<PAGE> 1
Securities And Exchange Commission
Washington, D.C. 20549
----------------
FORM 8-K
----------------
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (Date of earliest event reported) April 23, 1998
K N ENERGY, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
KANSAS 1-6446 48-0290000
(State or other jurisdiction of (Commission File Number) (IRS Employer Identification
incorporation) Number)
</TABLE>
370 VAN GORDON STREET
P.O. BOX 281304
LAKEWOOD, COLORADO 80228-8304
(Address of principal executive offices)
(303) 989-1740
(Registrant's telephone number, including area code)
<PAGE> 2
2
Item 5. Other Events
Pursuant to the terms and conditions of the Underwriting Agreement
dated April 23, 1998, among K N Energy, Inc. (the "Registrant") K N Capital
Trust III and Morgan Stanley & Co. Incorporated, J.P. Morgan Securities Inc.
and Petrie Parkman & Co., Inc. as Lead Managers of the several underwriters,
K N Capital Trust III will issue on or about April 28, 1998, $175,000,000
aggregate liquidation amount of its 7.63% Capital Securities (liquidation
amount $1,000 per Capital Security), the proceeds of which will be used to
invest in the 7.63% Junior Subordinated Debentures due 2028 of the Registrant.
Item 7. Exhibits
Exhibit 1.1 Underwriting Agreement, dated April 23, 1998, among the
Registrant, K N Capital Trust III and Morgan Stanley &
Co. Incorporated, J.P. Morgan Securities Inc. and Petrie
Parkman & Co., Inc., as Lead Managers of the several
underwriters named therein, including the Underwriting
Agreement Standard Provisions (Capital Securities),
dated April 23, 1998.
<PAGE> 3
3
SIGNATURE
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 hereunto duly authorized.
K N ENERGY, INC.
(Registrant)
By: /s/ Martha B. Wyrsch, Esq.
----------------------------------
Name: Martha B. Wyrsch, Esq.
Title: Vice President, General
Counsel and Secretary
Date: April 24, 1998
<PAGE> 4
4
Exhibit Index
Exhibits to Form 8-K
<TABLE>
<CAPTION>
Number in
Exhibit Table Exhibit
------------- -------
<S> <C>
1.1 Underwriting Agreement, dated April 23, 1998, among the
Registrant, K N Capital Trust III and Morgan Stanley &
Co. Incorporated, J.P. Morgan Securities Inc. and Petrie
Parkman & Co., Inc., as Lead Managers of the several
underwriters named therein, including the Underwriting
Agreement Standard Provisions (Capital Securities),
dated April 23, 1998.
</TABLE>
<PAGE> 1
UNDERWRITING AGREEMENT
(Capital Securities)
April 23, 1998
K N Energy, Inc.
K N Capital Trust III
370 Van Gordon Street
Lakewood, Colorado 80228-8304
Dear Sirs:
We (the "LEAD MANAGERS") are acting on behalf of the underwriters
(including ourselves) named below (such underwriter or underwriters being herein
called the "UNDERWRITERS"), and we understand that K N Capital Trust III (the
"ISSUER TRUST"), a statutory business trust created under the Delaware Business
Trust Act, proposes to issue and sell $175,000,000 aggregate liquidation amount
of K N Capital Trust III 7.63% Capital Securities (liquidation amount $1,000 per
Capital Security) (the "OFFERED CAPITAL SECURITIES").
It is understood that substantially contemporaneously with the closing of
the sale of the Offered Capital Securities to the Underwriters contemplated
hereby, (i) the Issuer Trust, its trustees (the "ISSUER TRUSTEES"), its
administrators (the "ADMINISTRATORS") and K N Energy, Inc. (the "COMPANY") shall
enter into an Amended and Restated Declaration of Trust in substantially the
form of the Form of the Amended and Restated Declaration of Trust attached as
Exhibit 4.8 to the Registration Statement referred to below (the "DECLARATION"),
pursuant to which the Issuer Trust shall (x) issue and sell the Offered Capital
Securities to the Underwriters pursuant hereto and (y) issue 5,500 of its Common
Securities (the "COMMON SECURITIES" and, together with the Offered Capital
Securities, the "TRUST SECURITIES") to the Company, in each case with such
rights and obligations as shall be set forth in such Declaration of Trust, (ii)
the Company and Wilmington Trust Company, as Trustee, acting pursuant to a Debt
Indenture dated as of April 28, 1998, as supplemented by a First Supplemental
Indenture dated as of April 28, 1998, shall provide for the issuance of
$180,500,000 liquidation amount of the Company's 7.63% Junior Subordinated
Debentures due 2028 (the "OFFERED TRUST DEBENTURES"), (iii) the Company shall
sell such Offered Trust Debentures to the Issuer Trust and the Issuer Trust
shall purchase such Offered Trust Debentures with proceeds of the sale of the
Offered Capital Securities to the Underwriters contemplated hereby and of the
Common Securities to the Company and (iv) the Company and Wilmington Trust
Company, as Guarantee Trustee, shall enter into a Common Securities Guarantee
Agreement and a Capital Securities Guarantee Agreement, in each case in
substantially the form of the Form of the Common Securities Guarantee Agreement
and the Form of the
<PAGE> 2
Capital Securities Guarantee Agreement attached, respectively, as Exhibit 4.13
and Exhibit 4.14 to the Registration Statement referred to below (the
"GUARANTEES") for the benefit of holders from time to time of the Offered
Capital Securities.
Subject to the terms and conditions set forth or incorporated by reference
herein, the Issuer Trust hereby agrees to sell and the Underwriters agree to
purchase, severally and not jointly, the aggregate number of Offered Capital
Securities set forth below opposite their names at a purchase price of $1,000
per Offered Capital Security (the "PURCHASE PRICE"), provided, that the Company
shall pay to the Underwriters' compensation equal to $10.00 per Offered Capital
Security:
<TABLE>
<CAPTION>
NUMBER OF
FIRM CAPITAL SECURITIES
UNDERWRITER TO BE PURCHASED
- ----------- -----------------------
<S> <C>
Morgan Stanley & Co. Incorporated 58,400
J.P. Morgan Securities Inc. 58,300
Petrie Parkman & Co., Inc. 58,300
Total........................................ -----------------------
175,000
=======================
</TABLE>
The Underwriters will pay for the Offered Capital Securities upon delivery
thereof through the book-entry facilities of The Depository Trust Company at
9:00 a.m. (New York time) on April 28, 1998, or at such other time, not later
than 5:00 p.m. (New York time) on April 28, 1998, as shall be designated by us.
The time and date of such payment and delivery are hereinafter referred to as
the Closing Date.
The Offered Securities shall have the terms set forth in the Prospectus
dated April 23, 1998, and the Prospectus Supplement dated April 23, 1998,
including the following:
Terms of Offered Capital Securities
Designation of the Series of Capital Securities: 7.63% Capital
Securities
Issuer of Offered Capital Securities: K N Capital Trust III
2
<PAGE> 3
Aggregate Number of Capital Securities: 175,000
Price to Public per Capital Security: $1,000.00
Purchase Price per Capital Security: $1,000.00
Underwriters' Compensation
per Capital Security: $10.00
Closing Date: April 28, 1998
Form: Book-Entry
Capitalized terms used above and not defined herein shall have the
meanings set forth in the Prospectus and Prospectus Supplement referred to
above.
Except as set forth below, all provisions contained in the document
entitled Underwriting Agreement Standard Provisions dated April 23, 1998
relating to the Capital Securities of K N Capital Trust III (fully and
unconditionally guaranteed to the extent described therein by K N Energy, Inc.)
(the "STANDARD PROVISIONS"), a copy of which is attached hereto, are herein
incorporated by reference in their entirety and shall be deemed to be a part of
this Agreement to the same extent as if such provisions had been set forth in
full herein, except that (i) if any term defined in such document is otherwise
defined herein, the definition set forth herein shall control, (ii) all
references in such document to a type of security that is not an Offered Capital
Security or an Offered Trust Debenture shall not be deemed to be a part of this
Agreement and (iii) all references in the Standard Provisions to "MANAGER" shall
be deemed to be the "LEAD MANAGERS", as defined herein.
3
<PAGE> 4
Please confirm your agreement by having an authorized officer sign a copy
of this Agreement in the space set forth below.
Very truly yours,
MORGAN STANLEY & CO.
INCORPORATED
J.P. MORGAN SECURITIES INC.
PETRIE PARKMAN & CO., INC.
On behalf of themselves and the other
Underwriters named herein
By MORGAN STANLEY & CO.
INCORPORATED
By: /s/ Harold J. Hendershot
_________________________________
Name: Harold J. Hendershot
Title: Vice President
Accepted:
K N ENERGY, INC.
By: /s/ Rose M. Robeson
____________________________
Name: Rose M. Robeson
Title: Vice President and
Treasurer
K N CAPITAL TRUST III
By: K N Energy, Inc., as Sponsor
By: /s/ Rose M. Robeson
____________________________
Name: Rose M. Robeson
Title: Vice President and
Treasurer
4
<PAGE> 5
K N ENERGY, INC.
K N CAPITAL TRUST III
CAPITAL SECURITIES
(Fully and unconditionally guaranteed, to the extent described herein, by
K N Energy, Inc.)
UNDERWRITING AGREEMENT
STANDARD PROVISIONS
April 23, 1998
From time to time, K N Energy, Inc., a Kansas corporation (the "COMPANY"),
may, either itself or together with a subsidiary trust (the "ISSUER TRUST"),
enter into one or more underwriting agreements that provide for the sale of
designated securities to the several underwriters named therein. The standard
provisions set forth herein may be incorporated by reference in any such
underwriting agreement (an "UNDERWRITING AGREEMENT"). The Underwriting
Agreement, including the provisions incorporated therein by reference, is herein
referred to as this "Agreement". Terms defined in the Underwriting Agreement are
used herein as therein defined.
The Company proposes from time to time to cause the Issuer Trust to issue
its capital securities ("CAPITAL SECURITIES") guaranteed by the Company to the
extent described in the Prospectus (as defined below) with respect to
distributions and amounts payable upon liquidation or redemption pursuant to a
Capital Securities Guarantee Agreement to be dated as of a date specified in the
Underwriting Agreement executed and delivered by the Company and Wilmington
Trust Company , as Trustee (the "GUARANTEE TRUSTEE"), for the benefit of the
holders from time to time of the Capital Securities (the "CAPITAL SECURITIES
GUARANTEE"). The Issuer Trust will use the proceeds from the sale of the Capital
Securities and the sale of Common Securities (as defined below) to purchase from
the Company an aggregate principal amount of its Junior Subordinated Debentures
(the "TRUST DEBENTURES") equal to the aggregate liquidation amount of the
Capital Securities and Common Securities issued by the Issuer Trust. The Trust
Debentures will be issued under an Indenture between the Company and Wilmington
Trust Company, as Trustee dated as of April 28, 1998 (the "DEBT SECURITIES
TRUSTEE") (as amended and supplemented by the First
1
<PAGE> 6
Supplemental Indenture dated as of April 28, 1998 between the Company and the
Debt Securities Trustee, the "INDENTURE"). With respect to any issuance of
Capital Securities by the Issuer Trust, the Company will also be the holder of
one hundred percent of the common securities representing undivided beneficial
interests in the assets of the Issuer Trust (the "COMMON SECURITIES" and
together with the Capital Securities, the "TRUST SECURITIES"). The Common
Securities will be guaranteed by the Company to the extent described in the
Prospectus (as defined below) with respect to distributions and amounts payable
upon liquidation or redemption pursuant to a Common Securities Guarantee
Agreement to be dated as of a date specified in the Underwriting Agreement
executed and delivered by the Company and the Guarantee Trustee, for the benefit
of the holders from time to time of the Common Securities (the "COMMON
SECURITIES GUARANTEE", and together with the Capital Securities Guarantee, the
"GUARANTEES").
The Issuer Trust will have been created under Delaware law pursuant to the
filing of a Certificate of Trust (each, a "CERTIFICATE OF TRUST") with the
Secretary of State of the State of Delaware, and will be governed by an Amended
and Restated Declaration of Trust (the "DECLARATION") among the Company, as
sponsor, Wilmington Trust Company, as Institutional Trustee (the "INSTITUTIONAL
TRUSTEE"), and Wilmington Trust Company, as Delaware Trustee (the "DELAWARE
TRUSTEE" and together with the Institutional Trustee, the "ISSUER TRUSTEES"),
the Administrators (as defined below) and the holders, from time to time, of the
Trust Securities. The Company, as holder of the Common Securities of the Issuer
Trust, has appointed three individuals who are employees or officers of or
affiliated with the Company to act as administrators with respect to the Issuer
Trust (the "ADMINISTRATORS"). Wilmington Trust Company, as Institutional
Trustee, will act as Indenture Trustee for the purposes of the Trust Indenture
Act of 1939, as amended (the "TRUST INDENTURE ACT").
The Company and the Issuer Trust have filed with the Securities and
Exchange Commission (the "COMMISSION") a registration statement, including a
prospectus, relating to the Trust Debentures, the Capital Securities and the
Capital Securities Guarantee and have filed with, or transmitted for filing to,
or shall promptly hereafter file with or transmit for filing to, the Commission
a prospectus supplement (the "PROSPECTUS SUPPLEMENT") pursuant to Rule 424 under
the Securities Act of 1933, as amended (the "SECURITIES ACT"), specifically
relating to the Capital Securities, the Capital Securities Guarantee and the
Trust Debentures (collectively, the "SECURITIES") offered pursuant to this
Agreement (respectively, the "OFFERED CAPITAL SECURITIES", the "OFFERED
GUARANTEES", the "OFFERED TRUST DEBENTURES" and collectively, the "OFFERED
SECURITIES"). The registration statement as amended at the date of this
Agreement, including information, if any, deemed to be part of the registration
statement at the time of effectiveness pursuant to Rule 430A under the
Securities Act is hereinafter referred to as the
2
<PAGE> 7
"REGISTRATION STATEMENT." The term "BASIC PROSPECTUS" means the prospectus
included in the Registration Statement. The term "PROSPECTUS" means the Basic
Prospectus together with the Prospectus Supplement. The term "PRELIMINARY
PROSPECTUS" means a preliminary prospectus supplement specifically relating to
the Offered Securities, together with the Basic Prospectus. As used herein, the
terms "BASIC PROSPECTUS", "PROSPECTUS" and "PRELIMINARY PROSPECTUS" shall
include in each case the documents, if any, incorporated by reference therein.
The terms "SUPPLEMENT", "AMENDMENT" and "AMEND" as used herein shall include all
documents deemed to be incorporated by reference in the Prospectus that are
filed subsequent to the date of the Basic Prospectus by the Company with the
Commission pursuant to the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT").
On January 30, 1998, the Company acquired from Occidental Petroleum
Corporation ("OCCIDENTAL") all of the capital stock of MidCon Corp. ("MIDCON")
and a short term note in the aggregate principal amount of $1.39 billion for
$2.1 billion in cash and another short-term note in the aggregate principal
amount of $1.39 billion (the "ACQUISITION"). Upon the consummation of the
Acquisition, Midcon became a wholly owned subsidiary of the Company. MidCon,
MidCon Texas Pipeline Operator, Inc., Natural Gas Pipeline Company of America, K
N Gas Gathering, Inc., K N Interstate Gas Transmission Co. and K N Services Inc.
are referred to herein as "SIGNIFICANT SUBSIDIARIES".
1. Representations and Warranties. The Issuer Trust and the Company
jointly and severally represents and warrants to each of the Underwriters as of
the date of the Underwriting Agreement:
(a) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect, and no
proceedings for such purpose are pending before or threatened by the Commission.
(b) (i) Each document, if any, filed or to be filed pursuant to the
Exchange Act and incorporated by reference in the Prospectus complied or will
comply when so filed in all material respects with the Exchange Act and the
applicable rules and regulations of the Commission thereunder, (ii) on the
original effective date of the Registration Statement, and at the time of filing
of the Company's annual report on Form 10-K for the year ended December 31,
1997, the Registration Statement did not contain, and, as amended or
supplemented, if applicable, will not contain, any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, (iii) the Registration
Statement and the Prospectus comply, and, as amended or supplemented, if
applicable, will comply,
3
<PAGE> 8
in all material respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder and (iv) the Prospectus does not
contain and, as amended or supplemented, if applicable, will not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, except that the representations and warranties
set forth in this paragraph do not apply (A) to statements or omissions in the
Registration Statement or the Prospectus based upon information relating to any
Underwriter furnished to the Company in writing by such Underwriter through the
Manager or its counsel expressly for use therein or (B) to those parts of the
Registration Statement that constitute the Statements of Eligibility (Form T-1)
under the Trust Indenture Act of the Issuer Trustees referred to in the
Registration Statement.
(c) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the state of Kansas, has the
corporate power and authority to own its property and to conduct its business as
described in the Prospectus and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification, except to the
extent that the failure to be so qualified or be in good standing would not have
a material adverse effect on the Company and its consolidated subsidiaries,
taken as a whole.
(d) Each Significant Subsidiary has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the jurisdiction of
its incorporation, has the corporate power and authority to own its property and
to conduct its business as described in the Prospectus and is duly qualified to
transact business and is in good standing in each jurisdiction in which the
conduct of its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or be in
good standing would not have a material adverse effect on the Company and its
consolidated subsidiaries, taken as a whole; all of the issued shares of capital
stock of each such Significant Subsidiary have been duly and validly authorized
and issued, are fully paid and non-assessable and are owned directly by the
Company, free and clear of all liens, encumbrances, equities or claims.
(e) The Issuer Trust has been duly created and is validly existing in good
standing as a business trust under the Delaware Business Trust Act, is a
"grantor trust" for Federal income tax purposes, has the power and authority to
conduct its business as presently conducted and as described in the Prospectus
and is not required to be authorized to do business in any other jurisdiction.
4
<PAGE> 9
(f) This Agreement has been duly authorized, executed and delivered by
each of the Issuer Trust and the Company.
(g) The Indenture has been duly qualified under the Trust Indenture Act
and has been duly authorized, executed and delivered by the Company and is a
valid and binding agreement of the Company, enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency or similar laws relating to
or affecting creditors' rights generally and general principles of equity.
(h) The Offered Trust Debentures have been duly authorized and, when
executed and authenticated in accordance with the provisions of the Indenture,
and delivered to the Issuer Trust against payment therefor as described in the
Prospectus, will be entitled to the benefits of the Indenture, and will be valid
and legally binding obligations of the Company, enforceable in accordance with
their respective terms, subject to applicable bankruptcy, insolvency or similar
laws relating to or affecting creditors' rights generally and general principles
of equity.
(i) The Offered Guarantees have been qualified under the Trust Indenture
Act and has been duly authorized by the Company and, upon execution and delivery
thereof by the Company (and assuming due authorization, execution and delivery
by the Guarantee Trustee), will be a valid and legally binding agreement of the
Company, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency or similar laws relating to or affecting creditors'
rights generally and general principles of equity.
(j) The Declaration has been qualified under the Trust Indenture Act and
has been duly authorized by the Company and, upon execution and delivery thereof
by the Company (and assuming due authorization, execution and delivery by each
party thereto other than the Company), will be a valid and legally binding
agreement of the Company, the Issuer Trustees and the Administrators,
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency or similar laws relating to or affecting creditors' rights generally
and general principles of equity.
(k) The Offered Capital Securities have been duly authorized under the
Declaration and, when executed and authenticated in accordance with the
provisions of the Declaration and delivered to and paid for by the Underwriters
in accordance with the terms of this Agreement, will be validly issued and
(subject to the terms of the Declaration) fully paid and non-assessable
undivided beneficial interests in the assets of the Issuer Trust, and the
issuance of such Offered Capital Securities will not be subject to any
preemptive or similar rights. Holders of the Offered Capital Securities will be
entitled to the same limitation of personal liability as that extended to
stockholders of private corporations for profit
5
<PAGE> 10
organized under the General Corporation Law of the State of Delaware. The Common
Securities have been duly authorized under the Declaration and, when issued and
delivered to the Company against payment therefor as described in the
Prospectus, will be validly issued undivided beneficial interests in the assets
of the Issuer Trust, and the issuance of such Common Securities will not be
subject to any preemptive rights.
(l) The execution and delivery by the Company of, and the performance by
the Company of its obligations under, each of this Agreement, the Indenture, the
Declaration, the Offered Guarantees and the Offered Trust Debentures, will not
contravene any provision of applicable law, or the articles of incorporation or
by-laws of the Company or any agreement or other instrument binding upon the
Company or any of its Significant Subsidiaries that is material to the Company
and its subsidiaries, taken as a whole, or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the Company or any
Significant Subsidiary, and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the
performance by the Company of its obligations under this Agreement, the
Indenture, the Declaration, the Offered Trust Debentures or the Offered
Guarantees, except the registration of the Offered Securities under the
Securities Act and such as have been obtained or as may be required by the
securities or blue sky laws of the various states in connection with the offer
and sale of the Offered Securities.
(m) The execution and delivery by the Issuer Trust of, and the performance
by the Issuer Trust of its obligations under, this Agreement and the Offered
Capital Securities will not contravene any provision of applicable law or the
Declaration or any agreement or other instrument binding upon the Issuer Trust
that is material to the Issuer Trust, or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the Issuer Trust,
and no consent, approval, authorization or order of, or qualification with, any
governmental body or agency is required for the performance by the Issuer Trust
of its obligations under this Agreement and the Offered Capital Securities,
except the registration of the Offered Capital Securities under the Securities
Act and such as have been obtained or as may be required by the securities or
Blue Sky laws of the various states in connection with the offer and sale of the
Offered Capital Securities.
(n) There has not occurred any material adverse change, or any development
involving a prospective material adverse change, in the condition, financial or
otherwise, or in the earnings, business or operations of the Issuer Trust or the
Company and its subsidiaries, taken as a whole, from that set forth in
6
<PAGE> 11
the Prospectus (exclusive of any amendments or supplements thereto effected
subsequent to the date of the Underwriting Agreement).
(o) Neither the Company nor the Issuer Trust is, and after giving effect
to the offering and sale of the Offered Capital Securities and the application
of the proceeds thereof as described in the Prospectus, will be an "investment
company" as such term is defined under the Investment Company Act of 1940, as
amended.
(p) There are no legal or governmental proceedings pending or threatened
to which the Issuer Trust, the Company or any of the Company's subsidiaries is a
party or to which any of the properties of the Issuer Trust, the Company or any
of the Company's subsidiaries is subject that are required to be described in
the Registration Statement or the Prospectus and are not so described or any
statutes, regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or the documents
incorporated therein by reference or to be filed as an exhibit to the
Registration Statement that are not described or filed as required.
(q) Each preliminary prospectus filed as part of the registration
statement as originally filed or as part of any amendment thereto, or filed
pursuant to Rule 424 under the Securities Act, complied when so filed in all
material respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder.
(r) The Company and its subsidiaries are in compliance with any and all
applicable foreign, federal, state and local laws and regulations relating to
the protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants ("ENVIRONMENTAL LAWS"), have
received all permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective businesses and are in
compliance with all terms and conditions of any such permit, license or
approval, except where such noncompliance with Environmental Laws, failure to
receive required permits, licenses or other approvals or failure to comply with
the terms and conditions of such permits, licenses or approvals would not,
singly or in the aggregate, have a material adverse effect on the Company and
its subsidiaries, taken as a whole.
(s) To the knowledge of the Company, no person or corporation which is a
"holding company" or a "subsidiary of a holding company", within the meaning of
such terms as defined in the Public Utility Holding Company Act of 1935,
directly or indirectly owns, controls or holds with power to vote 10% or more of
the outstanding voting securities of the Company; and the Company is
7
<PAGE> 12
not a "holding company" or to its knowledge, a "subsidiary of a holding company"
as so defined.
(t) The Company and its subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal, state or foreign
regulatory authorities, including, without limitation, the Federal Energy
Regulatory Commission, necessary to conduct their respective businesses as
described in the Prospectus, except when the failure to possess such
certificates, authorizations or permits would not have a material adverse effect
on the Company and its subsidiaries, taken as a whole, and neither the Company
nor any such subsidiary has received any notice of proceedings relating to the
revocation or modification of any such certificate, authorization or permit
which, singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(u) The financial statements (including the related notes and supporting
schedules) filed as part of the Registration Statement or included or
incorporated by reference in the Prospectus present fairly in all material
respects the financial position and results of operations of the entities
purported to be shown thereby, at the dates and for the periods indicated, and
have been prepared in conformity with generally accepted accounting principles
applied on a consistent basis throughout the periods involved, except as
otherwise stated therein.
(v) The pro forma financial statements of the Company, and the related
notes thereto, included in the Prospectus present fairly in all material
respects the pro forma financial position of the Company, as of the dates
indicated and the results of their operations for the periods specified; the pro
forma combined financial information, and the related notes thereto, included in
the Prospectus has been prepared in accordance with the applicable requirements
of the Exchange Act and is based upon good faith estimates and assumptions
believed by the Company to be reasonable.
(w) Subsequent to the respective dates as of which information is given in
the Registration Statement and the Prospectus, the Company and its subsidiaries
have not incurred any material liability or obligation, direct or contingent,
nor entered into any material transaction not in the ordinary course of
business; the Company has not purchased any of its outstanding capital stock,
nor declared, paid or otherwise made any dividend or distribution of any kind on
its capital stock other than ordinary and customary dividends; and there has not
been any material change in the capital stock, short-term debt or long-term debt
of the Company and its consolidated subsidiaries, except in each case as
described in the
8
<PAGE> 13
Prospectus (exclusive of any amendments or supplements thereto subsequent to the
date of this Agreement).
2. Public Offering. The Issuer Trust and the Company are advised by the
Manager that the Underwriters propose to make a public offering of their
respective portions of the Offered Capital Securities as soon after this
Agreement has been entered into as in the Manager's judgment is advisable. The
terms of the public offering of the Offered Capital Securities are set forth in
the Prospectus.
3. Purchase and Delivery. Payment for the Offered Capital Securities shall
be made to the Issuer Trust in Federal or other funds immediately available in
New York City at the time and place set forth in the Underwriting Agreement,
upon delivery to the Manager for the respective accounts of the several
Underwriters of the Offered Capital Securities registered in such names and in
such denominations or amounts, as the case may be, as the Manager shall request
in writing not less than one full business day prior to the date of delivery,
with any transfer taxes payable in connection with the transfer of the Offered
Securities to the Underwriters duly paid.
4. Conditions to Closing. The several obligations of the Underwriters
hereunder are subject to the following conditions:
(a) No stop order suspending the effectiveness of the Registration
Statement shall have been issued under the Securities Act and no
proceedings for that purpose shall have been instituted or shall be
pending or, to your knowledge or the knowledge of the Company, shall be
contemplated by the Commission, and any request on the part of the
Commission for additional information shall have been complied with to the
reasonable satisfaction of counsel for the Underwriters.
(b) Subsequent to the execution and delivery of the Underwriting
Agreement and prior to the Closing Date,
(i) there shall not have occurred any downgrading, nor shall
any notice have been given of any intended or potential downgrading
or of any review for a possible change that is with negative
implications, in the rating accorded any of the Company's securities
by any "nationally recognized statistical rating organization," as
such term is defined for purposes of Rule 436(g)(2) under the
Securities Act; and
(ii) there shall not have occurred any change, or any
development involving a prospective change, in the condition,
9
<PAGE> 14
financial or otherwise, or in the earnings, business or operations
of the Company and its subsidiaries, taken as a whole, or, the
Issuer Trust, from that set forth in the Prospectus (exclusive of
any amendments or supplements thereto effected subsequent to the
execution and delivery of the Underwriting Agreement), that, in the
judgment of the Manager, is material and adverse and that makes it,
in the judgment of the Manager, impracticable to market the Offered
Securities on the terms and in the manner contemplated in the
Prospectus.
(c) The Underwriters shall have received on the Closing Date:
(i) a certificate, dated the Closing Date and signed by each
of the chief executive officer and the chief financial officer of
the Company, to the effect set forth in Section 4(b)(i) and to the
effect that the representations and warranties of the Company
contained in this Agreement are true and correct as of the Closing
Date and that the Company has complied with all of the agreements
and satisfied all of the conditions on its part to be performed or
satisfied hereunder on or before the Closing Date and
(ii) a certificate, dated the Closing Date and signed by an
Administrator of the Issuer Trust to the effect that the
representations and warranties of the Issuer Trust contained in this
Agreement are true and correct as of the Closing Date and that the
Issuer Trust has complied with all of the agreements and satisfied
all of the conditions on its part to be performed or satisfied
hereunder on or before the Closing Date.
(d) The Underwriters shall have received on the Closing Date an
opinion or opinions of Simpson Thacher & Bartlett, outside counsel for the
Company, to the effect set forth in Exhibit A-1, an opinion of Martha
Wyrsch, Esq., Vice President, General Counsel and Secretary of the
Company, to the effect set forth in Exhibit A-2, an opinion of Polsinelli,
White, Vardeman & Shalton, Kansas counsel to the Company, to the effect
set forth in Exhibit A-3, and an opinion of Richards, Layton & Finger,
P.A., special Delaware counsel for the Issuer Trust to the effect set
forth in Exhibit A-4, in each case, dated the Closing Date. Such opinions
shall be rendered to the Underwriters at the request of the Company and
shall so state therein.
10
<PAGE> 15
(e) The Underwriters shall have received on the Closing Date an
opinion of Davis Polk & Wardwell, counsel for the Underwriters, dated the
Closing Date, in form and substance satisfactory to the Underwriters.
(f) The Underwriters shall have received on the date hereof and on
the Closing Date letters, dated the date hereof or the Closing Date, as
the case may be, in form and substance satisfactory to the Underwriters,
from Arthur Andersen LLP, the Company's independent public accountants,
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information relating to each of
the Company and MidCon contained in or incorporated by reference in the
Registration Statement and the Prospectus; provided that such letters
delivered on the Closing Date shall use a "cut-off date" not earlier than
the date of the Underwriting Agreement.
5. Covenants of the Company and the Issuer Trust. In further consideration
of the agreements of the Underwriters contained herein, each of the Company and
the Issuer Trust covenants as follows:
(a) To furnish to the Manager, without charge, five signed copies of
the Registration Statement (including exhibits thereto) and for delivery
to each other Underwriter a conformed copy of the Registration Statement
(without exhibits thereto) and to furnish to the Manager in New York City,
without charge, prior to 10:00 A.M. New York City time on the business day
next succeeding the date of this Agreement and, during the period
mentioned in paragraph (c) below, as many copies of the Prospectus, any
documents incorporated by reference therein and any supplements and
amendments thereto or to the Registration Statement as the Manager may
reasonably request.
(b) During the period in which the Prospectus is required by law to
be delivered in connection with the sale of the Offered Securities, before
amending or supplementing the Registration Statement or the Prospectus
(including by filing any document that would as a result thereof be
incorporated by reference in the Prospectus), to furnish to you a copy of
each such proposed amendment, supplement or other document and not to file
any such proposed amendment, supplement or other document to which you
reasonably object, and to file with the Commission within the applicable
period specified in Rule 424(b) under the Securities Act any prospectus
required to be filed pursuant to such Rule.
11
<PAGE> 16
(c) If, during such period after the first date of the public
offering of the Offered Securities as in the reasonable opinion of counsel
for the Underwriters or counsel for the Company the Prospectus is required
by law to be delivered in connection with sales by an Underwriter or
dealer, any event shall occur or condition exist as a result of which it
is necessary to amend or supplement the Prospectus in order to make the
statements therein, in the light of the circumstances existing when the
Prospectus is delivered to a purchaser, not misleading, or if in the
reasonable opinion of counsel for the Underwriters or counsel for the
Company, it is necessary to amend or supplement the Prospectus to comply
with law, forthwith to prepare, file with the Commission and furnish, at
its own expense, to the Underwriters and to the dealers (whose names and
addresses the Manager will furnish to the Company and the Issuer Trust) to
which Offered Securities may have been sold by the Manager on behalf of
the Underwriters and to any other dealers upon request, either amendments
or supplements to the Prospectus, so that the statements in the Prospectus
as so amended or supplemented will not, in the light of the circumstances
existing when the Prospectus is delivered to a purchaser, be misleading or
so that the Prospectus, as so amended or supplemented, will comply with
law.
(d) To endeavor to qualify the Offered Securities for offer and sale
under the securities or blue sky laws of such jurisdictions as the Manager
shall reasonably request and to maintain such qualifications for as long
as the Manager shall reasonably request.
(e) To make generally available to the Company's security holders
and to the Manager as soon as practicable an earning statement that
satisfies the provisions of Section 11(a) of the Securities Act and the
rules and regulations of the Commission thereunder.
(f) During the period beginning on the date of the Underwriting
Agreement and continuing to and including the Closing Date, not to offer,
sell, contract to sell or otherwise dispose of any Capital Securities, any
beneficial interest in the assets of the Issuer Trust, or any other
securities of the Company or the Issuer Trust or any similar trust
affiliated with the Company which are substantially similar to the Capital
Securities, or that are convertible into or exchangeable for, or otherwise
represent a right to acquire, any such securities, except pursuant to this
Agreement or with the prior written consent of the Manager.
(g) Whether or not the transactions contemplated in this Agreement
are consummated or this Agreement is terminated, to pay or
12
<PAGE> 17
cause to be paid all expenses incident to the performance of the Company's
and the Issuer Trust's obligations under this Agreement, including: (i)
the fees, disbursements and expenses of the Company's counsel and the
Company's accountants, of the Issuer Trust's counsel and of the Issuer
Trustees and their counsel in connection with the registration and
delivery of the Offered Securities under the Securities Act and all other
fees or expenses in connection with the preparation and filing of the
Registration Statement, any preliminary prospectus, the Prospectus and
amendments and supplements to any of the foregoing, including all printing
costs associated therewith, and the mailing and delivering of copies
thereof to the Underwriters and dealers, in the quantities hereinabove
specified, (ii) all costs and expenses related to the transfer and
delivery of the Offered Securities to the Underwriters, including any
transfer or other taxes payable thereon, (iii) the cost of printing or
producing any Blue Sky memorandum in connection with the offer and sale of
the Offered Securities under state securities law and all expenses in
connection with the qualification of the Offered Securities for offer and
sale under state law as provided in Section 5(d) hereof, including filing
fees and the reasonable fees and disbursements of counsel for the
Underwriters in connection with such qualification and in connection with
the Blue Sky memorandum, (iv) all filing fees and the reasonable fees and
disbursements of counsel to the Underwriters, if any, incurred in
connection with the review and qualification of the offering of the
Offered Securities by the National Association of Securities Dealers,
Inc., (v) any fees charged by the rating agencies for the rating of the
Offered Securities, (vi) if applicable, all costs and expenses incident to
listing the Offered Securities on any national securities exchanges and
foreign stock exchanges, (vii) the cost of printing certificates
representing the Offered Securities, (viii) the costs and charges of any
trustee, transfer agent, registrar or depositary, (ix) the costs and
expenses of the Company or the Issuer Trust relating to investor
presentations on any "road show" undertaken in connection with the
marketing of the offering of the Offered Securities, including, without
limitation, expenses associated with the production of road show slides
and graphics, fees and expenses of any consultants engaged in connection
with the road show presentations with the prior approval of the Company,
travel and lodging expenses of the representatives and officers of the
Company and any such consultants, and the cost of any aircraft chartered
in connection with the road show, and (x) all other costs and expenses
incident to the performance of the obligations of the Company hereunder
for which provision is not otherwise made in this Section. It is
understood, however, that except as provided in this Section, Section 6
entitled "Indemnification and Contribution", and the last paragraph of
Section 8 below, the Underwriters will pay all of their
13
<PAGE> 18
costs and expenses, including fees and disbursements of their counsel,
transfer taxes payable on resale of any of the Offered Securities by them
and any advertising expenses connected with any offers they may make.
6. Indemnification and Contribution. (a) Each of the Company and the
Issuer Trust jointly and severally, agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act from and against any and all losses, claims, damages and liabilities
(including, without limitation, any legal or other expenses reasonably incurred
in connection with defending or investigating any such action or claim) caused
by any untrue statement or allegedly untrue statement of a material fact
contained in the Registration Statement or any amendment thereof, any
preliminary prospectus or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto), or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages or liabilities are caused by any
such untrue statement or omission or allegedly untrue statement or omission
based upon information relating to any Underwriter furnished to the Company and
the Issuer Trust in writing by such Underwriters through the Manager or its
counsel expressly for use therein; provided however, that the foregoing
indemnity agreement with respect to any preliminary prospectus shall not inure
to the benefit of any Underwriter from whom the person asserting any such
losses, claims, damages or liabilities purchased Offered Securities, or any
person controlling such Underwriter, if a copy of the Prospectus (as then
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of such Underwriter
to such person, if required by law so to have been delivered, at or prior to the
written confirmation of sale of the Offered Securities to such person, and if
the Prospectus (as so amended or supplemented) would have cured the defect
giving rise to such losses, claims, damages or liabilities, unless such failure
is the result of noncompliance by the Company with Section 5(a) hereof.
(b) Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Issuer Trust, the Issuer Trustees, the Administrators, the
Company, its directors, its officers who sign the Registration Statement and
each person, if any, who controls the Issuer Trust or Company within the meaning
of either Section 15 of the Securities Act or Section 20 of the Exchange Act to
the same extent as the foregoing indemnity from the Company and the Issuer Trust
to each Underwriter, but only with reference to information relating to such
Underwriter furnished to the Company or the Issuer Trust by such Underwriter in
writing through the Manager or its counsel expressly for use in the Registration
14
<PAGE> 19
Statement, any preliminary prospectus, the Prospectus or any amendments or
supplements thereto.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to either Section 6(a) or 6(b) , such person (the "INDEMNIFIED
PARTY") shall promptly notify the person against whom such indemnity may be
sought (the "INDEMNIFYING PARTY") in writing and the indemnifying party, upon
request of the indemnified party, shall retain counsel reasonably satisfactory
to the indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all such indemnified parties and that all such fees
and expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by the Manager, in the case of parties indemnified
pursuant to Section 6(a) above, and by the Company and the Issuer Trust, in the
case of parties indemnified pursuant to Section 6(b) above. The indemnifying
party shall not be liable for any settlement of any proceeding effected without
its written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for reasonable fees and expenses of counsel as contemplated by
the third sentence of this paragraph, the indemnifying party agrees that it
shall be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 30 days after
receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the indemnified party in accordance
with such request prior to the date of such settlement. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
15
<PAGE> 20
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
(d) To the extent the indemnification provided for in Section 6(a) or 6(b)
is unavailable to an indemnified party or insufficient in respect of any losses,
claims, damages or liabilities referred to therein, then each indemnifying party
under such paragraph, in lieu of indemnifying such indemnified party thereunder,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (i) in such proportion as
is appropriate to reflect the relative benefits received by the Company and the
Issuer Trust on the one hand and the Underwriters on the other hand from the
offering of the Offered Securities or (ii) if the allocation provided by clause
6(d)(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause
6(d)(i) above but also the relative fault of the Company and the Issuer Trust on
the one hand and the Underwriters on the other hand in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Company and the Issuer Trust on the one hand
and the Underwriters on the other hand in connection with the offering of the
Offered Securities shall be deemed to be in the same respective proportions as
the net proceeds from the offering of such Offered Securities (before deducting
expenses) received by the Company and the Issuer Trust and the total
underwriting discounts and commissions received by the Underwriters, in each
case as set forth in the table on the cover of the Prospectus Supplement, bear
to the aggregate public offering price of the Offered Securities. The relative
fault of the Company and the Issuer Trust on the one hand and of the
Underwriters on the other hand shall be determined by reference to, among other
things, whether the untrue or allegedly untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to information
supplied by the Company (including information relating to MidCon) and the
Issuer Trust or by the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Underwriters' respective obligations to contribute pursuant to
this Section 6 are several in proportion to the respective principal amounts of
Offered Securities they have purchased hereunder, and not joint.
(e) The Company, the Issuer Trust and the Underwriters agree that it would
not be just or equitable if contribution pursuant to this Section 6 were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in Section 6(d). The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages
16
<PAGE> 21
and liabilities referred to in the immediately preceding paragraph shall be
deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 6, no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price at which the Offered
Securities underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages that such Underwriter has otherwise
been required to pay by reason of such untrue or allegedly untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 6 are not exclusive
and shall not limit any rights or remedies which may otherwise be available to
any indemnified party at law or in equity.
7. Termination. This Agreement shall be subject to termination by notice
given by the Manager to the Company, if (a) after the execution and delivery of
the Underwriting Agreement and prior to the Closing Date (i) trading generally
shall have been suspended or materially limited on or by, as the case may be,
any of the New York Stock Exchange or the National Association of Securities
Dealers, Inc., (ii) trading of any securities of the Company shall have been
suspended on any exchange or in any over-the-counter market, (iii) a general
moratorium on commercial banking activities in New York shall have been declared
by either Federal or New York State authorities, or (iv) there shall have
occurred any outbreak or escalation of hostilities or any change in financial
markets or any calamity or crisis that, in the judgment of the Manager, is
material and adverse and (b) in the case of any of the events specified in
clauses 7(a)(i) through 7(a)(iv), such event, singly or together with any other
such event, makes it, in the judgment of the Manager, impracticable to market
the Offered Securities on the terms and in the manner contemplated in the
Prospectus.
8. Defaulting Underwriters. If, on the Closing Date, any one or more of
the Underwriters shall fail or refuse to purchase Offered Capital Securities
that it has or they have agreed to purchase hereunder on such date, and the
aggregate principal amount of Offered Capital Securities which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase is not more
than one-tenth of the aggregate principal amount of the Offered Capital
Securities to be purchased on such date, the other Underwriters shall be
obligated severally in the proportions that the number of Offered Capital
Securities set forth opposite their respective names in the Underwriting
Agreement bears to the aggregate liquidation amount of Offered Capital
Securities set forth opposite the names of all such non-defaulting Underwriters,
or in such other proportions as the Manager
17
<PAGE> 22
may specify, to purchase the Offered Capital Securities which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase on such
date; provided that in no event shall the liquidation amount of Offered Capital
Securities that any Underwriter has agreed to purchase pursuant to this
Agreement be increased pursuant to this Section 8 by an amount in excess of
one-ninth of such principal amount of Offered Capital Securities without the
written consent of such Underwriter. If, on the Closing Date, any Underwriter or
Underwriters shall fail or refuse to purchase Offered Capital Securities and the
aggregate number of Offered Capital Securities with respect to which such
default occurs is more than one-tenth of the aggregate principal amount of
Offered Capital Securities to be purchased, and arrangements satisfactory to the
Manager and the Company for the purchase of such Offered Capital Securities are
not made within 36 hours after such default, this Agreement shall terminate
without liability on the part of any non-defaulting Underwriter or the Company.
In any such case either the Manager or the Company shall have the right to
postpone the Closing Date, but in no event for longer than seven days, in order
that the required changes, if any, in the Registration Statement and in the
Prospectus or in any other documents or arrangements may be effected. Any action
taken under this paragraph shall not relieve any defaulting Underwriter from
liability in respect of any default of such Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of them,
because of any failure or refusal on the part of the Company or the Issuer Trust
to comply with the terms or to fulfill any of the conditions of this Agreement,
or if for any reason the Company or the Issuer Trust shall be unable to perform
its obligations under this Agreement, the Company and the Issuer Trust jointly
and severally agree to reimburse the Underwriters or such Underwriters as have
so terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering contemplated hereunder.
9. Counterparts. The Underwriting Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
10. Applicable Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.
11. Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
18
<PAGE> 23
EXHIBIT A-1
OPINION OF OUTSIDE COUNSEL FOR
THE COMPANY AND THE ISSUER TRUST
The opinion of Simpson Thacher & Bartlett, outside counsel for the Company
and the Issuer Trust to be delivered pursuant to Section 4(d) of the
Underwriting Agreement, shall be to the effect that:
(A) The Registration Statement has become effective under the Act and, to
such counsel's knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued or proceeding for that purpose has been
instituted or threatened by the Commission.
(B) The Indenture has been duly qualified under the Trust Indenture Act
and, assuming the Indenture has been duly authorized, executed and delivered by
the Company and the Debt Securities Trustee, constitutes a valid and legally
binding obligation of the Company, enforceable against the Company in accordance
with its terms, subject to applicable bankruptcy, insolvency or similar laws
affecting creditors' rights generally and general principals of equity.
(C) Assuming the Offered Trust Debentures have been duly authorized,
executed and issued by the Company and duly authenticated by the Debt Securities
Trustee, and upon payment and delivery thereof in accordance with this Agreement
and the Declaration, the Offered Trust Debentures will constitute valid and
legally binding obligations of the Company, enforceable against the Company in
accordance with their terms and entitled to the benefits of the Indenture,
subject to applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally and general principals of equity.
(D) Assuming the Offered Guarantee has been duly authorized, executed and
delivered by the Company, and assuming due authorization, execution and delivery
thereof by the Guarantee Trustee and that the Indenture is the valid and legally
binding obligation of the Guarantee Trustee and upon payment for and delivery of
the Offered Capital Securities in accordance with the Underwriting Agreement,
the Offered Guarantee will constitute a valid and legally binding obligation of
the Company enforceable against the Company in accordance with its terms,
subject to applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally and general principals of equity.
A-1-1
<PAGE> 24
(E) The statements in the Prospectus set forth under the headings
"Description of the Capital Securities," "Description of the Subordinated
Debentures," "Description of the Guarantee" and "Relationship Among the Capital
Securities, the Subordinated Debentures and the Guarantee" insofar as they
purport to constitute summaries of certain terms of the documents referred to
therein, constitute accurate summaries of the terms of such documents in all
material respects.
(F) Subject to the qualifications and limitations stated in such opinion
and in the Prospectus, the statements made in the Prospectus under the caption
"Certain United States Federal Income Tax Considerations," insofar as they
purport to constitute summaries of matters of United States federal tax law and
regulations or legal conclusions with respect thereto, constitute accurate
summaries of the matters described therein in all material respects.
(G) The issue and sale of the Offered Capital Securities by the Company and
the Issuer Trust, as applicable, and compliance by the Issuer Trust and the
Company with all of the provisions of the Underwriting Agreement, the
Declaration, the Guarantees, the Indenture and the Offered Securities, as
applicable, will not violate any federal or New York statute or any rule or
regulation that has been issued pursuant to any federal or New York statute or
any order known to such counsel issued pursuant to any federal or New York
statute by any governmental agency or body or court having jurisdiction over the
Company or any of its subsidiaries or any of their properties, and no consent,
approval, authorization, order, registration, or qualification of or with, any
federal or New York governmental body or agency or, to the knowledge of such
counsel, any federal or New York court is required for the issue and sale of the
Offered Securities or the compliance by the Issuer Trust and the Company, as
applicable, with all of the provisions of the Underwriting Agreement, the
Declaration, the Guarantees, the Indenture or the Offered Securities, except for
registration under the Act of the Offered Securities and such as may be required
by the securities or Blue Sky laws of the various states in connection with the
purchase and distribution of the Offered Securities.
(H) Neither the Company nor the Issuer Trust is an "investment company"
within the meaning of, and subject to regulation under, the Investment Company
Act of 1940, as amended.
(I) Under current law and assuming full compliance with the terms of the
Indenture and the Declaration and, based upon certain facts and assumptions set
forth in such opinion, the Trust Debentures will be classified for United States
federal income tax purposes as indebtedness of the Company.
A-1-2
<PAGE> 25
(J) Under current law and assuming full compliance with the terms of the
Declaration and other documents and based upon certain facts and assumptions
contained in such opinion, the Issuer Trust will be classified as a grantor
trust for United States federal income tax purposes and not as an association
taxable as a corporation.
(K) Such counsel (A) is of the opinion that the Registration Statement, as
of its effective date, and Prospectus, as of the date of the Underwriting
Agreement (except for financial statements and schedules and other financial
data included therein as to which such counsel need not express any opinion)
comply as to form in all material respects with the Securities Act and the
applicable rules and regulations of the Commission thereunder, (B) has no reason
to believe that (except for financial statements and schedules and other
financial data as to which such counsel need not express any belief) the
Registration Statement at the time the Registration Statement became effective
or on the date of the filing of the latest annual report on Form 10-K after the
initial effective date of the Registration Statement contained any untrue
statements of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading and
(C) has no reason to believe that (except for financial statements and schedules
and other financial or statistical data as to which such counsel need not
express any belief) the Prospectus at the time the Prospectus Supplement was
issued or at the Closing Date contained or contains any untrue statement of a
material fact or omitted or omits to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
A-1-3
<PAGE> 26
EXHIBIT A-2
OPINION OF GENERAL COUNSEL OF THE COMPANY
The opinion of Martha B. Wyrsch, Esq., Vice President, General Counsel and
Secretary of the Company, to be delivered pursuant to Section 4(d) of the
Underwriting Agreement, shall be to the effect that:
(A) Each of the Company and the Significant Subsidiaries (i) is duly
qualified to do business as a foreign corporation and is in good standing under
the laws of each jurisdiction which requires such qualification wherein it owns
or leases material properties or conducts material business, except where the
failure to be so qualified or in good standing would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole, and (ii) holds all
material approvals, authorizations, orders, licenses, certificates and permits
from governmental authorities necessary for the conduct of its business as
described in the Prospectus, except where the failure to hold such approvals,
authorizations, orders, licenses, certificates and/or permits would not,
singularly or in the aggregate, have a material adverse effect on the Company
and its subsidiaries, taken as a whole;
(B) Each of the Significant Subsidiaries has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the
jurisdiction in which it is incorporated, with full corporate power and
authority to own its properties and conduct its business as described in the
Prospectus except to the extent that the failure to be in good standing would
not have a material adverse effect on the Company and its subsidiaries, taken as
a whole;
(C) All the outstanding shares of capital stock of each Significant
Subsidiary have been duly and validly authorized and issued and are fully paid
and nonassessable, and, except as otherwise set forth in the Prospectus, all of
such shares are owned by the Company either directly or through one or more
subsidiaries free and clear of any pledge, security interest, claims, lien or
other encumbrance;
(D) Such counsel does not know of any statutes or regulations, or any
pending or threatened legal or governmental proceedings, required to be
described in the Prospectus that are not described as required, nor of any
contracts or documents of a character required to be described or referred to in
the Registration
<PAGE> 27
Statement or the Prospectus or to be filed as exhibits to the Registration
Statement that are not described, referred to or filed as required;
(E) The descriptions included in or incorporated by reference in the
Prospectus of the statutes, regulations, legal or governmental proceedings,
contracts and other documents therein described are accurate and fairly
summarize the matters referred to therein;
(F) No consent, approval, authorization or order of any court or
governmental agency or body is required to be obtained by the Company or any
subsidiary for the consummation of the transactions contemplated herein in
connection with the purchase and sale of the Offered Securities by the
Underwriters, except such approvals (specified in such opinion) as have been
obtained;
(G) The execution and delivery of the Underwriting Agreement, the
Indenture, the Declaration and each of the Guarantees by the Company and the
Issuer Trust, as applicable, the issuance and delivery of the Offered
Securities, the consummation by the Company and the Issuer Trust, as applicable,
of the transactions contemplated therein and compliance by the Company and the
Issuer Trust with the terms of the Underwriting Agreement do not and will not
result in any violation of the charter or by-laws of the Company or any
Significant Subsidiary, and do not and will not conflict with, or result in a
breach of any of the terms or provisions of, or constitute a default under, or
result in the creation or imposition of any lien, charge or encumbrance upon any
property or asset of the Company or any Significant Subsidiary under (A) any
indenture, mortgage or loan agreement, or any other agreement or instrument
known to such counsel, to which the Company or any Significant Subsidiary is a
party or by which it may be bound or to which any of its properties may be
subject, (B) any existing applicable law, rule or regulation (other than the
securities or blue sky laws of the various states, as to which such counsel need
express no opinion), or (C) any judgment, order or decree of any government,
governmental instrumentality or court, domestic or foreign, known to such
counsel having jurisdiction over the Company or any Significant Subsidiary or
any of its properties (except, in the case of subclauses (A) and (B) hereof, for
such conflicts, breaches or defaults or liens, charges or encumbrances that
would not have a material adverse effect on the condition (financial or
otherwise), earnings, business affairs or business prospects of the Company and
its subsidiaries, considered as one enterprise or the transactions contemplated
by the Underwriting Agreement);
(H) Each of the Underwriting Agreement, the Indenture, the Declaration and
the Guarantees has been duly executed and delivered by the Company;
A-2-2
<PAGE> 28
(I) All issued and outstanding Common Securities of the Issuer Trust are
owned directly by the Company free and clear of any pledge, security interest,
claim, lien or other encumbrance;
(J) The Trust Debentures have been duly executed and delivered by the
Company;
(K) The Company and the Significant Subsidiaries hold all requisite
Certificates of Public Convenience and Necessity from the Federal Energy
Regulatory Commission to enable them to carry on the respective businesses in
which they are engaged;
(L) To the knowledge of such counsel (after due inquiry), none of the
Company, any Significant Subsidiary or the Issuer Trust is in default in the
performance or observance of any material obligation, agreement, covenant or
condition contained in any contract, indenture, loan agreement, note, lease or
other agreement or instrument that is described or referred to in the
Registration Statement or Prospectus or filed as an exhibit to the Registration
Statement;
(M) To the knowledge of such counsel, after due inquiry, no person or
corporation which is a "holding company" or a "subsidiary of a holding company,"
within the meaning of such terms as defined in the Public Utility Holding
Company Act of 1935, directly or indirectly owns, controls or holds with power
to vote 10% or more of the outstanding voting securities of the Company; and the
Company is not a "holding company" or to the knowledge of such counsel, after
due inquiry, a "subsidiary of a holding company" as so defined; and
(N) The documents incorporated by reference in the Prospectus (except for
the consolidated financial statements and other financial or statistical data
included therein or omitted therefrom, as to which such counsel need express no
opinion), as of the dates they were filed with the Commission or to the extent
such documents were subsequently amended prior to the date hereof, at the time
so amended, complied as to form in all material respects with the requirements
of the Exchange Act and the regulations thereunder.
In addition, such counsel shall state that such counsel has participated
in the preparation of the Registration Statement and the Prospectus (including
the documents incorporated by reference therein) and participated in conferences
with representatives of your legal counsel and representatives of the
Underwriters at which the contents of the Registration Statement and the
Prospectus and related matters were discussed. Such counsel shall also state
that although such counsel is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement
A-2-3
<PAGE> 29
and the Prospectus except as stated above, such counsel advises you that, on the
basis of the foregoing, no facts have come to such counsel's attention which
lead such counsel to believe that (A) the Registration Statement or any
amendments thereto (other than the financial statement and other financial or
statistical information included or incorporated by reference therein as to
which such counsel need not comment and except for that part of the Registration
Statement that constitutes the Form T-1 heretofore referred), at the time the
Registration Statement initially became effective, on the effective date of the
most recent post-effective amendment thereto, if any, on the date of the filing
of the latest annual report on Form 10-K after the initial effective date of the
Registration Statement, or on the date of the Underwriting Agreement, contained
an untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or (B) the Prospectus or any amendment or supplement thereto (other
than the financial statements and other financial or statistical information
included or incorporated by reference therein as to which such counsel need not
comment and except for that part of the Registration Statement that constitutes
the Form T-1 heretofore referred), at the time the Prospectus Supplement was
issued or at the Closing Date contained or contains an untrue statement of a
material fact or omitted or omits to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
In rendering such opinions, such counsel may (A) state that her opinion is
limited to the laws of the State of Colorado and the federal laws of the United
States and (B) rely as to matters involving the application of laws of any
jurisdiction other than the State of Colorado or the United States, to the
extent deemed proper and specified in such opinion, upon the opinions of
Polsinelli, White, Vardeman & Shalton and other local counsel of good standing
believed to be reliable and who are satisfactory to counsel for the Underwriters
and as to matters of fact, to the extent deemed proper, on certificates of
responsible officers of the Company and public officials.
A-2-4
<PAGE> 30
EXHIBIT A-3
OPINION OF KANSAS COUNSEL OF THE COMPANY
The opinion of Polsinelli, White, Vardeman & Shalton, Kansas counsel to
the Company, to be delivered pursuant to Section 4(d) of the Underwriting
Agreement, shall be to the effect that:
(A) The Company is duly incorporated, validly existing, and in good
standing under the laws of the State of Kansas, with corporate power and
authority under such laws to own its properties and conduct its business as
described in the Prospectus.
(B) The execution and delivery of each of the Indenture, the Declaration,
the Guarantees and the Underwriting Agreement have been duly authorized by all
necessary corporate action of the Company.
(C) The execution and delivery of the Trust Debentures have been duly
authorized by all necessary corporate action of the Company.
(D) No approval, authorization, consent or other action (other than under
the securities or blue sky laws of the State of Kansas) is required by any
regulatory authority or governmental body of the State of Kansas for the valid
issuance, sale, and delivery by the Company of the Offered Securities pursuant
to the Underwriting Agreement and to the best of our knowledge, do not result in
any breach or violation of any judgment, order or decree of any governmental
body, agency or court located in Kansas having jurisdiction over the Company.
<PAGE> 31
EXHIBIT A-4
OPINION OF SPECIAL DELAWARE COUNSEL OF THE ISSUER
TRUST
The opinion of Richards, Layton & Finger, P.A., special Delaware counsel
for the Issuer Trust and the Company, to be delivered pursuant to Section 4(d)
of the Underwriting Agreement, shall be to the effect that:
(A) The Issuer Trust has been duly created and is validly existing in good
standing as a business trust under the Delaware Business Trust Act and all
filings required under the laws of the State of Delaware with respect to the
creation and valid existence of the Issuer Trust as a business trust have been
made.
(B) Under the Declaration and the Delaware Business Trust Act, the Issuer
Trust has the trust power and authority to own its properties and conduct its
business, all as described in the Prospectus.
(C) The Declaration constitutes a valid and binding obligation of the
Company, the Administrators and the Issuer Trustees, and is enforceable against
the Company, the Administrators and the Issuer Trustees, in accordance with its
terms.
(D) Under the Declaration and the Delaware Business Trust Act, the Issuer
Trust has the trust power and authority to (A) execute and deliver the
Underwriting Agreement and to perform its obligations under the Underwriting
Agreement, and (B) issue and perform its obligations under the Trust Securities.
(E) Under the Declaration and the Delaware Business Trust Act, the
execution and delivery by the Issuer Trust of the Underwriting Agreement and the
performance by the Issuer Trust of its obligations thereunder, have been duly
authorized by all necessary trust action on the part of the Issuer Trust.
(F) The Capital Securities have been duly authorized by the Declaration and
are duly and validly issued and, subject to the qualifications set forth herein,
fully paid and nonassessable undivided beneficial interests in the assets of the
Issuer Trust. The holders of the Capital Securities, as beneficial owners of the
Issuer Trust, will be entitled to the same limitation of personal liability
extended to stockholders of private corporations for profit organized under the
General Corporation Law of the State of Delaware. Such counsel may note that the
holders of the Capital Securities are obligated for payments set forth in the
Declaration.
<PAGE> 32
(G) The Common Securities have been duly authorized by the Declaration and
are duly and validly issued undivided beneficial interests in the assets of the
Issuer Trust.
(H) Under the Declaration and the Delaware Business Trust Act, the issuance
of the Trust Securities is not subject to preemptive rights.
(I) The issuance and the sale of the Trust Securities by the Issuer Trust,
the execution, delivery and performance by the Issuer Trust of the Underwriting
Agreement, the consummation by the Issuer Trust of the transactions contemplated
by the Underwriting Agreement and compliance by the Issuer Trust with its
obligations under the Underwriting Agreement do not violate (A) the Certificate
or the Declaration, or (B) any applicable Delaware law or Delaware
administrative regulation.
(J) After due inquiry, on the day immediately prior to the Closing Date and
limited solely to the court docket for active cases for the Chancery Court of
the State of Delaware in and for New Castle County, Delaware, the Superior Court
of the State of Delaware in and for New Castle County, and the United States
Federal District Court sitting in the State of Delaware, we do not know of any
legal or governmental proceeding pending against the Issuer Trust.
(K) No authorization, approval, consent or order of any Delaware court or
any Delaware governmental authority or Delaware agency is required to be
obtained by the Issuer Trust solely in connection with the issuance and sale of
the Trust Securities.
(L) The holders of Capital Security (other than those holders who reside or
are domiciled in the State of Delaware) will have no liability for income taxes
imposed by the State of Delaware solely as a result of their participation in
the Issuer Trust, and the Issuer Trust will not be liable for any income tax
imposed by the State of Delaware.
(M) The statements in the Prospectus set forth under the headings "K N
Capital Trust III," "Description of the Preferred Securities," and "Description
of the Capital Securities," insofar as such statements constitute statements of
Delaware law, such statements are fairly presented.
Such counsel may state that the opinion expressed in paragraph C above is
subject, as to enforcement, to the effect upon the Declaration of (i)
bankruptcy, insolvency, moratorium, receivership, reorganization, liquidation,
fraudulent conveyance or transfer and other similar laws relating to or
affecting the rights and remedies of creditors generally, (ii) principles of
equity, including applicable
A-4-2
<PAGE> 33
law relating to fiduciary duties (regardless of whether considered and applied
in a proceeding in equity or at law), and (iii) the effect of applicable public
policy on the enforceability of provisions relating to the indemnification or
contribution.
A-4-3
