determined without regard to any period of grace or requirement of notice
provided under this Indenture.
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, SALE OR LEASE
SECTION 801. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.
The Company shall not consolidate with or merge into any other
corporation or convey, transfer or lease its properties and assets substantially
as an entirety to any Person, and the Company shall not permit any Person to
consolidate with or merge into the Company or convey, transfer or lease its
properties and assets substantially as an entirety to the Company, unless:
(1) in case the Company shall consolidate with or merge into
another corporation or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, the corporation formed by such
consolidation or into which the Company is merged or the Person which
acquires by conveyance or transfer, or which leases, the properties and
assets of the Company substantially as an entirety shall be a corporation
organized and existing under the laws of the United States of America, any
State thereof or the District of Columbia, and shall expressly assume, by
an indenture supplemental hereto, executed and delivered to the Trustee,
in form satisfactory to the Trustee, the due and punctual payment of the
principal of (and premium, if any) and interest, if any, on all the
Debentures and the performance of every covenant of this Indenture on the
part of the Company to be performed or observed;
(2) immediately after giving effect to such transaction and
treating any indebtedness which becomes an obligation of the Company or a
Subsidiary as a result of such transaction as having been incurred by the
Company or
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such Subsidiary at the time of such transaction, no Event of Default, and
no event which, after notice or lapse of time or both, would become an
Event of Default, shall have happened and be continuing;
(3) if, as a result of any such consolidation or merger or such
conveyance, transfer or lease, properties or assets of the Company would
become subject to a mortgage, pledge, lien, security interest or other
encumbrance which would not be permitted by this Indenture, the Company or
such successor corporation or Person, as the case may be, shall take such
steps as shall be necessary effectively to secure the Debentures equally
and ratably with (or prior to) all indebtedness secured thereby; and
(4) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and, if a
supplemental indenture is required in connection with such transaction,
such supplemental indenture comply with this Article and that all
conditions precedent herein provided for relating to such transaction have
been complied with.
SECTION 802. SUCCESSOR CORPORATION TO BE SUBSTITUTED.
Upon any consolidation by the Company with or merger by the Company
into any other corporation or any conveyance, transfer or lease of the
properties and assets of the Company substantially as an entirety in accordance
with Section 801, the successor corporation formed by such consolidation or into
which the Company is merged or to which such conveyance, transfer or lease is
made shall succeed to, and be substituted for, and may exercise every right and
power of, the Company under this Indenture with the same effect as if such
successor corporation had been named as the Company herein, and thereafter,
except in the case of a lease, the predecessor corporation shall be relieved of
all obligations and covenants under this Indenture and the Debentures.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
Without the consent of any Holders, the Company and the Trustee, at
any time and from time to time, may enter into one or
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more indentures supplemental hereto, in form satisfactory to the Trustee, for
any of the following purposes:
(1) to evidence the succession of another corporation to the Company
and the assumption by any such successor of the covenants of the Company
herein and in the Debentures;
(2) to add to the covenants of the Company for the benefit of the
Holders of all or any series of Debentures (and if such covenants are to
be for the benefit of less than all series of Debentures, stating that
such covenants are expressly being included solely for the benefit of such
series) or to surrender any right or power herein conferred upon the
Company;
(3) to add any additional Events of Default;
(4) to add to or change any of the provisions of this Indenture to
such extent as shall be necessary to permit or facilitate the issuance of
Debentures in bearer form, registrable or not registrable as to principal,
and with or without interest coupons, or to permit or facilitate the
issuance of Debentures in uncertificated form, or to permit or facilitate
the issuance of extendible Debentures;
(5) to change or eliminate any of the provisions of this Indenture,
PROVIDED that any such change or elimination shall become effective only
as to the Debentures of any series created by such supplemental indenture
and Debentures of any series subsequently created to which such change or
elimination is made applicable by the subsequent supplemental indenture
creating such series;
(6) to secure the Debentures;
(7) to establish the form or terms of Debentures of any series as
permitted by Sections 201 and 301;
(8) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Debentures of one or
more series and to add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee, pursuant
to the requirements of Section 611(b);
(9) to provide for any rights of the Holders of Debentures of any
series to require the repurchase of Debentures of such series by the
Company;
(10) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein, or to
make any other provisions with respect to matters or questions arising
under this
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Indenture, PROVIDED such action shall not adversely affect the interests
of the Holders of Debentures of any series in any material respect; or
(11) to modify, alter, amend or supplement this Indenture in any
other respect which is not materially adverse to Holders, which does not
involve a change described in clause (1), (2) or (3) of Section 902 hereof
and which, in the judgment of the Trustee, is not to the prejudice of the
Trustee, including, without limitation, to provide for the duties,
responsibilities and compensation of the Trustee as a transfer agent in
the event one registered Debenture of any series is issued in the
aggregate principal amount of all Outstanding Debentures of such series in
which Holders will hold an interest.
SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.
With the consent of the Holders of not less than a majority in
principal amount of the Outstanding Debentures of all series affected by such
supplemental indenture (voting as one class), by Act of said Holders delivered
to the Company and the Trustee, the Company, when authorized by or pursuant to a
Board Resolution, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders of Debentures of such series
under this Indenture; PROVIDED, HOWEVER, that no such supplemental indenture
shall, without the consent of the Holder of each Outstanding Debenture affected
thereby,
(1) change the Stated Maturity (whether fixed by its terms or by its
terms extendible at the option of the Company) of the principal of, or any
installment of principal of or interest, if any, on, any Debenture, or
reduce the principal amount thereof or the rate of interest thereon or any
premium payable upon the redemption thereof, or reduce the amount of the
principal of an Original Issue Discount Debenture that would be due and
payable upon a declaration of acceleration of the Maturity thereof
pursuant to Section 502, or change any Place of Payment where, or the coin
or currency in which, any Debenture or any premium or the interest thereon
is payable, or impair the right to institute suit for the enforcement of
any such payment on or after the Stated Maturity thereof (or, in the case
of redemption, on or after the Redemption Date), or
(2) reduce the percentage in principal amount of the Outstanding
Debentures of any series, the consent of whose Holders is required for any
such supplemental indenture, or the consent of whose Holders is required
for any waiver (of compliance with certain provisions of this Indenture or
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certain defaults hereunder and their consequences) provided for in this
Indenture, or
(3) modify any of the provisions of this Section or Section 513,
except to increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived without the
consent of the Holder of each Outstanding Debenture affected thereby,
PROVIDED, HOWEVER, that this clause shall not be deemed to require the
consent of any Holder with respect to changes in the references to "the
Trustee" and concomitant changes in this Section, or the deletion of this
proviso, in accordance with the requirements of Sections 611(b) and
901(8).
A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Debentures, or which modifies the
rights of the Holders of Debentures of such series with respect to such covenant
or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Debentures of any other series.
It shall not be necessary for any Act of Holders under this Section
to approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
SECTION 903. EXECUTION OF SUPPLEMENTAL INDENTURES.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 601) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
SECTION 904. EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Debentures theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
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SECTION 905. CONFORMITY WITH TRUST INDENTURE ACT.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
SECTION 906. REFERENCE IN DEBENTURES TO SUPPLEMENTAL INDENTURES.
Debentures of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article may, and shall
if required by the Trustee, bear a notation in form approved by the Trustee as
to any matter provided for in such supplemental indenture. If the Company shall
so determine, new Debentures of any series so modified as to conform, in the
opinion of the Trustee and the Company, to any such supplemental indenture may
be prepared and executed by the Company and authenticated and delivered by the
Trustee in exchange for Outstanding Debentures of such series.
ARTICLE TEN
COVENANTS
SECTION 1001. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST.
The Company covenants and agrees for the benefit of each series of
Debentures that it will duly and punctually pay the principal of (and premium,
if any) and interest, if any, on the Debentures of that series in accordance
with the terms of the Debentures and this Indenture.
SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY.
The Company will maintain in each Place of Payment for any series of
Debentures an office or agency where Debentures of that series may be presented
or surrendered for payment, where Debentures of that series may be surrendered
for registration of transfer or exchange and where notices and demands to or
upon the Company in respect of the Debentures of that series and this Indenture
may be served. The Company will give prompt written notice to the Trustee of
the location, and any change in the location, of such office or agency. If at
any time the Company shall fail to maintain any such required office or agency
or shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee, and, in such event, the Trustee shall act
as the Company's agent to receive all such presentations, surrenders, notices
and demands.
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The Company may also from time to time designate one or more other
offices or agencies where the Debentures of one or more series may be presented
or surrendered for any or all such purposes and may from time to time rescind
such designations; PROVIDED, HOWEVER, that no such designation or rescission
shall in any manner relieve the Company of its obligation to maintain an office
or agency in each Place of Payment for Debentures of any series for such
purposes. The Company will give prompt written notice to the Trustee of any
such designation or rescission and of any change in the location of any such
other office or agency.
SECTION 1003. MONEY FOR DEBENTURES PAYMENTS TO BE HELD IN TRUST.
If the Company shall at any time act as its own Paying Agent with
respect to any series of Debentures, it will, on or before each due date of the
principal of (and premium, if any) or interest, if any, on any of the Debentures
of that series, segregate and hold in trust for the benefit of the Persons
entitled thereto a sum sufficient to pay the principal (and premium, if any) or
interest, if any, so becoming due until such sums shall be paid to such Persons
or otherwise disposed of as herein provided and will promptly notify the Trustee
of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents for any
series of Debentures, it will, on, in case the payment referred to below is made
in same day funds, or, in all other cases, prior to, each due date of the
principal of (and premium, if any) or interest, if any, on any Debentures of
that series, deposit with a Paying Agent a sum sufficient to pay the principal
(and premium, if any) or interest so becoming due, such sum to be held in trust
for the benefit of the Persons entitled to such principal, premium or interest,
and (unless such Paying Agent is the Trustee) the Company will promptly notify
the Trustee of its failure so to act.
The Company will cause each Paying Agent for any series of
Debentures other than the Trustee to execute and deliver to the Trustee an
instrument in which such Paying Agent shall agree with the Trustee, subject to
the provisions of this Section, that such Paying Agent will:
(1) hold all sums held by it for the payment of the principal
of (and premium, if any) or interest, if any, on Debentures of that series
in trust for the benefit of the Persons entitled thereto until such sums
shall be paid to such Persons or otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or
any other obligor upon the Debentures of that series) in the making of any
payment of principal (and
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premium, if any) or interest, if any, on the Debentures of that series;
and
(3) at any time during the continuance of any such default,
upon the written request of the Trustee, forthwith pay to the Trustee all
sums so held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of (and premium,
if any) or interest, if any, on any Debenture of any series and remaining
unclaimed for three years after such principal (and premium, if any) or interest
has become due and payable shall be paid to the Company on Company Request, or
(if then held by the Company) shall be discharged from such trust; and the
Holder of such Debenture shall thereafter, as an unsecured general creditor,
look only to the Company for payment thereof, and all liability of the Trustee
or such Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease; PROVIDED, HOWEVER, that
the Trustee or such Paying Agent, before being required to make any such
repayment, may at the expense of the Company cause to be published once, in a
newspaper published in the English language, customarily published on each
Business Day and of general circulation in the City, County and State of New
York, notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such publication,
any unclaimed balance of such money then remaining will be repaid to the
Company.
SECTION 1004. CORPORATE EXISTENCE.
Subject to Article Eight, the Company will do or cause to be done
all things necessary to preserve and keep in full force and effect its corporate
existence and will use its best efforts to do or cause to be done all things
necessary to preserve and keep in full force and effect its rights (charter and
statutory) and franchises; PROVIDED, HOWEVER, that the Company shall not be
required to preserve any such right or franchise if the Board of Directors shall
determine that the preservation thereof is no longer desirable in the conduct of
the
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business of the Company and that the loss thereof is not disadvantageous in any
material respect to the Holders.
SECTION 1005. MAINTENANCE OF PROPERTIES.
The Company will cause all properties used or useful in the conduct
of its business or the business of any Subsidiary to be maintained and kept in
good condition, repair and working order and supplied with all necessary
equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Company may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times; PROVIDED,
HOWEVER, that nothing in this Section shall prevent the Company from
discontinuing the operation or maintenance of any of such properties if such
discontinuance is, in the judgment of the Company, desirable in the conduct of
its business or the business of any Subsidiary and not disadvantageous in any
material respect to the Holders.
SECTION 1006. PAYMENT OF TAXES AND OTHER CLAIMS.
The Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (1) all taxes, assessments and
governmental charges levied or imposed upon the Company or any Subsidiary or
upon the income, profits or property of the Company or any Subsidiary, and (2)
all lawful claims for labor, materials and supplies which, if unpaid, might by
law become a lien upon the property of the Company or any Subsidiary;
PROVIDED, HOWEVER, that the Company shall not be required to pay or
discharge or cause to be paid or discharged any such tax, assessment, charge or
claim whose amount, applicability or validity is being contested in good faith
by appropriate proceedings.
SECTION 1007. STATEMENT BY OFFICERS AS TO DEFAULT.
The Company will deliver to the Trustee on or before May 15, 1996,
and on May 15 in each year thereafter, an Officers' Certificate stating that in
the course of the performance by each signer of his duties as an officer of the
Company he would normally have knowledge of any default by the Company in the
performance and observance of any of the covenants contained in Sections 1001 to
1006, stating whether or not he has knowledge of any such default and, if so,
specifying each such default of which such signer has knowledge and the nature
thereof.
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SECTION 1008. DEFEASANCE OF CERTAIN OBLIGATIONS.
The Company may omit to comply with any term, provision or condition
set forth in Sections 801, 1004, 1005 and 1006 with respect to the Debentures of
any series, provided that the following conditions shall have been satisfied:
(1) The Company has deposited or caused to be irrevocably deposited
(except as provided in Section 402(c) and the last paragraph of Section
1003) with the Trustee (specifying that each deposit is pursuant to this
Section 1008) as trust funds in trust, specifically pledged as security
for, and dedicated solely to, the benefit of the Holders of the Debentures
of such series, (i) money in the currency or units of currency in which
such Debentures are payable in an amount, or (ii) (except as provided in a
supplemental indenture with respect to such series) if Debentures of such
series are not subject to repurchase at the option of Holders, (A) U.S.
Government Obligations (denominated in the same currency or units of
currency in which such Debentures are payable) which through the payment
of interest and principal in respect thereof in accordance with their
terms will provide not later than one day before the due date of any
payment referred to in clause (x) or (y) of this subparagraph (1) money in
an amount, or (B) a combination thereof, sufficient, in the opinion of a
nationally recognized firm of independent certified public accountants
expressed in a written certification thereof delivered to the Trustee, to
pay and discharge (x) the principal of (and premium, if any) and each
installment of principal (and premium, if any) and interest, if any, on
the Outstanding Debentures of such series on the Stated Maturity of such
principal or installment of principal or interest or to and including the
Redemption Date irrevocably designated by the Company pursuant to
subparagraph (4) of this Section and (y) any mandatory sinking fund
payments applicable to the Debentures of such series on the day on which
payments are due and payable in accordance with the terms of the Indenture
and of the Debentures of such series;
(2) No Event of Default or event which with notice or lapse of time
would become an Event of Default (including by reason of such deposit)
with respect to the Debentures of such series shall have occurred and be
continuing on the date of such deposit;
(3) The Company shall have delivered to the Trustee an Opinion of
Counsel to the effect (i) that Holders of the Debentures of such series
will not recognize income, gain or loss for Federal income tax purposes as
a result of such deposit and defeasance of certain obligations; (ii) that
such provision would not cause any outstanding Debentures of such series
then listed on any national securities exchange to be delisted as a result
thereof; and (iii) that the
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defeasance trust is not, or is registered as, an investment company under
the Investment Company Act of 1940; and
(4) If the Company has deposited or caused to be deposited money or
U.S. Government Obligations to pay or discharge the principal of (and
premium, if any) and interest, if any, on the Outstanding Debentures of a
series to and including a Redemption Date on which all of the Outstanding
Debentures of such series are to be redeemed, such Redemption Date shall
be irrevocably designated by a Board Resolution delivered to the Trustee
on or prior to the date of deposit of such money or U.S. Government
Obligations, and such Board Resolution shall be accompanied by an
irrevocable Company Request that the Trustee give notice of such
redemption in the name and at the expense of the Company not less than 30
nor more than 60 days prior to such Redemption Date in accordance with
Section 1104.
SECTION 1009. DISTRIBUTIONS AND PAYMENT OF DIVIDENDS.
The Company will not declare or pay any dividend on, or redeem,
purchase, acquire or make a distribution or liquidation payment with respect to,
any of its capital stock if at such time (i) there shall have occurred any event
that would constitute an Event of Default under the Indenture, (ii) the Company
shall be in default with respect to its payment of any obligations under the
Guarantee, if issued, or (iii) the Company shall have given notice of its
selection of an extended interest payment period as provided in the Indenture
and such period, or any extension thereof, shall be continuing.
SECTION 1010. REQUIRED CAPITAL CONTRIBUTIONS.
So long as any series of Debentures issued in connection with the
application of the proceeds from the issuance and sale of a series of Preferred
Securities of UtiliCorp Capital remain outstanding, and so long as UtiliCorp
Capital does not merge, consolidate, or amalgamate with or into, or is not
replaced by, or does not convey, transfer or lease to, a trust as permitted
without the consent of holders of the Preferred Securities under the Limited
Partnership Agreement, the Company will (i) remain the sole general partner of
UtiliCorp Capital and maintain 100% ownership of the general partner interests
thereof; provided that any permitted successor of the Company under the
Indenture may succeed to its duties as general partner, (ii) contribute capital
to the extent required to maintain its capital at an amount equal to at least 3%
of the total capital contributions to UtiliCorp Capital, (iii) not voluntarily
dissolve, wind-up or terminate UtiliCorp Capital, except in connection with a
distribution of Debentures and in connection with certain mergers,
consolidations, amalgamations permitted by the Limited Partnership Agreement,
(iv) timely perform all of its
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duties as General Partner (including the duty to pay dividends on the Preferred
Securities of UtiliCorp Capital), and (v) use its reasonable efforts to cause
UtiliCorp Capital to remain a limited partnership except in connection with a
distribution of Debentures and in connection with certain mergers,
consolidations, amalgamations, replacements, conveyances, transfers or leases
permitted by the Limited Partnership Agreement, and otherwise continue to be
treated as a partnership for United States federal income tax purposes except in
connection with a distribution of Debentures.
ARTICLE ELEVEN
REDEMPTION OF DEBENTURES
SECTION 1101. APPLICABILITY OF ARTICLE.
Debentures of any series which are redeemable before their Stated
Maturity shall be redeemable in accordance with their terms and (except as
otherwise specified as contemplated by Section 301 for Debentures of any series)
in accordance with this Article.
SECTION 1102. ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem any Debentures shall be
evidenced by an Officers' Certificate. In case of any redemption at the
election of the Company of less than all the Debentures of any series, the
Company shall, at least 60 days prior to the Redemption Date fixed by the
Company (unless a shorter notice shall be satisfactory to the Trustee), notify
the Trustee of such Redemption Date and of the principal amount of Debentures of
such series to be redeemed, such notice to be accompanied by a written statement
signed by an authorized officer of the Company stating that no defaults in the
payment of interest or Events of Default with respect to the Debentures of that
series have occurred (which have not been waived or cured). In the case of any
redemption of Debentures prior to the expiration of any restriction on such
redemption provided in the terms of such Debentures or elsewhere in this
Indenture, the Company shall furnish the Trustee with an Officers' Certificate
evidencing compliance with such restriction.
SECTION 1103. SELECTION BY TRUSTEE OF DEBENTURES TO BE REDEEMED.
If less than all the Debentures of any series are to be redeemed,
the particular Debentures to be redeemed shall be selected not more than 60 days
prior to the Redemption Date by the Trustee, from the Outstanding Debentures of
such series not previously called for redemption, by such method as the Trustee
shall deem fair and appropriate and which may provide for the
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selection for redemption of portions (equal to the minimum authorized
denomination for Debentures of that series or any integral multiple thereof) of
the principal amount of Debentures of such series of a denomination larger than
the minimum authorized denomination for Debentures of that series.
Debentures shall be excluded from eligibility for selection for
redemption if they are identified by registration and certificate number in a
written statement signed by an authorized officer of the Company and delivered
to the Debenture Registrar at least 60 days prior to the Redemption Date as
being owned of record and beneficially by, and not pledged or hypothecated by
either (a) the Company or (b) an entity specifically identified in such written
statement which is an Affiliate of the Company.
The Trustee shall promptly notify the Company in writing of the
Debentures selected for redemption and, in the case of any Debentures selected
for partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Debentures shall relate,
in the case of any Debentures redeemed or to be redeemed only in part, to the
portion of the principal amount of such Debentures which has been or is to be
redeemed.
SECTION 1104. NOTICE OF REDEMPTION.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption
Date, to each Holder of Debentures to be redeemed, at his address appearing in
the Debenture Register.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all the Outstanding Debentures of any series are
to be redeemed, the identification (and, in the case of partial
redemption, the principal amounts) of the particular Debentures to be
redeemed,
(4) that on the Redemption Date the Redemption Price will become
due and payable upon each such Debenture to be redeemed and, if
applicable, that interest thereon will cease to accrue on and after said
date,
(5) the place or places where such Debentures are to be surrendered
for payment of the Redemption Price, and
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(6) that the redemption is for a sinking fund, if such is the case.
Notice of redemption of Debentures to be redeemed at the election of
the Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.
SECTION 1105. DEPOSIT OF REDEMPTION PRICE.
On, in the case of same day funds, or in all other cases at least
five Business Days prior to any Redemption Date, the Company shall deposit with
the Trustee or with a Paying Agent (or, if the Company is acting as its own
Paying Agent, segregate and hold in trust as provided in Section 1003) an amount
of money sufficient to pay the Redemption Price of, and (except if the
Redemption Date shall be an Interest Payment Date) accrued interest on, all the
Debentures which are to be redeemed on that date (to the extent that such
amounts are not already on deposit at such time in accordance with the
provisions of Section 401, 403 or 1008).
SECTION 1106. DEBENTURES PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as aforesaid, the Debentures
so to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued and
unpaid interest) such Debentures shall cease to bear interest. Upon surrender
of any such Debenture for redemption in accordance with said notice, such
Debenture shall be paid by the Company at the Redemption Price, together with
accrued and unpaid interest to the Redemption Date; PROVIDED, HOWEVER, that
installments of interest whose Stated Maturity is on or prior to the Redemption
Date shall be payable to the Holders of such Debentures, or one or more
Predecessor Debentures, registered as such at the close of business on the
relevant Record Dates according to their terms and the provisions of Section
307.
If any Debenture called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any) shall,
until paid, bear interest from the Redemption Date at the rate prescribed
therefor in the Debenture.
SECTION 1107. DEBENTURES REDEEMED IN PART.
Any Debenture (including any Global Debenture) which is to be
redeemed only in part shall be surrendered at a Place of Payment therefor (with,
if the Company or the Trustee so requires, due endorsement by, or a written
instrument of transfer
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in form satisfactory to the Company and the Trustee duly executed by, the Holder
thereof or his attorney duly authorized in writing), and the Company shall
execute, and the Trustee shall authenticate and deliver to the Holder of such
Debenture without service charge, a new Debenture or Debentures of the same
series, of any authorized denomination as requested by such Holder, in aggregate
principal amount equal to and in exchange for the unredeemed portion of the
principal of the Debenture so surrendered; PROVIDED, that a Global Debenture
shall be in a denomination equal to the unredeemed portion of the principal of
the Global Debenture so surrendered.
ARTICLE TWELVE
SINKING FUNDS
SECTION 1201. APPLICABILITY OF ARTICLE.
The provisions of this Article shall be applicable to any sinking
fund for the retirement of Debentures of a series except as otherwise specified
as contemplated by Section 301 for Debentures of such series.
The minimum amount of any sinking fund payment provided for by the
terms of Debentures of any series is herein referred to as a "mandatory sinking
fund payment", and any payment in excess of such minimum amount provided for by
the terms of Debentures of any series is herein referred to as an "optional
sinking fund payment". If provided for by the terms of Debentures of any
series, the cash amount of any sinking fund payment may be subject to reduction
as provided in Section 1202. Each sinking fund payment shall be applied to the
redemption of Debentures of any series as provided for by the terms of
Debentures of such series.
SECTION 1202. SATISFACTION OF SINKING FUND PAYMENTS WITH DEBENTURES.
In lieu of making all or any part of any mandatory sinking fund
payment with respect to any series of Debentures in cash, the Company may at its
option (a) deliver to the Trustee Debentures of such series theretofore
purchased or otherwise acquired (except upon redemption pursuant to the
mandatory sinking fund) by the Company or receive credit for Debentures of such
series (not previously so credited) theretofore purchased or otherwise acquired
(except as aforesaid) by the Company and delivered to the Trustee for
cancellation pursuant to Section 309, (b) receive credit for optional sinking
fund payments (not previously so credited) made pursuant to this Section, or (c)
receive credit for Debentures of such series (not previously so credited)
redeemed by the Company through any optional redemption provision contained in
the terms of such series. Debentures so
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delivered or credited shall be received or credited by the Trustee at the
sinking fund Redemption Price specified in such Debentures.
SECTION 1203. REDEMPTION OF DEBENTURES FOR SINKING FUND.
Not less than 60 days prior to each sinking fund payment date for
any series of Debentures, the Company will deliver to the Trustee an Officers'
Certificate specifying (a) the amount of the next ensuing sinking fund payment
for that series pursuant to the terms of that series, (b) whether or not the
Company intends to exercise its right, if any, to make an optional sinking fund
payment with respect to such series on the next ensuing sinking fund payment
date and, if so, the amount of such optional sinking fund payment, and (c) the
portion thereof, if any, which is to be satisfied by payment of cash and the
portion thereof, if any, which is to be satisfied by delivering and crediting
Debentures of that series pursuant to Section 1202, and will also deliver to the
Trustee any Debentures to be so delivered. Such written statement shall be
irrevocable and upon its receipt by the Trustee the Company shall become
unconditionally obligated to make all the cash payments or payments therein
referred to, if any, on or before the next succeeding sinking fund payment date.
Failure of the Company, on or before any such 60th day, to deliver such written
statement and Debentures specified in this paragraph, if any, shall not
constitute a default but shall constitute, on and as of such date, the
irrevocable election of the Company (i) that the mandatory sinking fund payment
for such series due on the next succeeding sinking fund payment date shall be
paid entirely in cash without the option to deliver or credit Debentures of such
series in respect therefor and (ii) that the Company will make no optional
sinking fund payment with respect to such series as provided in this Section.
Not less than 30 days before each such sinking fund payment date the
Trustee shall select the Debentures to be redeemed upon such sinking fund
payment date in the manner specified in Section 1103 and cause notice of the
redemption thereof to be given in the name of and at the expense of the Company
in the manner provided in Section 1104. Such notice having been duly given, the
redemption of such Debentures shall be made upon the terms and in the manner
stated in Sections 1105, 1106 and 1107.
The Trustee shall not redeem or cause to be redeemed any Debenture
of a series with sinking fund moneys or mail any notice of redemption of
Debentures of such series by operation of the sinking fund during the
continuance of a default in payment of interest with respect to Debentures of
that series or an Event of Default with respect to the Debentures of that series
except that, where the mailing of notice of redemption of any Debentures shall
theretofore have been made, the Trustee shall redeem or
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cause to be redeemed such Debentures, provided that it shall have received from
the Company a sum sufficient for such redemption. Except as aforesaid, any
moneys in the sinking fund for such series at the time when any such default or
Event of Default, shall occur, and any moneys thereafter paid into the sinking
fund, shall, during the continuance of such default or Event of Default, be
deemed to have been collected under Article Five and held for the payment of all
such Debentures. In case such Event of Default shall have been waived as
provided in Section 513 or the default or Event of Default cured on or before
the 60th day preceding the sinking fund payment date, such moneys shall
thereafter be applied on the next succeeding sinking fund payment date in
accordance with this Section to the redemption of such Debentures.
ARTICLE THIRTEEN
SUBORDINATION OF DEBENTURES
SECTION 1301. AGREEMENT OF SUBORDINATION. The Company covenants and
agrees, and each Holder of Debentures issued hereunder by his acceptance thereof
likewise covenants and agrees, that all Debentures shall be issued subject to
the provisions of this Article Thirteen; and each Holder of Debentures, whether
upon original issue or upon transfer or assignment thereof, accepts and agrees
to be bound by such provisions.
The payment of the principal of, premium, if any, and interest on
all Debentures issued hereunder shall, to the extent and in the manner
hereinafter set forth, be subordinated and subject in right of payment to the
prior payment in full of all Senior Indebtedness, whether outstanding at the
date of this Indenture or thereafter incurred.
No provision of this Article Thirteen shall prevent the occurrence
of any default or Event of Default hereunder.
SECTION 1302. LIMITATIONS ON PAYMENTS TO HOLDERS. In the event and during
the continuation of any default in the payment of principal, premium, interest
or any other payment due on any Senior Indebtedness continuing beyond the period
of grace, if any, specified in the instrument evidencing such Senior
Indebtedness, unless and until such default shall have been cured or waived or
shall have ceased to exist, and in the event that the maturity of any Senior
Indebtedness has been accelerated because of a default, then no payment shall be
made by the Company with respect to the principal (including redemption and
sinking fund payments) of, or premium, if any, or interest on the Debentures.
In the event that, notwithstanding the foregoing, any payment shall
be received by the Trustee or any holder when such
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payment is prohibited by the preceding paragraph of this Section 1302, such
payment shall be held in trust for the benefit of, and shall be paid over or
delivered to, the holders of Senior Indebtedness or their respective
representatives, or to the trustee or trustees under any indenture pursuant to
which any of such Senior Indebtedness may have been issued, as their respective
interests may appear, but only to the extent that the holders of the Senior
Indebtedness (or their representative or representatives or a trustee) notify
the Trustee within 90 days of such payment of the amounts then due and owing on
the Senior Indebtedness and only the amounts specified in such notice to the
Trustee shall be paid to the holders of Senior Indebtedness.
SECTION 1303. PAYMENTS IN BANKRUPTCY. Upon any payment by the Company, or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, to creditors upon any dissolution or winding-up or
liquidation or reorganization of the Company, whether voluntary or involuntary
or in bankruptcy, insolvency, receivership or other proceedings, all amounts due
or to become due upon all Senior Indebtedness shall first be paid in full, or
payment thereof provided for in money in accordance with its terms, before any
payment is made on account of the principal (and premium, if any) or interest on
the Debentures; and upon any such dissolution or winding-up or liquidation or
reorganization any payment by the Company, or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, to
which the Holders of the Debentures or the Trustee would be entitled, except for
the provisions of this Article Thirteen, shall by paid by the Company or by any
receiver, trustee in bankruptcy, liquidating trustee, agent or other Person
making such payment or distribution, or by the Holders of the Debentures or by
the Trustee under this Indenture if received by them or it, directly to the
holders of Senior Indebtedness (pro rata to such holders on the basis of the
respective amounts of Senior Indebtedness held by such holders, as calculated by
the Company) or their representative or representatives, or to the trustee or
trustees under any indenture pursuant to which any instruments evidencing any
Senior Indebtedness may have been issued, as their respective interests may
appear, to the extent necessary to pay all Senior Indebtedness in full, in money
or money's worth, after giving effect to any concurrent payment or distribution
to or for the holders of Senior Indebtedness, before any payment or distribution
is made to the Holders of Debentures or to the Trustee.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, prohibited by the foregoing, shall be received by the
Trustee or the Holders of the Debentures before all Senior Indebtedness is paid
in full, or provision is made for such payment in money in accordance with its
terms, such payment or distribution shall be held in trust
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for the benefit of and shall be paid over or delivered to the holders of Senior
Indebtedness or their representative or representatives, or to the trustee or
trustees under any indenture pursuant to which any instruments evidencing any
Senior Indebtedness may have been issued, as their respective interests may
appear, as calculated by the Company, for application to the payment of all
Senior Indebtedness remaining unpaid to the extent necessary to pay all Senior
Indebtedness in full in money in accordance with its terms, after giving effect
to any concurrent payment or distribution to or for the holders of such Senior
Indebtedness.
For purposes of this Article Thirteen, the words, "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment, the payment of which
is subordinated at least to the extent provided in this Article Thirteen with
respect to the Debentures to the payment of all Senior Indebtedness which may at
the time be outstanding; provided that (i) the Senior Indebtedness is assumed by
the new corporation, if any, resulting from any such reorganization or
readjustment, and (ii) the rights of the holders of the Senior Indebtedness are
not, without the consent of such holders, altered by such reorganization or
readjustment. The consolidation of the Company with, or the merger of the
Company into, another corporation or the liquidation or dissolution of the
Company following the conveyance or transfer of its property as an entirety, or
substantially as an entirety, to another corporation upon the terms and
conditions provided for in Article Ten hereof shall not be deemed a dissolution,
winding-up, liquidation or reorganization for the purposes of this Section 1303
if such other corporation shall, as a part of such consolidation, merger,
conveyance or transfer, comply with the conditions stated in this Indenture.
Nothing in Section 1302 or in this Section 1303 shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 607.
SECTION 1304. SUBROGATION OF DEBENTURES. Subject to the payment in full
of all Senior Indebtedness, the rights of the Holders of the Debentures shall be
subrogated to the rights of the holders of Senior Indebtedness to receive
payments or distributions of cash, property or securities of the Company
applicable to the Senior Indebtedness until the principal of (and premium, if
any) and interest on the Debentures shall be paid in full; and, for the purposes
of such subrogation, no payments or distributions to the holders of the Senior
Indebtedness of any cash, property or securities to which the Holders of the
Debentures or the Trustee would be entitled except for the provisions of this
Article Thirteen, and no payment over pursuant to the provisions of this Article
Thirteen, to or for the benefit of the holders of Senior Indebtedness by Holders
of the Debentures or the Trustee, shall, as between the Company, its creditors
other than holders of
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Senior Indebtedness, and the Holders of the Debentures, be deemed to be a
payment by the Company to or on account of the Senior Indebtedness. It is
understood that the provisions of this Article Thirteen are and are intended
solely for the purposes of defining the relative rights of the Holders of the
Debentures, on the one hand, and the holders of the Senior Indebtedness on the
other hand.
Nothing contained in this Article Thirteen or elsewhere in this
Indenture or in the Debentures is intended to or shall impair, as between the
Company, its creditors other than the holders of Senior Indebtedness, and the
Holders of the Debentures, the obligation of the Company, which is absolute and
unconditional, to pay to the Holders of the Debentures the principal of (and
premium, if any) and interest on the Debentures as and when the same shall
become due and payable in accordance with their terms, or is intended to or
shall affect the relative rights of the Holders of the Debentures and creditors
of the Company other than the holders of the Senior Indebtedness, nor shall
anything herein or therein prevent the Trustee or the Holder of any Debenture
from exercising all remedies otherwise permitted by applicable law upon default
under this Indenture, subject to the rights, if any, under this Article Thirteen
of the holders of Senior Indebtedness in respect of cash, property or securities
of the Company received upon the exercise of any such remedy.
Upon any payment or distribution of assets of the Company referred
to in this Article Thirteen, the Trustee, subject to the provisions of Section
601, and the Holders of the Debentures shall be entitled to rely upon any order
or decree made by any court of competent jurisdiction in which such dissolution,
winding-up, liquidation or reorganization proceedings are pending, or a
certificate of the receiver, trustee in bankruptcy, liquidation trustee, agent
or other Person making such payment or distribution, delivered to the Trustee or
to the Holders of the Debentures, for the purposes of ascertaining the Persons
entitled to participate in such distribution, the holders of the Senior
Indebtedness and other indebtedness of the Company, the amount hereof or payable
thereon, the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Article Thirteen.
SECTION 1305. AUTHORIZATION BY HOLDERS. Each Holder of a Debenture by his
acceptance thereof authorizes and directs the Trustee in his behalf to take such
action as may be necessary or appropriate to effectuate the subordination
provided in this Article Thirteen and appoints the Trustee his attorney-in-fact
for any and all such purposes.
SECTION 1306. NOTICE TO TRUSTEE. The Company shall give prompt written
notice to a Responsible Officer of the Trustee of any
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fact known to the Company which would prohibit the making of any payment of
monies to or by the Trustee in respect of the Debentures pursuant to the
provisions of this Article Thirteen. Notwithstanding the provisions of this
Article Thirteen or any other provision of this Indenture, the Trustee shall not
be charged with knowledge of the existence of any facts which would prohibit the
making of any payment of monies to or by the Trustee in respect of the
Debentures pursuant to the provisions of this Article Thirteen, unless and until
a Responsible Officer of the Trustee shall have received written notice thereof
at the principal office of the Trustee from the Company or a holder or holders
of Senior Indebtedness or from any trustee therefor; and before the receipt of
any such written notice, the Trustee, subject to the provisions of Section 601,
shall be entitled in all respects to assume that no such facts exist; provided
that if the Trustee shall not have received the notice provided for in this
Section 1306 at least two business days prior to the date upon which by the
terms hereof any money may become payable for any purpose (including, without
limitation, the payment of the principal of (or premium, if any) or interest on
any Debenture), then, anything herein contained to the contrary notwithstanding,
the Trustee shall have full power and authority to receive such money and to
apply the same to the purposes for which they were received, and shall not be
affected by any notice to the contrary which may be received by it within two
business days prior to such date.
The Trustee, subject to the provisions of Section 601, shall be
entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Indebtedness (or a trustee on
behalf of such holder) to establish that such notice has been given by a holder
of Senior Indebtedness or a trustee on behalf of any such holder or holders. In
the event that the Trustee determines in good faith that further evidence is
required with respect to the right of any Person as a holder of Senior
Indebtedness to participate in any payment or distribution pursuant to this
Article Thirteen, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness
held by such Person, the extent to which such Person is entitled to participate
in such payment or distribution and any other facts pertinent to the rights of
such Person under this Article Thirteen, and if such evidence is not furnished
the Trustee may defer any payment to such Person pending judicial determination
as to the right of such Person to receive such payment.
SECTION 1307. TRUSTEE'S RELATION TO SENIOR INDEBTEDNESS. The Trustee in
its individual capacity shall be entitled to all the rights set forth in this
Article Thirteen in respect of any Senior Indebtedness at any time held by it,
to the same extent as any other holder of Senior Indebtedness, and nothing in
this
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Indenture shall deprive the Trustee of any of its rights as such holder.
With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article Thirteen, and no implied covenants
or obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness and, subject to the
provisions of Section 601, the Trustee shall not be liable to any holder of
Senior Indebtedness if it shall pay over or deliver to Holders of Debentures,
the Company or any other Person money or assets to which any holder of Senior
Indebtedness shall be entitled by virtue of this Article Thirteen or otherwise.
SECTION 1308. ACTS OF HOLDERS OF SENIOR INDEBTEDNESS. No right of any
present or future holder of any Senior Indebtedness to enforce subordination as
herein provided shall at any time in any way be prejudiced or impaired by any
act or failure to act on the part of the Company or by any act or failure to
act, in good faith, by any such holder, or by any noncompliance by the Company
with the terms, provisions and covenants of this Indenture, regardless of any
knowledge thereof which any such holder may have or otherwise be charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness may, at any time and from time to
time, without the consent of or notice to the Trustee or the Holders of the
Debentures, without incurring responsibility to the Holders of the Debentures
and without impairing or releasing the subordination provided in this Article
Thirteen or the obligations hereunder of the Holders of the Debentures to the
holders of Senior Indebtedness, do any one or more of the following: (i) change
the manner, place or terms of payment or extend the time of payment of, or renew
or alter, Senior Indebtedness, or otherwise amend or supplement in any manner
Senior Indebtedness or any instrument evidencing the same or any agreement under
which Senior Indebtedness is outstanding; (ii) sell, exchange, release or
otherwise deal with any property pledged, mortgaged or otherwise securing Senior
Indebtedness; (iii) release any Person liable in any manner for the collection
of Senior Indebtedness; and (iv) exercise or refrain from exercising any rights
against the Company and any other Person.
UMB Bank, N.A., as Trustee hereby accepts the trusts in this
Indenture declared and provided, upon the terms and conditions hereinabove set
forth.
* * * *
84
<PAGE>
This instrument may be executed in any number of counterparts, each
of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
85
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
[Seal] UTILICORP UNITED INC.
By: /s/ Dale J. Wolf
------------------------------------------
Dale J. Wolf
Vice President
Attest:
/s/ Randy Miller
- ---------------------------------
[Seal] UMB BANK, N.A.
as Trustee
By: /s/ Frank Bramwell
------------------------------------------
Attest:
/s/ R. Wm. Bloemker
- ---------------------------------
86
<PAGE>
STATE OF MISSOURI )
: ss.:
COUNTY OF JACKSON )
On the 7 day of June , 1995, before me personally came Dale J. Wolf,
to me known, who, being by me duly sworn, did depose and say that he is a Vice
President of UtiliCorp United Inc., the corporation described in and which
executed the foregoing instrument; that he knows the seal of said corporation;
that the seal affixed to said instrument is such corporate seal; that it was so
affixed by authority of the Board of Directors of said corporation, and that he
signed his name thereto by like authority.
/s/ Joyce J. Auer
-------------------------------------------
Notary Public,
State of Missouri
STATE OF Missouri)
: ss.:
COUNTY OF Jackson)
On the 7 day of June, 1995, before me personally came Frank C.
Bramwell, to me known, who, being by me duly sworn, did depose and say that he
is a Vice President of UMB Bank, N.A., the national banking association
described in and which executed the foregoing instrument; that he knows the seal
of said association; that the seal affixed to said instrument is such
association seal; that it was so affixed by authority of the Board of Directors
of said association, and that he signed his name thereto by like authority.
/s/ Jennifer DeMoss
------------------------------------------
Notary Public,
State of Missouri
87
<PAGE>
________________________________________________________________________________
UTILICORP UNITED INC.
AND
UMB BANK, N.A.,
as Trustee
________________
FIRST SUPPLEMENTAL INDENTURE
Dated as of June 1, 1995
TO
INDENTURE
Dated as of June 1, 1995
________________
8 7/8% Junior Subordinated Deferrable Interest Debentures, Series A, Due 2025
______________________________________________________________________________
<PAGE>
FIRST SUPPLEMENTAL INDENTURE, dated as of the 1st day of June, 1995 (the
"First Supplemental Indenture"), between UTILICORP UNITED INC., a corporation
duly organized and existing under the laws of the State of Delaware (hereinafter
sometimes referred to as the "Company"), and UMB Bank, N.A., a national banking
association organized and existing under the laws of the United States, as
trustee (hereinafter sometimes referred to as the "Trustee") under the Indenture
dated as of June 1, 1995 between the Company and the Trustee (the "Indenture";
all terms used and not defined herein are used as defined in the Indenture).
WHEREAS, the Company executed and delivered the Indenture to the Trustee
to provide for the future issuance of securities and the Company desires to
issue its junior subordinated debentures (the "Debentures"), said Debentures to
be issued from time to time in series as might be determined by the Company
under the Indenture, in an unlimited aggregate principal amount which may be
authenticated and delivered thereunder as in the Indenture provided; and
WHEREAS, pursuant to the terms of the Indenture, the Company desires to
provide for the establishment of a new series of its Debentures to be known as
its 8 7/8% Junior Subordinated Deferrable Interest Debentures, Series A, Due
2025 (said series being hereinafter referred to as the "Series A Debentures"),
the form and substance of such Series A Debentures and the terms, provisions and
conditions thereof to be set forth as provided in the Indenture and this First
Supplemental Indenture; and
WHEREAS, UtiliCorp Capital L.P., a Delaware limited partnership
("UtiliCorp Capital"), has offered to the public its 8 7/8% Cumulative Monthly
Income Preferred Securities, Series A (the "Series A Preferred Securities"),
representing limited partner interests in the Company and proposes to invest the
proceeds from such offering in the Series A Debentures; and
WHEREAS, upon the occurrence of a Special Event (as defined in the Amended
and Restated Agreement of Limited Partnership of UtiliCorp Capital L.P., dated
June 12, 1995, as amended or supplemented (the "Limited Partnership
Agreement")), the Company may dissolve UtiliCorp Capital and cause to be
distributed to the holders of the Series A Preferred Securities, on a pro rata
basis, Series A Debentures (a "Dissolution Event"); and
WHEREAS, the Company desires and has requested the Trustee to join with it
in the execution and delivery of this First Supplemental Indenture, and all
requirements necessary to make this First Supplemental Indenture a valid
instrument, in accordance with its terms, and to make the Series A Debentures,
when executed by the Company and authenticated and delivered by the Trustee, the
valid obligations of the Company, have been performed and fulfilled, and the
execution and delivery hereof have been in all respects duly authorized:
<PAGE>
NOW THEREFORE, in consideration of the purchase and acceptance of the
Series A Debentures by the holders thereof, and for the purpose of setting
forth, as provided in the Indenture, the form and substance of the Series A
Debentures and the terms, provisions and conditions thereof, the Company
covenants and agrees with the Trustee as follows:
ARTICLE ONE
General Terms and Conditions of
the Series A Debentures
SECTION 1.01. There shall be and is hereby authorized a series of
Debentures designated the "8 7/8% Junior Subordinated Deferrable Interest
Debentures, Series A, Due 2025", unlimited in aggregate principal amount. The
Series A Debentures will initially be issued in the aggregate principal amount
of $100,000,000. The Series A Debentures shall mature and the principal shall
be due and payable together with all accrued and unpaid interest thereon,
including Additional Interest (as hereinafter defined) on June 12, 2025, and
shall be issued in the form of registered Series A Debentures without coupons.
SECTION 1.02. Except as provided in Section 1.03 herein, the Series A
Debentures shall be issued in certificated form. Principal and interest on the
Series A Debentures issued in certificated form will be payable, the transfer of
such Series A Debentures will be registrable and such Series A Debentures will
be exchangeable for the Series A Debentures bearing identical terms and
provisions at the office or agency of the Company in the Borough of Manhattan,
The City and State of New York; provided, however, that payment of interest may
be made at the option of the Company by check mailed first class, postage
prepaid to the registered Holder at such address as shall appear in the
Debenture Register. Notwithstanding the foregoing, so long as the Holder of the
Series A Debentures is UtiliCorp Capital, the payment of the principal of and
interest on (including Additional Interest, if any) the Series A Debentures will
be made at such place and to such account as may be designated by UtiliCorp
Capital.
SECTION 1.03. In connection with a Dissolution Event, the Series A
Debentures in certificated form may be presented to the Trustee by UtiliCorp
Capital in exchange for a Global Debenture in an aggregate principal amount
equal to all Outstanding Series A Debentures, to be registered in the name of
the Depository, or its nominee, and delivered by the Trustee to the Depository
for crediting to the accounts of its participants pursuant to the instructions
of UtiliCorp Capital. The Company upon any such presentation shall execute a
Global Debenture in such aggregate principal amount and deliver the same to the
Trustee for authentication and delivery as hereinabove and in the Indenture
provided. Payments on the Series A Debentures issued as a Global Debenture will
be made to the Depository. The Depository for the Series A Debentures shall be
The Depository Trust Company, New York, New York.
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<PAGE>
SECTION 1.04. Each Series A Debenture will bear interest at the rate of 8
7/8% per annum from the original date of issuance until the principal thereof
becomes due and payable, and on any overdue principal and (to the extent that
payment of such interest is enforceable under applicable law) on any overdue
installment of interest at the same rate per annum, payable monthly in arrears
on the last day of each calendar month of each year (each, an "Interest Payment
Date", commencing on June 30, 1995), to the person in whose name such Series A
Debenture or any predecessor Series A Debenture is registered in the Debenture
Register, at the close of business on the Regular Record Date for such interest
installment, which shall be the close of business on the Business Day next
preceding that Interest Payment Date. If pursuant to the provisions of Section
305 of the Indenture the Series A Junior Subordinated Debentures are no longer
represented by a Global Debenture, the Company may select a Regular Record Date
for such interest installment which shall be any date not later than fifteen
days preceding an Interest Payment Date. Any such interest installment not
punctually paid or duly provided for shall forthwith cease to be payable to the
registered Holders on such Regular Record Date, and may be paid to the person in
whose name the Series A Debenture (or one or more Predecessor Debentures) is
registered at the close of business on a Special Record Date to be fixed by the
Trustee for the payment of such defaulted interest, notice whereof shall be
given to the registered Holders of the Series A Debentures not less than 10 days
prior to such Special Record Date, or may be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Series A Debentures may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in the Indenture
hereinafter referred to.
The amount of interest payable for any period will be computed on the
basis of a 360-day year of twelve 30-day months. In the event that any date on
which interest is payable on the Series A Debentures is not a Business Day, then
payment of interest payable on such date will be made on the next succeeding day
which is a Business Day (and without any interest or other payment in respect of
any such delay), except that, if such Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on such date.
If at any time when UtiliCorp Capital is the holder of the Series A
Debentures, UtiliCorp Capital shall be required to pay any interest on dividends
in arrears in respect of the Series A Preferred Securities pursuant to the terms
thereof, then the Company will pay as interest (the "Additional Interest") an
amount equal to such interest on dividends in arrears. In addition, if UtiliCorp
Capital would be required to pay any taxes, duties, assessments or governmental
charges of whatever nature (other than withholding taxes) imposed by the United
States, or any other taxing authority, then, in any such case, the Company shall
also pay as Additional Interest such amounts as shall be required so that the
net amount received and retained by UtiliCorp Capital after paying any such
taxes, duties, assessments or governmental charges will not be less than the
amounts UtiliCorp Capital would have received had no such taxes, duties,
assessments or governmental charges been imposed.
-3-
<PAGE>
ARTICLE TWO
Mandatory Prepayment and Optional Redemption
of the Series A Debentures
SECTION 2.01. If UtiliCorp Capital redeems the Series A Preferred
Securities in accordance with the terms thereof, the Series A Debentures will
become due and payable in a principal amount equal to the aggregate stated
liquidation preference of the Series A Preferred Securities so redeemed,
together with all accrued and unpaid interest thereon, including Additional
Interest, if any (the "Mandatory Prepayment Price"). Any payment pursuant to
this provision shall be made in immediately available same day funds prior to
12:00 noon, New York time, on the date of such redemption or at such earlier
time as the Company and UtiliCorp Capital shall agree.
SECTION 2.02. At such time as there are no Series A Preferred Securities
remaining outstanding and subject to the terms of Articles Eleven and Twelve of
the Indenture, the Company shall have the right to redeem the Series A
Debentures, in whole or in part, from time to time, on or after June 12, 2000,
at a redemption price equal to 100% of the principal amount to be redeemed plus
any accrued and unpaid interest thereon, including any Additional Interest, if
any, to the date of such redemption (the "Optional Redemption Price"). Any
redemption pursuant to this paragraph will be made upon not less than 30 nor
more than 60 days' notice, at the Optional Redemption Price. If the Series A
Debentures are only partially redeemed pursuant to this Section, the Debentures
will be redeemed pro rata or by lot or by any other method utilized by the
Trustee; provided, that if at the time of redemption, the Series A Debentures
are registered as a Global Debenture, the Depository shall determine the
principal amount of such Series A Debentures held by each Series A
Debentureholder to be redeemed.
ARTICLE THREE
Extension of Interest Payment Period
SECTION 3.01. The Company shall have the right, at any time during the
term of the Series A Debentures, from time to time to extend the interest
payment period, of such Series A Debentures for up to 60 consecutive months (the
"Extended Interest Payment Period"), at the end of which period the Company
shall pay all interest accrued and unpaid thereon (together with interest
thereon at the rate specified for the Series A Debentures to the extent
permitted by applicable law); provided that, during such Extended Interest
Payment Period the Company shall not declare or pay any dividend on, or redeem,
purchase, acquire or make a liquidation payment with respect to, any of its
capital stock or make any guarantee payments with respect to the foregoing.
Prior to the termination of any such Extended Interest Payment Period, the
Company may further extend such period, provided that such period together with
all such further extensions thereof shall not exceed 60 consecutive months. Upon
the termination of any Extended Interest Payment Period and upon the payment of
all accrued and unpaid interest and
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<PAGE>
any Additional Interest then due, the Company may select a new Extended Interest
Payment Period, subject to the foregoing requirements. No interest during an
Extended Interest Payment Period, except at the end thereof, shall be due and
payable.
SECTION 3.02. (a) If UtiliCorp Capital is the sole holder of the Series
A Debentures at the time the Company selects an Extended Interest Payment
Period, the Company shall give both UtiliCorp Capital and the Trustee written
notice of its selection of such Extended Interest Payment Period one Business
Day prior to the earlier of (i) the next succeeding date on which dividends on
the Series A Preferred Securities are payable or (ii) the date UtiliCorp Capital
is required to give notice of the Record Date or the date such dividends are
payable to the New York Stock Exchange or other applicable self-regulatory
organization or to holders of the Series A Preferred Securities, but in any
event not less than one Business Day prior to such Record Date. The Company
shall cause UtiliCorp Capital to give notice of the Company's selection of such
Extended Interest Payment Period to the holders of the Series A Preferred
Securities.
(b) If UtiliCorp Capital is not the sole Holder of the Series A
Debentures at the time the Company selects an Extended Interest Payment
Period, the Company shall give the Holders of the Series A Debentures and
the Trustee written notice of its selection of such Extended Interest
Payment Period 10 Business Days prior to the earlier of (i) the next
succeeding Interest Payment Date or (ii) the date the Company is required
to give notice of the record or payment date of such interest payment to
the New York Stock Exchange or other applicable self- regulatory
organization or to Holders of the Series A Debentures, but in any event
not less than two Business Days prior to such Record Date.
(c) The month in which any notice is given pursuant to paragraphs
(a) or (b) of this Section shall constitute one of the 60 months which
comprise the maximum Extended Interest Payment Period.
ARTICLE FOUR
Right of Set-Off
SECTION 4.01. Notwithstanding anything to the contrary in the Indenture
or herein, the Company shall have the right to set-off any payment it is
otherwise required to make thereunder or hereunder with and to the extent the
Company has heretofore made, or is concurrently on the date of such payment
making, a payment under the Guarantee, dated as of June 12, 1995 executed by the
Company and furnished to UtiliCorp Capital for the benefit of the holders of the
Series A Preferred Securities.
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<PAGE>
ARTICLE FIVE
Covenant to List on Exchange
SECTION 5.01. If the Series A Debentures are to be issued as a Global
Debenture in connection with the distribution of the Series A Debentures to the
holders of the Series A Preferred Securities upon a Dissolution Event, the
Company will use its best efforts to list such Debentures on the New York Stock
Exchange or on such other exchange as the Series A Preferred Securities are then
listed and traded on the same part of any such exchange.
ARTICLE SIX
Form of Series A Debenture
SECTION 6.01. The Series A Debentures and the Trustee's Certificate of
Authentication to be endorsed thereon are to be substantially in the following
forms:
(FORM OF FACE OF DEBENTURE)
[If the Debenture is to be a Global Debenture, insert - This Debenture is
a Global Debenture within the meaning of the Indenture hereinafter referred to
and is registered in the name of a Depository or a nominee of a Depository. This
Debenture is exchangeable for Debentures registered in the name of a person
other than the Depository or its nominee only in the limited circumstances
described in the Indenture, and no transfer of this Debenture (other than a
transfer of this Debenture as a whole by the Depository to a nominee of the
Depository or by a nominee of the Depository to the Depository or another
nominee of the Depository) may be registered except in limited circumstances.
Unless this Debenture is presented by an authorized representative of The
Depository Trust Company (55 Water Street, New York) to the issuer or its agent
for registration of transfer, exchange or payment, and any Debenture issued is
registered in the name of Cede & Co. or such other name as requested by an
authorized representative of The Depository Trust Company and any payment hereon
is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY A PERSON IS WRONGFUL since the registered owner hereof, Cede & Co.,
has an interest herein.]
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<PAGE>
No. 1 $100,000,000
UTILICORP UNITED INC.
8 7/8% JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURE, SERIES A, DUE 2025
UTILICORP UNITED INC., a corporation duly organized and existing under the
laws of the State of Delaware (herein referred to as the "Company", which term
includes any successor corporation under the Indenture), for value received,
hereby promises to pay to UtiliCorp Capital L.P. ("UtiliCorp Capital") or
registered assigns, the principal sum of One Hundred Million Dollars
($100,000,000) on June 12, 2025, and to pay interest on said principal sum from
June 12, 1995 or from the most recent interest payment date (each such date, an
"Interest Payment Date") to which interest has been paid or duly provided for,
monthly in arrears on the last day of each calendar month of each year
commencing June 30, 1995 at the rate of 8 7/8% per annum plus Additional
Interest, if any, until the principal hereof shall have become due and payable,
and on any overdue principal and premium, if any, and (to the extent that
payment of such interest is enforceable under applicable law) on any overdue
installment of interest at the same rate per annum. The amount of interest
payable on any Interest Payment Date shall be computed on the basis of a 360-day
year of twelve 30-day months. In the event that any date on which interest is
payable on this Debenture is not a Business Day, then payment of interest
payable on such date will be made on the next succeeding day which is a Business
Day (and without any interest or other payment in respect of any such delay),
except that, if such Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on such date. The interest installment
so payable, and punctually paid or duly provided for, on any Interest Payment
Date will, as provided in the Indenture, be paid to the person in whose name
this Debenture (or one or more Predecessor Debentures, as defined in said
Indenture) is registered at the close of business on the regular record date for
such interest installment, [which shall be the close of business on the Business
Day next preceding such Interest Payment Date]. [If pursuant to the provisions
of Section 305 of the Indenture the Series A Junior Subordinated Debentures are
no longer represented by a Global Debenture--which shall be the close of
business on the ___ Business Day next preceding such Interest Payment Date.] Any
such interest installment not punctually paid or duly provided for shall
forthwith cease to be payable to the registered Holders on such Regular Record
Date, and may be paid to the person in whose name this Debenture (or one or more
Predecessor Debentures) is registered in the Debenture Register at the close of
business on a Special Record Date to be fixed by the Trustee for the payment of
such defaulted interest, notice whereof shall be given to the registered Holders
of this series of Debentures not less than 10 days prior to such Special Record
Date, or may be paid at any time in any other lawful manner not inconsistent
with the requirements of any securities exchange on which the Debentures may be
listed, and upon such notice as may be required by such exchange, all as more
fully provided in the Indenture hereinafter referred to. The principal of (and
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<PAGE>
premium, if any) and the interest on this Debenture shall be payable at the
office or agency of the Company maintained for that purpose in the Borough of
Manhattan, The City and State of New York, in any coin or currency of the United
States of America which at the time of payment is legal tender for payment of
public and private debts; provided, however, that payment of interest may be
made at the option of the Company by check mailed first class, postage prepaid,
to the registered Holder at such address as shall appear in the Debenture
Register. Notwithstanding the foregoing, so long as the Holder of this Debenture
is UtiliCorp Capital, the payment of the principal of (and premium, if any) and
interest (including Additional Interest, if any) in this Debenture will be made
at such place and to such account as may be designated by UtiliCorp Capital.
The indebtedness evidenced by this Debenture is, to the extent provided in
the Indenture, subordinate and subject in right of payment to the prior payment
in full of all Senior Indebtedness, and this Debenture is issued subject to the
provisions of the Indenture with respect thereto. Each Holder of this Debenture,
by accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Trustee on his behalf to take such action as may be
necessary or appropriate to acknowledge or effectuate the subordination so
provided and (c) appoints the Trustee his attorney-in-fact for any and all such
purposes. Each Holder hereof, by his acceptance hereof, hereby waives all notice
of the acceptance of the subordination provisions contained herein and in the
Indenture by each holder of Senior Indebtedness, whether now outstanding or
hereafter incurred, and waives reliance by each such Holder upon said
provisions.
This Debenture shall not be entitled to any benefit under the Indenture
hereinafter referred to, be valid or become obligatory for any purpose until the
Certificate of Authentication hereon shall have been signed by or on behalf of
the Trustee.
Unless the Certificate of Authentication hereon has been executed by the
Trustee referred to on the reverse side hereof, this Debenture shall not be
entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.
The provisions of this Debenture are contained on the reverse side hereof
and such continued provisions shall for all purposes have the same effect as
though fully set forth at this place.
IN WITNESS WHEREOF, the Company has caused this Instrument to be executed
as of June 1, 1995
UTILICORP UNITED INC.
By________________________
Name:
Attest: Title:
__________________________
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<PAGE>
Title:
(FORM OF CERTIFICATE OF AUTHENTICATION)
CERTIFICATE OF AUTHENTICATION
This is one of the Debentures of the series of Debentures described in the
within-mentioned Indenture.
UMB BANK, N.A. or_____________________________
as Trustee as Authentication Agent
By__________________________ By___________________________
Authorized Signatory Authorized Signatory
Dated: June 12, 1995
(FORM OF REVERSE OF DEBENTURE)
This Debenture is one of a duly authorized series of Debentures of the
Company (herein sometimes referred to as the "Debentures"), specified in the
Indenture, all issued or to be issued in one or more series under and pursuant
to an Indenture dated as of June 1, 1995 duly executed and delivered between the
Company and UMB Bank, N.A., a national banking association duly organized and
existing under the laws of the United States, as Trustee (herein referred to as
the "Trustee"), as supplemented by the First Supplemental Indenture dated as of
June 1, 1995 between the Company and the Trustee (said Indenture as so
supplemented being hereinafter referred to as the "Indenture"), to which
Indenture and all indentures supplemental thereto reference is hereby made for a
description of the rights, limitations of rights, obligations, duties and
immunities thereunder of the Trustee, the Company and the holders of the
Debentures. By the terms of the Indenture, the Debentures are issuable in series
which may vary as to amount, date of maturity, rate of interest and in other
respects as in the Indenture provided. This series of Debentures is limited in
aggregate principal amount as specified in said First Supplemental Indenture.
If UtiliCorp Capital redeems its 8 7/8% Cumulative Monthly Income Preferred
Securities, Series A (the "Series A Preferred Securities") in accordance with
the terms thereof, this Debenture will become due and payable in a principal
amount equal to the aggregate stated liquidation preference of the Series A
Preferred Securities so redeemed, together with any interest accrued thereon,
including Additional Interest (the "Mandatory Prepayment Price"). Any Mandatory
Prepayment Price shall be paid prior to 12:00 noon, New York time, on the date
of such redemption or at such earlier time as the Company and UtiliCorp Capital
shall agree. At such time as there are no Series A Preferred Securities
remaining outstanding and subject to the
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<PAGE>
terms of Articles Eleven and Twelve of the Indenture, the Company shall have the
right to redeem this Debenture at the option of the Company, without premium or
penalty, in whole or in part at any time on or after June 12, 2000 (an "Optional
Redemption"), at a redemption price equal to 100% of the principal amount plus
any accrued but unpaid interest, including any Additional Interest, if any, to
the date of such redemption (the "Optional Redemption Price"). Any redemption
pursuant to this paragraph will be made upon not less than 30 nor more than 60
days' notice, at the Optional Redemption Price. If the Debentures are only
partially redeemed by the Company pursuant to an Optional Redemption, the
Debentures will be redeemed pro rata or by lot or by any other method utilized
by the Trustee; provided that if at the time of redemption, the Debentures are
registered as a Global Debenture, the Depositary shall determine the principal
amount of such Debentures held by each Holder to be redeemed.
In the event of redemption of this Debenture in part only, a new Debenture or
Debentures of this series for the unredeemed portion hereof will be issued in
the name of the Holder hereof upon the cancellation hereof.
In case an Event of Default, as defined in the Indenture, shall have occurred
and be continuing, the principal of all of the Debentures may be declared, and
upon such declaration shall become, due and payable, in the manner, with the
effect and subject to the conditions provided in the Indenture.
The Indenture contains provisions for defeasance at any time of the entire
indebtedness of this Debenture upon compliance by the Company with certain
conditions set forth therein.
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the Holders of not less than a majority in aggregate
principal amount of the Debentures of each series affected at the time
outstanding, as defined in the Indenture, to execute supplemental indentures for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of the Indenture or of any supplemental indenture or of
modifying in any manner the rights of the Holders of the Debentures; provided,
however, that no such supplemental indenture shall (i) extend the fixed maturity
of any Debentures of any series, or reduce the principal amount thereof, or
reduce the rate or extend the time of payment of interest thereon, or reduce
any premium payable upon the redemption thereof, without the consent of the
Holder of each Debenture so affected or (ii) reduce the aforesaid percentage of
Debentures, the Holders of which are required to consent to any such
supplemental indenture, without the consent of the Holders of each Debenture
then outstanding and affected thereby. The Indenture also contains provisions
permitting the Holders of a majority in aggregate principal amount of the
Debentures of all series at the time outstanding affected thereby, on behalf of
the Holders of the Debentures of such series, to waive any past default in the
performance of any of the covenants contained in the Indenture, or established
pursuant to the Indenture with respect to such series, and its consequences,
except a default in the payment of the principal of or premium, if any, or
interest on any of the Debentures of such series. Any such consent or waiver by
the registered Holder of this Debenture (unless revoked as provided in the
Indenture) shall be conclusive and binding upon such Holder and upon all future
Holders and owners of this
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<PAGE>
Debenture and of any Debenture issued in exchange herefor or in place hereof
(whether by registration of transfer or otherwise), irrespective of whether or
not any notation of such consent or waiver is made upon this Debenture.
No reference herein to the Indenture and no provision of this Debenture or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and premium, if any, and
interest on this Debenture at the time and place and at the rate and in the
manner herein prescribed.
The Company shall have the right at any time during the term of the
Debentures, from time to time to extend the interest payment period of such
Debentures to up to 60 consecutive months (the "Extended Interest Payment
Period"), at the end of which period the Company shall pay all interest then
accrued and unpaid (together with interest thereon at the rate specified for the
Debentures to the extent that payment of such interest is enforceable under
applicable law); provided that, during such Extended Interest Payment Period the
Company shall not declare or pay any dividend on, or redeem, purchase, acquire
or make a liquidation payment with respect to, any of its capital stock or make
any guarantee payments with respect to the foregoing. Prior to the termination
of any such Extended Interest Payment Period, the Company may further extend
such Extended Interest Payment Period, provided that such Period together with
all such further extensions thereof shall not exceed 60 consecutive months. At
the termination of any such Extended Interest Payment Period and upon the
payment of all accrued and unpaid interest and any additional amounts then due,
the Company may select a new Extended Interest Payment Period.
As provided in the Indenture and subject to certain limitations therein set
forth, this Debenture is transferable by the registered Holder hereof on the
Debenture Register of the Company, upon surrender of this Debenture for
registration of transfer at the office or agency of the Company in the Borough
of Manhattan, The City and State of New York accompanied by a written instrument
or instruments of transfer in form satisfactory to the Company or the Trustee
duly executed by the registered Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Debentures of authorized denominations
and for the same aggregate principal amount and series will be issued to the
designated transferee or transferees. No service charge will be made for any
such transfer, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in relation thereto.
Prior to due presentment for registration of transfer of this Debenture, the
Company, the Trustee, any paying agent and any Debenture Registrar may deem and
treat the registered Holder hereof as recorded in the Debenture Register as the
absolute owner hereof (whether or not this Debenture shall be overdue and
notwithstanding any notice of ownership or writing hereon made by anyone other
than the Debenture Registrar) for the purpose of receiving payment of or on
account of the principal hereof and premium, if any, and interest due hereon and
for all other purposes, and neither the Company nor the Trustee nor any paying
agent nor any Debenture Registrar shall be affected by any notice to the
contrary.
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<PAGE>
No recourse shall be had for the payment of the principal of or the interest
on this Debenture, or for any claim based hereon, or otherwise in respect
hereof, or based on or in respect of the Indenture, against any incorporator,
stockholder, officer or director, past, present or future, as such, of the
Company or of any predecessor or successor corporation, whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any assessment or
penalty or otherwise, all such liability being, by the acceptance hereof and as
part of the consideration for the issuance hereof, expressly waived and
released.
[The Debentures of this series are issuable only in registered form without
coupons in denominations of $25 and any integral multiple thereof.] [This Global
Debenture is exchangeable for Debentures in definitive form only under certain
limited circumstances set forth in the Indenture. Debentures of this series so
issued are issuable only in registered form without coupons in denominations of
$25 and any integral multiple thereof.] As provided in the Indenture and
subject to certain limitations [herein and] therein set forth, Debentures of
this series [so issued] are exchangeable for a like aggregate principal amount
of Debentures of this series of a different authorized denomination, as
requested by the Holder surrendering the same.
All terms used in this Debenture which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
ARTICLE SEVEN
Original Issue of Series A Debentures
SECTION 7.01. Series A Debentures may, upon execution of this First
Supplemental Indenture, or from time to time thereafter, be executed by the
Company and delivered to the Trustee for authentication, and the Trustee shall
thereupon authenticate and deliver said Debentures to or upon the written order
of the Company, signed by its Chairman, its President, or any Vice President and
its Treasurer or an Assistant Treasurer, without any further action by the
Company.
ARTICLE EIGHT
Sundry Provisions
SECTION 8.01. Except as otherwise expressly provided in this First
Supplemental Indenture or in the form of Series A Debenture or otherwise clearly
required by the context hereof or thereof, all terms used herein or in said form
of Series A Debenture that are defined in the Indenture shall have the several
meanings respectively assigned to them thereby.
SECTION 8.02. The Indenture, as supplemented by this First Supplemental
Indenture, is in all respects ratified and confirmed, and this First
Supplemental Indenture shall be deemed part of the Indenture in the manner and
to the extent herein and therein provided.
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<PAGE>
SECTION 8.03. The recitals herein contained are made by the Company and not
by the Trustee, and the Trustee assumes no responsibility for the correctness
thereof. The Trustee makes no representation as to the validity or sufficiency
of this First Supplemental Indenture.
SECTION 8.04. This First Supplemental Indenture may be executed in any
number of counterparts each of which shall be an original; but such counterparts
shall together constitute but one and the same instrument.
SECTION 8.05 If and to the extent that any provision of this First
Supplemental Indenture limits, qualifies or conflicts with the duties imposed by
Sections 310 to 317, inclusive, of the Trust Indenture Act of 1939, as amended,
such imposed duties shall control.
SECTION 8.06 The Article and Section headings are for convenience only and
shall not affect the construction hereof.
SECTION 8.07 All covenants and agreements in this First Supplemental
Indenture by Utilicorp shall bind its successors and assigns, whether so
expressed or not.
SECTION 8.08 In case any provision in this First Supplemental Indenture or
the Series A Debentures shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
SECTION 8.09 Nothing in this First Supplemental Indenture or the Series A
Debentures, express or implied, shall give to any Person, other than the parties
hereto and their successors hereunder and the Holders, any benefit or any legal
or equitable right, remedy or claim under this First Supplemental Indenture.
SECTION 8.10 This First Supplemental Indenture and the Series A Debentures
shall be governed by and construed in accordance with the laws of the State of
New York.
IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, on the date or dates indicated in the
acknowledgments and as of the day and year first above written.
UTILICORP UNITED INC.
By /s/ Dale J. Wolf
----------------------
Vice President
Attest:
/s/ Randy Miller
- --------------------------------
Assistant Treasurer
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<PAGE>
UMB BANK, N.A.
as Trustee
By /s/ Frank Bramwell
--------------------------
Attest:
/s/ R. Wm. Bloemker
- ---------------------------------
Assistant Secretary
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<PAGE>
STATE OF Missouri )
COUNTY OF Jackson ) June 7, 1995
On the 7 day June, in the year one thousand nine hundred ninety-five,
before me personally came Dale J. Wolf to me known, who, being by me duly
sworn, did depose and say that he resides at 3305 W. 132nd St. Leawood, KS;
that he is Vice President of UTILICORP UNITED INC., one of the corporations
described in and which executed the above instrument; that he knows the
corporate seal of said corporation; that the seal affixed to the said
instrument is such corporation seal; that it was so affixed by authority of
the Board of Directors of said corporation, and that he signed his name
thereto by like authority.
/s/ Joyce J. Auer
--------------------------
NOTARY PUBLIC
My Commission Expires
STATE OF Missouri )
COUNTY OF Jackson ) June 7, 1995
On the 7 day of June, in the year one thousand nine hundred ninety-five,
before me personally came Frank Bramwell to me known, who, being by me duly
sworn, did depose and say that (s)he resides at 11313 Jarbow Kansas City, MO,
of UMB Bank N.B., one of the corporations described in and which executed the
above instrument; that he knows the corporate seal of said corporation; that
the seal affixed to said instrument is such corporate seal; that it was so
affixed by authority of the Board of Directors of said corporation and that
he signed his name thereto by like authority.
/s/ Jennifer DeMoss
---------------------------
NOTARY PUBLIC
My Commission Expires
- 15 -
<PAGE>
EX 10(a)(3)
The following is a complete copy of the Plan:
UTILICORP UNITED INC.
AMENDED AND RESTATED
1986 STOCK INCENTIVE PLAN
1. PURPOSE
The UtiliCorp United Inc. Amended and Restated 1986 Stock Incentive Plan is
designed to enable qualified executive, managerial, supervisory and professional
personnel of UtiliCorp United Inc. to acquire or increase their ownership of the
$1.00 par value common stock of the Company on reasonable terms. The
opportunity so provided is intended to foster, in participants, a strong
incentive to put forth maximum effort for the continued success and growth of
the Company and its Subsidiaries, to aid in retaining individuals who put forth
such efforts, and to assist in attracting the best available individuals in the
future.
2. DEFINITIONS
When used herein, the following terms shall have the meaning set forth
below:
2.1 "Award" shall mean an Option or a Restricted Stock Award.
2.2 "Board" means the Board of Directors of UtiliCorp United Inc.
2.3 "Committee" means the members of the Board's Compensation Committee,
which shall consist of not less than three (3) Directors of the Company.
Members of the Committee shall be Disinterested Persons.
2.4 "Code" means the Internal Revenue Code of 1986, as amended from time
to time.
2.5 "Company" means UtiliCorp United Inc., a Delaware corporation.
2.6 "Disinterested Person" shall be as defined in regulations issued
pursuant to Section 16 of the Securities Exchange Act of 1934, as amended from
time to time (the "Exchange Act").
2.7 "Fair Market Value" means, with respect to the Company's Shares, the
mean between the high and low prices of Shares on the New York Stock Exchange
Composite Tape on, as applicable: (a) the day on which an Award is granted; (b)
the day all restrictions lapse for a Restricted Stock Award; or (c) the day
Shares are delivered in lieu of current cash compensation as permitted by the
Plan or, if there should be no sale on that date, on the next preceding day on
which there was a sale.
2.8 "Grantee" means a person to whom an Award is made.
<PAGE>
2.9 "Incentive Stock Option" or "ISO" means an Option awarded under the
Plan which meets the terms and conditions established by Section 422 of the Code
and applicable regulations.
2.10 "Non-Qualified Stock Option" or "NQSO" means an Option awarded under
the Plan other than an ISO.
2.11 "Option" means the right to purchase a number of Shares, at a price,
for a term, under conditions, and for cash or other considerations fixed by the
Committee and expressed in the written instrument evidencing the Option. An
Option may be either an ISO or NQSO.
2.12 "Plan" means the Company's Amended and Restated 1986 Stock Incentive
Plan.
2.13 "Restricted Stock Award" means the grant of a right to receive a
number of Shares at a time or times fixed by the Committee in accordance with
the Plan and subject to such limitations and restrictions as the Plan and the
Committee impose, all as expressed in the written instrument evidencing the
Restricted Stock Award.
2.14 "Right of First Refusal" means the right of the Company to be given
the opportunity to purchase Shares issued pursuant to Awards under the Plan at
their then Fair Market Value, in the event the holder of such Shares desires to
sell the Shares to any other person. This right may apply to any Shares awarded
under the Plan under terms and conditions established by the Committee at the
time of Award and included in the written instrument evidencing the Award, and
shall apply to sales by the Grantee or the Grantee's guardian, legal
representative, joint tenant, tenant in common, heir or successors.
2.15 "Section 16 Person" means a person who, with respect to the Shares, is
subject to Section 16 of the Exchange Act.
2.16 "Shares" means shares of the Company's $1.00 par value common stock
or, if by reason of the adjustment provisions hereof any rights under an Award
under the Plan pertain to any other security, such other security.
2.17 "Subsidiary" means any business, whether or not incorporated, in which
the Company, at the time an Award is granted to an employee thereof, or in other
cases, at the time of reference, owns directly or indirectly not less than 50
percent of the equity interest except that with respect to an ISO the term
"Subsidiary" shall have the meaning set forth in Section 425(f) of the Code.
2.18 "Successor" means the legal representative of the estate of a deceased
Grantee or the person or persons who shall acquire the right to exercise an
Option, or to receive Shares issuable in satisfaction of a Restricted Stock
Award, by bequest or inheritance or by reason of the death of the Grantee, as
provided in accordance with Section 9 hereof,
2.19 "Term" means the period during which a particular Option may be
exercised or the period during which the restrictions placed on a Restricted
Stock Award are in effect.
3. ADMINISTRATION OF THE PLAN
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<PAGE>
3.1 The Plan shall be administered by the Committee.
3.2 Subject to the provisions of the Plan, the Committee shall have the
sole authority to determine:
(i) the employees of the Company and its Subsidiaries to whom Awards
shall be granted;
(ii) the number of Shares to be covered by each Award;
(iii) the price to be paid for the Shares upon the exercise of
each Option;
(iv) the Term within which each Option may be exercised;
(v) the terms and conditions of each Option, which may include
provisions for payment of the option price in Shares at the Fair Market
Value of such Shares on the day of their delivery for such purpose;
(vi) the restrictions on transfer and forfeiture conditions with
respect to a Restricted Stock Award; and
(vii) any other terms and conditions of the Award.
3.3 The Committee may construe and interpret the Plan, reconcile
inconsistencies thereunder and supply omissions therefrom. Any decision or
action taken by the Committee in the exercise of such powers or otherwise,
arising out of or in connection with the construction, administration,
interpretation and effect of the Plan and of its rules and regulations shall be
conclusive and binding upon all Grantees, and any other person claiming under or
through any Grantee.
3.4 The Committee shall designate one of its members as Chairman. It
shall hold its meetings at such times and places as may be determined. All
determinations of the Committee shall be made by a majority of its members at
the time in office. Any determination reduced to writing and signed by a
majority of the members of the Committee at the time in office shall be fully as
effective as if it had been made at a meeting duly called and held. The
Committee may appoint a Secretary, who need not be a member of the Committee,
and may establish and amend such rules and regulations for the conduct of its
business and the administration of the Plan as it shall deem advisable.
3.5 No member of the Committee shall be liable, in the absence of bad
faith, for any act or omission with respect to his service on the Committee.
Service on the Committee is hereby specifically declared to constitute service
as a Director of the Company, to the end that the members of the Committee
shall, in respect of their acts and omissions as such, be entitled to the
limitation of liability, indemnification and reimbursement as Directors of the
Company pursuant to its Certificate of Incorporation, Bylaws and to the benefits
of any insurance policy maintained by the Company providing coverage with
respect to acts or omission of Directors of the Company.
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<PAGE>
3.6 The Committee shall regularly inform the Board as to its actions under
the Plan in such manner, at such times, and in such form as the Board may
request.
3.7 Notwithstanding the foregoing, in the event the Committee shall not
exist at any time during the term of this Plan, the Plan shall be administered
by the Board of Directors but only in the event the Board consists of a majority
of persons who are Disinterested Persons and a majority of Directors acting in
any matter related to the Plan consists of Disinterested Persons.
4. ELIGIBILITY
Awards may be made under the Plan only to the class of employees of the
Company or of a Subsidiary, including officers, consisting of those employees
who have executive, managerial, supervisory or professional responsibilities
("Eligible Employees"). A Director who is not an employee shall not be eligible
to receive an Award. Awards may be made to Eligible Employees whether or not
they have received prior Awards under the Plan or under any other plan, and
whether or not they are participants in other benefit plans of the Company.
5. SHARES SUBJECT TO PLAN
3,262,644(1) Shares are hereby reserved for issuance in connection with
Awards under the Plan and the issuance of Shares pursuant to Section 19, below.
The Shares so used may be Shares held in the treasury, however acquired, or
Shares which are authorized but unissued. Any Shares subject to Options which
lapse unexercised, and any Shares forming part of a Restricted Stock Award which
do not vest in the Grantee, shall once again be available for grant of Awards.
6. GRANTING OF OPTIONS
6.1 Subject to the terms of the Plan, the Committee may from time to time
grant Options to Eligible Employees.
6.2 Pursuant to the Code and applicable regulations, the aggregate Fair
Market Value (determined at the time the Option is granted) of Shares as to
which ISOs are exercisable for the first time by a Grantee during any calendar
year (under all Plans of the Grantee's employer corporation and its parent and
subsidiary corporations) shall not exceed $100,000. No ISO shall be granted to
a Grantee who, at the time the ISO is granted, owns (within the meaning of
Section 422(b)(6) of the Code) stock possessing more than 10 percent of the
total combined voting power of all classes of stock of the Grantee's employer
corporation or of its parent or subsidiary corporation unless, at the time the
ISO is granted, the Option price is at least 110 percent of the Fair Market
Value of the stock subject to the
- ----------------------------
(1) 262,644 Shares remain unissued under the 1986 Stock Incentive Plan and
3,000,000 additional Shares have been added to the Plan hereunder, contingent
upon the receipt of all required regulatory approvals and approval by the
Company's stockholders at the annual stockholders' meeting in 1996.
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<PAGE>
ISO, and the ISO by its terms is not exercisable after the expiration of five
years from the date the ISO is granted.
6.3 The purchase price of each Share subject to an Option shall be fixed
by the Committee, but shall not be less than the greater of the par value of the
Share or 100 percent of the Fair Market Value of the Share on the date the
Option is granted, except as otherwise provided in Section 6.2 with respect to a
10 percent stockholder.
6.4 Each Option shall expire and all rights to purchase Shares thereunder
shall terminate on the date fixed by the Committee and expressed in the written
instrument evidencing the Option, which date in the case of ISOs shall not be
after the expiration of ten years from the date the Option is granted.
6.5 Subject to the terms of the Plan each Option shall become exercisable
at the time, and for the number of Shares, fixed by the Committee and expressed
in the written instrument evidencing the Option; provided, however, that during
any fiscal year of the Company, no Grantee shall be granted Options covering
more than 150,000 Shares. Except to the extent otherwise provided in or
pursuant to Sections 9 and 10, no Option shall become exercisable as to any
Shares prior to the first anniversary of the date on which the Option was
granted.
6.6 Subject to the terms of the Plan, the Committee may at the time of the
Award make all or any portion of Option Shares subject to a Right of First
Refusal for any period of time designated by the Committee in the written
instrument evidencing the Awards.
7. RESTRICTED STOCK AWARDS
7.1 Subject to the terms of the Plan, the Committee may also grant
Eligible Employees Restricted Stock Awards.
7.2 The number of Shares covered thereby and other terms and conditions of
any such Restricted Stock Award, including the period for which and the
conditions on which the Shares included in the Award will be subject to
forfeiture and restrictions on transfer or on the ability of the Grantee to make
elections with respect to the taxation of the Award without the consent of the
Committee, shall be determined by the Committee and expressed in the written
instrument evidencing the Award; provided, however, that during any fiscal year
of the Company, no Grantee shall receive Restricted Stock Awards covering more
than 150,000 Shares. Except as provided in or pursuant to Sections 9 and 10, no
such restrictions shall lapse earlier than the first, or later than the tenth,
anniversary of the date on which the Award was granted.
7.3 Subject to the terms of the Plan, the Committee may at the time of the
Award make all or portion of the Shares awarded under a Restricted Stock Award
subject to a Right of First Refusal for any period of time designated by the
Committee and expressed in the written instrument evidencing the Award.
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<PAGE>
7.4 The Committee, in its sole discretion, may impose performance
restrictions on Restricted Stock Awards as it may deem advisable or appropriate
in accordance with this Section 7.4.
7.4.1 The Committee may set restrictions based upon (a) the
achievement of specific performance objectives (Company-wide, divisional or
individual), (b) applicable Federal or state securities laws, or (c) any
other basis determined by the Committee in its sole discretion.
7.4.2 For purposes of qualifying Restricted Stock Awards as
"performance-based compensation" under section 162(m) of the Code, the
Committee, in its sole discretion, may set restrictions based upon the
achievement of performance goals. The performance goals shall be set by
the Committee on or before the latest date permissible to enable the
Restricted Stock Awards to qualify as "performance-based compensation"
under Section 162(m) of the Code. In granting Restricted Stock Awards that
are intended to qualify under Code Section 162(m), the Committee shall
follow any procedures determined by it in its sole discretion from time to
time to be necessary, advisable or appropriate to ensure qualification of
the Restricted Stock Awards under Code Section 162(m) (e.g., in determining
the performance goals).
8. NON-TRANSFERABILITY OF RIGHTS
No Option and no rights under any Restricted Stock Award shall be
transferable by the Grantee otherwise than by will or the laws of descent and
distribution, and each Option may be exercised during the lifetime of the
Grantee only by him; and the written instrument evidencing each Option and each
Restricted Award shall so state.
9. DEATH OR TERMINATION OF EMPLOYMENT
9.1 Subject to the provisions of the Plan, the Committee may make and
include in the written instrument evidencing an Option such provisions
concerning exercise or lapse of the Option on death or termination of employment
as it shall in its discretion determine. No such provision shall permit an
Option to be exercised prior to six months after the date on which it was
granted, except in the event of death or termination of employment by reason of
disability.
9.2 No ISO shall be exercisable after the date which is three months
following the Grantee's termination of employment for any reason other than
death or disability, unless (a) the Grantee dies during such three-month period,
and (b) the written instrument evidencing the Award or the Committee permits
later exercise. No ISO may be exercised more than one year after the Grantee's
termination of employment on account of disability, unless (a) the Grantee dies
during such one-year period and (b) the written instrument evidencing the Award
or the Committee permits later exercise.
9.3 The effect of death or termination of employment on Shares issuable or
deliverable pursuant to any Restricted Stock Awards shall be as stated in the
written instrument evidencing the Award.
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9.4 A transfer of employment between the Company and a Subsidiary, or
between Subsidiaries, shall not constitute a termination of employment for
purposes of the Award and the Plan.
10. PROVISIONS RELATING TO TERMINATION OF THE COMPANY'S SEPARATE EXISTENCE
The Committee may provide that in the event that the Company is to be
wholly or partially liquidated, or agrees to participate in a merger,
consolidation or reorganization in which it or any entity controlled by it is
not the surviving entity, any or all Options granted under the Plan shall be
immediately exercisable in full and the restrictions relating to any or all
Restricted Stock Awards made under the Plan shall immediately lapse.
11. WRITINGS EVIDENCING AWARDS
Each Award granted under the Plan shall be evidenced by a writing which
may, but need not be, in the form of an agreement to be signed by the Grantee.
The writing shall set forth the nature and size of the Award, its Term, the
other terms and conditions thereof, and such other matters as the Committee
directs. Acceptance of any benefits of an Award by the Grantee shall be an
assent to the terms and conditions set forth therein, whether or not the writing
is in the form of an agreement signed by the Grantee.
12. EXERCISE OF RIGHTS UNDER AWARDS
12.1 A person entitled to exercise an Option may do so only by delivery of
a written notice to that effect specifying the number of Shares with respect to
which the Option is being exercised and any other information which the
Committee has previously prescribed and of which such person has been notified.
12.2 Such a notice shall be accompanied by payment in full of the purchase
price of any Shares to be purchased thereunder, with such payment being made in
cash or Shares having a Fair Market Value on the date of exercise of the Option
equal to the purchase price payable under the Option, or a combination of cash
and Shares, and no Shares shall be issued upon exercise of an Option until full
payment has been made therefor; provided that payment in part or full by the
transfer of Shares to the Company shall be subject to approval by the Committee.
12.3 Upon exercise of an Option or after grant of a Restricted Award under
which a Right of First Refusal has been required with respect to some or all of
the Shares subject to such Option, or included in the Restricted Stock Award,
the Grantee shall be required to acknowledge, in writing, his or her
understanding of such Right of First Refusal and the legend which shall be
placed on the certificates for such Shares in respect thereof.
12.4 All notices or requests by a Grantee provided for herein shall be
delivered to the Secretary of the Company.
13. EFFECTIVE DATE OF THE PLAN AND DURATION
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<PAGE>
13.1 The Plan shall become effective on September 1, 1995, the date of its
approval by the Executive Committee of the Board of Directors of the Company,
subject to approval of the stockholders at a meeting duly held in accordance
with applicable law; and subject to approval by any governmental body, the
approval of the Plan by which body is required under applicable law. No Option
shall be exercisable nor shall any Shares be deliverable under a Restricted
Stock Award prior to receipt of all required approvals.
13.2 No Awards may be granted under the Plan after September 1, 2005,
although the terms of any Award may be amended at any time prior to the
expiration of the Award in accordance with the Plan.
14. DATE OF AWARD
The date of an Award shall be the date on which the Committee's
determination to grant the same is final, or such latter date as shall be
specified by the Committee in connection with such determination.
15. STOCKHOLDER STATUS
No person shall have any rights as a stockholder by virtue of the grant of
an Award under the Plan except with respect to Shares actually issued to that
person.
16. POSTPONEMENT OF EXERCISE
The Committee may postpone any exercise of an Option or the delivery of any
Shares pursuant to a Restricted Stock Award for such period as the Committee in
its discretion may deem necessary in order to permit the Company (i) to effect
or maintain registration of the Plan or the Shares issuable upon the exercise of
an Option or distributable in satisfaction of a Restricted Stock Award under the
Securities Act of 1933, as amended, or the securities laws of any applicable
jurisdiction, (ii) to permit any action to be taken in order to comply with
restrictions or regulations incident to the maintenance of a public market for
its Shares or to list the Shares thereon; or (iii) to determine that such Shares
and the Plan are exempt from such registration or that no action of the kind
referred to in (ii) above need be taken; and the Company shall not be obligated
by virtue of any terms and conditions of any Award or any provision of the Plan
to permit the exercise of an Option to sell or deliver Shares in violation of
the Securities Act of 1933 or other applicable law. Any such postponement shall
not extend the Term of an Option nor shorten the Term of a restriction
applicable under any Restricted Stock Award; and neither the Company nor its
directors or officers or any of them shall have any obligation or liability to
the Grantee of an Award, to any Successor of a Grantee or to any other person
with respect to any Shares as to which an Option shall lapse because of such
postponement or as to which issuance under a Restricted Stock Award was thereby
delayed.
17. TERMINATION, SUSPENSION OR MODIFICATION OF PLAN
The Board may at any time terminate, suspend or modify the Plan, except
that the Board shall not, without authorization of the stockholders of the
Company, effect any change (other than through adjustment for changes in
capitalization as herein provided) which
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<PAGE>
increases the aggregate number of Shares for which Awards may be granted or
sold, materially amends the formula for determining the purchase price of Shares
on which Options may be granted, changes the class of employees eligible to
receive Awards, extends the period during which Awards may be granted or removes
the restrictions set forth in this sentence.
No termination, suspension or modification of the Plan shall adversely
affect any right acquired by any Grantee or any Successor under an Award granted
before the date of such termination, suspension or modification unless such
Grantee or Successor shall consent thereto. Adjustments for changes in
capitalization or corporate transactions as provided for herein shall not,
however, be deemed to adversely affect such right.
18. ADJUSTMENTS FOR CHANGES IN CAPITALIZATION AND CORPORATE TRANSACTIONS
Any change in the number of outstanding shares of the Company occurring
through stock splits, combination of shares, recapitalization, or stock
dividends after the adoption of the Plan shall be appropriately reflected in an
increase or decrease in the aggregate number of Shares then available for the
grant of Awards under the Plan, or to become available through the termination,
surrender or lapse of Awards previously granted and in the numbers of Shares
subject to Restricted Stock Awards then outstanding; and appropriate adjustments
shall be made in the per Share option price and/or number of Shares subject to
the Option as to any outstanding Options. No fractional Shares shall result
from such adjustments. Similar adjustments shall be made in the event of
distribution of other securities in respect of outstanding Shares or in the
event of a reorganization, merger, consolidation or any other change in the
corporate structure or Shares of the Company, if and to the extent that the
Committee deems such adjustments appropriate.
19. DELIVERY OF SHARES IN LIEU OF CASH INCENTIVE AWARDS OR DIRECTOR'S FEES
(a) Any employee otherwise eligible for an Award under the Plan who is
eligible to receive a cash bonus or incentive payment from the Company under any
management bonus or incentive plan of the Company or entitled to receive a cash
payment for services rendered as a Director, may make application to the
Committee in such manner as may be prescribed from time to time by the Committee
to receive Shares available under the Plan in lieu of all or any portion of such
cash payment. Such an application may be made by, and approved with respect to,
a member of the Committee.
(b) The Committee may in its discretion honor such application by
delivering Shares available under the Plan to such employee, equal in Fair
Market Value on the delivery date to that portion of the cash payment otherwise
payable to the employee under such bonus or incentive plan, or for services
rendered as a Director, for which a Share delivery is to be made in lieu of cash
payment.
(c) Any Shares delivered to an employee under this Section shall reduce
the aggregate number of Shares authorized for issuance and delivery under the
Plan.
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<PAGE>
(d) Such applications and such delivery of Shares shall not be permitted
after the expiration of ten years from the effective date of the Plan. Delivery
of such Shares shall be deemed to occur on the date certificates therefor are
sent by United States mail or hand-delivered to the recipient.
20. NON-UNIFORM DETERMINATION PERMISSIBLE
The Committee's determination under the Plan including, without limitation,
determinations as to the persons to receive Awards, the form, amount and type of
Awards (i.e., ISOs, NQSOs or Restricted Stock Awards), the terms and provisions
of Awards, the written instruments evidencing such Awards, and the granting or
rejecting of applications for delivery of Shares in lieu of cash bonus or
incentive payments or compensation of a Director need not be uniform as among
persons similarly situated and may be made selectively among otherwise eligible
employees or Directors, whether or not such employees or Directors are similarly
situated.
21. TAXES
(a) The Company shall be entitled to withhold the amount of any
withholding tax payable with respect to any Awards or Shares delivered in lieu
of cash payments. The person entitled to receive Shares pursuant to the Award
will be given notice as far in advance as practicable to permit such cash
payment to be made to the Company. The Company may defer making delivery of
Shares until indemnified to its satisfaction with respect to any such
withholding tax.
(b) Notwithstanding the foregoing, at any time when a Grantee is required
to pay to the Company an amount required to be withheld under applicable income
tax laws, the Grantee may satisfy this obligation in whole or in part by
electing (the "Election") to have the Company withhold Shares having a value
equal to the amount required to be withheld. The value of the Shares to be
withheld shall be based on the closing price of the Shares on the New York Stock
Exchange on the date that the amount of tax to be withheld shall be determined
("Tax Date"). Each election must be made prior to the Tax Date. The Committee
may disapprove any Election or may suspend or terminate the right to make
Elections. An Election is irrevocable.
If the Grantee is a Section 16 Person, then an Election relating to taxes
due upon the exercise of an NQSO is subject to the following additional
restrictions:
(1) No Election shall be effective for a Tax Date which occurs within
six months of the grant of the Option.
(2) The Election must be made either six months prior to the Tax Date
or must be made during a period beginning on the third business day
following the date of release for publication of the Company's quarterly or
annual summary statement of sales and earnings and ending on the twelfth
business day following such date (except that this limitation will not
apply in the event death or disability of the Grantee occurs prior to the
expiration of the six month period).
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<PAGE>
(3) If the Tax Date is deferred until six months after exercise, the
full amount of shares of Common Stock otherwise issuable upon exercise of
the Option will be issued and transferred to the Grantee upon exercise, but
such Grantee shall be unconditionally obliged to tender back to the Company
the proper number of shares of Common Stock on the Tax Date to satisfy the
income tax withholding requirements, plus cash for any fractional amount.
22. TENURE
An employee's right, if any, to continue in the employ of the Company or a
Subsidiary shall not be affected by the fact that he is a participant under this
Plan; and the Company or Subsidiary shall retain the right to terminate his
employment without regard to the effect such termination may have on any rights
he may have under the Plan.
23. APPLICATION OF PROCEEDS
The proceeds received by the Company from sale of its Shares pursuant to
Options granted under the Plan shall be used for general corporate purposes.
24. OTHER ACTIONS
Nothing in the Plan shall be construed to limit the authority of the
Company to exercise all of its corporate rights and powers, including, by way of
illustration and not by way of limitation, the right to grant Options for proper
corporate purposes otherwise than under the Plan to any employee or any other
person, firm, corporation, association or other entity, or to grant Options to,
or assume Options of, any person in connection with the acquisition by purchase,
lease, merger, consolidation or otherwise, of all or any part of the business or
assets of any person, firm, corporation, association or other entity.
-11-
<PAGE>
EX10(a)(6)
100388
SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT
THIS AGREEMENT, made and entered into as of this 13 day of October , 1988, be
and between UtiliCorp United, Inc., a Delaware corporation with its principle
place of business in Kansas City, Missouri, (hereinafter referred to as the
"Corporation"), and Dale J. Wolf, an individual residing in the State of Kansas
(Hereinafter referred to as the "Employee").
WITNESSETH THAT:
WHEREAS, the Employee is employed by the Corporation; and
WHEREAS, the Corporation recognizes the valuable services performed for it by
the Employee and wishes to encourage his continued employment; and
WHEREAS, the Employee desires assurance that he will receive a level of
retirement income from and after his retirement from active service with the
Corporation that will take into account his entire period of employment with
Missouri Public Service Company, now a division of the Corporation; and
WHEREAS, the Employee desires assurance that he will receive a level of
retirement income from and after his retirement from active service with the
Corporation which is no less than he would have received has he remained a
participant in the Missouri Public Service Company Non-Union Pension Plan
(hereinafter referred to as the "MPS Plan") (under the terms of said Plan as in
effect on July 31, 1988) until his retirement or other termination of
employment; and
WHEREAS, the parties hereto wish to set forth the terms and con- ditions upon
which the Corporation shall pay supplemental retirement income to the Employee
in addition to that provided by qualified pen- sion plans sponsored by the
Corporation.
NOW, THEREFORE, in consideration of the premises and of the mu- tual promises
herein contained, the parties hereto agree as follows:
1. RETIREMENT BENEFIT.
In consideration of the Employee's continued employment,
the Corporation shall pay a supplemental retirement benefit to the
Employee equal to the greater of (A) or (B):
(A) An amount equal to the excess, if any, of (a) over (b):
(a) An amount equal to the present value of what
would have been the Employee's accrued benefits under the
1
<PAGE>
MPS Plan as of the time of the commencement of monthly
retirement income to the Employee under the UtiliCorp
United Inc. Retirement Income Plan (UtiliCorp Plan),
assuming:
(i) the Employee had remained a participant
in the MPS Plan until his termination of employment
with the Corporation;
(ii) the Employee's years of Credited
Service and Service under the MPS Plan equaled his
combined actual years of Credited Service and Service
under the MPS Plan and the UtiliCorp Plan; provided,
however, no years of Credited Service and Service
shall be counted under both the MPS Plan and UtiliCorp
Plan for the same period of employment; and
(iii) the provision of the MPS Plan as of
July 31, 1988 (including those provisions reducing the
Employee's accrued benefit in the event his retirement
benefits commenced prior to his attainment of age (62)
remained unchanged.
(b) An amount equal to the sum of:
(i) the present value of the Employee's
accrued benefits under the UtiliCorp Plan as of the
time of the commencement of monthly retirement income
to the Employee under said Plan, calculated in accor-
dance with the provisions of the UtiliCorp Plan, (in-
cluding those provisions reducing the Employee's
accrued benefit in the event his retirement benefits
commence prior to his attainment of age 62); and
(ii) the value of the Employee's plan
account(s) in the UtiliCorp United Inc. Employee Stock
Ownership Plan (ESOP), determined as of the valuation
date next preceding the Employee's termination of
employment with the Corporation. The fair market
value of Corporation common stock or other employer
securities in the Employee's ESOP plan account(s)
shall be determined in the same manner for purposes of
this Agreement as under the ESOP.
(B) An amount equal to the excess of (a) over (b):
(a) An amount equal to the present value of the
Employee's accrued benefits under the UtiliCorp Plan as of
the time of the commencement of monthly retirement income
under the UtiliCorp Plan, calculated in accordance with the prov-
isions reducing the Employee's accrued benefit in the event
his monthly retirement income commences prior to his
attainment of age (62), but with the addition of 6.74 years
of benefit accrual service (Credited Service).
2
<PAGE>
(b) An amount equal to the present value of the
Employee's accrued benefits under the UtiliCorp Plan as of
the time of the commencement of monthly retirement income
under the UtiliCorp Plan, Calculated in accordance with the
provisions of the UtiliCorp Plan (including those pro-
visions reducing the Employee's accrued benefit in the
event his monthly retirement income commences prior to his
attainment of age 62).
For purposes of this paragraph, the present value of the
Employee's accrued benefits shall be calculated using the same
interest rate assumption as is used for determining the actu-
arial value of benefits under the UtiliCorp Plan as of the time
monthly retirement income commences to the Employee under the
UtiliCorp Plan.
2. EFFECT OF EARLY ESOP DISTRIBUTIONS.
Notwithstanding subparagraph 1(A) (b) (ii), if the Employee
should receive a distribution from the ESOP prior to the time
monthly retirement income commences to the Employee under the
UtiliCorp Plan, the value of such distribution determined as of the
date of the distribution shall be added to the total amount
described in subparagraph 1(A) (b) in determining the amount of the
Employee's supplemental retirement benefit.
3. PAYMENT OF BENEFITS.
No benefit payments will commence under this Agreement prior
to the Employee's termination of employment with the Corporation.
Benefits under this Agreement shall be paid by the Corporation in
the same manner and at or about the time benefits are paid to the
Employee under the UtiliCorp Plan in accordance with elections made
by the Employee under the UtiliCorp Plan. Such benefit payments
shall be the actuarial equivalent of the amount described in para-
graph 1 using the same assumptions for determining actuarial equiva-
lents as described in the UtiliCorp Plan at the time of the Em-
ployee's retirement.
4. DEATH BENEFITS FOR SPOUSE.
Should the Employee die before the commencement of monthly
retirement income under the UtiliCorp Plan, a monthly benefit shall
be payable to his surviving spouse, if any, for her life, commencing
as of the date that death benefits commence to the spouse under the
UtiliCorp Plan. The amount of such monthly benefit shall be equal
to 50% of the monthly benefit that would have been payable to the
Employee under this Agreement during his lifetime had he elected to
retire as of the date of his death and receive payments under the
UtiliCorp Plan in the form of a 50% joint and survivor annuity with
his surviving spouse as beneficiary.
3
<PAGE>
5. NO CONTRACT OF EMPLOYMENT.
Nothing contained herein shall be construed to be a contract
of employment for any term of years, nor as conferring upon the Em-
ployee the right to continue in the employ of the Corporation in his
present capacity, or in any other capacity.
6. BENEFITS PAYABLE ONLY FROM CORPORATE ASSETS.
(a) Nothing contained in this Agreement, and no action
taken pursuant to its provisions by either party shall create or be
construed to create, a trust of any kind, or a fiduciary relationship
between the Corporation and the Employee or any other person.
(b) The payments to the Employee or his surviving spouse
shall be made from assets which shall continue for all purposes to
be a part of the general assets of the Corporation and no person
shall acquire any interest in such assets by virtue of this Agree-
ment. To the extent the Employee or his surviving spouse acquires a
right to receive payments from the Corporation under this Agreement,
such right shall be no greater than the right of any unsecured gen-
eral creditor of the Corporation.
7. NON-ASSIGNABILITY OF BENEFITS.
Neither the Employee nor his spouse shall have the power or
right to transfer, assign, anticipate, hypothecate or otherwise en-
cumber all or any part of the amounts payable by the Corporation
hereunder. Such amounts shall not be subject to seizure by any
creditor of the Employee, by a proceeding at law or in equity, nor
transferable by operation of law in the event of bankruptcy, insol-
vency or death of the Employee or his spouse. Notwithstanding any
provision to the contrary in this Agreement, any such attempted
assignment, transfer or encumbrance shall be void.
8. AMENDMENT.
This Agreement may not be amended, altered or modified, ex-
cept by a written instrument signed by both parties and may not be
terminated, except as provided herein.
9. GOVERNING LAW.
This Agreement, and the rights of the parties hereunder,
shall be governed by and construed in accordance with the laws of
the State of Missouri.
IN WITNESS WHEREOF, the parties have executed this Agreement, in
duplicate, as of the date first written above.
UTILICORP UNITED INC.
ATTEST: "Corporation"
/s/Roger K. Sallee by s/Richard Green, Jr.
-------------------------- --------------------------------
Secretary President
"Employee"
s/Dale J. Wolf
--------------------------------
Dale J. Wolf
4
<PAGE>
SEVERANCE COMPENSATION AGREEMENT
This Agreement is effective as of the date it is signed by
both UTILICORP UNITED INC., a Delaware corporation (the
"Company"), and _________________________________________________
("Executive").
WHEREAS, the Company's Board of Directors has determined
that it is appropriate to reinforce and encourage the continued
attention and dedication of members of the Company's management,
including the Executive, to their assigned duties without
distraction in potentially disturbing circumstances arising from
the possibility of a Change in Control (as defined in Section 2
below) of the Company or a Spin-Off affecting Executive (as
defined in Section 3 below) of a business unit of the Company;
and
WHEREAS, this Agreement sets forth the severance
compensation to which the Executive will be entitled upon certain
conditions if the Executive's employment with the Company or a
Spin-Off Purchaser (as defined in Section 3) terminates following
a Change in Control or a Spin-Off.
1. TERM. This Agreement shall terminate, except to the
extent that any obligation of the Company hereunder remains
unpaid as of such time, upon the earliest of (a) three years from
the date hereof if a Change in Control or a Spin-Off affecting
Executive has not occurred within such three-year period;
provided that the term of this Agreement shall be automatically
extended for an additional year upon each anniversary of the date
hereof until a party provides notice to the other party that such
automatic extention shall cease, in which case this Agreement
shall terminate at the end of the then existing three-year term;
(b) the termination of the Executive's employment prior to a
Change in Control or a Spin-Off affecting Executive by the
Company or the Executive for any reason, with or without Cause
(as defined in Section 4(c) below); (c) the Executive's death;
(d) the termination of the Executive's employment following a
Change in Control or a Spin-Off affecting Executive by the
Company, or the Spin-Off Purchaser, as the case may be, for
Cause, or as a result of the Executive's Disability (as defined
in Section 4(a) below), or Retirement (as defined in Section 4(b)
below); (e) the termination of the Executive's employment
following a Change in Control or a Spin-Off affecting Executive
by the Executive for any reason other than for Good Reason (as
defined in Section 4(d) below; or (f) three years from the date
of a Change in Control of the Company or one year from the date
of a Spin-Off affecting Executive.
2. CHANGE IN CONTROL. For purposes of this Agreement, a
"Change in Control" shall be deemed to have occurred if (i) there
shall be consummated (x) any reorganization, consolidation or
merger of the Company in which the Company is not the continuing
<PAGE>
or surviving corporation or pursuant to which shares of the
Company's Voting Securities (as defined below) would be converted
into cash, securities or other property, other than a
reorganization, consolidation or merger of the Company in which
the holders of the Company's Voting Securities immediately prior
to the reorganization, consolidation or merger own at least 66
2/3% of the Voting Securities of the surviving corporation
immediately after the reorganization, consolidation or merger, or
(y) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all, or
substantially all, of the assets of the Company; (ii) the holders
of the Voting Securities of the Company approve any plan or
proposal for the liquidation or dissolution of the Company; (iii)
any person (as such term is used in Section 13(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act")), shall become the beneficial owner (within the meaning of
Rule 13d-3 under the Exchange Act) of 20% or more of the
Company's outstanding Voting Securities (other than as a result
of an acquisition directly from the Company); provided, that no
acquisition by the Company, its affiliates, or any employee
benefit plan of the Company or its affiliates shall be deemed to
constitute a Change in Control; (iv) at the time that individuals
who, as of the date hereof, constitute the board of directors of
the Company (as of the date hereof, the "Incumbent Board") cease
for any reason to constitute at least a majority of the Board,
provided that any person becoming a director subsequent to the
date hereof whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board
(other than an election or nomination of an individual whose
initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the
directors of the Company, as such terms are used in Rule 14a-11
of Regulation 14A promulgated under the Exchange Act) shall be,
for purposes of this Agreement, considered as though such person
were a member of the Incumbent Board; or (v) the occurrence of
any other event which the Incumbent Board in its sole discretion
determines constitutes a Change in Control. For purposes of this
Agreement, "Voting Securities" of a person means equity
securities or equity interests having a general right to vote for
election of the members of the board of directors or managers of
such person.
3. SPIN-OFF AFFECTING EXECUTIVE.
(a) A Spin-Off affecting Executive shall be deemed to have
occurred if (i) there shall be consummated by the Company any
Disposition (as defined below) of any Business Unit (as defined
below): and (ii) as a result of such Disposition the Executive's
employment with the Company is terminated.
(b) "Business Unit" means any direct or indirect subsidiary
of the Company (of which the Company holds directly or indirectly
at least 50% of the Voting Securities), or any unincorporated
unit of the Company, which subsidiary or unincorporated unit is
operated as a unit within the Company and which is determined by
the Incumbent Board in its sole discretion to be a separate
business unit at the time of the Disposition.
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<PAGE>
(c) "Disposition" means any of the following: (i) there
shall be consummated (x) any reorganization, consolidation or
merger of the Business Unit following which the Company owns,
directly and indirectly, less than 50% of the Voting Securities
of the Business Unit (if the Business Unit was prior to such
transaction a subsidiary of the Company), or (y) any sale, lease,
exchange or other transfer (in one transaction or a series of
related transactions) of all, or substantially all, of the assets
of the Business Unit; (ii) the holders of the Voting Securities
of the Business Unit approve any plan or proposal for the
liquidation or dissolution of the Business Unit (unless such
Business Unit continues to function as an unincorporated Business
Unit within the Company, as determined by the Incumbent Board in
its sole discretion); or (iii) the occurrence of any other event
which the Incumbent Board in its sole discretion determines
constitutes a Spin-Off affecting Executive.
(d) For purposes of this Agreement, "Spin-Off Purchaser"
shall mean (i) in the case of a reorganization, consolidation or
merger involving a Business Unit which is a direct or indirect
subsidiary of the Company, the surviving corporation of the
merger or consolidation; (ii) in the case of the sale, lease or
exchange of all or substantially all of the assets of a Business
Unit, the person acquiring control of such assets; and (iii) in
any other case, the person whom the Incumbent Board in its
reasonable discretion determines is the Spin-Off Purchaser.
4. OTHER DEFINITIONS.
(a) DISABILITY. The term "Disability" as used in this
Agreement shall mean the Executive's incapacity due to physical
or mental illness which shall have caused the Executive to have
been absent from his or her duties with the Company or the Spin-
Off Purchaser, as the case may be, on a full-time basis for six
months and the Executive shall not have returned to the full-time
performance of the Executive's duties within 30 days after
written Notice of Termination (as defined in paragraph 4(e)
below) has been given by the Company or the Spin-Off Purchaser,
as the case may be.
(b) RETIREMENT. The term "Retirement" as used in this
Agreement shall mean termination by the Company or the Executive
of the Executive's employment based on the Executive's having
retired pursuant to the then existing retirement plan of the
Company or the Spin-Off Purchaser, as the case may be, at or
after age 65 or by any agreement between the Company or the Spin-
Off Purchaser, as the case may be, and the Executive, or by any
generally applicable retirement policy of the Company or the
Spin-Off Purchaser, as the case may be.
(c) CAUSE. The term "Cause" as used in this Agreement
shall mean (i) the willful and continued failure by the Executive
to substantially perform his or her duties of employment with
Company or the Spin-Off Purchaser, as the case may be (other than
any such failure resulting from the Executive's incapacity due to
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<PAGE>
physical or mental illness), unless the Executive uses reasonable
efforts to correct such failure within a reasonable time after
demand for substantial performance is delivered by the Company or
the Spin-Off Purchaser, as the case may be, that specifically
identifies the manner in which the Company or the Spin-Off
Purchaser, as the case may be, believes the Executive has not
substantially performed his or her duties, (ii) the willful
misconduct by the Executive which materially injures the Company
or the Spin-Off Purchaser, as the case may be, monetarily or
otherwise, or (iii) conviction of, or entry of a plea of NOLO
CONTENDERE with regard to, any felony or any crime involving
moral turpitude or dishonesty of or by the Executive. For
purposes of this paragraph, no act, or failure to act, on the
Executive's part shall be considered "willful" unless done, or
omitted to be done, by him or her not in good faith and without
reasonable belief that his or her action or omission was in, or
not opposed to, the best interests of the Company or the Spin-Off
Purchaser, as the case may be.
(d) GOOD REASON.
(i) For purposes of this Agreement "Good Reason" shall
mean any of the following if the same shall occur, without the
Executive's express written consent, within three years after a
Change of Control:
(A) the assignment to the Executive of duties
materially inconsistent with the Executive's position,
duties, responsibilities and status with the Company
immediately prior to the Change in Control, or a material
adverse change in the Executive's titles or reporting
relationships as in effect immediately prior to the Change
in Control, or any removal of the Executive from or any
failure to reelect the Executive to any of such positions;
(B) a reduction in the Executive's base salary as
in effect on the date hereof or as the same may be increased
from time to time during the term of this Agreement, or the
Company's failure to increase (within 12 months of the
Executive's last increase in base salary) the Executive's
base salary after such Change in Control in an amount which
at least equals, on a percentage basis, the average
percentage increase in base salary for the Executive during
the three-year period immediately preceding the Change in
Control;
(C) any failure by the Company to continue in
effect any benefit plan or arrangement such as health, life
and disability insurance in which the Executive was
participating at the time of the Change in Control, or other
material fringe benefits (such as SERPs, deferred
compensation plans, or 401(k) plans) enjoyed by the
Executive at the time of the Change in Control (or plans or
arrangements or other benefits providing him or her with
substantially similar or better benefits, taken in the
aggregate) (hereinafter referred to as "Benefit Plans"), or
the taking of any action by the Company which would
adversely affect the Executive's participation in or
materially reduce the Executive's benefits under any such
Benefit Plans, taken in the aggregate;
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<PAGE>
(D) any failure by the Company to continue in
effect any incentive plan or arrangement, such as bonus or
performance plans, in which the Executive was participating
at the time of the Change in Control (or plans or
arrangements providing him or her with substantially similar
or better benefits, taken in the aggregate) (hereinafter
referred to as "Incentive Plans"), or the taking of any
action by the Company which would adversely affect the
Executive's participation in any such Incentive Plan or
reduce the Executive's benefits under any such Incentive
Plan, expressed as a percentage of his or her base salary,
by more than 10 percentage points in any fiscal year as
compared to the immediately preceding fiscal year;
(E) any failure by the Company to continue in
effect any plan or arrangement to receive securities of the
Company (including, without limitation, the Company's Stock
Incentive Plan and any other plan or arrangement to receive
and exercise stock options, stock appreciation rights,
restricted stock or grants thereof) in which the Executive
was participating at the time of the Change in Control (or
plans or arrangements providing him or her with
substantially similar or better benefits, taken in the
aggregate) (hereinafter referred to as "Securities Plans")
or the taking of any action by the Company which would
adversely affect the Executive's participation in or
materially reduce the Executive's benefits under any such
Securities Plan;
(F) Any requirement that the Executive relocate
to any place outside of the metropolitan area in which the
Executive performed the Executive's duties prior to the
Change in Control, except for required travel by the
Executive on the Company's business to an extent
substantially consistent with the Executive's business
travel obligations at the time of the Change in Control;
(G) any reduction in the number of paid vacation
days per year to which the Executive was entitled
immediately preceding the Change in Control;
(H) any material breach by the Company of any
provision of this Agreement;
(I) any failure by the Company to obtain the
assumption of this Agreement by any successor or assign of
the Company; or
(J) any purported termination of the Executive's
employment which is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 4(e), and
for purposes of this Agreement, no such purported
termination shall be effective.
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<PAGE>
(ii) For purposes of this Agreement "Good Reason" shall
mean any of the following if the same shall occur, without the
Executive's express written consent, within one year after a
Spin-Off affecting Executive (within the meaning of Section 3)
where the Executive has accepted employment with the Spin-Off
Purchaser or an affiliate of the Spin-Off Purchaser:
(A) the assignment to the Executive of duties
with respect to the Business Unit materially inconsistent
with the Executive's position, duties, responsibilities and
status with respect to the Business Unit immediately prior
to the Spin-Off, or a material adverse change in the
Executive's titles or reporting relationships with respect
to the Business Unit as in effect immediately prior to the
Spin-Off, or any removal of the Executive from or any
failure to reelect the Executive to any of such positions;
(B) a reduction in the Executive's base salary as
in effect on the date hereof or as the same may be increased
from time to time during the term of this Agreement, or the
failure to increase (within 12 months of the Executive's
last increase in base salary prior to the Spin-Off) the
Executive's base salary after such Spin-Off in an amount
which at least equals, on a percentage basis, the average
percentage increase in base salary for the Executive during
the three-year period immediately preceding the Spin-Off;
(C) any failure to have in effect Benefit Plans
providing Executive with benefits substantially similar to
or better than the benefits, taken in the aggregate,
available to Executive under the Benefit Plans in which the
Executive was participating at the time of the Spin-Off, or
the taking of any action by the Spin-Off Purchaser which
would adversely affect the Executive's participation in or
materially reduce the Executive's benefits under any such
Benefit Plan, taken in the aggregate;
(D) any failure to have in effect Incentive Plans
providing Executive with benefits substantially similar to
or better than the benefits, taken in the aggregate,
available to Executive under the Incentive Plans in which
the Executive was participating at the time of the Spin-Off,
or the taking of any action by the Spin-Off Purchaser which
would adversely affect the Executive's participation in any
such Incentive Plan or reduce the Executive's benefits under
any such Incentive Plan, expressed as a percentage of his or
her base salary, by more than 10 percentage points in any
fiscal year as compared to the immediately preceding fiscal
year;
-6-
<PAGE>
(E) any requirement that the Executive relocate
to any place outside of the metropolitan area in which the
Executive performed the Executive's duties prior to the
Spin-Off, except for required travel by the Executive on the
Company's business to an extent substantially consistent
with the Executive's business travel obligations at the time
of the Spin-Off;
(F) any reduction in the number of paid vacation
days per year to which the Executive was entitled
immediately preceding the Spin-Off;
(G) any material breach by the Company or the
Spin-Off Purchaser of any provision of this Agreement;
(H) any failure by the Company to obtain the
assumption of this Agreement by the Spin-Off Purchaser; or
(I) any purported termination of the Executive's
employment which is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 4(e), and
for purposes of this Agreement, no such purported
termination shall be effective.
(e) NOTICE OF TERMINATION. Any termination of the
Executive's employment due to the Executive's Disability or
Retirement, or for Cause, shall be effected pursuant to a Notice
of Termination conforming to the requirements of this section.
For purposes of this Agreement, a "Notice of Termination" shall
mean a written notice which shall indicate those specific
termination provisions in this Agreement relied upon and which
sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's
employment. For purposes of this Agreement, no such purported
termination shall be effective without such Notice of
Termination.
(f) DATE OF TERMINATION. "Date of Termination" shall mean
(i) if this Agreement is terminated by the Executive for Good
Reason, the date Executive delivers notice of such termination to
the Company or the Spin-Off Purchaser, as the case may be; (ii)
if Executive's employment is terminated by the Company or the
Spin-Off Purchaser, as the case may be, for Disability, 30 days
after Notice of Termination is given to the Executive (provided
that the Executive shall not have offered to return and is able
to return to the performance of the Executive's duties on a full-
time basis during such 30-day period) or (iii) if the Executive's
employment is terminated by the Company or the Spin-Off
Purchaser, as the case may be, for any other reason, the date on
which a Notice of Termination is given.
5. SEVERANCE COMPENSATION UPON TERMINATION OF EMPLOYMENT.
The Executive shall be entitled to payments and other benefits as
set forth in Sections 5(a) and 5(b) upon the occurrence of any of
the following: (x) within three years following a Change in
Control, the Company shall terminate the Executive's employment
other than for Disability, Retirement, or Cause, or, within such
three-year period, the Executive shall terminate his or her
employment for Good Reason; (y) in connection with a Spin-Off
-7-
<PAGE>
affecting Executive where the Executive does not become employed
by the Spin-Off Purchaser, the Company shall, at or within one
year following such Spin-Off, terminate the Executive's
employment other than for Disability, Retirement, or Cause, or
the Executive shall terminate his or her employment for any of
the grounds defined as "Good Reason" in Section 4(d)(i) (other
than the grounds set forth in Section 4(d)(i)(A)); provided that
the Company shall have no liability to Executive in the event
that the Spin-Off Purchaser shall have offered employment to
Executive on terms which would not give Executive grounds to
terminate his or her employment for Good Reason pursuant to
Section 4(d)(ii) (any such termination by the Company, where the
Executive does not receive such an offer from the Spin-Off
Purchaser, shall be referred to herein as a "Spin-Off
Termination"); or (z) within one year following a Spin-Off
affecting the Executive, the Spin-Off Purchaser shall terminate
the Executive's employment other than for Disability, Retirement,
or Cause, or within such one-year period, the Executive shall
terminate his or her employment for Good Reason. Except as
specifically provided in this Section 5, the Executive shall have
no right to receive compensation under this Agreement.
Termination of employment due to death shall not give rise to any
rights to compensation under this Agreement. In the case of (x)
and (y) above, the Company shall be liable to make such payments
and provide such benefits, and in the case of (z) above, the
Spin-Off Purchaser shall be liable to make such payments and
provide such benefits (except that in the case of (z) above the
Company shall be bound by the provisions of Section 5(b)(ii)(A)).
(a) SEVERANCE PAY. The Company, or the Spin-Off Purchaser,
as the case may be, shall pay as severance pay in a lump sum, in
cash, on the fifth business day following the Date of
Termination, an amount equal to:
(i) In the event that such termination follows a
Change in Control, 2.99 times the average of the aggregate
annual compensation includable for Federal income tax
purposes as gross income paid to the Executive by the
Company and any of its subsidiaries during the five calendar
years ending immediately before the Change in Control (the
"Executive's Average Annual Compensation") (provided, that
if the Executive was not employed by the Company or any of
its subsidiaries for the entire duration of such five-year
period, the "Executive's Average Annual Compensation" shall
be the annualized average of the Executive's aggregate
compensation includable for Federal income tax purposes as
gross income paid by the Company and any of its subsidiaries
during the portion of such five-year period during which the
Executive was employed by the Company or any of its
subsidiaries); and
(ii) In the event that such termination is in
connection with or follows a Spin-Off, 1.0 times the
Executive's Average Annual Compensation.
-8-
<PAGE>
(b) OTHER BENEFITS. In addition to compensation set forth
in Section 5(a) hereof, subject to the provisions and limitations
set forth below, the Executive shall be entitled to the following
benefits from the Company or the Spin-Off Purchaser, as the case
may be:
(i) In the event of termination of Executive's employment
following a Change in Control, or in the event of a Spin-Off
Termination of Executive, the following benefits shall be
provided to Executive:
(A) Commencing on the Date of Termination and for a
period of three months thereafter, the Executive may
exercise all stock options granted to the Executive pursuant
to the Company's Stock Incentive Plan or any such other
stock plan. Such stock options shall be exercisable whether
or not: (i) a period of one year has elapsed from the date
of grant to the date of exercise; or (ii) any installment
exercise terms as stipulated by the Committee in any
agreement issued under the Plan have been satisfied.
However, in no event shall the Executive exercise any stock
option after the expiration of the option period as
stipulated in an agreement issued under such Plan;
(B) Effective as of the Date of Termination, any
restrictions relating to stock awards under the Company's
Stock Incentive Plan shall lapse;
(C) Effective as of the Date of Termination, any
compensation which has been deferred will be paid upon
termination; and
(D) Effective as of the Date of Termination, the
Executive will be immediately vested in any long term
incentive compensation under any long term incentive plan of
the Company.
(ii) In the event of termination of Executive's employment
by the Spin-Off Purchaser following a Spin-Off, the
following benefits shall be provided to Executive:
(A) If Executive's employment by the Spin-Off
Purchaser is terminated within three months after the
termination of Executive's employment by the Company,
commencing on the Date of Termination and for the remainder
of the period of three months following the termination of
Executive's employment by the Company, the Executive may
exercise all stock options granted to the Executive pursuant
to the Company's Stock Incentive Plan or any such other
stock plan. Such stock options shall be exercisable whether
or not: (i) a period of one year has elapsed from the date
of grant to the date of exercise; or (ii) any installment
exercise terms as stipulated by the Committee in any
agreement issued under the Plan have been satisfied.
However, in no event shall the Executive exercise any stock
option after the expiration of the option period as
stipulated in an agreement issued under such Plan];
-9-
<PAGE>
(B) If Executive's employment by the Spin-Off
Purchaser is terminated more than three months after the
termination of Executive's employment by the Company, the
Spin-Off Purchaser shall pay to the Executive, in cash, the
amount determined by multiplying (x) the number of stock
options granted to the Executive pursuant to the Company's
Stock Incentive Plan or any such other stock plan which
Executive did not have the right to exercise upon the
termination of his or her employment by the Company (other
than stock options with respect to which the option period
as stipulated in an agreement issued under said Plan had
expired), by (y) the difference between (A) the closing
price for the Company's stock on the New York Stock Exchange
on the day of the termination of Employee's Employment by
the Company and (B) the average exercise price of such
options;
(C) The Spin-Off Purchaser shall pay to the Executive,
in cash, the amount determined by multiplying (x) the number
of shares of stock which had been awarded to the Executive
pursuant to the Company's Stock Incentive Plan, but which
were restricted and which Executive forfeited due to the
termination of his or her employment with the Company, by
(y) the closing price for the Company's stock on the New
York Stock Exchange on the day of the termination of
Employee's employment by the Company;
(D) The Spin-Off Purchaser shall pay to the Executive,
in cash, the amount of any deferred compensation forfeited
by the Executive due to the termination of his or her
employment with the Company; and
(E) The Spin-Off Purchaser shall pay to the Executive,
in cash, the amount of any long term incentive compensation
under any long term incentive plan of the Company forfeited
by the Executive due to the termination of his or her
employment with the Company.
(iii) Effective as of the Date of Termination, the
Company (in the case of a termination following a Change in
Control or a Spin-Off Termination, or the Spin-Off
Purchaser, in the case of termination of the Executive
following employment by the Spin-Off Purchaser) will provide
a benefit under the Consolidated Omnibus Budget
Reconciliation Act of 1986 ("COBRA") and Section 4980 of the
Code, as follows: the Company or the Spin-Off Purchaser, as
the case may be, shall pay the percentage of the cost of
COBRA coverage with respect to the Executive's coverage
status (e.g., individual or family coverage) in effect
immediately prior to the Date of Termination for the maximum
period of continuation coverage then required or permitted
under COBRA, which percentage shall be the fraction
(expressed as a percentage), the numerator of which shall be
the difference between (x) the monthly cost of COBRA
coverage for the Executive's coverage status in effect
immediately prior to the Date of Termination and (y) the
Executive's monthly contribution toward the Executive's
coverage in effect immediately prior to the Date of
Termination, and the denominator of which shall be the
monthly cost of COBRA coverage for the Executive's coverage
-10-
<PAGE>
status in effect immediately prior the Date of Termination.
All of such amounts shall be determined as of the day
immediately preceding the Date of Termination. The
insurance continuation benefits paid for hereunder shall be
deemed to be a part of the Executive's COBRA coverage. In
addition, in the event of termination following a Change in
Control, the Company shall, beginning at the expiration of
the Executive's COBRA continuation coverage under this
paragraph and continuing until three (3) years after the
Date of Termination, provide the Executive with health
insurance coverage at the same cost to the Executive and at
the same level of coverage for the Executive as the COBRA
continuation coverage in effect immediately prior to the
expiration of the Executive's COBRA continuation coverage.
The Company shall, at the Executive's option, contribute
amounts it is required to contribute on behalf of Executive
pursuant to this Section 5(b) (iii) either to: (A) plans
maintained for the Company's employees; or (B) a private
medical plan of the Executive's choice if the Executive
chooses not to participate in the plans referred to in (A).
All such benefits shall be in addition to any other benefits
relating to health or medical care benefits that are
available under the Company's policies to the Executive
following termination of employment.
(iv) An additional cash payment shall be made as follows:
(A) In the event of termination of Executive's
employment following a Change in Control, the Company will
pay to the Executive, in cash, at the time the Company makes
the payments required under Section 5(a), an amount equal to
the sum of the annual incentive paid to the Executive in
each of the immediately preceding two calendar years; or
(B) The Company, in the event of a Spin-Off
Termination of Executive, or the Spin-Off Purchaser, in the
event of termination of Executive's employment by the Spin-
Off Purchaser following a Spin-Off, will pay to the
Executive, in cash, at the time the Company or the Spin-Off
Purchaser, as the case may be, makes the payments required
under Section 5(a), an amount equal to the sum of the annual
incentive paid to the Executive in the immediately preceding
calendar year.
-11-
<PAGE>
(c) REDUCTION OF PAYMENTS.
(i) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that
any payment or distribution by the Company to or for the
benefit of the Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this
Agreement or otherwise) (a "Payment") would be nondeductible
by the Company for Federal income tax purposes because of
Section 280G of the Code, then the aggregate present value
of amounts payable or distributable as severance benefits
hereunder shall be reduced to the Reduced Amount. The
"Reduced Amount" shall be an amount expressed in present
value which maximizes the aggregate present value of such
severance benefits without causing any Payment to be
nondeductible by the Company because of Section 280G of the
Code. Anything to the contrary notwithstanding, if the
Reduced Amount is zero and it is determined further that any
Payment which is not part of the severance benefits payable
hereunder would nevertheless be nondeductible by the Company
for Federal income tax purposes because of Section 280G of
the Code, then the aggregate present value of Payments which
are not severance benefits under this Agreement shall also
be reduced (but not below zero) to an amount expressed in
present value which maximizes the aggregate present value of
Payments without causing any payment to be nondeductible by
the Company because of Section 280G of the Code. For
purposes of this paragraph 5, present value shall be
determined in accordance with Section 280G(d)(4) of the
Code.
(ii) All determinations required to be made under this
paragraph 5 shall be made by an accounting firm jointly
selected by the Executive and the Company (the "Accounting
Firm") and paid by the Company; provided that the Company
shall have the right to appoint the Company's independent
auditors to make such determinations, and such appointment
shall be final. The Accounting Firm shall provide detailed
supporting calculations both to the Company and the
Executive within 15 business days of the Date of Termination
or such earlier time as is requested by the Company and an
opinion to the Executive that he or she has substantial
authority not to report any excise tax on his Federal income
tax return with respect to any Payments. Any such
determination by the Accounting Firm shall be binding upon
the Company and the Executive. The Executive shall
determine which and how much of the Payments, shall be
eliminated or reduced consistent with the requirements of
this paragraph 5, provided that, if the Executive does not
make such determination within ten business days of the
receipt of the calculations made by the Accounting Firm, the
Company shall elect which and how much of the Payments shall
be eliminated or reduced consistent with the requirements of
this paragraph 5 and shall notify the Executive promptly of
such election; and provided further that any Payments which
do not constitute gross income to the Executive shall not be
reduced or eliminated unless all other Payments have first
been eliminated. Within five business days thereafter, the
Company shall pay to or distribute to or for the benefit of
the Executive such amounts as are then due to the Executive
under this Agreement.
-12-
<PAGE>
(iii) As a result of the uncertainty in the
application of Section 280G of the Code at the time of the
initial determination by the Accounting Firm hereunder, it
is possible that Payments will have been made by the Company
which should not have been made ("Overpayment") or that
Payments will not have been made by the Company which could
have been made ("Underpayment"), in each case, consistent
with the calculations required to be made hereunder. In the
event that the Accounting Firm, based upon the assertion of
a deficiency by the Internal Revenue Service against the
Executive or the Company which the Accounting Firm believes
has a high probability of success, determines that an
Overpayment has been made, any such Overpayment paid or
distributed by the Company to or for the benefit of the
Executive shall be treated for all purposes as a loan AB
INITIO to the Executive which the Executive shall repay to
the Company together with interest at the applicable federal
rate provided for in Section 7872(f)(2) of the Code;
PROVIDED, HOWEVER, that no such loan shall be deemed to have
been made and no amount shall be payable to the Company if
and to the extent such deemed loan and payment would not
either reduce the amount on which the Executive is subject
to tax under Section 1 and Section 4999 of the Code or
generate a refund of such taxes. In the event that the
Accounting Firm, based upon controlling precedent or other
substantial authority, determines that an Underpayment has
occurred, any such Underpayment shall be promptly paid by
the Company to or for the benefit of the Executive together
with interest at 120% of the applicable federal rate
provided for in Section 7872(f)(2) of the Code, compounded
semiannually.
(iv) In the event that a reduction of benefits and payments
is required pursuant to this section (c), the Company shall,
to the extent practicable and permitted without causing any
Overpayment, permit the Executive to select which payments
and benefits provided for hereunder will be paid as provided
by the Company to the Executive.
6. NO OBLIGATION TO MITIGATE DAMAGES; NO EFFECT ON OTHER
CONTRACTUAL RIGHTS.
(a) The Executive shall not be required to mitigate damages
or the amount of any payment provided for under this Agreement by
seeking other employment or otherwise, nor shall the amount of
any payment provided for under this Agreement be reduced by any
compensation earned by the Executive as the result of employment
by another employer after the Date of Termination, or otherwise.
-13-
<PAGE>
(b) The provisions of this Agreement, and any payment
provided for hereunder, shall not reduce any amounts otherwise
payable, or in any way diminish the Executive's existing rights,
or rights which would accrue solely as a result of the passage of
time, under any Benefit Plan, Incentive Plan or Securities Plan,
employment agreement or other contract, plan or arrangement.
7. SUCCESSOR TO THE COMPANY.
(a) The Company will require any successor or assign
(whether direct or indirect, by purchase, merger, consolidation
or otherwise) to all or substantially all of the business and/or
assets of the Company or in the event of a Spin-Off that may
affect the Executive's employment with the Company, by agreement
in form and substance reasonably satisfactory to the Executive,
expressly, absolutely and unconditionally to assume and agree to
perform this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such
succession or assignment had taken place. Any failure of the
Company to obtain such agreement prior to the effectiveness of
any such succession or assignment shall be a material breach of
this Agreement and shall entitle the Executive to terminate the
Executive's employment for Good Reason. As used in this
Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor or assign to its business and/or assets
as aforesaid which executes and delivers the agreement provided
for in this Section 8 or which otherwise becomes bound by all the
terms and provisions of this Agreement by operation of law. If
at any time during the term of this Agreement the Executive is
employed by any corporation, a majority of the Voting Securities
of which is then owned by the Company, or other entity of which a
majority of the Voting Securities is owned by the Company,
"Company" as used in Sections 4, 5, 13 and 14 hereof shall in
addition include such employer. In such event, the Company
agrees that it shall pay or shall cause such employer to pay any
amounts owed to the Executive pursuant to Section 5 hereof.
(b) This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal and legal
representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive should die
while any amounts are still payable to him or her hereunder, all
such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to the Executive's
devisee, legatee, or other designee, or if there be no such
designee, to the Executive's estate. The services to be provided
by the Executive to the Company under this Agreement are personal
and are not delegable or assignable.
8. NOTICE. For purposes of this Agreement, notices and
all other communications provided for in the Agreement shall be
in writing and shall be deemed to have been duly given when
delivered or mailed by United States certified or registered
mail, return receipt requested, postage prepaid, as follows:
-14-
<PAGE>
If to the Company:
UtiliCorp United Inc.
911 Main Street, Suite 2000
Kansas City, Missouri 64199
ATTN: Corporate Secretary
If to the Executive to the address of
the Executive on the books of the Company.
Another address may be used if a party has furnished a
different address to the other party in writing in accordance
herewith, except that notices of change of address shall be
effective only upon receipt.
9. SOLE AGREEMENT. This Agreement represents the entire
agreement between the parties with respect to the matters
contemplated herein. Any earlier agreement relating to severance
compensation between the parties or between the Executive and any
affiliate of the Company is hereby terminated and superseded, and
all obligations by either party thereunder shall cease
immediately preceding the commencement of the term of this
Agreement and are hereby agreed to be satisfied in full. No
agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made
by either party which are not set forth expressly in this
Agreement.
10. VALIDITY. The invalidity or unenforceability of any
provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which
shall remain in full force and effect.
11. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an
original but all of which together will constitute one and the
same instrument.
12. LEGAL FEES AND EXPENSES. The Company, or, in the event
of a Spin-Off affecting Executive in which the Spin-Off Purchaser
employs the Executive, the Spin-Off Purchaser, shall pay all
legal fees and expenses which the Executive reasonably may incur
as a result of the Company's or the Spin-Off Purchaser's (as the
case may be) contesting the validity, enforceability or the
Executive's interpretation of, or determinations under, this
Agreement.
13. CONFIDENTIAL INFORMATION. The Executive agrees not to
disclose during the term hereof or thereafter any of the
Company's confidential or trade secret information, except as
required by law. The Executive recognizes that the Executive
shall be employed in a sensitive position in which, as a result
of a relationship of trust and confidence, the Executive will
-15-
<PAGE>
have access to trade secrets and other highly confidential and
sensitive information. The Executive further recognizes that the
knowledge and informed acquired by the Executive concerning the
Company's materials regarding employer/employee contracts,
customers, pricing schedules, advertising and interviewing
techniques, manuals, systems, procedures and forms represent the
most vital part of the Company's business and constitute by their
very nature, trade secrets and confidential knowledge and
information. The Executive hereby stipulates and agrees that all
such information and materials shall be considered trade secrets
and confidential information. If it is at any time determined
that any of the information or materials identified in this
paragraph 14 are, in whole or in part, not entitled to protection
as trade secrets, they shall nevertheless be considered and
treated as confidential information in the same manner as trade
secrets, to the maximum extent permitted by law. The Executive
further agrees that all such trade secrets or other confidential
information, and any copy, extract or summary thereof, whether
originated or prepared by or for the Executive or otherwise
coming into the Executive's knowledge, possession, custody, or
control, shall be and remain the exclusive property of the
Company.
14. WITHHOLDING. The Company or the Spin-Off Purchaser, as
the case may be, may withhold from any benefits payable under
this Agreement all federal, state, city or other taxes as shall
be required pursuant to any law or governmental regulation or
ruling.
15. ARBITRATION. Any claim or controversy arising out of
or relating to this Agreement or any breach thereof shall be
settled by arbitration. Any such arbitration shall take place in
Kansas City, Missouri, in accordance with the rules of the
American Arbitration Association. Any award rendered shall be
final and conclusive upon the parties and judgment therein may be
entered in the highest court of the forum, state or federal,
having jurisdiction.
16. ATTACHMENT. Except as required by law, the right to
receive payments under this Agreement shall not be subject to
anticipation, sale, encumbrance, charge, levy, or similar process
or assignment by operation of law.
17. WAIVERS. Any waiver by a party or any breach of this
Agreement by another party shall not be construed as a continuing
waiver or as a consent to any subsequent breach by the other
party. Except as otherwise expressly set forth herein, no
failure on the part of any party hereto to exercise and no delay
in exercising any right, power or remedy hereunder shall operate
s a waiver thereof, nor shall any single or partial exercise of
any right, power or remedy hereunder preclude any other or
further exercise thereof or the exercise of any other right,
power or remedy.
18. HEADINGS. The headings of the sections of this
Agreement have been inserted for convenience of reference only
and shall in no way restrict or modify any of the terms or
provisions hereof.
-16-
<PAGE>
19. GOVERNING LAW. This Agreement shall be governed and
construed and the legal relationships of the parties determined
in accordance with the laws of the State of Missouri.
THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY
BE ENFORCED BY THE PARTIES.
UTILICORP UNITED INC.
By
--------------------------------
Title:
-----------------------------
Date:
------------------------------
EXECUTIVE
-----------------------------------
Date:
------------------------------
-17-
<PAGE>
EXHIBIT 10(a)(13)
UTILICORP UNITED INC.
LIFE INSURANCE PROGRAM FOR OFFICERS
The Company maintains a term life insurance program for certain officers
of the Company, including the named executive officers, providing for death
benefits equal to three times such officer's base salary.
<PAGE>
EXHIBIT 11
UTILICORP UNITED INC.
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
For the Year Ended
December 31,
Line No. 1995 1994 1993
- -------- ----------------------------
<S> <C> <C> <C>
Earnings available for common shares:
(a) Earnings available for common shares as reported 77.7 91.4 79.5
(b) Elimination of interest on convertible subordinated
debenture, net of tax .22 .55 .64
(c) Elimination of dividends on cumulative
convertible preference stock - .93 4.88
----------------------------
(d) Fully Diluted Earnings Available 77.9 92.9 85.0
----------------------------
----------------------------
Weighted average common shares outstanding:
(e) Primary weighted average shares outstanding
as reported 45.08 43.97 40.74
(f) Assumed conversion of convertible subordinated
debenture .39 .55 .66
(g) Assumed conversion of cumulative convertible
preference shares - .66 2.87
----------------------------
(h) Fully diluted weighted average shares
outstanding 45.47 45.18 44.27
----------------------------
----------------------------
Earnings Per Common Share:
Primary (a/e) $1.72 $2.08 $1.95
Fully Diluted (d/h) 1.71 2.06 1.92
</TABLE>
<PAGE>
EXHIBIT 21
UTILICORP UNITED INC.
SUBSIDIARIES
1995 ANNUAL REPORT ON FORM 10-K
Subsidiary Jurisdiction of
---------- Incorporation
----------------
West Kootenay Power Ltd. Province of British Columbia
UtilCo Group Inc. Delaware
Aquila Energy Corporation Delaware
UtiliCorp Asia Pacific Inc. Delaware
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
As Independent Public Accountants we hereby consent to the incorporation by
reference in the Prospectuses constituting part of the Registration Statements
on Form S-3 (No. 33-60406, No. 33-47289, No. 33-59237, No. 33-57167 and No.
33-39466) and on Form S-8 (No. 33-45525, No. 33-50260, No. 33-45074 and No.
33-52094) of UtiliCorp United Inc. of our reports dated February 6, 1996
appearing on pages 59 and 62 of the Annual Report on Form 10-K. It should be
noted that we have not audited any financial statements of UtiliCorp United Inc.
subsequent to December 31, 1995 or performed any audit procedures subsequent to
the date of our reports.
ARTHUR ANDERSEN LLP
Kansas City, Missouri
February 21, 1996
<TABLE> <S> <C>
<PAGE>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDING DECEMBER 31, 1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 0
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 676
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0
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2
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