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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
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Date of Earliest Event Reported: March 24, 1994
Date of Report: March 30, 1994
AMERICAN OIL AND GAS CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 1-8717 75-1967662
(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of Incorporation)
333 Clay Street, Suite 200, Houston, Texas 77002
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (713) 739-2900
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ITEM 5. OTHER EVENTS
On March 24, 1994, K N Energy, Inc., a Kansas corporation, its wholly
owned subsidiary, KNE Acquisition Corporation, a Delaware corporation, and
American Oil and Gas Corporation, a Delaware corporation, executed an Agreement
and Plan of Merger (the "Merger Agreement") providing for the merger of KNE
Acquisition Corporation with and into American Oil and Gas Corporation (the
"Merger"). Pursuant to the Merger, 0.47 of a share of Common Stock of K N
Energy, Inc. will be exchanged for each outstanding share of Common Stock of
American Oil and Gas Corporation. The Merger will require approval of the
shareholders of both companies and is subject to specific regulatory and lender
approvals.
The foregoing description is qualified in its entirety by reference to
the Merger Agreement (with exhibits attached thereto), a copy of which is
annexed hereto as Exhibit 2.1.
ITEM 7. EXHIBITS
2.1 Agreement and Plan of Merger dated as of March 24, 1994
among K N Energy, Inc., KNE Acquisition Corporation and American Oil and
Gas Corporation.
99.1 Joint Press Release, dated March 24, 1994 by K N Energy,
Inc. and American Oil and Gas Corporation.
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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 hereunto duly authorized.
AMERICAN OIL AND GAS CORPORATION
By: /s/ Thomas H. Fanning
Thomas H. Fanning
Senior Vice President
and Chief Financial Officer
Dated: March 30, 1994
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
2.1 Agreement and Plan of Merger dated as of March 24, 1994
among KN Energy, Inc., KNE Acquisition Corporation and
American Oil and Gas Corporaiton (with Exhibits).
99.1 Joint Press Release, dated March 24, 1994 by KN Energy, Inc.
and American Oil and Gas Corporation.
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Exhibit 2.1
To Form 8-K
AGREEMENT OF MERGER
AMONG
K N ENERGY, INC.
KNE ACQUISITION CORPORATION
AND
AMERICAN OIL AND GAS CORPORATION
MARCH 24, 1994
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TABLE OF CONTENTS
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ARTICLE I
THE MERGER . . . . . . . . . . . . . . . . . . . . . . 1
1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Consummation of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Effect of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Certificate of Incorporation; Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.6 Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.7 Conversion of Securities; Exchange; Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.8 No Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.9 Taking of Necessary Action; Further Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE II
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . .. . . . . . . 4
2.1 Representations and Warranties of KNE and Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(a) Organization and Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(b) Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(c) Authorization and Validity of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(d) No Approvals or Notices Required; No Conflict with Instruments to which KNE or any of its
Significant Subsidiaries is a Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(e) Commission Filings; Financial Statements; Information Supplied . . . . . . . . . . . . . . . . . . . . 7
(f) Conduct of Business in the Ordinary Course; Absence of Certain Changes and Events . . . . . . . . . . . 7
(g) Certain Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(h) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(i) Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(j) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(k) Environmental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(l) Certain Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(m) Voting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(n) Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(o) Title to Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(p) Interim Operations of Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(q) Utility Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(r) Ownership of AOG Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(s) Labor Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>
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2.2 Representations and Warranties of AOG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(a) Organization and Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(b) Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(c) Authorization and Validity of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(d) No Approvals or Notices Required; No Conflict with Instruments to which
AOG or any of its Significant Subsidiaries is a Party . . . . . . . . . . . . . . . . . . . . . . . . . 13
(e) Commission Filings; Financial Statements; Information Supplied . . . . . . . . . . . . . . . . . . . . 13
(f) Conduct of Business in the Ordinary Course; Absence of Certain Changes and Events . . . . . . . . . . . 14
(g) Certain Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(h) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(i) Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(j) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(k) Environmental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(l) Certain Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(m) Voting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(n) Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(o) Title to Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(p) Utility Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(q) Ownership of KNE Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE III
COVENANTS OF AOG PRIOR TO THE EFFECTIVE TIME . . . . . . . . . . . . . . . 17
3.1 Conduct of Business by AOG Pending the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.2 No Shopping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.3 Access to Information; Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.4 Share Transfer and Registration Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.5 KNE Environmental Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.6 Governmental Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE IV
COVENANTS OF KNE PRIOR TO THE EFFECTIVE TIME . . . . . . . . . . . . . . . 19
4.1 Conduct of Business by KNE Pending the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.2 No Shopping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.3 Access to Information; Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.4 Reservation of KNE Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.5 Stock Exchange Listing; Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.6 AOG Environmental Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.7 Governmental Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
</TABLE>
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ARTICLE V
ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . 22
5.1 Joint Proxy Statement/Prospectus; Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . 22
5.2 Comfort Letters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.3 Meetings of Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.4 Filings; Consents; Reasonable Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.5 Notification of Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.6 Agreement to Defend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.7 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.8 KNE's Board of Directors, Officers and Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.9 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.10 AOG Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.11 Standstill Agreement and Registration Rights Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.12 Tax Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.13 Stockholders' Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.14 AOG Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.15 AOG Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.16 Registration Statement on Form S-3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE VI
CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.1 Conditions to Obligation of Each Party to Effect the Merger . . . . . . . . . . . . . . . . . . . . . . . 28
6.2 Additional Conditions to Obligations of KNE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.3 Additional Conditions to Obligations of AOG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE VII
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 31
7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.3 Waiver and Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.4 Nonsurvival of Representations, Warranties, Covenants and Agreements . . . . . . . . . . . . . . . . . . 32
7.5 Public Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.6 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.9 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.11 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.12 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
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AGREEMENT OF MERGER
This Agreement of Merger, dated as of the 24th day of March, 1994 (the
"Agreement"), is among K N Energy, Inc., a Kansas corporation ("KNE"), KNE
Acquisition Corporation, a newly-formed Delaware corporation and a wholly-owned
subsidiary of KNE ("Sub"), and American Oil and Gas Corporation, a Delaware
corporation ("AOG").
WHEREAS, subject to and in accordance with the terms and conditions of
this Agreement, the respective Boards of Directors of KNE, Sub and AOG, and KNE
as sole stockholder of Sub, have approved the merger of Sub with and into AOG
(the "Merger"), whereby each issued and outstanding share of common stock, par
value $.04 per share, of AOG ("AOG Common Stock") will be converted into the
right to receive common stock, par value $5.00 per share, of KNE ("KNE Common
Stock"), as provided herein;
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, the Merger is intended to be treated as a "pooling of
interests" for accounting purposes; and
WHEREAS, the parties hereto desire to set forth certain representations,
warranties and covenants made by each to the other as an inducement to the
consummation of the Merger;
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties and covenants herein contained, the parties hereto
hereby agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Subject to and in accordance with the terms and
conditions of this Agreement and in accordance with the Delaware General
Corporation Law (the "DGCL"), at the Effective Time (as defined in Section 1.3)
Sub shall be merged with and into AOG. As a result of the Merger, the separate
corporate existence of Sub shall cease and AOG shall continue as the surviving
corporation (sometimes referred to herein as the "Surviving Corporation") and
shall succeed to and assume all of the assets, property, rights, privileges,
powers, franchises and obligations of Sub in accordance with the DGCL.
1.2 Closing Date. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Vinson & Elkins
L.L.P., First City Tower, Houston, Texas 77002 as soon as practicable after the
satisfaction or waiver of the conditions set forth in Article VI or at such
other time and place and on such other date as KNE and AOG shall agree;
provided, that the closing conditions set forth in Article VI shall have been
satisfied or waived at or prior to such time. The date on which the Closing
occurs is herein referred to as the "Closing Date".
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1.3 Consummation of the Merger. As soon as practicable on the Closing
Date, the parties hereto will cause the Merger to be consummated by filing with
the Secretary of State of Delaware a certificate of merger in such form as
required by, and executed in accordance with, the relevant provisions of the
DGCL. The "Effective Time" of the Merger as that term is used in this Agreement
shall mean the effective time set forth in the certified copy of the certificate
of merger issued by the Secretary of State of Delaware with respect to the
Merger.
1.4 Effect of the Merger. The Merger shall have the effect set forth
in Section 1.1 hereof and the applicable provisions of the DGCL.
1.5 Certificate of Incorporation; Bylaws.
(a) At the Effective Time, the Amended and Restated Certificate
of Incorporation of AOG, as in effect immediately prior to the Effective
Time, shall continue to be the certificate of incorporation of AOG, as
the Surviving Corporation, until duly amended in accordance with law;
provided, however, that Article IV of the Amended and Restated
Certificate of Incorporation of AOG shall be amended in its entirety to
read as follows:
"The aggregate number of shares which the Corporation shall have
authority to issue is one thousand (1,000), of the par value of one
dollar ($1.00) each, to be designated 'Common Stock'."
; and provided further, that Article IX of the Amended and Restated Certificate
of Incorporation of AOG shall be deleted in its entirety and Articles X and XI
renumbered as Articles IX and X, respectively.
(b) At the Effective Time, the Bylaws of AOG, as in effect
immediately prior to the Effective Time, shall become the bylaws of AOG,
as the Surviving Corporation, until duly amended in accordance with law.
1.6 Directors and Officers. The persons named in Exhibit 1.6 shall be
the directors of the Surviving Corporation, each to hold office in accordance
with the certificate of incorporation and bylaws of the Surviving Corporation,
and the officers of AOG immediately prior to the Effective Time shall be the
officers of the Surviving Corporation, in each case until their respective
successors are duly elected or appointed and qualified. If, prior to the
Effective Time, any such designees shall decline or be unable to serve, KNE or
AOG, as the case may be, shall designate another person to serve in such
person's stead.
1.7 Conversion of Securities; Exchange; Fractional Shares. Subject to
the terms and conditions of this Agreement, at the Effective Time, by virtue of
the Merger and without any action on the part of AOG, Sub or their stockholders:
(a) Each share of AOG Common Stock issued and outstanding
immediately prior to the Effective Time (the "Shares"), shall be
converted, subject to the provisions of this Section 1.7, into 0.47
fully paid and nonassessable shares of KNE Common Stock; provided,
however, that no fractional shares of KNE Common Stock shall be issued,
and, in lieu thereof, a cash payment shall be made pursuant to Section
1.7(g) hereof.
(b) Each share of AOG Common Stock held in the treasury of AOG
and each Share owned by Sub, KNE or any direct or indirect wholly-owned
subsidiary of KNE or of AOG immediately prior to the Effective Time, if
any, shall be cancelled and extinguished at the Effective Time without
any conversion thereof and no payment shall be made with respect
thereto.
(c) Each share of common stock, par value $1.00 per share, of
Sub issued and outstanding immediately prior to the Effective Time shall
be converted into and exchanged at the Effective Time for one validly
issued, fully paid and nonassessable share of common stock of the
Surviving Corporation.
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(d) As of the Effective Time, KNE shall deposit with Chemical
Bank or such other bank or trust company as may be reasonably acceptable
to each of KNE and AOG (the "Exchange Agent") for the benefit of holders
of Shares, for exchange in accordance with this Section 1.7,
certificates representing the shares of KNE Common Stock issuable
pursuant to Section 1.7(a) hereof. As soon as reasonably practicable
after the Effective Time, the Exchange Agent shall mail to each holder
of record of a certificate or certificates which immediately prior to
the Effective Time represented Shares (the "Certificates") that were
converted into shares of KNE Common Stock pursuant to Section 1.7(a),
(i) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass,
only by delivery of the Certificates to the Exchange Agent and shall be
in such form and have such other provisions as KNE and AOG may
reasonably specify) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for certificates representing
shares of KNE Common Stock. Upon surrender of a Certificate for
cancellation to the Exchange Agent together with such letter of
transmittal, duly executed, the holder of such Certificate shall be
entitled to receive in exchange therefor a certificate representing the
number of whole shares of KNE Common Stock which such holder has the
right to receive in respect of the Certificate surrendered pursuant to
the provisions of this Section 1.7 (after taking into account all Shares
then held by such holder), and the Certificate so surrendered shall
forthwith be canceled. Until so surrendered, each Certificate shall be
deemed from and after the Effective Time, for all corporate purposes,
other than the payment of earlier dividends and distributions, to
evidence the ownership of the number of full shares of KNE Common Stock
into which such Shares shall have been converted pursuant to this
Section 1.7. Unless and until any such Certificates shall be
surrendered, no dividends or other distributions payable to the holders
of record of KNE Common Stock, as of any time on or after the Effective
Time, shall be paid to the holders of such Certificates; provided,
however, that, upon surrender and exchange of such Certificates, subject
to any applicable escheat laws and paragraph D.3 of Section 4 of Article
Sixth of the Restated Articles of Incorporation of KNE, there shall be
paid to the record holders of the certificates issued and exchanged
therefor the amount, without interest thereon, of dividends and other
distributions, if any, that theretofore were declared and became payable
since the Effective Time with respect to the number of full shares of
KNE Common Stock issued to such holders.
(e) All shares of KNE Common Stock into which the Shares shall
have been converted pursuant to this Section 1.7 shall be issued in full
satisfaction of all rights pertaining to such converted Shares.
(f) If any certificate for shares of KNE Common Stock is to be
issued in a name other than that in which the Certificate surrendered in
exchange therefor is registered, it shall be a condition of the issuance
thereof that the Certificate so surrendered shall be properly endorsed
and otherwise in proper form for transfer and that the person requesting
such exchange shall have paid to KNE or the Exchange Agent any transfer
or other taxes required by reason of the issuance of a certificate for
shares of KNE Common Stock in any name other than that of the registered
holder of the Certificate surrendered, or established to the
satisfaction of KNE or the Exchange Agent that such tax has been paid or
is not payable.
(g) No fraction of a share of KNE Common Stock shall be issued,
but in lieu thereof each holder of Shares who would otherwise be
entitled to a fraction of a share of KNE Common Stock shall, upon
surrender of the Certificate representing such Shares to the Exchange
Agent, be paid an amount in cash equal to the value of such fraction of
a share based upon the closing price of KNE Common Stock on the New York
Stock Exchange Composite Tape on the last trading day prior to the
Effective Time. No interest shall be paid on such amount. KNE shall
provide the Exchange Agent with sufficient funds to make all payments
due under this Section 1.7(g). All Shares held by a record holder shall
be aggregated for purposes of computing the number of shares of KNE
Common Stock to be issued pursuant to this Section 1.7.
(h) None of KNE, Sub, AOG, or their officers, directors,
transfer agents or the Exchange Agent shall be liable to a holder of
Shares for any amount properly paid to a public official pursuant to
applicable property, escheat or similar laws.
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1.8 No Dissenters' Rights. The shares of KNE Common Stock and the
shares of AOG Common Stock that are held by stockholders of KNE and AOG,
respectively, shall not be entitled to appraisal rights.
1.9 Taking of Necessary Action; Further Action. The parties hereto
shall take all such reasonable and lawful action as may be necessary or
appropriate in order to effectuate the Merger as promptly as possible in
accordance with the terms of this Agreement. If, at any time after the
Effective Time, any such further action is necessary or desirable to carry out
the purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of AOG or Sub, such corporations shall direct their respective
officers and directors to take all such lawful and necessary action.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of KNE and Sub. KNE and Sub hereby
represent and warrant to AOG that:
(a) Organization and Compliance with Law. KNE and each
Significant Subsidiary (as such term is defined below) of KNE is a
corporation or partnership duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is chartered or
organized and has all requisite corporate or partnership power and
authority and all necessary governmental authorizations to own, lease
and operate all of its properties and assets and to carry on its
business as now being conducted, except where the failure to have any
such governmental authorization would not have a material adverse effect
on KNE. Except as set forth in a disclosure letter delivered by KNE to
AOG on the date hereof (the "KNE Disclosure Letter"), each of KNE and
its Subsidiaries is duly qualified as a foreign corporation or
partnership to do business, and is in good standing, in each
jurisdiction in which the property owned, leased or operated by it or
the nature of the business conducted by it makes such qualification
necessary, except in such jurisdictions where the failure to be duly
qualified does not and would not, either individually or in the
aggregate, have a material adverse effect on KNE. KNE and each of its
Subsidiaries are in compliance with all applicable laws, judgments,
orders, rules and regulations, domestic and foreign, except where
failure to be in such compliance would not have a material adverse
effect on KNE. KNE has heretofore delivered to AOG true and complete
copies of KNE's Restated Articles of Incorporation including the
designations of rights, powers and preferences of the KNE Preferred (as
defined below) (the "KNE Articles") and bylaws of KNE, as amended, and
as in existence on the date hereof. Exhibit 2.1(a) hereto sets forth
each of the Significant Subsidiaries of KNE and the respective
jurisdiction of its incorporation or formation. As used in this
Agreement, (i) the word "Subsidiary", when used with respect to any
party, means any corporation, or any partnership or other business
entity of which such party (or any other Subsidiary of such party) is a
general partner (excluding partnerships, the aggregate general partner
interests of which held by such party (or a Subsidiary of such party) do
not constitute a majority of the voting interests of such partnership),
at least a majority of the securities or other interests having by their
terms ordinary voting power to elect a majority of the board of
directors or others performing similar functions with respect to such
corporation, partnership or other business entity is directly or
indirectly owned or controlled by such party or by any one or more of
its Subsidiaries, or by such party and one or more of its Subsidiaries;
(ii) a "Significant Subsidiary" means any Subsidiary of KNE or AOG, as
the case may be, that would constitute a "significant subsidiary" of
such party within the meaning of Rule 1-02 of Regulation S-X promulgated
by the Securities and Exchange Commission (the "Commission"); (iii) any
reference to any event, change, condition or effect being "material"
with respect to any entity means an event, change, condition or effect
which is material in relation to the condition (financial or otherwise),
assets, liabilities, business or operations of such entity and its
Subsidiaries taken as a whole; and (iv) the term "material adverse
effect" means, with respect to KNE and AOG, a material adverse effect of
the business, assets, results of operations or condition (financial or
otherwise) of such party and its Subsidiaries taken as a whole or on
the ability of such party (and, with respect to KNE, of Sub) to perform
its obligations hereunder.
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(b) Capitalization.
(i) The authorized capital stock of KNE consists of
25,000,000 shares of KNE Common Stock, of which 15,035,301
were legally issued and outstanding on December 31, 1993;
200,000 shares of Class A Preferred Stock, no par value
("Class A Preferred Stock"), of which 5,000 shares were
legally issued and outstanding as Class A $8.50 Cumulative
Preferred Stock on such date, and 70,000 shares were
legally issued and outstanding as Class A $5.00 Cumulative
Preferred Stock on such date; and 2,000,000 shares of Class
B Preferred Stock, no par value ("Class B Preferred Stock"),
of which 28,576 shares were legally issued and outstanding
as Class B $8.30 Series Cumulative Preferred Stock on such
date. (The Class A Preferred Stock and the Class B
Preferred Stock are referred to collectively as the "KNE
Preferred.") As of December 31, 1993, there were reserved
for issuance 2,111,299 shares of KNE Common Stock under
KNE's (A) incentive stock option plans for key employees and
nonqualified stock option plans for nonemployee directors,
(B) Dividend Reinvestment and Cash Investment Plan, (C)
Employees Retirement Trust Fund Profit Sharing Plan and (D)
other employee benefit plans (collectively, the "KNE Stock
Plans"). Subject to shareholder approval of KNE's 1994
Long-Term Incentive Plan (the "KNE LTIP") at KNE's 1994
annual meeting of shareholders, an additional 700,000 shares
of KNE Common Stock will be reserved for issuance
thereunder. All issued shares of KNE Common Stock are
validly issued, fully paid and nonassessable and no holder
thereof is entitled to preemptive rights. All shares of KNE
Common Stock to be issued pursuant to the Merger, when
issued in accordance with this Agreement, will be validly
issued, fully paid and nonassessable and will not violate
the preemptive rights of any person. KNE is not a party to,
and is not aware of, any voting agreement, voting trust or
similar agreement or arrangement relating to any class or
series of its capital stock, or, except as contemplated
hereby, any agreement or arrangement providing for
registration rights with respect to any capital stock or
other securities of KNE. Except as set forth in the KNE
Disclosure Letter, all outstanding shares of capital stock
of, or partnership interests in, the KNE Significant
Subsidiaries are owned by KNE or a direct or indirect
wholly-owned subsidiary of KNE, free and clear of all liens,
minority interests, charges, encumbrances, adverse claims
and options of any nature which are material to KNE. As of
the date hereof and immediately prior to the Effective Time,
the authorized capital stock of Sub consists of 1,000 shares
of common stock, par value $1.00 per share, all of which are
validly issued, fully paid and nonassessable and are
directly owned by KNE.
(ii) As of December 31, 1993, options to purchase 426,678
shares of KNE Common Stock were outstanding and
options to purchase an additional 171,174 such shares were
available for grant pursuant to the plans set forth in
Section 2.1(b)(i)(A) above, and subsequent to such date and
subject to shareholder approval of the KNE LTIP, options,
stock appreciation rights, restricted shares and other types
of stock-based awards relating to an aggregate of 700,000
shares of KNE Common Stock became available for grant
pursuant to the KNE LTIP. Since December 31, 1993, there
have been no options, stock appreciation rights, restricted
shares or other types of stock- based awards granted by KNE,
except as disclosed in the KNE Disclosure Letter. Other
than as set forth in the first sentence of each of Section
2.1(b)(i) and 2.1(b)(ii) and other than as contemplated by
this Agreement to be issued in connection with the Merger,
there are not now, and at the Effective Time there will not
be, any (A) shares of capital stock of KNE outstanding
(other than KNE Common Stock issued pursuant to the KNE
Stock Plans) or (B) outstanding options, warrants, scrip,
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rights to subscribe for, calls or commitments of any
character whatsoever relating to, or securities or rights
convertible into or exchangeable for, shares of any class of
capital stock of KNE or any of its corporate Significant
Subsidiaries, or contracts, understandings or arrangements
to which KNE or any of its Significant Subsidiaries is a
party, or by which it is or may be bound, to issue
additional shares of its or any Significant Subsidiary's
capital stock or equity interest or options, warrants, scrip
or rights to subscribe for, or securities or rights
convertible into or exchangeable for, any additional shares
of its or any Significant Subsidiary's capital stock or
equity interest or (C) issued and outstanding bonds,
debentures, notes or other indebtedness of KNE or any its
Significant Subsidiaries having the right to vote (or
convertible into or exercisable for securities having the
right to vote) on any matters on which stockholders of KNE
or its Significant Subsidiaries, as the case may be, may
vote. All shares of KNE Common Stock issued pursuant to the
exercise of outstanding options granted pursuant to the KNE
Stock Plans will be validly issued, fully paid and
nonassessable and no holder thereof will be entitled to
preemptive rights.
(c) Authorization and Validity of Agreement. KNE and Sub have
all requisite corporate power and authority to enter into this Agreement
and to perform their obligations hereunder. The execution and delivery
by KNE and Sub of this Agreement and the consummation by each of them of
the transactions contemplated hereby have been duly authorized by all
necessary corporate action. This Agreement has been duly executed and
delivered by KNE and Sub and is the valid and binding obligation of KNE
and Sub, enforceable against KNE and Sub in accordance with its terms.
(d) No Approvals or Notices Required; No Conflict with
Instruments to which KNE or any of its Significant Subsidiaries is a
Party. Neither the execution and delivery of this Agreement nor the
performance by KNE or Sub of its obligations hereunder, nor the
consummation of the transactions contemplated hereby by KNE and Sub,
will (i) conflict with the KNE Articles or bylaws of KNE or the
partnership agreement, charter or bylaws of any of its Significant
Subsidiaries; (ii) assuming satisfaction of the requirements set forth
in clause (iii) below, violate any provision of law applicable to KNE or
any of its Subsidiaries; (iii) except for (A) filing with the Commission
of (x) a joint proxy statement in preliminary form relating to the
meetings of KNE's and AOG's stockholders to be held for the purpose of
obtaining stockholder approvals relating to the Merger (the "Proxy
Statement"), (y) such reports under Section 13(a) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") as may be required
in connection with this Agreement and the transactions contemplated
hereby, and (z) the registration statements referred to in Sections 5.1
and 5.14(c) hereof, (B) requirements arising out of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act"),
(C) approvals of the Colorado Public Utility Commission (the "PUC") and
the Wyoming Public Service Commission (the "PSC"), (D) the filing of a
certificate of merger by Sub in accordance with the DGCL, and (E) such
filings, qualifications and approvals as may be required under state
securities or takeover laws, require any consent or approval of, or
filing with or notice to, any public body or authority, domestic or
foreign, under any provision of law applicable to KNE or any of its
Subsidiaries; or (iv) require any consent, approval or notice under, or
violate, breach, be in conflict with or constitute a default (or an
event that, with notice or lapse of time or both, would constitute a
default) under, or permit the termination of any provision of, or result
in the creation or imposition of any lien upon any properties, assets or
business of KNE or any of its Subsidiaries under, any note, bond,
indenture, mortgage, deed of trust, lease, franchise, permit,
authorization, license, employee benefit plan, contract, instrument or
other agreement or commitment or any order, judgment or decree to which
KNE or any of its Subsidiaries is a party or by which KNE or any of its
Subsidiaries or any of its assets or properties is bound or encumbered,
except (A) those that have already been given, obtained or filed and (B)
those that are set forth in the KNE Disclosure Letter, which will be
obtained prior to the Effective Time, and except in any of the cases
enumerated in clauses (ii) through (iv) those that, in the aggregate,
would not have a material adverse effect on KNE.
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(e) Commission Filings; Financial Statements; Information
Supplied. Since January 1, 1991, KNE has filed all reports,
registration statements and other filings, together with any amendments
required to be made with respect thereto, that it has been required to
file with the Commission under the Securities Act of 1933, as amended
(the "Securities Act"), and the Exchange Act. All reports, registration
statements and other filings (including all notes, exhibits and
schedules thereto and documents incorporated by reference therein but
excluding any preliminary proxy material) filed by KNE with the
Commission since January 1, 1991 through the date of this Agreement,
together with any amendments thereto, are sometimes collectively
referred to as the "KNE Commission Filings". As of the respective dates
of their filing with the Commission, the KNE Commission Filings
complied, and the Registration Statement (as defined in Section 5.1) and
the Proxy Statement (except with respect to information concerning AOG
and its Significant Subsidiaries furnished by or on behalf of AOG to KNE
specifically for use therein) will comply, at the time of effectiveness
of the Registration Statement and the initial date of mailing of the
Proxy Statement to stockholders of each of KNE and AOG, in all material
respects with the Securities Act, the Exchange Act and the rules and
regulations of the Commission promulgated thereunder, and did not or
will not, as the case may be, at such time or date, 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 made therein,
in light of the circumstances under which they were made, not
misleading.
All material contracts of KNE and its Subsidiaries have been
included in the KNE Commission Filings, except for those contracts not
required to be filed, pursuant to the rules and regulations of the
Commission.
Each of the consolidated financial statements (including any
related notes or schedules) included in the KNE Commission Filings (i)
was, and each of the consolidated financial statements to be included in
the Registration Statement and Proxy Statement (except for those
financial statements of AOG and its Significant Subsidiaries furnished
by or on behalf of AOG to KNE specifically for use therein) will be, in
compliance as to form in all material respects with applicable
accounting requirements and with the published rules and regulations of
the Commission with respect thereto, (ii) was or will be, as the case
may be, prepared in accordance with generally accepted accounting
principles applied on a consistent basis (except as may be noted therein
or in the notes or schedules thereto or, in the case of unaudited
financial statements, as permitted by Form 10-Q and Regulation S-X of
the Commission), and (iii) fairly presents or will fairly present, as
the case may be, the consolidated financial position of KNE and its
consolidated Significant Subsidiaries as of the dates thereof and the
results of operations and cash flows for the periods then ended
(subject, in the case of the unaudited interim financial statements, to
normal year-end audit adjustments on a basis comparable with past
periods). As of the date hereof, neither KNE nor its Subsidiaries has
any liabilities, absolute or contingent, that are material to KNE and
not reflected in the KNE Commission Filings, except (i) those incurred
in the ordinary course of business consistent with past operations, and
(ii) those set forth in the KNE Disclosure Letter.
(f) Conduct of Business in the Ordinary Course; Absence of
Certain Changes and Events. Since January 1, 1993, except as
contemplated by this Agreement, disclosed in the KNE Commission Filings
filed with the Commission since that date or set forth in the KNE
Disclosure Letter, KNE and its Significant Subsidiaries have conducted
their business only in the ordinary and usual course, and there has not
been (i) any material adverse effect on such business, or any condition,
event or development that reasonably may be expected to result in any
such material adverse effect on such business; (ii) any change by KNE in
its accounting methods, principles or practices; (iii) any revaluation
by KNE or any of its Significant Subsidiaries of any of its or their
assets, including, without limitation, writing down the value of
inventory or writing off notes or accounts receivable other than in the
ordinary course of business; (iv) any entry by KNE or any of its
Significant Subsidiaries into any commitment or transaction material to
KNE; (v) any declaration, setting aside or payment of any dividends or
distributions in respect of the KNE Common Stock or KNE Preferred,
except for the regular periodic cash dividends on the KNE Common Stock
and the KNE Preferred, or any redemption, purchase or other acquisition
of any of its securities or any securities of any of its Significant
Subsidiaries (other than acquisitions of KNE Common Stock pursuant to
previously authorized approval of the KNE Board of Directors or KNE
Preferred to satisfy sinking fund obligations); (vi) any damage,
destruction or loss (whether or not covered by insurance) having a
material
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<PAGE> 12
adverse effect on KNE; (vii) any increase in long-term
indebtedness for borrowed money; (viii) any granting of a security
interest or lien on any material property or assets of KNE and its
Significant Subsidiaries, taken as a whole, other than (A) liens for
taxes not due and payable or which are being contested in good faith;
(B) mechanics', warehousemen's and other statutory liens incurred in the
ordinary course of business; and (C) defects and irregularities in title
and encumbrances which are not substantial in character or amount and do
not materially impair the use of the property or asset in question
(collectively, "Permitted Liens"); or (ix) except in the ordinary course
of business and consistent with past practice, any increase in or
establishment of any bonus, insurance, severance, deferred compensation,
pension, retirement, profit sharing, stock option (including, without
limitation, the granting of stock options, stock appreciation rights,
performance awards or restricted stock awards), stock purchase or other
employee benefit plan or any other increase in the compensation payable
or to become payable to any officers or key employees of KNE or any of
its Significant Subsidiaries, except for the establishment of the KNE
LTIP and, subject to shareholder approval of such plan, grants of awards
thereunder.
(g) Certain Fees. With the exception of the engagement of
Petrie Parkman & Co., Inc. and Rauscher Pierce Refsnes, Inc., neither
KNE nor any of its officers, directors or employees, on behalf of KNE or
any of its Subsidiaries or its or their respective Boards of Directors
(or any committee thereof), has employed any financial advisor, broker
or finder or incurred any liability for any financial advisory,
brokerage or finders' fees or commissions in connection with the
transaction contemplated hereby.
(h) Litigation. Except as disclosed in the KNE Commission
Filings or set forth in the KNE Disclosure Letter, there are no claims,
actions, suits, investigations or proceedings pending or, to the
knowledge of KNE, threatened against or affecting KNE or any of the KNE
Significant Subsidiaries or any of their respective properties at law or
in equity, or any of their respective employee benefit plans or
fiduciaries of such plans, or before or by any federal, state, municipal
or other governmental agency or authority, or before any arbitration
board or panel, wherever located, that individually or in the aggregate
if adversely determined would have a material adverse effect on KNE, or
that involve a material risk of criminal liability.
(i) Employee Benefit Plans. There are no "employee pension
benefit plans," as such term is defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), maintained
by KNE or its Significant Subsidiaries for the benefit of their
employees except for those plans (each a "KNE Pension Plan") disclosed
in KNE's Proxy Statement dated February 26, 1993 or in the KNE
Disclosure Letter. Each "employee benefit plan," as such term is
defined in Section 3(3) of ERISA, including such plans that may not be
subject to ERISA such as foreign plans maintained by KNE or a Subsidiary
(each a "KNE Benefit Plan") complies in all material respects with all
applicable requirements of ERISA, the Code and other applicable laws.
Neither KNE nor any Subsidiary, nor any of their respective directors,
officers, employees or agents, has, with respect to any KNE Benefit
Plan, engaged in any conduct that would result in any taxes or penalties
on prohibited transactions under Section 4975 of the Code or under
Section 502(i) of ERISA or in any breach of fiduciary duty liability
under Section 409 of ERISA, which in the aggregate could be material to
KNE.
Each of KNE and its Subsidiaries has fulfilled its obligations
to the extent applicable under the minimum funding requirements of
Section 302 of ERISA and Section 412 of the Code with respect to each
KNE Pension Plan. The assets of each KNE Pension Plan that is subject
to Title IV of ERISA exceed the present value of vested benefits accrued
under such plan, determined as of December 31, 1992 on a termination
basis using the actuarial assumptions established by the Pension Benefit
Guaranty Corporation (the "PBGC") as in effect on such date. Neither
KNE nor any Subsidiary has, or expects to have, any obligation or
liability (whether accrued, contingent, secondary or otherwise) to
contribute to any "multiemployer plan," as defined in Section 3(37) of
ERISA, and neither KNE nor any Subsidiary has any material liability
under (i) Title IV of ERISA (excluding liability for required premium
payments) to the PBGC in connection with any KNE Pension Plan that is
subject to Title IV of ERISA or (ii) Subtitle J, Coal Industry Health
Benefits, of the Code.
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The Internal Revenue Service (the "IRS") has issued for
each KNE Pension Plan intended to be qualified under Section 401(a) of
the Code a letter determining that such plan is exempt from United
States federal income tax under Sections 401(a) and 501 (a) of the Code
and approving the form of such plan as amended to comply with the
requirements of the Tax Equity and Fiscal Responsibility Act of 1982, as
amended ("TEFRA"), the Tax Reform Act of 1984, as amended ("TRA"), and
the Retirement Equity Act of 1984, as amended ("REA"), and there has
been no occurrence since the date of any such determination letter which
has adversely affected such qualification.
Except as disclosed in the notes to the latest audited financial
statements included in the KNE Commission Filings or as set forth in the
KNE Disclosure Letter, neither KNE nor any Subsidiary has any obligation
to provide welfare benefits to any of its former employees except to the
extent required by COBRA.
Upon request, KNE will furnish AOG true and complete copies as
in effect on the date hereof of each of (A) the KNE Benefit Plans,
including without limitation the KNE Pension Plans, the KNE Stock Plans
and the KNE LTIP, (B) the most recent summary plan description for each
KNE Benefit Plan for which a summary plan description is required, (C)
each trust agreement and group annuity contract, if any relating to the
KNE Benefit Plans, (D) the most recent reports on Form 5500 filed with
the IRS with respect to any KNE Benefit Plan, (E) the most recent
actuarial report or valuation relating to a KNE Benefit Plan subject to
Title IV of ERISA and (F) the most recent determination letter issued by
the IRS with respect to any KNE Benefit Plan qualified under Section
401(a) of the Code.
(j) Taxes. Except as set forth in the KNE Disclosure Letter,
all returns and reports, including, without limitation, information and
withholding returns and reports ("Tax Returns"), of or relating to any
foreign, federal, state or local tax, assessment or other governmental
charge ("Taxes" or a "Tax") that are required to be filed on or before
the Closing Date by or with respect to KNE or any of its Subsidiaries or
any other corporation that is or was a member of an affiliated group
(within the meaning of Section 1504(a) of the Code) of corporations of
which KNE was a member for any period ending on or before the Closing
Date and with respect to which such corporation was a member of such
affiliated group, have been or will be duly and timely filed, and all
Taxes, including interest and penalties, due and payable pursuant to
such Tax Returns have been paid or, except as set forth in the KNE
Disclosure Letter, adequately provided for in reserves established by
KNE, except where the failure to file, pay or provide for would not have
a material adverse effect on KNE. Except as set forth in the KNE
Disclosure Letter, (i) all Tax Returns of or with respect to KNE and its
Significant Subsidiaries have been audited by the applicable
governmental authority, or the applicable statute of limitations has
expired, for all periods up to and including the taxable year ended
December 31, 1985 and (ii) there are no outstanding audits, examinations
or other proceedings with respect to any periods covered by Tax Returns
which involve or could involve the payment of any material Taxes. There
is no material claim against KNE or any of its Subsidiaries with respect
to any Taxes, and no material assessment, deficiency or adjustment has
been asserted or proposed with respect to any Tax Return of or with
respect to KNE or any of its Subsidiaries that has not been adequately
provided for in reserves established by KNE. The total amounts set up
as liabilities for current and deferred Taxes in the consolidated
financial statements included in the KNE Commission Filings have been
established in accordance with generally accepted accounting principles
and, except as set forth in the KNE Disclosure Letter, are sufficient to
cover the payment of all material Taxes in the aggregate, including any
penalties or interest thereon and whether or not assessed or disputed,
that are, or are hereafter found to be, or to have been, due with
respect to the operations of KNE and its Significant Subsidiaries
through the periods covered thereby.
KNE has no plan or intention to (i) liquidate the Surviving
Corporation, (ii) merge the Surviving Corporation with or into another
corporation, (iii) sell or otherwise dispose of stock of the Surviving
Corporation (or cause the Surviving Corporation to issue additional
shares of its capital stock) that would result in KNE losing control of
the Surviving Corporation within the meaning of Section 368(c) of the
Code), (iv) cause or permit the Surviving Corporation to sell or
otherwise dispose of any of the assets
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acquired from AOG or the assets acquired from Sub except for
dispositions made in the ordinary course of business or transfers of
assets to a corporation controlled (within the meaning of Section 368(c)
of the Code) by the Surviving Corporation, (v) reacquire any of the
stock issued to the AOG stockholders pursuant to the Merger, or (vi)
cause or permit the Surviving Corporation to discontinue the historic
business of AOG.
KNE does not own, nor has it owned during the past five years,
any shares of the capital stock of AOG.
KNE is not an investment company as defined in Section
368(a)(2)(F)(iii) and (iv) of the Code.
(k) Environmental. Except as set forth in the KNE Disclosure
Letter, KNE and its Subsidiaries are in substantial compliance with all
applicable federal, state and local laws and regulations relating to
pollution control and environmental contamination including, but not
limited to, all laws and regulations governing the generation, use,
collection, treatment, storage, transportation, recovery, removal,
discharge or disposal of Hazardous Materials and all laws and
regulations with regard to recordkeeping, notification and reporting
requirements respecting Hazardous Materials. For purposes of this
Section 2.1(k), "substantial compliance" shall mean compliance, except
to the extent that failure to comply would not have a material adverse
effect on KNE.
Except as set forth in the KNE Disclosure Letter, neither KNE
nor any of its Subsidiaries is subject to any order or decree of or has
received, within the past five years, any notice from any governmental
agency with respect to any alleged violation by KNE or any of its
Subsidiaries or, to KNE's knowledge, any former Subsidiary, of, or the
incurrence of any remedial obligation by KNE or its Subsidiaries or, to
KNE's knowledge, any former Subsidiary, under, any applicable federal,
state or local environmental or health and safety statutes and
regulations, which in any instance is material to KNE.
The term "Hazardous Materials" shall mean material, substances,
waste or by-products defined as "hazardous substances", "hazardous
wastes" or "solid wastes" in the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, 42 U.S.C. Sections 9601-9657
and any amendments thereto ("CERCLA"), the Resource Conservation and
Recovery Act, 42 U.S.C. Sections 6901-6987 and any amendments thereto
("RCRA"), or any other applicable federal, state or local environmental
statute or regulation defining such terms.
(l) Certain Agreements. Except as disclosed in the KNE
Commission Filings filed prior to the date of this Agreement or as
disclosed in the KNE Disclosure Letter or as provided under this
Agreement, neither KNE nor any of its Significant Subsidiaries is a
party to any oral or written (i) agreement with, or obligation to, any
executive officer or key employee of KNE or any of its Significant
Subsidiaries (A) for any term of employment or guaranteed compensation
of such person by KNE or any of its Significant Subsidiaries beyond a
period of three months or (B) the benefits of which are contingent, or
the terms of which are materially altered, upon the occurrence of a
transaction involving KNE of the nature contemplated in this Agreement,
or (ii) agreement or plan, including any of the KNE Stock Plans or the
KNE LTIP, any of the benefits of which will be increased, or the vesting
of benefits which will be accelerated, by the occurrence of the
transactions contemplated in this Agreement or the value of which
benefits will be calculated on the basis of the transactions
contemplated by this Agreement.
(m) Voting Requirements. Approval of the issuance of the KNE
Common Stock issuable in the Merger by a majority of the votes cast
thereon by holders of KNE Common Stock and KNE Preferred, voting as a
single class, at the special stockholders' meeting, is the only vote of
the holders of any class or series of the capital stock of KNE necessary
to approve the transactions contemplated by this Agreement.
(n) Insurance. The KNE Disclosure Letter sets forth all
material policies of insurance currently in effect relating to the
business or operations of KNE and its Significant Subsidiaries.
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(o) Title to Property. Except as set forth in the KNE
Disclosure Letter or in the KNE Commission Filings, KNE and each of its
Significant Subsidiaries have good and indefeasible title to all of
their material real properties purported to be owned in fee and good
title to all their other material assets, free and clear of all
mortgages, liens, charges and encumbrances other than Permitted Liens.
(p) Interim Operations of Sub. Sub was formed solely for the
purpose of engaging in the transactions contemplated hereby, has engaged
in no other business activities, has no liabilities or obligations
(except those incurred hereunder) and has conducted its operations only
as contemplated hereby and will not transfer to AOG any assets subject
to liabilities in the Merger.
(q) Utility Status. Neither KNE nor any of its Subsidiaries is
a "holding company," a "subsidiary company" of a "holding company," an
"affiliate" of a "holding company" or a "public utility," within the
meaning of the Public Utility Holding Company Act of 1935, as amended
("PUHCA"), except that KNE is a "gas utility company" within the meaning
of PUHCA.
(r) Ownership of AOG Common Stock. Neither KNE nor any of its
Subsidiaries, nor to the knowledge of KNE, any of their respective
affiliates or associates (as such terms are defined under the Exchange
Act), (i) beneficially owns, directly or indirectly, or (ii) are parties
to any agreement, arrangement or understanding (other than this
Agreement) for the purpose of acquiring, holding, voting or disposing
of, in each case, shares of capital stock of AOG, which in the aggregate
represent 10% or more of the outstanding shares of capital stock of AOG
entitled to vote generally in the election of directors.
(s) Labor Agreements. Neither the business nor the employment
activities of AOG and its Subsidiaries, as conducted as of the date of
this Agreement, nor any of the AOG Employees (as defined in Section
5.10(f) hereof), will become subject at the Effective Time of the Merger
to any collective bargaining or other labor agreement to which KNE or
any of its Subsidiaries is a party, either by operation of law or as a
consequence of the provisions of any such agreement.
2.2 Representations and Warranties of AOG. AOG hereby represents and
warrants to KNE that:
(a) Organization and Compliance with Law. AOG and each of its
Significant Subsidiaries is a corporation or partnership duly organized,
validly existing and in good standing under the laws of the jurisdiction
in which it is chartered or organized and has all requisite corporate or
partnership power and authority and all necessary governmental
authorizations to own, lease and operate all of its properties and
assets and to carry on its business as now being conducted, except where
the failure to have any such governmental authorization would not have a
material adverse effect on AOG. AOG and each of its Subsidiaries are
duly qualified as a foreign corporation or partnership to do business,
and is in good standing, in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted
by it makes such qualification necessary, except in such jurisdictions
where the failure to be duly qualified does not and would not, either
individually or in the aggregate, have a material adverse effect AUG.
AOG and each of its Subsidiaries are in compliance with all applicable
laws, judgments, orders, rules and regulations, domestic and foreign,
except where failure to be in such compliance would not have a material
adverse effect on AOG. AOG has heretofore delivered to KNE true and
complete copies of AOG's Amended and Restated Certificate of
Incorporation (the "AOG Certificate") and bylaws as in existence on the
date hereof. Exhibit 2.2(a) hereto sets forth each of the Significant
Subsidiaries of AOG and the respective jurisdiction of its incorporation
or formation.
(b) Capitalization.
(i) The authorized capital stock of AOG
consists of 50,000,000 shares of AOG Common Stock, par value
$.04 per share, and 2,000,000 shares of Preferred Stock, $10.00
par value per share (the "AOG Preferred Stock"). As of the date
hereof, there were issued and outstanding 25,894,395 shares of
AOG Common Stock and no shares of AOG Preferred Stock.
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A total of 1,500,000 shares of AOG Common Stock have
been reserved for issuance pursuant to the Stock Incentive Plan
of AOG. All issued shares of AOG Common Stock are validly
issued, fully paid and nonassessable and no holder thereof is
entitled to preemptive rights. Except for (A) the Standstill
and Registration Rights Agreement, dated as of November 13, 1989
(the "Standstill Agreement"), between AOG and Cabot Corporation
and (B) as set forth in a disclosure letter delivered by AOG to
KNE on the date hereof (the "AOG Disclosure Letter"), AOG is not
a party to, and is not aware of, any voting agreement, voting
trust or similar agreement or arrangement relating to any class
or series of its capital stock, or any agreement or arrangement
providing for registration rights with respect to any capital
stock or other securities of AOG. Except as set forth in the
AOG Disclosure Letter, all outstanding shares of capital stock
of, or partnership interests in, the AOG Significant
Subsidiaries are owned by AOG or one or more direct or indirect
wholly-owned subsidiaries of AOG, free and clear of all minority
interests, liens, charges, encumbrances, adverse claims and
options of any nature which are material to AOG.
(ii) As of the date hereof, there are (A) outstanding
options (the "AOG Options") to purchase an aggregate of
1,185,000 shares of AOG Common Stock under the Stock Incentive
Plan of AOG and (B) warrants (the "AOG Warrants") to purchase an
aggregate of 2,557,052 shares of AOG Common Stock. AOG Warrants
to purchase 30,600 such shares are exercisable at $3.53 per
warrant and expire on March 9, 1997, and AOG Warrants to
purchase 2,526,452 such shares are exercisable at $8.25 per
warrant and expire on September 30, 1999. Since December 31,
1993, there have been no options, stock appreciation rights,
restricted shares or other types of stock-based awards granted
by AOG, except as disclosed in the AOG Disclosure Letter. Other
than as set forth in this Section 2.2(b), there are not now, and
at the Effective Time there will not be, any (A) shares of
capital stock or other equity securities of AOG outstanding
(other than AOG Common Stock issued pursuant to the exercise of
AOG Options or AOG Warrants) or (B) outstanding options,
warrants, scrip, rights to subscribe for, calls or commitments
of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, shares of any class of
capital stock of AOG or any of its corporate Significant
Subsidiaries, or contracts, understandings or arrangements to
which AOG or any of its Significant Subsidiaries is a party, or
by which it is or may be bound, to issue additional shares of
its or any Significant Subsidiary's capital stock or options,
warrants, scrip or rights to subscribe for, or securities or
rights convertible into or exchangeable for, any additional
shares of its or any Significant Subsidiary's capital stock or
(C) issued and outstanding bonds, debentures, notes or other
indebtedness of AOG or any of its Significant Subsidiaries
having the right to vote (or convertible into or exercisable for
securities having the right to vote) on any matters on which
stockholders of AOG or its Significant Subsidiaries, as the case
may be, may vote. All shares of AOG Common Stock issued
pursuant to the exercise of outstanding options granted pursuant
to the Stock Incentive Plan of AOG or the AOG Warrants will be
validly issued, fully paid and nonassessable and no holder
thereof will be entitled to preemptive rights.
(c) Authorization and Validity of Agreement. AOG has all
requisite corporate power and authority to enter into this Agreement and
to perform its obligations hereunder. The execution and delivery by AOG
of this Agreement and the consummation by it of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action (subject only, with respect to the Merger, to adoption of this
Agreement by its stockholders as provided for in Section 5.3(a)). On or
prior to the date hereof the Board of Directors of AOG has determined to
recommend approval of the Merger to the stockholders of AOG, and such
determination is in effect as of the date hereof. This Agreement has
been duly executed and delivered by AOG and is the valid and binding
obligation of AOG, enforceable against AOG in accordance with its terms.
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(d) No Approvals or Notices Required; No Conflict with
Instruments to which AOG or any of its Significant Subsidiaries is a
Party. Neither the execution and delivery of this Agreement nor the
performance by AOG of its obligations hereunder, nor the consummation of
the transactions contemplated hereby by AOG, will (i) conflict with the
AOG Certificate or bylaws of AOG or the partnership agreement, charter
or bylaws of any of its Significant Subsidiaries; (ii) assuming
satisfaction of the requirements set forth in clause (iii) below,
violate any provision of law applicable to AOG or any of its
Subsidiaries; (iii) except for (A) filing with the Commission of (x) the
Proxy Statement in preliminary form and (y) such reports under Section
13(a) of the Exchange Act as may be required in connection with this
Agreement and the transactions contemplated hereby, (B) requirements
arising out of the HSR Act, (C) requirements of notice filings in such
foreign jurisdictions as may be applicable, (D) the filing of a
certificate of merger in accordance with the DGCL, and (E) such filings,
qualifications and approvals as may be required under state securities
or takeover laws, require any consent or approval of, or filing with or
notice to, any public body or authority, domestic or foreign, under any
provision of law applicable to AOG or any of its Subsidiaries; or (iv)
require any consent, approval or notice under, or violate, breach, be in
conflict with or constitute a default (or an event that, with notice or
lapse of time or both, would constitute a default) under, or permit the
termination of any provision of, or result in the creation or imposition
of any lien upon any properties, assets or business of AOG or any of its
Subsidiaries under, any note, bond, indenture, mortgage, deed of trust,
lease, franchise, permit, authorization, license, employee benefit plan,
contract, instrument or other agreement or commitment or any order,
judgment or decree to which AOG or any of its Subsidiaries is a party or
by which AOG or any of its Subsidiaries or any of its assets or
properties is bound or encumbered, except (A) those that have already
been given, obtained or filed and (B) those that are required pursuant
to loan agreements or leasing arrangements, as set forth in the AOG
Disclosure Letter, which will be obtained prior to the Effective Time,
and except in any of the cases enumerated in clauses (ii) through (iv)
those that, in the aggregate, would not have a material adverse effect
on AOG.
(e) Commission Filings; Financial Statements; Information
Supplied. Since January 1, 1991, AOG has filed all reports,
registration statements and other filings, together with any amendments
required to be made with respect thereto, that they have been required
to file with the Commission under the Securities Act and the Exchange
Act. All reports, registration statements and other filings (including
all notes, exhibits and schedules thereto and documents incorporated by
reference therein but excluding any preliminary proxy material) filed by
AOG with the Commission since January 1, 1991 through the date of this
Agreement, together with any amendments thereto, are sometimes
collectively referred to as the "AOG Commission Filings". AOG has
heretofore delivered to KNE copies of the AOG Commission Filings. As of
the respective dates of their filing with the Commission, the AOG
Commission Filings complied, and the Proxy Statement (except with
respect to information concerning KNE and its Significant Subsidiaries
furnished by or on behalf of KNE to AOG specifically for use therein)
will comply, at each of the time of effectiveness of the Registration
Statement and the initial date of mailing of the Proxy Statement to
stockholders of each of KNE and AOG, in all material respects with the
Securities Act, the Exchange Act and the rules and regulations of the
Commission promulgated thereunder, and did not or will not, as the case
may be, at such time or date, 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 made therein, in light of the
circumstances under which they were made, not misleading.
All material contracts of AOG and its Subsidiaries have been
included in the AOG Commission Filings, except for those contracts not
required to be filed, pursuant to the rules and regulations of the
Commission.
Each of the consolidated financial statements (including any
related notes or schedules) included in the AOG Commission Filings (i)
was, and each of the consolidated financial statements to be included in
the Proxy Statement (except for those financial statements of KNE and
its Significant Subsidiaries furnished by or on behalf of KNE to AOG
specifically for use therein) will be, in compliance as to form in all
material respects with applicable accounting requirements and with the
published rules and regulations of the Commission with respect thereto,
(ii) was or will be, as the case may be, prepared in accordance with
generally accepted accounting principles applied on a consistent basis
(except as may be
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noted therein or in the notes or schedules thereto), and (iii)
fairly presents or will fairly present, as the case may be, the
consolidated financial position of AOG and its consolidated Significant
Subsidiaries as of the dates thereof and the results of operations and
cash flows for the periods then ended (subject, in the case of the
unaudited interim financial statements, to normal year-end audit
adjustments on a basis comparable with past periods). As of the date
hereof, neither AOG nor its Subsidiaries has any liabilities, absolute
or contingent, that are material to AOG and not reflected in the AOG
Commission Filings, except (i) those incurred in the ordinary course of
business consistent with past operations and not relating to the
borrowing of money, and (ii) those set forth in the AOG Disclosure
Letter.
(f) Conduct of Business in the Ordinary Course; Absence of
Certain Changes and Events. Since January 1, 1993, except as
contemplated by this Agreement, disclosed in the AOG Commission Filings
filed with the Commission since that date or set forth in the AOG
Disclosure Letter, AOG and its Significant Subsidiaries have conducted
their business only in the ordinary and usual course, and there has not
been (i) any material adverse effect on such business, or any condition,
event or development that reasonably may be expected to result in any
such material adverse effect on such business; (ii) any change by AOG in
its accounting methods, principles or practices; (iii) any revaluation
by AOG or any of its Significant Subsidiaries of any of its or their
assets, including, without limitation, writing down the value of
inventory or writing off notes or accounts receivable other than in the
ordinary course of business; (iv) any entry by AOG or any of its
Significant Subsidiaries into any commitment or transaction material to
AOG; (v) any declaration, setting aside or payment of any dividends or
distributions in respect of the AOG Common Stock or any redemption,
purchase or other acquisition of any of its securities or any securities
of any of its Significant Subsidiaries; (vi) any damage, destruction or
loss (whether or not covered by insurance) having a material adverse
effect on AOG; (vii) any increase in long-term indebtedness for borrowed
money; (viii) any granting of a security interest or lien on any
material property or assets of AOG and its Significant Subsidiaries,
taken as a whole, other than Permitted Liens; or (ix) except in the
ordinary course of business and consistent with past practice, any
increase in or establishment of any bonus, insurance, severance,
deferred compensation, pension, retirement, profit sharing, stock option
(including, without limitation, the granting of stock options, stock
appreciation rights, performance awards or restricted stock awards),
stock purchase or other employee benefit plan or any other increase in
the compensation payable or to become payable to any officers or key
employees of AOG or any of its Significant Subsidiaries.
(g) Certain Fees. With the exception of the engagement of
Goldman, Sachs & Co. ("Goldman Sachs") by AOG, neither AOG nor any of
its officers, directors or employees, on behalf of AOG or any of its
Subsidiaries or its or their respective Boards of Directors (or any
committee thereof), has employed any financial advisor, broker or finder
or incurred any liability for any financial advisory, brokerage or
finders' fees or commissions in connection with the transactions
contemplated hereby.
(h) Litigation. Except as disclosed in the AOG Commission
Filings or set forth in the AOG Disclosure Letter, there are no claims,
actions, suits, investigations or proceedings pending or, to the
knowledge of AOG, threatened against or affecting AOG or any of the AOG
Significant Subsidiaries or any of their respective properties at law or
in equity, or any of their respective employee benefit plans or
fiduciaries of such plans, or before or by any federal, state, municipal
or other governmental agency or authority, or before any arbitration
board or panel, wherever located, that individually or in the aggregate
if adversely determined would have a material adverse effect on AOG, or
that involve a material risk of criminal liability.
(i) Employee Benefit Plans. There are no "employee pension
benefit plans," as such term is defined in Section 3(2) of ERISA,
maintained by AOG or the AOG Significant Subsidiaries for the benefit of
their employees, except for those plans (each an "AOG Pension Plan")
disclosed in the AOG Disclosure Letter. Each "employee benefit plan," as
such term is defined in Section 3(3) of ERISA, including such plans
which may not be subject to ERISA such as foreign plans, maintained by
AOG or any Subsidiary (each an "AOG Benefit Plan") complies in all
material respects with all applicable requirements of ERISA,
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the Code and other applicable laws. Neither AOG nor any AOG
Subsidiary, nor any of their respective directors, officers, employees
or agents, has, with respect to any AOG Benefit Plan, engaged in any
conduct that would result in any taxes or penalties on prohibited
transactions under Section 4975 of the Code or under Section 502(i) of
ERISA or in breach of fiduciary duty liability under Section 409 of
ERISA, which in the aggregate could be material to AOG.
Neither AOG nor any AOG Subsidiary has, or within the preceding
five years has had, any obligation to contribute to any "multiemployer
plan," as defined in Section 3(37) of ERISA, or any plan subject to
Title IV of ERISA.
Except for AOG's 401(K) Plan, the IRS has issued for each AOG
Pension Plan intended to be qualified under Section 401(a) of the Code a
letter determining that such plan is exempt from United States federal
income tax under Sections 401(a) and 501(a) of the Code and approving
the form of such plan as amended to comply with the requirements of
TEFRA, TRA, and REA, and there has been no occurrence since the date of
any such determination letter which has adversely affected such
qualification.
Except as set forth in the AOG Disclosure Letter, neither AOG
nor any Subsidiary has any obligation to provide welfare benefits to any
of its former employees except to the extent required by COBRA.
Upon request, AOG will furnish KNE true and complete copies as
in effect on the date hereof of each of (A) the AOG Benefit Plans, (B)
the most recent summary plan description for each AOG Benefit Plan for
which a summary plan description is required, (C) each trust agreement
and group annuity contract, if any relating to the AOG Benefit Plans,
(D) the most recent reports on Form 5500 filed with the IRS with respect
to any AOG Benefit Plan, and (E) the most recent determination letter,
if any, issued by the IRS with respect to any AOG Benefit Plan qualified
under Section 401(a) of the Code.
(j) Taxes. Except as set forth in the AOG Disclosure Letter,
all Tax Returns of or relating to any Tax that are required to be filed
on or before the Closing Date by or with respect to AOG or any of its
Subsidiaries, or any other corporation that is or was a member of an
affiliated group (within the meaning of Section 1504 (a) of the Code) of
corporations of which AOG was a member for any period ending on or prior
to the Closing Date and with respect to which such corporation was a
member of such affiliated group, have been or will be duly and timely
filed, and all Taxes, including interest and penalties, due and payable
pursuant to such Tax Returns have been paid or adequately provided for
in reserves established by AOG, except where the failure to file, pay or
provide for would not have a material adverse effect on AOG. Except as
set forth in the AOG Disclosure Letter, (i) all Tax Returns of or with
respect to AOG or any of its Significant Subsidiaries have been audited
by the applicable governmental authority, or the applicable statute of
limitations has expired, for all periods up to and including the tax
year ended December 31, 1985 and (ii) there are no outstanding audits,
examinations or other proceedings with respect to any period covered by
Tax Returns which involve or could involve any material Taxes. There is
no material claim against AOG or any of its Subsidiaries with respect to
any Taxes, and no material assessment, deficiency or adjustment has been
asserted or proposed with respect to any Tax Return of or with respect
to AOG or any of its Subsidiaries that has not been adequately provided
for in reserves established by AOG. The total amounts set up as
liabilities for current and deferred Taxes in the consolidated financial
statements included in the AOG Commission Filings have been prepared in
accordance with generally accepted accounting principles and are
sufficient to cover the payment of all material Taxes in the aggregate,
including any penalties or interest thereon and whether or not assessed
or disputed, that are, or are hereafter found to be, or to have been,
due with respect to the operations of AOG and its Significant
Subsidiaries through the periods covered thereby.
There is no plan or intention by any stockholder of AOG who owns
five percent or more of the AOG Common Stock, and to the best knowledge
of the management of AOG there is no plan or intention on the part of
any of the remaining stockholders of AOG Common Stock, to sell, exchange
or otherwise dispose of a number of shares of KNE Common Stock to be
received in the Merger that would reduce
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the AOG stockholders' ownership of KNE Common Stock to a number
of shares having a value, as of the Effective Time, of less than 50
percent of the value of all of the AOG Common Stock (including shares of
AOG Common Stock exchanged for cash in lieu of fractional shares of KNE
Common Stock) outstanding immediately prior to the Effective Time.
AOG and the stockholders of AOG Common Stock will each pay their
respective expenses, if any, incurred in connection with the Merger.
There is no intercorporate indebtedness existing between AOG and
KNE or AOG and Sub that was issued, acquired, or will be settled at a
discount.
AOG is not an investment company as defined in Section
368(a)(2)(F)(iii) and (iv) of the Code.
AOG is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.
To the knowledge of AOG, the total amount of cash to be received
by stockholders of AOG Common Stock in lieu of fractional shares of KNE
Common Stock will not exceed one percent of the total fair market value
of the KNE Common Stock (as of the Effective Time) to be issued in the
Merger.
(k) Environmental. Except as set forth in the AOG Disclosure
Letter, AOG and its Subsidiaries are in substantial compliance with all
applicable federal, state and local laws and regulations relating to
pollution control and environmental contamination including, but not
limited to, all laws and regulations governing the generation, use,
collection, treatment, storage, transportation, recovery, removal,
discharge or disposal of Hazardous Materials and all laws and
regulations with regard to recordkeeping, notification and reporting
requirements respecting Hazardous Materials. For purposes of this
Section 2.2(k), "substantial compliance" shall mean compliance, except
to the extent that failure to comply would not have a material adverse
effect on AOG.
Except as set forth in the AOG Disclosure Letter, neither AOG
nor any of its Subsidiaries is subject to any order or decree of or has
received, within the past five years, any notice from any governmental
agency with respect to any alleged violation by AOG or any of its
Subsidiaries of, or the incurrence of any remedial obligation by AOG or
any of its Subsidiaries under, any applicable federal, state or local
environmental or health and safety statutes and regulations, which in
any instance is material to AOG.
(l) Certain Agreements. Except as disclosed in the AOG
Commission Filings filed prior to the date of this Agreement or as
disclosed in the AOG Disclosure Letter or as provided under this
Agreement, neither AOG nor any of its Significant Subsidiaries is a
party to any oral or written (i) agreement with, or obligation to, any
executive officer or key employee of AOG or any of its Significant
Subsidiaries (A) for any term of employment or guaranteed compensation
of such person by AOG or any of its Significant Subsidiaries beyond a
period of three months or (B) the benefits of which are contingent, or
the terms of which are materially altered, upon the occurrence of a
transaction involving AOG of the nature contemplated in this Agreement,
(ii) agreement or plan, including the AOG Stock Incentive Plan, any of
the benefits of which will be increased, or the vesting of benefits
which will be accelerated, by the occurrence of the transactions
contemplated in this Agreement or the value of which benefits will be
calculated on the basis of the transactions contemplated by this
Agreement.
(m) Voting Requirements. The affirmative vote of the holders of
a majority of the outstanding shares of AOG Common Stock is the only
vote of the holders of any class or series of the capital stock of AOG
necessary to approve this Agreement and the Merger.
(n) Insurance. The AOG Disclosure Letter sets forth all
material policies of insurance currently in effect relating to the
business or operations of AOG and its Significant Subsidiaries.
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(o) Title to Property. Except as set forth in the AOG
Disclosure Letter or in the AOG Commission Filings, AOG and each of its
Significant Subsidiaries have good and indefeasible title to all of
their material real properties purported to be owned in fee and good
title to all their other material assets, free and clear of all
mortgages, liens, charges and encumbrances other than Permitted Liens.
(p) Utility Status. Neither AOG nor any of its Subsidiaries is
a "holding company," a "subsidiary company" of a "holding company," an
"affiliate" of a "holding company" or a "public utility," within the
meaning of PUHCA.
(q) Ownership of KNE Common Stock. Neither AOG nor any of its
Subsidiaries, nor to the knowledge of AOG, any of their respective
affiliates or associates (as such terms are defined under the Exchange
Act), (i) beneficially owns, directly, or indirectly, or (ii) are
parties to any agreement, arrangement or understanding for the purpose
of acquiring, holding, voting or disposing of, in each case, shares of
capital stock of KNE, which in the aggregate represent 10% or more of
the outstanding shares of capital stock of KNE entitled to vote
generally in the election of directors.
ARTICLE III
COVENANTS OF AOG PRIOR TO THE EFFECTIVE TIME
3.1 Conduct of Business by AOG Pending the Merger. AOG covenants and
agrees that, from the date of this Agreement until the Effective Time, unless
KNE shall otherwise agree in writing or as otherwise expressly contemplated by
this Agreement or set forth in the AOG Disclosure Letter:
(a) The business of AOG and its Significant Subsidiaries shall
be conducted only in, and AOG and its Significant Subsidiaries shall not
take any action except in, the ordinary course of business and
consistent with past practice; provided, however, that AOG shall not
enter into any natural gas futures contract that is not designated as a
hedge of its price risks;
(b) AOG shall not directly or indirectly do any of the
following: (i) issue, sell, pledge, dispose of or encumber, or permit
any of its Significant Subsidiaries to issue, sell, pledge, dispose of
or encumber, (A) any capital stock of AOG or any of its Significant
Subsidiaries except upon the exercise of AOG Options or AOG Warrants
outstanding as of the date of this Agreement or (B) other than in the
ordinary course of business and consistent with past practice and not
relating to the borrowing of money, any assets of AOG or any of its
Significant Subsidiaries; (ii) amend or propose to amend the respective
partnership agreements, charters or bylaws of AOG or any of its
Significant Subsidiaries; (iii) split, combine or reclassify any
outstanding capital stock, or declare, set aside or pay any dividend
payable in cash, stock, property or otherwise with respect to its
capital stock whether now or hereafter outstanding; (iv) redeem,
purchase or acquire or offer to acquire, or permit any of its
Significant Subsidiaries to redeem, purchase or acquire or offer to
acquire, any of its or their capital stock; or (v) grant additional
options or awards or materially alter the terms of outstanding options
or awards pursuant to the AOG Stock Incentive Plan, or materially modify
the provisions of any AOG Benefit Plan; (vi) except in the ordinary
course of business and consistent with past practice, enter into any
contract, agreement, commitment or arrangement with respect to any of
the matters set forth in this Section 3.1(b);
(c) AOG shall use all reasonable efforts (i) to preserve intact
the business organization of AOG and each of its Significant
Subsidiaries, (ii) to maintain in effect any franchises, authorizations
or similar rights of AOG and each of its Significant Subsidiaries, (iii)
to keep available the services of its and their current officers and key
employees, (iv) to preserve the goodwill of those having business
relationships with it and its Significant Subsidiaries, (v) to maintain
and keep its properties and the properties of its Significant
Subsidiaries in as good a repair and condition as presently exists,
except for deterioration due to ordinary wear and tear and damage due to
casualty, and (vi) to maintain in full force and effect insurance
comparable in amount and scope of coverage to that currently maintained
by it and its Significant Subsidiaries;
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(d) AOG shall not make or agree to make, or permit any of its
Subsidiaries to make or agree to make, any new capital expenditure other
than those made in the ordinary course of business and consistent with
past practice;
(e) Neither AOG nor any of its Subsidiaries shall take, and AOG
will use its reasonable efforts to prevent any affiliate of AOG from
taking, any action that, in the judgment of Arthur Andersen & Co., AOG's
independent auditors, would cause the Merger not to be treated as a
"pooling of interests" for accounting purposes or as a reorganization
within the meaning of Section 368(a) of the Code;
(f) AOG shall, and shall cause its Subsidiaries to, perform
their respective obligations under any contracts and agreements to which
any of them is a party or to which any of their assets is subject,
except to the extent such failure to perform would not have a material
adverse effect on AOG, and except for such obligations as AOG or its
Subsidiaries in good faith may dispute; and
(g) AOG shall not, and shall not permit any of its Subsidiaries
to, take any action that would, or that reasonably could be expected to,
result in any of the representations and warranties set forth in this
Agreement becoming untrue or any of the conditions to the Merger set
forth in Article VI not being satisfied. AOG promptly shall advise KNE
orally and in writing of any change or event having, or which, insofar
as reasonably can be foreseen, would have, a material adverse effect on
AOG.
3.2 No Shopping. AOG will not, directly or indirectly, through any
officer, director, employee, representative or otherwise, solicit, initiate or
encourage submission of proposals or offers from any person or entity (other
than KNE) relating to any merger, acquisition or purchase of all or (other than
in the ordinary course of business) a portion of the assets of, or any equity
interest in, AOG or any of its Significant Subsidiaries or any business
combination with AOG or any of its Significant Subsidiaries (collectively, an
"AOG Acquisition Transaction") or participate in any negotiations regarding, or
furnish to any other person any information with respect to AOG for the purposes
of, or otherwise cooperate in any way with, or assist or participate in,
facilitate or encourage, any effort or attempt by any other person to seek or
effect an AOG Acquisition Transaction; provided, however, that (i) AOG may
furnish or cause to be furnished information concerning its businesses,
properties or assets to a third party; (ii) AOG may engage in discussions or
negotiations with a third party; (iii) following the receipt of a proposal for
an AOG Acquisition Transaction, the Board of Directors of AOG may withdraw,
modify or amend its recommendation to the stockholders of AOG regarding approval
of the Merger and this Agreement and discontinue the solicitation of proxies in
favor of such adoption and approval; and (iv) following receipt of a proposal
for an AOG Acquisition Transaction, AOG may take and disclose to its
stockholders a position contemplated by Rule 14e-2 under the Exchange Act or
otherwise make appropriate disclosures to AOG's stockholders, but in each case
referred to in the foregoing clauses (i) through (iv), only to the extent that
the Board of Directors of AOG concludes in good faith, after receipt of advice
from its outside financial advisors and legal counsel, that such action is
necessary for the Board of Directors of AOG to act in a manner which is
consistent with its fiduciary obligations under applicable law. AOG shall
promptly notify KNE (orally and in writing) if any such proposal or offer, or
any inquiry or contact with any person with respect thereto, is made.
3.3 Access to Information; Confidentiality. From the date hereof to
the Effective Time, AOG shall, and shall cause its Subsidiaries and its and
their officers, directors, employees and representatives to, afford the
representatives of KNE complete access during normal business hours to its
officers, employees, representatives, properties, books and records, and shall
furnish KNE all financial, operating and other data and information as KNE,
through its representatives, reasonably may request; provided, however, that
notwithstanding the foregoing provisions of this Section 3.3 or any other
provision of this Agreement, AOG shall not be required to provide to KNE any
information that is the subject of a confidentiality agreement and that relates
primarily to a party other than AOG, its Subsidiaries or a former Subsidiary of
AOG.
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AOG agrees to hold in confidence all, and not to disclose to others for
any reason whatsoever, any non-public information received by it, any of its
Subsidiaries or its or their representatives in connection with the transactions
contemplated hereby except (i) as required by law; (ii) for disclosure to
officers, directors, employees and representatives of AOG and its Subsidiaries
as necessary in connection with the transactions and filings contemplated hereby
or as necessary to the operation of AOG's business; and (iii) for information
which becomes publicly available other than through AOG. In the event the Merger
is not consummated, AOG will return all non-public documents and other material
obtained from KNE, its Subsidiaries or their representatives in connection with
the transactions contemplated hereby, or certify to KNE that such information
has been destroyed.
3.4 Share Transfer and Registration Agreement. AOG will use its
reasonable efforts to cause each stockholder who, in the opinion of counsel for
AOG, is an "affiliate" of AOG to enter into an agreement on the Closing Date
substantially in the form of Exhibit 3.4.
3.5 KNE Environmental Report. As soon as practicable after the date of
this Agreement, AOG may engage at its own expense Ecology and Environment, Inc.,
or such other environmental consulting firm as may be mutually acceptable to AOG
and KNE, to undertake and prepare a written environmental assessment report (the
"KNE Environmental Report") of such firm's environmental review of the business
and properties of KNE and its Subsidiaries, provided such review and report are
designed in course and scope to be completed no later than 60 days from the date
of this Agreement.
3.6 Governmental Filings. During the period from the date of this
Agreement to the Effective Time, AOG and its Subsidiaries shall, prior to making
any AOG Critical Filing (as defined below), make copies of such Critical Filing
available to KNE at a reasonable time prior to any filing deadline and, prior to
making such Critical Filing, AOG shall confer with KNE on the matters set forth
therein. Copies of filed Critical Filings shall be furnished to KNE promptly
upon filing. As used in this Agreement, an AOG Critical Filing shall mean any
filing by AOG or its Subsidiaries with the Federal Energy Regulatory Commission
("FERC") or any state utility commission or state or local public body having
jurisdiction over the gas pipeline or gas storage businesses and operations of
AOG or its Significant Subsidiaries which would (i) increase or seek to increase
a tariffed rate by more than 20%, (ii) seek abandonment of any service, or any
facility necessary to the performance of, any service accounting for more than
five percent of the consolidated revenues of AOG and its Subsidiaries or (iii)
represent or involve the incurrence by AOG or its Subsidiaries of obligations in
excess of $10 million.
ARTICLE IV
COVENANTS OF KNE PRIOR TO THE EFFECTIVE TIME
4.1 Conduct of Business by KNE Pending the Merger. KNE covenants and
agrees that, from the date of this Agreement until the Effective Time, unless
AOG shall otherwise agree in writing or as otherwise expressly contemplated by
this Agreement or set forth in the KNE Disclosure Letter:
(a) The business of KNE and its Significant Subsidiaries shall
be conducted only in, and KNE and its Significant Subsidiaries shall not
take any action except in, the ordinary course of business and
consistent with past practice;
(b) KNE shall not directly or indirectly do any of the
following: (i) issue, sell, pledge, dispose of or encumber, or permit
any of its Significant Subsidiaries to issue, sell, pledge, dispose of
or encumber, (A) any capital stock of KNE or any of its Significant
Subsidiaries except pursuant to the KNE Stock Plans or (B) other than in
the ordinary course of business and consistent with past practice and
not relating to the borrowing of money, any assets of KNE or any of its
Significant Subsidiaries; (ii) amend or propose to amend the respective
partnership agreements, charters or bylaws of KNE or any of its
Significant Subsidiaries, except as required by the provisions of this
Agreement; (iii) split, combine or reclassify any outstanding capital
stock, or declare, set aside or pay any dividend payable in cash, stock,
property or otherwise with respect to its capital stock whether now or
hereafter outstanding, except for its regular quarterly cash dividends
on the KNE Common Stock and regular periodic dividends on the KNE
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Preferred; (iv) redeem, purchase or acquire or offer to acquire,
or permit any of its Significant Subsidiaries to redeem, purchase or
acquire or offer to acquire, any of its or their capital stock, except
for acquisitions of KNE Preferred to satisfy sinking fund obligations;
(v) grant additional options or awards or materially alter the terms of
outstanding options or awards pursuant to the KNE Stock Plans or the KNE
LTIP, or materially modify the provisions of any such plan; or (vi)
except in the ordinary course of business and consistent with past
practice, enter into any contract, agreement, commitment or arrangement
with respect to any of the matters set forth in this Section 4.1 (b);
(c) KNE shall use all reasonable efforts (i) to preserve intact
the business organization of KNE and each of its Significant
Subsidiaries, (ii) to maintain in effect any franchises, authorizations,
or similar rights of KNE and each of its Significant Subsidiaries, (iii)
to keep available the services of its and their necessary officers and
key employees, (iv) to preserve the goodwill of those having business
relationships with it and its Significant Subsidiaries, (v) to maintain
and keep its properties and the properties of its Significant
Subsidiaries in as good a repair and condition as presently exists,
except for deterioration due to ordinary wear and tear and damage due to
casualty, and (vi) to maintain in full force and effect insurance
comparable in amount and scope of coverage to that currently maintained
by it and its Significant Subsidiaries;
(d) KNE shall not make or agree to make, or permit any of its
Subsidiaries to make or agree to make, any new capital expenditure other
than those made in the ordinary course of business and consistent with
past practice;
(e) Neither KNE nor any of its Subsidiaries shall take, and KNE
will use its reasonable efforts to prevent any affiliate of KNE from
taking, any action that, in the judgment of Arthur Andersen & Co., KNE's
independent auditors, would cause the Merger not to be treated as a
"pooling of interests" for accounting purposes or as a reorganization
within the meaning of Section 368(a) of the Code;
(f) KNE shall, and shall cause its Subsidiaries to, perform
their respective obligations under any contracts and agreements to which
any of them is a party or to which any of their assets is subject,
except to the extent such failure to perform would not have a material
adverse effect on KNE, and except for such obligations as KNE or its
Subsidiaries in good faith may dispute; and
(g) KNE shall not, and shall not permit any of its Subsidiaries
to, take any action that would, or that reasonably could be expected to,
result in any of the representations and warranties set forth in this
Agreement becoming untrue or any of the conditions to the Merger set
forth in Article VI not being satisfied. KNE promptly shall advise AOG
orally and in writing of any change or event having, or which, insofar
as reasonably can be foreseen, would have, a material adverse effect on
KNE.
4.2 No Shopping. KNE will not, directly or indirectly, through any
officer, director, employee, representative or otherwise, solicit, initiate or
encourage submission of proposals or offers from any person or entity (other
than AOG) relating to any merger, acquisition or purchase of all or (other than
in the ordinary course of business) a portion of the assets of, or any equity
interest in, KNE or any of its Significant Subsidiaries or any business
combination with KNE or any of its Significant Subsidiaries (collectively, a
"KNE Acquisition Transaction") or participate in any negotiations regarding, or
furnish to any other person any information with respect to KNE for the purposes
of, or otherwise cooperate in any way with, or assist or participate in,
facilitate or encourage, any effort or attempt by any other person to seek or
effect a KNE Acquisition Transaction; provided, however, that (i) KNE may
furnish or cause to be furnished information concerning its businesses,
properties or assets to a third party; (ii) KNE may engage in discussions or
negotiations with a third party; (iii) following the receipt of a proposal for a
KNE Acquisition Transaction, the Board of Directors of KNE may withdraw, modify
or amend its recommendation to the stockholders of KNE regarding approval of the
Merger and this Agreement and discontinue the solicitation of proxies in favor
of such adoption and approval; and (iv) following receipt of a proposal for a
KNE Acquisition Transaction, KNE may take and disclose to its stockholders a
position contemplated by Rule 14e-2 under the Exchange Act or otherwise make
appropriate disclosures to KNE's stockholders, but in each case
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referred to in the foregoing clauses (i) through (iv), only to the extent that
the Board of Directors of KNE concludes in good faith, after receipt of advice
from its outside financial advisors and legal counsel, that such action is
necessary for the Board of Directors of KNE to act in a manner which is
consistent with its fiduciary obligations under applicable law. KNE shall
promptly notify AOG (orally and in writing) if any such proposal or offer, or
any inquiry or contact with any person with respect thereto, is made.
4.3 Access to Information; Confidentiality. From the date hereof to
the Effective Time, KNE shall, and shall cause its Subsidiaries and its and
their officers, directors, employees and representatives to, afford the
representatives of AOG complete access during normal business hours to its
officers, employees, representatives, properties, books and records, and shall
furnish AOG all financial, operating and other data and information as AOG,
through its representatives, reasonably may request; provided, however, that
notwithstanding the foregoing provisions of this Section 4.3 or any other
provision of this Agreement, KNE shall not be required to provide to AOG any
information that is the subject of a confidentiality agreement and that relates
primarily to a party other than KNE, its Subsidiaries or a former Subsidiary of
KNE.
KNE agrees to hold in confidence all, and not to disclose to others for
any reason whatsoever, any non-public information received by it, any of its
Subsidiaries or its or their representatives in connection with the transactions
contemplated hereby except (i) as required by law; (ii) for disclosure to
officers, directors, employees and representatives of KNE and its Subsidiaries
as necessary in connection with the transactions and filings contemplated hereby
or as necessary to the operation of KNE's business; and (iii) for information
which becomes publicly available other than through KNE. In the event the Merger
is not consummated, KNE will return all non-public documents and other material
obtained from AOG, its Subsidiaries or their representatives in connection with
the transactions contemplated hereby, or certify to AOG that such information
has been destroyed.
4.4 Reservation of KNE Common Stock. KNE shall reserve for issuance,
out of its authorized but unissued capital stock, such number of shares of KNE
Common Stock as may be issuable (i) upon consummation of the Merger and (ii)
thereafter upon exercise of any Assumed Options or Assumed Warrants (as such
terms are defined in Sections 5.14 and 5.15).
4.5 Stock Exchange Listing; Regulatory Approvals. KNE shall use all
reasonable efforts to cause the shares of KNE Common Stock to be issued (i) upon
consummation of the Merger and (ii) thereafter upon exercise of any Assumed
Options or Assumed Warrants (as such terms are defined in Sections 5.14 and
5.15) to be approved for listing on the New York Stock Exchange, subject to
official notice of issuance, prior to the Closing Date. In addition, KNE shall
use all reasonable efforts to obtain the requisite approvals of the PUC and the
PSC for issuance of such shares, in each case prior to the Closing Date.
4.6 AOG Environmental Report. As soon as practicable after the date of
this Agreement, KNE may engage at its own expense Dames & Moore, or such other
environmental consulting firm as may be mutually acceptable to KNE and AOG, to
undertake and prepare a written environmental assessment report (the "AOG
Environmental Report") of such firm's environmental review of the business and
properties of AOG and its Subsidiaries, provided such review and report are
designed in course and scope to be completed no later than 60 days from the date
of this Agreement.
4.7 Governmental Filings. During the period from the date of this
Agreement to the Effective Time, KNE and its Subsidiaries shall, prior to making
any KNE Critical Filing (as defined below), make copies of such Critical Filing
available to AOG at a reasonable time prior to any filing deadline and, prior to
making such Critical Filing, KNE shall confer with AOG on the matters set forth
therein. Copies of filed Critical Filings shall be furnished to AOG promptly
upon filing. As used in this Agreement, a KNE Critical Filing shall mean any
filing or related filings by KNE or its Subsidiaries with the FERC or any state
utility commission or state or local public body having jurisdiction over the
gas pipeline, distribution or storage businesses and operations of KNE or its
Subsidiaries which would (i) increase or seek to increase a tariffed rate by
more than 20%, (ii) seek abandonment of any service, or any facility necessary
to the performance of, any service accounting in the aggregate for more than
five percent of the consolidated revenues of KNE and its Significant
Subsidiaries or (iii) represent or involve the incurrence by KNE or its
Subsidiaries of aggregate obligations in excess of $10 million.
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ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Joint Proxy Statement/Prospectus; Registration Statement. As
promptly as practicable after the execution of this Agreement, KNE and AOG shall
prepare and file with the Commission the Proxy Statement in preliminary form.
As promptly as practicable after comments are received from the Commission on
the preliminary proxy materials and after the furnishing by AOG and KNE of all
information required to be contained therein, AOG and KNE shall file with the
Commission a registration statement on Form S-4 (the "Registration Statement")
containing the Proxy Statement as a prospectus and relating to, inter alia, the
approval and adoption of the Merger and this Agreement by the stockholders of
AOG and the issuance by KNE of KNE Common Stock in connection with the Merger
and the approval of such issuance by the stockholders of KNE, and AOG and KNE
shall use all reasonable efforts to cause the Registration Statement to become
effective as soon thereafter as practicable. Subject to the terms and
conditions set forth in Section 3.2 and Section 5.3, the Proxy Statement shall
contain the recommendation of the Board of Directors of AOG that the
stockholders of AOG vote to approve and adopt the Merger and this Agreement.
Subject to the terms and conditions set forth in Section 4.2 and Section 5.3,
the Proxy Statement shall contain the recommendation of the Board of Directors
of KNE that the stockholders of KNE vote to approve (i) the issuance by KNE of
the KNE Common Stock contemplated by this Agreement and (ii) an amendment to the
KNE Articles increasing the number of authorized shares of KNE Common Stock to
50,000,000 shares and increasing the maximum number of directors of KNE from 14
to 15 (the "Charter Amendment").
5.2 Comfort Letters.
(a) AOG shall use its reasonable efforts to cause to be
delivered to KNE a letter of Arthur Andersen & Co. dated as of a date
within two business days before the date on which the Registration
Statement shall become effective and addressed to KNE, in form and
substance reasonably satisfactory to KNE and customary in scope and
substance for "comfort" letters delivered by independent public
accountants in connection with registration statements and proxy
statements similar to the Registration Statement and Proxy Statement.
(b) KNE shall use its reasonable efforts to cause to be
delivered to AOG a letter of Arthur Andersen & Co. dated as of a date
within two business days before the date on which the Registration
Statement shall become effective and addressed to AOG, in form and
substance reasonably satisfactory to AOG and customary in scope and
substance for "comfort" letters delivered by independent public
accountants in connection with registration statements and proxy
statements similar to the Registration Statement and Proxy Statement.
5.3 Meetings of Stockholders.
(a) AOG shall promptly take all action reasonably necessary in
accordance with the DGCL and the AOG Certificate and bylaws to convene a
meeting of its stockholders to consider and vote upon the adoption and
approval of the Merger and this Agreement. Subject to the terms and
conditions set forth in Section 3.2, the Board of Directors of AOG: (i)
shall recommend at such meeting that the stockholders of AOG vote to
adopt and approve the Merger and this Agreement; (ii) shall use its
reasonable efforts to solicit from stockholders of AOG proxies in favor
of such adoption and approval; and (iii) shall take all other action
reasonably necessary to secure a vote of its stockholders in favor of
the adoption and approval of the Merger and this Agreement; provided
that the recommendation of the Board of Directors may be withdrawn,
modified or amended, and the actions required in clauses (ii) and (iii)
hereof may be suspended, to the extent that the Board of Directors
determines in good faith, after receipt of advice from its outside
financial advisors and legal counsel, that the Board of Directors is
required to do so in the exercise of its fiduciary duties.
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(b) KNE shall promptly take all action reasonably necessary in
accordance with the Kansas General Corporation Code (the "KGCC") and the
KNE Articles and bylaws to convene a meeting of its stockholders to
consider and vote upon the approval of the Charter Amendment and the
issuance by KNE of the KNE Common Stock contemplated by this Agreement.
Subject to the terms and conditions set forth in Section 4.2, the Board
of Directors of KNE: (i) shall recommend at such meeting that the
stockholders of KNE vote to approve the Charter Amendment and such
issuance; (ii) shall use its reasonable efforts to solicit from
stockholders of KNE proxies in favor of such approval; and (iii) shall
take all other action reasonably necessary to secure a vote of its
stockholders in favor of such approval; provided that the recommendation
of the Board of Directors may be withdrawn, modified or amended, and the
actions required in clauses (ii) and (iii) hereof may be suspended, to
the extent that the Board of Directors determines in good faith, after
receipt of advice from its outside financial advisors and legal counsel,
that the Board of Directors is required to do so in the exercise of its
fiduciary duties.
(c) Notwithstanding anything to the contrary in this Agreement,
if the Board of Directors of AOG or KNE, as the case may be, determines
in good faith, after receipt of advice from its outside financial
advisors and legal counsel, that the Board of Directors is required in
the exercise of its fiduciary duties to withdraw, modify or amend its
recommendation, or suspend any action described in clauses (ii) and
(iii) of Section 5.3(a) or 5.3(b), such withdrawal, modification,
amendment or suspension of action shall not constitute a breach of this
Agreement.
5.4 Filings; Consents; Reasonable Efforts. Subject to the terms and
conditions of this Agreement, AOG and KNE shall (i) make all necessary filings
with respect to the Merger and this Agreement under the HSR Act, the Securities
Act, the Exchange Act and applicable state takeover laws, blue sky or similar
securities laws and shall use all reasonable efforts to obtain required
approvals and clearances with respect thereto; (ii) obtain all consents,
waivers, approvals, authorizations and orders required in connection with the
authorization, execution and delivery of this Agreement and the consummation of
the Merger; and (iii) take, or cause to be taken, all appropriate action, and
do, or cause to be done, all things necessary, proper or advisable to consummate
and make effective as promptly as practicable the transactions contemplated by
this Agreement.
5.5 Notification of Certain Matters. AOG shall give prompt notice to
KNE, and KNE shall give prompt notice to AOG, orally and in writing, of (i) the
occurrence, or failure to occur, of any event which occurrence or failure would
be likely to cause any representation or warranty contained in this Agreement to
be untrue or inaccurate at any time from the date hereof to the Effective Time,
(ii) any material failure or reasonably likely inability of AOG or KNE, as the
case may be, or any officer, director, employee or agent thereof, to comply with
or satisfy any covenant, condition or agreement to be complied with or satisfied
by it hereunder, and (iii) any fact or event that would make it necessary to
amend the Registration Statement or the Proxy Statement in order to render the
statements therein not misleading or to comply with applicable law.
5.6 Agreement to Defend. In the event any claim, action, suit,
investigation or other proceeding by any governmental body or other person or
other legal or administrative proceeding is commenced that questions the
validity or legality of the transactions contemplated hereby or seeks damages in
connection therewith, whether before or after the Effective Time, the parties
hereto agree to cooperate and use their reasonable efforts to defend against and
respond thereto.
5.7 Expenses. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expenses. Notwithstanding the provisions of the immediately
preceding sentence, (i) if this Agreement is terminated by KNE pursuant to
Section 7.1(e), then AOG shall promptly, but in no event later than three
business days after written request by KNE, pay to KNE an amount equal to
$7,000,000 in immediately available funds; and (ii) if this Agreement is
terminated by AOG pursuant to Section 7.1(f), then KNE shall promptly, but in no
event later than three business days after written request by AOG, pay to AOG an
amount equal to $7,000,000 in immediately available funds. Notwithstanding the
foregoing,
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AOG shall not be required to pay such amount to KNE if the AOG Board of
Directors, Goldman Sachs and Cabot Corporation support the Merger in all
respects, but this Agreement is not approved by the AOG stockholders, and KNE
shall not be required to pay such amount to AOG if the KNE Board and Petrie
Parkman & Co., Inc. support the approval of the issuance by KNE of the KNE
Common Stock pursuant to this Agreement and the Charter Amendment in all
respects, but such matters are not approved by the KNE stockholders.
5.8 KNE's Board of Directors, Officers and Committees. KNE's Board of
Directors will take action to increase the number of directors comprising the
full Board of Directors of KNE at the Effective Time to 14 persons and the
directors of KNE shall elect as of the Effective Time four persons designated by
AOG to fill the vacancies created by the increase in the number of directors
prior to the Effective Time. The designees and their term of office and certain
new officers of KNE as of the Effective Time are set forth on Exhibit 5.8. If,
prior to the Effective Time, any such designees shall decline or be unable to
serve, AOG or KNE, as the case may be, shall designate another person to serve
in such person's stead. KNE's Board of Directors will also take action to cause
the election of an AOG designee to the audit and compensation committees of the
Board of Directors of KNE. KNE's Board of Directors will also take action to
cause a designee of Cabot Corporation to be elected as of the Effective Time as
an advisory director of KNE. In addition, the Board of Directors of KNE will
take action to establish a Management Committee consisting of four designees as
set forth on Exhibit 5.8.
5.9 Indemnification.
(a) AOG shall, and from and after the Effective Time, KNE and
the Surviving Corporation shall, to the fullest extent permitted under
applicable law, defend, indemnify and hold harmless each person who is
now, or has been at any time prior to the date hereof or who becomes
prior to the Effective Time, an officer or director of AOG or any of its
Subsidiaries (each, an "Indemnified Party" and, collectively, the
"Indemnified Parties") against (i) all costs or expenses (including
reasonable attorneys' fees), judgments, fines, losses, claims, damages,
liabilities and amounts paid in settlement in connection with any claim,
action, suit, proceeding or investigation, whether civil, administrative
or investigative, based in whole or in part on, or arising in whole or
in part out of, the fact that such person is or was an officer or
director, whether pertaining to any matter existing or occurring at or
prior to the Effective Time and whether asserted or claimed prior to, or
at or after, the Effective Time (collectively, the "Indemnified
Liabilities"); and (ii) all Indemnified Liabilities based in whole or in
part on, or arising in whole or in part out of, or pertaining to, this
Agreement, the Merger or the transactions contemplated hereby. The
Indemnified Parties shall be entitled to the indemnification provided
herein whether such Indemnified Liabilities shall be based on their own
negligence, whether such persons are solely, concurrently or
comparatively negligent, strict liability or any other theory of
recovery. AOG (or after the Effective Time, KNE and the Surviving
Corporation) will be entitled to participate in and, to the extent that
it may wish, to assume the defense of any action, with counsel
reasonably satisfactory to the Indemnified Party but, if any Indemnified
Party believes that, by reason of an actual or potential conflict of
interest, it is advisable for such Indemnified Party to be represented
by separate counsel, or if AOG (or after the Effective Time, KNE and the
Surviving Corporation) shall fail to assume responsibility for such
defense, such Indemnified Party may retain counsel reasonably
satisfactory to AOG (or after the Effective Time, KNE and the Surviving
Corporation) who will represent such Indemnified Party, and AOG (or
after the Effective Time, KNE and the Surviving Corporation) shall pay
all reasonable fees and disbursements of such counsel promptly as
statements therefor are received to the full extent permitted by
applicable law upon receipt of any undertaking contemplated by Section
145(e) of the DGCL or Section 17-6305(e) of the KGCC, as the case may
be. The Indemnified Party and AOG (or after the Effective Time, KNE and
the Surviving Corporation) will cooperate with each other and use all
reasonable efforts to assist each other in the vigorous defense of any
such matter; provided, however, that neither AOG, KNE nor the Surviving
Corporation shall be liable for any settlement of any claim effected
without its written consent, which consent, however, shall not be
unreasonably withheld. Any Indemnified Party wishing to claim
indemnification under this Section 5.9, upon learning of any such claim,
action, suit, proceeding or investigation, shall promptly notify AOG,
KNE or the Surviving Corporation, as applicable (but the failure
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to be so notified by an indemnifying party shall not relieve it
from any liability which it may have under this Section 5.9 except to
the extent such failure prejudices such party). The indemnifying
parties shall be required to pay for only one law firm selected by the
Indemnified Parties as a group in accordance with the foregoing
provisions with respect to each such matter unless there is, under
applicable standards of professional conduct, a conflict in any
significant issue between the positions of any two or more Indemnified
Parties.
(b) For a period of six years after the Effective Time, KNE
shall, to the extent commercially practicable, make all reasonable
efforts to cause to be maintained in effect the current policies of
directors' and officers' liability insurance maintained by AOG, or such
substitute policies of at least the same coverage and amounts and terms
and conditions which are no less advantageous, with respect to claims
arising from the facts or events which occurred before the Effective
Time, excluding pending and prior litigation or claims that would have
been required to have been reported on or prior to the Effective Time
under such current AOG policies and which pending and prior litigation
or claims were not timely reported under such policies. As a condition
precedent to the obligation of KNE to maintain or obtain such policies,
AOG shall cooperate in the seeking of such insurance.
(c) Nothing in this Section 5.9 shall give rise to any right to
indemnification for the malfeasance or willful misfeasance of any
person. This Section 5.9 is intended to be for the benefit of, and shall
be enforceable by, each Indemnified Party, his heirs and his
representatives.
5.10 AOG Employee Benefits.
(a) From and after the Effective Time until January 1, 1995, KNE
and AOG agree that any AOG Pension Plan shall be continued separately
without change, except for (i) changes required by applicable law, and
(ii) changes not adverse to the AOG Employees (as hereinafter defined),
for the benefit of, and participation therein shall be continue to be
made available to the AOG Employees; provided, however, that the
employer matching contributions to be made to each such plan on behalf
of an AOG Employee who is a participant shall be, as a percentage of
such participant's contributions, at least equal to the rate at which
employer matching contributions for participants in such plan were made
by AOG for the plan year ending in 1993, subject to compliance with the
terms of each such AOG Pension Plan.
(b) From and after the Effective Time until January 1, 1995, KNE
and AOG agree that the AOG Benefit Plans (other than any AOG Pension
Plans) existing as of the Effective Time shall be continued without
change for the benefit of the AOG Employees, except for (i) changes
required by applicable law, and (ii) changes not adverse to the AOG
Employees.
(c) From and after the Effective Time until January 1, 1995, KNE
and AOG agree that the AOG benefit policies, practices and programs
existing as of the Effective Time shall be continued without change for
the benefit of the AOG Employees, except for (i) changes required by
applicable law, and (ii) changes not adverse to the AOG Employees.
(d) In the event that an AOG Employee is transferred or
reassigned from AOG or any AOG Significant Subsidiary to an employment
status with KNE or any Significant Subsidiary (other than AOG) and is no
longer covered under any of the benefit plans, policies, practices or
programs described in the preceding paragraphs of this Section 5.10,
such individual shall be afforded coverage under the KNE Benefit Plans
and benefit policies, practices or programs that are available to
similarly situated KNE employees on the terms provided in paragraph (e)
below.
(e) From and after January 1, 1995, KNE will provide or cause to
be provided to, the AOG Employees benefit plans, policies and programs
that are no less favorable than the benefit plans, policies and programs
that KNE and its Significant Subsidiaries provide to their similarly
situated employees and shall credit, or cause to be credited, the
service that such AOG Employees had completed with AOG, the AOG
Significant Subsidiaries, their predecessors and any previous service in
connection with any business
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or assets acquired by AOG as of the Effective Time (but only to
the extent that any such service was recognized by AOG) and service
completed with KNE and its Significant Subsidiaries prior to January 1,
1995, for all purposes under the KNE Benefit Plans, except for (i) the
accrual of benefits under any defined benefit pension plan, (ii) the
eligibility to participate in, or receive benefits under, any portion of
a welfare benefit plan which provides post-retirement medical, dental or
other health benefits, and (iii) any allocation of contributions under
any defined contribution pension plan for any plan year ending before
the earlier of (A) the date that such AOG Employee is transferred or
reassigned from AOG or any AOG Significant Subsidiary to an employment
status with KNE or any Significant Subsidiary (other than AOG) or (B)
January 1, 1995. Further, with respect to any KNE Benefit Plan which
provides medical, dental or other health benefits, KNE shall, or cause
such plan to, waive any pre-existing conditions or limitations
thereunder applicable to the AOG Employees and their dependents to the
extent that an AOG Employee or dependent's condition would not have
operated as a preexisting condition or would not have been subject to
limitation under any similar AOG Benefit Plan.
(f) The term "AOG Employees" shall mean those individuals who
are employed by AOG or any AOG Significant Subsidiary immediately prior
to the Effective Time and shall include those individuals employed by
AOG or any AOG Significant Subsidiary (or their successors) on or after
the Effective Time. KNE agrees to effect the removal of restrictions
applicable to restricted AOG Common Stock issued under the AOG Stock
Incentive Plan promptly upon the lapse of such restrictions in
accordance with the terms of such grant and the AOG Stock Incentive
Plan.
(g) KNE shall guarantee all obligations of AOG and the AOG
Significant Subsidiaries arising under any AOG Benefit Plan, including,
without limitation, any severance plan, policy or agreement existing as
of the Effective Time.
5.11 Standstill Agreement and Registration Rights Agreement. AOG's
agreements and obligations under its Standstill Agreement with its principal
stockholder, Cabot Corporation, will be terminated on or before the Closing Date
and KNE will enter into on the Closing Date a Registration Rights Agreement in
the form of Exhibit 5.11 with each "affiliate" of AOG or KNE who will hold at
the Effective Time one percent (1%) or more of the KNE Common Stock outstanding.
5.12 Tax Opinion. KNE covenants and agrees that during the two year
period following the Effective Time it will not cause or permit the Surviving
Corporation to discontinue its historic business or, in the alternative, cease
to use a significant portion of its historic business assets in a business.
5.13 Stockholders' Agreements. AOG has delivered to KNE agreements
from certain key stockholders of AOG whereby such persons agree to vote in favor
of the adoption and approval of this Agreement and in favor of the Merger,
subject to the terms and conditions of this Agreement.
5.14 AOG Stock Options.
(a) KNE agrees to assume, effective as of the Effective Time,
each AOG Option (whether or not vested) which remains as of such date
unexercised in whole or in part and to substitute shares of KNE Common
Stock as purchasable under such assumed option ("Assumed Option"), with
such assumption and substitution to be effected as follows:
(i) The Assumed Option shall not give the optionee
additional benefits which he did not have under the AOG Option
before such assumption;
(ii) The number of shares of KNE Common Stock
purchasable under any Assumed Option shall be equal to the
number of whole shares of KNE Common Stock that the holder of
the AOG Option being assumed would have received upon
consummation of the Merger had such AOG Option been exercised
immediately prior to the Merger;
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(iii) The per share option price of the Assumed Option
shall be equal to the per share option price of the AOG Option
divided by 0.47; and
(iv) The Assumed Option shall provide the optionee with
the same benefit rights which he had under the AOG Option before
such assumption.
(b) As soon as practicable after the Effective Time, KNE shall
deliver to the holders of AOG Options appropriate agreements evidencing
its assumption of such options.
(c) Prior to the Effective Time, KNE shall file a registration
statement on Form S-8, with respect to the shares of KNE Common Stock
issuable in respect of the Assumed Options and KNE shall use its best
efforts to cause such registration statement to become effective
promptly after the Effective Time and to maintain the effectiveness of
such registration statement (and maintain the current status of the
prospectus or prospectuses contained therein) for so long as such
Assumed Options remain outstanding. So long as any holder of an Assumed
Option shall be subject to the reporting requirements under Section
16(a) of the Exchange Act, KNE shall cause the AOG Stock Incentive Plan
to be administered in a manner that complies with Rule 16b-3 promulgated
under the Exchange Act.
5.15 AOG Warrants.
(a) KNE agrees to assume, effective as of the Effective Time,
each AOG Warrant which remains as of such date unexercised in whole or
in part and to substitute shares of KNE Common Stock as purchasable
under such assumed warrant ("Assumed Warrants"), with such assumption
and substitution to be effected as follows:
(i) The Assumed Warrant shall not give the holder
additional benefits which it did not have under the AOG Warrant
before such assumption;
(ii) The number of shares of KNE Common Stock
purchasable under any Assumed Warrant shall be equal to the
number of shares of KNE Common Stock that the holder of the AOG
Warrant being assumed would have received upon consummation of
the Merger had such AOG Warrant been exercised immediately prior
to the Merger;
(iii) The per warrant exercise price of the Assumed
Warrant shall be equal to the per warrant exercise price of the
AOG Warrant divided by 0.47; and
(iv) The Assumed Warrant shall provide the holder with
the same benefit rights which the holder had under the AOG
Warrant before such assumption.
(b) On the Closing Date, KNE shall deliver to the holders of
Assumed Warrants appropriate agreements evidencing its assumption of
such Assumed Warrants and related registration rights (including all
rights under that certain Warrant Share Registration Rights Agreement
dated November 19, 1988, by and between AOG and Cabot Corporation).
5.16 Registration Statement on Form S-3. On or prior to the Closing
Date, KNE shall file the registration statement on Form S-3 described in the
Share Transfer and Registration Agreement provided for in Section 3.4 hereof.
KNE shall use its best efforts to cause such registration statement to become
effective on or before the Closing Date. KNE shall make such registration
statement available to all "affiliates" of KNE and AOG who will beneficially own
more than one percent (1%) of the issued and outstanding shares of KNE Common
Stock immediately after the Effective Time.
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ARTICLE VI
CONDITIONS
6.1 Conditions to Obligation of Each Party to Effect the Merger. The
respective obligations of each party to effect the Merger shall be subject to
the fulfillment at or prior to the Closing Date of the following conditions:
(a) This Agreement and the Merger shall have been approved and
adopted by the requisite vote of the stockholders of AOG, and the
issuance by KNE of the KNE Common Stock contemplated by this Agreement
and the Charter Amendment shall have been approved by the stockholders
of KNE, in each case as may be required by law, by the rules of the New
York Stock Exchange and by any applicable provisions of their respective
charters or bylaws;
(b) The waiting period (and any extension thereof) applicable to
the consummation of the Merger under the HSR Act shall have expired or
been terminated;
(c) No order shall have been entered and remain in effect in any
action or proceeding before any foreign, federal or state court or
governmental agency or other foreign, federal or state regulatory or
administrative agency or commission that would prevent or make illegal
the consummation of the Merger;
(d) The Registration Statement shall be effective on the Closing
Date, and all post-effective amendments filed shall have been declared
effective or shall have been withdrawn; and no stop-order suspending the
effectiveness thereof shall have been issued and no proceedings for that
purpose shall have been initiated or, to the knowledge of the parties,
threatened by the Commission;
(e) There shall have been obtained any and all material permits,
approvals, qualifications and consents of securities or blue sky
commissions of any jurisdiction, the PUC, the PSC and of any other
governmental body or agency, that reasonably may be deemed necessary so
that the consummation of the Merger and the transactions contemplated
thereby will be in compliance with applicable laws, the failure to
comply with which would have a material adverse effect on KNE after
consummation of the Merger;
(f) The shares of KNE Common Stock issuable (i) upon
consummation of the Merger and (ii) thereafter upon exercise of any
Assumed Options or Assumed Warrants shall have been approved for listing
on the New York Stock Exchange, subject to official notice of issuance;
(g) All approvals of private persons or corporations, (i) the
granting of which is necessary for the consummation of the Merger or the
transactions contemplated in connection therewith and (ii) the
non-receipt of which would have a material adverse effect on KNE after
the consummation of the Merger, shall have been obtained; and
(h) After the date of this Agreement and prior to the Closing,
there shall not have been (i) any action taken, or any statute, rule,
regulation or order enacted, issued, entered, enforced or deemed
applicable to the Merger or to KNE or its Significant Subsidiaries by
any federal or state governmental entity which in connection with the
grant of a requisite regulatory approval for the Merger and the
transactions contemplated in this Agreement, imposes any condition or
restriction upon or applicable to KNE or its Significant Subsidiaries
after the Effective Time or (ii) any other action taken, or rule,
regulation or order issued or entered, by the FERC, the PUC, the PSC or
any municipality or group of municipalities which is applicable to KNE
or its Significant Subsidiaries, which in either case would have a
material adverse effect on KNE after the Effective Time.
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6.2 Additional Conditions to Obligations of KNE. The obligation of KNE
to effect the Merger is, at the option of KNE, also subject to the fulfillment
at or prior to the Closing Date of the following conditions:
(a) The representations and warranties of AOG contained in
Section 2.2 shall be accurate as of the Closing Date (except for such
representations and warranties that by their terms are expressly limited
to the date hereof or some other date) as though such representations
and warranties had been made at and as of that time; all of the terms,
covenants and conditions of this Agreement to be complied with and
performed by AOG on or before the Closing Date shall have been duly
complied with and performed in all material respects, and a certificate
to the foregoing effect dated the Closing Date and signed by the chief
executive officer of AOG shall have been delivered to KNE;
(b) Since the date of this Agreement, no material adverse change
in the business, operations or financial condition of AOG and its
Subsidiaries, taken as a whole, shall have occurred, and AOG and its
Subsidiaries shall not have suffered any damage, destruction or loss
(whether or not covered by insurance) having a material adverse effect
on AOG, and KNE shall have received a certificate signed by the chief
executive officer of AOG dated the Closing Date to such effect;
(c) KNE shall have been advised in writing on the Closing Date
by Arthur Andersen & Co. that, in accordance with generally accepted
accounting principles, the Merger qualifies for treatment as a "pooling
of interests" for accounting purposes if consummated in accordance with
this Agreement, and that AOG is a poolable entity;
(d) The Board of Directors of KNE shall have received from
Petrie Parkman & Co., Inc. a written opinion, dated as of the date of
this Agreement, satisfactory in form and substance to the Board of
Directors of KNE, to the effect that the number of shares of KNE Common
Stock to be issued for each share of AOG Common Stock pursuant to the
Merger is fair to the stockholders of KNE, which opinion shall have been
confirmed in writing to such Board as of the date the Proxy Statement is
first mailed to the stockholders of KNE and not subsequently withdrawn;
(e) AOG shall have received, and furnished written copies to KNE
of, the AOG affiliates' agreements pursuant to Section 3.4;
(f) KNE shall have received from Messrs. Andrews & Kurth L.L.P.
and the General Counsel of AOG opinions dated the Effective Time
covering the matters set forth in Exhibit 6.2(f);
(g) KNE shall have received a copy of the "comfort letter" of
Arthur Andersen & Co. pursuant to Section 5.2(a) and on or prior to the
Closing Date an additional letter from Arthur Andersen & Co. dated as of
the Closing Date, in form and substance reasonably satisfactory to KNE,
stating that nothing has come to their attention, as of a date no
earlier than five days prior to the Closing Date, which would require
any change in their letter delivered pursuant to Section 5.2(a) if it
were required to be dated and delivered on the Closing Date;
(h) KNE shall have received from Messrs. Vinson & Elkins L.L.P.
a written opinion dated as of the date that the Proxy Statement is first
mailed to stockholders of KNE to the effect that (i) the Merger will be
treated for federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code, (ii) KNE, Sub and AOG will each
be a party to that reorganization within the meaning of Section 368(b)
of the Code, and (iii) KNE, Sub and AOG shall not recognize any gain or
loss as a result of the Merger, and such opinion shall not have been
withdrawn or modified in any material respect;
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(i) KNE shall have received the AOG Environmental Report, such
report shall not indicate violations of, or noncompliance with, or
reclamation or remediation obligations under, federal, state or local
environmental laws, rules, regulations, ordinances or orders, in effect
as of the Effective Time, which violations, noncompliance or
obligations, in the aggregate, are reasonably likely to result in the
incurrence by AOG or its Significant Subsidiaries of a material
liability;
(j) KNE shall have determined that the gas processing plants,
gas storage facilities, gas gathering and transmission facilities and
other material properties of AOG and the AOG Significant Subsidiaries
are in good working order and repair (reasonable wear and tear
excepted); and
(k) The Amended and Restated Basket Agreement dated as of June
30, 1990, between American Pipeline Company, Cabot Corporation and Cabot
Transmission Corporation shall have been terminated on terms and
conditions reasonably satisfactory to KNE.
6.3 Additional Conditions to Obligations of AOG. The obligation of AOG
to effect the Merger is, at the option of AOG, also subject to the fulfillment
at or prior to the Closing Date of the following conditions:
(a) The representations and warranties of KNE and Sub contained
in Section 2.1 shall be accurate as of the Closing Date (except for such
representations and warranties that by their terms are expressly limited
to the date hereof or some other date) as though such representations
and warranties had been made at and as of that time; all the terms,
covenants and conditions of this Agreement to be complied with and
performed by KNE or Sub on or before the Closing Date shall have been
duly complied with and performed in all material respects; and a
certificate to the foregoing effect dated the Closing Date and signed by
the chief executive officers of KNE or Sub shall have been delivered to
AOG;
(b) Since the date of this Agreement, no material adverse change
in the business, operations or financial condition of KNE and its
Subsidiaries, taken as a whole, shall have occurred, and KNE and its
Subsidiaries shall not have suffered any damage, destruction or loss
(whether or not covered by insurance) materially adversely affecting
KNE, and AOG shall have received a certificate signed by the chief
executive officer of KNE dated the Closing Date to such effect;
(c) AOG shall have been advised in writing on the Closing Date
by Arthur Andersen & Co. that, in accordance with generally accepted
accounting principles, the Merger qualifies for treatment as a "pooling
of interests" for accounting purposes if consummated in accordance with
this Agreement, and that KNE is a poolable entity;
(d) AOG shall have received from Goldman Sachs a written
opinion, dated as of the date of this Agreement, satisfactory in form
and substance to the Board of Directors of AOG, to the effect that the
number of shares of KNE Common Stock to be issued for each share of AOG
Common Stock pursuant to the Merger is fair to the stockholders of AOG,
which opinion shall have been confirmed in writing to such Board as of
the date the Proxy Statement is first mailed to the stockholders of AOG
and not subsequently withdrawn;
(e) The Board of Directors of KNE shall have taken such action
as may be necessary to elect the persons listed on Exhibit 5.8 to the
positions and for the terms set forth on Exhibit 5.8, effective as of
the Effective Time;
(f) AOG shall have received from Messrs. Andrews & Kurth L.L.P.,
counsel to AOG, a written opinion dated as of the date that the Proxy
Statement is first mailed to stockholders of AOG to the effect that (i)
the Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code; (ii)
KNE, Sub and AOG will each be a party to that reorganization within the
meaning of Section 368(b) of the Code; and (iii) the stockholders of AOG
shall not recognize any gain or loss as a result of the Merger, other
than to the extent such stockholders receive cash in lieu of fractional
shares, and such opinion shall not have been withdrawn or modified in
any material respect;
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(g) AOG shall have received from Messrs. Vinson & Elkins L.L.P.
and the General Counsel of KNE opinions dated the Effective Time
covering the matters set forth in Exhibit 6.3(g);
(h) AOG shall have received a copy of the "comfort letter" of
Arthur Andersen & Co. pursuant to Section 5.2(b) and on or prior to the
Closing Date an additional letter from Arthur Andersen & Co. dated as of
the Closing Date, in form and substance reasonably satisfactory to AOG,
stating that nothing has come to their attention, as of a date no
earlier than five days prior to the Closing Date, which would require
any change in their letter delivered pursuant to Section 5.2(b) if it
were required to be dated and delivered on the Closing Date;
(i) AOG shall have been advised by Cabot Corporation, the
principal stockholder of AOG, that it has received evidence satisfactory
to it in the form of a "no action" letter from the Commission to the
effect that, under Section 2(a)(7) of PUHCA, the Commission would take
no action with respect to Cabot Corporation upon consummation of the
Merger asserting Cabot Corporation to be a public utility holding
company under PUHCA with respect to KNE;
(j) AOG shall have received the KNE Environmental Report, and
such report shall not indicate violations of, or noncompliance with, or
reclamation or remediation obligations under, federal, state or local
environmental laws, rules, regulations, ordinances, or orders, in effect
as of the Effective Time, which violations, noncompliance or
obligations, in the aggregate, are reasonably likely to result in the
incurrence by KNE or its Significant Subsidiaries of a material
liability; and
(k) The Bylaws of KNE shall have been amended by the Board of
Directors of KNE in the manner set forth in Exhibit 6.3(k) hereto.
(l) The registration statement referred to in Section 5.16 shall
have become effective.
ARTICLE VII
MISCELLANEOUS
7.1 Termination. This Agreement may be terminated and the Merger and
the other transactions contemplated herein may be abandoned at any time prior to
the Effective Time, whether prior to or after approval by the stockholders of
AOG:
(a) by mutual consent of KNE and AOG;
(b) by either KNE or AOG if the Merger has not been effected on
or before October 31, 1994;
(c) by KNE if the condition set forth in Section 6.2(d), 6.2(i),
6.2(j) or 6.2(k) is not satisfied;
(d) by AOG if the condition set forth in Section 6.3(d), 6.3(i)
or 6.3(j) is not satisfied;
(e) by KNE if (A) an AOG Acquisition Transaction has been
proposed and (i) the recommendation of the Board of Directors of AOG in
favor of the adoption and approval of the Merger and this Agreement is
withdrawn; (ii) regardless of whether such recommendation remains in
effect, the Merger is not approved by the requisite vote of the
stockholders of AOG; or (iii) the opinion of Goldman Sachs pursuant to
Section 6.3(d) is withdrawn or (B) if Cabot Corporation does not file
or, for any reason, withdraws its request for a "no action" letter from
the Commission as set forth in Section 6.3(i) herein;
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(f) by AOG if a KNE Acquisition Transaction has been proposed
and (i) the recommendation of the Board of Directors of KNE in favor of
the approval of the issuance by KNE of the KNE Common Stock contemplated
by this Agreement or the Charter Amendment is withdrawn; (ii) regardless
of whether such recommendation remains in effect, either such matter is
not approved by the requisite vote of the stockholders of KNE; or (iii)
the opinion of Petrie Parkman & Co., Inc. pursuant to Section 6.2(d) is
withdrawn;
(g) by either KNE or AOG if a final, unappealable order
restraining, enjoining or otherwise preventing, ordering the divestiture
of substantial assets or awarding substantial damages in connection
with, a consummation of this Agreement or the transactions contemplated
in connection herewith shall have been entered;
(h) by either KNE or AOG if (i) the required approval of the
stockholders of AOG for the adoption and approval of the Merger and this
Agreement, or (ii) the required approval of the stockholders of KNE of
the matters set forth in paragraph (f) above, is not received at their
respective meetings;
(i) by KNE if (i) since the date of this Agreement there has
been a material adverse change with respect to AOG, or (ii) there has
been a material breach of any representation or warranty set forth in
this Agreement by AOG, which breach has not been cured within five
business days following receipt by AOG of notice of such breach; or
(j) by AOG if (i) since the date of this Agreement there has
been a material adverse change with respect to KNE, or (ii) there has
been a material breach of any representation or warranty set forth in
this Agreement by KNE or Sub, which breach has not been cured within
five business days following receipt by KNE of notice of such breach.
7.2 Effect of Termination. In the event of any termination of this
Agreement pursuant to Section 7.1, AOG on the one hand and KNE and Sub on the
other hand shall have no obligation or liability to each other except that (i)
the provisions of the second paragraphs of Sections 3.3 and 4.3 and the
provisions of Sections 5.6, 5.7, 5.9 and Article VII shall survive any such
termination, and (ii) nothing herein and no termination pursuant hereto will
relieve any party from liability for any breach of this Agreement.
7.3 Waiver and Amendment. Any provision of this Agreement may be
waived at any time by the party that is, or whose stockholders are, entitled to
the benefits thereof. This Agreement may not be amended or supplemented at any
time, except by an instrument in writing authorized by action taken by the Board
of Directors and signed on behalf of each party hereto, provided that after this
Agreement has been approved and adopted by the stockholders of AOG, this
Agreement may be amended only as may be permitted by applicable provisions of
the DGCL. The waiver by any party hereto of any condition or of a breach of
another provision of this Agreement shall not operate or be construed as a
waiver of any other condition or subsequent breach. The waiver by any party
hereto of any of the conditions precedent to its obligations under this
Agreement shall not preclude it from seeking redress for breach of this
Agreement other than with respect to the condition so waived.
7.4 Nonsurvival of Representations, Warranties, Covenants and
Agreements. None of the representations, warranties, covenants or agreements in
this Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Effective Time, except for the terms of Article I, the second, third
and fourth paragraphs of Section 2.1(j), the second, third and fourth paragraphs
of Section 2.2(j), Sections 5.7, 5.9, 5.10, 5.11, 5.12, 5.14 and 5.15, Article
VII, and the agreements of the affiliates of AOG delivered pursuant to Section
3.4.
7.5 Public Statements. AOG and KNE agree to consult with each other
prior to issuing any press release or otherwise making any public statement with
respect to the transactions contemplated hereby, and shall not issue any such
press release or make any such public statement prior to such consultation,
except as may be required by law or applicable stock exchange policy.
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7.6 Assignment. This Agreement shall inure to the benefit of and will
be binding upon the parties hereto and their respective successors and permitted
assigns. Except as set forth in this Agreement, this Agreement shall not be
assignable by the parties hereto.
7.7 Notices. All notices, requests, demands, claims and other
communications which are required to be or may be given under this Agreement
shall be in writing and shall be (i) delivered in person or by courier, (ii)
sent by telecopy or facsimile transmission, answer back requested, or (iii)
mailed, certified first class mail, postage prepaid, return receipt requested,
to the parties hereto at the following addresses:
if to AOG: American Oil and Gas Corporation
333 Clay, Suite 2000
Houston, Texas 77002
Attention: David M. Carmichael,
Chairman of the Board
with a copy to: Andrews & Kurth L.L.P.
4200 Texas Commerce Tower
Houston, Texas 77002
Attention: P. Dexter Peacock
if to KNE or Sub: K N Energy, Inc.
370 Van Gordon Street
P.O. Box 281304
Lakewood, Colorado 80228-8304
Attention: Larry D. Hall, President
with a copy to: Vinson & Elkins L.L.P.
2500 First City Tower
Houston, Texas 77002-6760
Attention: Robert H. Whilden, Jr.
or to such other address as any party shall have furnished to the others by
notice given in accordance with this Section 7.7. Such notices shall be
effective only upon receipt.
7.8 Governing Law. This Agreement shall be governed by and construed
in accordance with the law of the State of Delaware.
7.9 Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall continue in full force and effect and shall
in no way be affected, impaired or invalidated.
7.10 Counterparts. This Agreement may be executed in counterparts,
each of which shall be an original, but all of which together shall constitute
one and the same agreement.
7.11 Headings. The Article or Section headings herein are for
convenience only and shall not affect the construction hereof.
7.12 Entire Agreement. This Agreement constitutes the entire agreement
and supersedes all other prior agreements and understandings, both oral and
written, among the parties or any of them, with respect to the subject matter
hereof.
-33-
<PAGE> 38
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officer thereunto duly authorized, all as of the
date first above written.
K N Energy, Inc.
By: /s/ Charles W. Battey
Charles W. Battey, Chairman of the Board
KNE Acquisition Corporation
By: /s/ Larry D. Hall
Larry D. Hall, President
American Oil and Gas Corporation
By: /s/ David M. Carmichael
David M. Carmichael, Chairman of the Board
-34-
<PAGE> 39
EXHIBIT 1.6
DIRECTORS:
Charles W. Battey
Larry D. Hall
David M. Carmichael
Edward H. Austin
<PAGE> 40
EXHIBIT 2.1(A)
<TABLE>
<CAPTION>
SIGNIFICANT SUBSIDIARY STATE OF INCORPORATION
---------------------- ----------------------
<S> <C>
Gasco, Inc. Colorado
K N Gas Gathering, Inc. Colorado
K N Gas Marketing, Inc. Colorado
K N Interstate Gas Transmission Co. Colorado
K N Production Company Delaware
Northern Gas Company Wyoming
Rocky Mountain Natural Gas Company Colorado
</TABLE>
<PAGE> 41
EXHIBIT 2.2(A)
AMERICAN OIL AND GAS CORPORATION
<TABLE>
<CAPTION>
Significant Subsidiaries: State:
------------------------- ------
<S> <C>
American Pipeline Company Delaware
Westar Transmission Company Delaware
American Gathering, L.P. Texas
American Processing, L.P. Texas
Anthem Energy Company, L.P. Texas
</TABLE>
<PAGE> 42
Exhibit 3.4
SHARE TRANSFER AND REGISTRATION AGREEMENT
THIS SHARE TRANSFER AND REGISTRATION AGREEMENT (this "Agreement"), made
and entered into as of ________________________, 1994, by and between K N
Energy, Inc., a Kansas corporation ("KNE"), and the undersigned (the
"Stockholder"),
W I T N E S S E T H:
WHEREAS, the Stockholder beneficially owns shares of Common Stock of
American Oil and Gas Corporation, a Delaware corporation ("AOG");
WHEREAS, KNE, and its wholly-owned subsidiary ("Sub") and AOG have
entered into an Agreement of Merger dated as of March, 1994 (the "Merger
Agreement"), providing for the merger (the "Merger") of Sub with and into AOG
with the issued and outstanding shares of Common Stock of AOG being converted
into shares of Common Stock of KNE. The shares of Common Stock of KNE received
in the Merger are hereinafter referred to as the "KNE Shares";
WHEREAS, KNE has been advised that the Stockholder is an "affiliate" of
AOG, as that term is defined for purposes of paragraphs (c) and (d) of Rule 145
promulgated by the Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933 (the "Act");
WHEREAS, the Merger is conditional upon, among other things, KNE's
receipt of an undertaking from the Stockholder restricting the disposition of
the Stockholder's KNE Shares received by the Stockholder pursuant to the Merger
such that the Merger will be treated as a pooling of interests under generally
accepted accounting principles, and the Stockholder desires to deliver such
undertaking hereby; and
WHEREAS, KNE desires to grant the Stockholder certain rights to the
registration under the Act of up to 1,500,000 KNE Shares received by the
Stockholder pursuant to the Merger (the "Subject Shares"), generally so as to
permit the Stockholder to dispose of the Subject Shares from time to time in
market transactions without constraint by the volume limitations imposed by
Rules 144(e) and 145(d) promulgated by the SEC under the Act and to provide
Stockholder with similar liquidity provided other affiliated stockholders of
AOG;
NOW, THEREFORE, for and in consideration of the premises and the mutual
agreements contained herein, the parties hereto agree as follows:
<PAGE> 43
ARTICLE I
Representations and Warranties
1.01 Representations of the Stockholder. The Stockholder represents
and warrants to KNE that:
(a) the Stockholder has the requisite power and authority to
enter into and perform this Agreement;
(b) since [date - at least 30 days in advance of the effective
date of the Merger] to and including the date hereof, the Stockholder
has not sold, transferred or otherwise disposed of any shares of Common
Stock of AOG; and
(c) the Stockholder will not make any sale, transfer or other
disposition of all or any part of the KNE Shares in violation of the Act
or the rules and regulations thereunder, including, without limitation,
Rule 145.
1.02 Representations of KNE. KNE represents and warrants to the
Stockholder that:
(a) KNE has the requisite power and authority to enter into and
perform this Agreement; and
(b) the execution, delivery and performance of this Agreement
have been duly authorized by all necessary corporate action on the part
of KNE, and this Agreement has been duly executed by a duly authorized
officer on behalf of KNE.
ARTICLE II
Transfer Restrictions
2.01 Restrictions on Disposition of Subject Shares. Prior to the
Expiration Date (as hereinafter defined), the Stockholder agrees not to contract
to sell, sell or otherwise transfer or dispose of any of the KNE Shares or any
interest therein. For purposes of this Agreement, the term "Expiration Date"
shall mean the date that KNE first publishes financial statements (the "Combined
Financials") which reflect at least thirty (30) days of combined operations of
KNE and AOG. Notwithstanding the foregoing, and without regard to the
Expiration Date, if the SEC notifies the Stockholder of a scheduled hearing for
the purpose of determining
-2-
<PAGE> 44
whether or not the Stockholder will be deemed to be a "public utility holding
company" of KNE under the Public Utility Holding Company Act of 1935, then the
Stockholder may contract to sell, sell or otherwise transfer or dispose of any
of the Subject Shares at any time after the 60th day preceding such scheduled
hearing.
2.02 Combined Financials. KNE agrees to publish the Combined
Financials without undue delay and thereupon to notify the Stockholder of the
occurrence of the Expiration Date.
2.03 Legends on Certificates. Except with respect to the Subject
Shares included in the "shelf" registration statement described in Article III
hereof, KNE may give stop transfer instructions to its transfer agent with
respect to the KNE Shares and place on each certificate representing any KNE
Shares (and any substitution therefor) a legend stating in substance:
"The securities represented by this certificate were issued in a
transaction to which Rule 145 promulgated under the Securities Act of
1933 (the "Act") applies and may be sold, transferred or otherwise
disposed of only in compliance with the limitations of such Rule 145,
upon receipt by K N Energy, Inc. of an opinion of counsel acceptable to
it that some other exemption from registration under the Act is
available, or pursuant to a registration statement under the Act. Such
securities may also be subject to restrictions on transfer pursuant to
Section 2.01 of a Share Transfer and Registration Rights Agreement
between KNE and the holder hereof."
The legend set forth above shall be removed by delivery of substitute
certificates without such legend, and the related stop transfer instructions
shall be lifted forthwith, provided that the KNE Shares have been registered
under the Act for sale, transfer, or other disposition by the Stockholder or on
the Stockholder's behalf, whether pursuant to Article III hereof or otherwise,
or the Stockholder has delivered to KNE an opinion of counsel reasonably
acceptable to KNE, to the effect that an exemption from registration under the
Act is available with respect thereto.
ARTICLE III
Shelf Registration
3.01 Participation in Shelf Registration. (a) Pursuant to Section 5.16
of the Merger Agreement, KNE shall prepare and file with the SEC a continuous or
"shelf" registration statement (as the same may be amended, the "Registration
Statement") pursuant to Rule 415 under the Act, respecting the sale from time to
time of up to the number of Subject Shares issued to each AOG affiliate in the
Merger, who will beneficially own more than one percent (1%) of the issued and
outstanding shares of Common Stock of KNE immediately after consummation of the
Merger, in one or more transactions (which may involve block
-3-
<PAGE> 45
transactions) on the New York Stock Exchange, in special offerings, exchange
distributions and/or secondary distributions pursuant to and in accordance with
the rules of the New York Stock Exchange, in the over-the-counter market, other
brokerage transactions, negotiated transactions, underwritten firm commitment
or best efforts offerings, or a combination of such methods of sale, at market
prices prevailing at the time of sale, at prices related to such market prices
or at negotiated prices. Except for the Subject Shares, KNE shall have no
obligation to register under the Act any of the KNE Shares for sale, transfer
or other disposition by the Stockholder, except pursuant to that certain
affiliate Registration Rights Agreement of even date herewith between the
parties hereto.
(b) KNE shall use its best efforts to cause the Registration Statement
to (i) become effective on or before the Closing Date (as defined in the Merger
Agreement) and (ii) remain effective continuously until Stockholder does not own
KNE Shares aggregating ten percent (10%) of the then outstanding KNE Shares as
shown by the most recent report or statement published by KNE.
3.02 Registration Procedures. KNE shall, as expeditiously as possible:
(a) prepare and file with the SEC such amendments and supplements to
the Registration Statement and each prospectus used in connection therewith as
may be necessary to keep the Registration Statement effective for the period
specified in Section 3.01(b) and as may be necessary to comply with the
provisions of the Act with respect to the disposition of the Subject Shares
covered by the Registration Statement in accordance with the intended method of
disposition set forth in the Registration Statement;
(b) furnish to the Stockholder and to each broker or dealer acting on
behalf of the Stockholder such number of copies of the Registration Statement as
originally filed and each amendment or supplement thereto and each prospectus
included therein (including any preliminary prospectus and each document
incorporated by reference therein to the extent then required by the rules and
regulations of the SEC) as such persons may reasonably request in order to
facilitate the public sale or other disposition of the Subject Shares covered by
the Registration Statement, and, upon the Stockholder's request, furnish each
such prospectus to the New York Stock Exchange at such times and in such
quantities as may be necessary to comply with Rule 153 under the Act;
-4-
<PAGE> 46
(c) use its best efforts to register or qualify the Subject Shares
covered by the Registration Statement under the securities or blue sky laws of
such jurisdictions within the United States as the Stockholder shall reasonably
request and to take all necessary action to keep such registration or
qualification effective for the period specified in Section 3.01(b); provided,
however, that KNE shall not be required to qualify to transact business as a
foreign corporation in any jurisdiction in which it would not otherwise be
required to be so qualified or to take any action which would subject it to
general service of process in any such jurisdictions which it is not then so
subject; and
(d) immediately notify the Stockholder, at any time when a prospectus
relating thereto is required to be delivered under the Act, of the happening of
any event as a result of which the prospectus contained in the Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
then existing (in which case, KNE shall as soon as practicable in view of the
circumstances giving rise to such misstatement or omission provide the
Stockholder with revised or supplemental prospectuses and if so requested by
KNE, the Stockholder shall promptly take action to cease making any offers of
Subject Shares until receipt and distribution of such revised or supplemental
prospectuses).
In connection with the registration of any Subject Shares hereunder, the
Stockholder will furnish promptly to KNE in writing such information (together
with such supplements as may be necessary from time to time) with respect to
himself or itself and the proposed distribution by him or it as shall be
reasonably necessary in order to ensure compliance with federal and applicable
state securities laws.
3.03 Expenses. KNE will pay all expenses incurred by it in complying
with its registration obligations pursuant to Section 3.01 hereof, including,
without limitation, all registration and filing fees, blue sky fees and
expenses, printing expenses, fees and disbursements of counsel and independent
public accountants for KNE, and fees of transfer agents and registrars, but
excluding any selling commissions or discounts allocable to the sale of the
Subject Shares, fees and disbursements of counsel and other representatives for
the Stockholder and any stock transfer taxes payable by reason of the
Stockholder's sale of the Subject Shares, all of which shall be for the
Stockholder's account.
3.04 Indemnification.
(a) KNE shall indemnify and hold harmless the Stockholder, each of its
officers and directors, each statutory underwriter of Subject Shares thereunder
and each person who controls the Stockholder or such underwriter within the
meaning of the Act, against any losses, claims, damages or liabilities
(including reasonable attorneys' fees), joint or several, to which the
Stockholder, its directors or officers, or such underwriter or controlling
person may become
-5-
<PAGE> 47
subject under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereof, or arise out of or
are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and KNE shall reimburse the Stockholder, its officers and
directors, each such underwriter and each such controlling person for any legal
or other expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability or action; provided,
however, that KNE shall not be liable hereunder in any such case if and to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission so made in conformity with information furnished by the Stockholder,
such underwriter or such controlling person in writing specifically for use in
the Registration Statement or such prospectus.
(b) The Stockholder will indemnify and hold harmless KNE, each person
who controls KNE within the meaning of the Act, each officer of KNE who signs
the Registration Statement, and each director of KNE, against any losses,
claims, damages or liabilities (including reasonable attorneys' fees), joint or
several, to which KNE or such officer, director or controlling person may become
subject under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereof, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and the Stockholder shall reimburse KNE and each such officer,
director and controlling person for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the Stockholder
shall be liable hereunder in any such case if and only to the extent that any
such loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission relating
to the Stockholder made in reliance upon and in conformity with information
pertaining to the Stockholder, as such, furnished in writing to KNE by the
Stockholder specifically for use in the Registration Statement or such
prospectus ("Stockholder Information"); and provided, further, that the
liability of the Stockholder hereunder shall not exceed the amount of the
proceeds received by the Stockholder from the sale of the Subject Shares covered
by the Registration Statement.
-6-
<PAGE> 48
(c) Promptly after receipt by an indemnified party hereunder of notice
of the commencement of any action, such indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party hereunder, notify
the indemnifying party in writing thereof, but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party other than under this Section 3.04. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate in and, to the extent it shall wish, to assume and
undertake the defense thereof with counsel reasonably satisfactory to such
indemnified party and, after notice from the indemnifying party to such
indemnified party of its election so to assume and undertake the defense
thereof, the indemnifying party shall not be liable to such indemnified party
under this Section 3.04 for any legal expenses subsequently incurred by such
indemnified party in connection with the defense thereof; provided, however,
that if the indemnifying party has failed to assume the defense and employ
counsel or if the interests of the indemnified party reasonably may be deemed to
conflict with the interests of the indemnifying party, then the indemnified
party shall have the right to select a separate counsel and to assume such legal
defense and otherwise to participate in the defense of such action, with the
expenses and fees of such separate counsel and other expenses related to such
participation to be reimbursed by the indemnifying party as incurred.
(d) If the indemnification provided for in this Section 3.04 is
unavailable or insufficient to hold harmless an indemnified party in respect of
any losses, claims, damages or liabilities or actions in respect thereof, then
the indemnifying party shall in lieu of indemnifying such indemnified party
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or actions in such proportion as is
appropriate to reflect the relative fault of KNE, on the one hand, and the
Stockholder, on the other, in connection with the statements or omissions which
resulted in such losses, claims, damages, liabilities or actions as well as any
other relevant equitable considerations, including the failure to give any
required notice. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by KNE, on the one hand, or the Stockholder, on the other,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. KNE and the
Stockholder agree that it would not be just and equitable if contribution
pursuant to this subparagraph (d) were determined by pro rata allocation or by
any other method of allocation which does not take account of the equitable
considerations referred to above in this subparagraph (d). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages,
liabilities or actions in respect thereof referred to above in this subparagraph
(d) shall be deemed to include 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 subparagraph (d), the
amount that the Stockholder shall be required to contribute shall not exceed the
amount of the proceeds received by the
-7-
<PAGE> 49
Stockholder from the sale of the Subject Shares covered by the Registration
Statement. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
ARTICLE IV
Miscellaneous Provisions
4.01 Binding Effect. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by either of
the parties hereto without the prior written consent of the other party, except
that if the Subject Shares are transferred to any affiliate of Stockholder, this
Agreement and the rights and obligations hereunder shall be assignable to such
affiliate with notice to KNE, provided that Stockholder shall remain liable for
all obligations of Stockholder hereunder. Nothing in this Agreement, express or
implied, is intended to confer upon any person other than the parties hereto and
their respective successors and permitted assigns, any right, benefit or
obligation hereunder.
4.02 Amendments. This Agreement may not be modified, amended, altered
or supplemented except by way of a written agreement executed by each of the
parties hereto. However, either party may waive any condition to the
obligations of the other party hereunder.
4.03 Notices. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given if delivered by hand or facsimile transmission:
(a) If to KNE, to:
K N Energy, Inc.
370 Van Gordon Street
Lakewood, Colorado 80228
Attention: President
(b) If to the Stockholder, to the address specified on the
signature page hereof;
or to such other address as either party may have furnished to the other in
writing in accordance herewith.
-8-
<PAGE> 50
4.04 Applicable Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, without reference to or
application of any conflicts of law principles.
4.05 Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original but all of
which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and made and entered into as of the date first set forth above.
K N ENERGY, INC.
By:
------------------------------
President
THE STOCKHOLDER
By:
------------------------------
Stockholder's Address:
----------------------------------
----------------------------------
----------------------------------
----------------------------------
-9-
<PAGE> 51
EXHIBIT 5.8
AOG DIRECTOR DESIGNEES:
<TABLE>
<CAPTION>
NAME TERM EXPIRES
---- ------------
<S> <C>
David M. Carmichael 1997
Edward H. Austin, Jr. 1997
Edward Randall, III 1996
[To be designated by AOG prior to the 1996
effectiveness of the Registration
Statement referred to in Section 5.1]
</TABLE>
Certain Officers of KNE at the Effective Time of the Merger:
<TABLE>
<CAPTION>
NAME OFFICE
---- ------
<S> <C>
Charles W. Battey Chairman of the Board
David M. Carmichael Vice Chairman of the Board
Larry D. Hall President and Chief Executive Officer
</TABLE>
MANAGEMENT COMMITTEE DESIGNEES:
David M. Carmichael, Chairman
Charles W. Battey
Edward H. Austin, Jr.
Larry D. Hall
<PAGE> 52
EXHIBIT 5.11
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement is entered into by and between
K N Energy, Inc., a Kansas corporation (the "Company") and
______________________ ("Stockholder") pursuant to Section 5.11 of that
certain Agreement of Merger dated as of March __, 1994 (the "Merger
Agreement") by and among the Company, K N Acquisition Corporation, a Delaware
corporation and American Oil and Gas Corporation, a Delaware corporation
("AOG"). Capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the Merger Agreement.
W I T N E S S E T H:
WHEREAS, Stockholder beneficially owns shares of Common Stock of
AOG;
WHEREAS, the Company has been advised that Stockholder is an
"affiliate" of AOG, as that term is defined for purposes of paragraphs (c) and
(d) of Rule 145 promulgated by the Commission (hereinafter defined) and
Stockholder may be an affiliate of the Company upon consummation of the Merger;
WHEREAS, due to Stockholder's status as an affiliate, Stockholder
will be restricted under Rule 145 promulgated by the Commission from effecting
sales and transfers of shares of KNE Common Stock received by Stockholder as a
result of the Merger in excess of certain volumes; and
WHEREAS, KNE desires to grant Stockholder certain rights to
registration under the Act (hereinafter defined) so as to permit Stockholder
the opportunity to dispose of shares of KNE Common Stock received by
Stockholder as a result of the Merger without constraint by the volume
limitation restrictions imposed by Rule 145 promulgated by the Commission;
NOW, THEREFORE, for and in consideration of the premises and the
mutual agreements contained herein, the parties hereto agree as follows:
1.01 Certain Definitions. As used in this Agreement, the
following terms shall have the following respective meanings:
(a) "Act" shall mean the Securities Act of 1933, as amended,
or any similar federal statute enacted hereafter, and the rules and
regulations of the Commission thereunder all as the same shall be in
effect from time to time.
(b) "Commission" shall mean the Securities and Exchange
Commission or any other federal agency at the time administering the
Act.
<PAGE> 53
(c) "Holder" shall mean any holder of outstanding Registrable
Common Stock.
(d) "Initiating Holders" shall mean any Holders of shares of
Registrable Common Stock which such shares total not less than 1% of the
then outstanding shares of KNE Common Stock as shown by the most recent
report or statement published by KNE.
(e) The terms "register", "registered" and "registration"
refer to a registration effected by preparing and filing a registration
statement in compliance with the Act, and the declaration or ordering of
the effectiveness of such registration statement.
(f) "Registrable Common Stock" shall mean (i) KNE Common
Stock received as a result of the Merger by Stockholder and all other
stockholders of AOG who have executed similar Registration Rights
Agreements pursuant to Section 5.11 of the Merger Agreement and (ii) KNE
Common Stock beneficially owned by any affiliate of KNE who beneficially
owns in excess of 1% of the then outstanding shares of KNE Common Stock
as of the Effective Time and who enters into a registration rights
agreement similar to this Agreement.
(g) "Share Transfer Agreement" shall mean that certain Share
Transfer and Registration Agreement dated of even date herewith by and
between the Company and Stockholder.
1.02 Required Registration. At any time during a period of
five years following the date of consummation of the Merger, the Initiating
Holders may request that the Company effect a registration with respect to the
Registrable Common Stock, as follows:
(a) Request for Registration of Common Stock. In the event
that the Company shall receive from Initiating Holders a written request
that the Company effect any registration with respect to all or any part
but not less than 750,000 shares of the Registrable Common Stock, the
Company will: (i) promptly give written notice of the proposed
registration to all other Holders; and (ii) as soon as practicable, use
its diligent best efforts to effect all such registration, qualification
and compliance (including, without limitation, the execution of an
undertaking to file post-effective amendments, appropriate qualification
under applicable blue sky or other state securities laws and appropriate
compliance with applicable regulations issued under the Act) as may be
so requested and as would permit or facilitate the sale and distribution
of all or such portion of such Registrable Common Stock as is specified
in such request, together with all or such portion of the Registrable
Common Stock of any Holder or Holders thereof joining in such request as
are specified in a written request given within 30 days after receipt of
such written notice from the Company.
-2-
<PAGE> 54
(b) Underwriting. If the Initiating Holders intend to
distribute the Registrable Common Stock covered by their request by
means of an underwriting, they shall so advise the Company as a part of
their request made pursuant to this Section 1.02 and the Company shall
include such information in the written notice referred to in Section
1.02(a)(i). In such event, the right of any Holder to registration
pursuant to this Section 1.02 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion in the underwriting
of not less than 10% of the Registrable Common Stock held by such Holder
(unless otherwise mutually agreed by a majority in interest of the
Initiating Holders and such Holder) to the extent provided herein.
The Company shall (together with all Holders proposing to
distribute their Registrable Common Stock through such underwriting)
enter into an underwriting agreement in customary form with the
representative of the lead managing underwriter selected for such
underwriting by a majority in interest of the Initiating Holders and
approved by the Company, which approval shall not be unreasonably
withheld and any co-managing underwriters mutually selected for such
underwriting by a majority-in-interest of the Initiating Holders and the
Company, the approval of which selection shall not be unreasonably
withheld by either party. Notwithstanding any other provision of this
Section 1.02, if the underwriter determines, in good faith and
independent of any request by the Company, that marketing factors
require a limitation of the number of shares to be underwritten, and if
all directors or officers of the Company who had sought to have any of
their shares included in such registration shall have withdrawn all such
shares from registration, the underwriter may limit the number of shares
of Registrable Common Stock to be included in the registration and
underwriting to the extent such underwriter deems necessary. The
Company shall so advise all Holders, and the number of shares of
Registrable Common Stock that may be included in the registration and
underwriting shall be allocated among all Holders thereof in proportion,
as nearly as practicable, to the respective amounts of Registrable
Common Stock entitled to inclusion in such registration held by such
Holders at the time of filing the registration statement. If any Holder
of Registrable Common Stock disapproves of the terms of the
underwriting, such person may elect to withdraw therefrom by written
notice to the Company, the underwriter and the Initiating Holders and
the Registrable Common Stock so withdrawn shall also be withdrawn from
registration but shall be entitled to such registration rights granted
to such Registrable Common Stock pursuant to this Section 1.02 as may
thereafter remain in effect.
The Company and the holders of the Common Stock and of any other
security of the Company to whom the Company has granted registration
rights substantially identical to those granted to Holders of
Registrable Common Stock may include their respective securities for
their own accounts in such registration if the underwriter so agrees and
if the number of shares of Registrable Common Stock and other securities
which would otherwise have
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been included in such registration and underwriting will not thereby be
limited and if such inclusion will not otherwise adversely impact the
offering.
(c) Expenses of Requested Registration. The Company shall
bear all expenses incurred in connection with each registration,
qualification or compliance pursuant to Section 1.02(a), including,
without limitation, all registration, filing and qualification fees,
printing expenses, audit fees and fees and disbursements of counsel for
the Company and counsel for the underwriters, if any (unless any such
underwriter pays such counsel fees) (but excluding underwriter's
commissions, fees and expenses allocable to the Registrable Common Stock
of the Holders and fees of independent counsel, if any, for the Holders,
which commissions, fees and expenses and fees of counsel shall be borne
pro rata (by share) by the Holders electing to participate in such
requested registration).
(d) Limitations on Registration. Notwithstanding any
provision to the contrary in this Section 1.02, the Company shall not be
obligated to take any action to effect any such registration,
qualification or compliance pursuant to Section 1.02(a) if (i) reputable
counsel designated by the Company delivers an opinion to such Initiating
Holders, in form and substance satisfactory to such Initiating Holders,
to the effect that the Registrable Common Stock specified in the request
for registration may be sold or distributed as planned by the Initiating
Holders without registration or (ii) the Company has effected two
previous registrations pursuant to this Section 1.02(a). Additionally,
the Company shall not be obligated to include in any registration
statement effected pursuant to this Section 1.02, any shares of
Registrable Common Stock which are subject to an effective and current
shelf registration statement under the Share Transfer Agreement.
1.03 Registration Rights; Company Registration.
(a) Registration Initiated by the Company. In the event the
Company shall determine to register any shares of KNE Common Stock,
either for its own account or for the account of a security holder or
holders exercising their respective demand registration rights (other
than a shelf registration referred to in Section 1.02(d) or a
registration relating to stock options or employee benefit plans, the
Company's dividend reinvestment plan, or the acquisition or purchase by
or combination by merger or otherwise of the Company of or with another
company or business entity or partnership or a registration pursuant to
Section 1.02) the Company will:
(i) promptly give to each Holder written notice thereof
(which shall include a list of the jurisdictions in which the
Company intends to attempt to qualify such securities under the
applicable blue sky or other state securities laws); and
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(ii) include in such registration (and any related
qualification under blue sky laws or other compliance), and in
any underwriting involved therein, all the Registrable Common
Stock specified in a written request or requests, made within 30
days after receipt of such written notice from the Company, by
any Holder or Holders of such Registrable Common Stock, except as
set forth in Section 1.03(b) below.
(b) Underwriting. If the registration of which the Company
gives notice is for a registered public offering involving an
underwriting, the Company shall so advise the Holders as a part of the
written notice given pursuant to Section 1.03(a)(i). In such event, the
right of any Holder to registration pursuant to this Section 1.03 shall
be conditioned upon such Holder's participation in such underwriting and
the inclusion of such Holder's Registrable Common Stock in the
underwriting to the extent provided herein. All Holders proposing to
distribute their Registrable Common Stock through such underwriting
shall (together with the Company and the other holders (if any)
distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting by the Company.
Notwithstanding any other provision of this Section 1.03, if the
underwriter determines, in good faith and independent of any request by
the Company, that marketing factors require a limitation of the number
of shares to be underwritten, and if all directors or officers of the
Company who had sought to have any of their shares included in such
registration shall have withdrawn all such shares from registration, the
underwriter may limit the number of shares of Registrable Common Stock
to be included in the registration and underwriting to the extent such
underwriter deems necessary. The Company shall so advise all Holders,
and the number of shares of Registrable Common Stock that may be
included in the registration and underwriting shall be allocated among
all Holders thereof in proportion, as nearly as practicable, to the
respective amounts of Registrable Common Stock entitled to inclusion in
such registration held by such Holders at the time of filing the
registration statement. If any Holder disapproves of the terms of any
such underwriting, he may elect to withdraw therefrom by written notice
to the Company and the underwriter. Any Registrable Common Stock
excluded or withdrawn from such underwriting shall be withdrawn from
such registration.
(c) Expenses of Registration by the Company. The Company
shall bear all expenses incurred in connection with each registration,
qualification or compliance pursuant to this Section 1.03, including,
without limitation, all registration, filing and qualification fees,
printing expenses, audit fees and fees and disbursements of counsel for
the Company and counsel for the underwriters, if any (unless any such
underwriter pays such counsel fees) (but excluding underwriter's
commissions, fees and expenses allocable to the Registrable Common Stock
of the Holders and fees of independent counsel, if any, for the Holders,
which commissions, fees and expenses and fees of counsel
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shall be borne pro rata (by share) by the Holders electing to participate
in such requested registration).
(d) Limitations on Registration. The Company's obligation to
effect a registration under Section 1.03(a) shall expire five years from
the date of consummation of the Merger. Notwithstanding any provision
to the contrary in this Section 1.03, the Company shall not be obligated
to take any action to effect any such registration, qualification or
compliance pursuant to Section 1.03 if the Company has effected two
previous registrations pursuant to this Section 1.03. Additionally, the
Company shall not be obligated to include in any registration statement
effected pursuant to this Section 1.03, any shares of Registrable Common
Stock which are subject to an effective and current shelf registration
statement under the Share Transfer Agreement.
1.04 Registration Procedures. In the case of each
registration, qualification or compliance effected by the Company pursuant to
this Agreement pursuant to which Registrable Common Stock for a Holder is
included therein, the Company will keep such Holder advised in writing as to
the initiation of each registration, qualification and compliance and as to the
completion thereof. At its expense, the Company will:
(a) keep such registration, qualification or compliance
effective for a period of at least 120 days or until the Holder or
Holders have completed the distribution described in the registration
statement relating thereto, whichever first occurs;
(b) furnish such number of prospectuses and other documents
incident thereto as such Holder from time to time may reasonably
request; and
(c) list such Registrable Common Stock on each securities
exchange (if any) on which the Common Stock is listed.
1.05 Indemnification.
(a) The Company shall, if Registrable Common Stock held by a
Holder is included in the securities as to which such registration,
qualification or compliance is being effected, indemnify such Holder,
each of its officers and directors, and each person controlling such
Holder, with respect to which registration, qualification or compliance
has been effected pursuant to Section 1.02 or 1.03, and each
underwriter, if any, and each person who controls any underwriter,
against all claims, losses, damages and liabilities (or actions in
respect thereof) arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any
prospectus, offering circular or other document (including any related
registration statement, notification or the like) incident to any such
registration, qualification or compliance, or based on any omission (or
alleged omission) to state therein a
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material fact required to be stated therein or necessary to make the
statements not misleading, and will reimburse each such Holder, each
of its officers and directors, and each person controlling such Holder,
each such underwriter and each person who controls any such
underwriter, for any legal and any other expenses reasonably incurred
in connection with investigating or defending any such claim, loss,
damage, liability or action, provided that the Company will not be
liable in any such case to the extent that any such claim, loss, damage,
liability or expense arises out of or is based on any untrue statement
or mission based upon written information furnished to the Company by an
instrument duly executed by such Holder or underwriter and stated to be
specifically for use therein. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of such
party and shall survive the subsequent transfer of shares of Common
Stock by the seller thereof and the transfer of any shares of Common
Stock of the Company which were the subject of such registration,
qualification or listing.
(b) Each Holder will, if Registrable Common Stock held by such
Holder is included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company,
each of its directors and officers, each legal counsel and independent
accountant of the Company, each underwriter, if any, of the Company's
securities covered by such a registration statement, each person who
controls the Company or such underwriter within the meaning of the Act,
and each other Holder registering Registrable Common Stock, each of its
officers and directors and each person controlling such Holder, against
all claims, losses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or 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, and will reimburse the Company, such Holders, such
directors, officers, persons, underwriters or control persons for any
legal or any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or
action, in each case to the extent, but only to the extent, that such
untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering
circular or other document in reliance upon and in conformity with
written information furnished to the Company by an instrument duly
executed by such Holder and stated to be specifically for use therein;
provided, however, that (i) the obligations of such Holders hereunder
shall be limited to an amount equal to the proceeds to each such Holder
of Registrable Common Stock sold as contemplated herein and (ii) the
indemnity for untrue statements or omissions described above shall not
apply if the Holder providing such written information provides the
Company with such additional written information prior to the
effectiveness of the registration as is required to make the previously
supplied written information
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<PAGE> 59
true and complete, together with a description in reasonable detail of
the information previously supplied which was untrue or incomplete.
(c) Each party entitled to indemnification under this Section
1.05 (the "Indemnified Party") shall give notice to the party required
to provide indemnification (the "Indemnifying Party") promptly after
such Indemnified Party has actual knowledge of any claim as to which
indemnity may be sought, and shall permit the Indemnifying Party to
assume the defense of any such claim or any litigation resulting
therefrom, provided that counsel for the Indemnifying Party, who shall
conduct the defense of such claim or litigation, shall be approved by
the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense at
such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve
the Indemnifying Party of any obligations it may have otherwise than on
account of this Section 1.05. After notice from the Indemnifying Party
to the Indemnified Party of its election to assume the defense of such
claim or litigation, the Indemnifying Party will not be liable to such
Indemnified Party for any legal or other expenses subsequently incurred
by such Indemnified Party in connection with the defense thereof other
than reasonable costs of investigation, unless the Indemnifying Party
abandons the defense of such claim or litigation. No Indemnifying
Party, in the defense of any such claim or litigation, shall, except
with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to
such Indemnified Party of a release from all liability in respect to
such claim or litigation.
1.06 Information by Holder. The Holder or Holders of
Registrable Common Stock included in any registration shall furnish to the
Company such information regarding such Holder or Holders and the distribution
proposed by such Holder or Holders as the Company may reasonably request in
writing, and as shall be required in connection with any registration,
qualification or compliance referred to in this Agreement.
1.07 Postponement of Requested Registration. If, within five
days of the Company's receipt of a registration request from Initiating
Holders, the Company notifies such Initiating Holders in writing that effecting
the requested registration would materially and adversely affect a material
transaction then under current consideration by the Company, as determined by
the Board of Directors, and such determination is confirmed by an independent
investment banker satisfactory to the Initiating Holders, then the Company may
postpone its performance of its obligations hereunder for a period not to
exceed 90 days.
1.08 Amendments. This Agreement may not be modified, amended,
altered or supplemented except by way of a written agreement executed by each
of
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the parties hereto. However, either party may waive any condition to the
obligations of the other party hereunder.
1.09 Notices. All notices, requests, demands and other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given if delivered by hand or facsimilie transmission:
(a) If to the Company, to:
K N Energy, Inc.
370 Van Gordon Street
Lakewood, Colorado 80228
Attention: General Counsel
(b) If to Stockholder, to the address specified on the
signature page hereof.
1.10 Assignability and Assumption. The registration rights
granted hereunder to Stockholder may be assigned in whole or in part by
Stockholder to any affiliate in connection with a transfer of Registrable
Common Stock to such affiliate provided that (i) Stockholder shall remain
liable for its obligations hereunder, (ii) Stockholder provides the Company
with written notice of such assignment and (iii) the assignee of such rights
agrees in writing to be bound by the terms and conditions of this Agreement.
The Company agrees that any successor to the Company by merger or operation of
law shall be bound by the terms of this Agreement and the terms of this
Agreement shall apply to any securities of such successor received by
Stockholder in exchange for Registrable Common Stock.
IN WITNESS WHEREOF, the parties have executed this Agreement
this ______ day of ____________, 1994.
K N ENERGY, INC.
By: _______________________
Name: _____________________
Title: ____________________
<PAGE> 61
STOCKHOLDER:
________________________________
(Printed Name)
Signature: _____________________
Name: __________________________
Title, if applicable: __________
Stockholder's Address:
________________________________
________________________________
________________________________
________________________________
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<PAGE> 62
EXHIBIT 6.2(F)
ANDREWS & KURTH
(i) AOG is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware and has all requisite
corporate power and authority to carry on its business as now being conducted as
described in the Proxy Statement;
(ii) The appropriate filings have been made to cause the Merger to
become effective;
(iii) AOG has the requisite corporate power to merge with Sub as
contemplated by the Agreement;
(iv) The execution and delivery of the Agreement did not, and the
consummation of the Merger will not, violate any provisions of AOG's Amended and
Restated Certificate of Incorporation or By-laws; and
(v) The Agreement has been duly and validly authorized, executed and
delivered by AOG.
AOG GENERAL COUNSEL
The matters set forth in Section 2.2(d)(iv).
<PAGE> 63
EXHIBIT 6.3(G)
VINSON & ELKINS
(i) KNE is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Kansas and has all requisite
corporate power and authority to carry on its business as now being conducted as
described in the Registration Statement;
(ii) Sub is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware;
(iii) The appropriate filings have been made to cause the Merger to
become effective;
(iv) Sub has the requisite corporate power to merge with and into AOG
as contemplated by the Agreement;
(v) The execution and delivery of the Agreement did not, and the
consummation of the Merger will not, violate any provision of KNE's Restated
Articles of Incorporation or Bylaws, as amended, or Sub's Certificate of
Incorporation or Bylaws;
(vi) The Agreement has been duly and validly authorized, executed and
delivered by KNE and Sub;
(vii) The Registration Statement has become effective under the
Securities Act; and
(viii) The shares of KNE Common Stock to be delivered in connection
with the Merger are duly authorized and reserved for issuance and, when issued
in accordance with the terms and conditions of the Agreement, will be validly
issued, fully paid and nonassessable.
KNE GENERAL COUNSEL
(i) The matters set forth in Section 2.1(d)(iii) and (iv); and
(ii) The matters set forth in Section 2.1(s).
(iii) The amendments to the Bylaws set forth in Exhibit 6.3(k) have
been duly adopted by KNE and such amendments do not violate or contravene any
provision of the laws of the State of Kansas.
(iv) The Charter Amendment has been duly adopted.
<PAGE> 64
EXHIBIT 6.3(K)
AMENDMENT TO BY-LAWS
OF KN ENERGY, INC.
The Board of Directors of KNE shall adopt the following amendment to its
By-Laws as of the Effective Date:
"ARTICLE XII
SPECIAL MANAGEMENT PROVISIONS
Section 1. General. The provisions of this Article XII of the
By-Laws have been adopted by the Board of Directors of the Corporation pursuant
to that certain Agreement of Merger by and between the Corporation, KNE
Acquisition Corporation, a Delaware corporation, and American Oil and Gas
Corporation, a Delaware corporation dated March ___, 1994 (the "Merger
Agreement"). Capitalized terms used in this Article XII not otherwise defined
herein shall have the meaning ascribed to them in the Merger Agreement. The
provisions of this Article XII shall be effective from and after the Effective
Time notwithstanding any other provisions of these By-Laws to the contrary. In
the event of a conflict between the provisions of this Article XII and other
provisions of the By-Laws, the provisions of this Article XII shall control.
Section 2. Management Committee. The Corporation shall establish
a Management Committee consisting of four (4) members of the Board of
Directors. The initial members of the Management Committee shall consist of
David M. Carmichael (who shall serve as the Chairman), Charles W. Battey,
Edward H. Austin, Jr. and Larry D. Hall. The initial directors serving on the
Management Committee shall serve for a term which shall end upon the earlier of
(i) the date of such director's resignation, removal or failure to stand for
reelection to the Board of Directors, and (ii) the date of the Corporation's
annual meeting of stockholders in the year 1996. The duties delegated by the
Board of Directors to the Management Committee shall consist of (w) oversight
and direction of management decisions with respect to the day-to-day operations
of the Corporation and its subsidiaries, (x) oversight and direction of matters
relating to the integration and consolidation of the business, operations and
assets of the Corporation with those of American Oil and Gas Corporation and
its subsidiaries, (y) the duties, powers and procedures heretofore delegated to
the Executive Committee in Article VI of these Bylaws, and (z) such
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<PAGE> 65
EXHIBIT 6.3(K)
additional duties as are from time to time delegated to the Management
Committee by the Board of Directors. The Corporation shall not have an
Executive Committee.
Section 3. Vice-Chairman. The office of Vice-Chairman of the
Board shall be established by the Board of Directors. The Vice-Chairman shall
perform the duties of the Chairman of the Board as provided in these By-Laws in
the Chairman's absence and such additional duties as the Board of Directors may
prescribe from time to time.
Section 4. Chief Executive Officer/Chief Operating Officer. The
Board of Directors may elect only the Chief Executive Officer or the Chief
Operating Officer as President of the Corporation. The Chief Operating Officer
shall be elected by the Board of Directors upon recommendation of the
Management Committee.
Section 5. Cabot Director. For so long as Cabot Corporation
shall continue to own beneficially (within the meaning of Rule13d-3 promulgated
by the Securities and Exchange Commission) 10% or more of the issued and
outstanding voting stock of the Corporation, Cabot Corporation shall have the
right to designate one person to serve as an advisory director of the
Corporation. In the event beneficial ownership of Cabot Corporation of the
issued and outstanding voting stock of the Corporation falls below 10% but
constitutes more than 5%, the Board of Directors shall appoint the Cabot
Corporation advisory director as a full director, to serve the then remaining
term of a Class II director. For so long as Cabot Corporation continues to own
beneficially less than 10% but more than 5% of the issued and outstanding
voting stock of the Corporation, the Board of Directors shall nominate a Cabot
Corporation designee (provided that such nominee is otherwise qualified as
required by these Bylaws) for election by the Corporation's shareholders as a
director. The Corporation shall at all times during which Cabot Corporation
shall beneficially own in excess 10% of the issued and outstanding voting stock
of the Corporation, maintain a vacancy on its Board of Directors for such Cabot
designee.
Section 6. Terms of Office for Certain Officers. The persons
designated as of the Effective Time to hold the offices of Chairman of the
Board, Vice Chairman of the Board, President, Chief Executive Officer and
Chairman of the Management Committee will be elected to terms commencing as of
the Effective Time and terminating on the date of the Corporation's annual
meeting of stockholders in 1996.
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EXHIBIT 6.3(K)
After such date, notwithstanding any other provision of this Article XII to the
contrary, such officers shall be elected by majority of the Board of Directors.
Section 7. Vacancies in Certain Offices. Any vacancy arising
following the Effective Time and prior to the Corporation's Annual Meeting of
Stockholders in 1996, in the offices of the Chairman of the Board,
Vice-Chairman of the Board, President, Chief Executive Officer or Chief
Operating Officer, or on the Management Committee or the Chairman of the
Management Committee, shall be filled by the Board of Directors upon
recommendation by a Special Nominating Committee of the Board of Directors.
The Board of Directors shall by majority vote establish a Special Nominating
Committee in the event of a vacancy in any of the foregoing positions. The
Special Nominating Committee shall consist of four directors, two of whom shall
be designated by the Board of Directors from the directors of the Corporation
who served as a director prior to the Effective Time, and two of whom shall be
designated by the directors designated by American Oil and Gas Corporation in
the Merger Agreement.
Section 8. Continuation of Retirement Policy. The Corporation
shall continue its present retirement policy that officers of the Corporation
(including the Chairman of the Board, Vice-Chairman of the Board, President and
Chief Executive Officer or Chief Operating Officer) shall be ineligible and
cease to serve as an officer of the Corporation as of the first of the month
coincident with or next following his or her 65th birthday.
Section 9. Super Majority Vote. For purposes of this Article
XII, the term "Super Majority Vote" shall mean the affirmative vote of at least
12 of a 14 member Board of Directors; at least 11 of a 13 member Board of
Directors; at least 10 of a 12 member Board of Directors; at least 9 of an 11
member Board of Directors; or in all other cases, the affirmative vote of a
number of directors equal to at least 85% of the total number of directors. A
Super Majority Vote shall be required for the following actions to be taken by
the Board of Directors: (i) amendment, modification or revocation of any
provision of this Article XII; (ii) amendment, modification or revocation of
the current retirement policy of the Corporation; and (iii) any increase in the
number of members to serve on the Board of Directors; provided that, no Super
Majority Vote shall be required for any such action taken by the Board of
Directors from and after the date of the annual stockholders meeting for 1997."
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Exhibit 99.1
To Form 8-K
AMERICAN OIL AND GAS CORPORATION NEWS RELEASE
KN ENERGY
K N ENERGY AND AMERICAN OIL AND GAS
ENTER INTO MERGER AGREEMENT
Lakewood, CO/Houston, TX -- K N Energy, Inc. (NYSE-KNE) and American Oil and
Gas Corporation (NYSE-AOG) jointly announced today they had signed a definitive
merger agreement to combine the two companies.
TRANSACTION STRUCTURE
The contemplated merger will be a tax-free exchange of common stock, in which
0.47 of a share of K N Energy common stock will be exchanged for each
outstanding share of American Oil and Gas. Following the merger, the combined
company will have approximately 28 million shares of common stock outstanding.
The proposed merger will require approval by the shareholders of both
companies, as well as specific regulatory and lender approvals. Closing is
anticipated within the next 90 to 120 days.
"We view this important merger as a marriage of two complementary companies
with the ability to capitalize on their respective strengths," said Charles W.
Battey, K N Energy chairman and chief executive officer. "Shareholders will
benefit as a result of the new company's strong financial position, attractive
dividend yield and prospects for future growth."
"The merger will create a strategic alliance and will better position the
combined company to take advantage of growth opportunities," said David M.
Carmichael, chairman and chief executive officer of American Oil and Gas. "We
believe the new company will be a significant player in the evolving North
American gas markets by virtue of its strong access to supply and markets."
The merger will combine two geographically distinct gas systems with
complementary supply basins, service territories, and target marketing areas.
The proximity of the two companies' Rocky Mountain and Mid-Continent operating
regions enhances the opportunity to integrate facilities and services, and
compete more effectively in the natural gas industry.
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FINANCIAL CONSIDERATIONS
At December 31, 1993, the pro forma combined companies would have had
approximately $1.2 billion in assets, $1.0 billion in annual revenues and $31
million in annual net income. Also, pro forma combined pre-tax cash flow from
operations, defined as operating income plus depreciation, depletion and
amortization, would have been $123 million. The merger is expected to be
accounted for as a pooling of interests, in which the resources and the
reported financial statements of the two entities are consolidated.
The parties anticipate the merger will provide substantial operating benefits.
The benefits are expected to increase cash flow from operations and provide for
positive earnings momentum once the combination is completed and the one-time
charges associated with the combination have been absorbed.
The combined entity will have equity capital of approximately $392 million, and
a long-term debt to total capitalization ratio of approximately 45 percent,
which will provide significant financial flexibility. This ratio compares to
an average long-term debt to total capitalization ratio of 50 percent among
diversified natural gas companies and about 55 percent among natural gas
gathering, transportation and marketing companies.
K N Energy's most recent declared quarterly common stock dividend was $0.24 per
share, payable March 31, 1994; American Oil and Gas does not pay a common stock
dividend. It is anticipated that the combined company will maintain a $0.24
per share quarterly dividend level on common stock after the merger.
BUSINESS OPPORTUNITIES
The combined company will be a major pipeline participant in the natural gas
gathering, transportation and marketing sector, particularly in the Rocky
Mountain and Mid-Continent regions of the United States. The combined entity
will market, sell and transport an aggregate of 1.5 billion cubic feet of
natural gas per day -- almost three percent of total United States natural gas
consumption.
GAS SALES AND MARKETING: For 1993, the total sales of natural gas of the two
companies was approximately 333 billion cubic feet. K N Energy's traditional
service territory has a high winter heating demand for natural gas, while
American Oil and Gas's service territory has a higher demand in the summer when
natural gas is used for electricity generation and to power irrigation pump
engines. The balanced load that results from the combined company's strong
year-round demand will enhance market access for producers and provide a
diverse, competitive gas supply for customers.
The combined company will have greater access to multiple pipeline market
centers, or trading hubs, thereby enhancing the ability to market gas to a
broader customer base on the nationwide natural gas pipeline system. Market
centers are physical pipeline interconnects among a number of pipelines where
natural gas is bought, sold, delivered and transferred for short and long-term
customer needs. The natural gas industry's use of market centers increased
dramatically during the abnormally cold winter of 1993-1994 and contributed to
the
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<PAGE> 3
success of the industry in meeting marketplace demands. American Oil and Gas's
systems connect with the Waha market center in West Texas and with K N Energy's
Buffalo Wallow market center in the Texas Panhandle.
GAS TRANSPORTATION AND STORAGE: The combined company will have over 18,700
total miles of transmission and gathering pipeline that serve direct markets
and also interconnect with other major pipelines. The new company will offer
natural gas shippers greater access to diverse supply regions and to natural
gas markets throughout the United States and, therefore, will be better able to
utilize existing pipeline system capacity. K N Energy was successful in
increasing the total throughput on its pipeline systems by 70 percent between
1988 and 1993. The combined management team will focus its efforts on
maximizing throughput on all of the merged company's systems.
In addition, the combined company will have initial core working gas storage
capacity of 28 billion cubic feet, with an additional three billion cubic feet
of high-deliverability salt cavern storage under development. The locations of
the principal storage fields in southwestern Nebraska and in western Texas
offer customers flexible storage options to meet peaking needs and seasonal
load management requirements. American Oil and Gas's storage sites are located
near the Waha, Texas market center and are directly connected to K N Energy's
Buffalo Wallow market center through the Red River Pipeline, operated by
American Oil and Gas.
NATURAL GAS GATHERING AND PROCESSING: The combined company will operate
nonregulated gathering and processing facilities in six Rocky Mountain and
Mid-Continent states. The company will have operations in some of the largest
and most prolific gas-producing areas in the U.S., stretching from the Wind
River and Powder River Basins in Wyoming, south through the Denver-Julesburg
basin in Colorado, the Anadarko Basin and Hugoton Embayment in Kansas, Oklahoma
and Texas, to the Permian Basin in southwestern Texas.
For 1993, total processing plant hydrocarbon liquid sales of the two companies
were 320 million gallons. This accounted for approximately 10 percent of 1993
aggregate revenues of the two companies.
CONSOLIDATION EFFICIENCIES: The combined entity's diversity of operations in
all facets of the natural gas value stream allows it to moderate the potential
risks of any one sector of the industry. The combined company will attain
economies of scale in operations and will be able to reduce overall
administrative overhead costs, making it a more competitive service provider
from the natural gas wellhead to the burnertip.
MANAGEMENT AND GOVERNANCE
Upon closing of the transaction, Charles W. Battey, chairman and chief
executive officer of K N Energy, will serve as chairman of the board of the
combined company, Larry D. Hall, K N Energy's president and chief operating
officer, will serve as president and chief executive officer of the combined
company, and David M. Carmichael, chairman and chief executive
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officer of American Oil and Gas, will serve as vice chairman of the combined
company. Prior to closing, Dan Dienstbier will continue as president of
American Oil and Gas and will help accomplish the integration of the two
companies.
Also, upon closing, K N Energy's Board of Directors will be increased from 10
to 14 directors, as a result of adding four current directors of American Oil
and Gas. Cabot Corporation, American Oil and Gas's largest shareholder, will
be represented at board of directors' meetings of the combined company via a
single, non-voting, advisory director. Cabot owns approximately 35 percent of
the outstanding shares of American Oil and Gas, and would own approximately 15
percent of the outstanding common stock of the combined company at the time of
merger.
OPERATIONS DESCRIPTIONS
K N Energy is a natural gas services company focusing on gas reserves
development, gas gathering, processing, marketing, storage, transportation and
retail gas distribution services. The Company, with 1,735, employees, operates
in seven states and serves customers, including 232,000 direct retail
customers, through three pipeline systems.
American Oil and Gas operates principally in Texas in the mid-stream segment of
the natural gas industry, providing essential services between the wellhead and
the end user. These services include marketing, storage, transportation,
gathering and processing. American Oil and Gas has 409 employees.
Petrie Parkman & Co. and Rauscher Pierce Refsnes, Inc. are serving as financial
advisors to K N Energy in connection with the merger, and Goldman, Sachs & Co.
is serving in the same capacity for American Oil and Gas.
# # #
(A TABLE OF SUMMARY 1993 FINANCIAL AND STATISTICAL INFORMATION RELATING TO THE
TWO COMPANIES FOLLOWS.)
RELEASE DATE: Immediate Release, Thursday, March 24, 1994
CONTACTS: K N ENERGY, INC.
Dick Buxton (303) 763-3472
Dave Loiseau (303) 763-3494
AMERICAN OIL AND GAS CORPORATION
Tom Fanning (713) 739-2960
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K N ENERGY, INC. AND AMERICAN OIL AND GAS CORPORATION
SUMMARY FINANCIAL AND STATISTICAL INFORMATION
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1993
---------------------------------------------------
AMERICAN PRO FORMA
K N ENERGY OIL AND GAS COMBINED
---------- ----------- --------
<S> <C> <C> <C> <C>
FINANCIAL INDICATORS
--------------------
(Dollars in Millions)
Operating Revenue $ 493 $ 539 $ 1,032
Operating Costs 434 518 952
------ ------ -------
Operating Income 59 21 80
Net Income $ 24 $ 7 $ 31
------ ------ -------
Pre-Tax Cash Flow From Operations $ 85 $ 38 $ 123
(Operating Income + DD&A)
Assets $ 731 $ 422 $ 1,153
Common Equity $ 202 $ 190 $ 392
Long-Term Debt % of Total Capitalization 52% 35% 45%
STATISTICS
----------
Natural Gas Sales, Bcf 129 204 333
Natural Gas Transported, Bcf 100 111 211
Average Daily Throughput (Sales Plus 627 871 1,498
Transport), MMcf
Natural Gas Liquids Sales, Million Gallons 145 175 320
Transmission and Gathering Pipeline, Miles 12,500 6,200 18,700
Bcf = billion cubic feet
MMcf = million cubic feet
</TABLE>
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