AGREEMENT AND PLAN OF MERGER among KNIGHT HOLDCO LLC, KNIGHT ACQUISITION CO. and KINDER MORGAN, INC. Dated as of August 28, 2006
EXHIBIT
2.1
AGREEMENT
AND PLAN OF MERGER
among
KNIGHT
HOLDCO LLC,
KNIGHT
ACQUISITION CO.
and
▇▇▇▇▇▇
▇▇▇▇▇▇, INC.
Dated
as
of August 28, 2006
TABLE OF CONTENTS
Pages
|
ARTICLE
I
THE MERGER
|
2
|
|
|
Section
1.1
|
The
Merger
|
2
|
|
Section
1.2
|
Closing
|
2
|
|
Section
1.3
|
Effective
Time
|
2
|
|
Section
1.4
|
Effects
of the Merger
|
2
|
|
Section
1.5
|
Articles
of Incorporation and By-laws of the Surviving Corporation
|
3
|
|
Section
1.6
|
Directors
|
3
|
|
Section
1.7
|
Officers
|
3
|
|
ARTICLE
II
CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES
|
3
|
|
|
Section
2.1
|
Effect
on Capital Stock
|
3
|
|
Section
2.2
|
Exchange
of Certificates
|
5
|
|
Section
2.3
|
Timing
of Equity Rollover
|
7
|
|
ARTICLE
III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
|
7
|
|
|
Section
3.1
|
Qualification,
Organization, Subsidiaries, etc.
|
8
|
|
Section
3.2
|
Capital
Stock
|
9
|
|
Section
3.3
|
Subsidiaries
and Company Joint Ventures
|
10
|
|
Section
3.4
|
Corporate
Authority Relative to This Agreement; No Violation
|
11
|
|
Section
3.5
|
Reports
and Financial Statements
|
12
|
|
Section
3.6
|
Internal
Controls and Procedures
|
13
|
|
Section
3.7
|
No
Undisclosed Liabilities
|
14
|
|
Section
3.8
|
Compliance
with Law; Permits
|
14
|
|
Section
3.9
|
Environmental
Laws and Regulations
|
15
|
|
Section
3.10
|
Employee
Benefit Plans
|
16
|
|
Section
3.11
|
Interested
Party Transactions
|
17
|
|
Section
3.12
|
Absence
of Certain Changes or Events
|
18
|
|
Section
3.13
|
Investigations;
Litigation
|
18
|
|
Section
3.14
|
Proxy
Statement; Other Information
|
18
|
|
Section
3.15
|
Tax
Matters
|
19
|
|
Section
3.16
|
Labor
Matters
|
20
|
|
Section
3.17
|
Intellectual
Property
|
21
|
|
Section
3.18
|
Property
|
21
|
|
Section
3.19
|
Insurance
|
22
|
|
Section
3.20
|
Opinion
of Financial Advisor
|
22
|
|
Section
3.21
|
Required
Vote of the Company Stockholders
|
22
|
|
Section
3.22
|
Material
Contracts
|
23
|
|
Section
3.23
|
Finders
or Brokers
|
23
|
|
Section
3.24
|
State
Takeover Statutes; Charter Provisions
|
24
|
|
ARTICLE
IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER
SUB
|
24
|
|
|
Section
4.1
|
Qualification;
Organization
|
24
|
|
Section
4.2
|
Corporate
Authority Relative to This Agreement; No Violation
|
24
|
|
Section
4.3
|
Proxy
Statement; Other Information
|
25
|
|
Section
4.4
|
Financing
|
25
|
|
Section
4.5
|
Ownership
and Operations of Merger Sub
|
26
|
|
Section
4.6
|
Finders
or Brokers
|
26
|
|
Section
4.7
|
Ownership
of Shares
|
26
|
|
Section
4.8
|
Certain
Arrangements
|
26
|
|
Section
4.9
|
Investigations;
Litigation
|
27
|
|
Section
4.10
|
Guarantees
|
27
|
|
Section
4.11
|
No
Other Information
|
27
|
|
Section
4.12
|
Access
to Information; Disclaimer.
|
27
|
|
ARTICLE
V
COVENANTS AND AGREEMENTS
|
28
|
|
|
Section
5.1
|
Conduct
of Business by the Company
|
28
|
|
Section
5.2
|
Investigation
|
31
|
|
Section
5.3
|
No
Solicitation
|
32
|
|
Section
5.4
|
Filings;
Other Actions.
|
35
|
|
Section
5.5
|
Stock
Options and Other Stock-Based Awards; Employee Matters
|
36
|
|
Section
5.6
|
Efforts
|
39
|
|
Section
5.7
|
Takeover
Statute
|
41
|
|
Section
5.8
|
Public
Announcements
|
41
|
|
Section
5.9
|
Indemnification
and Insurance
|
42
|
|
Section
5.10
|
Financing
|
44
|
|
Section
5.11
|
[Intentionally
omitted.]
|
45
|
|
Section
5.12
|
Stockholder
Litigation
|
45
|
|
Section
5.13
|
Notification
of Certain Matters
|
46
|
|
Section
5.14
|
Rule
16b-3
|
46
|
|
Section
5.15
|
Control
of Operations
|
46
|
|
Section
5.16
|
Certain
Transfer Taxes
|
46
|
|
ARTICLE
VI
CONDITIONS TO THE MERGER
|
47
|
|
|
Section
6.1
|
Conditions
to Each Party’s Obligation to Effect the Merger
|
47
|
|
Section
6.2
|
Conditions
to Obligation of the Company to Effect the Merger
|
47
|
|
Section
6.3
|
Conditions
to Obligation of Parent and Merger Sub to Effect the
Merger
|
48
|
|
ARTICLE
VII
TERMINATION
|
49
|
|
|
Section
7.1
|
Termination
or Abandonment
|
49
|
|
Section
7.2
|
Termination
Fees
|
51
|
|
ARTICLE
VIII
MISCELLANEOUS
|
54
|
|
|
Section
8.1
|
No
Survival of Representations and Warranties
|
54
|
|
Section
8.2
|
Expenses
|
54
|
|
Section
8.3
|
Counterparts;
Effectiveness
|
54
|
|
Section
8.4
|
Governing
Law
|
54
|
|
Section
8.5
|
Jurisdiction;
Enforcement
|
54
|
|
Section
8.6
|
WAIVER
OF JURY TRIAL
|
55
|
|
Section
8.7
|
Notices
|
55
|
|
Section
8.8
|
Assignment;
Binding Effect
|
56
|
|
Section
8.9
|
Severability
|
57
|
|
Section
8.10
|
Entire
Agreement; No Third-Party Beneficiaries
|
57
|
|
Section
8.11
|
Amendments;
Waivers
|
57
|
|
Section
8.12
|
Headings
|
57
|
|
Section
8.13
|
Interpretation
|
57
|
|
Section
8.14
|
No
Recourse
|
58
|
|
Section
8.15
|
Determinations
by the Company.
|
58
|
|
Section
8.16
|
Certain
Definitions
|
58
|
AGREEMENT
AND PLAN OF MERGER, dated as of August 28, 2006 (this “Agreement”),
among
Knight Holdco LLC, a Delaware limited liability company (“Parent”),
Knight Acquisition Co., a Kansas corporation and a wholly owned subsidiary
of
Parent (“Merger
Sub”),
and
▇▇▇▇▇▇ ▇▇▇▇▇▇, Inc., a Kansas corporation (the “Company”).
WITNESSETH
:
WHEREAS,
the parties intend that Merger Sub be merged with and into the Company, with
the
Company surviving that merger on the terms and subject to the conditions set
forth in this Agreement (the “Merger”);
WHEREAS,
the Board of Directors of the Company, acting upon the unanimous recommendation
of the Special Committee, has unanimously (with three directors abstaining)
(i)
determined that it is in the best interests of the Company and its stockholders,
and declared it advisable, to enter into this Agreement, (ii) approved the
execution, delivery and performance by the Company of this Agreement and the
consummation of the transactions contemplated hereby, including the Merger
and
(iii) resolved to recommend adoption of this Agreement by the stockholders
of
the Company;
WHEREAS,
the Board of Directors of Merger Sub and the Members of Parent have each
unanimously approved this Agreement and declared it advisable for Merger Sub
and
Parent, respectively, to enter into this Agreement;
WHEREAS,
certain existing stockholders of the Company desire to contribute Shares (as
hereinafter defined) to Parent or one or more of its Subsidiaries immediately
prior to the Effective Time in exchange for limited liability company interests
of Parent;
WHEREAS,
concurrently with the execution of this Agreement, as a condition and inducement
to Parent and Merger Sub’s willingness to enter into this Agreement, Parent,
Merger Sub and certain stockholders of the Company are entering into a voting
agreement, of even date herewith (the “Voting
Agreement”)
pursuant to which such stockholders have agreed, subject to the terms thereof,
to vote their respective Shares (as defined below) in favor of adoption of
this
Agreement;
WHEREAS,
concurrently with the execution of this Agreement, and as a condition and
inducement to the Company’s willingness to enter into this Agreement, each of GS
Capital Partners V Fund, L.P., GS Global Infrastructure Partners I, L.P., AIG
Financial Products Corp., Carlyle Partners IV, L.P. and Carlyle/Riverstone
Global Energy and Power Fund III, L.P. (together, the “Guarantors”)
have
provided a guarantee (together, the “Guarantees”)
in
favor of the Company, in the form set forth on Section 4.10 of the Parent
Disclosure Letter, with respect to the performance by Parent and Merger Sub,
respectively, of their obligations under this Agreement; and
WHEREAS,
Parent, Merger Sub and the Company desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and the
transactions contemplated by this Agreement and also to prescribe certain
conditions to the Merger as specified herein.
NOW,
THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements contained herein, and intending to be
legally bound hereby, Parent, Merger Sub and the Company hereby agree as
follows:
ARTICLE
I
THE
MERGER
Section
1.1 The
Merger.
At the
Effective Time (as hereinafter defined), upon the terms and subject to the
conditions set forth in this Agreement and in accordance with the applicable
provisions of the General Corporation Code of the State of Kansas (the
“KGCC”),
Merger Sub shall be merged with and into the Company, whereupon the separate
corporate existence of Merger Sub shall cease, and the Company shall continue
as
the surviving company in the Merger (the “Surviving
Corporation”)
and an
wholly owned subsidiary of Parent.
Section
1.2 Closing.
The
closing of the Merger (the “Closing”)
shall
take place at the offices of Weil, Gotshal & ▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ at 10:00 a.m., local time, on a date to be specified by
the
parties (the “Closing
Date”)
which
shall be no later than the later of (i) the second Business Day after the
satisfaction or waiver (to the extent permitted by applicable Law (as
hereinafter defined)) of the conditions set forth in ARTICLE
VI
(other
than those conditions that by their nature are to be satisfied at the Closing,
but subject to the satisfaction or waiver of such conditions) or (ii) the
date
of completion of the Marketing Period (or, if Parent so notifies the Company,
a
date during the Marketing Period not less than three Business Days following
such notice to the Company), or at such other place, date and time as the
Company and Parent may agree in writing.
Section
1.3 Effective
Time.
On the
Closing Date, the Company shall cause the Merger to be consummated by executing
and filing a certificate of merger (the “Certificate
of Merger”)
with
the Secretary of State of the State of Kansas in accordance with
Section 17-6701 of the KGCC. The Merger shall become effective at such time
as the Certificate of Merger is duly filed with the Secretary of State of
the
State of Kansas, or at such later date or time as may be agreed by Parent
and
the Company in writing and specified in the Certificate of Merger in accordance
with the KGCC (such time as the Merger becomes effective is referred to herein
as the “Effective
Time”).
Section
1.4 Effects
of the Merger.
The
Merger shall have the effects set forth in this Agreement and the applicable
provisions of the KGCC.
2
Section
1.5 Articles
of Incorporation and By-laws of the Surviving Corporation.
(a) The
articles of incorporation of the Company, as in effect immediately prior
to the
Effective Time, shall be the articles of incorporation of the Surviving
Corporation until thereafter amended in accordance with the provisions
thereof,
hereof and applicable Law, in each case consistent with the obligations
set
forth in Section
5.9.
(b) The
by-laws of Merger Sub, as in effect at the Effective Time, shall be the by-laws
of the Surviving Corporation until thereafter amended in accordance with
the
provisions thereof, hereof and applicable Law, in each case consistent with
the
obligations set forth in Section
5.9.
Section
1.6 Directors.
Subject
to applicable Law, the directors of Merger Sub immediately prior to the
Effective Time shall be the initial directors of the Surviving Corporation
and
shall hold office until their respective successors are duly elected and
qualified, or their earlier death, resignation or removal.
Section
1.7 Officers.
The
officers of the Company immediately prior to the Closing Date shall be the
initial officers of the Surviving Corporation and shall hold office until
their
respective successors are duly elected and qualified, or their earlier death,
resignation or removal.
ARTICLE
II
CONVERSION
OF SHARES; EXCHANGE OF CERTIFICATES
Section
2.1 Effect
on Capital Stock.
At the
Effective Time, by virtue of the Merger and without any action on the part
of
the Company, Merger Sub or the holders of any securities of the Company or
Merger Sub:
(a) Conversion
of Company Common Stock.
Subject
to Section
2.1(b),
2.1(d)
and 2.1(e), each issued and outstanding share of common stock, par value
$5.00
per share, of the Company outstanding immediately prior to the Effective
Time
(such shares, collectively, “Company
Common Stock”,
and
each, a “Share”),
other
than (i) any Shares held by any direct or indirect wholly owned subsidiary
of
the Company, which Shares shall remain outstanding except that the number
of
such Shares shall be appropriately adjusted in the Merger (the “Remaining
Shares”),
(ii)
any Cancelled Shares (as defined, and to the extent provided in, Section
2.1(b))
and
(iii) any Dissenting Shares (as defined, and to the extent provided in,
Section
2.1(e))
shall
thereupon be converted automatically into and shall thereafter represent
the
right to receive $107.50 in cash (the “Merger
Consideration”).
All
Shares that have been converted into the right to receive the Merger
Consideration as provided in this Section
2.1
shall be
automatically cancelled and shall cease to exist, and the holders of
certificates which immediately prior to the Effective Time represented such
Shares shall cease to have any rights with respect to such Shares other than
the
right to receive the Merger Consideration.
3
(b) Parent
and Merger Sub-Owned Shares.
Each
Share that is owned, directly or indirectly, by Parent or Merger Sub immediately
prior to the Effective Time, if any, or held by the Company immediately prior
to
the Effective Time (in each case, other than any such Shares held on behalf
of
third parties) (the “Cancelled
Shares”)
shall,
by virtue of the Merger and without any action on the part of the holder
thereof, be cancelled and retired and shall cease to exist, and no consideration
shall be delivered in exchange for such cancellation and
retirement.
(c) Conversion
of Merger Sub Common Stock.
At the
Effective Time, by virtue of the Merger and without any action on the part
of
the holder thereof, each share of common stock, par value $0.01 per share,
of
Merger Sub issued and outstanding immediately prior to the Effective Time
shall
be converted into and become one validly issued, fully paid and nonassessable
share of common stock, par value $0.01 per share, of the Surviving Corporation
and shall with the Remaining Shares constitute the only outstanding shares
of
capital stock of the Surviving Corporation. From and after the Effective
Time,
all certificates representing the common stock of Merger Sub shall be deemed
for
all purposes to represent the number of shares of common stock of the Surviving
Corporation into which they were converted in accordance with the immediately
preceding sentence.
(d) Adjustments.
If at
any time during the period between the date of this Agreement and the Effective
Time, any change in the outstanding shares of capital stock of the Company,
or
securities convertible or exchangeable into or exercisable for shares of
capital
stock, shall occur as a result of any reclassification, recapitalization,
stock
split (including a reverse stock split) or subdivision or combination, exchange
or readjustment of shares, or any stock dividend or stock distribution with
a
record date during such period (excluding, in each case, normal quarterly
cash
dividends), merger or other similar transaction, the Merger Consideration
shall
be equitably adjusted to reflect such change; provided
that
nothing herein shall be construed to permit the Company to take any action
with
respect to its securities that is prohibited by the terms of this
Agreement.
(e) Dissenters’
Rights.
Notwithstanding anything in this Agreement to the contrary, shares of Company
Common Stock that are issued and outstanding immediately prior to the Effective
Time and which are held by a stockholder who did not vote in favor of the
Merger
(or consent thereto in writing) and who is entitled to demand and properly
demands appraisal of such shares pursuant to, and who complies in all respects
with, the provisions of Section 17-6712 of the KGCC (the “Dissenting
Stockholders”),
shall
not be converted into or be exchangeable for the right to receive the Merger
Consideration (the “Dissenting
Shares,”
and
together with the Cancelled Shares, the “Excluded
Shares”),
but
instead such holder shall be entitled to payment of the appraised value of
such
shares in accordance with the provisions of Section 17-6712 of the KGCC
(and at the Effective Time, such Dissenting Shares shall no longer be
outstanding and shall automatically be canceled and shall cease to exist,
and
such holder shall cease to have any rights with respect thereto, except the
right to receive the appraised value of such Dissenting Shares in accordance
with the provisions of Section 17-6712 of the KGCC), unless and until such
holder shall have failed to perfect or shall have effectively withdrawn or
lost
rights to appraisal under the KGCC. If any Dissenting Stockholder shall have
failed to perfect or shall have effectively withdrawn or lost such right,
such
holder’s shares of Company Common Stock shall thereupon be treated as if they
had been converted into and become exchangeable for the right to receive,
as of
the Effective Time, the Merger Consideration for each such share of Company
Common Stock, in accordance with Section
2.1(a),
without
any interest thereon. The Company shall give Parent (i) prompt notice of
any
written demands for appraisal of any shares of Company Common Stock, attempted
withdrawals of such demands and any other instruments served pursuant to
the
KGCC and received by the Company relating to stockholders’ rights of appraisal
and (ii) the opportunity to participate in negotiations and proceedings with
respect to demands for appraisal under the KGCC. The Company shall not, except
with the prior written consent of Parent, voluntarily make any payment with
respect to, or settle, or offer or agree to settle, any such demand for payment.
Any portion of the Merger Consideration made available to the Paying Agent
pursuant to Section
2.2
to pay
for shares of Company Common Stock for which appraisal rights have been
perfected shall be returned to Parent upon demand.
4
Section
2.2 Exchange
of Certificates.
(a) Paying
Agent.
At or
prior to the Effective Time, Parent shall deposit, or shall cause to be
deposited, with a U.S. bank or trust company that shall be appointed by Parent
and approved by the Company in writing (such approval not to be unreasonably
withheld) to act as a paying agent hereunder (the “Paying
Agent”),
in
trust for the benefit of holders of the Shares, the Company Stock Options
(as
hereinafter defined) and the Company Stock-Based Awards (as hereinafter
defined), cash in U.S. dollars sufficient to pay (i) the aggregate Merger
Consideration in exchange for all of the Shares outstanding immediately prior
to
the Effective Time (other than the Excluded Shares and the Remaining Shares)
pursuant to the provisions of this ARTICLE
II
and (ii)
the Option and Stock-Based Consideration (as hereinafter defined) payable
pursuant to Section
5.5
(such
cash referred to in subsections (a)(i) and (a)(ii) being hereinafter referred
to
as the “Exchange
Fund”).
(b) Payment
Procedures.
(i) As
soon
as reasonably practicable after the Effective Time and in any event not later
than the fifth Business Day following the Effective Time, the Paying Agent
shall
mail (x) to each holder of record of Shares whose Shares were converted
into the Merger Consideration pursuant to Section
2.1,
(A) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the certificates that immediately
prior
to the Effective Time represented Shares (“Certificates”)
shall
pass, only upon delivery of Certificates (to the Paying Agent and shall be
in
such form and have such other provisions as Parent and the Company may
reasonably determine prior to the Effective Time) and (B) instructions for
use in effecting the surrender of Certificates (or effective affidavits of
loss
in lieu thereof) or non-certificated Shares represented by book-entry
(“Book-Entry
Shares”)
in
exchange for the Merger Consideration and (y) to each holder of a Company
Stock Option or a Company Stock-Based Award, a check in an amount due and
payable to such holder pursuant to Section
5.5
hereof
in respect of such Company Stock Option or Company Stock-Based
Award.
5
(ii) Upon
surrender of Certificates (or effective affidavits of loss in lieu thereof)
or
Book-Entry Shares to the Paying Agent together with such letter of transmittal,
duly completed and validly executed in accordance with the instructions thereto,
and such other documents as may customarily be required by the Paying Agent,
the
holder of such Certificates or Book-Entry Shares shall be entitled to receive
in
exchange therefor a check in an amount equal to the product of (x) the
number of Shares represented by such holder’s properly surrendered Certificates
(or effective affidavits of loss in lieu thereof) and Book-Entry Shares
multiplied by (y) the Merger Consideration. No interest will be paid or
accrued on any amount payable upon due surrender of Certificates or Book-Entry
Shares. In the event of a transfer of ownership of Shares that is not registered
in the transfer or stock records of the Company, a check for any cash to
be paid
upon due surrender of the Certificate formerly representing such Shares may
be
paid to such a transferee if such Certificate is presented to the Paying
Agent,
accompanied by all documents required to evidence and effect such transfer
and
to evidence that any applicable stock transfer or other Taxes (as hereinafter
defined) have been paid or are not applicable.
(iii) The
Surviving Corporation, Parent and the Paying Agent shall be entitled to deduct
and withhold from the consideration otherwise payable under this Agreement
to
any holder of Shares or holder of Company Stock Options or Company Stock-Based
Awards, such amounts as are required to be withheld or deducted under the
Internal Revenue Code of 1986, as amended (the “Code”),
or
any provision of U.S. state, local or foreign Tax Law with respect to the
making
of such payment. To the extent that amounts are so withheld or deducted and
paid
over to the applicable Governmental Entity (as hereinafter defined), such
withheld or deducted amounts shall be treated for all purposes of this Agreement
as having been paid to the holder of the Shares or holder of the Company
Stock
Options or Company Stock-Based Awards, in respect of which such deduction
and
withholding were made.
(c) Closing
of Transfer Books.
At the
Effective Time, the stock transfer books of the Company shall be closed,
and
there shall be no further registration of transfers on the stock transfer
books
of the Surviving Corporation of the Shares that were outstanding immediately
prior to the Effective Time. If, after the Effective Time, Certificates are
presented to the Surviving Corporation or Parent for transfer, they shall
be
cancelled and exchanged for a check in the proper amount pursuant to and
subject
to the requirements of this ARTICLE
II.
(d) Termination
of Exchange Fund.
Any
portion of the Exchange Fund (including the proceeds of any investments thereof)
that remains undistributed to the former holders of Shares for one year after
the Effective Time shall be delivered to the Surviving Corporation upon demand,
and any former holders of Shares who have not surrendered their Shares in
accordance with this Section
2.2
shall
thereafter look only to the Surviving Corporation for payment of their claim
for
the Merger Consideration, without any interest thereon, upon due surrender
of
their Shares.
(e) No
Liability.
Notwithstanding anything herein to the contrary, none of the Company, Parent,
Merger Sub, the Surviving Corporation, the Paying Agent or any other person
shall be liable to any former holder of Shares for any amount properly delivered
to a public official pursuant to any applicable abandoned property, escheat
or
similar Law.
6
(f) Investment
of Exchange Fund.
The
Paying Agent shall invest all cash included in the Exchange Fund as reasonably
directed by Parent; provided, however, that any investment of such cash shall
be
limited to direct short-term obligations of, or short-term obligations fully
guaranteed as to principal and interest by, the U.S. government and that
no such
investment or loss thereon shall affect the amounts payable to holders of
Certificates or Book-Entry Shares pursuant to this ARTICLE
II.
Any
interest and other income resulting from such investments shall be paid to
the
Surviving Corporation pursuant to Section
2.2(d).
(g) Lost
Certificates.
In the
case of any Certificate that has been lost, stolen or destroyed, upon the
making
of an affidavit of that fact by the person claiming such Certificate to be
lost,
stolen or destroyed and, if required by Parent or the Paying Agent, the posting
by such person of an indemnity agreement or, at the election of Parent or
the
Paying Agent, a bond in customary amount as indemnity against any claim that
may
be made against it with respect to such Certificate, the Paying Agent will
issue
in exchange for such lost, stolen or destroyed Certificate a check in the
amount
of the number of Shares represented by such lost, stolen or destroyed
Certificate multiplied by the Merger Consideration.
Section
2.3 Timing
of Equity Rollover.
For the
avoidance of doubt, the parties acknowledge and agree that the contribution
of
Shares to Parent or one of its Subsidiaries pursuant to the Rollover Commitments
(and any subsequent contribution of such Shares prior to the Effective Time
by
Parent to one or more of its Subsidiaries) shall be deemed to occur immediately
prior to the Effective Time and prior to any other above-described
event.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
Except
(i) as disclosed in the Company SEC Documents filed on or after
December 31, 2005 and prior to the date of this Agreement (excluding any
disclosures set forth in any risk factor section thereof, in any section
relating to forward looking statements and any other disclosures included
therein to the extent that they are cautionary, predictive or forward looking
in
nature) or (ii) as disclosed in the disclosure letter delivered by the
Company to Parent immediately prior to the execution of this Agreement (the
“Company
Disclosure Letter”,
it
being agreed that disclosure of any item in any section of the Company
Disclosure Letter shall also be deemed disclosure with respect to any other
section of this Agreement to which the relevance of such item is reasonably
apparent on its face), the Company represents and warrants to Parent and
Merger
Sub as follows:
7
Section
3.1 Qualification,
Organization, Subsidiaries, etc.
(a) Each
of
the Company and its Subsidiaries is a legal entity duly organized, validly
existing and in good standing under the Laws of its respective jurisdiction
of
organization. Each of the Company and its Subsidiaries and the Company Joint
Ventures has all requisite corporate, partnership or similar power and authority
to own, lease and operate its properties and assets and to carry on its business
as presently conducted, except where the failure to have such power or authority
would not, individually or in the aggregate, have a Company Material Adverse
Effect.
(b) Each
of
the Company and its Subsidiaries is qualified to do business and is in good
standing as a foreign corporation in each jurisdiction where the ownership,
leasing or operation of its assets or properties or conduct of its business
requires such qualification, except where the failure to be so qualified
or in
good standing would not, individually or in the aggregate, have a Company
Material Adverse Effect. The organizational or governing documents of the
Company and each of its Subsidiaries and Company Joint Ventures, as previously
provided to Parent, are in full force and effect. Neither the Company nor
any
Subsidiary nor, to the Company’s Knowledge, any Company Joint Venture, is in
violation of its organizational or governing documents.
(c) As
used
in this Agreement, any reference to any fact, circumstance, event, change,
effect or occurrence having a “Company
Material Adverse Effect”
means
(a) any fact, circumstance, event, change, effect or occurrence (including
those affecting or relating to any Company Joint Venture) that, individually
or
in the aggregate with all other facts, circumstances, events, changes, effects
or occurrences, has or would be reasonably likely to have a material adverse
effect on the assets, properties, business, results of operation or financial
condition of the Company and its Subsidiaries and the Company Joint Ventures,
taken as a whole (but with respect to the Company’s direct or indirect interests
in any non-wholly owned entities only to the extent of such effects on the
Company’s direct or indirect interests therein), or that would be reasonably
likely to prevent or materially delay or materially impair the ability of
the
Company to perform its obligations hereunder or to consummate the Merger
or the
other transactions contemplated hereby, or (b) without limiting the
foregoing, a Partnership Event, but, in any case, shall not include facts,
circumstances, events, changes, effects or occurrences (i) generally
affecting the energy transportation, energy storage, oil and gas, terminals,
natural gas distribution or retail, or electric power industries in the United
States or Canada (including general pricing changes) or the economy or the
financial or securities markets in the United States or elsewhere in the
world,
including any regulatory and political conditions or developments, or any
outbreak or escalation of hostilities, declared or undeclared acts of war
or
terrorism, except to the extent any fact, circumstance, event, change, effect
or
occurrence that, relative to other industry participants, disproportionately
impacts the assets, properties, business, results of operation or financial
condition of the Company and its Subsidiaries and the Company Joint Ventures,
taken as a whole (but with respect to the Company’s direct or indirect interests
in any non-wholly owned entities only to the extent of such effects on the
Company’s direct or indirect interests therein), or
(ii) resulting from the announcement of (A) the proposal of the Merger or
(B) this Agreement and the transactions contemplated hereby.
8
Section
3.2 Capital
Stock.
(a) The
authorized capital stock of the Company consists of 300,000,000 shares of
Company Common Stock, 200,000 shares of Class A Preferred Stock, no par value
(“Company
Class A Preferred Stock”),
and
2,000,000 shares of Class B Preferred Stock, no par value (“Company
Class B Preferred Stock”
and
together with the Company Class A Preferred Stock, “Company
Preferred Stock”).
As of
August 23, 2006, (i) 133,947,769 shares of Company Common Stock were issued
and outstanding, (ii) 15,016,901 shares of Company Common Stock were held
in treasury, (iii)(A) 353,000 shares of Company Common Stock were reserved
for issuance under the Company’s Amended and Restated 1992 Stock Option Plan for
Non-Employee Directors, of which 353,000 shares of Company Common Stock were
subject to outstanding options issued pursuant to such plan, (B) 663,553
shares of Company Common Stock were reserved for issuance under the Company’s
1994 Amended and Restated Long-term Incentive Plan, of which 663,553 shares
of
Company Common Stock were subject to outstanding options issued pursuant
to such
plan, (C) 4,361,224 shares of Company Common Stock were reserved for
issuance under the Company’s Amended and Restated 1999 Stock Plan, of which
1,909,817 shares of Company Common Stock were subject to outstanding options
issued pursuant to such plan, (D) 466,650 shares of Company Common Stock
were reserved for issuance under the Company’s Non-Employee Directors Stock
Awards Plan, (E) 636,418 shares of Company Common Stock were reserved for
issuance under the Company’s Employees Stock Purchase Plan, and (F) 999,254
shares of Company Common Stock were reserved for issuance under the Company’s
Foreign Subsidiary Employees Stock Purchase Plan, and (iv) no shares of
Company Preferred Stock were issued or outstanding. All outstanding shares
of
Company Common Stock, and all shares of Company Common Stock reserved for
issuance as noted in clause (iii), when issued in accordance with the respective
terms thereof, are or will be duly authorized, validly issued, fully paid
and
non-assessable and free of pre-emptive rights and issued in compliance with
all
applicable securities Laws.
(b) Except
as
set forth in subsection (a) above, as of the date hereof, (i) the
Company does not have any shares of its capital stock issued or outstanding
other than shares of Company Common Stock that have become outstanding after
August 23, 2006 upon exercise of Company Stock Options outstanding as of
August
23, 2006 and (ii) there are no outstanding subscriptions, options,
warrants, calls, convertible securities or other similar rights, agreements
or
commitments relating to the issuance of capital stock or other equity interests
to which the Company or any of its Subsidiaries or, to the Company’s Knowledge,
any of the Company Joint Ventures is a party obligating the Company or any
of
its Subsidiaries or, to the Company’s Knowledge, any of the Company Joint
Ventures to (A) issue, transfer or sell any shares of capital stock or
other equity interests of the Company or any of its Subsidiaries or any of
the
Company Joint Ventures or securities convertible into or exchangeable for
such
shares or equity interests, (B) grant, extend or enter into any such
subscription, option, warrant, call, convertible securities or other similar
right, agreement or arrangement, (C) redeem or otherwise acquire any such
shares of capital stock or other equity interests or (D) provide a material
amount of funds to, or make any material investment (in the form of a loan,
capital contribution or otherwise) in, any Subsidiary or Company Joint
Venture.
9
(c) Except
for the awards to acquire shares of Company Common Stock under the Company
Stock
Plans and Stock Purchase Plans listed in Section
3.2(a)
above,
neither the Company nor any of its Subsidiaries has outstanding bonds,
debentures, notes or other obligations, the holders of which have the right
to
vote (or which are convertible into or exercisable for securities having
the
right to vote) with the stockholders of the Company on any matter.
(d) There
are
no stockholder agreements, voting trusts or other agreements or understandings
to which the Company or any of its Subsidiaries or, to the Company’s Knowledge,
any Company Joint Venture is a party with respect to the voting of the capital
stock or other equity interest of the Company or any of its Subsidiaries
or, to
the Company’s Knowledge, any Company Joint Venture.
(e) No
holder
of securities in the Company or any of its Subsidiaries or, to the Company’s
Knowledge, any Company Joint Venture has any right to have such securities
registered by the Company or any of its Subsidiaries or, to the Company’s
Knowledge, any Company Joint Ventures, as the case may be.
Section
3.3 Subsidiaries
and Company Joint Ventures.
(a) Section
3.3 of the Company Disclosure Letter sets forth a complete and correct list
of each “significant subsidiary” of the Company as such term is defined in
Regulation S-X promulgated by the SEC (each, a “Significant
Subsidiary”).
Section
3.3
of the
Company Disclosure Letter also sets forth the jurisdiction of organization
and percentage of outstanding equity interests (including partnership interests
and limited liability company interests) owned by the Company or its
Subsidiaries of each Significant Subsidiary and each Company Joint Venture.
All
equity interests (including partnership interests and limited liability company
interests) of the Company’s Significant Subsidiaries and, to the Company’s
Knowledge, the Company Joint Ventures held by the Company or any other
Subsidiary have been duly and validly authorized and are validly issued,
fully
paid and non-assessable and were not issued in violation of any preemptive
or
similar rights, purchase option, call or right of first refusal or similar
rights. All such equity interests owned by the Company or its Subsidiaries
are
free and clear of any Liens, other than restrictions imposed by applicable
Law.
(b) The
Company, or a wholly owned Subsidiary of the Company, owns all the outstanding
shares of capital stock of KMGP. KMGP is the sole general partner of ▇▇▇▇▇▇
▇▇▇▇▇▇ Energy Partners, L.P. KMGP owns a general partner interest in ▇▇▇▇▇▇
▇▇▇▇▇▇ Energy Partners, L.P., and such general partner interest is duly
authorized by the Partnership Agreement and was validly issued to or acquired
by
KMGP. KMGP owns such general partner interest free and clear of all Liens,
other
than restrictions imposed by applicable Law or Liens permissible under any
applicable loan agreements and indentures. As of August 23, 2006, the
Company owns, directly or indirectly, 14,355,735 Common Units (as defined
in the
Partnership Agreement), 5,313,400 Class B Units (as defined in the Partnership
Agreement), approximately 9,484,943 listed shares representing limited liability
company interests of ▇▇▇▇▇▇ ▇▇▇▇▇▇ Management, LLC, and all of the voting
shares
(as defined in the LLC Agreement) of ▇▇▇▇▇▇ ▇▇▇▇▇▇ Management, LLC, all of
which
are duly authorized by the Partnership Agreement or the LLC Agreement, as
applicable, and were validly issued to or acquired by the Company or its
direct
or indirect wholly owned Subsidiaries, and are fully paid and non-assessable.
The Company or such wholly owned Subsidiaries (other than KMP and KMR) own
such
Common Units and Class B Units and listed shares and voting shares free and
clear of all Liens, other than restrictions imposed by applicable
Law.
10
Section
3.4 Corporate
Authority Relative to This Agreement; No Violation.
(a) The
Company has the requisite corporate power and authority to enter into this
Agreement and, subject to receipt of the Company Stockholder Approval (as
hereinafter defined), to consummate the transactions contemplated hereby.
The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by
the
Board of Directors of the Company, acting upon the unanimous recommendation
of
the Special Committee, and, except for (i) the Company Stockholder Approval
and
(ii) the filing of the Certificate of Merger with the Secretary of State
of the
State of Kansas, no other corporate proceedings on the part of the Company
are
necessary to authorize the consummation of the transactions contemplated
hereby.
As of the date hereof, each of the Board of Directors of the Company (with
3
directors abstaining) and the Special Committee of the Board of Directors
has
unanimously resolved to recommend that the Company’s stockholders approve this
Agreement and the transactions contemplated hereby (including the Special
Committee’s recommendation, the “Recommendation”).
This
Agreement has been duly and validly executed and delivered by the Company
and,
assuming this Agreement constitutes the valid and binding agreement of Parent
and Merger Sub, constitutes the valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, subject to
the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors’ rights
generally, general equitable principles (whether considered in a proceeding
in
equity or at law) and any implied covenant of good faith and fair
dealing.
(b) Other
than in connection with or in compliance with (i) the KGCC, (ii) the
Securities Exchange Act of 1934 (the “Exchange
Act”),
(iii) the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976 (the
“▇▇▇
▇▇▇”),
(▇▇) ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇ (▇▇▇▇▇▇) and (v) the approvals set forth on
Section
3.4(b)
of the
Company Disclosure Letter (collectively, the “Company
Approvals”),
no
authorization, consent or approval of, or filing with, any United States
or
foreign governmental or regulatory agency, commission, court, body, entity
or
authority (each, a “Governmental
Entity”)
is
necessary, under applicable Law, for the consummation by the Company of the
transactions contemplated hereby, except for such authorizations, consents,
approvals or filings that, if not obtained or made, would not have, individually
or in the aggregate, a Company Material Adverse Effect.
(c) The
execution and delivery by the Company of this Agreement does not, and the
consummation of the transactions contemplated hereby and compliance with
the
provisions hereof by the Company will not, (i) result in any violation of,
or default (with or without notice or lapse of time, or both) under, require
consent under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to the loss of any benefit under any loan,
guarantee of indebtedness or credit agreement, note, bond, mortgage, indenture,
lease, agreement, contract, instrument, permit, Company Permit, concession,
franchise, right or license binding upon the Company or any of its Subsidiaries
or, to the Company’s Knowledge, the Company Joint Ventures or result in the
creation of any liens, claims, mortgages, encumbrances, pledges, security
interests, equities or charges of any kind (each, a “Lien”)
upon
any of the properties or assets of the Company or any of its Subsidiaries
or, to
the Company’s Knowledge, the Company Joint Ventures, (ii) conflict with or
result in any violation of any provision of the articles of incorporation
or
by-laws or other equivalent organizational document, in each case as amended,
of
the Company or any of its Subsidiaries or, to the Company’s Knowledge, the
Company Joint Ventures or (iii) assuming that the consents and approvals
referred to in Section
3.4(b)
are duly
obtained, conflict with or violate any applicable Laws, other than, in the
case
of clauses (i) and (iii), any such violation, required consent, conflict,
default, termination, cancellation, acceleration, right, loss or Lien that
would
not have, individually or in the aggregate, a Company Material Adverse
Effect.
11
Section
3.5 Reports
and Financial Statements.
(a) The
Company and its Subsidiaries have filed all forms, documents, statements
and
reports required to be filed prior to the date hereof by them with the
Securities and Exchange Commission (the “SEC”)
since
January 1, 2004 (the forms, documents, statements and reports filed with
the SEC since January 1, 2003 and those filed with the SEC subsequent to
the date of this Agreement, if any, including any amendments thereto) (the
“Company
SEC Documents”).
As of
their respective dates, or, if amended, as of the date of the last such
amendment prior to the date hereof, the Company SEC Documents complied, and
each
of the Company SEC Documents filed subsequent to the date of this Agreement
will
comply, in all material respects with the requirements of the Securities
Act of
1933, as amended (the “Securities
Act”),
and
the Exchange Act, as the case may be, and the applicable rules and regulations
promulgated thereunder. None of the Company SEC Documents so filed or that
will
be filed subsequent to the date of this Agreement contained or will contain,
as
the case may be, any untrue statement of a material fact or omitted to state
any
material fact required to be stated therein or necessary to in order make
the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(b) The
Company and its Subsidiaries have filed all forms, documents, statements
and
reports required to be filed prior to the date hereof by them with the
securities regulatory authorities of each applicable province of Canada (the
“CSA”)
on the
SEDAR system since January 1, 2004 (the forms, documents, statements and
reports filed with the CSA since January 1, 2003 and those filed with the
CSA subsequent to the date of this Agreement, if any, including any amendments
thereto (the “Company
CSA Documents”).
As of
their respective dates, or, if amended, as of the date of the last such
amendment prior to the date hereof, the Company CSA Documents complied, and
each
of the Company CSA Documents filed subsequent to the date of this Agreement
will
comply, in all material respects with the requirements of the securities
Laws of
each applicable province of Canada, as the case may be, and the applicable
rules
and regulations promulgated thereunder. None of the Company CSA Documents
so
filed or that will be filed subsequent to the date of this Agreement contained
or will contain, as the case may be, any untrue statement of a material fact
or
omitted to state any material fact required to be stated therein or necessary
to
make the statements therein, in light of the circumstances under which they
were
made, not misleading.
12
(c) The
financial statements (including all related notes and schedules) of the Company
and its Subsidiaries (such financial statements being consolidated to the
extent
applicable) included in the Company SEC Documents fairly present in all material
respects the financial position of the Company and its Subsidiaries, as at
the
respective dates thereof, and the results of their operations and their cash
flows for the respective periods then ended (subject, in the case of the
unaudited statements, to normal year-end audit adjustments and to any other
adjustments described therein, including the notes thereto) in conformity
with
United States generally accepted accounting principles (“GAAP”)
(except, in the case of the unaudited statements or foreign Subsidiaries,
as
permitted by the SEC) applied on a consistent basis during the periods involved
(except as may be indicated therein or in the notes thereto).
Section
3.6 Internal
Controls and Procedures.
The
Company, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Energy Partners, L.P., and ▇▇▇▇▇▇ ▇▇▇▇▇▇ Management,
LLC
have established and maintain disclosure controls and procedures and internal
control over financial reporting (as such terms are defined in paragraphs
(e)
and (f), respectively, of Rule 13a-15 under the Exchange Act) as required
by
Rule 13a-15 under the Exchange Act. The Company’s, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Energy
Partners, L.P.’s, and ▇▇▇▇▇▇ ▇▇▇▇▇▇ Management, LLC’s disclosure controls and
procedures are reasonably designed to ensure that all material information
required to be disclosed by the Company, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Energy Partners, L.P.,
and ▇▇▇▇▇▇ ▇▇▇▇▇▇ Management, LLC in the reports that it or they file under
the
Exchange Act are recorded, processed, summarized and reported within the
time
periods specified in the rules and forms of the SEC, and that all such material
information is accumulated and communicated to the management of the Company,
▇▇▇▇▇▇ ▇▇▇▇▇▇ Energy Partners, L.P., and ▇▇▇▇▇▇ ▇▇▇▇▇▇ Management, LLC as
appropriate to allow timely decisions regarding required disclosure and to
make
the certifications required pursuant to Sections 302 and 906 of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002, as amended, and the rules and regulations
promulgated thereunder (the “▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act”).
The
management of the Company, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Energy Partners, L.P., and ▇▇▇▇▇▇
▇▇▇▇▇▇ Management, LLC have completed their assessment of the effectiveness
of
the Company’s, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Energy Partners, L.P.’s, and ▇▇▇▇▇▇ ▇▇▇▇▇▇
Management, LLC’s respective internal control over financial reporting in
compliance with the requirements of Section 404 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act
for the year ended December 31, 2005, and such assessment concluded that
such controls were effective. The Company, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Energy Partners,
L.P.,
and ▇▇▇▇▇▇ ▇▇▇▇▇▇ Management, LLC have disclosed, based on their most recent
evaluations, to the Company’s, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Energy Partners, L.P.’s, and ▇▇▇▇▇▇
▇▇▇▇▇▇ Management, LLC’s respective outside auditors and the audit committee of
the respective boards of directors of the Company, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Energy
Partners, L.P., and ▇▇▇▇▇▇ ▇▇▇▇▇▇ Management, LLC (A) all significant
deficiencies and material weaknesses in the design or operation of internal
controls over financial reporting (as defined in Rule 13a-15(f) of the Exchange
Act) which are reasonably likely to adversely affect in any material respect
the
Company’s, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Energy Partners, L.P.’s, and ▇▇▇▇▇▇ ▇▇▇▇▇▇ Management,
LLC’s ability to record, process, summarize and report financial data and
(B) any fraud, whether or not material, that involves management or other
employees who have a significant role in the Company’s, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Energy
Partners, L.P.’s, or ▇▇▇▇▇▇ ▇▇▇▇▇▇ Management, LLC’s internal controls over
financial reporting.
13
Section
3.7 No
Undisclosed Liabilities.
Except
(i) as reflected or reserved against in the Company’s consolidated balance
sheets (or the notes thereto) included in the Company SEC Documents filed
prior
to the date hereof, (ii) for transactions contemplated by this Agreement,
(iii) for liabilities and obligations incurred in the ordinary course of
business consistent with past practice since December 31, 2005 and
(iv) for liabilities or obligations which have been discharged or paid in
full in the ordinary course of business, neither the Company nor any Subsidiary
of the Company nor, to the Company’s Knowledge, any Company Joint Venture has
any liabilities or obligations of any nature, whether or not accrued, contingent
or otherwise, whether known or unknown and whether due or to become due,
that
would, individually or in the aggregate, have a Company Material Adverse
Effect.
Section
3.8 Compliance
with Law; Permits.
(a) The
Company and its Subsidiaries and, to the Company’s Knowledge, the Company Joint
Ventures are, and since the later of December 31, 2004 and their respective
dates of formation or organization have been, in compliance with and are
not in
default under or in violation of any applicable federal, state, local or
foreign
or provincial law, statute, ordinance, rule, regulation, judgment, order,
injunction, decree or agency requirement of or undertaking to or agreement
with
any Governmental Entity, including common law, (collectively, “Laws”
and
each, a “Law”),
except where such non-compliance, default or violation would not have,
individually or in the aggregate, a Company Material Adverse
Effect.
(b) The
Company and its Subsidiaries and to the Company’s Knowledge, the Company Joint
Ventures are in possession of all franchises, tariffs, grants, authorizations,
licenses, permits, easements, variances, exceptions, consents, certificates,
approvals and orders of any Governmental Entity necessary for the Company
and
its Subsidiaries and to the Company’s Knowledge, the Company Joint Ventures to
own, lease and operate their properties and assets or to carry on their
businesses as they are now being conducted (the “Company
Permits”),
except where the failure to have any of the Company Permits would not have,
individually or in the aggregate, a Company Material Adverse Effect. All
Company
Permits are in full force and effect, except where the failure to be in full
force and effect would not have, individually or in the aggregate, a Company
Material Adverse Effect. No suspension or cancellation of any of the Company
Permits is pending or, to the Knowledge of the Company, threatened, except
where
such suspension or cancellation would not, individually or in the aggregate,
have a Company Material Adverse Effect. The Company and its Subsidiaries
and to
the Company’s Knowledge, the Company Joint Ventures are not, and since December
31, 2004 have not been, in violation or breach of, or default under, any
Company
Permit, except where such violation, breach or default would not, individually
or in the aggregate, have a Company Material Adverse Effect. As of the date
of
this Agreement, to the Knowledge of the Company, no event or condition has
occurred or exists which would result in a violation of, breach, default
or loss
of a benefit under, or acceleration of an obligation of the Company or any
of
its Subsidiaries under, any Company Permit (in each case, with or without
notice
or lapse of time or both), except for violations, breaches, defaults, losses
or
accelerations that would not, individually or in the aggregate, have a Company
Material Adverse Effect.
14
Section
3.9 Environmental
Laws and Regulations.
(a) Except
as
would not, individually or in the aggregate, have a Company Material Adverse
Effect, (i) the Company and each of its Subsidiaries and, to the Company’s
Knowledge, each of its Company Joint Ventures have conducted their respective
businesses in compliance with all applicable Environmental Laws (as hereinafter
defined), (ii) there has been no release of any Hazardous Substance by the
Company or any of its Subsidiaries or, to the Company’s Knowledge, any of its
Company Joint Ventures in any manner that could reasonably be expected to
give
rise to any remedial obligation or corrective action requirement under
applicable Environmental Laws, (iii) since December 31, 2005 until the
date of this Agreement, neither the Company nor any of its Subsidiaries nor,
to
the Company’s Knowledge, any of its Company Joint Ventures has received in
writing any notices, demand letters or requests for information from any
federal, state, local or foreign or provincial Governmental Entity asserting
that the Company or any of its Subsidiaries or, to the Company’s Knowledge, any
of its Company Joint Ventures may be in violation of, or liable under, any
Environmental Law, (iv) to the Company’s Knowledge no Hazardous Substance
has been disposed of, released or transported in violation of any applicable
Environmental Law, or in a manner giving rise to any liability under
Environmental Law, from any properties while owned or operated by the Company
or
any of its Subsidiaries or, to the Company’s Knowledge, any of its Company Joint
Ventures or as a result of any operations or activities of the Company or
any of
its Subsidiaries or, to the Company’s Knowledge, any of its Company Joint
Ventures and (v) neither the Company, its Subsidiaries, to the Company’s
Knowledge, its Company Joint Ventures nor any of their respective properties
are, or, to the Knowledge of the Company, threatened to become, subject to
any
liabilities relating to any suit, settlement, court order, administrative
order,
regulatory requirement, judgment or written claim asserted or arising under
any
Environmental Law or any agreement relating to environmental liabilities.
This
Section 3.9 (together with Sections 3.7, 3.12 and 3.13) shall be deemed to
contain the only representations and warranties in this Agreement with respect
to Environmental Laws, Hazardous Substances and any other environmental
matter.
(b) As
used
herein, “Environmental
Law”
means
any Law relating to (i) the protection, preservation or restoration of the
environment (including air, surface water, groundwater, drinking water supply,
surface land, subsurface land, plant and animal life or any other natural
resource), or (ii) the exposure to, or the use, storage, recycling,
treatment, generation, transportation, processing, handling, labeling,
production, release or disposal of Hazardous Substances, in each case as
in
effect at the date hereof.
(c) As
used
herein, “Hazardous
Substance”
means
any substance listed, defined, designated, classified or regulated as hazardous,
toxic, radioactive or dangerous under any Environmental Law. Hazardous Substance
includes any substance to which exposure is regulated by any Governmental
Entity
or any Environmental Law as a toxic waste, pollutant, contaminant, hazardous
substance, toxic substance, hazardous waste, special waste or petroleum or
any
derivative or byproduct thereof, radon, radioactive material, asbestos or
asbestos containing material, urea formaldehyde, foam insulation or
polychlorinated biphenyls.
15
Section
3.10 Employee
Benefit Plans.
(a) Section
3.10(a)
of the
Company Disclosure Letter lists all material Company Benefit Plans.
“Company
Benefit Plans”
means
all compensation or employee benefit plans, programs, policies, agreements
or
other arrangements, whether or not “employee benefit plans” (within the meaning
of Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended (“ERISA”),
whether or not subject to ERISA), providing cash- or equity-based incentives,
health, medical, dental, disability, accident or life insurance benefits
or
vacation, severance, retirement, pension or savings benefits, that are
sponsored, maintained or contributed to by the Company or any of its
Subsidiaries for the benefit of current or former employees, directors or
consultants of the Company or its Subsidiaries and all employee agreements
providing compensation, vacation, severance or other benefits to any current
or
former officer, employee or consultant of the Company or its
Subsidiaries.
(b) Except
for such claims which would not have, individually or in the aggregate, a
Company Material Adverse Effect, no material action, dispute, suit, claim,
arbitration, or legal, administrative or other proceeding or governmental
action
(other than claims for benefits in the ordinary course) is pending or, to
the
Knowledge of the Company, threatened (x) with respect to any Company
Benefit Plan (other than a “multiemployer plan” (within the meaning of Section
4001(a)(3) of ERISA) (a “Multiemployer
Plan”))
by
any current or former employee, officer or director of the Company or any
of its
Subsidiaries, (y) alleging any breach of the material terms of any Company
Benefit Plan (other than a Multiemployer Plan) or any fiduciary duties or
(z) with respect to any violation of any applicable law with respect to
such Company Benefit Plan (other than a Multiemployer Plan).
(c) Each
Company Benefit Plan (other than a Multiemployer Plan) has been maintained
and
administered in compliance with its terms and with applicable Law, including
ERISA and the Code to the extent applicable thereto, except for such
non-compliance which would not have, individually or in the aggregate, a
Company
Material Adverse Effect. Any Company Benefit Plan (other than a Multiemployer
Plan) intended to be qualified under Section 401(a) or 401(k) of the Code
has received a favorable determination letter from the United States Internal
Revenue Service that has not been revoked and to the Knowledge of the Company,
no fact or event has occurred since the date of such determination letter
or
letters from the Internal Revenue Service that would reasonably be expected
to
affect adversely the qualified status of any such Company Benefit Plan. Except
as set forth on Section
3.10(c)
of the
Company Disclosure Letter, neither the Company nor any of its Subsidiaries
maintains or contributes to any plan or arrangement which provides medical
benefits to any employee or former employee following his retirement, except
as
required by applicable Law or as provided in individual agreements upon a
severance event.
16
(d) With
respect to each Company Benefit Plan (other than a Multiemployer Plan) that
is
subject to Title IV or Section 302 of ERISA or Section 412 or 4971 of
the Code, (i) there does not exist any material accumulated funding
deficiency within the meaning of Section 412 of the Code or
Section 302 of ERISA, (ii) no reportable event within the meaning of
Section 4043(c) of ERISA for which the 30-day notice requirement has not
been waived has occurred, (iii) all material premiums to the Pension
Benefit Guaranty Corporation (the “PBGC”)
have
been timely paid in full, (iv) no material liability (other than for
premiums to the PBGC) under Title IV of ERISA has been or is expected to
be
incurred by the Company or any of its Subsidiaries and (v) the PBGC has not
instituted proceedings to terminate any such Company Benefit Plan.
(e) All
material contributions, premiums and other material payments due from any
of the
Company or its Subsidiaries required by law or any Company Benefit Plan or
applicable collective bargaining agreement have been made under any such
plan to
any fund, trust or account established thereunder or in connection therewith
by
the due date thereof; and any and all material contributions, premiums and
other
payments with respect to compensation or service before and through the Closing
Date, or otherwise with respect to periods before and through the Closing
Date,
due from any of the Company or its Subsidiaries to, under or on account of
each
Company Benefit Plan shall have been paid prior to the Closing Date or shall
have been fully reserved and provided for or accrued on the Company’s financial
statements.
(f) Except
as
set forth on Section
3.10(f)(i)
of
the Company Disclosure Letter, the consummation of the transactions contemplated
by this Agreement will not, either alone or in combination with another event,
(i) entitle any current or former employee, consultant or officer of the
Company or any of its Subsidiaries to severance pay, retention bonuses,
parachute payments, non-competition payments, unemployment compensation or
any
other payment, except as expressly provided in this Agreement or as required
by
applicable Law, (ii) accelerate the time of payment or vesting, or increase
the amount of compensation due any such employee, consultant or officer,
except
as expressly provided in this Agreement or (iii) result in any forgiveness
of indebtedness or obligation to fund benefits with respect to any such
employee, director or officer. Except as set forth on Section
3.10(f)(ii)
of
the Company Disclosure Letter, no director, officer, employee or service
provider is entitled to a gross-up, make whole or other payment as a result
of
the imposition of taxes under Section 280G or 4999 of the Code pursuant to
any agreement or arrangement with the Company or any of its
Subsidiaries.
(g) Except
as
would not have, individually or in the aggregate, a Company Material Adverse
Effect, all Company Benefit Plans subject to the Law of any jurisdiction
outside
of the United States (i) have been maintained in accordance with all
applicable requirements, (ii) if they are intended to qualify for special
tax treatment meet all necessary requirements for such treatment, and
(iii) if they are intended to be funded and/or book-reserved are funded
and/or book-reserved, as appropriate, based upon reasonable actuarial
assumptions and in accordance with applicable Law.
Section
3.11 Interested
Party Transactions.
Except
for employment Contracts filed or incorporated by reference as an exhibit
to a
Company SEC Document filed prior to the date hereof or Company Benefit Plans,
Section
3.11
of the
Company Disclosure Letter sets forth a correct and complete list of the
contracts or arrangements that are in existence as of the date of this Agreement
under which the Company has any existing or future liabilities between the
Company or any of its Subsidiaries, on the one hand, and, on the other hand,
any
(A) present officer or director of either the Company or any of its
Subsidiaries or any person that has served as such an officer or director
within
the past two years (in each case other than the Company as a former director
of
▇▇▇▇▇▇ ▇▇▇▇▇▇ Management, LLC or ▇▇▇▇▇▇ ▇▇▇▇▇▇ Energy Partners, L.P.) or
any of
such officer’s or director’s immediate family members, (B) record or
beneficial owner of more than 5% of the Shares as of the date hereof, or
(C) to the Knowledge of the Company, any Affiliate of any such officer,
director or owner (other than the Company or any of its Subsidiaries or any
Company Joint Venture) (each, an “Affiliate
Transaction”).
The
Company has provided to Parent correct and complete copies of each Contract
or
other relevant documentation (including any amendments or modifications thereto)
providing for each Affiliate Transaction.
17
Section
3.12 Absence
of Certain Changes or Events.
Since
December 31, 2005, (a) except as otherwise required or expressly
contemplated by this Agreement, the businesses of the Company and its
Subsidiaries and, to the Company’s Knowledge, the Company Joint Ventures have
been conducted, in all material respects, in the ordinary course of business
consistent with past practice and there have not been any facts, circumstances,
events, changes, effects or occurrences that have had or would have,
individually or in the aggregate, a Company Material Adverse Effect and
(b) prior to the date hereof, neither the Company nor any of its
Subsidiaries (other than KMP or KMR, or KMGP when acting in any capacity
on
behalf or with respect to KMP or KMR) has taken or permitted to occur any
action
that were it to be taken from and after the date hereof would require approval
of Parent pursuant to clauses (i), (ii), (xi), (xiii), (xvi) or (xviii) of
Section
5.1(b).
Section
3.13 Investigations;
Litigation.
There
are no
(i) investigations or proceedings pending (or, to the Knowledge of the
Company, threatened) by any Governmental Entity with respect to the Company
or
any of its Subsidiaries, or to the Company’s Knowledge, any of the Company Joint
Ventures or (ii) actions, suits or proceedings pending (or, to the
Knowledge of the Company, threatened) against or affecting the Company or
any of
its Subsidiaries, or to the Company’s Knowledge, any of the Company Joint
Ventures, or any of their respective properties at law or in equity before,
and
there are no orders, judgments or decrees of any Governmental Entity against
the
Company or any of its Subsidiaries or, to the Company’s Knowledge, any Company
Joint Venture, in each case of clause (i) or (ii), which would reasonably
be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect.
Section
3.14 Proxy
Statement; Other Information.
The
Proxy Statement (as hereinafter defined) will not at the time of the mailing
of
the Proxy Statement to the stockholders of the Company, at the time of the
Company Meeting, and at the time of any amendments thereof or supplements
thereto, and the information supplied or to be supplied by the Company for
inclusion or incorporation by reference in the Schedule 13E-3 (as
hereinafter defined) to be filed with the SEC concurrently with the filing
of
the Proxy Statement, will not, at the time of its filing with the SEC, and
at
the time of any amendments thereof or supplements thereto, contain any untrue
statement of a material fact or omit to state any material fact required
to be
stated therein or necessary in order to make the statements therein, in light
of
the circumstances under which they were made, not misleading; provided,
that no
representation is made by the Company with respect to information supplied
by or
related to Parent. The Proxy Statement and the Schedule 13E-3 will comply
as to form in all material respects with the Exchange Act, except that no
representation is made by the Company with respect to information supplied
by or
related to Parent. The letter to stockholders, notice of meeting, proxy
statement and forms of proxy to be distributed to stockholders in connection
with the Merger to be filed with the SEC and the CSA in connection with seeking
the adoption and approval of this Agreement are collectively referred to
herein
as the “Proxy
Statement.”
The
Rule 13E-3 Transaction Statement on Schedule 13E-3 to be filed with the SEC
in connection with seeking the adoption and approval of this Agreement is
referred to herein as the “Schedule 13E-3.”
18
Section
3.15 Tax
Matters.
(a) Except
as
would not have, individually or in the aggregate, a Company Material Adverse
Effect, (i) the Company and each of its Subsidiaries have prepared and
timely filed (taking into account any extension of time within which to file)
all Tax Returns required to be filed by any of them and all such Tax Returns
are
complete and accurate, (ii) the Company and each of its Subsidiaries have
timely paid all Taxes that are required to be paid by any of them (whether
or
not shown on any Tax Return), except with respect to matters contested in
good
faith and for which adequate reserves have been established on the financial
statements of the Company and its Subsidiaries in accordance with GAAP,
(iii) the U.S. consolidated federal income Tax Returns of the Company
through the tax year ending 2003 have been examined or are currently being
examined by the Internal Revenue Service (or the period for assessment of
the
Taxes in respect of which such Tax Returns were required to be filed has
expired), (iv) all assessments for Taxes due with respect to completed and
settled examinations or any concluded litigation have been fully paid,
(v) there are no audits, examinations, investigations or other proceedings
pending or threatened in writing in respect of Taxes or Tax matters of the
Company or any of its Subsidiaries, (vi) there are no Liens for Taxes on
any of the assets of the Company or any of its Subsidiaries other than statutory
Liens for Taxes not yet due and payable or Liens for Taxes that are being
contested in good faith and for which adequate reserves have been established
on
the financial statements of the Company and its Subsidiaries in accordance
with
GAAP, (vii) none of the Company or any of its Subsidiaries has been a
“controlled corporation” or a “distributing corporation” in any distribution
that was purported or intended to be governed by Section 355 of the Code
(or any similar provision of state, local or foreign Law) (A) occurring
during the two-year period ending on the date hereof, or (B) that otherwise
constitutes part of a “plan” or “series of related transactions” (within the
meaning of Section 355(e) of the Code) that includes the Merger,
(viii) the Company and each of its Subsidiaries has timely withheld and
paid all Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, creditor, independent contractor,
shareholder or other third party and is in compliance with all applicable
rules
and regulations regarding the solicitation, collection and maintenance of
any
forms, certifications and other information required in connection therewith,
(ix) none of the Company or any of its Subsidiaries has been a party to any
“reportable transaction” within the meaning of Treasury Regulation Section
1.6011-4(b)(1), (x) neither the Company nor any of its Subsidiaries is a
party to any agreement or arrangement relating to the apportionment, sharing,
assignment or allocation of any material Tax or material Tax asset (other
than
an agreement or arrangement solely among members of a group the common parent
of
which is the Company) or has any liability for Taxes of any Person (other
than
the Company or any of its Subsidiaries) under Treasury Regulation
Section 1.1502-6 (or any predecessor or successor thereof or any analogous
or similar provision of Law), by contract, agreement or otherwise, (xi) no
waivers or extensions of any statute of limitations have been granted or
requested with respect to any Taxes of the Company or any of its Subsidiaries
and (xii) ▇▇▇▇▇▇ ▇▇▇▇▇▇ Energy Partners, L.P. qualifies as a “publicly
traded partnership” within the meaning of Section 7704(b) of the Code and has
met, and continues to meet the “gross income requirements” (within the meaning
of Section 7704(c) of the Code) in each Tax year since its formation up to
and
including the current Tax year.
19
(b) As
used
in this Agreement, (i) “Tax”
or
“Taxes”
means
(A) any and all federal, state, local or foreign or provincial taxes,
charges, fees, imposts, levies or other assessments, including all net income,
gross receipts, capital, sales, use, ad valorem, value added, transfer,
franchise, profits, inventory, capital stock, license, withholding, payroll,
employment, social security, unemployment, excise, severance, stamp, occupation,
property and estimated taxes, customs duties, fees, assessments and charges
of
any kind whatsoever, including any and all interest, penalties, fines, additions
to tax or additional amounts imposed by any Governmental Entity in connection
with respect thereto, and (B) any liability in respect of any items
described in clause (A) payable by reason of contract, assumption, transferee
liability, operation of Law, Treasury Regulation Section 1.1502-6(a) (or
any predecessor or successor thereof of any analogous or similar provision
of
Law) or otherwise, and (ii) “Tax
Return”
means
any return, report or similar filing (including any attached schedules,
supplements and additional or supporting material) filed or required to be
filed
with respect to Taxes, including any information return, claim for refund,
amended return or declaration of estimated Taxes (and including any amendments
with respect thereto).
Section
3.16 Labor
Matters.
Except
for such matters which would not have, individually or in the aggregate,
a
Company Material Adverse Effect, neither the Company nor any of its Subsidiaries
has received written notice during the past two years of the intent of any
Governmental Entity responsible for the enforcement of labor, employment,
occupational health and safety or workplace safety and insurance/workers
compensation laws to conduct an investigation of the Company or any of its
Subsidiaries and, to the Knowledge of the Company, no such investigation
is in
progress. Except for such matters which would not have, individually or in
the
aggregate, a Company Material Adverse Effect, (i) there are no (and have
not been during the two year period preceding the date hereof) strikes or
lockouts with respect to any employees of the Company or any of its Subsidiaries
(“Employees”),
(ii) to the Knowledge of the Company, there is no (and has not been during
the two year period preceding the date hereof) union organizing effort pending
or threatened against the Company or any of its Subsidiaries, (iii) there
is no (and has not been during the two year period preceding the date hereof)
unfair labor practice, labor dispute (other than routine individual grievances)
or labor arbitration proceeding pending or, to the Knowledge of the Company,
threatened against the Company or any of its Subsidiaries and (iv) there is
no (and has not been during the two year period preceding the date hereof)
slowdown, or work stoppage in effect or, to the Knowledge of the Company,
threatened with respect to Employees. To the Knowledge of the Company, neither
the Company nor any of its Subsidiaries has any liabilities under the Worker
Adjustment and Retraining Act of 1998 (the “WARN
Act”)
as a
result of any action taken by the Company that would have, individually or
in
the aggregate, a Company Material Adverse Effect. Except for such non-compliance
which would not have, individually or in the aggregate, a Company Material
Adverse Effect, the Company and each of its Subsidiaries is in compliance
with
all applicable Laws respecting employment and employment practices, terms
and
conditions of employment, wages and hours and occupational safety and health
(including, without limitation, classifications of service providers as
employees and/or independent contractors).
20
Section
3.17 Intellectual
Property.
Except
as would not have, individually or in the aggregate, a Company Material Adverse
Effect, either the Company or a Subsidiary of the Company or, to the Company’s
Knowledge, a Company Joint Venture owns, or is licensed or otherwise possesses
adequate rights to use, all material trademarks, trade names, service marks,
service names, ▇▇▇▇ registrations, logos, assumed names, registered and
unregistered copyrights, patents or applications and registrations used in
their
respective businesses as currently conducted (collectively, the “Intellectual
Property”).
Except as would not have, individually or in the aggregate, a Company Material
Adverse Effect, (i) there are no pending or, to the Knowledge of the
Company, threatened claims by any person alleging infringement by the Company
or
any of its Subsidiaries, or to the Company’s Knowledge, any of the Company Joint
Ventures for their use of the Intellectual Property of the Company or any
of its
Subsidiaries or, to the Company’s Knowledge, any of the Company Joint Ventures,
(ii) to the Knowledge of the Company, the conduct of the business of the
Company and its Subsidiaries and the Company Joint Ventures does not infringe
any intellectual property rights of any person, (iii) neither the Company
nor any of its Subsidiaries nor, to the Company’s Knowledge, any of the Company
Joint Ventures has made any claim of a violation or infringement by others
of
its rights to or in connection with the Intellectual Property of the Company
or
any of its Subsidiaries or, to the Company’s Knowledge, any of the Company Joint
Ventures, and (iv) to the Knowledge of the Company, no person is infringing
any Intellectual Property of the Company or any of its Subsidiaries or any
of
the Company Joint Ventures.
Section
3.18 Property.
(a) Except
as
would not have, individually or in the aggregate, a Company Material Adverse
Effect, the Company or a Subsidiary of the Company or, to the Company's
Knowledge, a Company Joint Venture owns and has good and indefeasible title
to
all of its owned real property and good title to all its personal property
and
has valid leasehold interests in all of its leased properties free and clear
of
all Liens (except in all cases for Liens permissible under any applicable
loan
agreements and indentures and for title exceptions, defects, encumbrances,
liens, charges, restrictions, restrictive covenants and other matters, whether
or not of record, which in the aggregate do not materially affect the continued
use of the property for the purposes for which the property is currently
being
used (assuming the timely discharge of all obligations owing under or related
to
the owned real property, the personal property and the leased property) by
the
Company or a Subsidiary of the Company, or to the Company's Knowledge, a
Company
Joint Venture), including its leasehold interests derived from oil, gas and
mineral leases or mineral interests (which constitute a portion of such real
property owned or leased by any such person) sufficient to conduct their
respective businesses as currently conducted. Except as would not have,
individually or in the aggregate, a Company Material Adverse Effect, all
leases
under which the Company or any of its Subsidiaries, or to the Company’s
Knowledge, any of the Company Joint Ventures lease any real or personal property
(including such oil, gas and mineral leases or mineral interests) are valid
and
effective against the Company or any of its Subsidiaries, or to the Company’s
Knowledge, any of the Company Joint Ventures and, to the Company’s Knowledge,
the counterparties thereto, in accordance with their respective terms, and
there
is not, under any of such leases, any existing default by the Company or
any of
its Subsidiaries, or to the Company’s Knowledge, any of the Company Joint
Ventures or, to the Company’s Knowledge, the counterparties thereto, or, to the
Company’s Knowledge, event which, with notice or lapse of time or both, would
become a default by the Company or any of its Subsidiaries, or to the Company’s
Knowledge, any of the Company Joint Ventures or, to the Company’s Knowledge, the
counterparties thereto.
21
(b) The
Company and its Subsidiaries and, to the Company’s Knowledge, each of the
Company Joint Ventures have such consents, easements, rights-of-way, permits
or
licenses from each person (collectively, “rights-of-way”)
as are
sufficient to conduct their businesses in all material respects as currently
conducted, except such rights-of-way that, if not obtained, would not,
individually or in the aggregate, have a Company Material Adverse Effect.
Except
as would not, individually or in the aggregate, have a Company Material Adverse
Effect, each of the Company and its Subsidiaries and, to the Company’s
Knowledge, each of the Company Joint Ventures has fulfilled and performed
all
its obligations with respect to such rights-of-way and no event has occurred
that allows, or after notice or lapse of time would allow, revocation or
termination thereof or would result in any impairment of the rights of the
holder of any such rights-of-way, except for such revocations, terminations
and
impairments that do not affect the commercial use of the property for the
purposes for which the property is currently being used and except for rights
reserved to, or vested in, any municipality or other Governmental Entity
or any
railroad by the terms of any right, power, franchise, grant, license, permit,
or
by any other provision of any applicable Law, to terminate or to require
annual
or other periodic payments as a condition to the continuance of such
right.
Section
3.19 Insurance.
The
Company and its Subsidiaries and, to the Company’s Knowledge, the Company Joint
Ventures maintain, or are entitled to the benefits of, insurance covering
their
properties, operations, personnel and businesses in the amounts set forth
in
Section
3.19
of the
Company Disclosure Letter. Except as would not have, individually or in the
aggregate, a Company Material Adverse Effect, none of the Company or its
Subsidiaries or, to the Company’s Knowledge, the Company Joint Ventures has
received notice from any insurer or agent of such insurer that substantial
capital improvements or other expenditures will have to be made in order
to
continue such insurance, and all such insurance is outstanding and duly in
force.
Section
3.20 Opinion
of Financial Advisor.
The
Board
of Directors of the Company and the Special Committee have received the opinion
of each of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated and The Blackstone Group, L.P.,
dated as of August 27, 2006, to the effect that, as of the date thereof,
the
Merger Consideration was fair to the holders of the Company Common Stock
(other than those holders that are parties to a Rollover Commitment, Parent
and
Merger Sub) from a financial point of view.
Section
3.21 Required
Vote of the Company Stockholders.
The
affirmative vote of the holders of outstanding shares of Company Common Stock,
voting together as a single class, representing at least two-thirds of all
the
votes then entitled to vote at a meeting of stockholders, is the only vote
of
holders of securities of the Company which is required to approve this
Agreement, the Merger and the other transactions contemplated hereby (the
“Company
Stockholder Approval”).
22
Section
3.22 Material
Contracts.
(a) Except
for this Agreement, the Company Benefit Plans or as filed with the SEC prior
to
the date hereof, neither the Company nor any of its Subsidiaries nor, to
the
Company’s Knowledge, the Company Joint Ventures is a party to or bound by, as of
the date hereof, any Contract (whether written or oral) (i) which is a
“material contract” (as such term is defined in Item 601(b)(10) of Regulation
S-K of the SEC) to the Company or ▇▇▇▇▇▇ ▇▇▇▇▇▇ Energy Partners, L.P. or
▇▇▇▇▇▇
▇▇▇▇▇▇ Management, LLC ; (ii) to the Company’s Knowledge, which is an
agreement relating to the formation of or specifying the rights of the interest
holders in a Company Joint Venture; (iii) which constitutes a contract or
commitment relating to indebtedness for borrowed money or the deferred purchase
price of property (in either case, whether incurred, assumed, guaranteed
or
secured by any asset) in excess of $10,000,000; or (iv) which contains any
provision that prior to or following the Effective Time would materially
restrict or alter the conduct of business of, or purport to materially restrict
or alter the conduct of business of, whether or not binding on, Parent or
any
Affiliate of the Parent (other than the Company, any of its Subsidiaries
or any
director, officer or employee of any of the Company or any of its Subsidiaries)
(all contracts of the type described in this Section
3.22(a)
being
referred to herein as “Company
Material Contracts”).
Neither the Company nor any of its Subsidiaries nor, to the Company’s Knowledge,
the Company Joint Ventures is a party to any Contract (other than any Contracts
to which Parent or any Affiliate of Parent is a party) that purports to be
binding on, or imputes any obligations on, Parent or any Affiliate of Parent
other than (i) the Company or its Subsidiaries or (ii) any employee,
officer or director of the Company or any of its Subsidiaries (in such
capacity).
(b) (i)
Each Company Material Contract is valid and binding on the Company and any
of
its Subsidiaries and, to the Company’s Knowledge, the Company Joint Ventures
that is a party thereto, as applicable, and in full force and effect, except
where the failure to be valid, binding and in full force and effect, either
individually or in the aggregate, would not have a Company Material Adverse
Effect, (ii) the Company and each of its Subsidiaries and, to the Company’s
Knowledge, each of the Company Joint Ventures has in all material respects
performed all obligations required to be performed by it to date under each
Company Material Contract, except where such noncompliance, either individually
or in the aggregate, would not have a Company Material Adverse Effect, and
(iii) neither the Company nor any of its Subsidiaries nor, to the Company’s
Knowledge, any of the Company Joint Ventures has received written notice
of, or
to the Company’s Knowledge, knows of, the existence of any event or condition
which constitutes, or, after notice or lapse of time or both, will constitute,
a
material default on the part of the Company or any of its Subsidiaries or,
to
the Company’s Knowledge, the Company Joint Ventures under any such Company
Material Contract, except where such default, either individually or in the
aggregate, would not have a Company Material Adverse Effect.
Section
3.23 Finders
or Brokers.
Except
for ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated and The Blackstone Group, L.P.,
neither the Company nor any of its Subsidiaries has engaged any investment
banker, broker or finder in connection with the transactions contemplated
by
this Agreement who might be entitled to any fee or any commission in connection
with or upon consummation of the Merger or the other transactions contemplated
hereby.
23
Section
3.24 State Takeover Statutes; Charter Provisions. As of the
date of this Agreement, the Company is not an "issuing public corporation"
for
purposes of Section 17-1286 et seq. of the Kansas Statutes Annotated
("KSA"), and the Board of Directors of the Company, on August 27, 2006,
approved this Agreement, the Voting Agreement, the Rollover Commitments entered
into on the date of this Agreement, the Merger and the other transactions
contemplated thereby for purposes of Section 17-12, 100 et. seq. of the
KSA. Other than Article Seventh of the Company’s Restated Articles of
Incorporation, no other provision of the Company’s Restated Articles of
Incorporation impacts the vote required for the Merger or other transactions
contemplated hereby.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF PARENT AND MERGER SUB
Except
as
disclosed in the disclosure letter delivered by Parent to the Company
immediately prior to the execution of this Agreement (the “Parent
Disclosure Letter”),
Parent and Merger Sub jointly and severally represent and warrant to the
Company
as follows:
Section
4.1 Qualification;
Organization.
(a) Each
of
Parent and Merger Sub is a legal entity duly organized, validly existing
and in
good standing under the Laws of its respective jurisdiction of organization.
Each of Parent and Merger Sub has all requisite corporate, limited liability
company, or similar power and authority to own, lease and operate its properties
and assets and to carry on its business as presently conducted, except where
the
failure to have such power or authority would not, individually or in the
aggregate, have a Parent Material Adverse Effect.
(b) Each
of
Parent and Merger Sub is qualified to do business and is in good standing
as a
foreign corporation or limited liability company, as applicable, in each
jurisdiction where the ownership, leasing or operation of its assets or
properties or conduct of its business requires such qualification, except
where
the failure to be so qualified or in good standing would not, individually
or in
the aggregate, prevent or materially delay or materially impair the ability
of
Parent or Merger Sub to consummate the Merger and the other transactions
contemplated hereby (a “Parent
Material Adverse Effect”).
The
organizational or governing documents of the Parent and Merger Sub, as
previously provided to the Company, are in full force and effect. Neither
Parent
nor Merger Sub is in violation of its organizational or governing
documents.
Section
4.2 Corporate
Authority Relative to This Agreement; No Violation.
(a) Each
of
Parent and Merger Sub has all requisite corporate or limited liability company,
as applicable, power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery
of
this Agreement and the consummation of the transactions contemplated hereby
have
been duly and validly authorized by the Members of Parent and the Board of
Directors of Merger Sub and no other corporate proceedings on the part of
Parent
or Merger Sub are necessary to authorize the consummation of the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by Parent and Merger Sub and, assuming this Agreement constitutes
the
valid and binding agreement of the Company, this Agreement constitutes the
valid
and binding agreement of Parent and Merger Sub, enforceable against each
of
Parent and Merger Sub in accordance with its terms, subject to the effects
of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and
other similar laws relating to or affecting creditors’ rights generally, general
equitable principles (whether considered in a proceeding in equity or at
law)
and any implied covenant of good faith and fair dealing.
24
(b) Other
than in connection with or in compliance with (i) the provisions of the
KGCC, (ii) the Exchange Act, (iii) the HSR Act, (iv) Competition
Act (Canada) and (v) the approvals set forth on Section
4.2(b)
of the
Parent Disclosure Letter (collectively, the “Parent
Approvals”),
no
authorization, consent or approval of, or filing with, any Governmental Entity
is necessary for the consummation by Parent or Merger Sub of the transactions
contemplated by this Agreement, except for such authorizations, consents,
approvals or filings, that, if not obtained or made, would not have,
individually or in the aggregate, a Parent Material Adverse Effect.
(c) The
execution and delivery by Parent and Merger Sub of this Agreement does not,
and
the consummation of the transactions contemplated hereby and compliance with
the
provisions hereof will not (i) result in any violation of, or default (with
or without notice or lapse of time, or both) under, require consent under,
or
give rise to a right of termination, cancellation or acceleration of any
obligation or to the loss of any benefit under any loan, guarantee of
indebtedness or credit agreement, note, bond, mortgage, indenture, lease,
agreement, contract, instrument, permit, concession, franchise, right or
license
binding upon Parent or any of its Subsidiaries or result in the creation
of any
Lien upon any of the properties or assets of Parent or any of its Subsidiaries,
(ii) conflict with or result in any violation of any provision of the
certificate of incorporation or by-laws or other equivalent organizational
document, in each case as amended, of Parent or any of its Subsidiaries or
(iii) conflict with or violate any applicable Laws, other than, in the case
of clauses (i) and (iii), any such violation, conflict, default, termination,
cancellation, acceleration, right, loss or Lien that would not have,
individually or in the aggregate, a Parent Material Adverse Effect.
Section
4.3 Proxy
Statement; Other Information.
None of
the information supplied or to be supplied by Parent or Merger Sub in writing
for inclusion or incorporation by reference in the Proxy Statement will at
the
time of the mailing of the Proxy Statement to the stockholders of the Company,
at the time of the Company Meeting, and at the time of any amendments thereof
or
supplements thereto, and none of the information supplied or to be supplied
by
Parent or Merger Sub and contained in the Schedule 13E-3 to be filed with
the SEC concurrently with the filing of the Proxy Statement, will, at the
time
of its filing with the SEC, and at the time of any amendments thereof or
supplements thereto, contain any untrue statement of a material fact or omit
to
state any material fact required to be stated therein or necessary in order
to
make the statements therein, in light of the circumstances under which they
were
made, not misleading.
Section
4.4 Financing.
Section
4.4
of the
Parent Disclosure Letter sets forth true, accurate and complete copies, as
of the date hereof, of (i) executed equity commitment letters to
provide equity financing to Parent and/or Merger Sub, (ii) the Rollover
Commitments, (iii) executed debt commitment letters and related term sheets
(the “Debt
Commitment Letters”
and
together with the equity commitment letters described in clause (i), the
“Financing
Commitments”)
pursuant to which, and subject to the terms and conditions thereof, certain
lenders have committed to provide Parent or the Surviving Corporation with
loans
in the amounts described therein, the proceeds of which may be used to
consummate the Merger and the other transactions contemplated hereby (the
“Debt
Financing”
and,
together with the equity financing referred to in clause (i) and the Rollover
Commitments, the “Financing”).
As of
the date hereof, each of the Financing Commitments, in the form so delivered,
is
a legal, valid and binding obligation of Parent or Merger Sub, to the Parent’s
Knowledge, the other parties thereto. The Financing Commitments are in full
force and effect and have not been withdrawn or terminated (and no party
thereto
has indicated an intent to so withdraw or terminate) or otherwise amended
or
modified in any respect (except that it is acknowledged that, following the
date
hereof, amounts committed pursuant to the equity commitment letters
referred to in clause (i) are contemplated to be decreased in amounts equal
to
the increase in equity provided by the cash and rollover equity value
represented by new Rollover Commitments) and neither Parent nor Merger Sub
is in breach of any of the terms or conditions set forth therein and no event
has occurred which, with or without notice, lapse of time or both, could
reasonably be expected to constitute a material breach or failure to satisfy
a
condition precedent set forth therein. Assuming that the number of
shares to be rolled over pursuant to the Rollover Commitments are
contributed to Parent or one of its Subsidiaries prior to the Effective Time,
the proceeds from the Financing constitute all of the financing required
for the
consummation of Merger and the other transactions contemplated hereby, and
are
sufficient for the satisfaction of all of Parent’s and Merger Sub’s obligations
under this Agreement, including the payment of the Merger Consideration and
the
Option and Stock-Based Consideration. Parent or Merger Sub has fully paid
any
and all commitment fees or other fees on the dates and to the extent required
by
the Financing Commitments. The Financing Commitments contain all of the
conditions precedent to the obligations of the parties thereunder to make
the
Financing available to Parent on the terms therein. Notwithstanding anything
in
this Agreement to the contrary, the Debt Commitment Letters may be superseded
at
the option of Parent or Merger Sub after the date of this Agreement but prior
to
the Effective Time by the New Financing Commitments in accordance with
Section
5.10.
In such
event, the term “Financing Commitment” as used herein shall be deemed to include
the New Financing Commitments to the extent then in effect.
25
Section
4.5 Ownership
and Operations of Merger Sub.
As of
the date of this Agreement, the authorized capital stock of Merger Sub consists
of 100 shares of common stock, par value $0.01 per share, all of which are
validly issued and outstanding. All of the issued and outstanding capital
stock
of Merger Sub is, and at the Effective Time will be, owned by Parent or a
direct
or indirect wholly owned Subsidiary of Parent. Neither Parent nor Merger
Sub has
conducted any business other than incident to its formation and pursuant
to this
Agreement, the Merger and the other transactions contemplated hereby and
the
financing of such transactions.
Section
4.6 Finders
or Brokers.
Except
for ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co., neither Parent nor any of its Subsidiaries has
engaged any investment banker, broker or finder in connection with the
transactions contemplated by this Agreement who might be entitled to any
fee or
any commission in connection with or upon consummation of the Merger or the
other transactions contemplated hereby.
Section
4.7 Ownership
of Shares.
Neither
Parent, as of the date hereof, nor Merger Sub owns any Shares, beneficially,
of
record or otherwise. Immediately prior to the Effective Time, Parent or Merger
Sub will only own those Shares subject to the Rollover Commitments.
Section
4.8 Certain Arrangements. Other than the Voting Agreement, the
Rollover Commitments entered into on the date of this Agreement and the Original
LLC Agreement, there are no Contracts between Parent, Merger Sub or the
Guarantors, on the one hand, and any member of the Company’s management or
directors, on the other hand, as of the date hereof that relate in any way
to
the Company or the transactions contemplated by this Agreement. Parent has
provided the Special Committee with true, correct and complete copies of
the
Voting Agreement, the Rollover Commitments entered into on the date of this
Agreement and the Original LLC Agreement. Prior to the Board of Directors
of the Company approving this Agreement, the Voting Agreement, the Rollover
Commitments entered into on the date of this Agreement, the Merger and the
other transactions contemplated thereby for purposes of Section 17-12, 100
et. seq. of the KSA, neither Parent nor Merger Sub, alone or together with
any other person, has taken any action that would cause Section 17-12, 100
et seq. of the KSA to be applicable to this Agreement, the Merger, or
any transactions contemplated by this Agreement.
26
Section
4.9 Investigations;
Litigation.
There
are no suits, claims, actions, proceedings, arbitrations, mediations or
investigations pending or, to the Knowledge of Parent, threatened against
Parent
or any of its Subsidiaries, other than any such suit, claim, action, proceeding
or investigation that would have, individually or in the aggregate, a Parent
Material Adverse Effect. As of the date hereof, neither Parent nor any of
its
Subsidiaries nor any of their respective properties is or are subject to
any
order, writ, judgment, injunction, decree or award that would have, individually
or in the aggregate, a Parent Material Adverse Effect.
Section
4.10 Guarantees.
Concurrently with the execution of this Agreement, each of the Guarantors
has
delivered to the Company the Guarantees, dated as of the date hereof, in
favor
of the Company, in the form set forth in Section 4.10 of the Parent Disclosure
Letter, with respect to the performance by Parent and Merger Sub, respectively,
of their obligations under this Agreement.
Section
4.11 No
Other Information.
Parent
and Merger Sub acknowledge that the Company makes no representations or
warranties as to any matter whatsoever except as expressly set forth in
ARTICLE
III.
The
representations and warranties set forth in ARTICLE III are made solely by
the
Company, and no Representative of the Company shall have any responsibility
or
liability related thereto.
Section
4.12 Access
to Information; Disclaimer. Parent
and Merger Sub each acknowledges and agrees that it (a) has had an opportunity
to discuss the business of the Company and its Subsidiaries with the management
of the Company, (b) has had reasonable access to the books and records of
the
Company, its Subsidiaries and Company Joint Ventures, (c) has been afforded
the
opportunity to ask questions of and receive answers from officers of the Company
and (d) has conducted its own independent investigation of the Company and
its
Subsidiaries, their respective businesses and the transactions contemplated
hereby, and has not relied on any representation, warranty or other statement
by
any Person on behalf of the Company or any of its Subsidiaries or Joint Venture
Companies, other than the representations and warranties of the Company
expressly contained in ARTICLE III of this Agreement and that all other
representations and warranties are specifically disclaimed.
27
ARTICLE
V
COVENANTS
AND AGREEMENTS
Section
5.1 Conduct
of Business by the Company.
(a) From
and
after the date hereof and prior to the Effective Time or the date, if any,
on
which this Agreement is earlier terminated pursuant to Section
7.1
(the
“Termination
Date”),
and
except (i) as may be required by applicable Law, (ii) with the prior
written consent of Parent, (iii) as expressly contemplated or permitted by
this
Agreement or (iv) as disclosed in Section
5.1
of the
Company Disclosure Letter, the Company shall, and shall cause each of its
Subsidiaries to, (i) conduct its business in all material respects in the
ordinary course consistent with past practices, (ii) use commercially
reasonable efforts to maintain and preserve intact its business organization
and
advantageous business relationships and to retain the services of its key
officers and key employees and (iii) take no action which would materially
adversely affect or materially delay the ability of any of the parties hereto
from obtaining any necessary approvals of any regulatory agency or other
Governmental Entity required for the transactions contemplated hereby,
performing its covenants and agreements under this Agreement or consummating
the
transactions contemplated hereby or otherwise materially delay or prohibit
consummation of the Merger or other transactions contemplated hereby; provided,
however, that no action by the Company or its Subsidiaries with respect to
matters specifically addressed by any other provision of this Section
5.1
shall be
deemed a breach of this sentence unless such action would constitute a breach
of
such other provision.
(b) The
Company agrees with Parent that between the date hereof and the Effective
Time,
except as set forth in Section
5.1(b)
of the
Company Disclosure Letter or expressly contemplated or expressly permitted
by this Agreement, the Company shall not, and shall not permit any of its
Subsidiaries to, without the prior written consent of Parent:
(i) adjust,
split, combine or reclassify any capital stock or otherwise amend the terms
of
its capital stock;
(ii) make,
declare or pay any dividend, or make any other distribution on, or directly
or
indirectly redeem, purchase or otherwise acquire or encumber, any shares
of its
capital stock or any securities or obligations convertible (whether currently
convertible or convertible only after the passage of time or the occurrence
of
certain events) into or exchangeable for any shares of its capital stock,
except
in connection with cashless exercises or similar transactions pursuant to
the
exercise of stock options or other awards issued and outstanding as of the
date
hereof under the Company Stock Plans or permitted hereunder to be granted
after
the date hereof; provided
that the
Company may continue to pay its quarterly cash dividends in the ordinary
course
of its business consistent with past practices (but in no event in an amount
in
excess of $0.875 per quarter) and that this Section
5.1(b)(ii)
shall
not apply dividends or distributions paid in cash by Subsidiaries to the
Company
or to other Subsidiaries in the ordinary course of business consistent with
past
practice;
28
(iii) grant
any
person any right to acquire any shares of its capital stock;
(iv) issue
any
additional shares of capital stock except pursuant to the exercise of stock
options or other awards issued under the Company Stock Plans issued and
outstanding as of the date hereof and in accordance with the terms of such
instruments; provided,
that
except
as
disclosed in Section
5.1(b)(iv)
of the
Company Disclosure Letter, the Company shall not issue any Shares under the
Stock Purchase Plans;
(v) purchase,
sell, transfer, mortgage, encumber or otherwise dispose of any properties
or
assets having a value in excess of $50 million in the aggregate (other than
commodity, purchase, sale or hedging agreements in the ordinary course of
business), except as disclosed in Section
5.1(b)(v)
of the
Company Disclosure Letter;
(vi) make
any
capital expenditures not contemplated by the capital expenditure budget having
an aggregate value in excess of $50 million for any 12 consecutive month
period;
(vii) incur,
assume, guarantee, or become obligated with respect to any debt, which when
taken together with all other debt of the Company and its Subsidiaries would
result in there being indebtedness of the Company and its Subsidiaries greater
than $7.925 billion in the aggregate outstanding at any given time (excluding
intercompany debt), or any debt which contains covenants that materially
restrict the Merger or that are materially inconsistent with the Financing
Commitments in effect as of the date hereof;
(viii) make
any
investment in excess of $50 million in the aggregate, whether by purchase
of
stock or securities, contributions to capital, property transfers, or entering
into binding agreements with respect to any such investment or acquisition;
(ix) make
any
acquisition of another Person or business in excess of $50 million in the
aggregate, whether by purchase of stock or securities, contributions to capital,
property transfers, or entering into binding agreements with respect to any
such
investment or acquisition;
(x) except
in
the ordinary course of business consistent with past practice, enter into,
renew, extend, materially amend or terminate (A) any Company Material Contract
or Contract which if entered into prior to the date hereof would be a Company
Material Contract, in each case, other than any Contract relating to
indebtedness that would not be prohibited under clause (vii) of this
Section
5.1(b),
or (B)
any Contracts not in the ordinary course, involving the commitment or transfer
of value in excess of $50 million in the aggregate in any year;
29
(xi) except
to
the extent required by Law or by Contracts in existence as of the date hereof
or
as disclosed in Section 5.1(b)(xi) of the Company Disclosure Letter,
(A) increase in any manner the compensation or benefits of any of its
employees, directors, consultants, independent contractors or service providers
except in the ordinary course of business consistent with past practice
(including, for this purpose, the normal employee salary, bonus and equity
compensation review process conducted each year), (B) pay any pension,
severance or retirement benefits not required by any existing plan or agreement
to any such employees, directors, consultants, independent contractors or
service providers, (C) enter into, amend, alter (other than amendments that
are immaterial to the participants or employees, directors, consultants,
independent contractors or service providers who are party and do not materially
increase the cost to the Company or any of its Subsidiaries of maintaining
the
applicable compensation or benefit program, policy, arrangement or agreement),
adopt, implement or otherwise commit itself to any compensation or benefit
plan,
program, policy, arrangement or agreement including any pension, retirement,
profit-sharing, bonus or other employee benefit or welfare benefit plan,
policy,
arrangement or agreement or employment or consulting agreement with or for
the
benefit of any employee, director, consultant, independent contractor or
service
provider, (D) accelerate the vesting of, or the lapsing of restrictions
with respect to, any stock options or other stock-based compensation,
(E) cause the funding of any rabbi trust or similar arrangement or take any
action to fund or in any other way secure the payment of compensation or
benefits under any Company Benefit Plan, or (F) materially change any
actuarial or other assumptions used to calculate funding obligations with
respect to any Company Benefit Plan or change the manner in which contributions
to such plans are made or the basis on which such contributions are determined,
except as may be required by GAAP or applicable Law;
(xii) waive,
release, assign, settle or compromise any claim, action or proceeding, other
than waivers, releases, assignments, settlements or compromises that involve
only the payment of monetary damages not in excess of $50 million in the
aggregate (excluding amounts to be paid under existing insurance policies)
or
otherwise pay, discharge or satisfy any claims, liabilities or obligations
in
excess of such amount, in each case, other than in the ordinary course
consistent with past practice;
(xiii) amend
or
waive any provision of its articles of incorporation or its by-laws, partnership
agreement, operating agreement or other equivalent organizational documents
or,
in the case of the Company, enter into any agreement with any of its
stockholders in their capacity as such;
(xiv) take
or
omit to take any action that is intended or would reasonably be expected
to,
individually or in the aggregate, result in any of the conditions to the
Merger
set forth in ARTICLE
VI
not
being satisfied or satisfaction of those conditions being materially delayed
in
violation of any provision of this Agreement;
(xv) enter
into any “non-compete” or similar agreement that would materially restrict the
businesses of the Surviving Corporation or its Subsidiaries following the
Effective Time or that would in any way restrict the businesses of Parent
or its
Affiliates (excluding the Surviving Corporation, its Subsidiaries) or take
any
action that may impose new or additional material regulatory requirements
on any
Affiliate of Parent (excluding the Surviving Corporation and its
Subsidiaries);
30
(xvi) adopt
a
plan of complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of such
entity;
(xvii) implement
or adopt any material change in its Tax or financial accounting principles,
practices or methods, other than as required by GAAP, applicable Law or
regulatory guidelines;
(xviii) enter
into any closing agreement with respect to material Taxes, settle or compromise
any material liability for Taxes, make, revoke or change any material Tax
election, agree to any adjustment of any material Tax attribute, file or
surrender any claim for a material refund of Taxes, execute or consent to
any
waivers extending the statutory period of limitations with respect to the
collection or assessment of material Taxes, file any material amended Tax
Return
or obtain any material Tax ruling;
(xix) enter
into any new, or materially amend or otherwise materially alter any current,
Affiliate Transaction or transaction which would be an Affiliate Transaction
if
such transaction occurred prior to the date hereof;
(xx) take
any
material action with respect to any Affiliate of the Company (other than
any
wholly owned Subsidiaries of the Company or any Company Joint Venture) that
is
outside the ordinary course of business consistent with past
practices;
(xxi) agree
to
take, make any commitment to take, or adopt any resolutions of its Board
of
Directors in support of, any of the actions prohibited by this Section
5.1(b);
or
(xxii) sell,
contribute or otherwise directly or indirectly transfer, exchange, or dispose
(or authorize or permit any such transfer, exchange or disposition) of
(A) any of its limited or general partnership interests in ▇▇▇▇▇▇ ▇▇▇▇▇▇
Energy Partners, L.P.; (B) any equity interest in KMGP or (C) any of
its interests in ▇▇▇▇▇▇ ▇▇▇▇▇▇ Management, LLC.
Section
5.2 Investigation.
(a) From
the
date hereof until the Effective Time and subject to the requirements of
applicable Laws, the Company shall, and shall request KMP and KMR to,
(i) provide to Parent, its counsel, financial advisors, auditors and other
authorized representatives reasonable access during normal business hours
to the
offices, properties, books and records of the Company and its Subsidiaries
and
of KMP and KMR, (ii) furnish to Parent, its counsel, financial advisors,
auditors and other authorized representatives such financial and operating
data
and other information as such persons may reasonably request (including,
to the
extent possible, furnishing to Parent the financial results of the Company
and
of KMP and KMR in advance of any filing by the Company with the SEC containing
such financial results), and (iii) instruct the employees, counsel,
financial advisors, auditors and other authorized representatives (other
than
directors who are not Employees) of the Company and its Subsidiaries and
of KMP
and KMR to cooperate reasonably with Parent in its investigation of the Company
and its Subsidiaries and KMP and KMR, as the case may be, except that nothing
herein shall require the Company or any of its Subsidiaries to disclose any
information that would cause a violation of any agreement to which the Company
or any of its Subsidiaries or KMP or KMR is a party or would cause a risk
of a
loss of privilege to the Company or any of its Subsidiaries or KMP or KMR.
Any
investigation pursuant to this Section
5.2(a)
shall be
conducted in such manner as not to interfere unreasonably with the conduct
of
the business of the Company, its Subsidiaries, KMP and KMR. No information
or
knowledge obtained by Parent or Merger Sub in any investigation pursuant
to this
Section
5.2(a)
shall
affect or be deemed to modify any representation or warranty made by the
Company
in ARTICLE
III.
31
(b) Parent
hereby agrees that all information provided to it or its counsel, financial
advisors, auditors and other authorized representatives in connection with
this
Agreement and the consummation of the transactions contemplated hereby shall
be
deemed to be “Evaluation Material” to the extent such information would be
considered “Evaluation Material,” in each case, as such term is used in, and
shall be treated in accordance with, the Confidentiality Agreement, dated
as of
June 19, 2006, between the Company and GS Capital Partners Fund V, L.P.;
the
Confidentiality Agreement, dated as of June 20, 2006, between the Company
and
Carlyle Investment Management, LLC; the Confidentiality Agreement, dated
as of
June 20, 2006, between the Company and Carlyle/Riverstone Energy Partners,
III,
L.P.; and the Confidentiality Agreement, dated as of June 20, 2006, between
the
Company and AIG Global Asset Management Holdings Corp. (the “Confidentiality
Agreements”) had
it
been provided prior to the date of this Agreement; provided
that
Parent shall be entitled to share such Confidential Information with prospective
co-investors or limited partners of the members of Parent; provided further,
however,
that
any prospective co-investors or limited partners of the members of Parent
to
whom Parent provides Confidential Information shall, prior to receiving such
Confidential Information, agree in writing to be bound by the confidentiality
provisions of the Confidentiality Agreements or shall execute their own
confidentiality agreements with the Company.
Section
5.3 No
Solicitation.
(a) Subject
to Section
5.3(b)-(g)
and
(k),
the
Company agrees that neither it nor any Subsidiary of the Company shall, and
that
it shall direct its and their respective officers, directors, employees,
agents
and representatives, including any investment banker, attorney or accountant
retained by it or any of its Subsidiaries (“Representatives”)
not
to, directly or indirectly, (i) initiate, solicit, knowingly encourage
(including by providing information) or facilitate any inquiries, proposals
or
offers with respect to, or the making or completion of, an Alternative Proposal,
(ii) engage or participate in any negotiations concerning, or provide or
cause to be provided any non-public information or data relating to the Company,
any of its Subsidiaries, any Company Joint Venture, KMP or KMR in connection
with, or have any discussions with any person relating to, an actual or proposed
Alternative Proposal, or otherwise knowingly encourage or facilitate any
effort
or attempt to make or implement an Alternative Proposal, (iii) approve,
endorse or recommend, or propose publicly to approve, endorse or recommend,
any
Alternative Proposal, (iv) approve, endorse or recommend, or propose to
approve, endorse or recommend, or execute or enter into, any letter of intent,
agreement in principle, merger agreement, acquisition agreement, option
agreement or other similar agreement relating to any Alternative Proposal,
(v) amend, terminate, waive or fail to enforce, or grant any consent under,
any confidentiality, standstill or similar agreement (provided, that the
Company
shall be permitted to waive any such agreement to permit the counterparty
thereto to make a non-public offer or proposal to the Board of Directors
(or
Special Committee) of the Company with respect to an Alternative Proposal
(except that references in the definition thereof to "20%" shall be deemed
to be
references to "50%" for purposes of this proviso), or (vi) resolve to
propose or agree to do any of the foregoing; provided, however, it is understood
and agreed that any determination or action by the Board of Directors of
the
Company (acting through its Special Committee) permitted under Section
5.3(c)
or
(d),
or
Section
7.1(c)(ii)
shall
not be deemed to be a breach or violation of this Section 5.3(a). Without
limiting the foregoing, it is understood that any violation of the foregoing
restrictions by any Subsidiary of the Company or Representatives of the Company
or any of its Subsidiaries shall be deemed to be a breach of this Section
5.3
by the
Company.
32
(b) The
Company shall, shall cause each of its Subsidiaries to, and shall direct
each of
its Representatives to, immediately cease any existing solicitations,
discussions or negotiations with any Person (other than the parties hereto)
that
has made or indicated an intention to make an Alternative Proposal.
(c) Notwithstanding
anything to the contrary in Section
5.3(a)
or
(b),
the
Company may, in response to an unsolicited Alternative Proposal which did
not
result from or arise in connection with a breach of Section
5.3(a)
and
which the Board of Directors of the Company (acting through its Special
Committee) determines, in good faith, after consultation with its outside
counsel and financial advisors, may reasonably be expected to lead to a Superior
Proposal, (i) furnish non-public information with respect to the Company
and its Subsidiaries and KMP, KMR and any Company Joint Venture to the person
making such Alternative Proposal and its Representatives pursuant to a customary
confidentiality agreement no less restrictive of the other party than the
Confidentiality Agreements; provided that such confidentiality agreement
need
not contain any standstill or similar provision, and (ii) participate in
discussions or negotiations with such person and its Representatives regarding
such Alternative Proposal; provided,
however,
(i)
that Parent shall be entitled to receive an executed copy of such
confidentiality agreement prior to or substantially simultaneously with the
Company furnishing information to the person making such Alternative Proposal
or
its Representatives and (ii) that the Company shall simultaneously provide
or make available to Parent any material non-public information concerning
the
Company or any of its Subsidiaries that is provided to the person making
such
Alternative Proposal or its Representatives which was not previously provided
or
made available to Parent.
(d) Subject
to Section
7.1(c)(ii),
neither
the Board of Directors of the Company nor any committee thereof shall
(i) withdraw or modify in a manner adverse to Parent or Merger Sub, or
publicly propose to withdraw or modify in a manner adverse to Parent or Merger
Sub, the Recommendation, (ii) approve any letter of intent, agreement in
principle, acquisition agreement or similar agreement relating to any
Alternative Proposal or (iii) approve or recommend, or publicly propose to
approve, endorse or recommend, any Alternative Proposal. Notwithstanding
the
foregoing, but subject to Section
5.4(b),
if,
prior to receipt of the Company Stockholder Approval, the Board of Directors
of
the Company or the Special Committee determines in good faith, after
consultation with outside counsel, that failure to so withdraw or modify
its
Recommendation would be inconsistent with the Board of Directors of the
Company’s or the Special Committee’s exercise of its fiduciary duties, the Board
of Directors of the Company or any committee thereof may withdraw or modify
its
Recommendation.
33
(e) The
Company promptly (and in any event within 48 hours) shall advise Parent orally
and in writing of (i) any Alternative Proposal or indication or inquiry
with respect to or that would reasonably be expected to lead to any Alternative
Proposal, (ii) any request for non-public information relating to the
Company, its Subsidiaries, a Company Joint Venture, KMP or KMR, other than
requests for information not reasonably expected to be related to an Alternative
Proposal, and (iii) any inquiry or request for discussion or negotiation
regarding an Alternative Proposal, including in each case the identity of
the
person making any such Alternative Proposal or indication or inquiry and
the
material terms of any such Alternative Proposal or indication or inquiry
(including copies of any document or correspondence evidencing such Alternative
Proposal or inquiry). The Company shall keep Parent reasonably informed on
a
reasonably current basis of the status (including any material change to
the
terms thereof) of any such Alternative Proposal or indication or
inquiry.
(f) Notwithstanding
the foregoing, the Company shall not waive Section 17 1286 et
seq.
and
Section 17 12,100 et
seq.
of the
KGCC with respect to any Person other than Parent, its interestholders and
their
respective Affiliates.
(g) Nothing
contained in this Agreement shall prohibit the Company or its Board of Directors
(or the Special Committee) from (i) disclosing to its stockholders a position
contemplated by Rules 14d-9 and 14e-2(a) promulgated under the Exchange
Act.
(h) As
used
in this Agreement, “Alternative
Proposal”
shall
mean (i) any inquiry, proposal or offer from any Person or group of Persons
other than Parent or one of its Subsidiaries for a merger, reorganization,
consolidation, share exchange, business combination, recapitalization,
liquidation, dissolution or similar transaction involving the Company (or
any
Subsidiary or Subsidiaries of the Company whose business constitutes 20%
or more
of the net revenues, net income or assets of the Company and its Subsidiaries,
taken as a whole), (ii) any proposal for the issuance by the Company of
over 20% of its equity securities or (iii) any proposal or offer to acquire
in any manner, directly or indirectly, over 20% of the equity securities
or
consolidated total assets of the Company and its Subsidiaries, in each case
other than the Merger.
(i) As
used
in this Agreement, “Superior
Proposal”
shall
mean any Alternative Proposal (i) on terms which the Board of Directors of
the Company (or the Special Committee) determines in good faith, after
consultation with the Company’s outside legal counsel and financial advisors, to
be more favorable from a financial point of view to the holders of Company
Common Stock than the Merger (other than those holders of Company Common
Stock
who are party to a Rollover Commitment), taking into account all the terms
and
conditions of such proposal, and this Agreement (including any proposal or
offer
by Parent to amend the terms of this Agreement and the Merger during the
5
Business Day period referred to herein) and (ii) that the Board of
Directors (or Special Committee) believes is reasonably capable of being
completed, taking into account all financial, regulatory, legal and other
aspects of such proposal; provided that the Board of Directors of the Company
(or the Special Committee) shall not so determine that any such proposal
is a
Superior Proposal prior to the time that is 5 Business Days after the time
at
which the Company has complied in all respects with Section
5.3(e)
with
respect to such proposal, and provided
that for
purposes of the definition of "Superior Proposal", the references to "20%"
in
the definition of Company Acquisition Proposal shall be deemed to be references
to "50%."
34
(j) Subject
to applicable Law, the Company agrees that neither it nor any Subsidiary
of the
Company shall, and that it shall direct its Representatives not to, directly or
indirectly, (i) initiate, solicit, encourage (including by providing
information) or facilitate any inquiries, proposals or offers with respect
to,
or the making or completion of, a KMP/KMR Proposal, (ii) engage or
participate in any negotiations concerning, or provide or cause to be provided
any non-public information or data relating to ▇▇▇▇▇▇ ▇▇▇▇▇▇ Energy Partners,
L.P. or ▇▇▇▇▇▇ ▇▇▇▇▇▇ Management, LLC in connection with, or have any
discussions with any person relating to, an actual or proposed KMP/KMR Proposal,
or otherwise knowingly encourage or facilitate any effort or attempt to make
or
implement a KMP/KMR Proposal. As used in this Agreement, a “KMP/KMR
Proposal”
shall
mean (i) any inquiry, proposal or offer from any Person or group of Persons
other than Parent or one of its Subsidiaries for a merger, consolidation,
dissolution, recapitalization or other business combination involving ▇▇▇▇▇▇
▇▇▇▇▇▇ Energy Partners, L.P. or ▇▇▇▇▇▇ ▇▇▇▇▇▇ Management, LLC or any of their
respective Subsidiaries, (ii) any proposal for the issuance by ▇▇▇▇▇▇
▇▇▇▇▇▇ Energy Partners, L.P. or ▇▇▇▇▇▇ ▇▇▇▇▇▇ Management, LLC of over 20%
of
their equity securities or (iii) any proposal or offer to acquire in any
manner, directly or indirectly, over 20% of the equity securities of ▇▇▇▇▇▇
▇▇▇▇▇▇ Energy Partners, L.P. or ▇▇▇▇▇▇ ▇▇▇▇▇▇ Management, LLC or of the
consolidated total assets of ▇▇▇▇▇▇ ▇▇▇▇▇▇ Energy Partners, L.P. or ▇▇▇▇▇▇
▇▇▇▇▇▇ Management, LLC, in each case other than the Merger.
(k) Notwithstanding
anything to the contrary in this Section
5.3,
(i)
none of the provisions of this Section
5.3
that
would require any action or inaction on the part of a Person that is a
Representative of the Company or any of its Subsidiaries that is also a
Representative of KMP or KMR (or KMGP when acting in any capacity on behalf
of
or with respect to KMR or KMP) requires or shall be construed to require
such
Person to take or refrain from taking any action when acting as a Representative
of KMP or KMR (or KMGP), and (ii) no action or inaction taken or not taken
by
such Person when acting as a Representative of KMP or KMR (or KMGP) shall
be
deemed a breach of this Section
5.3.
Section
5.4 Filings;
Other Actions.
(a) As
promptly as reasonably practicable following the date of this Agreement,
the
Company shall prepare the Proxy Statement, and the Company and Parent shall
prepare the Schedule 13E-3. Parent and the Company shall cooperate with
each other in connection with the preparation of the foregoing documents.
The
Company will use its reasonable best efforts to have the Proxy Statement,
and
Parent and the Company will use their reasonable best efforts to have the
Schedule 13E-3, cleared by the SEC as promptly as practicable after such
filing. The Company will use its reasonable best efforts to cause the Proxy
Statement to be mailed to the Company’s stockholders as promptly as practicable
after the Proxy Statement is cleared by the SEC. The Company shall as promptly
as practicable notify Parent of the receipt of any oral or written comments
from
the SEC relating to the Proxy Statement. The Company shall cooperate and
provide
Parent with a reasonable opportunity to review and comment on the draft of
the
Proxy Statement (including each amendment or supplement thereto), and Parent
and
the Company shall cooperate and provide each other with a reasonable opportunity
to review and comment on the draft Schedule 13E-3 (including each amendment
or supplement thereto) and all responses to requests for additional information
by and replies to comments of the SEC, prior to filing such with or sending
such
to the SEC, and Parent and the Company will provide each other with copies
of
all such filings made and correspondence with the SEC with respect thereto.
If
at any time prior to the Effective Time, any information should be discovered
by
any party hereto which should be set forth in an amendment or supplement
to the
Proxy Statement or the Schedule 13E-3 so that the Proxy Statement or the
Schedule 13E-3 would not include any misstatement of a material fact or
omit to state any material fact required to be stated therein or necessary
to
make the statements therein, in the light of the circumstances under which
they
were made, not misleading, the party which discovers such information shall
promptly notify the other parties hereto and, to the extent required by
applicable Law, an appropriate amendment or supplement describing such
information shall be promptly filed by the Company with the SEC and disseminated
by the Company to the stockholders of the Company.
35
(b) Subject
to the other provisions of this Agreement, the Company shall (i) take all
action
necessary in accordance with the KGCC (including, not less than 20 days prior
to
the Company Meeting, notifying each stockholder of record entitled to vote
at
such meeting that appraisal rights are available under Section 17-6712 of
the
KGCC) and its articles of incorporation and by-laws to duly call, give notice
of, convene and hold a meeting of its stockholders as promptly as reasonably
practicable following the mailing of the Proxy Statement for the purpose
of
obtaining the Company Stockholder Approval (such meeting or any adjournment
or
postponement thereof, the “Company
Meeting”),
and
(ii) subject to the Board of Directors of the Company’s or the Special
Committee’s withdrawal or modification of its Recommendation in accordance with
Section
5.3(d),
use
reasonable best efforts to solicit from its stockholders proxies in favor
of the
approval of this Agreement, the Merger and the other transactions contemplated
hereby. Notwithstanding anything in this Agreement to the contrary, unless
this
Agreement is terminated in accordance with Section
7.1
and
subject to compliance with Section
7.2,
the
Company, regardless of whether the Board of Directors (whether or not acting
through the Special Committee, if then in existence) has approved, endorsed
or
recommended an Alternative Proposal or has withdrawn, modified or amended
the
Recommendation, will submit this Agreement for adoption by the stockholders
of
the Company at the Company Meeting.
Section
5.5 Stock
Options and Other Stock-Based Awards; Employee Matters.
(a) Stock
Options and Other Stock-Based Awards.
(i) Except
as
otherwise agreed in writing by Parent and the applicable holder thereof,
each
option or other award to purchase shares of Company Common Stock (each, a
“Company
Stock Option”)
granted under any employee or director equity plans of the Company (the
“Company
Stock Plans”),
whether vested or unvested, that is outstanding immediately prior to the
Effective Time shall, as of the Effective Time, become fully vested and be
converted into the right to receive within three Business Days following
the
Effective Time an amount in cash in U.S. dollars equal to the product of
(x) the total number of shares of Company Common Stock subject to such
Company Stock Option and (y) the excess, if any, of the amount of the
Merger Consideration over the exercise price per share of Company Common
Stock
subject to such Company Stock Option (or if there is not any such excess,
zero)
with the aggregate amount of such payment rounded to the nearest cent (the
aggregate amount of such cash hereinafter referred to as the “Option
Consideration”)
less
such amounts as are required to be withheld or deducted under the Code or
any
provision of U.S., state, local or foreign Tax Law with respect to the making
of
such payment.
36
(ii) Except
as
otherwise agreed in writing by Parent and the applicable holder thereof,
at the
Effective Time, each right of any kind, contingent or accrued, to receive
shares
of Company Common Stock or benefits measured in whole or in part by the value
of
a number of shares of Company Common Stock granted under the Company Stock
Plans
or Company Benefit Plans (including performance shares, restricted stock,
restricted stock units, phantom units, deferred stock units and dividend
equivalents), other than Restricted Shares (as hereinafter defined), shares
acquired by participants pursuant to the terms of the Company’s Employee Stock
Purchase Plan and the Company’s Foreign Subsidiary Employees Stock Purchase
Plan, and Company Stock Options (each, other than Restricted Shares, Purchase
Plan Shares and Company Stock Options, a “Company
Stock-Based Award”),
whether vested or unvested, which is outstanding immediately prior to the
Effective Time shall cease to represent a right or award with respect to
shares
of Company Common Stock, shall become fully vested and shall entitle the
holder
thereof to receive, at the Effective Time an amount in cash equal to the
Merger
Consideration in respect of each Share underlying a particular Company
Stock-Based Award (the aggregate amount of such cash, together with the Option
Consideration, hereinafter referred to as the “Option
and Stock-Based Consideration”)
less
such amounts as are required to be withheld or deducted under the Code or
any
provision of U.S., state, local or foreign Tax Law with respect to the making
of
such payment.
(iii) Except
as
otherwise agreed in writing by Parent and the applicable holder thereof,
immediately prior to the Effective Time, each award of restricted Company
Common
Stock (the “Restricted
Shares”)
shall
vest in full and be converted into the right to receive the Merger Consideration
as provided in Section 2.1(a).
(iv) At
the
Effective Time, the Company’s Employees Stock Purchase Plan and the Company’s
Foreign Subsidiary Employees Stock Purchase Plan (the “Stock
Purchase Plans”)
shall
terminate. In connection with such termination, the Company shall refund
to the
participants in the Stock Purchase Plans any accumulated payroll deductions
in
respect of any purchase period ending after the Effective Time. The participants
in the Stock Purchase Plans shall be entitled to continue to make purchases
of
Company Common Stock pursuant to the terms of the Stock Purchase Plans for
any
purchase period ending prior to the Effective Time and such shares of Company
Common Stock shall be converted into the right to receive the Merger
Consideration in accordance with Section
2.1(a).
After
the date hereof, no participant in the Company's Foreign Subsidiary Employees
Stock Purchase Plan may increase the percentage amount of his or her payroll
deduction election from those in effect on the date hereof.
37
(v) Prior
to
the Effective Time, the Compensation Committee of the Board of Directors
of the
Company, or the Board of Directors of the Company, as appropriate, shall
make
such adjustments and amendments to, make such determinations or take such
actions with respect to Company Stock Plans, Company Stock Options, Company
Benefit Plans, Company Stock-Based Awards, Restricted Shares and Purchase
Plan
Shares, including obtaining consents where necessary, to implement the foregoing
provisions of this Section
5.5.
(b) Employee
Matters.
(i) From
and
after the Effective Time, Parent shall honor all Company Benefit Plans and
compensation arrangements and agreements in accordance with their terms as
in
effect immediately before the Effective Time, provided that nothing herein
shall
limit the right of the Company or Parent from amending or terminating such
plans, arrangements and agreements in accordance with their terms. For a
period
of one (1) year following the Effective Time, Parent shall provide, or shall
cause to be provided, to each current and former employee of the Company
and its
Subsidiaries other than such employees covered by collective bargaining
agreements (“Company
Employees”)
compensation opportunities (excluding the value of equity-based awards) and
benefits that are substantially comparable, in the aggregate, to the
compensation opportunities and benefits provided to Company Employees
immediately before the Effective Time, it being understood that that the
total
package of such compensation and benefits may be different from the compensation
and benefits provided to the Company Employees prior to the Effective
Time.
(ii) For
all
purposes (including purposes of vesting, eligibility to participate and level
of
benefits) under the employee benefit plans of Parent and its Subsidiaries
providing benefits to any Company Employees after the Effective Time as required
pursuant to this Section
5.5(b)
(the
“New
Plans”),
each
Company Employee shall be credited with his or her years of service with
the
Company and its Subsidiaries and their respective predecessors before the
Effective Time, to the same extent as such Company Employee was entitled,
before
the Effective Time, to credit for such service under any similar Company
employee benefit plan in which such Company Employee participated or was
eligible to participate immediately prior to the Effective Time, provided
that
the foregoing shall not apply with respect to benefit accrual under any defined
benefit pension plan (other than the ▇▇▇▇▇▇ ▇▇▇▇▇▇ Inc. Retirement Plan)
or to
the extent that its application would result in a duplication of benefits.
In
addition, and without limiting the generality of the foregoing, to the extent
permitted by such plans, (A) each Company Employee shall be immediately eligible
to participate, without any waiting time, in any and all New Plans to the
extent
coverage under such New Plan is comparable to a Company Benefit Plan in which
such Company Employee participated immediately before the consummation of
the
Merger (such plans, collectively, the “Old
Plans”),
and
(B) for purposes of each New Plan providing medical, dental, pharmaceutical
and/or vision benefits to any Company Employee, Parent shall cause all
pre-existing condition exclusions and actively-at-work requirements of such
New
Plan to be waived for such employee and his or her covered dependents, unless
such conditions would not have been waived under the comparable plans of
the
Company or its Subsidiaries in which such employee participated immediately
prior to the Effective Time and Parent shall cause any eligible expenses
incurred by such employee and his or her covered dependents during the portion
of the plan year of the Old Plan ending on the date such employee’s
participation in the corresponding New Plan begins to be taken into account
under such New Plan for purposes of satisfying all deductible, coinsurance
and
maximum out-of-pocket requirements applicable to such employee and his or
her
covered dependents for the applicable plan year as if such amounts had been
paid
in accordance with such New Plan.
38
(iii) Nothing
contained herein shall be construed as requiring Parent or the Surviving
Corporation to continue (or resume) the employment of any specific
person.
(iv) Without
limiting the generality of Section
8.10,
no
provision of this Section
5.5
shall be
construed to create any third party beneficiary rights in any employee, officer,
current or former director or consultant of the Company or its Subsidiaries,
or
any beneficiary of such employee, officer, director or consultant under a
Company Benefit Plan or otherwise.
Section
5.6 Efforts.
(a) Subject
to the terms and conditions set forth in this Agreement, each of the parties
hereto shall, and the Company shall cause each of its Subsidiaries to, and
shall
request each of KMP and the Company Joint Ventures to, use its reasonable
best
efforts (subject to, and in accordance with, applicable Law) to take promptly,
or to cause to be taken, all actions, and to do promptly, or to cause to
be
done, and to assist and to cooperate with the other parties in doing, all
things
necessary, proper or advisable to consummate and make effective the Merger
and
the other transactions contemplated hereby, including (i) the obtaining of
all necessary actions or nonactions, waivers, consents and approvals, including
the Company Approvals and the Parent Approvals, from Governmental Entities
and
the making of all necessary registrations and filings and the taking of all
steps as may be necessary to obtain an approval or waiver from, or to avoid
an
action or proceeding by, any Governmental Entity, (ii) the obtaining of all
necessary consents, approvals or waivers from third parties, (iii) the
defending of any lawsuits or other legal proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of the
transactions contemplated hereby and (iv) the execution and delivery of any
additional instruments reasonably necessary to consummate the transactions
contemplated hereby; provided, however, that in no event shall the Company
or
any of its Subsidiaries be required to pay prior to the Effective Time any
fee,
penalties or other consideration to any third party to obtain any consent
or
approval required for the consummation of the Merger under any Contract (other
than de minimis amounts or if Parent and Merger Sub have provided adequate
assurance of repayment).
39
(b) Subject
to the terms and conditions herein provided and without limiting the foregoing,
the Company and Parent shall (i) promptly, but in no event later than
fifteen (15) days after the date hereof, make their respective filings and
thereafter make any other required submissions under the HSR Act as promptly
as
reasonably practicable, (ii) use reasonable best efforts to cooperate with
each other in (x) determining whether any filings are required to be made
with, or consents, permits, authorizations, waivers or approvals are required
to
be obtained from, any third parties or other Governmental Entities in connection
with the execution and delivery of this Agreement and the consummation of
the
transactions contemplated hereby and (y) timely making all such filings and
timely seeking all such consents, permits, authorizations or approvals,
including but not limited to approvals from the California Public Utilities
Commission, the Colorado Public Utilities Commission, the Wyoming Public
Services Commission, the Nebraska Public Utilities Commission and under the
Investment Canada Act and the Competition Act (Canada) (the “Specified
Regulatory Clearances”),
(iii) use reasonable best efforts to take, or to cause to be taken, all
other actions and to do, or to cause to be done, all other things necessary,
proper or advisable to consummate and make effective the Merger and the other
transactions contemplated hereby, including taking all such further action
as
reasonably may be necessary to resolve such objections, if any, as the United
States Federal Trade Commission, the Antitrust Division of the United States
Department of Justice, state or foreign antitrust enforcement authorities
or
competition authorities, other Governmental Entities in connection with the
Specified Regulatory Clearances, or other state or federal regulatory
authorities of any other nation or other jurisdiction or any other person
may
assert under Regulatory Law (as hereinafter defined) with respect to the
Merger
and the other transactions contemplated hereby, and to avoid or eliminate
each
and every impediment under any Law that may be asserted by any Governmental
Entity with respect to the Merger so as to enable the Closing to occur as
soon
as reasonably possible (and in any event no later than the End Date (as
hereinafter defined)), (iv) subject to applicable legal limitations and the
instructions of any Governmental Entity, keep each other apprised of the
status
of matters relating to the completion of the transactions contemplated by
this
Agreement, including to the extent permitted by Law promptly furnishing the
other with true and complete copies of notices or other communications sent
or
received by the Company or Parent, as the case may be, or any of their
Subsidiaries, to or from any third party and/or any Governmental Entity with
respect thereto, and permit the other to review in advance any proposed
communication by such party to any supervisory or Governmental Entity and
(v)
give the other reasonable notice of, and, to the extent permitted by such
Governmental Entity, allow the other to attend and participate at any meeting
with any Governmental Entity in respect of any filings, investigation or
other
inquiry or proceeding relating thereto. Notwithstanding anything in this
Agreement to the contrary, except as provided below, nothing contained in
this
Agreement shall be deemed to require Parent, any of its Subsidiaries, the
Company (unless requested by Parent), or the Surviving Corporation or any
of its
Subsidiaries to take or agree to take any Action of Divestiture or Limitation.
For purposes of this Agreement, an “Action
of Divestiture or Limitation”
shall
mean (i) executing or carrying out agreements or submitting to the
requirements of any Governmental Entity providing for a license, sale or
other
disposition of any material assets or businesses or material categories of
assets or businesses of the Company and its Subsidiaries or the holding separate
of any material assets or businesses or Company capital stock or imposing
or
seeking to impose any material limitation on the ability of the Company or
any
of its Subsidiaries to own such assets or to acquire, hold or exercise full
rights of ownership of the Company’s business or on the ability of the Company
to conduct the business of the Company and its Subsidiaries,
(ii) modification of a Company Permit or the terms of any Contract with any
customer of the Company or any of its subsidiaries in a manner that would
materially affect the Company or (iii) the imposition of any condition or
limitation that would materially affect the Company on or in connection with
any
approval listed on Section
6.3(e)
of the
Parent Disclosure Letter (other than any such condition or limitation to
which
such approval is customarily subject) or that materially restricts the business
of Parent or that materially restricts the business of any of the Affiliates
of
Parent. The Company and Parent shall permit counsel for the other party
reasonable opportunity to review in advance, and consider in good faith the
views of the other party in connection with, any proposed written communication
to any Governmental Entity. Notwithstanding anything in this Agreement to
the
contrary, the Company shall, upon the request of Parent, agree to take any
Action of Divestiture or Limitation so long as such Action of Divestiture
or
Limitation is binding on the Company only in the event the Closing occurs;
provided, however, that the Company shall not be required to take, or cause
to
be taken, any such action with respect to KMP or KMR unless such action is
approved by the Conflicts and Audit Committee thereof in accordance with
Section
6.9 of the Partnership Agreement. Notwithstanding anything in this Agreement
to
the contrary, the Company shall not undertake any Action of Divestiture or
Limitation without the consent of Parent.
40
(c) Subject
to the rights of Parent in Section
5.12,
and in
furtherance and not in limitation of the covenants of the parties contained
in
this Section
5.6,
if any
administrative or judicial action or proceeding, including any proceeding
by a
private party, is instituted (or threatened to be instituted) challenging
the
Merger or any other transaction contemplated by this Agreement, each of the
Company and Parent shall cooperate in all respects with each other and shall
use
their respective reasonable best efforts to contest and resist any such action
or proceeding and to have vacated, lifted, reversed or overturned any decree,
judgment, injunction or other order, whether temporary, preliminary or
permanent, that is in effect and that prohibits, prevents or restricts
consummation of the Merger or any other transactions contemplated hereby.
Notwithstanding the foregoing or any other provision of this Agreement, nothing
in this Section
5.6
shall
limit a party’s right to terminate this Agreement pursuant to Section
7.1(b)(i)
or (ii)
so long as such party has, prior to such termination, complied with its
obligations under this Section
5.6.
(d) For
purposes of this Agreement, “Regulatory
Law”
means
any and all state, federal and foreign statutes, rules, regulations, orders,
decrees, administrative and judicial doctrines and other Laws requiring notice
to, filings with, or the consent or approval of, any Governmental Entity,
or
that otherwise may cause any restriction, in connection with the Merger and
the
transactions contemplated thereby, including (i) the ▇▇▇▇▇▇▇ Act of 1890,
the ▇▇▇▇▇▇▇ Antitrust Act of 1914, the HSR Act, the Federal Trade Commission
Act
of 1914 and all other Laws that are designed or intended to prohibit, restrict
or regulate actions having the purpose or effect of monopolization or restraint
of trade or lessening competition through merger or acquisition, (ii) any
Law governing the direct or indirect ownership or control of any of the
operations or assets of the Company and its Subsidiaries or (iii) any Law
with the purpose of protecting the national security or the national economy
of
any nation.
Section
5.7 Takeover
Statute.
If any
“fair price,” “moratorium,” “control share acquisition” or other form of
anti-takeover statute or regulation shall become applicable to the Merger,
the
Voting Agreement, the Rollover Commitments or the other transactions
contemplated by this Agreement after the date of this Agreement, each of
the
Company and Parent and the members of their respective Boards of Directors
shall
grant such approvals and take such actions as are reasonably necessary so
that
the Merger, the Voting Agreement, the Rollover Commitments and the other
transactions contemplated hereby may be consummated as promptly as practicable
on the terms contemplated herein and otherwise act to eliminate or minimize
the
effects of such statute or regulation on the Merger, the Voting Agreement,
the
Rollover Commitments and the other transactions contemplated
hereby.
Section
5.8 Public
Announcements.
The
Company and Parent will consult with and provide each other the opportunity
to
review and comment upon any press release or other public statement or comment
prior to the issuance of such press release or other public statement or
comment
relating to this Agreement or the transactions contemplated herein and shall
not
issue any such press release or other public statement or comment prior to
such
consultation except as may be required by applicable Law or by obligations
pursuant to any listing agreement with any national securities exchange.
Parent
and the Company agree to issue a joint press release announcing the execution
and delivery of this Agreement.
41
Section
5.9 Indemnification
and Insurance.
(a) Parent
and Merger Sub agree that all rights to exculpation, indemnification and
advancement of expenses for acts or omissions occurring at or prior to the
Effective Time, whether asserted or claimed prior to, at or after the Effective
Time, now existing in favor of the current or former directors, officers
or
employees (in their capacity as such and not as stockholders or option holders
of the Company or its Subsidiaries), as the case may be, of the Company or
its
Subsidiaries or KMP or KMR as provided in their respective certificates of
incorporation or by-laws or other organization documents or in any agreement
shall survive the Merger and shall continue in full force and effect. For
a
period of six (6) years from the Effective Time, Parent and the Surviving
Corporation shall maintain in effect the exculpation, indemnification and
advancement of expenses provisions of the Company’s and any of its Subsidiaries’
(and, unless otherwise required by the independent directors of ▇▇▇▇▇▇ ▇▇▇▇▇▇
Management, LLC, of KMP's and KMR's) articles of incorporation and by-laws
or
similar organization documents in effect immediately prior to the Effective
Time
or in any indemnification agreements of the Company or its Subsidiaries (and,
unless otherwise required by the independent directors of ▇▇▇▇▇▇ ▇▇▇▇▇▇
Management, LLC, of KMP's and KMR's) with any of their respective directors,
officers or employees in effect as of the date hereof, and shall not amend,
repeal or otherwise modify any such provisions in any manner that would
adversely affect the rights thereunder of any individuals who at the Effective
Time were current or former directors, officers or employees of the Company
or
any of its Subsidiaries or KMP or KMR; provided,
however,
that
all rights to indemnification in respect of any Action (as hereinafter defined)
pending or asserted or any claim made within such period shall continue until
the disposition of such Action or resolution of such claim.
(b) From
and
after the Effective Time, each of Parent and the Surviving Corporation shall,
to
the fullest extent permitted under applicable Law, indemnify and hold harmless
(and advance funds in respect of each of the foregoing) each current and
former
director, officer or employee of the Company or any of its Subsidiaries (each,
together with such person’s heirs, executors or administrators, an “Indemnified
Party”)
against any costs or expenses (including advancing reasonable attorneys’ fees
and expenses in advance of the final disposition of any claim, suit, proceeding
or investigation to each Indemnified Party to the fullest extent permitted
by
Law), judgments, fines, losses, claims, damages, liabilities and amounts
paid in
settlement in connection with any actual or threatened claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative (an “Action”),
arising out of, relating to or in connection with any action or omission
occurring or alleged to have occurred whether before or after the Effective
Time
(including acts or omissions in connection with such persons serving as an
officer, director or other fiduciary in any entity if such service was at
the
request or for the benefit of the Company); provided,
however,
that
neither Parent nor the Surviving Corporation shall be liable for any settlement
effected without either Parent’s or the Surviving Corporation’s prior written
consent and Parent and the Surviving Corporation shall not be obligated to
pay
the fees and expenses of more than one counsel (selected by a plurality of
the
applicable Indemnified Parties) for all Indemnified Parties in any jurisdiction
with respect to any single such claim, action, suit, proceeding or
investigation, unless the use of one counsel for such Indemnified Parties
would
present such counsel with a conflict of interest that would make such joint
representation inappropriate. It shall be a condition to the advancement
of any
amounts to be paid in respect of legal and other fees and expenses that Parent
or the Surviving Corporation receive an undertaking by the Indemnified Party
to
repay such legal and other fees and expenses paid in advance if it is ultimately
determined that such Indemnified Party is not entitled to be indemnified
under
applicable Law. In the event of any such Action, Parent and the Surviving
Corporation shall reasonably cooperate with the Indemnified Party in the
defense
of any such Action.
42
(c) For
a
period of six (6) years from the Effective Time, Parent shall either cause
to be
maintained in effect the current policies of directors’ and officers’ liability
insurance and fiduciary liability insurance maintained by the Company and
its
Subsidiaries or provide substitute policies or purchase or cause the Surviving
Corporation to purchase, a “tail policy,” in either case of at least the same
coverage and amounts containing terms and conditions that are not less
advantageous in the aggregate than such policy with respect to matters arising
on or before the Effective Time; provided,
however,
that
after the Effective Time, Parent shall not be required to pay with respect
to
such insurance policies in respect of any one policy year more than 250%
of the
last annual premium paid by the Company prior to the date hereof in respect
of
the coverages required to be obtained pursuant hereto, but in such case shall
purchase as much coverage as reasonably practicable 250% of such last annual
premium; and further provided that if the Surviving Corporation purchases
a
“tail policy” and the same coverage costs more than 250% of such last annual
premium, the Surviving Corporation shall purchase the maximum amount of coverage
that can be obtained for 250% of such last annual premium.
(d) The
rights of each Indemnified Party hereunder shall be in addition to, and not
in
limitation of, any other rights such Indemnified Party may have under the
articles of incorporation or by-laws or other organization documents of the
Company or any of its Subsidiaries or KMP or KMR or the Surviving Corporation,
any other indemnification arrangement, the KGCC or otherwise. The provisions
of
this Section
5.9
shall
survive the consummation of the Merger and expressly are intended to benefit,
and are enforceable by, each of the Indemnified Parties.
(e) In
the
event Parent, the Surviving Corporation or any of their respective successors
or
assigns (i) consolidates with or merges into any other person and shall not
be the continuing or surviving corporation or entity in such consolidation
or
merger or (ii) transfers all or substantially all of its properties and
assets to any person, then, and in either such case, proper provision shall
be
made so that the successors and assigns of Parent or the Surviving Corporation,
as the case may be, shall assume the obligations set forth in this Section
5.9.
(f) Nothing
in this Section
5.9
shall
limit or restrict any actions that KMP or KMR (or KMGP when acting in any
capacity on behalf of or with respect to KMP or KMR) may take or amounts
that
they may expend with respect to matters related to indemnification or
insurance.
43
Section
5.10 Financing.
Parent
shall use its reasonable best efforts to obtain the Financing on the terms
and
conditions described in the Financing Commitments or terms more favorable
to
Parent, including using its reasonable best efforts (i) to negotiate
definitive agreements with respect thereto on the terms and conditions contained
in the Financing Commitments, (ii) to satisfy all conditions applicable to
Parent in such definitive agreements, (iii) to comply with its obligations
under the Financing Commitments and (iv) to enforce its rights under the
Financing Commitments. Parent shall give the Company prompt notice upon becoming
aware of any material breach by any party of the Financing Commitments or
any
termination of the Financing Commitments. Parent shall keep the Company informed
on a reasonably current basis and in reasonable detail of the status of its
efforts to arrange the Financing and provide to the Company copies of all
documents related to the Financing (other than any ancillary documents subject
to confidentiality agreements). In connection with its obligations under
this
Section
5.10,
Parent
shall be permitted to amend, modify or replace the Debt Commitment Letters
with
new Financing Commitments, including through co-investment by or financing
from
one or more other additional parties (the “New
Financing Commitments”),
provided
Parent
shall not permit any replacement of, or amendment or modification to be made
to,
or any waiver of any material provision or remedy under, the Debt Commitment
Letter if such replacement (including through co-investment by or financing
from
one or more other additional parties), amendment, modification, waiver or
remedy
reduces the aggregate amount of the Financing required to consummate the
Merger
and the other transactions contemplated hereby, adversely amends or expands
the
conditions to the drawdown of the Financing in any respect that would make
such
conditions less likely to be satisfied, that can reasonably be expected to
delay
the Closing, or is adverse to the interests of the Company in any other material
respect. In the event that Parent becomes aware of any event or circumstance
that makes procurement of any portion of the Financing unlikely to occur
in the
manner or from the sources contemplated in the Financing Commitments, Parent
shall notify the Company and shall use its reasonable best efforts to arrange
as
promptly as practicable any such portion from alternative sources (including
through co-investment by one or more other additional parties) on terms and
conditions no less favorable to Parent or Merger Sub and no more adverse
to the
ability of Parent to consummate the transactions contemplated by this Agreement.
The Company shall provide, and shall cause its Subsidiaries, and shall use
reasonable best efforts to cause each of its and their respective
Representatives, including legal and accounting, to provide, and if necessary
shall reasonably request KMP and KMR to provide, all cooperation reasonably
requested by Parent in connection with the Financing and the other transactions
contemplated by this Agreement (provided that such requested cooperation
does
not unreasonably interfere with the ongoing operations of the Company and
its
Subsidiaries or KMP or KMR), including (i) providing reasonably required
information relating to the Company, its Subsidiaries and KMP and KMR to
the
parties providing the Financing, which shall include all financial statements
and financial data for the Company and its Subsidiaries (A) of the type required
by Regulation S-X and Regulation S-K under the Securities Act and of type
and
form customarily included in private placements under Rule 144A of the
Securities Act to consummate any offering of senior or senior subordinated
notes
of the Company (or any direct or indirect parent thereof), including
replacements thereof prior to any such information going stale or otherwise
being unusable for such purpose and (B) all financial statements and information
necessary for the satisfaction of the conditions set forth in the Debt
Commitment Letter (the “Required
Financial Information”),
(ii) participating in meetings, drafting sessions and due diligence
sessions in connection with the Financing, (iii) assisting in the
preparation of (A) one or more offering documents or confidential
information memoranda for any of the Debt Financing (including the execution
and
delivery of one or more customary representation letters in connection
therewith) and (B) materials for rating agency presentations,
(iv) reasonably cooperating with the marketing efforts for any of the Debt
Financing, including providing assistance in the preparation for, and
participating in, meetings, due diligence sessions and similar presentations
to
and with, among others, prospective lenders, investors and rating agencies,
and
(v) executing and delivering (or using reasonable best efforts to obtain
from advisors), and causing its Subsidiaries to execute and deliver (or use
reasonable best efforts to obtain from advisors), and if necessary reasonably
requesting KMP and KMR to execute and deliver or obtain from advisors, customary
certificates (including a certificate of the chief financial officer of the
Company with respect to solvency matters), accounting comfort letters, legal
opinions, surveys, title insurance or other documents and instruments relating
to guarantees, the pledge of collateral and other matters ancillary to the
Financing as may be reasonably requested by Parent in connection with the
Financing and otherwise reasonably facilitating the pledge of collateral
and
providing of guarantees contemplated by the Debt Commitment Letter; provided,
however,
that no
obligation of the Company or any of its Subsidiaries under any such certificate,
document or instrument (other than the representation letter referred to
above)
shall be effective until the Effective Time and none of the Company or any
of
its Subsidiaries shall be required to pay any commitment or other similar
fee or
incur any other liability in connection with the Financing prior to the
Effective Time. For purposes of this Agreement, “Marketing
Period”
shall
mean the first period of 15 consecutive Business Days after the date hereof
throughout which (A) Parent shall have the Required Financial Information
that the Company is required to provide to Parent pursuant to this Section
5.10,
(B) the conditions set forth in Section
6.1
and
Section
6.3
(other
than 6.3(c)) shall be satisfied, and (C) the applicable auditors shall not
have
withdrawn their audit opinions for any applicable Required Financial
Information; provided, that (x) such 15 Business Day period shall commence
no earlier than (i) three Business Days after the condition set forth in
Section
6.1(a)
has been
satisfied, and (y) if such 15 Business Day period would otherwise end on or
after December 18, 2006, but before January 19, 2007, the Marketing
Period shall end on January 22, 2007.
44
Section
5.11 [Intentionally
omitted.]
Section
5.12 Stockholder
Litigation.
The
Company shall give Parent the opportunity to participate, subject to a customary
joint defense agreement, in, but not control, the defense or settlement of
any
stockholder litigation against the Company or its directors or officers relating
to the Merger or any other transactions contemplated hereby; provided,
however,
that no
such settlement shall be agreed to without Parent’s consent. In the event that
(i) a proposed settlement of any stockholder litigation (of which Parent
has
been advised and kept informed in accordance with the terms of this Section
5.12)
would
not have a Company Material Adverse Effect, (ii) Parent does not consent
to such
proposed settlement and (iii) the ultimate resolution of such litigation
is less
favorable to the Company and its Subsidiaries than such proposed settlement,
then such resolution and the effects thereof on the Company and its Subsidiaries
(to the extent so less favorable) shall not constitute, or be considered
in
determining the existence or occurrence of, a Company Material Adverse
Effect.
45
Section
5.13 Notification
of Certain Matters.
The
Company shall give prompt notice to Parent, and Parent shall give prompt
notice
to the Company, of (i) any notice or other communication received by such
party from any Governmental Entity in connection with the Merger or the other
transactions contemplated hereby or from any person alleging that the consent
of
such person is or may be required in connection with the Merger or the other
transactions contemplated hereby, if the subject matter of such communication
or
the failure of such party to obtain such consent could be material to the
Company, the Surviving Corporation or Parent, (ii) any actions, suits,
claims, investigations or proceedings commenced or, to such party’s Knowledge,
threatened against, relating to or involving or otherwise affecting such
party
or any of its Subsidiaries which relate to the Merger or the other transactions
contemplated hereby, (iii) the discovery of any fact or circumstance that,
or the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which, would cause or result in any of the Conditions to
the
Merger set forth in Article VI not being satisfied or satisfaction of those
conditions being materially delayed in violation of any provision of this
Agreement; provided,
however,
that
the delivery of any notice pursuant to this Section
5.13
shall
not (x) cure any breach of, or non-compliance with, any other provision of
this Agreement or (y) limit the remedies available to the party receiving
such notice. The Company shall notify Parent, on a reasonably current basis,
of
any events or changes with respect to any criminal or material regulatory
investigation or action involving the Company or any of its Affiliates (but,
excluding traffic violations or similar misdemeanors), and shall reasonably
cooperate with Parent or its Affiliates in efforts to mitigate any adverse
consequences to Parent or its Affiliates which may arise (including by
coordinating and providing assistance in meeting with regulators).
Section
5.14 Rule
16b-3.
Prior
to the Effective Time, the Company shall take such steps as may be reasonably
requested by any party hereto to cause dispositions of Company equity securities
(including derivative securities) pursuant to the transactions contemplated
by
this Agreement by each individual who is a director or officer of the Company
to
be exempt under Rule 16b-3 promulgated under the Exchange Act in accordance
with
that certain No-Action Letter dated January 12, 1999 issued by the SEC
regarding such matters.
Section
5.15 Control
of Operations.
Without
in any way limiting any party’s rights or obligations under this Agreement, the
parties understand and agree that (i) nothing contained in this Agreement
shall
give Parent, directly or indirectly, the right to control or direct the
Company’s operations prior to the Effective Time, and (ii) prior to the
Effective Time, the Company shall exercise, consistent with the terms and
conditions of this Agreement, complete control and supervision over its
operations.
Section
5.16 Certain
Transfer Taxes.
Any
liability arising out of any real estate transfer Tax with respect to interests
in real property owned directly or indirectly by the Company or any of its
Subsidiaries immediately prior to the Merger, if applicable and due with
respect
to the Merger, shall be borne by the Surviving Corporation or Parent and
expressly shall not be a liability of stockholders of the Company.
46
ARTICLE
VI
CONDITIONS
TO THE MERGER
Section
6.1 Conditions
to Each Party’s Obligation to Effect the Merger.
The
respective obligations of each party to effect the Merger shall be subject
to
the fulfillment (or waiver by all parties) at or prior to the Effective Time
of
the following conditions:
(a) The
Company Stockholder Approval shall have been obtained.
(b) No
restraining order, preliminary or permanent injunction or other order issued
by
any court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Merger and/or the other transactions
contemplated by this Agreement shall be in effect.
(c) Any
applicable waiting period under the HSR Act shall have expired or been earlier
terminated.
Section
6.2 Conditions
to Obligation of the Company to Effect the Merger.
The
obligation of the Company to effect the Merger is further subject to the
fulfillment or waiver of the following conditions:
(a) (i) The
representations and warranties of Parent and Merger Sub contained in
Section
4.1
(Qualification, Organization) and Section
4.2(a)
(Corporate Authority) shall be true and correct in all respects (except,
in the
case of Section
4.1(a)
for such
inaccuracies as are de minimis in the aggregate), in each case at and as
of the
date of this Agreement and at and as of the Closing Date as though made at
and
as of the Closing Date, (ii) the representations and warranties of Parent
and Merger Sub set forth in this Agreement (other than in clause (i) above)
which are qualified by a “Parent Material Adverse Effect” or “materiality”
qualification shall be true and correct in all respects as so qualified at
and
as of the date of this Agreement and at and as of the Closing Date as though
made at and as of the Closing Date and (iii) the representations and
warranties of Parent and Merger Sub set forth in this Agreement (other than
in
clause (i) above) which are not qualified by a “Parent Material Adverse Effect”
or “materiality” qualification shall be true and correct in all material
respects at and as of the date of this Agreement and at and as of the Closing
Date as though made at and as of the Closing Date; provided,
however,
that,
with respect to clauses (i), (ii) or (iii) hereof, representations and
warranties that are made as of a particular date or period shall be true
and
correct (in the manner set forth in clauses (i), (ii) or (iii), as applicable)
only as of such date or period.
(b) Parent
shall have in all material respects performed all obligations and complied
with
all covenants required by this Agreement to be performed or complied with
by it
prior to the Effective Time.
47
(c) Parent
shall have delivered to the Company a certificate, dated the Effective Time
and
signed by its Chief Executive Officer or another senior executive officer,
certifying to the effect that the conditions set forth in Section
6.2(a) and
6.2(b) have been satisfied.
(d) Each
of
the approvals listed on Section 6.2(d) of the Company Disclosure Letter shall
have been obtained.
Section
6.3 Conditions
to Obligation of Parent and Merger Sub to Effect the Merger.
The
obligation of Parent and Merger Sub to effect the Merger is further subject
to
the fulfillment or waiver of the following conditions:
(a) (i)
The
representations and warranties of the Company contained in Section
3.1
(Qualification, Organization, Subsidiaries, etc.), Section
3.2
(Capital
Stock), Section
3.3
(Subsidiaries and Company Joint Ventures), Section
3.4(a)
(Corporate Authority), Section
3.21
(Required Vote of the Company Stockholders), and Section
3.24
(State
Takeover Statutes; Charter Provisions) shall be true and correct in all respects
(except, in the case of Section
3.1(a),
3.2 and
3.3 for such inaccuracies as are de minimis in the aggregate), in each case
at
and as of the date of this Agreement and at and as of the Closing Date as
though
made at and as of the Closing Date, (ii) the representations and warranties
of the Company set forth in this Agreement (other than in clause (i) above)
which are qualified by a “Company Material Adverse Effect” or “materiality”
qualification shall be true and correct in all respects as so qualified at
and
as of the date of this Agreement and at and as of the Closing Date as though
made at and as of the Closing Date and (iii) the representations and
warranties of the Company set forth in this Agreement (other than in clause
(i)
above) which are not qualified by a “Company Material Adverse Effect” or
“materiality” qualification shall be true and correct in all material respects
at and as of the date of this Agreement and at and as of the Closing Date
as
though made at and as of the Closing Date; provided,
however,
that,
with respect to clauses (i), (ii) or (iii) hereof, representations and
warranties that are made as of a particular date or period shall be true
and
correct (in the manner set forth in clauses (i), (ii) or (iii), as applicable)
only as of such date or period.
(b) The
Company shall have in all material respects performed all obligations and
complied with all covenants required by this Agreement to be performed or
complied with by it prior to the Effective Time.
(c) The
Company shall have delivered to Parent a certificate, dated the Effective
Time
and signed by its Chief Executive Officer or another senior executive officer,
certifying to the effect that the conditions set forth in Section
6.3(a)and
Section
6.3(b)
have
been satisfied.
(d) Since
the
date of this Agreement there shall not have occurred and be continuing any
Company Material Adverse Effect.
(e) Each
of
the approvals listed on Section
6.3(e)
of the
Parent Disclosure Letter shall have been obtained, without the imposition
of any condition that would have the effect of an Action of Divestiture or
Limitation.
48
ARTICLE
VII
TERMINATION
Section
7.1 Termination
or Abandonment.
Notwithstanding anything contained in this Agreement to the contrary, this
Agreement may be terminated and abandoned at any time prior to the Effective
Time, whether before or after any approval of the matters presented in
connection with the Merger by the stockholders of the Company:
(a) by
the
mutual written consent of the Company and Parent;
(b) by
either
the Company or Parent, if:
(i) the
Effective Time shall not have occurred on or before February 28, 2007, as
extended to the end of the Marketing Period, if the Marketing Period has
commenced and such end of the Marketing Period would be later (the “End
Date”),
and
the party seeking to terminate this Agreement pursuant to this Section
7.1(b)(i)
shall
not have breached its obligations under this Agreement in any manner that
shall
have proximately caused the failure to consummate the Merger on or before
the
End Date; provided,
however,
that in
the event the conditions set forth in Section
6.1(c),
Section
6.2(d) or Section
6.3(e)
shall
not have been satisfied on or before the End Date, either Parent or the Company
may unilaterally extend, by notice delivered to the other party on or prior
to
the original End Date, the End Date until August 28, 2007, in which case
the End
Date shall deemed to be for all purposes to be such date; provided,
further,
that
the Company may not terminate under this clause during the Marketing
Period;
(ii) an
injunction, other legal restraint or order shall have been entered permanently
restraining, enjoining or otherwise prohibiting the consummation of the Merger
and such injunction, other legal restraint or order shall have become final
and
non-appealable, provided that the party seeking to terminate this Agreement
pursuant to this Section
7.1(b)(i)
shall
have used its reasonable best efforts to remove such injunction, other legal
restraint or order in accordance with Section
5.6;
or
(iii) the
Company Meeting (including any adjournments thereof) shall have concluded
and
the Company Stockholder Approval contemplated by this Agreement shall not
have
been obtained;
(c) by
the
Company, if:
(i) Parent
shall have breached or failed to perform any of its representations, warranties,
covenants or other agreements contained in this Agreement, which breach or
failure to perform (i) would result in a failure of a condition set forth
in Section
6.1
or
Section
6.2
and
(ii) cannot be cured by the End Date, provided
that the
Company shall have given Parent written notice, delivered at least thirty
(30)
days prior to such termination, stating the Company’s intention to terminate
this Agreement pursuant to this Section
7.1(c)(i)
and the
basis for such termination;
49
(ii) prior
to
the receipt of the Company Stockholder Approval, (A) the Board of Directors
of the Company (or the Special Committee) has received a Superior Proposal,
(B) in light of such Superior Proposal a majority of the disinterested
directors of the Company (or the Special Committee) shall have determined
in
good faith, after consultation with outside counsel, that the failure to
withdraw or modify its Recommendation would be inconsistent with the Board
of
Directors of the Company’s (or the Special Committee's) exercise of its
fiduciary duty under applicable Law, (C) the Company has notified Parent in
writing of the determinations described in clause (B) above, (D) at least 5
Business Days following receipt by Parent of the notice referred to in clause
(C) above, and taking into account any revised proposal made by Parent
since receipt of the notice referred to in clause (C) above, such Superior
Proposal remains a Superior Proposal and a majority of the disinterested
directors of the Company (or the Special Committee) has again made the
determinations referred to in clause (B) above, (E) the Company is in
compliance, in all material respects, with Section
5.3,
(F) the Company has previously paid the fee due under Section
7.2
and
(G) the Board of Directors of the Company has approved, and the Company
concurrently enters into, a definitive agreement providing for the
implementation of such Superior Proposal; or
(iii) the
Merger shall not have been consummated by the last day of the Marketing Period
and at the time of such termination the conditions set forth in Section 6.1,
Section 6.3(a), Section 6.3(b), Section 6.3(d) and Section 6.3(e) have been
satisfied; or
(d) by
Parent, if:
(i) the
Company shall have breached or failed to perform any of its representations,
warranties, covenants or other agreements contained in this Agreement, which
breach or failure to perform (i) would result in a failure of a condition
set forth in Section
6.1
or
Section
6.3
and
(ii) cannot be cured by the End Date, provided
that
Parent shall have given the Company written notice, delivered at least thirty
(30) days prior to such termination, stating Parent’s intention to terminate
this Agreement pursuant to this Section
7.1(d)(i)
and the
basis for such termination;
(ii) the
Board
of Directors of the Company or the Special Committee withdraws, modifies
or
qualifies in a manner adverse to Parent or Merger Sub, or publicly proposes
to
withdraw, modify or qualify, in a manner adverse to Parent or Merger Sub,
its
Recommendation, fails to recommend to the Company’s stockholders that they give
the Company Stockholder Approval or approves, endorses or recommends, or
publicly proposes to approve, endorse or recommend, any Alternative Proposal;
(iii) the
Company gives Parent the notification contemplated by Section
7.1(c)(ii)(C);
or
(iv) since
the
date of this Agreement there shall have been a Company Material Adverse Effect
that cannot be cured by the End Date.
50
In
the
event of termination of this Agreement pursuant to this Section
7.1,
this
Agreement shall terminate (except for the Confidentiality Agreements, the
Guarantees and the provisions of Section
7.2
and
ARTICLE
VIII),
and
there shall be no other liability on the part of the Company or Parent and
Merger Sub to the other except liability arising out of any willful breach
of
any of the representations, warranties or covenants in this Agreement by
the
Company (subject to any express limitations set forth in this Agreement),
or as
provided for in the Confidentiality Agreements or the Guarantees, in which
case
the aggrieved party shall be entitled to all rights and remedies available
at
law or in equity.
Section
7.2 Termination
Fees.
(a) In
the
event that:
(i) (A)
an
Alternative Proposal that reasonably appears to be bona fide shall have been
made known to the Company or shall have been made directly to its stockholders
generally or any person shall have publicly announced an intention (whether
or
not conditional or withdrawn) to make an Alternative Proposal that reasonably
appears to be bona fide and thereafter, (B) this Agreement is terminated by
the Company or Parent pursuant to Section
7.1(b)(i),
Section
7.1(b)(iii)
(so long
as the Alternative Proposal was publicly disclosed and not withdrawn at the
time
of the Company Meeting) or Section
7.1(d)(i),
and
(C) the Company enters into a definitive agreement with respect to, or
consummates, a transaction contemplated by any Alternative Proposal within
twelve (12) months of the date this Agreement is terminated; provided
that for
purposes of this Section 7.2(a)(i), the references to "20%" in the definition
of
Alternative Proposal shall be deemed to be references to
"50%;"
(ii) this
Agreement is terminated by the Company pursuant to Section
7.1(c)(ii);
or
(iii) this
Agreement is terminated by Parent pursuant to Section
7.1(d)(i),
(ii) or
(iii); provided,
that in
the event of a termination by Parent pursuant to Section
7.1(d)(i),
without
limiting Parent’s other rights and remedies under this Agreement, this
Section
7.2(a)(iii)
shall
apply only in the event that the Company shall have willfully breached or
failed
to perform in any material respect any of its representations, warranties,
covenants or other agreements contained in this Agreement;
then
in
any such event under clause (i), (ii) or (iii) of this Section
7.2(a),
the
Company shall pay to Parent a termination fee of $215 million in cash (the
“Termination
Fee”),
it
being understood that in no event shall the Company be required to pay the
Termination Fee on more than one occasion.
In
the
event that an Alternative Proposal shall have been made known to the public
or shall have been made directly to its stockholders generally or any person
shall have publicly announced an intention (whether or not conditional or
withdrawn) to make an Alternative Proposal that reasonably appears to be
bona
fide and thereafter this Agreement is terminated by the Company or Parent
pursuant to Section
7.1(b)(iii)
and no
Termination Fee is yet payable in respect thereof pursuant to Section
7.2(a)(i),
then
the Company shall pay to Parent all of the Expenses (as hereinafter defined)
of
Parent and Merger Sub and thereafter if the Company is be obligated to pay
to
Parent the Termination Fee pursuant to Section
7.2(a)(i)such
payment obligation shall be reduced by the amount of Expenses previously
actually paid to Parent pursuant to this sentence. As used herein, “Expenses”
shall
mean all reasonable out-of-pocket documented fees and expenses (including
all
fees and expenses of counsel, accountants, consultants, financial advisors
and
investment bankers of Parent and its Affiliates), up to $45 million in the
aggregate, incurred by Parent or Merger Sub or on its behalf in connection
with
or related to the authorization, preparation, negotiation, execution and
performance of this Agreement and the Financing and all other matters related
to
the Merger.
51
(b) In
the
event that (i) the Company shall terminate this Agreement pursuant to
Section
7.1(c)(i),
provided,
that in
the event of a termination by the Company pursuant to Section 7.1(c)(i),
without
limiting the Company’s other rights and remedies under this Agreement, this
Section 7.2(b)
shall
only apply in the event that Parent or Merger Sub shall have willfully breached
or failed to perform in any material respect any of their representations,
warranties, covenants or other agreements contained in this Agreement and
(y) at the time of such termination there is no state of facts or
circumstances that would reasonably be expected to cause the conditions in
Section 6.1, Section 6.3(a), Section 6.3(b), Section 6.3(d) or Section 6.3(e)
not to be satisfied on the End Date assuming the Closing were to be scheduled
on
the End Date, (ii) Parent or the Company shall terminate this Agreement
pursuant to Section
7.1(b)(i)
and, at
the time of such termination, the conditions set forth in Section
6.1,
Section
6.3(a), Section 6.3(b), Section 6.3(d) and Section 6.3(e) have been satisfied,
or (iii) the Company shall terminate this Agreement pursuant to Section
7.1(c)(iii), then Parent shall pay to the Company a termination fee of $215
million in cash (the “Parent
Termination Fee”),
it
being understood that in no event shall Parent be required to pay the Parent
Termination Fee on more than one occasion.
(c) Any
payment required to be made pursuant to clause (i) of Section
7.2(a)
shall be
made to Parent promptly following the earlier of the execution of a definitive
agreement with respect to, or the consummation of, any transaction contemplated
by an Alternative Proposal (and in any event not later than two Business
Days
after delivery to the Company of notice of demand for payment); any payment
required to be made pursuant to clause (ii) of Section
7.2(a)
shall be
made to Parent concurrently with, and as a condition to the effectiveness
of,
the termination of this Agreement by the Company pursuant to Section
7.1(c)(ii);
any
payment required to be made pursuant to clause (iii) of Section
7.2(a)
shall be
made to Parent promptly following termination of this Agreement by Parent
pursuant to Section
7.1(d)(i),
(ii) or
(iii), as applicable (and in any event not later than two Business Days after
delivery to the Company of notice of demand for payment), and such payment
shall
be made by wire transfer of immediately available funds to an account to
be
designated by Parent. In circumstances in which Expenses or Required Expenses,
as the case may be, are payable, such payment shall be made to Parent or
the
Company, as the case may be not later than two Business Days after delivery
to
the Company or Parent, as the case may be, of an itemization setting forth
in
reasonable detail all Expenses or Required Expenses, as the case may be (which
itemization may be supplemented and updated from time to time by Parent or
the
Company, as the case may be, until the 60th day after Parent or the Company,
as
the case may be, delivers such notice of demand for payment), and all such
payments shall be made by wire transfer of immediately available funds to
an
account to be designated by the Company or Parent, as the case may be. Any
payment required to be made pursuant to Section
7.2(b)
shall be
made to the Company promptly following termination of this Agreement by the
Company or Parent, as the case may be (and in any event not later than two
Business Days after delivery to Parent of notice of demand for payment),
and
such payment shall be made by wire transfer of immediately available funds
to an
account to be designated by the Company.
52
(d) In
the
event that the Company shall fail to pay the Termination Fee and/or Expenses,
or
Parent shall fail to pay the Parent Termination Fee, required pursuant to
this
Section
7.2
when
due, such fee and/or Expenses, as the case may be, shall accrue interest
for the
period commencing on the date such fee and/or Expenses, as the case may be,
became past due, at a rate equal to the rate of interest publicly announced
by
Citibank, in the City of New York from time to time during such period, as
such
bank’s Prime Lending Rate. In addition, if either party shall fail to pay such
fee and/or Expenses, as the case may be, when due, the such owing party shall
also pay to the owed party all of the owed party’s costs and expenses (including
attorneys’ fees) in connection with efforts to collect such fee and/or Expenses,
as the case may be. Parent and the Company acknowledges that the fees, Expense
reimbursement and the other provisions of this Section
7.2
are an
integral part of the Merger and that, without these agreements, Parent and
the
Company would not enter into this Agreement.
(e) Each
of
the parties hereto acknowledges that the agreements contained in this
Section
7.2
are an
integral part of the transactions contemplated by this Agreement and that
neither the Termination Fee nor the Parent Termination Fee is a penalty,
but
rather is liquidated damages in a reasonable amount that will compensate
Parent
and Merger Sub or the Company, as the case may be, for the efforts and resources
expended and opportunities foregone while negotiating this Agreement and
in
reliance on this Agreement and on the expectation of the consummation of
the
transactions contemplated hereby, which amount would otherwise be impossible
to
calculate with precision. Notwithstanding anything to the contrary in this
Agreement, (i) the Company’s right to receive payment of the Parent Termination
Fee pursuant to this Section
7.2
or the
guarantee thereof pursuant to the Guarantees shall be the exclusive remedy
of
the Company against Parent, Merger Sub, the Guarantors or any of their
respective stockholders, partners, members, directors, Affiliates, officers
or
agents for (x) the loss suffered as a result of the failure of the Merger
to be
consummated and (y) any other losses, damages, obligations or liabilities
suffered as a result of or under this Agreement and the transactions
contemplated hereby, and upon payment of the Parent Termination Fee in
accordance with this Section
7.2,
none of
Parent, Merger Sub or the Guarantors, or any of their respective stockholders,
partners, members, directors, officers or agents, as the case may be, shall
have
any further liability or obligation relating to or arising out of this Agreement
or the transactions contemplated by hereby (except that Parent also shall
be
obligated with respect to the provisions of Section
7.2(d),
Section
5.2(b)
and
Section
8.2,
it
being understood that no other person (including the Guarantors) shall
have any liability or obligation under or with respect to such provisions);
and
(ii) upon payment of the Company Termination Fee, in accordance with this
Section 7.2, except as set forth in Section 7.1(d), none of the Company or
any
of its respective stockholders, directors, officers or agents, as the case
may
be, shall have any further liability or obligation relating to or arising
out of
this Agreement or the transactions contemplated hereby (except that the Company
also shall be obligated with respect to the provisions of Section 7.2(d)
and
5.2(b), it being understood that no other person shall have any liability
or
obligation under or with respect to such provisions).
53
ARTICLE
VIII
MISCELLANEOUS
Section
8.1 No
Survival of Representations and Warranties.
None of
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Merger.
Section
8.2 Expenses.
Except
as set forth in Section
7.2
or in
the Guarantees, whether or not the Merger is consummated, all costs and expenses
incurred in connection with the Merger, this Agreement and the transactions
contemplated hereby shall be paid by the party incurring or required to incur
such expenses, except expenses incurred in connection with the printing,
filing
and mailing of the Proxy Statement (including applicable SEC filing fees)
and
all fees paid in respect of any HSR Act or other regulatory filing shall
be
borne one-half by the Company and one-half by Parent.
Section
8.3 Counterparts;
Effectiveness.
This
Agreement may be executed in two or more consecutive counterparts (including
by
facsimile), each of which shall be an original, with the same effect as if
the
signatures thereto and hereto were upon the same instrument, and shall become
effective when one or more counterparts have been signed by each of the parties
and delivered (by telecopy or otherwise) to the other parties.
Section
8.4 Governing
Law.
This
Agreement, and all claims or causes of action (whether at law, in contract
or in
tort) that may be based upon, arise out of or relate to this Agreement or
the
negotiation, execution or performance hereof, shall be governed by and construed
in accordance with the laws of the State of Delaware (other than with respect
to
matters governed by KGCC, with respect to which such laws apply), without
giving
effect to any choice or conflict of law provision or rule (whether of the
State
of Delaware or any other jurisdiction) that would cause the application of
the
laws of any jurisdiction other than the State of Delaware.
Section
8.5 Jurisdiction;
Enforcement.
The
parties agree that irreparable damage would occur in the event that any of
the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that
prior
to the termination of this Agreement in accordance with ARTICLE
VII
the
parties shall be entitled to an injunction or injunctions to prevent breaches
of
this Agreement and to enforce specifically the terms and provisions of this
Agreement exclusively in any federal or state court located in the State
of
Delaware, this being in addition to any other remedy which they are entitled
at
law or in equity. In addition, each of the parties hereto irrevocably agrees
that any legal action or proceeding with respect to this Agreement and the
rights and obligations arising hereunder, or for recognition and enforcement
of
any judgment in respect of this Agreement and the rights and obligations
arising
hereunder brought by the other party hereto or its successors or assigns,
shall
be brought and determined exclusively in any federal or state court located
in
the State of Delaware. Each of the parties hereto hereby irrevocably submits
with regard to any such action or proceeding for itself and in respect of
its
property, generally and unconditionally, to the personal jurisdiction of
the
aforesaid courts and agrees that it will not bring any action relating to
this
Agreement or any of the transactions contemplated hereby in any court other
than
the aforesaid courts. Each of the parties hereto hereby irrevocably waives,
and
agrees not to assert, by way of motion, as a defense, counterclaim or otherwise,
in any action or proceeding with respect to this Agreement, (a) any claim
that it is not personally subject to the jurisdiction of the above named
courts
for any reason other than the failure to serve in accordance with this
Section
8.5,
(b) any claim that it or its property is exempt or immune from jurisdiction
of any such court or from any legal process commenced in such courts (whether
through service of notice, attachment prior to judgment, attachment in aid
of
execution of judgment, execution of judgment or otherwise) and (c) to the
fullest extent permitted by the applicable law, any claim that (i) the
suit, action or proceeding in such court is brought in an inconvenient forum,
(ii) the venue of such suit, action or proceeding is improper or
(iii) this Agreement, or the subject mater hereof, may not be enforced in
or by such courts.
54
Section
8.6 WAIVER
OF JURY TRIAL.
EACH OF
THE PARTIES HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY
IN ANY
LEGAL PROCEEDING BETWEEN THE PARTIES HERETO ARISING OUT OF OR RELATING TO
THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section
8.7 Notices.
Any
notice required to be given hereunder shall be sufficient if in writing,
and
sent by facsimile transmission (provided that any notice received by facsimile
transmission or otherwise at the addressee’s location on any Business Day after
5:00 p.m. (addressee’s local time) shall be deemed to have been received at 9:00
a.m. (addressee’s local time) on the next Business Day), by reliable overnight
delivery service (with proof of service), hand delivery or certified or
registered mail (return receipt requested and first-class postage prepaid),
addressed as follows:
To
Parent
or Merger Sub:
▇/▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇
▇▇
▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇ ▇▇▇▇▇
Telecopy:
(▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇
▇.
Silk
▇▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇
with
copies to:
Wachtell,
Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇
▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇ ▇▇▇▇▇
Telecopy:
(▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇
▇.
Silk
▇▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇
55
Weil,
Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Telecopy:
(▇▇▇) ▇▇▇-▇▇▇▇
Attention:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Weil,
Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Telecopy:
(▇▇▇) ▇▇▇-▇▇▇▇
Attention:
R. ▇▇▇ ▇▇▇▇▇
To
the
Company:
▇▇▇
▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Telecopy:
(▇▇▇) ▇▇▇-▇▇▇▇
Attention:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
with
a
copy to:
Skadden,
Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇
▇▇▇
▇▇▇▇ ▇▇▇., ▇.▇.
▇▇▇▇▇▇▇▇▇▇,
▇.▇. ▇▇▇▇▇
Telecopy:
(▇▇▇) ▇▇▇-▇▇▇▇
Attention:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
& ▇▇▇▇▇▇▇▇ LLP
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
Telecopy:
(▇▇▇) ▇▇▇-▇▇▇▇
Attention:
▇▇▇▇ ▇. ▇▇▇▇▇▇
or
to
such other address as any party shall specify by written notice so given,
and
such notice shall be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed. Any party to this Agreement
may notify any other party of any changes to the address or any of the other
details specified in this paragraph; provided,
however,
that
such notification shall only be effective on the date specified in such notice
or five (5) Business Days after the notice is given, whichever is later.
Rejection or other refusal to accept or the inability to deliver because
of
changed address of which no notice was given shall be deemed to be receipt
of
the notice as of the date of such rejection, refusal or inability to
deliver.
Section
8.8 Assignment;
Binding Effect.
Neither
this Agreement nor any of the rights, interests or obligations hereunder
shall
be assigned by any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other parties, except
that
Merger Sub may assign, in its sole discretion, any of or all of its rights,
interest and obligations under this agreement to Parent or to any direct
or
indirect wholly-owned subsidiary of Parent, but no such assignment shall
relieve
Merger Sub of its obligations hereunder. Subject to the preceding sentence,
this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns.
Parent
shall cause Merger Sub, and any assignee thereof, to perform its obligations
under this Agreement.
56
Section
8.9 Severability.
Any
term or provision of this Agreement which is invalid or unenforceable in
any
jurisdiction shall, as to that jurisdiction, be ineffective to the extent
of
such invalidity or unenforceability without rendering invalid or unenforceable
the remaining terms and provisions of this Agreement in any other jurisdiction.
If any provision of this Agreement is so broad as to be unenforceable, such
provision shall be interpreted to be only so broad as is
enforceable.
Section
8.10 Entire
Agreement; No Third-Party Beneficiaries.
This
Agreement (including the exhibits and letters hereto), the Confidentiality
Agreements and the Guarantees constitute the entire agreement, and supersede
all
other prior agreements and understandings, both written and oral, between
the
parties, or any of them, with respect to the subject matter hereof and thereof
and, except as set forth in Section
5.9,
is not
intended to and shall not confer upon any person other than the parties hereto
any rights or remedies hereunder.
Section
8.11 Amendments;
Waivers.
At any
time prior to the Effective Time, any provision of this Agreement may be
amended
or waived if, and only if, such amendment or waiver is in writing and signed,
in
the case of an amendment, by the Company (approved by the Special Committee),
Parent and Merger Sub, or in the case of a waiver, by the party against whom
the
waiver is to be effective (and, in the case of the Company, as approved by
the
Special Committee); provided,
however,
that
after receipt of Company Stockholder Approval, if any such amendment or waiver
shall by applicable Law or in accordance with the rules and regulations of
the
New York Stock Exchange require further approval of the stockholders of the
Company, the effectiveness of such amendment or waiver shall be subject to
the
approval of the stockholders of the Company. Notwithstanding the foregoing,
no
failure or delay by the Company or Parent in exercising any right hereunder
shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise of any other right
hereunder.
Section
8.12 Headings.
Headings of the Articles and Sections of this Agreement are for convenience
of
the parties only and shall be given no substantive or interpretive effect
whatsoever. The table of contents to this Agreement is for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
Section
8.13 Interpretation.
When a
reference is made in this Agreement to an Article or Section, such reference
shall be to an Article or Section of this Agreement unless otherwise
indicated. Whenever the words “include,” “includes” or “including” are used in
this Agreement, they shall be deemed to be followed by the words “without
limitation.” Whenever the words “the transactions contemplated hereby” or
similar words or phrases appear, such words or phrases shall be deemed to
be
followed by the words “(but not including the Financing or any other
arrangements, agreements or understandings to which the Company is not a
party).” The words “hereof,” “herein” and “hereunder” and words of similar
import when used in this Agreement shall refer to this Agreement as a whole
and
not to any particular provision of this Agreement. The word “or” shall be deemed
to mean “and/or.” All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant thereto unless otherwise defined therein. The definitions contained
in
this Agreement are applicable to the singular as well as the plural forms
of
such terms and to the masculine as well as to the feminine and neuter genders
of
such term. Any agreement, instrument or statute defined or referred to herein
or
in any agreement or instrument that is referred to herein means such agreement,
instrument or statute as from time to time amended, modified or supplemented,
including (in the case of agreements or instruments) by waiver or consent
and
(in the case of statutes) by succession of comparable successor statutes
and
references to all attachments thereto and instruments incorporated therein.
Each
of the parties has participated in the drafting and negotiation of this
Agreement. If an ambiguity or question of intent or interpretation arises,
this
Agreement must be construed as if it is drafted by all the parties, and no
presumption or burden of proof shall arise favoring or disfavoring any party
by
virtue of authorship of any of the provisions of this Agreement. Any time
materiality of effect is measured with respect to the Company and its
Subsidiaries, the interests not owned directly or indirectly by the Company
and
its wholly owned Subsidiaries shall be excluded.
57
Section
8.14 No
Recourse.
This
Agreement may only be enforced against, and any claims or causes of action
that
may be based upon, arise out of or relate to this Agreement, or the negotiation,
execution or performance of this Agreement may only be made against the entities
that are expressly identified as parties hereto or the Guarantors and no
past,
present or future Affiliate, director, officer, employee, incorporator, member,
manager, partner, stockholder, agent, attorney or representative of any party
hereto (other than the Guarantors) shall have any liability for any obligations
or liabilities of the parties to this Agreement or for any claim based on,
in
respect of, or by reason of, the transactions contemplated hereby.
Section
8.15 Determinations
by the Company. Whenever
a determination, decision or approval by the Company is called for in this
Agreement, such determination, decision or approval must be authorized by
the
Special Committee or, if the Special Committee is not then in existence,
the
Company's Board of Directors.
Section
8.16 Certain
Definitions.
For
purposes of this Agreement, the following terms will have the following meanings
when used herein:
(a) “Affiliates”
shall
mean, as to any person, any other person which, directly or indirectly,
controls, or is controlled by, or is under common control with, such person.
As
used in this definition, “control”
(including, with its correlative meanings, “controlled by” and “under common
control with”) shall mean the possession, directly or indirectly, of the power
to direct or cause the direction of management or policies of a person, whether
through the ownership of securities or partnership or other ownership interests,
by contract or otherwise.
(b) “Business
Day”
shall
mean any day other than a Saturday, Sunday or a day on which the banks in
New
York are authorized by law or executive order to be closed.
58
(c) “Company
Joint Ventures”
means
(a) the Express joint venture, (b) the Plantation joint venture, (c) the
Rockies
Express joint venture, (d) the ▇▇▇▇▇▇ Pipeline joint venture, and (e) except
for
purposes of Section
3.4(c)(i)
and
Section
3.12,
the Red
Cedar joint venture.
(d) “Contracts”
means
any contracts, agreements, licenses, notes, bonds, mortgages, indentures,
commitments, leases or other instruments or obligations, whether written
or
oral.
(e) “KMGP”
means
Kinder ▇▇▇▇▇▇ ▇.▇., Inc., a Delaware corporation.
(f) “Knowledge”
means
(i) with respect to Parent, the knowledge of the individuals listed on
Section
8.16(f)(i)
of
the Parent Disclosure Letter after reasonable inquiry and (ii) with
respect to the Company, the knowledge of the individuals listed on Section
8.16(f)(ii)
of
the Company Disclosure Letter after reasonable inquiry.
(g) “LLC
Agreement”
means
the Second Amended and Restated Limited Liability Company Agreement of ▇▇▇▇▇▇
▇▇▇▇▇▇ Management, LLC, dated as of July 23, 2002.
(h) “Orders”
or
“orders”
means
any orders, judgments, injunctions, awards, decrees or writs handed down,
adopted or imposed by, including any consent decree, settlement agreement
or
similar written agreement with, any Governmental Entity.
(i) “Original
LLC Agreement”
means
the
Limited Liability Company Agreement of Knight Holdco LLC, dated as of August
28,
2006.
(j) “Partnership
Agreement”
means
the Third Amended and Restated Agreement of Limited Partnership of ▇▇▇▇▇▇
▇▇▇▇▇▇
Energy Partners, L.P., dated as of May 18, 2001, as amended by Amendment
No. 1,
dated as of November 19, 2004, and further amended by Amendment No. 2, dated
as
of April 29, 2005.
(k) “Partnership
Event”
means
(i) the failure of ▇▇▇▇▇▇ ▇▇▇▇▇▇ Energy Partners, L.P., ▇▇▇▇▇▇ ▇▇▇▇▇▇
Operating L.P. “A”, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Operating L.P. “B”, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Operating
L.P. “C”, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Operating L.P. “D”, ▇▇▇▇▇▇ ▇▇▇▇▇▇ CO2
Company
L.P. or SFPP L.P. to qualify as a partnership, or an entity that is disregarded
as separate from its owner, as applicable, for federal income tax purposes
or
the failure of ▇▇▇▇▇▇ ▇▇▇▇▇▇ Energy Partners, L.P. to meet the gross income
requirements under Section 7704(c) of the Code in each Tax year since its
formation, up to and including the current Tax year, (ii) any circumstance
that would constitute an “Event of Withdrawal” under Section 13.1(a) of the
Partnership Agreement, (iii) any circumstance that would constitute
dissolution of ▇▇▇▇▇▇ ▇▇▇▇▇▇ Energy Partners, L.P. under Article XIV of the
Partnership Agreement, (iv) any circumstance that would constitute a
“Mandatory Purchase Event” under the LLC Agreement, (v) removal of KMGP as
the general partner of ▇▇▇▇▇▇ ▇▇▇▇▇▇ Energy Partners, L.P. without the consent
of the Company and its Subsidiaries (including KMGP), (vi) the failure by
KMGP to maintain its general partnership interest through additional Capital
Contributions (as defined in Partnership Agreement) as required by Section
4.1(d)
of
the Partnership Agreement, (vii) approval by KMGP of any amendment of the
Partnership Agreement pursuant to Sections 15.1(d), 15.1(f), 15.3(b)(ii)
and
15.3(d) thereof, and (viii) consent by KMGP to any merger or consolidation
of ▇▇▇▇▇▇ ▇▇▇▇▇▇ Energy Partners, L.P. in accordance with Section 16.2 of
the Partnership Agreement or a sale of all or substantially all of the assets
of
▇▇▇▇▇▇ ▇▇▇▇▇▇ Energy Partners, L.P. in accordance with Section
6.1
of the
Partnership Agreement.
59
(l) “person”
or
“Person”
shall
mean an individual, a corporation, a partnership, a limited liability company,
an association, a trust or any other entity, group (as such term is used
in
Section 13 of the Exchange Act) or organization, including, without
limitation, a Governmental Entity, and any permitted successors and assigns
of
such person.
(m) “Rollover
Commitment”
means
the commitment made by a Person listed on Section
8.16(m)
of the
Parent Disclosure Letter in such Person’s equity rollover letter, which has
been executed and which is valid and binding.
(n) “Special
Committee”
means
a
committee of the Company’s Board of Directors, the members of which are not
affiliated with Merger Sub and are not members of the Company’s management,
formed for the purpose of evaluating, and making a recommendation to the
full
Board of Directors of the Company with respect to, this Agreement and the
transactions contemplated hereby, including the Merger, and shall include
any
successor committee to the Special Committee existing as of the date of this
Agreement or any reconstitution thereof.
(o) “Subsidiaries”
of
any
party shall mean any corporation, partnership, association, trust or other
form
of legal entity of which (i) more than 50% of the outstanding voting
securities are on the date hereof directly or indirectly owned by such party,
or
(ii) such party or any Subsidiary of such party is a general partner
(excluding partnerships in which such party or any Subsidiary of such party
does
not have a majority of the voting interests in such partnership); provided,
however,
that
▇▇▇▇▇▇ ▇▇▇▇▇▇ Management LLC, a Delaware limited liability company and its
Subsidiaries (together with its Subsidiaries, “KMR”)
and
▇▇▇▇▇▇ ▇▇▇▇▇▇ Energy Partners, L.P., a Delaware limited partnership and its
Subsidiaries (together with its Subsidiaries, “KMP”)
shall
be deemed “Subsidiaries” of the Company solely for purposes of (1) the
representations and warranties of the Company contained in ARTICLE
III,
(2) the definition of “Company Material Adverse Effect” in Section
3.1(c),
(3) the definition “Action of Divestiture or Limitation” in Section
5.6(b)
or
whether the condition set forth in Section
6.3(e)
has been
satisfied, (4) the provision in Section
5.6(b)
that
provides that “nothing contained in this Agreement shall be deemed to require
Parent, any of its Subsidiaries, the Company (unless requested by Parent),
or
the Surviving Corporation or any of its Subsidiaries to take or agree to
take
any Action of Divestiture or Limitation”, (4) Section
5.9(a)
and
(5) the last sentence of Section
8.13;
provided,
further,
that
the Company Joint Ventures shall not be deemed “Subsidiaries” of the Company for
purposes of this Agreement. For the sake of clarity, no covenant that would
require any action or inaction on the part of any Subsidiary or Affiliate
of the
Company shall be construed to require KMGP to take or refrain from taking
any
such action when acting in any capacity on behalf of or with respect to KMP
or
KMR.
(p) Each
of
the following terms is defined on the page set forth opposite such
term:
60
|
“Action
of Divestiture or Limitation”
|
40
|
|
“Action”
|
42
|
|
“Affiliate
Transaction”
|
17
|
|
“Affiliates”
|
58
|
|
“Agreement”
|
1
|
|
“Alternative
Proposal”
|
34
|
|
“Book-Entry
Shares”
|
5
|
|
“Business
Day”
|
58
|
|
“Cancelled
Shares”
|
4
|
|
“Certificate
of Merger”
|
2
|
|
“Certificates”
|
5
|
|
“Closing
Date”
|
2
|
|
“Closing”
|
2
|
|
“Code”
|
6
|
|
“Company”
|
1
|
|
“Company
Approvals”
|
11
|
|
“Company
Benefit Plans”
|
16
|
|
“Company
Class A Preferred Stock”
|
9
|
|
“Company
Class B Preferred Stock”
|
9
|
|
“Company
Common Stock”
|
3
|
|
“Company
CSA Documents”
|
12
|
|
“Company
Disclosure Letter”
|
7
|
|
“Company
Employees”
|
38
|
|
“Company
Joint Ventures”
|
59
|
|
“Company
Material Adverse Effect”
|
8
|
|
“Company
Material Contracts”
|
23
|
|
“Company
Meeting”
|
36
|
|
“Company
Permits”
|
14
|
|
“Company
Preferred Stock”
|
9
|
|
“Company
SEC Documents”
|
12
|
|
“Company
Stock Option”
|
36
|
|
“Company
Stock Plans”
|
36
|
|
“Company
Stock-Based Award”
|
37
|
|
“Company
Stockholder Approval”
|
22
|
|
“Confidentiality
Agreements”
|
32
|
|
“Contracts”
|
59
|
|
“control”
|
58
|
|
“CSA”
|
12
|
|
“Debt
Commitment Letters”
|
25
|
|
“Debt
Financing”
|
25
|
|
“Dissenting
Shares
|
4
|
|
“Dissenting
Stockholders”
|
4
|
|
“Effective
Time”
|
2
|
|
“Employees”
|
20
|
|
“End
Date”
|
49
|
|
“Environmental
Law”
|
15
|
|
“ERISA”
|
16
|
|
“Exchange
Act”
|
11
|
|
“Exchange
Fund”
|
5
|
61
|
“Excluded
Shares”
|
4
|
|
“Expenses”
|
51
|
|
“Financing
Commitments”
|
25
|
|
“Financing”
|
25
|
|
“GAAP”
|
13
|
|
“Governmental
Entity”
|
11
|
|
“Guarantees”
|
1
|
|
“Guarantors”
|
1
|
|
“Hazardous
Substance”
|
15
|
|
“HSR
Act”
|
11
|
|
“Indemnified
Party”
|
42
|
|
“Intellectual
Property”
|
21
|
|
“KGCC”
|
2
|
|
“KMGP”
|
58
|
|
“KMP/KMR
Proposal”
|
35
|
|
“KMP”
|
60
|
|
“KMR”
|
60
|
|
“Knowledge”
|
58
|
|
“KSA”
|
24
|
|
“Law”
|
14
|
|
“Laws”
|
14
|
|
“Lien”
|
11
|
|
“LLC
Agreement”
|
58
|
|
“Marketing
Period”
|
45
|
|
“Merger
Consideration”
|
3
|
|
“Merger
Sub”
|
1
|
|
“Merger”
|
1
|
|
“Multiemployer
Plan”
|
16
|
|
“New
Financing Commitments”
|
44
|
|
“New
Plans”
|
38
|
|
“Old
Plans”
|
38
|
|
“Option
and Stock-Based Consideration”
|
37
|
|
“Option
Consideration”
|
36
|
|
“orders”
|
59
|
|
“Orders”
|
59
|
|
“Original
LLC Agreement”
|
59
|
|
“Parent”
|
1
|
|
“Parent
Approvals”
|
25
|
|
“Parent
Disclosure Letter”
|
24
|
|
“Parent
Material Adverse Effect”
|
24
|
|
“Parent
Termination Fee”
|
52
|
|
“Partnership
Agreement”
|
59
|
|
“Partnership
Event”
|
59
|
|
“Paying
Agent”
|
5
|
|
“PBGC”
|
17
|
|
“person”
|
60
|
|
“Person”
|
60
|
62
|
“Proxy
Statement”
|
18
|
|
“Recommendation”
|
11
|
|
“Regulatory
Law”
|
41
|
|
“Remaining
Shares”
|
3
|
|
“Representatives”
|
32
|
|
“Required
Financial Information”
|
44
|
|
“Restricted
Shares”
|
37
|
|
“rights-of-way”
|
22
|
|
“Rollover
Commitment”
|
60
|
|
“▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act”
|
13
|
|
“Schedule 13E-3”
|
18
|
|
“SEC”
|
12
|
|
“Securities
Act”
|
12
|
|
“Share”
|
3
|
|
“Significant
Subsidiary”
|
10
|
|
“Special
Committee”
|
60
|
|
“Specified
Regulatory Clearances”
|
40
|
|
“Stock
Purchase Plans”
|
37
|
|
“Subsidiaries”
|
60
|
|
“Superior
Proposal”
|
34
|
|
“Surviving
Corporation”
|
2
|
|
“Tax
Return”
|
20
|
|
“Tax”
|
20
|
|
“Taxes”
|
20
|
|
“Termination
Date”
|
28
|
|
“Termination
Fee”
|
51
|
|
“Voting
Agreement”
|
1
|
|
“WARN
Act”
|
20
|
63
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered as of the date first above written.
|
KNIGHT
HOLDCO LLC
By:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title:
Authorized Person
KNIGHT
ACQUISITION CO.
By:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title:
Authorized Person
▇▇▇▇▇▇
▇▇▇▇▇▇, INC.
By:
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Name:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title:
Vice President and General
Counsel
|