<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to ___________
Commission file number: 1-3562
UTILICORP UNITED INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 44-0541877
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
20 West Ninth Street, Kansas City, Missouri 64105
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 816-421-6600
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 the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
Class Outstanding at August 7, 1998
- ----- ------------------------------
Common Stock, $1 par value 53,755,409
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Information regarding the consolidated condensed financial statements
is set forth on pages 3 through 15.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Management's discussion and analysis of financial condition and
results of operations can be found on pages 16 through 26.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
See page 27 for the results of voting at the Annual Shareholders'
meeting held on May 6, 1998.
ITEM 5. OTHER INFORMATION
See page 28.
ITEM 6. EXHIBITS
Exhibits and Reports on Form 8-K can be found on page 28.
2
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
UTILICORP UNITED INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME--UNAUDITED
<TABLE>
Quarter Ended June 30,
DOLLARS IN MILLIONS 1998 1997
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
Sales $2,564.6 $1,550.1
Cost of sales 2,354.4 1,333.4
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GROSS PROFIT 210.2 216.7
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Operating, administrative and maintenance expense 132.7 131.5
Depreciation and amortization 31.1 31.2
Provision for asset impairments 27.7 -
- ---------------------------------------------------------------------------------------------------------------------------------
INCOME FROM OPERATIONS 18.7 54.0
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Other income (expense):
Equity in earnings from investments and partnerships 61.1 16.2
Other income 4.9 3.3
Minority interest and other expense (13.9) (6.3)
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Total other income 52.1 13.2
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EARNINGS BEFORE INTEREST AND TAXES 70.8 67.2
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Interest expense:
Interest expense - long-term debt 29.4 27.7
Interest expense - short-term debt 2.4 2.3
Minority interest in income of partnership 2.2 2.2
- ---------------------------------------------------------------------------------------------------------------------------------
Total interest expense 34.0 32.2
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EARNINGS BEFORE INCOME TAXES 36.8 35.0
Income taxes 13.4 14.7
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EARNINGS BEFORE EXTRAORDINARY ITEM 23.4 20.3
NET INCOME 23.4 20.3
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EARNINGS AVAILABLE FOR COMMON SHARES $ 23.4 $ 20.3
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</TABLE>
See accompanying notes to consolidated condensed financial statements.
3
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UTILICORP UNITED INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME--UNAUDITED
<TABLE>
Six Months Ended
June 30,
DOLLARS IN MILLIONS 1998 1997
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
Sales $5,460.4 $3,609.7
Cost of sales 4,996.6 3,138.8
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GROSS PROFIT 463.8 470.9
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Operating, administrative and maintenance expense 262.8 269.1
Depreciation and amortization 73.1 63.1
Provision for asset impairments 27.7 26.5
- ---------------------------------------------------------------------------------------------------------------------------------
INCOME FROM OPERATIONS 100.2 112.2
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Other income (expense):
Equity in earnings from investments and partnerships 83.2 37.4
Merger termination fee - 53.0
Other income 11.2 7.0
Minority interest and other expense (19.6) (12.5)
- ---------------------------------------------------------------------------------------------------------------------------------
Total other income 74.8 84.9
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EARNINGS BEFORE INTEREST AND TAXES 175.0 197.1
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Interest expense:
Interest expense - long-term debt 61.3 57.6
Interest expense - short-term debt 3.9 4.7
Minority interest in income of partnership 4.4 4.4
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Total interest expense 69.6 66.7
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EARNINGS BEFORE INCOME TAXES 105.4 130.4
Income taxes 38.7 52.2
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EARNINGS BEFORE EXTRAORDINARY ITEM 66.7 78.2
Loss on extinguishment of debt (net of income tax of $4.5) - 7.2
- ---------------------------------------------------------------------------------------------------------------------------------
NET INCOME 66.7 71.0
Preference dividends - .3
- ---------------------------------------------------------------------------------------------------------------------------------
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EARNINGS AVAILABLE FOR COMMON SHARES $ 66.7 $ 70.7
- ---------------------------------------------------------------------------------------------------------------------------------
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</TABLE>
See accompanying notes to consolidated condensed financial statements.
4
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UTILICORP UNITED INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
June 30, December 31,
DOLLARS IN MILLIONS 1998 1997
- ---------------------------------------------------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 129.1 $ 89.5
Funds on deposit 37.6 31.5
Accounts receivable, net 965.9 1,165.1
Inventories and supplies, at average cost 142.9 134.6
Price risk management assets 487.1 121.5
Prepayments and other 47.2 72.2
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TOTAL CURRENT ASSETS 1,809.8 1,614.4
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Property, plant and equipment, net 2,489.2 2,480.3
Investments in subsidiaries and partnerships 687.1 691.2
Price risk management assets 169.0 161.5
Deferred charges 153.8 166.1
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TOTAL ASSETS $5,308.9 $ 5,113.5
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- ---------------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREOWNERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 83.7 $ 149.6
Short-term debt 285.0 113.8
Accounts payable 1,134.7 1,356.3
Accrued liabilities 45.6 13.8
Price risk management liabilities 466.7 123.7
Other current liabilities 87.5 52.7
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 2,103.2 1,809.9
- ---------------------------------------------------------------------------------------------------------------------------------
LONG-TERM LIABILITIES:
Long-term debt, net 1,260.0 1,358.6
Deferred income taxes and credits 378.7 362.7
Price risk management liabilities 175.0 170.5
Minority interest 58.4 59.0
Other deferred credits 116.5 89.2
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL LONG-TERM LIABILITIES 1,988.6 2,040.0
- ---------------------------------------------------------------------------------------------------------------------------------
Company-obligated mandatorily redeemable preferred securities
of partnership 100.0 100.0
Common shareowners' equity 1,117.1 1,163.6
Commitments and contingencies - -
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREOWNERS' EQUITY $5,308.9 $ 5,113.5
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated condensed financial statements
5
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UTILICORP UNITED INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME -- UNAUDITED
<TABLE>
Three Months Ended Six Months Ended
June 30, June 30,
- ------------------------------------------------------------------------------------------------------------------------------
DOLLARS IN MILLIONS 1998 1997 1998 1997
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Income $ 23.4 $20.3 $ 66.7 $71.0
Other comprehensive income (loss)
Unrealized translation adjustments (14.7) (4.3) (16.2) (5.8)
- ------------------------------------------------------------------------------------------------------------------------------
Comprehensive Income $ 8.7 $16.0 $ 50.5 $65.2
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</TABLE>
CONSOLIDATED CONDENSED STATEMENTS OF COMMON SHAREOWNERS' EQUITY
<TABLE>
June 30, December 31,
DOLLARS IN MILLIONS 1998 1997
- ---------------------------------------------------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C>
Common Stock: authorized 200,000,000 shares, par value
$1 per share; 53,753,800 shares outstanding at June 30, 1998 and
December 31, 1997; authorized 20,000,000 shares of Class A common stock,
par value $1 per share, none issued
$ 53.8 $ 53.8
Premium on Capital Stock 985.1 999.1
Retained Earnings 171.0 152.8
Treasury Stock, at cost (1,225,404 and 235,075 shares at June 30, 1998 and December
31, 1997, respectively) (45.3) (10.8)
Accumulated Other Comprehensive Losses (47.5) (31.3)
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TOTAL COMMON SHAREOWNERS' EQUITY $1,117.1 $1,163.6
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</TABLE>
See accompanying notes to consolidated condensed financial statements.
6
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UTILICORP UNITED INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS--UNAUDITED
<TABLE>
Quarter Ended June 30,
DOLLARS IN MILLIONS 1998 1997
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 23.4 $ 20.3
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization 39.2 31.2
Net changes in price risk management assets and liabilities (16.1) 2.4
Deferred income taxes and credits 17.8 6.7
Equity in earnings from investments and partnerships (35.5) (16.2)
Dividends from investments and partnerships 8.8 4.0
Minority interests 1.1 1.8
Gain on sale of subsidiary stock (25.5) -
Provision for asset impairments 27.7 -
Changes in certain assets and liabilities:
Accounts receivable, net 18.4 122.8
Accounts receivable, sold - 50.0
Inventories and supplies 3.3 (10.8)
Prepayments and other (21.1) (3.9)
Deferred charges, net 12.3 5.5
Accounts payable 11.3 (30.8)
Accrued liabilities, net (27.7) (59.3)
Other 16.4 (16.8)
- ---------------------------------------------------------------------------------------------------------------------------------
CASH PROVIDED BY OPERATING ACTIVITIES 53.8 106.9
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CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to utility plant (37.9) (38.8)
Repayment of debt securities 100.1 -
Investments in international businesses (82.6) (1.1)
Investments in energy related properties (5.1) (4.0)
Other (33.8) (10.3)
- ---------------------------------------------------------------------------------------------------------------------------------
CASH USED FOR INVESTING ACTIVITIES (59.3) (54.2)
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
UTILICORP UNITED INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS--UNAUDITED, CONTINUED
<TABLE>
Quarter Ended June 30,
DOLLARS IN MILLIONS 1998 1997
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock $ - $ 5.0
Treasury stock (acquired)/sold (44.8) (2.4)
Issuance of long-term debt 30.2 19.7
Retirement of long-term debt (164.9) (11.4)
Short-term borrowings (repayments), net 219.7 (49.0)
Cash dividends paid (23.7) (23.5)
Other (7.0) -
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CASH (USED FOR) PROVIDED BY FINANCING ACTIVITIES 9.5 (61.6)
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Increase (Decrease) in cash and cash equivalents 4.0 (8.9)
Cash and cash equivalents at beginning of period 125.1 172.9
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $129.1 $164.0
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</TABLE>
See accompanying notes to consolidated condensed financial statements.
8
<PAGE>
UTILICORP UNITED INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS--UNAUDITED
<TABLE>
Six Months Ended June 30,
DOLLARS IN MILLIONS 1998 1997
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 66.7 $ 71.0
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization 81.2 63.1
Net changes in price risk management assets and liabilities (25.7) 3.8
Deferred income taxes and credits 16.0 12.9
Equity in earnings from investments and partnerships (57.7) (37.4)
Dividends from investments and partnerships 12.8 10.8
Minority interests 1.8 3.9
Gain on sale of subsidiary stock (25.5) -
Provision for asset impairments 27.7 26.5
Loss on extinguishment of debt - 7.2
Changes in certain assets and liabilities:
Accounts receivable, net 199.2 277.0
Accounts receivable, sold - 50.0
Inventories and supplies (8.3) 11.6
Prepayments and other 25.0 (16.4)
Deferred charges, net 12.3 5.2
Accounts payable (221.6) (190.7)
Accrued liabilities, net 31.8 (2.0)
Other 79.0 (59.1)
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CASH PROVIDED BY OPERATING ACTIVITIES 214.7 237.4
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CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to utility plant (54.4) (58.4)
Repayment of debt securities 100.1 -
Investments in international businesses (82.6) (3.0)
Investments in energy related properties (9.1) (8.9)
Other (56.6) (7.6)
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CASH USED FOR INVESTING ACTIVITIES (102.6) (77.9)
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</TABLE>
9
<PAGE>
UTILICORP UNITED INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS--UNAUDITED, CONTINUED
<TABLE>
Six Months Ended June 30,
DOLLARS IN MILLIONS 1998 1997
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock $ - $ 10.7
Treasury stock (acquired)/sold (34.5) 3.2
Issuance of long-term debt 31.0 20.1
Retirement of long-term debt (165.5) (94.0)
Retirement of preference stock - (25.0)
Short-term borrowings (repayments), net 159.0 1.0
Cash dividends paid (48.5) (47.3)
Other (14.0) (1.3)
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CASH USED FOR FINANCING ACTIVITIES (72.5) (132.6)
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Increase in cash and cash equivalents 39.6 26.9
Cash and cash equivalents at beginning of period 89.5 137.1
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $129.1 $ 164.0
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated condensed financial statements.
10
<PAGE>
UTILICORP UNITED INC.
NOTES TO CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS
(UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited consolidated condensed financial statements have been
prepared in accordance with the accounting policies described in the
consolidated financial statements and related notes included in UtiliCorp's 1997
Annual Report on Form 10-K. It is suggested that those consolidated financial
statements be read in conjunction with this report. The year end financial
statements presented were derived from audited financial statements of UtiliCorp
United Inc. (the company or UtiliCorp), but do not include all disclosures
required by generally accepted accounting principles. In the opinion of
management, the accompanying consolidated condensed financial statements reflect
all adjustments (which include only normal recurring adjustments) necessary for
a fair representation of the financial position of the company and the results
of its operations. Certain estimates and assumptions that affect reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of sales and expenses during the reporting periods shown
have been made in preparing the consolidated condensed financial statements.
Actual results could differ from these estimates.
Certain prior year amounts in the consolidated financial statements have been
reclassified where necessary to conform to the 1998 presentation.
FINANCIAL INSTRUMENTS
TRADING OPERATIONS
The company uses a variety of financial instruments in connection with price
risk management services provided by Aquila Energy Corporation, a wholly-owned
subsidiary of the company. These financial instruments include forward contracts
which commit the company to purchase or sell energy in the future; swap
agreements which require payment to (or receipt of payments from) counterparties
based on the differential between specific prices for the related commodity;
futures and options contracts traded on the New York Mercentile Exchange and
other contractual arrangements. The value of all the financial instruments used
for price risk management activities are recorded at market value with changes
in value reflected in the statement of income.
NON-TRADING ACTIVITIES FOR COMMODITY OPERATIONS
The company utilizes various exchange-traded and over-the-counter financial
instrument contracts to hedge anticipated purchases and sales of natural gas and
natural gas liquids. The financial instruments used are futures, options,
forward contracts and price and basis swaps. Financial instruments used for
non-trading activities are designated as a hedge at inception where there is a
direct relationship to the price risk associated with the company's future sales
and purchases of commodities used in the company's operations. Financial
instruments used to hedge anticipated transactions are accounted for under the
deferral method with gains and losses on these transactions recognized in sales
when the hedged transaction occurs.
11
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UTILICORP UNITED INC.
NOTES TO CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS--CONTINUED
(UNAUDITED)
2. EARNINGS PER SHARE
The following table shows the amounts used in computing basic and dilutive
earnings per share and the effect on income and weighted average number of
shares of dilutive potential common stock for the three months and six months
ending June 30, 1998 and 1997.
<TABLE>
Three Months Six Months
Ended Ended
IN MILLIONS, EXCEPT PER SHARE AMOUNTS June 30, June 30,
- ------------------------------------------------------------------------------------------------------------------------------
1998 1997 1998 1997
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Earnings available for common shares $ 23.4 $ 20.3 $ 66.7 $ 70.7
Interest expense on convertible bonds .1 .1 .1 .1
- ------------------------------------------------------------------------------------------------------------------------------
Earnings available for common shares after
assumed conversion of dilutive securities $ 23.5 $ 20.4 $ 66.8 $ 70.8
- ------------------------------------------------------------------------------------------------------------------------------
Earnings per share:
Basic:
Earnings before extraordinary item $ .44 $ .38 $ 1.25 $ 1.45
Loss on retirement of debt -- -- -- (.13)
- ------------------------------------------------------------------------------------------------------------------------------
Earnings available for common shares $ .44 $ .38 $ 1.25 $ 1.32
- ------------------------------------------------------------------------------------------------------------------------------
Diluted:
Earnings before extraordinary item $ .43 $ .38 $ 1.23 $ 1.45
Loss on retirement of debt -- -- -- (.13)
- ------------------------------------------------------------------------------------------------------------------------------
Earnings available for common shares $ .43 $ .38 $ 1.23 $ 1.32
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Weighted average number of common shares
used in basic EPS 53.33 53.69 53.50 53.47
Per Share effect of dilutive securities:
Stock options .57 -- .56 --
Convertible bonds .23 .28 .24 .29
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Weighted number of common shares and dilutive
potential common shares used in diluted EPS 54.13 53.97 54.30 53.76
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
12
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UTILICORP UNITED INC.
NOTES TO CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS--CONTINUED
(UNAUDITED)
3. REGULATORY MATTER
In March 1998, the MPSC ordered the company to reduce its annual electric rates
in Missouri by $16.9 million and increase depreciation expense by $5.8 million
beginning in April 1998. The impact of this order will reduce EBIT by $16.3
million in 1998 and reduce EBIT by $22.7 million in 1999 and beyond.
4. UNITED KINGDOM GAS SUPPLY CONTRACTS
In July 1998, United Gas, a wholly-owned subsidiary of UtiliCorp, lost a
long-standing dispute on a take-or-pay gas supply contract with a gas
supplier. United Gas and the supplier were disputing whether the supplier
made proper deliveries pursuant to the supply contract, which would enable
United Gas to avoid paying the required contract price. United Gas paid the
supplier the prevailing market prices which were lower than the contract
price. The difference between the two prices accumulated to approximately $38
million which had been previously recorded as a liability.
In a court ruling, a judge ordered United Gas to pay the gas cost amount in
accordance with the contract. In addition, United Gas is required to pay
interest to the supplier on the unpaid gas payable. This is estimated at
approximately $6.8 million.
In June 1998, UtiliCorp paid $25.6 million to a third party to cancel two
take-or-pay contracts effective April 1, 1998, that required the company to
take gas at significantly above-market prices until 2005. The third party
also canceled UtiliCorp's obligations under a guarantee related to the
contracts. Between 1995 and 1997, the company reserved $19.0 million against
the estimated future losses on these contracts resulting in an additional net
settlement loss of $6.6 million.
5. COMPLETION OF AUSTRALIAN INITIAL PUBLIC OFFERING
In May 1998, UtiliCorp recorded a $.47 per share gain to reflect the
completed initial public offering of United Energy Limited (UEL). UEL sold
42% of its common stock, reducing UtiliCorp's ownership share in UEL from
49.9% to 29%. Concurrent with the offering, UtiliCorp acquired an additional
5% in UEL from a prior joint venture partner. UtiliCorp's current ownership
is 34%.
6. PROVISION FOR ASSET IMPAIRMENTS
Retail Gas Marketing Assets
As part of a strategic planning process that was concluded in June, the
company's retail strategy was redefined into the company's networks and energy
merchant strategies. This strategy change altered the business plan for certain
retail businesses that were marginal performers. In addition, certain retail gas
marketers were acquired under a strategic plan that assumed that retail markets
would be competitive; however, the retail market remains regulated. Given this
business
13
<PAGE>
environment, the cash flows from these businesses will not fully recover the
price paid for the assets, requiring a writedown of $13.2 million. This
writedown is comprised of the following items.
<TABLE>
<S> <C>
Retail gas marketing assets $10.7
Other 2.5
--------
Total $13.2
</TABLE>
Independent Power Project (IPP) Investment
As part of a strategic evaluation, the company determined that its IPP assets
are not part of its core businesses and is in the process of considering various
alternatives that may package these assets into a joint venture that can better
utilize them. Through this strategic planning process, a project-by-project
review was performed and it was determined that the cash flow from a project was
not sufficient to recover invested capital. As a result, a $6.5 million
impairment was recorded.
EnergyOne L.L.C. Liquidation
In April 1998, UtiliCorp and PECO Energy Company (PECO) agreed to disband the
EnergyOne-SM- L.L.C. joint venture in recognition that a fully competitive
marketplace did not materialize as originally anticipated. EnergyOne L.L.C.
offered utilities a branded line of energy products and services and other
consumer services, all of which could be billed together. With the pace of
deregulation much slower than was assumed in its strategic plan, EnergyOne
L.L.C. was unable to sell its concept to other utilities. In connection with
the disbanding of EnergyOne L.L.C., the company recorded an $8.0 million
reserve to cover severance costs, contract termination costs, and asset
write-offs. It is continuing to use the EnergyOne brand in its own utility
service territories.
7. REPORTABLE SEGMENT RECONCILIATION
<TABLE>
Quarter Ended Six Months Ended
June 30, June 30,
- ------------------------------------------------------------------------------------------------------------------------
DOLLARS IN MILLIONS 1998 1997 1998 1997
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales:
Energy Delivery $218.7 $224.6 $611.3 $692.5
Generation 96.0 69.6 168.8 142.2
Aquila Energy 2,170.9 1,197.3 4,478.1 2,616.6
International 79.5 56.9 201.9 156.0
Other (.5) 1.7 .3 2.4
- -------------------------------------------------------------------------------------------------------------------------
Total $2,564.6 $1,550.1 $5,460.4 $3,609.7
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
EBIT
Energy Delivery $19.2 $26.1 $82.9 $91.8
Generation 11.7 16.2 28.2 36.5
Aquila Energy (.1) 14.0 13.1 17.7
International 45.6 14.4 61.8 25.9
Other (5.6) (3.5) (11.0) 25.2
- -------------------------------------------------------------------------------------------------------------------------
Total $70.8 $67.2 $175.0 $197.1
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE>
8. PURCHASED POWER CONTRACT - MERCHANT PLANT
The company entered into a 15-year contract commencing in June 2000 whereby
the company would receive 267 megawatts of capacity for a fixed price. The
seller guarantees a heat rate, output and availability. The contract can be
renewed for 5 years. The electricity output from this contract will be used
by Aquila Energy.
15
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
UTILICORP UNITED INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
EXCEPT WHERE NOTED, THE FOLLOWING DISCUSSION REFERS TO THE CONSOLIDATED ENTITY,
UTILICORP UNITED INC. THE BUSINESS SEGMENTS OF THE COMPANY INCLUDE THE FOLLOWING
BUSINESS GROUPS: UTILICORP ENERGY DELIVERY (UED), CONSISTING PRIMARILY OF
TRANSMISSION AND DISTRIBUTION UTILITY OPERATIONS; AQUILA ENERGY CORPORATION
(AQUILA), CONSISTING PRIMARILY OF ENERGY MARKETING (BOTH GAS AND ELECTRIC), AND
GAS PROCESSING, GATHERING AND TRANSMISSION; AND GENERATION, CONSISTING OF
DOMESTIC ELECTRIC GENERATION AND INDEPENDENT POWER PROJECTS. THE COMPANY ALSO
HAS VARIOUS OPERATIONS THAT INCLUDE GENERATION, GAS MARKETING, ELECTRIC
DISTRIBUTION AND VARIOUS EQUITY INVESTMENTS THAT ARE DISCUSSED IN THE
INTERNATIONAL SECTION OF THIS REPORT. THE LIQUIDITY AND CAPITAL RESOURCES
SECTION IS PREPARED ON A CONSOLIDATED BASIS.
FORWARD-LOOKING INFORMATION
This Form 10-Q contains forward-looking information. Although the company
believes that its expectations are based on reasonable assumptions, it can give
no assurance that its goals will be achieved. Important factors that could cause
actual results to differ materially from those in the forward looking statements
herein include changes in the prices of natural gas, natural gas liquids and
electricity, future deregulation initiatives and their regulatory actions
against the company, specifically, the successful rollout of future products and
services directly or through alliances, changes in the future state or federal
income tax rates and laws, changes in the Canadian, Australian, New Zealand and
British currencies relative to the U.S. dollar and changes in interest rates.
LIQUIDITY AND CAPITAL RESOURCES
Management believes that the company's liquidity and capital resources are
sufficient and provide adequate financial flexibility. The company's operations
have historically generated strong positive cash flow, which, along with the
company's credit lines, accounts receivable sales programs, common stock
offerings and ability to issue public debt, have provided adequate liquidity to
meet the company's short-term and long-term cash requirements, including
requirements for acquisitions.
The company uses its $280 million accounts receivable sales programs to
efficiently manage its working capital and provide immediate liquidity. These
programs were fully utilized at June 30, 1998. In addition to the accounts
receivable sales program, the company can issue up to $150 million of commercial
paper which is supported by a $250 million revolving credit agreement. The
company had $40 million of commercial paper borrowings at June 30, 1998. The
company anticipates that it will pursue loaning funds to third parties
prospectively to underwrite energy related contracts with Aquila Energy.
SIGNIFICANT BALANCE SHEET MOVEMENTS
Total assets increased $195.4 million since December 31, 1997. This increase is
primarily due to a $365.6 million increase in current price risk management
assets related to the rapid expansion of the marketing portfolio partially
offset by a reduction of accounts receivable. The accounts
16
<PAGE>
receivable balance will tend to be near its highest level at year end due to
seasonality of gas sales and prices.
Total liabilities increased $241.9 million since December 31, 1997. This
increase is primarily due to a $171.2 million increase in short-term debt
stemming from a $25.6 million payment to a gas supplier to close out two
uneconomic gas contracts, $37 million used to acquire approximately 990,000
shares of common stock and $43 million used to acquire an additional interest in
Power New Zealand. The remaining $65.6 million increase primarily relates to
support the expanding energy marketing business.
Current price risk management liabilities increased $343.0 million due to
similar reasons discussed for the asset variances. Partially offsetting the
liability increases was a reduction of long term debt of $164.5 million related
to application of the pay-down of invested capital in Australia as well as
paying down maturing debt with short-term facilities.
Common Stock Repurchases
The company has acquired approximately 1.2 million shares of its common stock
(990,000 shares since December 31, 1997) to fund its existing stock plans and
other corporate purposes.
The remaining increases and decreases in the components of the company's
financial position reflect normal operating activity.
RESULTS OF OPERATIONS
The results of operations for the 1998 and 1997 periods have been impacted by
several items which do not have a continuing effect on the company's financial
position or results of operations. The consolidated table below summarizes the
impact of the non-recurring items on earnings before interest and taxes (EBIT)
and diluted earnings per share (EPS).
<TABLE>
Quarter Ended June 30, Six Months Ended June 30,
- -----------------------------------------------------------------------------------------------------------------------------------
DOLLARS IN MILLIONS 1998 1997 1998 1997
- -----------------------------------------------------------------------------------------------------------------------------------
EBIT EPS EBIT EPS EBIT EPS EBIT EPS
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AS REPORTED $ 70.8 $ .43 $67.2 $.38 $ 175.0 $ 1.23 $ 197.1 $ 1.32
NON-RECURRING ITEMS:
Merger termination fee (a) - - - - - - (53.0) (.61)
Provision for asset impairments (b) 27.7 .30 - - 27.7 .30 26.5 .30
UK contract settlements (c) 13.4 .15 - - 13.4 .15 6.5 .07
Loss on extinguishment of debt (d) - - - - - - - .13
Australia Initial Public Offering (e) (45.3) (.47) - - (45.3) (.47) - -
- -----------------------------------------------------------------------------------------------------------------------------------
NORMALIZED $ 66.6 $ .41 $67.2 $.38 $ 170.8 $ 1.21 $ 177.1 $ 1.21
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
a) In 1997, Kansas City Power & Light (KCPL) paid the company a $53
million termination fee which was recorded as other income in the
first quarter of 1997. The payment was required when Western Resources
Inc. and KCPL signed a definitive agreement to merge.
b) In 1997, the company recorded a provision for impaired assets of $26.5
million related to certain technology and royalty assets. In 1998, the
company recorded a $27.7 million provision for impaired assets relating to
certain retail gas marketing assets, termination of EnergyOne L.L.C., and
the write-off of an independent power project.
17
<PAGE>
c) In 1997, the company recorded a $5.0 million reserve against earnings for
unfavorable gas supply contracts in the United Kingdom. In 1998, the
company settled two above-market gas contracts at a net loss of $6.6
million. In addition, a court ruled against the company on a
disputed gas supply contract requiring the company to record $6.8 million
in interest related to the contract.
d) In 1997, the company retired, at a premium, $69.1 million of 10.5%
debt. The transaction resulted in an extraordinary loss of $7.2
million, net of an income tax benefit of $4.5 million.
e) United Energy Limited (UEL) sold to the public 42% of its common stock
resulting in a $45.3 million gain for UtiliCorp.
Normalized earnings or normalized income are terms used by management to
describe the recurring earnings or income of the company. These terms are not
meant to replace net income or other measures under generally accepted
accounting principles.
18
<PAGE>
ENERGY DELIVERY
The table below summarizes the operations of UtiliCorp Energy Delivery for the
following periods:
<TABLE>
Quarter Ended Six Months Ended
June 30, June 30,
- --------------------------------------------------------------------------------------------------------------------
DOLLARS IN MILLIONS 1998 1997 1998 1997
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales:
Electric $158.7 $128.1 $ 286.7 $ 250.8
Gas 101.8 112.0 380.0 454.5
Other 54.2 54.1 113.4 129.4
Purchases from Generation (96.0) (69.6) (168.8) (142.2)
- --------------------------------------------------------------------------------------------------------------------
Total net sales 218.7 224.6 611.3 692.5
- --------------------------------------------------------------------------------------------------------------------
Cost of sales:
Electric 3.3 3.3 7.1 7.2
Gas 53.0 59.3 233.8 297.1
Other 47.8 43.7 96.4 110.7
- --------------------------------------------------------------------------------------------------------------------
Total cost of sales 104.1 106.3 337.3 415.0
- --------------------------------------------------------------------------------------------------------------------
Gross profit 114.6 118.3 274.0 277.5
- --------------------------------------------------------------------------------------------------------------------
Operating expenses:
Other operating 53.1 57.7 105.4 114.7
Maintenance 8.2 6.3 14.9 12.6
Taxes, other than income taxes 12.5 12.8 25.9 26.8
Depreciation and amortization 19.8 17.1 43.3 34.5
Provision for asset impairments 2.5 - 2.5 -
- --------------------------------------------------------------------------------------------------------------------
Total operating expenses 96.1 93.9 192.0 188.6
- --------------------------------------------------------------------------------------------------------------------
Other income .7 1.7 .9 2.9
- --------------------------------------------------------------------------------------------------------------------
EBIT 19.2 26.1 82.9 91.8
Non-recurring items:
Provision for asset impairments 2.5 - 2.5 -
- --------------------------------------------------------------------------------------------------------------------
Normalized EBIT $ 21.7 $ 26.1 $ 85.4 $ 91.8
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
QUARTER-TO-QUARTER
Gross profit decreased $3.7 million in the 1998 quarter compared to 1997. This
decrease is primarily due to unfavorable weather impacting Energy Delivery's gas
service territories that reduced margin by $6.5 million, partially offset by
favorable weather in its electric service areas of $4.1 million. Additionally,
the Missouri rate reduction reduced margin by $2.0 million that began April 13,
1998. The total ordered decrease is $16.9 million plus $5.8 million in increased
depreciation. The annual impact for 1998 will reduce EBIT by $16.3 million and
$22.7 million in 1999 and beyond.
Operating expenses increased $2.2 million in the 1998 quarter compared to
1997. This increase is primarily due to a $2.5 million provision for an
asset impairment charge recorded in 1998. See footnote 6 for more
information.
YEAR-TO-DATE
Gross profit decreased $3.5 million in the 1998 six month period compared to the
same period in 1997. Warmer than normal weather reduced gross profit by $9.0
million. This decrease was partially offset by a $4.8 million margin increase
due to an increase in the number of customers. The 1998 period was also impacted
by the rate reduction discussed in the quarter section above.
19
<PAGE>
Operating expenses increased $3.4 million in the 1998 period compared to the
same period in 1997. This increase is primarily due to the write-off of
certain appliance repair assets of $2.5 million as referred to above.
GENERATION
The table below summarizes the operations of Generation for the following
periods:
<TABLE>
Quarter Ended Six Months Ended
June 30, June 30,
- ------------------------------------------------------------------------------------------------------------------
DOLLARS IN MILLIONS 1998 1997 1998 1997
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales to affiliate and other $96.0 $69.6 $168.8 $142.2
Cost of sales 60.7 39.5 103.7 78.8
- ------------------------------------------------------------------------------------------------------------------
Gross profit 35.3 30.1 65.1 63.4
- ------------------------------------------------------------------------------------------------------------------
Operating expenses:
Other operating 13.4 11.5 25.8 23.3
Maintenance 4.3 3.9 7.6 7.5
Taxes, other than income taxes 1.7 1.7 3.6 3.5
Depreciation and amortization 4.3 4.4 9.0 7.9
Provision for asset impairments 6.5 - 6.5 -
- ------------------------------------------------------------------------------------------------------------------
Total operating expenses 30.2 21.5 52.5 42.2
- ------------------------------------------------------------------------------------------------------------------
Equity in earnings of investments and partnerships
6.7 7.6 15.6 15.0
Other income (expense) (.1) - - .3
- ------------------------------------------------------------------------------------------------------------------
EBIT 11.7 16.2 28.2 36.5
Non-recurring items:
Provision for asset impairments 6.5 - 6.5 -
- ------------------------------------------------------------------------------------------------------------------
Normalized EBIT $18.2 $16.2 $34.7 $36.5
- ------------------------------------------------------------------------------------------------------------------
EBIT by business subunit:
Regulated power $11.9 $9.1 $19.8 $22.8
UtilCo Group 6.3 7.1 14.9 13.7
- ------------------------------------------------------------------------------------------------------------------
Total $18.2 $16.2 $34.7 $36.5
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
QUARTER-TO-QUARTER
Generation's gross profit increased $5.2 million in the 1998 quarter compared to
the 1997 quarter. This increase is primarily due to increased off-system power
sales due to the heat wave in the Midwest in May and June and unexpected plant
outages at other utilities.
Operating expenses increased $2.2 million in 1998 excluding the provision for
asset impairments. This increase was attributable to increased incentive
payroll and bad debt expense related to off-system sales.
Equity in earnings decreased $1.0 million in 1998 to 1997 primarily due to a
project's contract change from long-run avoided cost to short-term avoided
cost.
20
<PAGE>
YEAR-TO-DATE
Generation's gross profit increased $1.7 million in 1998 compared to 1997.
The increase is due to the favorable off-system margin discussed in the
quarter section, partially offset by the impact of a lower transfer price
between Generation and Energy Delivery.
Operating expenses increased $3.8 million in 1998 compared to 1997 due to
increased incentive payroll, bad debt expense and transmission fees related to
off-system sales.
Projected Capacity Shortage
The company projects that it will need approximately 1,000 mw's by 2001 to
replace expiring purchased power contracts and to meet the growing power
demands from regulated customers. The company is evaluating various
alternatives that include building or contracting for this capacity shortage.
21
<PAGE>
AQUILA ENERGY
The table below summarizes the operations of Aquila Energy for the following
periods:
<TABLE>
Quarter Ended Six Months Ended
June 30, June 30,
- ---------------------------------------------------------------------------------------------------------------------------
DOLLARS IN MILLIONS 1998 1997 1998 1997
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales:
Energy marketing $1,905.2 $ 988.9 $3,975.2 $2,135.0
Aquila Gas Pipeline 265.7 208.4 502.9 481.6
- ---------------------------------------------------------------------------------------------------------------------------
Total sales 2,170.9 1,197.3 4,478.1 2,616.6
- ---------------------------------------------------------------------------------------------------------------------------
Cost of sales:
Cost of energy marketing 1,874.6 970.6 3,918.5 2,098.8
Aquila Gas Pipeline 244.2 177.2 458.6 415.7
- ---------------------------------------------------------------------------------------------------------------------------
Total cost of sales 2,118.8 1,147.8 4,377.1 2,514.5
- ---------------------------------------------------------------------------------------------------------------------------
Gross profit 52.1 49.5 101.0 102.1
- ---------------------------------------------------------------------------------------------------------------------------
Operating expenses:
Operating and maintenance 30.9 25.8 56.6 50.7
Depreciation, depletion and amortization 7.6 7.0 15.0 12.9
Provision for asset impairments 10.7 - 10.7 15.5
- ---------------------------------------------------------------------------------------------------------------------------
Total operating expenses 49.2 32.8 82.3 79.1
- ---------------------------------------------------------------------------------------------------------------------------
Minority interest expense and other 3.0 2.7 5.6 5.3
- ---------------------------------------------------------------------------------------------------------------------------
EBIT (.1) 14.0 13.1 17.7
Non-recurring items:
Provision for asset impairments 10.7 - 10.7 15.5
- ---------------------------------------------------------------------------------------------------------------------------
Normalized EBIT $ 10.6 $ 14.0 $ 23.8 $ 33.2
- ---------------------------------------------------------------------------------------------------------------------------
EBIT by business subunit:
Energy marketing $ 4.2 $ (.2) $ 10.4 $ 2.3
Aquila Gas Pipeline 6.4 14.2 13.4 30.9
- ---------------------------------------------------------------------------------------------------------------------------
Total $10.6 $ 14.0 $ 23.8 $ 33.2
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
QUARTER-TO-QUARTER
Energy marketing's gross profit increased $12.3 million for the 1998 quarter
compared to the 1997 quarter. Higher power marketing margins due to the June
heat wave in the Midwest were partially offset by lower gas marketing
performance carrying over from mild winter weather conditions. Power
marketing volumes increased significantly from the prior year, reflecting the
impact of the company's energy marketing trading growth strategies. Power
marketing volumes increased 111% to 24.8 million mwhs compared to 11.7
million mwhs, while total gas marketing volumes increased 65% to 6.8 Bcf/d
compared to 4.1 Bcf/d in 1997.
Partially offsetting the increased power marketing margins were decreased gas
marketing margins. The lower margins were due to a trading strategy that did
not perform as expected. The mild winter weather has kept gas storage levels
relatively high, mitigating the effect summer gas storage buying could have
on the market.
Gross profit from Aquila Gas Pipeline (AQP) decreased $9.7 million in 1998
compared to 1997. The decrease is primarily due to a 17% decline in natural gas
liquids (NGL) prices, a 34% decrease in production and a 16% decline in
throughput volumes. These declines were due to low oil prices that depressed NGL
prices and reduced drilling activity in the Austin Chalk area.
22
<PAGE>
Continued gross margin and EBIT declines relative to 1997 results are
expected to continue for the remainder of the year.
Operating expenses adjusted for non-recurring items increased $5.7 million due
to increased headcount to support the expanding energy marketing businesses.
YEAR-TO-DATE
Energy Marketing's gross profit increased $20.5 million for the 1998 period
compared to the 1997 period. The margin increase is due to power marketing
growth combined with margin increases in both gas and power term businesses.
Partially offsetting these increases were lower gas marketing results due to a
trading strategy that did not perform as expected as described in the quarter
section above.
AQP's gross margin decreased $21.6 million due to a 26% decrease in NGL prices,
a 31% decrease in NGL volumes and a 12% decrease in throughout volumes. See
quarter section for reasons.
Operating expenses adjusted for non-recurring items increased $8.0 million in
the 1998 period compared to the 1997 period primarily due to an increase in
headcount to support the expansion of the energy marketing business.
TERMINATED SALE OF AQUILA GAS PIPELINE
On August 6, 1998, AQP announced that it is no longer considering selling the
company. In March, AQP retained Merrill Lynch to explore various strategic
alternatives, including the possible sale of AQP, and has determined that
more value can be achieved through other means.
23
<PAGE>
INTERNATIONAL
<TABLE>
Quarter Ended Six Months Ended
June 30, June 30,
- ---------------------------------------------------------------------------------------------------------------
DOLLARS IN MILLIONS 1998 1997 1998 1997
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales:
Electric (Canada) $ 19.8 $19.9 $ 42.9 $ 46.2
Gas Marketing (primarily United
Kingdom) 59.7 37.0 159.0 109.8
- ---------------------------------------------------------------------------------------------------------------
Total Sales 79.5 56.9 201.9 156.0
- ---------------------------------------------------------------------------------------------------------------
Cost of Sales:
Cost of fuel and purchased power
(Canada) 7.4 5.6 15.0 14.6
Cost of gas marketing (United Kingdom)
62.8 35.3 161.5 113.4
- ---------------------------------------------------------------------------------------------------------------
Total Cost of sales 70.2 40.9 176.5 128.0
- ---------------------------------------------------------------------------------------------------------------
Gross Profit 9.3 16.0 25.4 28.0
- ---------------------------------------------------------------------------------------------------------------
Operating expenses:
Operating and maintenance 5.4 7.2 14.2 15.1
Taxes, other than income taxes 3.1 2.8 6.1 5.7
Depreciation and amortization 3.2 1.5 5.9 5.6
- ---------------------------------------------------------------------------------------------------------------
Total Expense 11.7 11.5 26.2 26.4
- ---------------------------------------------------------------------------------------------------------------
Equity earnings in subsidiaries and
partnerships 54.4 9.1 68.2 22.8
Other income (6.4) .8 (5.6) 1.5
- ---------------------------------------------------------------------------------------------------------------
EBIT 45.6 14.4 61.8 25.9
Non-recurring item :
Gain on sale (45.3) - (45.3) -
UK gas contracts reserve 13.4 - 13.4 5.0
- ---------------------------------------------------------------------------------------------------------------
Normalized EBIT $13.7 $14.4 $29.9 $30.9
- ---------------------------------------------------------------------------------------------------------------
EBIT by business subunit:
Australia $4.9 $6.6 $14.5 $16.0
New Zealand 3.8 3.0 5.2 5.3
United Kingdom .9 (.2) (.8) (2.6)
Canada 4.1 5.0 11.0 12.2
- ---------------------------------------------------------------------------------------------------------------
Normalized EBIT $13.7 $14.4 $29.9 $30.9
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
QUARTER-TO-QUARTER
International gross profit was about the same as in 1997 after normalizing the
$6.6 million gas contract settlement in 1998. The Canadian operation was
negatively impacted by milder weather which reduced margins in 1998 compared to
1997. The lower Canadian margin is partially offset by increased margin from the
United Kingdom primarily due to the gas contract settlement.
United Gas, a wholly owned subsidiary in the United Kingdom recently obtained a
new aggregation customer that will increase United Gas indirect customers by
206,000 in the fourth quarter of 1998. As of June 30, 1998, United Gas had
approximately 280,000 indirect customers.
Operating expenses for international was about the same as the 1997 quarter.
The equity earnings in subsidiaries and partnerships includes the earnings from
UtiliCorp's Australian and New Zealand operations. After adjusting for the gain
on the initial public offering in Australia, the normalized equity earnings was
$9.1 million, about the same as in 1997. The normalized 1998 amount reflects
lower contributions from Australia due to a lower ownership
24
<PAGE>
percentage offset by higher contributions from New Zealand. The higher New
Zealand earnings is due to a 4% year-over-year growth in Power New Zealand
and Wel Energy's net income.
Other income reflects a $6.8 million interest accrual on a gas supply dispute.
See footnote 4 for more information.
YEAR-TO-DATE
Normalized International gross profit was $32.0 million adjusted for the $6.6
million contract settlement compared to $33.0 million in the prior year
adjusted for the $5.0 million gas contract reserve. Gross profit from Canada
is lower by $3.8 million due to unfavorable weather and lower exchange rates.
Partially offsetting this is higher margins from the United Kingdom.
In June 1998, the company acquired 6.9% of Power New Zealand Limited common
stock for approximately $43 million. UtiliCorp now owns approximately 37.5%
of Power New Zealand Limited.
ENERGYONE PARTNERSHIP
In April 1998, UtiliCorp and PECO Energy Company (PECO) agreed to disband
the EnergyOne-SM- L.L.C. joint venture in recognition that a fully
competitive marketplace did not materialize as originally anticipated.
EnergyOne L.L.C. offered utilities a branded line of energy products and
services and other consumer services, all of which could be billed together.
With the pace of deregulation much slower than was assumed in its strategic
plan, EnergyOne L.L.C. was unable to sell its concept to other utilities. In
connection with the disbanding of EnergyOne L.L.C., the company recorded an
$8.0 million reserve to cover severance costs, contract termination costs,
and asset write-offs.
For the quarter ended June 30, 1998, the elimination of EnergyOne L.L.C.,
activities improved the company's EBIT by $5.2 million over 1997.
YEAR 2000
At year 2000, a two-digit date of "00" may not be recognized by computer
systems, software applications, and certain operating controls developed in the
1970s and 1980s as the year 2000, causing systems to shut down or malfunction.
UtiliCorp has established a Year 2000 Project Office to coordinate the Year 2000
efforts of teams in the company's operating units to ensure that its computer
systems and applications will function properly beyond 1999. Many of the
company's information systems and software are Year 2000 ready.
UtiliCorp is currently undergoing a major software system overhaul that when
completed will consist of new financial, customer information and support
systems. The financial system is installed and the customer information
system is currently being installed on a phased plan. The customer
information system is expected to be fully installed by 1999. These projects,
known internally as "Project BTU" are expected to replace at least 80% of
potentially affected software. Project BTU began in 1995 and was intended to
update the company's internal support systems and to position the company to
better serve its customers. Year 2000 compliance was incorporated into the
scope of deliverables of Project BTU. Total expenditures for the new systems
are estimated at approximately $190.6 million of which $123.0 million has
been spent to date.
The Year 2000 Project Team (the Project Team) is also coordinating the
identification and testing of non-information technology devices that may be
impacted by the year 2000. The Project Team is expected to have the
identification and testing phase completed by the end of 1998 and begin
remediation in 1999. Concurrent with that phase it is expected that the Project
Team will have developed a contingency plan to address unforeseen issues. At
this time, the company does not have a contingency plan. Also, the company does
not have an estimate of remediation costs for
25
<PAGE>
its non-information technology devices. The estimated cost of administering
the Year 2000 efforts through the Project Office is approximately $1.6
million through 2000. The remediation of certain non-mission critical systems
is expected to extend beyond 1999.
NEW ACCOUNTING STANDARD
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" (SFAS 133). SFAS 133 established accounting and
reporting standards for derivative instruments and hedging activities requiring
that every derivative instrument, including certain derivative instruments
embedded in other contracts, be recorded in the balance sheet as either an asset
or liability measured at its fair value. The Statement requires that changes in
the derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met. Special accounting for qualifying hedges
allows a derivative's gains and losses to offset related results on the hedged
item in the income statement, and requires that the company must formally
document, designate, and assess the effectiveness of transactions that receive
hedge accounting. SFAS 133 is required to be adopted for fiscal years beginning
after June 15, 1999.
SFAS 133 will impact the company's hedging activities at Aquila Energy and
Aquila Gas Pipeline, corporate treasury activities and foreign subsidiary
trading activities. The impact of SFAS 133 has not been quantified.
26
<PAGE>
PART II
OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
The company held its annual meeting of shareholders on May 6, 1998. At the
meeting, the following matters were voted on by the shareholders:
1. Election of Directors:
<TABLE>
DIRECTOR TERM FOR WITHHELD
-------- ---- --- --------
<S> <C> <C> <C>
John R. Baker 3 years 47,778,342 944,357
Irvine O. Hockaday, Jr. 3 years 47,849,012 873,687
Stanley O. Ikenberry 3 years 47,818,630 904,069
</TABLE>
Following the election, the Company's Board of Directors consisted of
Mr. Richard C. Green, Jr.; Mr. John R. Baker; Mr. Herman Cain;
Mr. Robert K. Green; Mr. Irvine O. Hockaday, Jr.; Dr. Stanley O.
Ikenberry, Ph.D.; Mr. Robert F. Jackson, Jr.; Mr. L. Patton Kline;
and Ms. Avis Green Tucker.
2. The shareholders voted 43,889,772 For, 3,846,303 Against and 986,624
Abstain to amend the Amended and Restated 1986 Stock incentive Plan to
allow the issuance of an additional 2,000,000 shares pursuant to the Plan.
3. The shareholders voted 43,665,673 For, 3,864,246 Against, and 1,192,780
Abstain to amend the UtiliCorp United Inc. Annual and Long-Term Incentive
Plan.
4. The shareholders voted 42,731,336 For, 5,101,985 Against, and 889,378
Abstain to amend the Certificate of Incorporation to increase the number
of authorized shares of Common Stock to 200,000,000.
5. The shareholders voted 27,789,873 For, 12,970,919 Against, and
1,217,028 Abstain to amend the Certificate of Incorporation of the
Company to allow the Board to designate voting rights for Preference
Stock.
6. The shareholders voted 28,176,156 For, 12,775,250 Against, and
1,026,414 Abstain to amend the Certificate of Incorporation of the
Company to increase the number of shares required to call a special
meeting.
7. The shareholders voted 30,042,012 For, 10,593,529 Against and 1,342,280
Abstain to amend the Certificate of Incorporation of the Company to
eliminate cumulative voting.
8. The shareholders voted 27,711,402 For, 12,991,791 Against, and
1,274,647 Abstain to amend the Certificate of Incorporation of the
Company to provide for removal of board members only for cause.
27
<PAGE>
ITEM 5. OTHER INFORMATION
The By-Laws of the Company provide that any stockholder who intends to bring
any matter before a meeting of stockholders must deliver written notice of
such stockholder's intent to the Company at least 60 days in advance of such
meeting. The Company's Annual Meeting of Stockholders in 1999 is scheduled to
be held on May 5, 1999. Accordingly, such notice must be received by the
Company at least 60 days in advance of such date.
ITEM 6. EXHIBITS
(a) LIST OF EXHIBITS:
3.1 UtiliCorp United Inc. Amended and Restated By-Laws, adopted May
5, 1998.
3.2 Certificate of Amendment of Certificate of Incorporation, dated
May 12, 1998.
10.1 Supplemental Executive Retirement Plan, Amended and Restated,
effective as of January 1, 1998.
10.2 Annual and Long-term Incentive Plan, as amended.
10.3 Amended and Restated 1986 Stock Incentive Plan.
10.4 Employment Agreement as amended for Richard C. Green.
10.5 Employment Agreement as amended for Robert K. Green.
12 Statements re computation of ratios.
27.1 Financial Data Schedule--For the six months ended June 30,
1998.
27.2 Financial Data Schedule -- For the six months ended June 30,
1997.
27.3 Financial Data Schedule -- For the nine months ended
September 30, 1997.
(b) REPORTS ON FORM 8-K:
The company filed no reports on Form 8-K for the quarter ended June
30, 1998.
28
<PAGE>
SIGNATURES
Pursuant to the requirements 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 C. Green, Jr.
Chairman of the Board and Chief Executive Officer
Date: August 14, 1998
By: /s/ James S. Brook
------------------
James S. Brook
Vice President, Controller and Chief Accounting Officer
Date: August 14, 1998
29
<PAGE>
UTILICORP UNITED INC.
AMENDED AND RESTATED
BY-LAWS
ARTICLE I
STOCKHOLDERS
SECTION 1. ANNUAL MEETINGS. The Corporation shall hold regular annual
meetings of its Stockholders for the election of Directors and for the
transaction of such other business as may properly be brought before the
meeting at its executive offices in Kansas City, Missouri, or at such other
locations as the Board of Directors may designate, on the first Wednesday in
May, in each year, if not a legal holiday, and if a legal holiday, then on
the first day following which is not a legal holiday, or at such other date
as may be designated from time to time by the Board of Directors and stated
in the notice of the meeting.
SECTION 2. SPECIAL MEETINGS. At any time in the interval between
annual meetings, special meetings of the Stockholders may be called by the
Chairman or the President, or by a majority of the Board of Directors by vote
at a meeting or in writing with or without a meeting, or by not less than a
majority of all of the outstanding shares entitled to vote at such meeting.
At any time after the vesting of voting power of the holders of the
Preference Stock, a special meeting of the Stockholders shall be held upon
the request in writing of any holder of the Preference Stock entitled to vote
in which case the President, a Vice President or the Secretary shall call
such meeting to be held not less than ten (10) days nor more than sixty (60)
days after the receipt of such request. Special meetings of the Stockholders
shall be held at the executive offices of the Corporation in Kansas City,
Missouri except in cases in which the calls designate some other place either
within or out of the State of Missouri.
SECTION 3. NOTICE OF MEETING. Notice of every annual meeting or
special meeting of the Stockholders shall state the place, day and hour of
such meeting and shall be given to each Stockholder entitled to vote at such
meeting by leaving the same with him or her at his or her residence or usual
place of business or by mailing it, postage prepaid and addressed to him or
her at his or her address as it appears upon the books of the Corporation,
not less than ten (10) nor more than sixty (60) days before such meeting.
Notice of every special meeting shall state the purpose or purposes of the
proposed meeting. Failure to give notice of any annual meeting, or any
irregularity in such notice, shall not affect the validity of such annual
meeting or of any proceedings at
<PAGE>
such meeting, except as otherwise required by law, by the Certificate of
Incorporation or by these By-Laws.
It shall not be requisite to the validity of any meeting of Stockholders
that notice thereof, whether prescribed by law, by the Certificate of
Incorporation or by these By-Laws, shall have been given to any Stockholder
who attends in person or by proxy, except as otherwise prescribed by law, or
to any Stockholder, who in writing executed and filed with records of the
meeting either before or after the holding thereof, waives such notice.
SECTION 4. QUORUM. At all meetings of Stockholders, the holders of
record of a majority of the shares of stock of the Corporation issued and
outstanding and entitled to vote thereat, present in person or by proxy,
shall constitute a quorum for the transaction of business; provided, however,
that at any special meeting of Stockholders called at the request of any
holders of the Preference Stock pursuant to Section 2 of this Article I, and
at the next and succeeding annual meetings of Stockholders until termination
of such voting power of the Preference Stock, the holders of record of a
majority of the shares of the Preference Stock issued and outstanding,
present in person or represented by proxy, shall constitute a quorum for the
election of such number of Directors as the holders of the Preference Stock
may be entitled to elect at such special or annual meetings. If, however, no
such quorum shall be present or represented at any meeting of the
Stockholders, the Stockholders entitled to vote thereat, present in person or
by proxy, shall have the power to adjourn the meeting from time to time
without notice other than announcement at the meeting, until the requisite
amount of voting stock shall be present or represented. At such adjourned
meeting at which the requisite amount of voting stock shall be present or
represented, any business may be transacted which might have been transacted
at the meeting as originally called. If adjournment is for more than thirty
(30) days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
Stockholder of record entitled to vote at the meeting.
SECTION 5. VOTING. Except as otherwise provided by law or by the
Certificate of Incorporation or these By-Laws, at every meeting of the
Stockholders, each Stockholder shall be entitled to one vote, in person or by
proxy, for each share of capital stock of the Corporation registered in his
name on the books of the Corporation. Provided, however, that at any special
meeting of Stockholders called at the request of any holder of the Preference
Stock pursuant to Section 2 of this Article I and at the next and succeeding
annual meetings of Stockholders until termination of the voting power of the
Preference Stock, the holders of the Preference Stock, voting separately as a
class, shall be entitled to elect two Directors of the Corporation and the
holders of the Common Stock shall be entitled to elect the remaining
Directors of the Corporation. At all meetings of the Stockholders, all
matters, except where other provisions are made by law
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or by the Certificate of Incorporation or these By-Laws, shall be decided by
the vote of a majority in interest of the Stockholders entitled to vote
thereon, present in person or by proxy, at such meeting, a quorum being
present.
SECTION 6. PROXIES. Any Stockholder entitled to vote at any meeting of
Stockholders may vote either in person or by proxy, but no proxy which is
dated more than three (3) years before the meeting at which it is offered
shall be accepted, unless such proxy shall, on its face, name a longer period
for which it is to remain in force. Every proxy shall be in writing
subscribed by the Stockholder or his or her duly authorized attorney, and
dated, but need not be sealed, witnessed or acknowledged.
In lieu thereof, to the extent permitted by law, a proxy may be
transmitted in a telegram, cablegram or other means of electronic
transmission provided that the telegram, cablegram or electronic transmission
either sets forth or is submitted with information from which it can be
determined that the telegram, cablegram or other electronic transmission was
authorized by the Stockholder. A copy, facsimile transmission or other
reliable reproduction of a written or electronically-transmitted proxy
authorized by this Section 6 may be substituted for or used in lieu of the
original writing or electronic transmission.
SECTION 7. LIST OF STOCKHOLDERS. A complete list of the Stockholders
entitled to vote at each meeting of Stockholders arranged by class in
alphabetical order, with the address of each according to the records of the
Corporation and the number of voting shares registered in the name of each,
shall be prepared by the Secretary and shall be open to the examination of
any Stockholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least ten (10) days before every meeting,
either at a place within the city where the meeting is to be held, which
place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also
be produced and kept at the time and place of the meeting during the whole
time thereof, and may be inspected by any Stockholder who is present and
shall be the only evidence as to who are the Stockholders entitled to examine
the list of Stockholders or to vote in person or by proxy at such meeting.
SECTION 8. INSPECTORS OF ELECTION. The Corporation shall, in advance
of any meeting of Stockholders, appoint one or more inspectors of election to
act at the meeting and make a written report thereof. The Corporation may
designate one or more persons as alternate inspectors to replace any
inspector who fails to act. In the event that no inspector so appointed or
designated is able to act at a meeting of Stockholders, the person presiding
at the meeting shall appoint one or more inspectors to act at the meeting.
Each inspector, before entering upon the discharge of his or her duties,
shall take and sign an oath faithfully to execute the duties of inspector
with strict impartiality and according to the best of his or her ability.
The inspector or inspectors so appointed or designated
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shall (i) ascertain the number of shares of capital stock of the Corporation
outstanding and the voting power of each such share, (ii) determine the
shares of capital stock of the Corporation represented at the meeting and the
validity of proxies and ballots, (iii) count all votes and ballots, (iv)
determine and retain for a reasonable period a record of the disposition of
any challenges made to any determination by the inspectors, and (v) certify
their determination of the number of shares of capital stock of the
Corporation represented at the meeting and such inspectors' count of all
votes and ballots. Such certification shall specify such other information
as may be required by law. In determining the validity and counting of
proxies and ballots cast at any meeting of Stockholders of the Corporation,
the inspectors may consider such information as is permitted by applicable
law. No person who is a candidate for an office at an election may serve as
an inspector at such election.
SECTION 9. CONDUCT OF MEETINGS. The date and time of the opening and
the closing of the polls for each matter upon which the Stockholders will
vote at a meeting shall be announced at such meeting by the person presiding
over the meeting. The Board of Directors of the Corporation may adopt by
resolution such rules or regulations for the conduct of meetings of
Stockholders as it shall deem appropriate. Except to the extent inconsistent
with such rules and regulations as adopted by the Board of Directors, the
chairman of any meeting of Stockholders shall have the right and authority to
prescribe such rules, regulations and procedures and to do all such acts as,
in the judgement of such chairman, are appropriate for the proper conduct of
the meeting. Such rules, regulations or procedures, whether adopted by the
Board of Directors or prescribed by the chairman of the meeting, may include,
without limitation, the following: (1) the establishment of an agenda or
order of business for the meeting; (2) rules and procedures for maintaining
order at the meeting and the safety of those present; (3) limitation on
attendance at or participation in the meeting to Stockholders of record of
the Corporation, their duly authorized and constituted proxies or such other
persons as the chairman shall permit; (4) restrictions on entry to the
meeting after the time fixed for the commencement thereof; and (5)
limitations on the time allotted to questions or comments by participants.
Unless, and to the extent determined by the Board of Directors or the
chairman of the meeting, meetings of Stockholders shall not be required to be
held in accordance with rules of parliamentary procedure.
SECTION 10. NOTICE OF STOCKHOLDER PROPOSAL. At a meeting of the
Stockholders, only such business shall be conducted as shall have been
properly brought before the meeting. Any Stockholder who intends to bring
any matter other than the election of Directors before a meeting of
Stockholders and is entitled to vote on such matter shall deliver written
notice of such Stockholder's intent to bring such matter before the meeting
of Stockholders, either by personal delivery or by United States mail,
postage pre-paid, to the Secretary of the Corporation. Such notice must be
received by the Secretary not later than the following dates: (1) with
respect to an annual meeting of
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Stockholders, 60 days in advance of such meeting if such meeting is to be
held on a day which is within 30 days preceding the anniversary of the
previous year's annual meeting or 90 days in advance of such meeting if such
meeting is to be held on or after the anniversary of the previous year's
annual meeting; and (2) with respect to any other annual meeting of
Stockholders, or a special meeting of Stockholders the close of business on
the tenth day following the date of public disclosure of the date of such
meeting.
ARTICLE II
BOARD OF DIRECTORS
SECTION 1. NUMBER, TERM OF OFFICE, POWERS. The Board of Directors of
the Corporation shall consist of not less than three persons, the exact
number of Directors to be fixed from time to time solely by the vote of not
less than a majority of the Directors then in office, and shall be divided
into three classes, Class A, Class B and Class C. Each class shall be
elected at successive annual meetings of Stockholders for a term of three
years and shall be as nearly equal in number as possible. At each annual
meeting of Stockholders, the successors to the class of Directors whose term
shall expire shall be elected to hold office for a term expiring at the third
succeeding annual meeting. Each Director shall hold office for the term for
which he or she was elected and until his or her successor is elected and
qualified or until his or her earlier resignation or removal; or, in the
event of the vesting of voting power in the Preference Stock, until the
election of his or her successor pursuant to the provisions of Article Four
of the Certificate of Incorporation and the qualification of such new
Director. Any increase or decrease in the number of Directors shall be
apportioned by the Board of Directors among the classes so as to make all
classes as nearly equal in number as possible. No decrease in the number of
Directors shall shorten the term of any incumbent Director. A Director who
is chosen in the manner provided herein to fill a vacancy in the Board or to
fill a newly-created directorship resulting from an increase in the number of
Directors shall hold office until the next election of the class for which
such Director shall have been chosen and until his or her successor is
elected and qualified or until his or her earlier resignation or removal; or,
in the event of the vesting of voting power in the Preference Stock, until
the election of his or her successor pursuant to the provisions of Article
Four of the Certificate of Incorporation and the qualification of such new
Director. Upon termination of the voting power of the Preference Stock, the
terms of office of all Directors elected by the holders of such class shall
forthwith terminate.
Effective for Directors first elected or appointed to the Board of
Directors on and after November 3, 1993, each Director of the Corporation
upon attaining the age of 72 years shall be deemed to have submitted his or
her resignation as a Director of this
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Corporation to be effective on the day such Director attains the age of 72
years. The continuation as a Director, election or reelection of a Director,
by mistake or otherwise, in violation of the aforesaid policy, shall not,
ipso facto, void such continuation, election or reelection, or nullify any
action so taken by such person as a Director.
Directors need not be Stockholders. The business and property of the
Corporation shall be conducted and managed by its Board of Directors, which
may exercise all of the powers of the Corporation except such as are by
statute, by the Certificate of Incorporation or by these By-Laws conferred
upon or reserved to the Stockholders. The Board of Directors shall keep full
and fair account of its transactions.
SECTION 2. REGULAR MEETINGS. Regular meetings of the Board of
Directors may be held without notice at such time and at such place as may be
fixed from time to time by the Board of Directors.
SECTION 3. SPECIAL MEETINGS. Special meetings of the Board of
Directors shall be held whenever called by the Secretary at the direction and
upon the request of the Chairman of the Board, the Vice Chairman of the
Board, the President, or by the Board of Directors by a vote at a meeting or
any two Directors, and notice of the place, day and hour of every special
meeting shall be given to each Director by the mailing of notice to each
Director at least 48 hours before the meeting or by notifying each Director
of the meeting at least 24 hours prior thereto either personally, by
telephone, telegram, cablegram or electronic or facsimile transmission. It
shall not be requisite to the validity of any meeting of the Board of
Directors that notice thereof shall have been given to any Director who
attends, or to any Director who, in writing executed and filed with the
records of the meeting either before or after the holding thereof, waives
such notice. No notice of adjourned meetings of the Board of Directors need
be given. All regular and special meetings of the Board of Directors shall
be general meetings, which will be open for the transaction of any business
within the powers of the Corporation without special notice of such business,
except in cases in which special notice is required by law, by the
Certificate of Incorporation, by these By-Laws or by the call of such meeting.
SECTION 4. QUORUM. At all meetings of the Board of Directors, a
majority of the total number of the Directors as constituted from time to
time shall constitute a quorum for the transaction of business. Except in
cases in which it is by law, by the Certificate of Incorporation or by these
By-Laws otherwise provided, a majority of such quorum shall decide any
questions that may come before the meeting. In the absence of a quorum at
any meeting of the Board, such meeting need not be held, or a majority of the
Directors present thereat, or, if no Director be present, the Secretary may
adjourn such meeting from time to time until a quorum shall be present.
Notice of any adjourned meeting need not be given. At any such adjourned
meeting at which a quorum shall be
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present, any business may be transacted which might have been transacted at
the meeting as originally notified.
SECTION 5. VACANCIES. Vacancies occurring in the Board of Directors,
through death, resignation, increase in the number of Directors, termination
of the terms of office of Directors elected by the holders of the Preference
Stock or any other cause may be filled by the vote of a majority of the
remaining Directors, although such majority is less than a quorum; provided,
however, that so long as voting power is vested in the holders of the
Preference Stock to elect Directors, any vacancy in Directors elected by the
holders of Preference Stock may be filled by the remaining Director elected
by the holders of the Preference Stock or, in the event of simultaneous
vacancies among Directors elected by the holders of the Preference Stock, an
election of the holders of the Preference Stock pursuant to the provisions of
Article Four of the Certificate of Incorporation will be held, and any
vacancies in the Directors elected by any other class or classes of stock may
be filled by the remaining Director or Directors elected by such class or
classes of stock.
SECTION 6. COMMITTEES. The Board of Directors may, by resolution
passed by a majority of the whole Board, designate one or more committees,
each committee to consist of one or more of the Directors of the Corporation.
The Board may designate one or more Directors as alternate members of any
such committee, who may replace any absent or disqualified member at any
meeting of the committee. Any such committee shall have such powers as are
granted to it by the resolution of the Board or by subsequent resolutions
passed by a majority of the whole Board. Nothing herein shall limit the
authority of the Board of Directors to appoint other committees consisting in
whole or in part of persons who are not Directors of the Corporation to carry
out such functions as the Board may designate.
SECTION 7. PRESENCE AT MEETING. Members of the Board of Directors or
any committee designated by such Board, may participate in the meeting of
said Board or committee by means of conference telephone or similar
communication equipment by means of which all persons in the meeting can hear
each other and participate. The ability to participate in a meeting in the
above manner shall constitute presence at said meeting for purpose of a
quorum and any action thereat.
SECTION 8. ACTION WITHOUT MEETINGS. Any action required to be taken at
any meeting of the Board of Directors or any committee designated by such
Board may be taken without a meeting, if all members of the Board or
committee consent thereto in writing and the writing or writings are filed
with the minutes of the proceedings of the Board or committee.
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SECTION 9. ELIGIBILITY TO MAKE NOMINATIONS. Nominations of candidates
for election as Directors at any meeting of Stockholders called for election
of Directors (an "Election Meeting") may be made by the Nominating Committee
of the Board of Directors or by any Stockholder entitled to vote at such
Election Meeting.
SECTION 10. PROCEDURE FOR NOMINATIONS BY STOCKHOLDERS. Any Stockholder
entitled to vote for the election of a Director at an Election Meeting may
nominate one or more persons for such election only if written notice of such
Stockholder's intent to make such nomination is given, either by personal
delivery or by United States mail postage pre-paid, to the Secretary of the
Corporation. Such notice must be received by the Secretary not later than
the following dates: (1) with respect to an annual meeting of Stockholders,
60 days in advance of such meeting if such meeting is to be held on a day
which is 30 days preceding the anniversary of the previous year's annual
meeting or 90 days in advance of such meeting if such meeting is to be held
on or after the anniversary of the previous year's annual meeting; and (2)
with respect to any other annual meeting of Stockholders or a special meeting
of Stockholders, the close of business on the tenth day following the date of
public disclosure of the date of such meeting. The written notice shall set
forth (i) the name, age, business address and residence address of each
nominee proposed in such notice, (ii) the principal occupation or employment
of each such nominee, (iii) the number of shares of capital stock of the
Corporation which are beneficially owned by each such nominee, and (iv) such
other information concerning each such nominee as would be required, under
the rules of the United States Securities and Exchange Commission in a proxy
statement soliciting proxies for the election of such nominee as a Director.
Such notice shall include a signed consent of each such nominee to serve as a
Director of the Corporation, if elected.
SECTION 11. COMPLIANCE WITH PROCEDURES. If the chairman of the
Election Meeting determines that a nomination of any candidate for election
as a Director was not made in accordance with the applicable provisions of
these By-Laws, such nomination shall be void; provided, however, that nothing
in these By-Laws shall be deemed to limit any class voting rights provided to
holders of Preference Stock.
SECTION 12. COMPENSATION. Directors may receive such compensation as
may be fixed for their services by resolution of the Board of Directors, and
expenses of attendance, if any, may be allowed for attendance at each regular
or special meeting thereof. Nothing in this Section shall be construed to
preclude a Director from serving the Corporation in any other capacity and
receiving compensation therefor.
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ARTICLE III
OFFICERS
SECTION 1. ELECTION, TERM OF OFFICE, APPOINTMENTS. The Board of
Directors shall elect the following officers at its annual meeting: a
President, one or more Vice Presidents (hereinafter referred to as "elected
Vice Presidents" and identified in this Section), a Secretary, one or more
Assistant Secretaries, a Treasurer and one or more Assistant Treasurers. The
Board may also elect such other officers as may from time to time appear
necessary or advisable in the conduct of the affairs of the Corporation,
including, but not limited to, a Chairman of the Board and one or more Vice
Chairmen of the Board. Officers shall hold office until the corresponding
meeting in the next year and until their successors shall have been duly
chosen and qualified in their stead or removed in the manner provided in
Section 9 of this Article III. Any vacancy in any of the officer positions
may be filled for the unexpired portion of the term by the Board of Directors
at any regular or special meeting. The Board of Directors may authorize the
Chairman and/or the President to appoint and remove additional Vice
Presidents and other subordinate officers.
SECTION 2. CHAIRMAN AND VICE CHAIRMEN. The Chairman of the Board
shall preside over meetings of the Stockholders and meetings of the Board of
Directors and shall have additional powers and duties as may be prescribed by
the Board of Directors. The Chairman of the Board may sign and execute, in
the name of the Corporation, all authorized deeds, mortgages, bonds,
contracts or other instruments, and may cause to be formed or direct any
subordinate officer to form subsidiary corporations or other legal entities
of the Corporation, except in cases where the signing and execution thereof
shall be expressly delegated to some other officer or agent of the
Corporation, and he or she shall have such additional powers and duties as
may be prescribed by the Board of Directors. A Vice Chairman of the Board or
President, when designated by the Chairman or by a majority of the Board of
Directors, shall preside over meetings of the Stockholders and meetings of
the Board of Directors in the absence of the Chairman of the Board.
SECTION 3. PRESIDENT AND VICE PRESIDENTS. The President shall have
general supervision and management over the business and policies of the
Corporation. The President or any elected Vice President may sign and
execute, in the name of the Corporation, all authorized deeds, mortgages,
bonds, contracts or other instruments and may cause to be formed or direct
any subordinate officer to form subsidiary corporations or other legal
entities of the Corporation, except in cases in which the signing and
execution thereof shall have been expressly delegated to some other officer
or agent of
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the Corporation. The President or any Vice President may sign, with the
Treasurer or an Assistant Treasurer, or with any Secretary or Assistant
Secretary, certificates of stock of the Corporation. The President and Vice
President shall have such additional powers and duties as may be prescribed
by the Board of Directors. In the case of Vice Presidents appointed by the
Chairman and/or President, such Vice President shall have such powers and
duties as may be prescribed by the Chairman and/or President.
SECTION 4. CHIEF OFFICERS. The Board of Directors may designate either
the Chairman of the Board or the President as Chief Executive Officer. The
Chief Executive Officer shall have overall responsibility for the management
of the business of the Corporation and the establishment of its policies.
The Board of Directors may designate any elected officer as Chief Operating
Officer. The Chief Operating Officer shall have overall operational
responsibility for the Corporation. The Board of Directors may designate any
elected Vice President as Chief Financial Officer. The Chief Financial
Officer shall have overall responsibility for the financial and accounting
operations of the Corporation.
SECTION 5. SECRETARY. The Secretary and any Assistant Secretary shall
be sworn to the faithful discharge of his or her duty and shall record the
proceedings of the meetings of the Stockholders and of the Board of
Directors, in books provided for that purpose; he or she shall see that all
notices are duly given in accordance with the provisions of these By-Laws, or
as required by law; he or she shall be custodian of the records and of the
corporate seal or seals of the Corporation; he or she shall see that the
corporate seal is affixed to all documents, the execution of which, on behalf
of the Corporation, under its seal, is duly authorized, and when so affixed
may attest the same; he or she may sign, with the Chairman, President or an
elected Vice President, certificates of stock of the Corporation; and, in
general, he or she shall perform all duties incident to the office of a
Secretary of a corporation, and such other duties as, from time to time, may
be assigned to him or her by the Board of Directors.
SECTION 6. TREASURER. The Treasurer shall have charge of and be
responsible for all funds, securities, receipts and disbursements of the
Corporation, and shall deposit or cause to be deposited, in the name of the
Corporation, all moneys or other valuable effects in such banks, trust
companies or other depositories as shall, from time to time, be selected by
the Board of Directors; he or she shall render to the Chairman of the Board
or President and to the Board of Directors, whenever requested, an account of
the financial condition of the Corporation; he or she may sign, with the
Chairman, President or any elected or appointed Vice President, certificates
of stock of the Corporation; and, in general, he or she shall perform all
duties incident to the office of a Treasurer of a corporation, and such other
duties as, from time to time, may be assigned to him or her by the Board of
Directors. Any Assistant Treasurer elected by the Board of Directors shall
execute in the capacity of Assistant Treasurer in the absence or direction of
the Treasurer.
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SECTION 7. OFFICERS HOLDING TWO OR MORE OFFICES. Any two of the above
mentioned offices may be held by the same person, except that one person may
not hold the offices of President and Vice President, but no officer shall
execute, acknowledge or verify any instrument in more than one capacity, if
such instrument be required by statute, by the Certificate of Incorporation
or by these By-Laws, to be executed, acknowledged or verified by any two or
more officers.
SECTION 8. COMPENSATION. The Board of Directors shall have the power
to fix the compensation of all officers of the Corporation.
SECTION 9. REMOVAL. Any officer of the Corporation may be removed,
with or without cause, by a vote of a majority of the entire Board of
Directors at a meeting called for that purpose, or by an officer upon whom
such power of removal may have been conferred.
ARTICLE IV
STOCK
SECTION 1. CERTIFICATES AND UNCERTIFICATED SHARES. Certificates
representing stock in the Corporation shall be signed in the name of and for
and on the behalf of the Corporation by the Chairman of the Board, the
President or a Vice President and the Treasurer or an Assistant Treasurer, or
the Secretary or an Assistant Secretary, and sealed, with the seal of the
Corporation; provided, however, that where such certificate is countersigned
by a transfer agent, other than the Corporation or its employee, or by a
registrar, other than the Corporation or its employee, any other signature on
such certificate may be a facsimile, engraved, stamped or printed. In case
an officer or officers who shall have signed, or whose facsimile signature or
signatures shall have been used on, any such certificate or certificates
shall cease to be such officer or officers whether because of death,
resignation, or otherwise, before such certificate or certificates shall have
been delivered by the Corporation, such certificate or certificates may
nevertheless be issued and delivered as though the person or persons who
signed such certificate or certificates or whose facsimile signature shall
have been used thereon had not ceased to be such officer or officers. Stock
certificates shall be in such form, not inconsistent with law or with the
Certificate of Incorporation, as shall be approved by the Board of Directors.
The powers, designations, preferences and relative, participating,
optional or other special rights of each class of stock or series thereof and
the qualifications, limitations or restrictions of such preferences and/or
rights shall be set forth in full or summarized on
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the face or back of the certificate which the Corporation shall issue to
represent such class or series of stock, provided that, except as otherwise
provided in Section 202 of the General Corporation Law of Delaware, in lieu
of the foregoing requirements, there may be set forth on the face or back of
the certificate which the Corporation shall issue to represent such class or
series of stock, a statement that the Corporation will furnish without charge
to each Stockholder who so requests the powers, designations, preferences and
relative, participating, optional or other special rights of each class of
stock or series thereof and qualifications, limitations or restrictions of
such preferences and/or rights.
The Board of Directors may provide by resolution or resolutions that
some or all of any or all classes or series of the stock of the Corporation
shall be uncertificated shares. Within a reasonable time after the issuance
or transfer of any uncertificated shares, the Corporation shall send to the
requested owner thereof any written notice prescribed by the General
Corporation Law of Delaware.
SECTION 2. TRANSFER OF SHARES. Transfers of stock shall be made upon
the books of the Corporation by the registered holder in person or by duly
authorized attorney, or upon presentation of proper evidence of succession,
assignment or authority to transfer and, in the case of shares represented by
certificates, upon surrender of the certificate.
SECTION 3. TRANSFER AGENTS AND REGISTRARS. The Corporation may have
one or more transfer agents and one or more registrars of its stock, whose
respective duties the Board of Directors may, from time to time, define. In
the case of shares represented by certificates, no certificate of stock shall
be valid until countersigned by a transfer agent, if the Corporation has a
transfer agent, or until registered by a registrar, if the Corporation has a
registrar. The Board of Directors may designate the same person or
corporation as registrar and transfer agent.
SECTION 4. RECORD DATES. The Board of Directors is hereby authorized
to fix in advance a date, not exceeding sixty (60) days and not less than ten
(10) days preceding (1) the date of any meeting of Stockholders, (2) the date
for the payment of any dividend, (3) the date for the allotment of rights, or
(4) the date when any change or conversion or exchange of capital stock shall
go into effect, as a record date for the determination of the Stockholders
entitled to notice of, or to vote at, any such meeting, or entitled to
receive payment of any such dividend, or to any such allotment of rights, or
to exercise the rights in respect of any such change, conversion or exchange
of capital stock, and in such case such Stockholders and only such
Stockholders, as shall be Stockholders of record on the date so fixed, shall
be entitled to such notice of, and to vote at such meeting, or any
adjournment thereof, or to receive payment of such dividend, or to receive
such allotment of rights, or to exercise such rights, as the case may be,
notwithstanding any transfer of any shares on the books of the Corporation
after any such
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record date fixed aforesaid. In any case in which the Board of Directors
does not fix a record date as aforesaid, the determination of the
Stockholders entitled to notice of and to vote at such a meeting of
Stockholders, or to receive such dividends or rights, as the case may be,
shall be made in accordance with Section 213 of the General Corporation Law
of Delaware.
SECTION 5. MUTILATED, LOST OR DESTROYED CERTIFICATES. The Board of
Directors or any officer of the Corporation to whom the Board of Directors
has delegated authority, or failing such delegation, the Secretary of the
Corporation, may authorize any transfer agent of the Corporation to issue,
and any registrar of the Corporation to register, at any time and from time
to time unless otherwise directed, a new certificate or certificates of stock
in the place of a certificate or certificates theretofore issued by the
Corporation, alleged to have been lost, destroyed or mutilated, upon
surrender of the mutilated certificate, or in the case of loss or destruction
of the certificate, upon receipt by the transfer agent of evidence of such
loss or destruction, which may be the affidavit of the applicant; a bond
indemnifying the Corporation and any transfer agent and registrar of the
class of stock involved against claims that may be made against it or them on
account of the lost or destroyed certificate or the issuance of a new
certificate, of such kind and in such amount as the Board of Directors shall
have authorized the transfer agent to accept generally or as the Board of
Directors or an authorized officer shall approve in particular cases; and any
other documents or instruments that the Board of Directors or an authorized
officer may require from time to time to protect adequately the interest of
the Corporation. A new certificate may be issued without requiring any bond
when, in the judgment of the Directors, or such authorized officer, it is
proper to do so.
ARTICLE V
DIVIDENDS AND FINANCE
SECTION 1. DIVIDENDS. Subject to the provisions of the Certificate of
Incorporation, and of any bonds or indentures securing bonds of the
Corporation, the Board of Directors may, in its discretion, declare what, if
any, dividends shall be paid upon the stock of the Corporation, or upon any
class of such stock. Except as otherwise provided by the Certificate of
Incorporation, dividends shall be payable upon such dates as the Board of
Directors may designate. Before payment of any dividend there may be set
aside out of any funds of the Corporation available for dividends such sum or
sums as the Directors from time to time, in their absolute discretion, think
proper as a reserve fund to meet contingencies, or for equalizing dividends,
or for payment as a sinking fund to retire bonds of the Corporation, or for
repairing or maintaining any property of the Corporation, or for such other
purpose as the Directors shall think conducive to the
13
<PAGE>
interests of the Corporation, and the Directors may abolish any such reserve
in the manner in which it was created.
SECTION 2. FISCAL YEAR. The fiscal year of the Corporation shall be
the twelve months ending on December 31 of each year, unless otherwise
provided by the Board of Directors.
ARTICLE VI
SUNDRY PROVISIONS
SECTION 1. SEAL. The Corporate Seal of the Corporation shall bear the
name of the Corporation and the words "CORPORATE SEAL, DELAWARE" and may bear
the year of incorporation. If deemed advisable by the Board of Directors, a
duplicate seal or duplicate seals may be provided and kept for the necessary
purposes of the Corporation.
SECTION 2. BOOKS AND RECORDS. The Board of Directors may determine
from time to time whether and, if allowed, when and under what conditions and
regulations, the books and records of the Corporation, or any of them, shall
be open to the inspection of Stockholders, and the rights of Stockholders in
this respect are and shall be limited accordingly, except as otherwise
provided by statute. Under no circumstances shall any Stockholder have the
right to inspect any books or records or receive any statement for an illegal
or improper purpose.
SECTION 3. VOTING STOCK IN OTHER CORPORATIONS. Any stock in other
corporations, which may from time to time be held by the Corporation, may be
represented and voted at any meeting of stockholders of such other
corporations by the Chairman, President, Secretary or Assistant Secretary of
the Corporation or any officer of the Corporation authorized by the Chairman
or President or by any officer or nominee of the Corporation when authorized
by the Board of Directors.
SECTION 4. INDEMNIFICATION OF OFFICERS AND DIRECTORS. Except as
otherwise provided by Delaware law, each person who is or was serving as a
director or officer of the Corporation, or who is or was serving at the
request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
(including the heirs, executors, administrators or estate of such person),
shall be indemnified by the Corporation against any costs or expenses
(including attorney's fees), judgments, fines and amounts paid in settlement,
which are actually and reasonably incurred by such person in connection with
any threatened, pending or completed action, suit or proceeding, whether
criminal, civil,
14
<PAGE>
administrative or investigative, and whether brought by or in the right of
the Corporation to procure a judgment in its favor, to which such person is
made a party or threatened to be made a party by reason of the fact that he
is or was a director or officer of the Corporation, or is or was at the
request of the Corporation serving as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other
enterprise. Such right to indemnification, however, may be made only as
authorized in any particular case by the Board of Directors by (1) a majority
vote of a quorum thereof consisting of Directors not parties to the action,
suit or proceeding, or, (2) if such a quorum is not obtainable or, if
obtainable, a majority thereof so directs, by independent legal counsel (who,
if a quorum of disinterested directors is not obtainable, shall be selected
by a majority vote of the full Board) in a written opinion, or (3) by the
Stockholders, upon a determination that the person to be indemnified, did
under the circumstances involved, act in good faith and in a manner which he
or she reasonably believed to be in or not opposed to the best interests of
the Corporation, or, with respect to any criminal action, upon a
determination that the person to be indemnified had no reasonable cause to
believe that his or her conduct was unlawful. The Corporation shall advance
the costs and expenses (including attorney's fees) reasonably incurred by
each person in defending any civil or criminal action, suit or proceeding
herein described in advance of the final disposition thereof, if authorized
by the Board of Directors in the specific case, upon receipt of an
undertaking by or on behalf of such person to repay any or all of such amount
as to which it may be ultimately determined under this By-Law that such
person is not entitled. The indemnification provided by this By-Law
provision shall not be exclusive of any other right to which those
indemnified may be entitled under the laws of the State of Delaware, as now
in effect or hereafter amended, or under any other by-law or any agreement,
vote of the Stockholders or disinterested directors, or otherwise, and shall
not limit in any way any right which the Corporation may have to make further
indemnifications with respect to the same or different persons or classes of
persons.
SECTION 5. AMENDMENTS. Subject to the provisions of Article Seven of
the Certificate of Incorporation, these By-Laws, whether made by the
Stockholders or by the Board of Directors, may be amended, added to or
repealed at any meeting of the Board of Directors or the Stockholders.
SECTION 6. DIVISIONS. The Board of Directors may from time to time
designate and organize certain geographical areas of the utility operations
and business of the Corporation as Divisions of the Corporation. The Board
of Directors may cause such Divisions to operate and conduct business by
names other than the name of the Corporation if lawful to do so.
SECTION 7. REGISTERED OFFICE AND REGISTERED AGENT. The location of the
registered office and the name of the registered agent of the Corporation in
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<PAGE>
the State of Delaware shall be as stated in the Certificate of Incorporation
or as determined from time to time by the Board of Directors and on file in
the appropriate public offices of the state of Delaware pursuant to
applicable provisions of law.
SECTION 8. CORPORATE OFFICES. The Corporation may have such other
corporate offices and places of business anywhere within or out of the State
of Delaware as the Board of Directors may from time to time designate or the
business of the Corporation may require.
/s/ Dale Wolf
Date: May 5, 1998
16
<PAGE>
State of Delaware
Office of the Secretary of State
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF "UTILICORP UNITED INC.", FILED IN THIS OFFICE ON THE TWELFTH DAY
OF MAY, A.D. 1998, AT 4 O'CLOCK P.M.
A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS.
SECRETARY'S OFFICE /s/ Edward J. Freel
-----------------------------------
1793 DELAWARE 1855 Edward J. Freel, Secretary of State
AUTHENTICATION: 9077921
2101053 8100
DATE: 05-13-98
981182779
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
UTILICORP UNITED INC.
UtiliCorp United Inc., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), does hereby certify:
The Amendments to the Corporation's Certificate of Incorporation set
forth in the following resolutions approved by the Corporation's Board of
Directors and Stockholders were duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware:
1. RESOLVED, that the Certificate of Incorporation of the Corporation
be amended by amending Article Four, Section 1 to read in its entirety
as follows:
Section 1. The total number of shares of stock which the
Corporation shall have authority to issue is Two Hundred Thirty
Million (230,000,000) shares, of which Two Hundred Million
(200,000,000) shares shall be common stock, of the par value of One
Dollar ($1.00) per share (hereinafter referred to as "Common
Stock"), Ten Million (10,000,000) shares shall be preference stock,
without par value (hereinafter referred to as "Preference Stock")
and Twenty Million (20,000,000) shares shall be Class A Common
Stock, of the par value of One Dollar ($1.00) per share (hereinafter
referred to as "Class A Common Stock").
2. RESOLVED, that the Certificate of Incorporation of the Corporation
be amended by amending Article Four, Section 2A(1) to read in its
entirety as follows:
(1) SERIES AND VARIATIONS BETWEEN SERIES. The Preference
Stock may be divided into and issued in series. The Board of
Directors is hereby expressly authorized to cause such shares to be
issued from time to time in series, and, by resolution adopted prior
to the issue of shares of a particular series, to fix and determine
the following with respect to such series, as to which matters the
shares of a particular series may vary from those of any or all
other series:
(a) the distinctive serial designation of the shares of
such series;
(b) the dividend rate thereof;
<PAGE>
(c) the date from which dividends on shares issued prior to
the date for payment of the first dividend thereon shall be
cumulative;
(d) the redemption price or prices and the terms of redemption
(except as fixed in this Division A);
(e) the terms and amount of any sinking fund for the purchase
or redemption thereof;
(f) the terms and conditions, if any, under which said shares
may be converted;
(g) the amounts payable thereon upon the involuntary
liquidation, dissolution or winding up of the corporation; and
(h) the voting rights, full or limited, or the voting power,
if any, of shares of such series.
Except as the shares of a particular series may vary from those of
any or all other series in the foregoing respects, all of the shares of
the Preference Stock, regardless of series, shall in all respects be
equal and shall have the preferences, rights, privileges and
restrictions herein fixed.
3. RESOLVED, that the Certificate of Incorporation of the Corporation
be amended by amending Article Four, Section 2A(5) to read in its entirety
as follows:
(5) VOTING RIGHTS. Any particular series of Preference Stock shall
have such voting rights as shall be designated in a resolution passed by
the Board of Directors establishing such series.
4. RESOLVED, that the Certificate of Incorporation of the Corporation
be amended by amending Article Nine, Section 2 to read in its entirety
as follows:
Section 2. Special meetings of the stockholders may be called by
the President, by the Board of Directors, by the holders of not less
than a majority of all outstanding shares entitled to vote at such
meetings or by such other officers or persons as may be provided in the
Bylaws.
5. RESOLVED, that the Certificate of Incorporation of the Corporation
be amended by amending Article Nine, Section 3 to read in its entirety
as follows:
Section 3. At all elections of directors of the Corporation, each
stockholder shall be entitled to one vote per share as to each director
to be elected and no
2
<PAGE>
shareholder shall have the right to cast votes in the aggregate or to
cumulate votes for the election of any director; provided, however, that
at any special meeting of stockholders called at the request of any holder
of the Preference Stock entitled to make such a request pursuant to the
provisions of Section 2A of Article Four and at the next and succeeding
annual meetings of stockholders until termination of the voting powers of
the Preference Stock, the holders of the Preference Stock, voting
separately as a class, shall be entitled to elect two directors of the
Corporation and the holders of the Common Stock shall be entitled to
elect the remaining directors of the Corporation in accordance with this
Section.
6. RESOLVED, that the Certificate of Incorporation of the Corporation
be amended by amending Article Nine, Section 4 to read in its entirety
as follows:
Section 4. At a meeting called expressly for that purpose,
directors may be removed in the manner provided in this Section. Such
meeting shall be held at the registered office or principal business
office of the Corporation in this state or in the city or county of the
state in which the principal business office of the Corporation is
located. The entire Board of Directors may be removed as provided in
Section 3 of Article Six of this Certificate of Incorporation. If less
than the entire Board is to be removed, no one of the Directors may be
removed without cause. Whenever the holders of the shares of any class
or series are entitled to elect one or more directors by the provisions
of this Certificate of Incorporation, the provisions of this section
shall apply, in respect of the removal of a director or directors so
elected, to the vote of the holders of the outstanding shares of that
class or series and not to the vote of the outstanding shares as a
whole. This Section may not be repealed or amended in any respect,
unless such action is approved by the affirmative vote of the holders of
not less than 80% of the outstanding shares of Voting Stock (as defined
in Article Eight) of the Corporation.
IN WITNESS WHEREOF, UtiliCorp United Inc. has caused this Certificate to
be signed and attested by its duly authorized officers this 12th day of May,
1998.
UTILICORP UNITED INC.
(Corporate Seal) By: /s/ Dale J. Wolf
-----------------------------------
Name: Dale J. Wolf
Title: Vice President
3
<PAGE>
UTILICORP UNITED INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
AMENDED AND RESTATED
EFFECTIVE JANUARY 1, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I - DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . 1
1.01 Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Change in Control. . . . . . . . . . . . . . . . . . . . . . . 1
1.03 Claimant . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.04 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.05 Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.06 Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.07 Employer(s) . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.08 Participant. . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.09 Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.10 SERP Benefit . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II - ELIGIBILITY . . . . . . . . . . . . . . . . . . . . . . . . 2
2.01 Selection by Committee . . . . . . . . . . . . . . . . . . . . 2
ARTICLE III - VESTING. . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.01 Vesting in Benefits. . . . . . . . . . . . . . . . . . . . . . 3
3.02 Change in Control. . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE IV - BENEFITS. . . . . . . . . . . . . . . . . . . . . . . . . . 3
4.01 Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4.02 Payment of Benefits. . . . . . . . . . . . . . . . . . . . . . 3
4.03 Committee Discretion . . . . . . . . . . . . . . . . . . . . . 4
4.04 Withholding and Payroll Taxes. . . . . . . . . . . . . . . . . 4
4.05 Benefits on Death. . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE V - TERMINATION AND AMENDMENT. . . . . . . . . . . . . . . . . . 4
5.01 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . 4
5.02 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE VI - OTHER BENEFITS AND AGREEMENTS . . . . . . . . . . . . . . . 5
6.01 Coordination with Other Benefits.. . . . . . . . . . . . . . . 5
6.02 Reduction in SERP Benefits . . . . . . . . . . . . . . . . . . 5
ARTICLE VII - ADMINISTRATION OF THE PLAN . . . . . . . . . . . . . . . . 6
7.01 Committee Duties . . . . . . . . . . . . . . . . . . . . . . . 6
7.02 Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
7.03 Binding Effect of Decisions. . . . . . . . . . . . . . . . . . 6
7.04 Indemnity of Committee . . . . . . . . . . . . . . . . . . . . 6
7.05 Employer Information . . . . . . . . . . . . . . . . . . . . . 6
i
<PAGE>
ARTICLE VIII - CLAIMS PROCEDURES . . . . . . . . . . . . . . . . . . . . 6
8.01 Presentation of Claim. . . . . . . . . . . . . . . . . . . . . 6
8.02 Notification of Decision . . . . . . . . . . . . . . . . . . . 7
8.03 Review of a Denied Claim . . . . . . . . . . . . . . . . . . . 7
8.04 Decision on Review . . . . . . . . . . . . . . . . . . . . . . 7
8.05 Legal Action . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE IX - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 8
9.01 Unsecured General Creditor . . . . . . . . . . . . . . . . . . 8
9.02 Employer's Liability . . . . . . . . . . . . . . . . . . . . . 8
9.03 Nonassignability . . . . . . . . . . . . . . . . . . . . . . . 8
9.04 Not a Contract of Employment . . . . . . . . . . . . . . . . . 8
9.05 Furnishing Information . . . . . . . . . . . . . . . . . . . . 9
9.06 Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
9.07 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
9.08 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . 9
9.09 Validity . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
9.10 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
9.11 Successors . . . . . . . . . . . . . . . . . . . . . . . . . . 10
9.12 Spouse's Interest. . . . . . . . . . . . . . . . . . . . . . . 10
9.13 Incompetent. . . . . . . . . . . . . . . . . . . . . . . . . . 10
9.14 Court Order. . . . . . . . . . . . . . . . . . . . . . . . . . 10
9.15 Distribution in the Event of Taxation. . . . . . . . . . . . . 10
</TABLE>
ii
<PAGE>
UTILICORP UNITED INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
AMENDED AND RESTATED
EFFECTIVE JANUARY 1, 1998
PURPOSE
The purpose of this Plan (formerly known as the "UtiliCorp United Inc.
Excess Benefit Plan") is to provide specified benefits to a select group of
management and highly compensated employees of UtiliCorp United Inc., a
Delaware corporation, and its subsidiaries, if any, that sponsor this Plan.
This Plan shall be unfunded for tax purposes and for purposes of Title I of
ERISA.
ARTICLE I - DEFINITIONS
Except as specifically provided herein, all capitalized terms used in
this Plan shall have the definitions assigned to them under the UtiliCorp
United Inc. Restated Retirement Income Plan (the "Retirement Income Plan"),
as amended from time to time.
1.01 "Board" shall mean the board of directors of the Company.
1.02 "Change in Control" shall mean the first to occur of any of the
following events:
(1) Any "person" (as that term is used in Section 13 and 14(d)(2)
of the Securities Exchange Act of 1934 ("Exchange Act")
becomes the beneficial owner (as that term is used in Section
(13)(d) of the Exchange Act), directly or indirectly, of 20%
or more of the Company's capital stock entitled to vote in the
election of directors;
(2) During any period of not more than two consecutive years, not
including any period prior to the adoption of this Plan.
Individuals who at the beginning of such period constitute the
board of directors of the Company cease for any reason to
constitute at least a majority thereof;
(3) The shareholders of the Company approve any consolidation or
merger of the Company, other than a consolidation or merger of
the Company in which the holders of the common stock of the
Company immediately prior to the consolidation or merger hold
the same proportion of the common stock of the surviving
corporation immediately after the consolidation or merger;
<PAGE>
(4) The shareholders of the Company approve any plan or proposal
for the liquidation or dissolution of the Company; or
(5) The shareholders of the Company approve the sale or transfer
of all or substantially all of the assets of the Company (in
one transaction or a series of related transactions) to
parties that are not within a "controlled group of
corporations" (as defined in Code Section 1563) in which the
Company is a member.
1.03 "Claimant" shall have the meaning set forth in Section 8.1.
1.04 "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
1.05 "Committee" shall mean the Committee described in Article 7.
1.06 "Company" shall mean UtiliCorp United Inc., a Delaware corporation.
1.07 "Employer(s)" shall mean the Company and any subsidiaries of the
Company that have been selected by the Board to participate in the
Plan.
1.08 "Participant" shall mean any employee who is a participant in the
Retirement Income Plan and who is selected to participate in the Plan
by the Committee.
1.09 "Plan" shall mean this restated Supplemental Executive Retirement
Plan (formerly known as the "UtiliCorp United Inc. Excess Benefit
Plan"). The Plan was originally adopted effective as of July 1,
1986, and was thereafter amended and restated in its entirety
effective as of May 1, 1991. This restatement is effective as of
January 1, 1998.
1.10 "SERP Benefit" shall mean the benefit payable to a Participant
determined under Section 4.01.
ARTICLE II - ELIGIBILITY
2.01 SELECTION BY COMMITTEE. Participation in the Plan shall be
limited to a select group of management and highly compensated
employees of the Employers. From that group, the Committee shall
select, in its sole discretion, employees to participate in the
Plan.
2
<PAGE>
ARTICLE III - VESTING
3.01 VESTING IN BENEFITS. Each Participant shall be 100% vested in his
SERP Benefit upon the completion of five (5) years of service, or
the termination of employment after attaining age 55. If a
Participant terminates employment prior to completing five (5)
years of service or prior to attaining age 55, he shall be 0%
vested in his SERP Benefit.
3.02 CHANGE IN CONTROL. Notwithstanding Section 3.1 or any other
provision in this Plan that could interpreted to the contrary, in
the event of a Change in Control, a Participant's SERP Benefit
shall immediately become 100% vested (if it is not already vested
in accordance Section 3.01 above).
ARTICLE IV - BENEFITS
4.01 BENEFITS. The benefit payable to a Participant under this Plan shall
be equal to (A) minus (B), where:
(A) = the benefit that would be payable to the
Participant under the Retirement Income Plan,
determined in accordance with the elections made
by the Participant thereunder and in accordance
with the applicable assumptions and actuarial
adjustments set forth in that plan, if (i) the
maximum benefit limit under Section 415(b)(1)(A)
of the Code and the annual compensation limit
under Section 401(a)(17) of the Code were not
applicable, and (ii) for Plan Years beginning
after December 31, 1997, Monthly Earnings included
the Participant's annual base compensation
deferred during a Plan Year under any nonqualified
deferred compensation plan maintained by the
Participant's Employer; and
(B) = the benefit actually payable to or on behalf of
such Participant under the Retirement Income Plan.
4.02 PAYMENT OF BENEFITS. Payments of vested SERP Benefits shall be made
in the same manner and at the same time that benefits under the
Retirement Income Plan are payable, determined in accordance with the
elections made by the Participant and in accordance with the
applicable assumptions and actuarial adjustments set forth in the
Retirement Income Plan; provided that if a Participant elects to
receive his benefits in a form of payment under the Retirement Income
Plan which provides death benefits to a non-spouse beneficiary, the
Participant's SERP Benefit shall be paid in monthly installments for
the life of the Participant only and shall terminate upon his death.
3
<PAGE>
4.03 COMMITTEE DISCRETION. Upon the request of a Participant, the
Committee, in its sole discretion and consistent with its
established procedures and rules, may consider other forms of
vested SERP Benefit payments, or the timing of vested SERP Benefit
payments, as it deems necessary and prudent under the circumstances.
4.04 WITHHOLDING AND PAYROLL TAXES. The Employers, to the extent
required by applicable law, shall withhold from any and all
benefits made under this Article 4, all federal, state and local
income, employment and other taxes required to be withheld by the
Employer in connection with the benefits hereunder, in amounts to
be determined in the sole discretion of the Employer.
4.05 BENEFITS ON DEATH. If a spousal death benefit is payable under the
Retirement Income Plan with respect to a Participant, a spousal death
benefit shall also be payable under this Plan. The spousal death
benefit under this Plan shall be equal to (A) minus (B), where:
(A) = the benefit that would be payable to the
Participant's spouse under the Retirement Income
Plan, determined in accordance with the elections
made by the Participant or spouse thereunder and in
accordance with the applicable assumptions and
actuarial adjustments set forth in that plan, if (i)
the maximum benefit limit under Section 415(b)(1)(A)
of the Code and the annual compensation limit under
Section 401(a)(17) of the Code were not applicable,
and (ii) for Plan Years beginning after December 31,
1997, Monthly Earnings included the Participant's
annual base compensation deferred during a Plan Year
under any nonqualified deferred compensation plan
maintained by the Participant's Employer; and
(B) = the benefit actually payable to the Participant's
spouse under the Retirement Income Plan.
Any spousal death benefits payable under this Plan shall be paid in
the same manner and at the same time that death benefits are paid
to the Participant's spouse under the Retirement Income Plan. If a
Participant has no surviving spouse, the benefits remaining under
the Plan shall be forfeited.
ARTICLE V - TERMINATION AND AMENDMENT
5.01 TERMINATION. Each Employer reserves the right to terminate the
Plan at any time with respect to its participating employees by the
actions of its board of directors.
4
<PAGE>
The termination of the Plan shall not adversely affect any
Participant or his or her Beneficiary who has become entitled to
the payment of any benefits under the Plan as of the date of
termination, provided, however, that the Employer shall have the
right to accelerate payments by paying the Actuarial Value of such
payments. For all other Participants, upon the termination of the
Plan, all Plan Agreements shall terminate and the Actuarial Value
of a Participant's vested SERP Benefit shall be paid out in a lump
sum.
5.02 AMENDMENT. Any Employer may, at any time, amend or modify the Plan
in whole or in part with respect to its participating employees by
the actions of its board of directors; provided, however, that no
amendment or modification shall be effective to decrease or
restrict a Participant's then vested SERP Benefit, determined on an
Actuarial Equivalent basis. The amendment or modification of the
Plan shall not affect any Participant or his or her Beneficiary who
has become entitled to the payment of benefits under the Plan as of
the date of the amendment or modification; provided, however, that
the Employer shall have the right to accelerate installment
payments by paying the Actuarial Value of such payments in a lump
sum or the Actuarial Equivalent in some other accelerated form of
payment.
ARTICLE VI - OTHER BENEFITS AND AGREEMENTS
6.01 COORDINATION WITH OTHER BENEFITS. Except as provided in Section
6.02 and except as otherwise expressly provided under any other
plan or program for employees of the Employers, the benefits
provided under this Plan to a Participant are in addition to the
benefits available to such Participant under any other such plan or
program. The Plan shall supplement and shall not supersede, modify
or amend any other such plan or program except as my otherwise be
expressly provided.
6.02 REDUCTION IN SERP BENEFITS. Notwithstanding any provision in this
Plan that may be interpreted to the contrary, the SERP Benefit
payable to any Participant hereunder shall be reduced by the
equivalent monthly lifetime benefit payable to such Participant
under any other supplemental retirement agreement or plan with his
Employer. If the benefit under such other retirement plan or
agreement is payable in the form of a lump sum, such benefit shall
be converted to a monthly lifetime benefit in accordance with the
applicable Actuarial Value assumptions set forth in the Retirement
Income Plan, for purposes of determining the benefit offset under
this Section 6.02.
5
<PAGE>
ARTICLE VII - ADMINISTRATION OF THE PLAN
7.01 COMMITTEE DUTIES. This Plan shall be administered by a Committee
which shall consist of the Board, or such committee as the Board
shall appoint. Members of the Committee may be Participants under
this Plan. The Committee shall also have the discretion and
authority to (i) make, amend, interpret and enforce all appropriate
rules and regulations for the administration of this Plan and (ii)
decide or resolve any and all questions including interpretations
of this Plan, as may arise in connection with the Plan.
7.02 AGENTS. In the administration of this Plan, the Committee may
employ agents and delegate to them such administrative duties as it
sees fit (including acting through a duly appointed representative)
and may from time to time consult with counsel who may be counsel
to any Employer.
7.03 BINDING EFFECT OF DECISIONS. The decision or action of the
Committee with respect to any question arising out of or in
connection with the administration, interpretation and application
of the Plan and the rules and regulations promulgated hereunder
shall be final and conclusive and binding upon all persons having
any interest in the Plan.
7.04 INDEMNITY OF COMMITTEE. All Employers shall indemnify and hold
harmless the members of the Committee against any and all claims,
losses, damages, expenses or liabilities arising from any action or
failure to act with respect to this Plan, except in the case of
willful misconduct by the Committee or any of its members.
7.05 EMPLOYER INFORMATION. To enable the Committee to perform its
functions, each Employer shall supply full and timely information
to the Committee on all matters relating to the compensation of its
Participants, the date and circumstances of the retirement,
disability, death or termination of employment of its Participants,
and such other pertinent information as the Committee may
reasonably require.
ARTICLE VIII - CLAIMS PROCEDURES
8.01 PRESENTATION OF CLAIM. Any Participant or Beneficiary of a
deceased Participant (such Participant or Beneficiary being
referred to below as a "Claimant") may deliver to the Committee a
written claim for a determination with respect to the amounts
distributable to such Claimant from the Plan. If such a claim
relates to the contents of a notice received by the Claimant, the
claim must be made within 60 days after such notice was received by
the Claimant. The claim must state with particularity the
determination desired by the Claimant. All other claims must be
made within 180 days of the date on which the event that caused the
claim to arise
6
<PAGE>
occurred. The claim must state with particularity the
determination desired by the Claimant.
8.02 NOTIFICATION OF DECISION. The Committee shall consider a Claimant's
claim within 90 days (unless special circumstances require additional
time), and shall notify the Claimant in writing:
(i) that the Claimant's requested determination has been made, and
that the claim has been allowed in full; or
(ii) that the Committee has reached a conclusion contrary, in whole
or in part, to the Claimant's requested determination, and
such notice must set forth in a manner calculated to be
understood by the Claimant:
(1) the specific reason(s) for the denial of the claim, or
any part of it;
(2) specific reference(s) to pertinent provisions of the Plan
upon which such denial was based;
(3) a description of any additional material or information
necessary for the Claimant to perfect the claim, and an
explanation of why such material or information is
necessary; and
(4) an explanation of the claim review procedure set forth in
Section 8.03) below.
8.03 REVIEW OF A DENIED CLAIM. Within 60 days after receiving a notice
from the Committee that a claim has been denied, in whole or in
part, a Claimant (or the Claimant's duly authorized representative)
may file with the Committee a written request for a review of the
denial of the claim. Thereafter, but not later than 30 days after
the review procedure began, the Claimant (or the Claimant's duly
authorized representative):
(i) may review pertinent documents;
(ii) may submit written comments or other documents; and/or
(iii) may request a hearing, which the Committee, in its sole
discretion, may grant.
8.04 DECISION ON REVIEW. The Committee shall render its decision on
review promptly, and not later than 60 days after the filing of a
written request for review of the denial, unless a hearing is held
or other special circumstances require additional
7
<PAGE>
time, in which case the Committee's decision must be rendered
within 120 days after such date. Such decision must be written in a
manner calculated to be understood by the Claimant, and it must
contain:
(i) specific reasons for the decision;
(ii) specific reference(s) to the pertinent Plan provisions
upon which the decision was based; and
(iii) such other matters as the Committee deems relevant.
8.05 LEGAL ACTION. A Claimant's compliance with the foregoing
provisions of this Article 8 is a mandatory prerequisite to a
Claimant's right to commence any legal action with respect to any
claim for benefits under this Plan.
ARTICLE IX - MISCELLANEOUS
9.01 UNSECURED GENERAL CREDITOR. Participants and their Beneficiaries
successors and assigns shall have no legal or equitable rights,
interests or claims in any property or assets of an Employer. Any
and all of an Employer's assets shall be, and remain, the general,
unpledged, unrestricted assets of the Employer. An Employer's
obligation under the Plan shall be merely that of an unfunded and
unsecured promise to pay money in the future.
9.02 EMPLOYER'S LIABILITY. An Employer's liability for the payment of
benefits shall be defined only by the Plan. An Employer shall have
no obligation to a Participant under the Plan except as expressly
provided in the Plan.
9.03 NONASSIGNABILITY. Neither a Participant nor any other person shall
have any right to commute, sell, assign, transfer, pledge,
anticipate, mortgage or otherwise encumber, transfer, hypothecate
or convey in advance of actual receipt, the amounts, if any,
payable hereunder, or any part thereof, which are, and all rights
to which are, expressly declared to be, unassignable and
non-transferable. No part of the amounts payable shall, prior to
actual payment, be subject to seizure or sequestration for the
payment of any debts, judgments, alimony or separate maintenance
owed by a Participant or any other person, nor be transferable by
operation of law in the event of a Participant's or any other
person's bankruptcy or insolvency.
9.04 NOT A CONTRACT OF EMPLOYMENT. The terms and conditions of this
Plan shall not be deemed to constitute a contract of employment
between any Employer and the Participant. Such employment is
hereby acknowledged to be an "at will" employment relationship that
can be terminated at any time for any reason, with
8
<PAGE>
or without cause, unless expressly provided in a written employment
agreement. Nothing in this Plan shall be deemed to give a
Participant the night to be retained in the service of any Employer
or to interfere with the right of any Employer to discipline or
discharge the Participant at any time.
9.05 FURNISHING INFORMATION. A Participant or his or her Beneficiary
will cooperate with the Committee by furnishing any and all
information requested by the Committee and take such other actions
as may be requested in order to facilitate the administration of
the Plan and the payments of benefits hereunder, including but not
limited to taking such physical examinations as the Committee may
deem necessary.
9.06 TERMS. Whenever any words are used herein in the masculine, they
shall be construed as though they were in the feminine in all cases
where they would so apply: and wherever any words are used herein
in the singular or in the plural, they shall be construed as though
they were used in the plural or the singular, as the case may be,
in all cases where they would so apply.
9.07 CAPTIONS. The captions of the articles, sections and paragraphs of
this Plan are for convenience only and shall not control or affect
the meaning or construction of any of its provisions.
9.08 GOVERNING LAW. Subject to ERISA, the provisions of this Plan shall
be construed and interpreted according to the internal laws of the
State of Missouri without regard to its conflict of laws principles.
9.09 VALIDITY. In case any provision of this Plan shall be illegal or
invalid for any reason, said illegally or invalidity shall not
affect the remaining parts hereof, but this Plan shall be construed
and enforced as if such illegal and invalid provision had never
been inserted herein.
9.10 NOTICE. Any notice or filing required or permitted to be given to
the Committee under this Plan shall be sufficient if in writing and
hand-delivered, or sent by registered or certified mail, to the
address below:
Phil Beyer
Director of Benefits
UtiliCorp United Inc.
20 West Ninth Street
Kansas City, MO 64105-1711
9
<PAGE>
Such notice shall be deemed given as of the date of delivery or, if
delivery is made by mail, as of the date shown on the postmark on
the receipt for registration or certification.
Any notice or filing required or permitted to be given to a
Participant under this Plan shall be sufficient if in writing and
hand-delivered, or sent by mail, to the last known address of the
Participant.
9.11 SUCCESSORS. The provisions of this Plan shall bind and inure to the
benefit of the Participant's Employer and its successors and assigns
and the Participant and the Participant's Beneficiary.
9.12 SPOUSE'S INTEREST. The interest in the benefits hereunder of a
spouse of a Participant who has predeceased the Participant shall
automatically pass to the Participant and shall not be transferable
by such spouse in any manner, including but not limited to such
spouse's will, nor shall such interest pass under the laws of
intestate succession.
9.13 INCOMPETENT. If the Committee determines in its discretion that a
benefit under this Plan is to be paid to a minor, a person declared
incompetent or to a person incapable of handling the disposition of
that person's property, the Committee may direct payment of such
benefit to the guardian, legal representative or person having the
care and custody of such minor, incompetent or incapable person.
The Committee may require proof of minority, incompetency,
incapacity or guardianship, as it may deem appropriate prior to
distribution of the benefit. Any payment of a benefit shall be a
payment for the account of the Participant and the Participant's
Beneficiary, as the case may be, and shall be a complete discharge
of any liability under the Plan for such payment amount.
9.14 COURT ORDER. The Committee is authorized to make any payments
directed by court order in any action in which the Plan or
Committee has been named as a party.
9.15 DISTRIBUTION IN THE EVENT OF TAXATION. If, for any reason, all or
any portion of a Participant's benefit under this Plan becomes
taxable to the Participant prior to receipt, a Participant may
petition the Committee for a distribution of that portion of his or
her benefit that has become taxable. Upon the grant of such a
petition, which grant shall not be unreasonably withheld, a
Participant's Employer shall distribute to the Participant
immediately available funds in an amount equal to the taxable
portion of his or her benefit (which amount shall not exceed a
Participant's unpaid vested benefit under the Plan). If the
petition is granted, the tax liability distribution shall be made
within 90 days of the date when the Participant's petition
is granted. Such a distribution shall affect and reduce the
benefits to be paid under this Plan.
10
<PAGE>
Exhibit 10.2
UTILICORP UNITED INC.
ANNUAL AND LONG-TERM INCENTIVE PLAN
INTRODUCTION: The following sets forth the Annual and Long-Term Incentive
Plan for UtiliCorp United Inc. which amends and restates the
Annual Incentive Plan effective January 1, 1986 and expands
it to include the Long-Term Incentive Plan, effective as of
January 1, 1994.
(A) Plan Purposes
The key purposes of the Plan are as set forth below.
1. To encourage and reward both annual and long-term sustained
performance above the level of performance that would be expected
at a fully competent level, thereby enabling the Company to
continue to provide outstanding service to its ratepayers and
other customers while enhancing the value of the Company for
its stockholders.
2. Further, to provide competitive levels of cash compensation for
key employees to assure the Company of the necessary talent for
future success, and to directly link a significant portion of
such compensation to those performance results most directly
impacted by such key employees.
3. Further, to permit the payment of a significant portion of the
Plan awards on a deferred basis with appropriate vesting
requirements to assist the Company in retaining the services
of key employees and, by using Restricted Stock for such deferral,
to enhance the ownership interest of key employees for the benefit
of Company stockholders.
(B) Definitions
1. "Annual Award" shall mean the payment received annually by a Plan
Participant whether paid in cash or shares of Restricted Stock as
described in Section (F) below.
2. "Award" shall mean the payment of an Annual Award or Long-Term
Award.
3. "Board" shall mean the Board of Directors of the Company.
4. "Committee" shall mean the Compensation Committee of the Board.
5. "Company" shall mean UtiliCorp United Inc., and its divisions,
subsidiaries and affiliated organizations approved for
participation.
<PAGE>
6. "Designated Beneficiary" shall mean the person, or persons as
elected by the Participant (or designated by the Company in
the absence of such election) to receive any payments, whether
in cash or shares of Restricted Stock due from the Plan in the
event of a Participant's death.
7. "Discretionary Annual Award" shall have the meaning described
in Section (F), below.
8 "Discretionary Annual Award Pools" shall have the meaning set out
in Section (F), below.
9. "Long-Term Award" shall mean the payment received hereunder,
either in cash and/or shares of Restricted Stock following
completion of a Long-Term Award Cycle.
10. "Long-Term Award Cycle" shall mean a period of three or more
consecutive calendar years during which cumulative Performance
Awards are set.
11. "Effective Date" shall mean January 1, 1994.
12. "Participant" or "Plan Participant" shall mean a key managerial,
professional or technical employee approved for Plan membership
by the Board (or the Committee) with respect to any Plan Year.
13. "Performance Goals" shall have the meaning set forth in
Paragraphs (F) and (H) below.
14. "Plan" shall mean the UtiliCorp United Inc. Annual and Long-Term
Incentive Plan as described herein or amended hereafter.
15. "Plan Year" shall mean January 1 through December 31, the calendar
year, which corresponds with the Company's fiscal year.
16. "Restricted Stock" shall mean shares of the Company's common stock
awarded to Participants under the UtiliCorp United Inc. 1986 Stock
Incentive Plan or any successor plan providing for the grant of
Restricted Stock.
(C) Plan Administration
1. The Company shall be responsible for the general administration
of the Plan.
2. The Board or, at the Board's direction, the Committee shall be
responsible for monitoring the ongoing use of the Plan and shall:
(a) review Company recommendations with respect to all
necessary actions;
<PAGE>
(b) review Company recommendations for any amendments to the
Plan; and
(c) approve all Annual Awards and Long-Term Awards under
the Plan and monitor the use of Discretionary Annual
Award Pools.
(D) Board (or Committee) Powers
1. The Board, acting upon the advice and counsel of the Committee,
or the Committee itself if so empowered by the Board, shall have
the following powers with respect to the Plan.
(a) Annual approval of: Participants; opportunity levels;
the basis of Awards; and the method of payment for
such Awards including the use and content of written
agreements for Restricted Stock Awards.
(b) The right to review, amend, and authorize any
Performance Goals or other factors used to determine
Annual Awards, Long-Term Awards and the Discretionary
Annual Award Pools for any division or unit of the
Company as described in Section (F) below.
(c) The right to retroactively adjust any aspect of the Plan
for an already completed or ongoing Plan Year if in the
Board's (or Committee's) judgment significant events
outside of the control of Plan Participants have occurred
which require such adjustment if the Plan is to effectively
serve its purposes.
(d) The right to receive an annual summary of all Awards paid
for each Plan Year and pertinent information with respect
to all Restricted Stock Awards, plus such other information
as it may reasonably request.
(e) The right to amend or discontinue the Plan at any time if
such action is deemed to be in the best interests of the
Company, its ratepayers and its stockholders. In such event
an appropriate and equitable resolution of Awards in the
process of being earned during a Plan Year shall be made.
(E) Plan Participation
1. Each Plan Year all full-time employees shall be eligible to
participate in the Plan with respect to the receipt of
Discretionary Annual Awards pursuant to Section (F) below.
2. With respect to Annual Awards and Long-Term Awards pursuant to
Section (F) below, participation shall be limited to those
managerial, professional, or
<PAGE>
technical employees who are key employees approved for
participation by the Committee.
3. To the extent separate incentive arrangements are established
for various divisions or units of the Company, participation
may include the eligibility for an Annual Award or Long-Term Award
from one or more of such separate arrangements as the Board
(or Committee) may determine.
4. Participation for an Annual Award or Long-Term Award in one Plan
Year does not automatically qualify an employee for participation
in subsequent years nor does participation in a separate incentive
arrangement for one division or unit automatically qualify an
employee for participation in any other such arrangements.
5. Subject to special action by the Board (or Committee) pursuant to
subsection (6) below, participation for otherwise eligible employees
whose status changes during a Plan Year shall be determined by the
Chief Executive Officer of the Company, in accordance with
the following.
(a) Voluntary Termination of Employment, or Termination at the
Request of the Company. In such event a Participant shall
forfeit all rights to any Award from the Plan for the Plan
Year in which such termination occurs.
(b) Death, Retirement, or Total Disability. In such event a
Participant (or his or her estate) shall be entitled to a
pro-rata Award, if any, for the Plan Year in which such
event occurs.
(i) Such Awards shall be determined when all other Awards
are determined for the applicable Plan Year.
(ii) "Pro-rata" shall mean the Award for the entire Plan
Year multiplied by a fraction the numerator of which
is the Participant's days of full-time active
employment (counting any days on short-term
disability or salary continuation) during the
Plan Year and denominator of which is 365.
(iii) "Total Disability" shall mean the date of
commencement of payments under the Company's
long-term disability plan applicable to the
Participant.
(iv) "Retirement" shall mean the cessation of active
employment and the effective date of normal, later,
or early Retirement under the Company's retirement
or pension plan applicable to the
<PAGE>
Participant but not a termination of employment with
vested rights under any such plan.
(c) Hire or Promotion During a Plan Year. Provided such event
occurs within the first nine months of any Plan Year
participation may be authorized for a pro-rata Annual Award
or Long-Term Award subject to Board (or Committee) approval
with respect to the opportunity levels and Performance
Goals.
Actions taken by the Chief Executive Officer of the
Company in accordance with the above do not require Board
(or Committee) approval.
6. Based upon the recommendation of the Company the Board
(or Committee) may authorize actions other than those set forth
in subsection (5) above to address unusual circumstances.
7. Regardless of any other provision of the Plan a Participant
whose personal, individual, performance for any Plan Year is
determined to be unsatisfactory shall forfeit all rights to an
Award for such Plan Year. This determination shall be made by
the Chief Executive Officer of the Company with respect to
employees not assigned to a specific unit or division and by
the chief executive officer of the Participant's division or
unit in all other cases, subject to the approval of the Chief
Executive Officer of the Company.
(F) Types of Awards
1. There are three types of Awards payable under the Plan:
a Annual Award, a Long-Term Award and a Discretionary
Annual Award.
2. Annual Awards and Long-Term Awards are available only to key
employees specifically approved as eligible for such Awards
and payment with respect thereto shall be based on the
achievement of specific Performance Goals established for
each Participant.
(a) Performance Goals may be set for the Company as a whole,
for each division or unit, or for individual performance
criteria.
(b) Such Performance Goals can be established on the basis of
specific numeric standards (e.g. return on net assets) or
as one or more objectives or results for which performance
achievements shall be determined on a discretionary,
subjective basis by an appropriate individual, subject to
Section (H), below.
(c) For any Plan Year the Annual Award or Long-Term Award for
any Participant shall have a set maximum amount,
expressed as a percentage
<PAGE>
of annual salary and/or a dollar amount, as approved by
the Board (or Committee); and set Award amounts may also
be established at other performance levels such as
threshold and par with or without provision for
pro-ration.
(d) Specific Board (or Committee) approval is required annually
for the payment of Awards.
(e) As approved by the Board (or Committee) for any Plan Year the
Annual Award or Long-Term Award payable may be subject to
either or both of the criteria set forth below.
(i) A "Stockholder (or Corporate) Protection Trigger"
which establishes a minimum level of performance,
or otheraction (e.g. the distribution of a level
of dividends), which must be achieved before any
Awards are payable for a Plan Year.
(ii) A "Ratepayer Protection Feature" which establishes
a schedule of absolute or relative performance
relating to the quality or cost of service provided
by the Company (or division or unit) against which
actual results will be compared for the Plan Year
with the resulting comparison used to modify, or
eliminate, Total Awards otherwise payable for such
Plan Year.
(f) Each Participant approved for an Award shall receive a
written description of his or her opportunity and
applicable Performance Goals.
3. "Discretionary Awards" are available to any full-time employee
of the Company except the Chief Executive Officer of the Company.
(a) Such Discretionary Awards shall be payable from a
Discretionary Award Pool established annually for each
division or unit and the sum of such Awards for the
employees in any unit or division for any Plan Year cannot
exceed the pool approved by the Board (or Committee) for
such division or unit. The pool established for employees
not assigned to a division or unit shall be used for any
Discretionary Award payable to the respective chief
executive officers of the Company's participating divisions
or units. The minimum Discretionary Award, if any, is $500
and the maximum Discretionary Award is ten percent of the
employee's then existing annual base salary rate.
(b) Discretionary Awards shall be determined subjectively
by the chief executive officer or each division or unit,
subject to the approval of the Chief Executive Officer of
the Company and shall be used to recognize outstanding
individual performance, the accomplishment of a specific
<PAGE>
task in an exemplary manner, or for individuals who made an
inordinately significant contribution to overall divisional,
unit or Company-wide results.
(c) The total Discretionary Award Pool authorized for any
division or unit need not be spent for any Plan Year.
Unallocated Pool funds are not carried forward for
subsequent Plan Years.
(G) Payment of Awards
1. Discretionary Awards shall be payable in cash.
2. Annual Awards and Long-Term Awards shall be payable in cash,
Restricted Stock, or any combination thereof as approved by the
Board (or Committee) for any individual Participant in any Plan
Year; provided that payment in the form of Restricted Stock shall
be approved by the Committee.
(H) Compliance with Section 162(m) Requirements.
Subject to the discretion of the Board (or the Committee) to determine
that it would be in the best interests of the shareholders to do
otherwise, the Plan shall at all times be administered to ensure that
any Award under the Plan to the Company's Chief Executive Officer and
the four highest compensated officers (determined pursuant to the
executive compensation disclosure rules under the Securities Exchange
Act of 1934) (each a "Covered Employee") will be tax deductible. In
furtherance of this goal, with respect to Awards payable under the Plan
for Covered Employees, the Performance Goals established by the
Committee may vary from one Covered Employee to another, and will be
limited to certain business criteria measured by one or more of the
following: revenues, units sold, operating income, operating company
contribution, cash flow, income before taxes, net income, earnings
available per share, return on equity, return on assets, Economic Value
Added (EVA) or total return to stockholders, whether applicable to the
Company or any relevant subsidiary or business unit, or combination
thereof, as the Committee may deem appropriate, or any of the above
goals as compared to the performance of a published or special index
deemed appropriate by the Committee, including, but not limited to, the
Standard & Poor's 500 Stock Index or a group of comparator companies.
The criteria selected by the Committee shall include a minimum
performance standard below which no payments will be made and a maximum
performance level above which no increased payment will be made.
Notwithstanding the foregoing, in no event may any Performance Goals be
established which would permit a Covered Employee to receive a single
Annual Award or a Long-Term Award of more than 400% of such Covered
Employee's base annual compensation as of January 1 for the year in
which an Award is paid. No payment of any Award may be made to any
Covered Employee unless the
<PAGE>
material terms of the Performance Goal under which the compensation is
to be paid have been approved by shareholders of the Company and the
Committee has certified in writing that the Performance Goals and any
other material terms of the Award were in fact satisfied.
(I) Miscellaneous and Administrative Provisions
1. All Participants shall be entitled to receive a copy of the
Plan and any amendments made subsequent to its Effective Date.
2. The Plan shall be binding upon and inure to the benefit of the
Participants (and their personal representatives), the Company
and any successor organization or organizations which shall
succeed to substantially all of the business and property of
the Company, whether by means of merger, consolidation,
acquisition of substantially all of the assets of the Company
or otherwise, including by operation of law.
3. All amounts used for Plan purposes shall be rounded to the
nearest whole dollar.
4. Awards whether in cash or Restricted Stock shall not be subject
to assignment, pledge, lien, or encumbrances of any kind.
5. Participation in the Plan does not guarantee employment by the
Company.
6. Awards shall not be used for any purposes for any employee
benefit plan of the Company.
7. The Plan shall be interpreted under the laws of the State of
Missouri.
<PAGE>
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 solely of two or more directors who are both (a)
"non-employee directors" under Rule 16b-3(b)(3) promulgated under Section 16 of
the Exchange Act, or any successor provision thereto and (b) "outside directors"
under Section 162(m) of the Code.
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 "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.
2.7 "Grantee" means a person to whom an Award is made.
<PAGE>
2.8 "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.
2.9 "Non-Qualified Stock Option" or "NQSO" means an Option awarded
under the Plan other than an ISO.
2.10 "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.
2.11 "Plan" means the Company's Amended and Restated 1986 Stock
Incentive Plan.
2.12 "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.
2.13 "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.
2.14 "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.
2.15 "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.
2.16 "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,
<PAGE>
inheritance or permitted transfer as provided in accordance with Section 8
hereof, or by reason of the death of the Grantee, as provided in accordance with
Section 9 hereof.
2.17 "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
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 the 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
<PAGE>
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.
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.
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
2,262,644 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.
- ----------
1 262,644 Shares remain unissued under the 1986 Stock Incentive Plan and
2,000,000 additional Shares have been added to the Plan hereunder.
<PAGE>
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 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, except as otherwise provided in Section 6.2 with respect to a 10
percent stockholder.
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
<PAGE>
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.
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
<PAGE>
Except for certain transfers of Non-Qualified Stock Options to family
members, trusts and charities, or pursuant to domestic relations orders, which
the Committee in its sole discretion may permit, 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, except for permitted
transferees, each Option may be exercised during the lifetime of the Grantee
only by him.
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.
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.
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 of a Change in Control, 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.
A "Change in Control" shall be deemed to have occurred if the event set
forth in any one of the following paragraphs shall have occurred:
(1) any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company (not including in the
securities beneficially owned by such Person any securities
acquired directly from the
<PAGE>
Company or its affiliates, other than in connection with the
acquisition by the Company or its affiliates of a business)
representing 20% or more of either the then outstanding shares
of common stock of the Company or the combined voting power of
the Company's then outstanding securities; or
(2) the following individuals cease for any reason to constitute
at least two-thirds (2/3) of the number of directors then
serving: individuals who, on August 4, 1998, constituted the
Board and any new director (other than a director whose
initial assumption of office is in connection with an actual
or threatened election contest, including but not limited to a
consent solicitation, relating to the election of directors of
the Company (as such terms are used in Rule 14A-11 of
Regulation 14A under the Exchange Act)) whose appointment or
election by the Board or nomination of election by the
Company's shareholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who
either were directors on August 4, 1998, or whose appointment,
election or nomination for election was previously approved;
or
(3) the execution of an agreement in which the Company agrees to
merge or consolidate with any other entity, other than (i) a
merger or consolidation which would result in (A) the voting
securities of the Company outstanding immediately prior to
such merger or consolidation continuing to represent (either
by remaining outstanding or by being converted into voting
securities of the surviving entity or any parent thereof), in
combination with the ownership of any trustee or other
fiduciary holding securities under an employee benefit plan of
the Company, greater than 50% of the combined voting power of
the voting securities of the Company or such surviving entity
or any parent thereof outstanding immediately after such
merger or consolidation, (B) such of Richard C. Green, Jr. and
Robert K. Green continue as members of the board of directors
of the surviving entity or ultimate parent thereof as were
members of the Board of the Company immediately prior to such
transaction, and (C) individuals described in paragraph (2)
above constitute more than one-half of the members of the
board of directors of the surviving entity or ultimate parent
thereof, or (ii) a merger or consolidation effected to
implement a recapitalization of the Company (or similar
transaction) in which no Person is or becomes the Beneficial
Owner, directly or indirectly, of securities of the Company
(not including in the securities Beneficially Owned by such
Person any securities acquired directly from the Company or
its affiliates, other than in connection with the acquisition
by the Company or its affiliates of a business) representing
20% or more of either the then outstanding shares of common
stock of the Company or the combined voting power of the
Company's then outstanding securities; or
(4) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or an agreement for
the sale or
<PAGE>
disposition by the Company of all or substantially all of the
Company's assets, other than a sale or disposition by the
Company of all or substantially all of the Company's assets to
an entity, greater than 50% of the combined voting power of
the voting securities of which is owned by Persons in
substantially the same proportions as their ownership of the
Company immediately prior to such sale.
Notwithstanding the foregoing, no "Change in Control" shall be deemed
to have occurred if there is consummated any transaction or series of integrated
transactions immediately following which the record holders of the common stock
of the Company immediately prior to such transaction or series of transactions
continue to have substantially the same proportionate ownership in an entity
which owns all or substantially all of the assets of the Company immediately
following such transaction or series of transactions.
For purposes of this Section 10, the following definitions shall apply:
(a) "Beneficial Owner" shall have the meaning set forth in Rule
13d-3 under the Exchange Act.
(b) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(c) "Person" shall have the meaning given in Section 3(a)(9) of
the Exchange Act, as modified and used in Sections 13(d) and
14(d) thereof, except that such term shall not include (i) the
Company or any of its affiliates (as defined in Rule 12b-2
promulgated under the Exchange Act), (ii) a trustee or other
fiduciary holding securities under an employee benefit plan of
the Company or any of its affiliates, (iii) an underwriter
temporarily holding securities pursuant to an offering of such
securities, or (iv) a corporation owned, directly or
indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of stock
of the Company.
The Committee may amend any existing Option or Restricted Stock Award
to reflect this provision, provided, however, that should the Company determine
that shareholder or regulatory approval of this provision is required and such
shareholder or regulatory approval is not obtained by December 31, 1999, any
such amendment shall be null and void.
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
<PAGE>
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 the Committee may disapprove
any payment in part or full by the transfer of Shares to the Company.
12.3 Upon exercise of an Option or after grant of a Restricted Stock
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
The Plan shall be effective as of September 1, 1995, and 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
<PAGE>
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.
<PAGE>
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 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
<PAGE>
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.
(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
<PAGE>
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 on or 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.
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
<PAGE>
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.
<PAGE>
AMENDMENT TO
AMENDED AND RESTATED
1986 STOCK INCENTIVE PLAN
The UtiliCorp United Inc. Amended and Restated 1986 Stock Incentive
Plan (the "Plan") is hereby amended as follows:
Section 10 is hereby deleted in its entirety and a new Section 10 is
hereby added to read as follows:
10. PROVISIONS RELATING TO TERMINATION OF THE COMPANY'S SEPARATE EXISTENCE
The Committee may provide that in the event of a Change in Control, 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.
A "Change in Control" shall be deemed to have occurred if the event set
forth in any one of the following paragraphs shall have occurred:
(1) any Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company
(not including in the securities beneficially owned
by such Person any securities acquired directly from
the Company or its affiliates, other than in
connection with the acquisition by the Company or its
affiliates of a business) representing 20% or more of
either the then outstanding shares of common stock of
the Company or the combined voting power of the
Company's then outstanding securities; or
(2) the following individuals cease for any reason to
constitute at least two-thirds (2/3) of the number of
directors then serving: individuals who, on August 4,
1998, constituted the Board and any new director
(other than a director whose initial assumption of
office is in connection with an actual or threatened
election contest, including but not limited to a
consent solicitation, relating to the election of
directors of the Company (as such terms are used in
Rule 14A-11 of Regulation 14A under the Exchange
Act)) whose appointment or election by the Board or
nomination of election by the Company's shareholders
was approved by a vote of at least two-thirds (2/3)
of the directors then still in office who either were
directors on August 4, 1998, or whose appointment,
election or nomination for election was previously
approved; or
(3) the execution of an agreement in which the Company
agrees to merge or consolidate with any other entity,
other than (i) a merger or consolidation which would
result in (A) the voting securities of the Company
<PAGE>
outstanding immediately prior to such merger or
consolidation continuing to represent (either by
remaining outstanding or by being converted into
voting securities of the surviving entity or any
parent thereof), in combination with the ownership of
any trustee or other fiduciary holding securities
under an employee benefit plan of the Company,
greater than 50% of the combined voting power of the
voting securities of the Company or such surviving
entity or any parent thereof outstanding immediately
after such merger or consolidation, (B) such of
Richard C. Green, Jr. and Robert K. Green continue as
members of the board of directors of the surviving
entity or ultimate parent thereof as were members of
the Board of the Company immediately prior to such
transaction, and (C) individuals described in
paragraph (2) above constitute more than one-half of
the members of the board of directors of the
surviving entity or ultimate parent thereof, or (ii)
a merger or consolidation effected to implement a
recapitalization of the Company (or similar
transaction) in which no Person is or becomes the
Beneficial Owner, directly or indirectly, of
securities of the Company (not including in the
securities Beneficially Owned by such Person any
securities acquired directly from the Company or its
affiliates, other than in connection with the
acquisition by the Company or its affiliates of a
business) representing 20% or more of either the then
outstanding shares of common stock of the Company or
the combined voting power of the Company's then
outstanding securities; or
(4) the stockholders of the Company approve a plan of
complete liquidation or dissolution of the Company or
an agreement for the sale or disposition by the
Company of all or substantially all of the Company's
assets, other than a sale or disposition by the
Company of all or substantially all of the Company's
assets to an entity, greater than 50% of the combined
voting power of the voting securities of which is
owned by Persons in substantially the same
proportions as their ownership of the Company
immediately prior to such sale.
Notwithstanding the foregoing, no "Change in Control" shall be deemed
to have occurred if there is consummated any transaction or series of integrated
transactions immediately following which the record holders of the common stock
of the Company immediately prior to such transaction or series of transactions
continue to have substantially the same proportionate ownership in an entity
which owns all or substantially all of the assets of the Company immediately
following such transaction or series of transactions.
For purposes of this Section 10, the following definitions shall apply:
(a) "Beneficial Owner" shall have the meaning set forth in Rule
13d-3 under the Exchange Act.
(b) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
<PAGE>
(c) "Person" shall have the meaning given in Section 3(a)(9) of
the Exchange Act, as modified and used in Sections 13(d) and
14(d) thereof, except that such term shall not include (i) the
Company or any of its affiliates (as defined in Rule 12b-2
promulgated under the Exchange Act), (ii) a trustee or other
fiduciary holding securities under an employee benefit plan of
the Company or any of its affiliates, (iii) an underwriter
temporarily holding securities pursuant to an offering of such
securities, or (iv) a corporation owned, directly or
indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of stock
of the Company.
The Committee may amend any existing Option or Restricted Stock Award
to reflect this provision, provided, however, that should the Company determine
that shareholder or regulatory approval of this provision is required and such
shareholder or regulatory approval is not obtained by December 31, 1999, any
such amendment shall be null and void.
<PAGE>
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT made and entered into as of the 6th day of
November, 1996 by and between UTILICORP UNITED INC. (the "Company"), a
Delaware corporation, and Richard C. Green, Jr. (the "Executive");
WHEREAS, the Executive is currently serving as Chairman and Chief
Executive Officer of the Company, and the Company desires to secure the
continued employment of the Executive in accordance herewith;
WHEREAS, the Executive is willing to commit himself to be employed by
the Company on the terms and conditions herein set forth and thus to forego
opportunities elsewhere; and
WHEREAS, the parties desire to enter into this Agreement, as of the
Effective Date, as hereinafter defined, setting forth the terms and conditions
for the employment relationship of the Executive with the Company during the
Employment Period (as hereinafter defined).
NOW, THEREFORE, IN CONSIDERATION of the mutual premises, covenants and
agreements set forth below, it is hereby agreed as follows:
1. EMPLOYMENT AND TERM.
(a) EMPLOYMENT. The Company agrees to employ the Executive,
and the Executive agrees to be employed by the Company, in accordance with the
terms and provisions of this Agreement during the term hereof (as described
below).
(b) TERM. The term of this Agreement shall commence as of the
date hereof (the "Effective Date") and shall continue until the date that is the
third anniversary of the Effective Date (such term being referred to hereinafter
as the "Employment Period"); provided, however, that the Employment Period shall
automatically be extended for one additional day on each day this Agreement is
effective beginning with the day after the Effective Date, unless the Company,
with the approval of the Board of Directors of the Company (the "Board"), or the
Executive shall have given notice that this Agreement shall not be extended, in
which case the Employment Period shall terminate on the date that is three years
following receipt of such notice by the party to whom it is directed.
2. DUTIES AND POWERS OF EXECUTIVE.
(a) POSITION; LOCATION. During the Employment Period, the
Executive shall serve as Chairman of the Board and Chief Executive Officer of
the Company and perform such duties and services appertaining to such position
as reasonably directed by the Company. The Executive's services shall be
performed primarily at the Company's headquarters which shall be located in the
Kansas City metropolitan area.
<PAGE>
(b) BOARD MEMBERSHIP. The Executive shall be a member of the
Board on the first day of the Employment Period, and the Board shall propose the
Executive for re-election to the Board throughout the Employment Period.
(c) ATTENTION. During the Employment Period, and excluding any
periods of vacation and sick leave to which the Executive is entitled, the
Executive shall devote reasonable attention and time during normal business
hours to the business and affairs of the Company and, to the extent necessary to
discharge the responsibilities assigned to the Executive under this Agreement,
shall use his reasonable best efforts to carry out such responsibilities
faithfully and efficiently. It shall not be considered a violation of the
foregoing for the Executive to serve on corporate, industry, civic or charitable
boards or committees, so long as such activities do not significantly interfere
with the performance of the Executive's responsibilities as an employee of the
Company in accordance with this Agreement.
3. COMPENSATION. The Executive shall receive the following
compensation for his services hereunder to the Company:
(a) SALARY. During the Employment Period, the Executive's
annual base salary (the "Annual Base Salary"), payable in accordance with the
Company's general payroll practices, in effect from time to time, shall be at
the annual rate established by the Board, but in no event less than $630,000
which is the Executive's annual base salary with the Company in effect as of the
day before the Effective Date. The Board may from time to time direct such
upward adjustments in Annual Base Salary as the Board deems to be necessary or
desirable, including, without limitation, adjustments in order to reflect
increases in the cost of living. The Annual Base Salary shall not be reduced
after any increase thereof. Any increase in the Annual Base Salary shall not
serve to limit or reduce any other obligation of the Company under this
Agreement.
(b) INCENTIVE COMPENSATION. During the Employment Period, the
Executive shall participate in short-term incentive compensation plans and
long-term incentive compensation plans, consisting of plans offering stock
options, performance units or performance shares, restricted stock and other
short-term and long-term incentive compensation, providing him with the
opportunity to earn, on a year-by-year basis, short-term and long-term incentive
compensation (the "Incentive Compensation") at least equal to the greater of (I)
the amounts that he had the opportunity to earn under the comparable plans of
the Company as in effect immediately before the Effective Time, or (ii) the
amounts that any other senior executive officer of the Company has the
opportunity to earn under the plans of the Company and its subsidiaries for that
year.
(c) RETIREMENT AND WELFARE BENEFIT PLANS. In addition to the
benefits available under Section 3(b), during the Employment Period and so long
as the Executive is employed by the Company, he shall be eligible to participate
in all other savings, retirement and welfare plans, practices, policies and
programs applicable generally to employees and/or senior
<PAGE>
executive officers of the Company and its subsidiaries, except with respect to
any benefits under any plan, practice, policy or program to which the Executive
has waived his rights in writing.
(d) INSURANCE. During the Employment Period, the Company shall
provide the Executive with life insurance coverage providing a death benefit to
such beneficiary or beneficiaries as the Executive may designate of not less
than three times his Annual Base Salary.
(e) EXPENSES. The Company shall reimburse the Executive for
all expenses, including those for travel and entertainment, properly incurred by
him in the performance of his duties hereunder, subject to any reasonable
policies established from time to time by the Board.
(f) FRINGE BENEFITS. During the Employment Period and so long
as the Executive is employed by the Company, he shall be entitled to receive
fringe benefits in accordance with the plans, practices, programs and policies
of the Company from time to time in effect, commensurate with his position,
which benefits shall be at least the same as those received by any senior
executive officer of the Company.
4. TERMINATION OF EMPLOYMENT.
(a) DEATH. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment Period.
(b) BY THE COMPANY FOR CAUSE. The Company may terminate the
Executive's employment during the Employment Period for Cause. For purposes of
this Agreement, "Cause" shall mean (i) conduct which is not authorized by the
Board, is materially detrimental to the Company, is a willful breach of this
Agreement, and fails to fulfill substantially all of Executive's necessary
duties; or (ii) the conviction of the Executive for the commission of a felony
which, at the time of such commission, has a materially adverse effect on the
Company.
(c) BY THE COMPANY WITHOUT CAUSE. Notwithstanding any other
provision of this Agreement, the Company may terminate the Executive's
employment for any reason other than for Cause during the Employment Period, but
only upon the affirmative vote of two-thirds of the membership of the Board.
(d) BY THE EXECUTIVE FOR GOOD REASON. The Executive may
terminate his employment during the Employment Period for Good Reason. For
purposes of this Agreement, "Good Reason" shall mean:
(i) the reduction in the Executive's Annual Base
Salary as specified in Section 3(a) of this Agreement, the
Executive's Incentive Compensation benefit as specified in
Section 3(b) of this Agreement, or any other benefit or
payment described in Section 3 of this Agreement;
<PAGE>
(ii) the change without the Executive's consent of
the Executive's title, authority, duties or responsibilities
as specified in Section 2(a) of this Agreement;
(iii) the Company's requiring the Executive without
his consent to be based at any office or location other than
the Company's headquarters which shall be located in the
Kansas City metropolitan area; or
(iv) any breach by the Company of any other material
provision of this Agreement.
(e) NOTICE OF TERMINATION. Any termination of Executive's
employment during the Employment Period by the Company for any reason, or by the
Executive for Good Reason, shall be communicated by Notice of Termination to the
other party hereto given in accordance with Section 11(b) of this Agreement. For
purposes of this Agreement, a "Notice of Termination" means a written notice
which (i) indicates the specific termination provision in this Agreement relied
upon, (ii) to the extent applicable, sets forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated, and (iii) if the Date of
Termination (as defined in Section 4(f)) is other than the date of receipt of
such notice, specifies the termination date (which date shall not be more than
30 days after the giving of such notice). The failure by the Executive or the
Company to set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive any right of
the Executive or the Company hereunder or preclude the Executive or the Company
from asserting such fact or circumstance in enforcing the Executive's or the
Company's rights hereunder.
(f) DATE OF TERMINATION. "Date of Termination" means (i) if
the Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any later date specified therein, as the case may be, (ii) if the Executive's
employment is terminated by the Company other than for Cause, the Date of
Termination shall be the date on which the Company notifies the Executive of
such termination and (iii) if the Executive's employment is terminated by reason
of death, the Date of Termination shall be the date of death.
<PAGE>
5. OBLIGATIONS OF THE COMPANY UPON TERMINATION.
(a) TERMINATION OTHER THAN FOR CAUSe. If, during the
Employment Period, the Company shall terminate the Executive's employment (other
than in the case of a termination for Cause), the Executive shall terminate his
employment for Good Reason or the Executive's employment shall terminate by
reason of death or Executive becoming eligible for long-term disability benefits
under Company sponsored disability plan(s) (which circumstance shall hereinafter
be referred to as "disability") (termination in any such case being referred to
as a "Termination"):
(i) the Company shall pay to the Executive a lump sum
amount in cash equal to the sum of (A) the Executive's Annual
Base Salary through the Date of Termination to the extent not
theretofore paid, (B) an amount equal to the maximum Incentive
Compensation benefit described in Section 3(b) of this
Agreement for the fiscal year of the Company that includes the
Date of Termination multiplied by a fraction the numerator of
which shall be the number of days from the beginning of such
fiscal year to and including the Date of Termination and the
denominator of which shall be 365, which calculation shall be
based on the assumption that all target performance goals in
effect on the Date of Termination will be exceeded to the
maximum extent possible and that the Executive will make any
and all elections available that would maximize the amount of
Incentive Compensation, and (C) any compensation and
restricted stock previously deferred by the Executive
(together with any accrued interest or earnings thereon) and
any accrued vacation pay, in each case to the extent not
theretofore paid. (The amounts specified in clauses (A), (B)
and (C) shall be hereinafter referred to as the "Accrued
Obligations".) The amounts specified in this Section 5(a)(i)
shall be paid within 30 days after the Date of Termination;
and
(ii) in the event of Termination other than by reason
of the Executive's death or disability, then the Company shall
pay to the Executive (A) continued salary at the minimum
annual base salary rate required by this Agreement for three
years following the Date of Termination (the "Continuation
Period"); (B) a lump sum amount, in cash, equal to three times
the maximum Incentive Compensation benefit described in
Section 3(b) of this Agreement that would be paid to Executive
for the year during which termination occurs, including the
value of any restricted stock that would be granted for such
year, assuming that all target performance goals in effect on
the Date of Termination were exceeded to the maximum extent
possible for such year and that the Executive will make any
and all elections available that would maximize the amount of
Incentive Compensation, such amount to be paid within 30 days
of such Date of Termination; (C) except with respect to the
benefits provided pursuant to clause (E) below, the Company
shall pay to the Executive the value of all benefits to which
the Executive would have been entitled under Sections 3(d) and
(f) had he remained in employment with the Company until the
end of the Continuation
<PAGE>
Period; (D) the Company shall pay the value of all deferred
compensation amounts (together with any accrued interest or
earnings thereon) and all executive life insurance benefits
whether or not then vested or payable; and (E) the Company
shall continue medical and welfare benefits to the Executive
and/or the Executive's family at least equal to those which
would have been provided had the Executive remained in
employment to the end of the Continuation Period (excluding
benefits to which the Executive has waived his rights in
writing), such benefits to be in accordance with the most
favorable medical and welfare benefit plans, practices,
programs or policies (the "M&W Plans") of the Company as in
effect and applicable to any senior executive officer of the
Company and his or her family during the 90-day period
immediately preceding the Date of Termination or, if more
favorable to the Executive, as in effect at any time
thereafter with respect to any senior executive officer of the
Company (but on a prospective basis only unless and then only
to the extent, such more favorable M&W Plans are by their
terms retroactive); provided, however, that if the Executive
becomes employed with another employer and is eligible to
receive medical or other welfare benefits under another
employer-provided plan, the benefits under the M&W Plans shall
be secondary to those provided under such other plan during
such applicable period of eligibility.
(b) Termination by the Company for Cause or by the Executive
Other than for Good Reason. Subject to the provisions of Section 6 of this
Agreement, if the Executive's employment shall be terminated for Cause during
the Employment Period, or if the Executive terminates employment during the
Employment Period other than a termination for Good Reason, the Company shall
have no further obligations to the Executive under this Agreement other than the
obligation to pay to the Executive the Annual Base Salary through the Date of
Termination plus the amount of any compensation and restricted stock previously
deferred by the Executive (together with any accrued interest or earnings
thereon), in each case to the extent theretofore unpaid, plus any other benefits
to which Executive is entitled under any other agreements or policies with or of
the Company.
(c) Payments in the Event of Application of An Excise Tax. It
is the intention of the parties that any payments under this Agreement shall not
be contingent upon a change in control of the Company. Nevertheless, in the
event that any payments under this Agreement or any other compensation, benefit
or other amount from the Company for the benefit of Executive are subject to the
tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended
(the "Code") (including any applicable interest and penalties, the "Excise
Tax"), no such payment ("Parachute Payment") shall be reduced (except for
required tax withholdings) and the Company shall pay to Executive by the earlier
of the date such Excise Tax is withheld from payments made to Executive or the
date such Excise Tax becomes due and payable by Executive, an additional amount
(the "Gross-Up Payment") such that the net amount retained by Executive, after
deduction of any Excise Tax on the Parachute Payments, taxes based upon the Tax
Rate and Excise Tax upon the payment provided for by this Section 5(c), shall be
equal to the amount the Executive would have received if no Excise Tax had been
imposed. The Company shall
<PAGE>
determine in good faith whether any of the Parachute Payments are subject to the
Excise Tax and the amount of any Excise Tax and shall notify Executive of its
determination. The Company and Executive shall file all tax returns and reports
regarding such Parachute Payments in a manner consistent with the Company's
reasonable good faith determination. For purposes of determining the amount of
the Gross-Up Payment, Executive shall be deemed to pay taxes at the Tax Rate
applicable at the time of the Gross-Up Payment. In the event that the Excise Tax
is subsequently determined to be less than the amount taken into account
hereunder at the time a Parachute Payment is made, Executive shall repay to the
Company at the time that the amount of such reduction in Excise Tax is finally
determined the portion of the Gross-Up Payment attributable to such reduction
plus interest on the amount of such repayment at the rate provided in Section
1274(d)(1) of the Code or other applicable provision of the Code but only to the
extent that such interest is paid to Executive. In the event that the Excise Tax
is determined to exceed the amount taken into account hereunder at the time a
Parachute Payment is made (including by reason of any payment the existence or
amount of which cannot be determined at the time of the Gross-Up Payment), the
Company shall make an additional gross-up payment in respect of such excess
(plus any interest or penalties payable in respect of such excess) at the time
that the amount of such excess is finally determined. The Company shall
reimburse Executive for all reasonable fees, expenses, and costs related to
determining the reasonableness of any Company position in connection with this
paragraph, preparation of any tax return or other filing that is affected by any
matter addressed in this paragraph and any audit, litigation or other proceeding
that is affected by any matter addressed in this paragraph. For the purposes of
the foregoing, "Tax Rate" means Executive's effective tax rate based upon the
combined federal and state and local income, earnings, Medicare and any other
tax rates applicable to Executive, net of the reduction in federal income taxes
which could be obtained by deduction of such state and local taxes.
6. NONEXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any benefit, plan,
program, policy or practice provided by the Company and for which the Executive
may qualify (except with respect to any benefit to which the Executive has
waived his rights in writing), nor shall anything herein limit or otherwise
affect such rights as the Executive may have under any other contract or
agreement entered into after the Effective Date with the Company. Amounts which
are vested benefits or which the Executive is otherwise entitled to receive
under any benefit, plan, policy, practice or program of, or any contract or
agreement entered into with, the Company shall be payable in accordance with
such benefit, plan, policy, practice or program or contract or agreement except
as explicitly modified by this Agreement.
7. FULL SETTLEMENT; MITIGATION. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts
(including amounts for damages for breach) payable to the Executive under any of
the provisions of this Agreement and, except as provided in Section 5(a)(ii)(D),
such amounts shall not be
<PAGE>
reduced whether or not the Executive obtains other employment. If there occurs a
dispute between the Executive and the Company as to the interpretation, terms,
validity or enforceability of (including any dispute about the amount of any
payment pursuant to this Agreement) this Agreement, the Company agrees to pay
all legal fees and expenses which the Executive may reasonably incur as a result
of any such dispute.
8. CONFIDENTIAL INFORMATION. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret, confidential information,
knowledge or data relating to the Company or any of its affiliated companies,
and their respective businesses, which shall have been obtained by the Executive
during the Executive's employment by UCU and the Company or any of their
affiliated companies and that shall not have been or now or hereafter have
become public knowledge (other than by acts by the Executive or representatives
of the Executive in violation of this Agreement). During the Employment Period,
the Executive shall not, without the prior written consent of the Company or as
may otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the Company and those
designated by it.
9. NON-COMPETITION. Executive acknowledges that he will forfeit all
rights under this Agreement if, during the Employment Period, and for a period
of two years thereafter, Executive directly or indirectly, owns, manages,
operates, controls, is employed by, performs services for, consults with,
solicits business for, participates in, or is connected with the ownership,
management, operation, or control of any business that is either directly or
indirectly competitive with the products or services of the Company.
<PAGE>
10. SUCCESSORS.
(a) ASSIGNMENT BY EXECUTIVE. This Agreement is personal to the
Executive and without the prior written consent of the Company shall not be
assignable by the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by
the Executive's legal representatives.
(b) Successors and Assigns of Company. This Agreement shall
inure to the benefit of and be binding upon the Company, its successors and
assigns.
(c) ASSUMPTION. The Company shall require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the Company to assume
expressly 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
had taken place. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its businesses and/or assets as
aforesaid that assumes and agrees to perform this Agreement by operation of law,
or otherwise.
11. MISCELLANEOUS.
(a) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Missouri, without
reference to its principles of conflict of laws. The captions of this Agreement
are not part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended, modified, repealed, waived, extended or discharged
except by an agreement in writing signed by the party against whom enforcement
of such amendment, modification, repeal, waiver, extension or discharge is
sought. No person, other than pursuant to a resolution of the Board or a
committee thereof, shall have authority on behalf of the Company to agree to
amend, modify, repeal, waive, extend or discharge any provision of this
Agreement or anything in reference thereto.
(b) NOTICES. All notices and other communications hereunder
shall be in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return- receipt requested, postage prepaid,
addressed, in either case, at the Company's headquarters or to such other
address as either party shall have furnished to the other in writing in
accordance herewith. Notices and communications shall be effective when actually
received by the addressee.
(c) SEVERABILITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
<PAGE>
(d) WITHHOLDING. The Company may withhold from any amounts
payable under this Agreement such federal, state or local taxes as shall be
required to be withheld pursuant to any applicable law or regulation.
(e) NO WAIVER. The Executive's or the Company's failure to
insist upon strict compliance with any provision hereof or any other provision
of this Agreement or the failure to assert any right the Executive or the
Company may have hereunder, including, without limitation, the right of the
Executive to terminate employment for Good Reason pursuant to Section 4(d) of
this Agreement, or the right of the Company to terminate the Executive's
employment for Cause pursuant to Section 4(b) of this Agreement shall not be
deemed to be a waiver of such provision or right or any other provision or right
of this Agreement.
(f) ENTIRE AGREEMENT. This instrument contains the entire
agreement of the Executive, the Company or any predecessor or subsidiary thereof
with respect to the subject matter hereof, and may be modified only by a writing
signed by the parties hereto. All promises, representations, understandings,
arrangements and prior agreements, including the severance agreement entered
into on October 17, 1995, between the Executive and the Company, are merged
herein and superseded hereby.
IN WITNESS WHEREOF, the Executive and, pursuant to due authorization
from its Board of Directors, the Company have caused this Agreement to be
executed as of the day and year first above written.
UtiliCorp United Inc.
/s/ L. Patton Kline
----------------------------------
Name: L. Patton Kline
Title: Chairman of the Compensation
Committee
/s/ Richard C. Green, Jr.
----------------------------------
Richard C. Green, Jr.
<PAGE>
AMENDMENT TO
EMPLOYMENT AGREEMENT
THIS AMENDMENT TO EMPLOYMENT AGREEMENT is made and entered into as of
the day of , 1998, by and between UTILICORP UNITED INC. (the "Company"), a
Delaware corporation, and Richard C. Green, Jr. (the "Executive").
WHEREAS, the Company and the Executive are parties to an Employment
Agreement dated November 6, 1996 (the "Agreement");
WHEREAS, the parties desire to amend the Agreement to clarify the
Company's obligations under the Agreement and the Executive agrees to remain
employed pursuant to the Agreement as amended.
NOW, THEREFORE, IN CONSIDERATION of the mutual premises, covenants and
agreements set forth below, it is hereby agreed as follows:
1. Sections 3(b) and 3(c) are hereby deleted in their entirety and new
Sections 3(b) and 3(c) are added to read as follows:
(b) INCENTIVE COMPENSATION. During the Employment Period, the
Executive shall participate in short-term incentive compensation plans
and long-term incentive compensation plans, consisting of plans
offering stock options, performance units or performance shares,
restricted stock and other short-term and long-term incentive
compensation, providing him with the opportunity to earn, on a
year-by-year basis, short-term and long-term incentive compensation
(the "Incentive Compensation") at least equal to the greater of (I) the
amounts that he had the opportunity to earn under the comparable plans
of the Company as in effect immediately before the Effective Time, or
(ii) the amounts that any other senior executive officer of the Company
has the opportunity to earn under the plans of the Company and its
subsidiaries for that year.
(c) RETIREMENT AND WELFARE BENEFIT PLANS. In addition to the
benefits available under Section 3(b), during the Employment Period and
so long as the Executive is employed by the Company, he shall be
eligible to participate in all other savings, retirement and welfare
plans, practices, policies and programs applicable generally to
employees and/or senior executive officers of the Company and its
subsidiaries, except with respect to any benefits under any plan,
practice, policy or program to which the Executive has waived his
rights in writing.
2. Section 5(a) is hereby deleted in its entirety and a new Section
5(a) is added to read as follows:
5. OBLIGATIONS OF THE COMPANY UPON TERMINATION.
<PAGE>
(a) Termination Other Than for Cause. If, during the Employment
Period, the Company shall terminate the Executive's employment
(other than in the case of a termination for Cause), the
Executive shall terminate his employment for Good Reason or
the Executive's employment shall terminate by reason of death
or Executive becoming eligible for long-term disability
benefits under Company sponsored disability plan(s) (which
circumstance shall hereinafter be referred to as "disability")
(termination in any such case being referred to as a
"Termination"):
(i) the Company shall pay to the Executive a
lump sum amount in cash equal to the sum of (A) the
Executive's Annual Base Salary through the Date of
Termination to the extent not theretofore paid, (B)
an amount equal to the maximum Incentive Compensation
benefit described in Section 3(b) of this Agreement
for the fiscal year of the Company that includes the
Date of Termination multiplied by a fraction the
numerator of which shall be the number of days from
the beginning of such fiscal year to and including
the Date of Termination and the denominator of which
shall be 365, which calculation shall be based on the
assumption that all target performance goals in
effect on the Date of Termination will be exceeded to
the maximum extent possible and that the Executive
will make any and all elections available that would
maximize the amount of Incentive Compensation, and
(C) any compensation and restricted stock previously
deferred by the Executive (together with any accrued
interest or earnings thereon) and any accrued
vacation pay, in each case to the extent not
theretofore paid. (The amounts specified in clauses
(A), (B) and (C) shall be hereinafter referred to as
the "Accrued Obligations".) The amounts specified in
this Section 5(a)(I) shall be paid within 30 days
after the Date of Termination; and
(ii) in the event of Termination other than by
reason of the Executive's death or disability, then
the Company shall pay to the Executive (A) continued
salary at the minimum annual base salary rate
required by this Agreement for three years following
the Date of Termination (the "Continuation Period");
(B) a lump sum amount, in cash, equal to three times
the maximum Incentive Compensation benefit described
in Section 3(b) of this Agreement that would be paid
to Executive for the year during which termination
occurs, including the value of any restricted stock
that would be granted for such year, assuming that
all target performance goals in effect on the Date of
Termination were exceeded to the maximum extent
possible for such year and that the Executive will
make any and all elections available that would
maximize the amount of Incentive Compensation, such
amount to be paid
<PAGE>
within 30 days of such Date of Termination; (C)
except with respect to the benefits provided pursuant
to clause (E) below, the Company shall pay to the
Executive the value of all benefits to which the
Executive would have been entitled under Sections
3(d) and (f) had he remained in employment with the
Company until the end of the Continuation Period; (D)
the Company shall pay the value of all deferred
compensation amounts (together with any accrued
interest or earnings thereon) and all executive life
insurance benefits whether or not then vested or
payable; and (E) the Company shall continue medical
and welfare benefits to the Executive and/or the
Executive's family at least equal to those which
would have been provided had the Executive remained
in employment to the end of the Continuation Period
(excluding benefits to which the Executive has waived
his rights in writing), such benefits to be in
accordance with the most favorable medical and
welfare benefit plans, practices, programs or
policies (the "M&W Plans") of the Company as in
effect and applicable to any senior executive officer
of the Company and his or her family during the
90-day period immediately preceding the Date of
Termination or, if more favorable to the Executive,
as in effect at any time thereafter with respect to
any senior executive officer of the Company (but on a
prospective basis only unless and then only to the
extent, such more favorable M&W Plans are by their
terms retroactive); provided, however, that if the
Executive becomes employed with another employer and
is eligible to receive medical or other welfare
benefits under another employer-provided plan, the
benefits under the M&W Plans shall be secondary to
those provided under such other plan during such
applicable period of eligibility.
IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed as of the day and year first above written.
UtiliCorp United Inc.
By:
----------------------------------
Name:
Title:
----------------------------------
Richard C. Green, Jr.
<PAGE>
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT made and entered into as of the 6th day of
November, 1996 by and between UTILICORP UNITED INC. (the "Company"), a
Delaware corporation, and Robert K. Green (the "Executive");
WHEREAS, the Executive is currently serving as President of the
Company, and the Company desires to secure the continued employment of the
Executive in accordance herewith;
WHEREAS, the Executive is willing to commit himself to be employed by
the Company on the terms and conditions herein set forth and thus to forego
opportunities elsewhere; and
WHEREAS, the parties desire to enter into this Agreement, as of the
Effective Date, as hereinafter defined, setting forth the terms and conditions
for the employment relationship of the Executive with the Company during the
Employment Period (as hereinafter defined).
NOW, THEREFORE, IN CONSIDERATION of the mutual premises, covenants and
agreements set forth below, it is hereby agreed as follows:
1. EMPLOYMENT AND TERM.
(a) EMPLOYMENT. The Company agrees to employ the Executive,
and the Executive agrees to be employed by the Company, in accordance with the
terms and provisions of this Agreement during the term hereof (as described
below).
(b) TERM. The term of this Agreement shall commence as of the
date hereof (the "Effective Date") and shall continue until the date that is the
third anniversary of the Effective Date (such term being referred to hereinafter
as the "Employment Period"); provided, however, that the Employment Period shall
automatically be extended for one additional day on each day this Agreement is
effective beginning with the day after the Effective Date, unless the Company,
with the approval of the Board of Directors of the Company (the "Board"), or the
Executive shall have given notice that this Agreement shall not be extended, in
which case the Employment Period shall terminate on the date that is three years
following receipt of such notice by the party to whom it is directed.
2. DUTIES AND POWERS OF EXECUTIVE.
(a) POSITION; LOCATION. During the Employment Period, the
Executive shall serve as President of the Company and perform such duties and
services appertaining to such position as reasonably directed by the Company.
The Executive's services shall be performed primarily at the Company's
headquarters which shall be located in the Kansas City metropolitan area.
<PAGE>
(b) BOARD MEMBERSHIP. The Executive shall be a member of the
Board on the first day of the Employment Period, and the Board shall propose the
Executive for re-election to the Board throughout the Employment Period.
(c) ATTENTION. During the Employment Period, and excluding any
periods of vacation and sick leave to which the Executive is entitled, the
Executive shall devote reasonable attention and time during normal business
hours to the business and affairs of the Company and, to the extent necessary to
discharge the responsibilities assigned to the Executive under this Agreement,
shall use his reasonable best efforts to carry out such responsibilities
faithfully and efficiently. It shall not be considered a violation of the
foregoing for the Executive to serve on corporate, industry, civic or charitable
boards or committees, so long as such activities do not significantly interfere
with the performance of the Executive's responsibilities as an employee of the
Company in accordance with this Agreement.
3. COMPENSATION. The Executive shall receive the following
compensation for his services hereunder to the Company:
(a) SALARY. During the Employment Period, the Executive's
annual base salary (the "Annual Base Salary"), payable in accordance with the
Company's general payroll practices, in effect from time to time, shall be at
the annual rate established by the Board, but in no event less than $480,000
which is the Executive's annual base salary with the Company in effect as of the
day before the Effective Date. The Board may from time to time direct such
upward adjustments in Annual Base Salary as the Board deems to be necessary or
desirable, including, without limitation, adjustments in order to reflect
increases in the cost of living. The Annual Base Salary shall not be reduced
after any increase thereof. Any increase in the Annual Base Salary shall not
serve to limit or reduce any other obligation of the Company under this
Agreement.
(b) INCENTIVE COMPENSATION. During the Employment Period, the
Executive shall participate in short-term incentive compensation plans and
long-term incentive compensation plans, consisting of plans offering stock
options, performance units or performance shares, restricted stock and other
short-term and long-term incentive compensation, providing him with the
opportunity to earn, on a year-by-year basis, short-term and long-term incentive
compensation (the "Incentive Compensation") at least equal to the greater of (I)
the amounts that he had the opportunity to earn under the comparable plans of
the Company as in effect immediately before the Effective Time, or (ii) the
amounts that any other senior executive officer of the Company has the
opportunity to earn under the plans of the Company and its subsidiaries for that
year.
(c) RETIREMENT AND WELFARE BENEFIT PLANS. In addition to the
benefits available under Section 3(b), during the Employment Period and so long
as the Executive is employed by the Company, he shall be eligible to participate
in all other savings, retirement and welfare plans, practices, policies and
programs applicable generally to employees and/or senior
<PAGE>
executive officers of the Company and its subsidiaries, except with respect to
any benefits under any plan, practice, policy or program to which the Executive
has waived his rights in writing.
(d) INSURANCE. During the Employment Period, the Company shall
provide the Executive with life insurance coverage providing a death benefit to
such beneficiary or beneficiaries as the Executive may designate of not less
than three times his Annual Base Salary.
(e) EXPENSES. The Company shall reimburse the Executive for
all expenses, including those for travel and entertainment, properly incurred by
him in the performance of his duties hereunder, subject to any reasonable
policies established from time to time by the Board.
(f) FRINGE BENEFITS. During the Employment Period and so long
as the Executive is employed by the Company, he shall be entitled to receive
fringe benefits in accordance with the plans, practices, programs and policies
of the Company from time to time in effect, commensurate with his position,
which benefits shall be at least the same as those received by any senior
executive officer of the Company.
4. TERMINATION OF EMPLOYMENT.
(a) DEATH. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment Period.
(b) BY THE COMPANY FOR CAUSE. The Company may terminate the
Executive's employment during the Employment Period for Cause. For purposes of
this Agreement, "Cause" shall mean (i) conduct which is not authorized by the
Board, is materially detrimental to the Company, is a willful breach of this
Agreement, and fails to fulfill substantially all of Executive's necessary
duties; or (ii) the conviction of the Executive for the commission of a felony
which, at the time of such commission, has a materially adverse effect on the
Company.
(c) BY THE COMPANY WITHOUT CAUSE. Notwithstanding any other
provision of this Agreement, the Company may terminate the Executive's
employment for any reason other than for Cause during the Employment Period, but
only upon the affirmative vote of two-thirds of the membership of the Board.
(d) BY THE EXECUTIVE FOR GOOD REASON. The Executive may
terminate his employment during the Employment Period for Good Reason. For
purposes of this Agreement, "Good Reason" shall mean:
(i) the reduction in the Executive's Annual Base
Salary as specified in Section 3(a) of this Agreement, the
Executive's Incentive Compensation benefit as specified in
Section 3(b) of this Agreement, or any other benefit or
payment described in Section 3 of this Agreement;
<PAGE>
(ii) the change without the Executive's consent of
the Executive's title, authority, duties or responsibilities
as specified in Section 2(a) of this Agreement;
(iii) the Company's requiring the Executive without
his consent to be based at any office or location other than
the Company's headquarters which shall be located in the
Kansas City metropolitan area; or
(iv) any breach by the Company of any other material
provision of this Agreement.
(e) NOTICE OF TERMINATION. Any termination of Executive's
employment during the Employment Period by the Company for any reason, or by the
Executive for Good Reason, shall be communicated by Notice of Termination to the
other party hereto given in accordance with Section 11(b) of this Agreement. For
purposes of this Agreement, a "Notice of Termination" means a written notice
which (i) indicates the specific termination provision in this Agreement relied
upon, (ii) to the extent applicable, sets forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated, and (iii) if the Date of
Termination (as defined in Section 4(f)) is other than the date of receipt of
such notice, specifies the termination date (which date shall not be more than
30 days after the giving of such notice). The failure by the Executive or the
Company to set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive any right of
the Executive or the Company hereunder or preclude the Executive or the Company
from asserting such fact or circumstance in enforcing the Executive's or the
Company's rights hereunder.
(f) DATE OF TERMINATION. "Date of Termination" means (i) if
the Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any later date specified therein, as the case may be, (ii) if the Executive's
employment is terminated by the Company other than for Cause, the Date of
Termination shall be the date on which the Company notifies the Executive of
such termination and (iii) if the Executive's employment is terminated by reason
of death, the Date of Termination shall be the date of death.
<PAGE>
5. OBLIGATIONS OF THE COMPANY UPON TERMINATION.
(a) TERMINATION OTHER THAN FOR CAUSe. If, during the
Employment Period, the Company shall terminate the Executive's employment (other
than in the case of a termination for Cause), the Executive shall terminate his
employment for Good Reason or the Executive's employment shall terminate by
reason of death or Executive becoming eligible for long-term disability benefits
under Company sponsored disability plan(s) (which circumstance shall hereinafter
be referred to as "disability") (termination in any such case being referred to
as a "Termination"):
(i) the Company shall pay to the Executive a lump sum
amount in cash equal to the sum of (A) the Executive's Annual
Base Salary through the Date of Termination to the extent not
theretofore paid, (B) an amount equal to the maximum Incentive
Compensation benefit described in Section 3(b) of this
Agreement for the fiscal year of the Company that includes the
Date of Termination multiplied by a fraction the numerator of
which shall be the number of days from the beginning of such
fiscal year to and including the Date of Termination and the
denominator of which shall be 365, which calculation shall be
based on the assumption that all target performance goals in
effect on the Date of Termination will be exceeded to the
maximum extent possible and that the Executive will make any
and all elections available that would maximize the amount of
Incentive Compensation, and (C) any compensation and
restricted stock previously deferred by the Executive
(together with any accrued interest or earnings thereon) and
any accrued vacation pay, in each case to the extent not
theretofore paid. (The amounts specified in clauses (A), (B)
and (C) shall be hereinafter referred to as the "Accrued
Obligations".) The amounts specified in this Section 5(a)(i)
shall be paid within 30 days after the Date of Termination;
and
(ii) in the event of Termination other than by reason
of the Executive's death or disability, then the Company shall
pay to the Executive (A) continued salary at the minimum
annual base salary rate required by this Agreement for three
years following the Date of Termination (the "Continuation
Period"); (B) a lump sum amount, in cash, equal to three times
the maximum Incentive Compensation benefit described in
Section 3(b) of this Agreement that would be paid to Executive
for the year during which termination occurs, including the
value of any restricted stock that would be granted for such
year, assuming that all target performance goals in effect on
the Date of Termination were exceeded to the maximum extent
possible for such year and that the Executive will make any
and all elections available that would maximize the amount of
Incentive Compensation, such amount to be paid within 30 days
of such Date of Termination; (C) except with respect to the
benefits provided pursuant to clause (E) below, the Company
shall pay to the Executive the value of all benefits to which
the Executive would have been entitled under Sections 3(d) and
(f) had he remained in employment with the Company until the
end of the Continuation
<PAGE>
Period; (D) the Company shall pay the value of all deferred
compensation amounts (together with any accrued interest or
earnings thereon) and all executive life insurance benefits
whether or not then vested or payable; and (E) the Company
shall continue medical and welfare benefits to the Executive
and/or the Executive's family at least equal to those which
would have been provided had the Executive remained in
employment to the end of the Continuation Period (excluding
benefits to which the Executive has waived his rights in
writing), such benefits to be in accordance with the most
favorable medical and welfare benefit plans, practices,
programs or policies (the "M&W Plans") of the Company as in
effect and applicable to any senior executive officer of the
Company and his or her family during the 90-day period
immediately preceding the Date of Termination or, if more
favorable to the Executive, as in effect at any time
thereafter with respect to any senior executive officer of the
Company (but on a prospective basis only unless and then only
to the extent, such more favorable M&W Plans are by their
terms retroactive); provided, however, that if the Executive
becomes employed with another employer and is eligible to
receive medical or other welfare benefits under another
employer-provided plan, the benefits under the M&W Plans shall
be secondary to those provided under such other plan during
such applicable period of eligibility.
(b) TERMINATION BY THE COMPANY FOR CAUSE OR BY THE EXECUTIVE
OTHER THAN FOR GOOD REASON. Subject to the provisions of Section 6 of this
Agreement, if the Executive's employment shall be terminated for Cause during
the Employment Period, or if the Executive terminates employment during the
Employment Period other than a termination for Good Reason, the Company shall
have no further obligations to the Executive under this Agreement other than the
obligation to pay to the Executive the Annual Base Salary through the Date of
Termination plus the amount of any compensation and restricted stock previously
deferred by the Executive (together with any accrued interest or earnings
thereon), in each case to the extent theretofore unpaid, plus any other benefits
to which Executive is entitled under any other agreements or policies with or of
the Company.
(c) PAYMENTS IN THE EVENT OF APPLICATION OF AN EXCISE TAX. It
is the intention of the parties that any payments under this Agreement shall not
be contingent upon a change in control of the Company. Nevertheless, in the
event that any payments under this Agreement or any other compensation, benefit
or other amount from the Company for the benefit of Executive are subject to the
tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended
(the "Code") (including any applicable interest and penalties, the "Excise
Tax"), no such payment ("Parachute Payment") shall be reduced (except for
required tax withholdings) and the Company shall pay to Executive by the earlier
of the date such Excise Tax is withheld from payments made to Executive or the
date such Excise Tax becomes due and payable by Executive, an additional amount
(the "Gross-Up Payment") such that the net amount retained by Executive, after
deduction of any Excise Tax on the Parachute Payments, taxes based upon the Tax
Rate and Excise Tax upon the payment provided for by this Section 5(c), shall be
equal to the amount the Executive would have received if no Excise Tax had been
imposed. The Company shall
<PAGE>
determine in good faith whether any of the Parachute Payments are subject to the
Excise Tax and the amount of any Excise Tax and shall notify Executive of its
determination. The Company and Executive shall file all tax returns and reports
regarding such Parachute Payments in a manner consistent with the Company's
reasonable good faith determination. For purposes of determining the amount of
the Gross-Up Payment, Executive shall be deemed to pay taxes at the Tax Rate
applicable at the time of the Gross-Up Payment. In the event that the Excise Tax
is subsequently determined to be less than the amount taken into account
hereunder at the time a Parachute Payment is made, Executive shall repay to the
Company at the time that the amount of such reduction in Excise Tax is finally
determined the portion of the Gross-Up Payment attributable to such reduction
plus interest on the amount of such repayment at the rate provided in Section
1274(d)(1) of the Code or other applicable provision of the Code but only to the
extent that such interest is paid to Executive. In the event that the Excise Tax
is determined to exceed the amount taken into account hereunder at the time a
Parachute Payment is made (including by reason of any payment the existence or
amount of which cannot be determined at the time of the Gross-Up Payment), the
Company shall make an additional gross-up payment in respect of such excess
(plus any interest or penalties payable in respect of such excess) at the time
that the amount of such excess is finally determined. The Company shall
reimburse Executive for all reasonable fees, expenses, and costs related to
determining the reasonableness of any Company position in connection with this
paragraph, preparation of any tax return or other filing that is affected by any
matter addressed in this paragraph and any audit, litigation or other proceeding
that is affected by any matter addressed in this paragraph. For the purposes of
the foregoing, "Tax Rate" means Executive's effective tax rate based upon the
combined federal and state and local income, earnings, Medicare and any other
tax rates applicable to Executive, net of the reduction in federal income taxes
which could be obtained by deduction of such state and local taxes.
6. NONEXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any benefit, plan,
program, policy or practice provided by the Company and for which the Executive
may qualify (except with respect to any benefit to which the Executive has
waived his rights in writing), nor shall anything herein limit or otherwise
affect such rights as the Executive may have under any other contract or
agreement entered into after the Effective Date with the Company. Amounts which
are vested benefits or which the Executive is otherwise entitled to receive
under any benefit, plan, policy, practice or program of, or any contract or
agreement entered into with, the Company shall be payable in accordance with
such benefit, plan, policy, practice or program or contract or agreement except
as explicitly modified by this Agreement.
7. FULL SETTLEMENT; MITIGATION. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts
(including amounts for damages for breach) payable to the Executive under any of
the provisions of this Agreement and, except as provided in Section 5(a)(ii)(D),
such amounts shall not be
<PAGE>
reduced whether or not the Executive obtains other employment. If there occurs a
dispute between the Executive and the Company as to the interpretation, terms,
validity or enforceability of (including any dispute about the amount of any
payment pursuant to this Agreement) this Agreement, the Company agrees to pay
all legal fees and expenses which the Executive may reasonably incur as a result
of any such dispute.
8. CONFIDENTIAL INFORMATION. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret, confidential information,
knowledge or data relating to the Company or any of its affiliated companies,
and their respective businesses, which shall have been obtained by the Executive
during the Executive's employment by UCU and the Company or any of their
affiliated companies and that shall not have been or now or hereafter have
become public knowledge (other than by acts by the Executive or representatives
of the Executive in violation of this Agreement). During the Employment Period,
the Executive shall not, without the prior written consent of the Company or as
may otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the Company and those
designated by it.
9. NON-COMPETITION. Executive acknowledges that he will forfeit all
rights under this Agreement if, during the Employment Period, and for a period
of two years thereafter, Executive directly or indirectly, owns, manages,
operates, controls, is employed by, performs services for, consults with,
solicits business for, participates in, or is connected with the ownership,
management, operation, or control of any business that is either directly or
indirectly competitive with the products or services of the Company.
<PAGE>
10. SUCCESSORS.
(a) ASSIGNMENT BY EXECUTIVE. This Agreement is personal to the
Executive and without the prior written consent of the Company shall not be
assignable by the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by
the Executive's legal representatives.
(b) Successors and Assigns of Company. This Agreement shall
inure to the benefit of and be binding upon the Company, its successors and
assigns.
(c) ASSUMPTION. The Company shall require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the Company to assume
expressly 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
had taken place. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its businesses and/or assets as
aforesaid that assumes and agrees to perform this Agreement by operation of law,
or otherwise.
11. MISCELLANEOUS.
(a) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Missouri, without
reference to its principles of conflict of laws. The captions of this Agreement
are not part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended, modified, repealed, waived, extended or discharged
except by an agreement in writing signed by the party against whom enforcement
of such amendment, modification, repeal, waiver, extension or discharge is
sought. No person, other than pursuant to a resolution of the Board or a
committee thereof, shall have authority on behalf of the Company to agree to
amend, modify, repeal, waive, extend or discharge any provision of this
Agreement or anything in reference thereto.
(b) NOTICES. All notices and other communications hereunder
shall be in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return- receipt requested, postage prepaid,
addressed, in either case, at the Company's headquarters or to such other
address as either party shall have furnished to the other in writing in
accordance herewith. Notices and communications shall be effective when actually
received by the addressee.
(c) SEVERABILITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
<PAGE>
(d) WITHHOLDING. The Company may withhold from any amounts
payable under this Agreement such federal, state or local taxes as shall be
required to be withheld pursuant to any applicable law or regulation.
(e) NO WAIVER. The Executive's or the Company's failure to
insist upon strict compliance with any provision hereof or any other provision
of this Agreement or the failure to assert any right the Executive or the
Company may have hereunder, including, without limitation, the right of the
Executive to terminate employment for Good Reason pursuant to Section 4(d) of
this Agreement, or the right of the Company to terminate the Executive's
employment for Cause pursuant to Section 4(b) of this Agreement shall not be
deemed to be a waiver of such provision or right or any other provision or right
of this Agreement.
(f) ENTIRE AGREEMENT. This instrument contains the entire
agreement of the Executive, the Company or any predecessor or subsidiary thereof
with respect to the subject matter hereof, and may be modified only by a writing
signed by the parties hereto. All promises, representations, understandings,
arrangements and prior agreements, including the severance agreement entered
into on October 17, 1995, between the Executive and the Company, are merged
herein and superseded hereby.
IN WITNESS WHEREOF, the Executive and, pursuant to due authorization
from its Board of Directors, the Company have caused this Agreement to be
executed as of the day and year first above written.
UtiliCorp United Inc.
/s/ L. Patton Kline
----------------------------------
Name: L. Patton Kline
Title: Chairman of the
Compensation Committee
/s/ Robert K. Green
----------------------------------
Robert K. Green
<PAGE>
AMENDMENT TO
EMPLOYMENT AGREEMENT
THIS AMENDMENT TO EMPLOYMENT AGREEMENT is made and entered into as of
the day of , 1998, by and between UTILICORP UNITED INC. (the "Company"), a
Delaware corporation, and Robert K. Green (the "Executive").
WHEREAS, the Company and the Executive are parties to an Employment
Agreement dated November 6, 1996 (the "Agreement");
WHEREAS, the parties desire to amend the Agreement to clarify the
Company's obligations under the Agreement.
NOW, THEREFORE, IN CONSIDERATION of the mutual premises, covenants and
agreements set forth below, it is hereby agreed as follows:
1. Sections 3(b) and 3(c) are hereby deleted in their entirety and new
Sections 3(b) and 3(c) are added to read as follows:
(b) Incentive Compensation. During the Employment Period, the
Executive shall participate in short-term incentive compensation plans
and long-term incentive compensation plans, consisting of plans
offering stock options, performance units or performance shares,
restricted stock and other short-term and long-term incentive
compensation, providing him with the opportunity to earn, on a
year-by-year basis, short-term and long-term incentive compensation
(the "Incentive Compensation") at least equal to the greater of (I) the
amounts that he had the opportunity to earn under the comparable plans
of the Company as in effect immediately before the Effective Time, or
(ii) the amounts that any other senior executive officer of the Company
has the opportunity to earn under the plans of the Company and its
subsidiaries for that year.
(c) Retirement and Welfare Benefit Plans. In addition to the
benefits available under Section 3(b), during the Employment Period and
so long as the Executive is employed by the Company, he shall be
eligible to participate in all other savings, retirement and welfare
plans, practices, policies and programs applicable generally to
employees and/or senior executive officers of the Company and its
subsidiaries, except with respect to any benefits under any plan,
practice, policy or program to which the Executive has waived his
rights in writing.
2. Section 5(a) is hereby deleted in its entirety and a new Section
5(a) is added to read as follows:
5. Obligations of the Company Upon Termination.
<PAGE>
(a) Termination Other Than for Cause. If, during the Employment
Period, the Company shall terminate the Executive's employment
(other than in the case of a termination for Cause), the
Executive shall terminate his employment for Good Reason or
the Executive's employment shall terminate by reason of death
or Executive becoming eligible for long-term disability
benefits under Company sponsored disability plan(s) (which
circumstance shall hereinafter be referred to as "disability")
(termination in any such case being referred to as a
"Termination"):
(i) the Company shall pay to the Executive a
lump sum amount in cash equal to the sum of (A) the
Executive's Annual Base Salary through the Date of
Termination to the extent not theretofore paid, (B)
an amount equal to the maximum Incentive Compensation
benefit described in Section 3(b) of this Agreement
for the fiscal year of the Company that includes the
Date of Termination multiplied by a fraction the
numerator of which shall be the number of days from
the beginning of such fiscal year to and including
the Date of Termination and the denominator of which
shall be 365, which calculation shall be based on the
assumption that all target performance goals in
effect on the Date of Termination will be exceeded to
the maximum extent possible and that the Executive
will make any and all elections available that would
maximize the amount of Incentive Compensation, and
(C) any compensation and restricted stock previously
deferred by the Executive (together with any accrued
interest or earnings thereon) and any accrued
vacation pay, in each case to the extent not
theretofore paid. (The amounts specified in clauses
(A), (B) and (C) shall be hereinafter referred to as
the "Accrued Obligations".) The amounts specified in
this Section 5(a)(I) shall be paid within 30 days
after the Date of Termination; and
(ii) in the event of Termination other than
by reason of the Executive's death or disability,
then the Company shall pay to the Executive (A)
continued salary at the minimum annual base salary
rate required by this Agreement for three years
following the Date of Termination (the "Continuation
Period"); (B) a lump sum amount, in cash, equal to
three times the maximum Incentive Compensation
benefit described in Section 3(b) of this Agreement
that would be paid to Executive for the year during
which termination occurs, including the value of any
restricted stock that would be granted for such year,
assuming that all target performance goals in effect
on the Date of Termination were exceeded to the
maximum extent possible for such year and that the
Executive will make any
<PAGE>
and all elections available that would maximize the
amount of Incentive Compensation, such amount to be
paid within 30 days of such Date of Termination; (C)
except with respect to the benefits provided pursuant
to clause (E) below, the Company shall pay to the
Executive the value of all benefits to which the
Executive would have been entitled under Sections
3(d) and (f) had he remained in employment with the
Company until the end of the Continuation Period; (D)
the Company shall pay the value of all deferred
compensation amounts (together with any accrued
interest or earnings thereon) and all executive life
insurance benefits whether or not then vested or
payable; and (E) the Company shall continue medical
and welfare benefits to the Executive and/or the
Executive's family at least equal to those which
would have been provided had the Executive remained
in employment to the end of the Continuation Period
(excluding benefits to which the Executive has waived
his rights in writing), such benefits to be in
accordance with the most favorable medical and
welfare benefit plans, practices, programs or
policies (the "M&W Plans") of the Company as in
effect and applicable to any senior executive officer
of the Company and his or her family during the
90-day period immediately preceding the Date of
Termination or, if more favorable to the Executive,
as in effect at any time thereafter with respect to
any senior executive officer of the Company (but on a
prospective basis only unless and then only to the
extent, such more favorable M&W Plans are by their
terms retroactive); provided, however, that if the
Executive becomes employed with another employer and
is eligible to receive medical or other welfare
benefits under another employer-provided plan, the
benefits under the M&W Plans shall be secondary to
those provided under such other plan during such
applicable period of eligibility.
IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed as of the day and year first above written.
TILICORP UNITED INC.
By:
------------------------------
Name
Title
<PAGE>
------------------------------
Robert K. Green
<PAGE>
UTILICORP UNITED INC.
Ratio of Earnings to Fixed Charges
(dollars in thousands)
Interest Coverage Ratios
<TABLE>
<CAPTION>
12 months ended Years ended Dec 31,
June 30, 1998 1997 1996 1995 1994 1993
--------------- ---------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income from continuing operations
before provision for income taxes................ $190,843 $223,800 $186,460 $131,812 $146,532 $116,366
Add:
Interest on long-term debt....................... 128,004 124,357 126,933 110,227 89,526 89,027
Interest on short-term debt and other............ 10,186 10,879 18,151 16,847 7,257 7,207
Portion of rents representative of the
interest factor................................ 15,782 17,548 16,537 15,346 15,329 15,008
-------- ---------------------------------------------------------------
Income as adjusted................................. $344,815 $376,584 $348,081 $274,232 $258,644 $227,608
-------- ---------------------------------------------------------------
Fixed Charges
Interest on long-term debt....................... $128,004 $124,357 $126,933 $110,227 $ 89,526 $ 89,027
Interest on short-term debt...................... 10,186 10,879 18,151 16,847 7,257 7,207
Portion of rents representative of the
interest factor................................ 15,782 17,548 16,537 15,346 15,329 15,008
-------- ---------------------------------------------------------------
Fixed Charges...................................... $153,972 $152,784 $161,621 $142,420 $112,112 $111,242
-------- ---------------------------------------------------------------
RATIO OF EARNINGS TO FIXED CHARGES................. 2.24 2.46 2.15 1.93 2.31 2.06
-------- ---------------------------------------------------------------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS ENDING JUNE 30, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 129
<SECURITIES> 0
<RECEIVABLES> 966
<ALLOWANCES> 0
<INVENTORY> 143
<CURRENT-ASSETS> 1,810
<PP&E> 2,489
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,309
<CURRENT-LIABILITIES> 2,103
<BONDS> 1,360
0
0
<COMMON> 54
<OTHER-SE> 1,063
<TOTAL-LIABILITY-AND-EQUITY> 5,309
<SALES> 5,460
<TOTAL-REVENUES> 5,460
<CGS> 4,997
<TOTAL-COSTS> 364
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 70
<INCOME-PRETAX> 105
<INCOME-TAX> 39
<INCOME-CONTINUING> 67
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 67
<EPS-PRIMARY> 1.25
<EPS-DILUTED> 1.23
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS ENDING JUNE 30, 1997
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 164
<SECURITIES> 0
<RECEIVABLES> 495
<ALLOWANCES> 0
<INVENTORY> 99
<CURRENT-ASSETS> 899
<PP&E> 2,416
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,405
<CURRENT-LIABILITIES> 1,306
<BONDS> 1,356
0
0
<COMMON> 54
<OTHER-SE> 1,135
<TOTAL-LIABILITY-AND-EQUITY> 4,405
<SALES> 3,610
<TOTAL-REVENUES> 3,610
<CGS> 3,139
<TOTAL-COSTS> 359
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 67
<INCOME-PRETAX> 130
<INCOME-TAX> 52
<INCOME-CONTINUING> 78
<DISCONTINUED> 0
<EXTRAORDINARY> (7)
<CHANGES> 0
<NET-INCOME> 71
<EPS-PRIMARY> 1.32
<EPS-DILUTED> 1.32
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS ENDING SEPTEMBER 30, 1997
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 109
<SECURITIES> 0
<RECEIVABLES> 748
<ALLOWANCES> 0
<INVENTORY> 141
<CURRENT-ASSETS> 1,186
<PP&E> 2,449
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,700
<CURRENT-LIABILITIES> 1,617
<BONDS> 1,337
0
0
<COMMON> 54
<OTHER-SE> 1,134
<TOTAL-LIABILITY-AND-EQUITY> 4,700
<SALES> 5,866
<TOTAL-REVENUES> 5,866
<CGS> 5,158
<TOTAL-COSTS> 534
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 101
<INCOME-PRETAX> 174
<INCOME-TAX> 71
<INCOME-CONTINUING> 103
<DISCONTINUED> 0
<EXTRAORDINARY> (7)
<CHANGES> 0
<NET-INCOME> 96
<EPS-PRIMARY> 1.78
<EPS-DILUTED> 1.78
</TABLE>
