Kinder Morgan Energy Partners, L.P.
7.125% Notes due 2012
7.750% Notes due 2032
UNDERWRITING AGREEMENT
----------------------
March 11, 2002
J.P. Morgan Securities Inc.
First Union Securities, Inc.
Banc One Capital Markets, Inc.
BMO Nesbitt Burns Corp.
Commerzbank Capital Markets Corp.
Credit Lyonnais Securities (USA) Inc.
Scotia Capital (USA) Inc.
Sun Trust Capital Markets, Inc.
c/o J.P. Morgan Securities Inc.
270 Park Avenue
New York, New York 10017
Ladies and Gentlemen:
Kinder Morgan Energy Partners, L.P., a Delaware limited partnership (the
"Partnership"), confirms its agreement with J.P. Morgan Securities Inc.
("JPMorgan") and each of the other Underwriters named in Schedule I hereto
(collectively, the "Underwriters", which term shall also include any underwriter
substituted as hereinafter provided in Section 11 hereof), for whom JPMorgan and
First Union Securities, Inc. are acting as representatives (in such capacity,
the "Representatives"), with respect to the issue and sale by the Partnership
and the purchase by the Underwriters, acting severally and not jointly, of the
respective principal amounts set forth in said Schedule I of $450,000,000
aggregate principal amount of the Partnership's 7.125% Notes due March 15, 2012
and $300,000,000 aggregate principal amount of the Partnership's 7.750% Notes
due March 15, 2032 (the "Securities"). The Securities are to be issued pursuant
to an indenture dated as of January 2, 2001 (the "Indenture") between the
Partnership and First Union National Bank, as trustee (the "Trustee"). The term
"Indenture," as used herein, includes the Officer's Certificate (as defined in
the Indenture) establishing the form and terms of the Securities pursuant to
Sections 2 and 3 of the Indenture.
The Partnership understands that the Underwriters propose to make a public
offering of the Securities as soon as the Representatives deem advisable after
this Agreement has been executed and delivered.
The Partnership has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333-54616) covering the
registration of the Securities under the Securities Act of 1933, as amended (the
"1933 Act"), including the related preliminary prospectus or prospectuses.
Promptly after execution and delivery of this Agreement, the Partnership will
prepare and file a prospectus in accordance with the provisions of paragraph (b)
of Rule 424 ("Rule 424(b)") of the rules and regulations of the Commission under
the 1933 Act (the "1933 Act Regulations"). Each prospectus used before such
registration statement became effective, and any prospectus filed pursuant to
Rule 424(b) that was used after such effectiveness and prior to the execution
and delivery of this Agreement is herein called a "preliminary prospectus." Such
registration statement, including the exhibits thereto, schedules thereto, if
any, and the documents incorporated by reference therein pursuant to Item 12 of
Form S-3 under the 1933 Act, at the time it became effective is herein called
the "Registration Statement." Any registration statement filed pursuant to Rule
462(b) of the 1933 Act Regulations is herein referred to as the "Rule 462(b)
Registration Statement," and after such filing the term "Registration Statement"
shall include the Rule 462(b) Registration Statement. The final prospectus,
including the documents incorporated by reference therein pursuant to Item 12 of
Form S-3 under the 1933 Act, in the form first furnished to the Underwriters for
use in connection with the offering of the Securities is herein called the
"Prospectus." For purposes of this Agreement, all references to the Registration
Statement, any preliminary prospectus, the Prospectus or any amendment or
supplement to any of the foregoing shall be deemed to include the copy filed
with the Commission pursuant to its Electronic Data Gathering, Analysis and
Retrieval system ("EDGAR").
All references in this Agreement to financial statements and schedules and
other information which is "contained," "included" or "stated" in the
Registration Statement, any preliminary prospectus or the Prospectus (or other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
by reference in the Registration Statement, any preliminary prospectus or the
Prospectus, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement, any preliminary
prospectus or the Prospectus shall be deemed to mean and include the filing of
any document under the Securities Exchange Act of 1934, as amended (the "1934
Act"), which is incorporated by reference in the Registration Statement, such
preliminary prospectus or the Prospectus, as the case may be.
1. (a) The Partnership represents and warrants to each Underwriter as of
the date hereof, and as of the Closing Time referred to in Section 2(b) hereof,
and agrees with each Underwriter, as follows:
(i) (A) The Partnership meets the requirements for use of Form
S-3 under the 1933 Act. Each of the Registration Statement and any Rule 462(b)
Registration Statement has become effective under the 1933 Act and no stop order
suspending the effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the 1933 Act and no proceedings for
that purpose have been instituted or are pending or, to the knowledge of the
Partnership, are contemplated by the Commission, and any request on the part of
the Commission for additional information has been complied with. The Indenture
has been qualified under the Trust Indenture Act of 1939, as amended (the "1939
Act");
2
At the respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto became
effective and at the Closing Time, the Registration Statement, the Rule 462(b)
Registration Statement and any amendments and supplements thereto complied and
will comply in all material respects with the requirements of the 1933 Act and
the 1933 Act Regulations and the 1939 Act and the rules and regulations of the
Commission under the 1939 Act (the "1939 Act Regulations"), and did not and will
not contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading. Neither the Prospectus nor any amendments or supplements
thereto, at the time the Prospectus or any such amendment or supplement was
issued and at the Closing Time, included or will include an untrue statement of
a material fact or omitted or will omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. The representations and warranties in this
subsection shall not apply to statements in or omissions from the Registration
Statement or Prospectus made in reliance upon and in conformity with information
furnished to the Partnership in writing by any Underwriter through JPMorgan
expressly for use in the Registration Statement or Prospectus;
Each preliminary prospectus and the prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment thereto,
or filed pursuant to Rule 424 under the 1933 Act, complied when so filed in all
material respects with the 1933 Act Regulations and each preliminary prospectus
and the Prospectus delivered to the Underwriters for use in connection with this
offering was identical to the electronically transmitted copies thereof filed
with the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T;
(B) The documents incorporated or deemed to be incorporated
by reference in the Registration Statement and the Prospectus, when they became
effective or at the time they were or hereafter are filed with the Commission,
complied and will comply in all material respects with the requirements of the
1933 Act and the 1933 Act Regulations or the 1934 Act and the rules and
regulations of the Commission thereunder (the "1934 Act Regulations"), as
applicable, and, when read together with the other information in the
Prospectus, at the time the Registration Statement became effective, at the time
the Prospectus was issued and at the Closing Time, did not and will not contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading;
(ii) The financial statements of the Partnership included in the
Registration Statement and the Prospectus, together with the related schedules
and notes thereto, present fairly the financial condition of the Partnership and
its subsidiaries as of the dates indicated and the results of operations,
changes in financial position, partner's capital and cash flows for the periods
therein specified, in conformity with generally accepted accounting principles
("GAAP") consistently applied throughout the periods involved (except as
otherwise stated therein) and all adjustments necessary for a fair presentation
of results for such periods have been made. The supporting schedules, if any,
included in the Registration Statement present fairly in accordance with GAAP
the information required to be stated therein. Any summary and selected
financial and statistical data included in the Prospectus present fairly the
information shown therein and, to the extent based upon or derived from the
financial statements,
3
have been compiled on a basis consistent with that of the audited financial
statements included in the Registration Statement except as otherwise stated
therein or in the notes thereto;
(iii) The Partnership is a limited partnership duly formed,
validly existing and in good standing under the laws of the State of Delaware.
The Partnership has all necessary partnership power and authority to conduct the
activities conducted by it, to own or lease all the assets owned or leased by it
and to conduct its business as described in the Prospectus. The Partnership is
duly licensed or qualified to do business and is in good standing as a foreign
limited partnership in all jurisdictions in which the nature of the activities
conducted by it or the character of the assets owned or leased by it makes such
licensing or qualification necessary (except where the failure to be so licensed
or qualified would not have a material adverse effect on the financial
condition, results of operations or business of the Partnership and its
subsidiaries taken as a whole (a "Material Adverse Effect"));
(iv) Each of the Partnership's subsidiaries has been duly formed
or incorporated and is validly existing as a corporation, limited partnership,
general partnership or limited liability company in good standing under the laws
of the jurisdiction in which it is chartered or organized, with full entity
power and authority to own or lease, as the case may be, and to operate its
properties and conduct its business as described in the Prospectus, and is duly
qualified to do business as a corporation, limited partnership, general
partnership or limited liability company and is in good standing under the laws
of each jurisdiction which requires such qualification, other than any
jurisdiction where the failure to be so qualified would not, individually or in
the aggregate, have a Material Adverse Effect;
(v) Kinder Morgan G.P., Inc., a Delaware corporation (the
"General Partner") is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. The General Partner is an
indirect subsidiary of Kinder Morgan, Inc., a Delaware corporation. The General
Partner has all necessary corporate power and authority to conduct all the
activities conducted by it, to own or lease all the assets owned or leased by it
and to conduct its business as described in the Prospectus. The General Partner
is duly licensed or qualified to do business and is in good standing as a
foreign corporation in all jurisdictions in which the nature of the activities
conducted by it or the character of the assets owned or leased by it makes such
licensing or qualification necessary (except where the failure to be so licensed
or qualified would not have a Material Adverse Effect or material adverse effect
on the financial condition, results of operations or business of the General
Partner and its subsidiaries taken as a whole);
(vi) Kinder Morgan Management, LLC, a Delaware limited liability
company (the "Company"), all of the shares of which that may vote for the
election of directors are owned by the General Partner and which is the delegate
of the General Partner, is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Delaware. The
Company has all the necessary limited liability company power and authority to
perform its functions as the delegate of the General Partner;
(vii) All of the outstanding shares of capital stock, limited
partner interests, general partner interests or limited liability company
interests of each of the Partnership's subsidiaries have been duly and validly
authorized and issued and are fully paid
4
and (except (A) as required to the contrary by the Delaware Limited Liability
Company Act and the Delaware Revised Uniform Limited Partnership Act (the
"Delaware Act") and (B) with respect to any general partner interests)
nonassessable, and are owned by the Partnership, directly or indirectly through
one or more wholly-owned subsidiaries or the General Partner, free and clear of
any lien, encumbrance, security interest, equity or charge (except for such
liens, encumbrances, security interest, equities or charges as are not,
individually or in the aggregate, material to such interest ownership or as
described in the Prospectus);
(viii) The General Partner is the sole general partner of the
Partnership and each of Kinder Morgan Operating L.P. "A," a Delaware limited
partnership ("OLP-A"), Kinder Morgan Operating L.P. "B," a Delaware limited
partnership ("OLP-B"), Kinder Morgan Operating L.P. "C," a Delaware limited
partnership ("OLP-C") and Kinder Morgan Operating L.P. "D," a Delaware limited
partnership ("OLP-D" and together with OLP-A, OLP-B, and OLP-C, the "Operating
Partnerships"); such general partner interests are duly authorized by the
Partnership Agreement and the Agreements of Limited Partnership of the
respective Operating Partnerships, as the case may be, and were validly issued
to the General Partner; and the General Partner owns each such general partner
interest free and clear of all liens, encumbrances, security interests, equities
or charges (except for such liens, encumbrances, security interests, equities or
charges as are not, individually or in the aggregate, material to such ownership
or as described in the Prospectus). The authorized, issued and outstanding
common units of the Partnership are as set forth in the Prospectus (except for
subsequent issuances, if any, pursuant to reservations, agreements or employee
benefit plans referred to in the Prospectus or pursuant to the exercise of
convertible securities or options referred to in the Prospectus). The issued and
outstanding common units of the Partnership have been duly authorized and
validly issued and are fully paid and non-assessable; none of the outstanding
common units of the Partnership were issued in violation of the preemptive or
other similar rights of any securityholder of the Partnership;
(ix) The Partnership has all necessary partnership power and
authority to enter into this Agreement and consummate the transactions
contemplated hereby. This Agreement has been duly authorized, executed and
delivered by the Partnership;
(x) The Securities have been duly and validly authorized and,
when issued and delivered against payment therefor as provided in this
Agreement, will have been duly executed, authenticated, issued and delivered and
will constitute valid and legally binding obligations of the Partnership
entitled to the benefits provided by the Indenture, enforceable against the
Partnership in accordance with their respective terms; the Indenture has been
duly authorized, executed and delivered by the Partnership and, assuming due
authorization, execution and delivery by the Trustee, constitutes a valid and
legally binding instrument, enforceable against the Partnership in accordance
with its terms, subject, as to enforcement, in the case of the Securities and
the Indenture (A) to bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors' rights, and (B) to
general equity principles; and the Securities will conform and the Indenture
conforms in all material respects to the descriptions thereof under the caption
"Description of Debt Securities" in the Prospectus and in under the caption
"Description of Notes" in the prospectus supplement thereto and in the case of
the Indenture is and in the case of the Securities will be in substantially the
respective forms filed or incorporated by reference, as the case may be, as
exhibits to the Registration Statement;
5
(xi) Prior to the date hereof, none of the Partnership or any of
its subsidiaries or the General Partner has taken any action that is designed to
or that has constituted or that might have been expected to cause or result in
stabilization or manipulation of the price of any security of the Partnership in
connection with the offering of the Securities;
(xii) Neither the execution, delivery and performance of the
Securities, the Indenture or this Agreement, nor the consummation of the
transactions contemplated herein, therein or in the Registration Statement
(including, without limitation, the issuance and sale by the Partnership of the
Securities), will conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to which the
Partnership or any of its subsidiaries is a party or by which the Partnership or
any of its subsidiaries is bound or to which any of the property or assets of
the Partnership or any of its subsidiaries is subject, except where any such
foregoing occurrence will not prevent the consummation of the transactions
contemplated herein or would not have a Material Adverse Effect, nor will such
action result in any violation of the provisions of the partnership agreement,
certificate of incorporation, by-laws or other formation document, as the case
may be, of the Partnership or any of its subsidiaries or any statute or any
order, rule or regulation of any court or governmental agency or body having
jurisdiction over the Partnership or any of its subsidiaries or any of the
properties of any such entities, and no consent, approval, authorization, order,
registration or qualification of or with any court or governmental agency or
body having jurisdiction over the Partnership or any of its subsidiaries or any
of the properties of such entities is required in connection with the offering,
issuance or sale of the Securities hereunder or the consummation by the
Partnership of the transactions contemplated by this Agreement or for the due
execution, delivery or performance of the Indenture by the Partnership, except
such as have been already obtained or as may be required under the 1933 Act or
the 1933 Act Regulations or state securities laws;
(xiii) None of the Partnership or any of its subsidiaries, the
General Partner or the Company is (A) in violation of its partnership agreement,
certificate of incorporation, by-laws or other formation documents, as the case
may be, or (B) in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any indenture, mortgage, deed of
trust, loan agreement, lease or other agreement or instrument to which it is a
party or by which it or any of its properties may be bound, except for such
violations and defaults as would not have a Material Adverse Effect;
(xiv) Other than as disclosed in the Registration Statement,
there are no legal or governmental proceedings pending, or, to the knowledge of
the Partnership, threatened, to which the Partnership or any of its subsidiaries
is a party or of which any property of the Partnership or any of its
subsidiaries is the subject that is required to be disclosed in the Registration
Statement or, if determined adversely to such entity, would individually or in
the aggregate have a Material Adverse Effect;
(xv) Except as disclosed in the Registration Statement, neither
the Partnership nor any of its subsidiaries has violated any federal or state
law or regulation relating to the protection of human health or the environment
except for any violations and remedial actions as would not have a Material
Adverse Effect;
6
(xvi) Each of the Partnership and its subsidiaries maintains
insurance (issued by insurers of recognized financial responsibility) of the
types and in the amounts generally deemed adequate for their respective
businesses and, to the knowledge of the Partnership, consistent with insurance
coverage maintained by similar companies in similar businesses, including, but
not limited to, insurance covering real and personal property owned or leased by
it against theft, damage, destruction, acts of vandalism and all other risks
customarily insured against, all of which insurance is in full force and effect;
(xvii) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as otherwise
stated therein, (A) none of the Partnership or any of its subsidiaries has
sustained any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree otherwise
than as set forth or contemplated in the Prospectus, and (B) there has not been
any material change in the capitalization or long-term debt of the Partnership
or any of its subsidiaries or any material adverse change, or any development
involving a prospective material adverse change, in or affecting the general
affairs, management, financial position, stockholders' or unitholders' equity or
results of operations of the Partnership or any of its subsidiaries, taken as a
whole otherwise than as set forth or contemplated in the Prospectus;
(xviii) The Partnership and its subsidiaries own or lease all
properties as are necessary to the conduct of their operations as described in
the Prospectus, except where the failure to own or lease any of such properties
would not, individually or in the aggregate, have a Material Adverse Effect;
(xix) There are no contracts or documents which are required to
be described in the Registration Statement, the Prospectus or the documents
incorporated by reference therein or to be filed as exhibits thereto which have
not been so described and filed as required;
(xx) Each of the Partnership, the General Partner and the Company
is, and after giving effect to the offering and sale of the Securities and the
application of the proceeds thereof as described in the Prospectus, will be,
exempt from regulation as (A) a "holding company" or a "subsidiary company" of a
"holding company" thereof within the meaning of the Public Utility Holding
Company Act of 1935, as amended, or (B) an "investment company," a person
"controlled by" an "investment company" or an "affiliated person" of or
"promoter" or "principal underwriter" for an "investment company," as such terms
are defined in the Investment Company Act of 1940, as amended (the "Investment
Company Act");
(xxi) None of the Partnership or any of its subsidiaries is
involved in any labor dispute and, to the knowledge of the Partnership, no such
dispute has been threatened, except for such disputes as would not have a
Material Adverse Effect;
(xxii) None of the Partnership or any of its subsidiaries, the
General Partner or the Company is in violation or default of any statute, law,
rule, regulation, judgment, order or decree of any court, regulatory body,
administrative agency, governmental body, arbitrator or other authority having
jurisdiction over the Partnership, such subsidiary, the General
7
Partner or the Company or any of its properties, as applicable, except where
such violation or default would not, individually or in the aggregate, have a
Material Adverse Effect; and
(xxiii) To the knowledge of the Partnership,
PricewaterhouseCoopers LLP, who has certified certain financial statements of
the Partnership and certain of its subsidiaries and the General Partner, is an
independent accountant as required by the 1933 Act and the 1933 Act Regulations.
(b) Any certificate signed by any officer of the General Partner or
the Company on behalf of the Partnership or by any officer of any of the
Partnership's subsidiaries delivered to the Representatives or to counsel for
the Underwriters shall be deemed a representation and warranty by the
Partnership to each Underwriter as to the matters covered thereby.
2. (a) On the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the
Partnership agrees to sell to each Underwriter, severally and not jointly, and
each Underwriter, severally and not jointly, agrees to purchase from the
Partnership, at the price set forth in Schedule II, the aggregate principal
amount of Securities set forth in Schedule I opposite the name of such
Underwriter, plus any additional principal amount of Securities which such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 11 hereof.
(b) Subject to Section 10 hereof, payment for and delivery of the
Securities will be made at the Closing Location (as defined below) at 10:00
A.M., New York City time, on March 14, 2002, or at such other time on the same
or such other date, not later than the fifth business day thereafter, as the
Representatives and the Partnership may agree upon in writing (such time and
date of payment and delivery being herein called "Closing Time").
3. (a) Payment shall be made to the Partnership by wire transfer of
immediately available funds to a bank account designated by the Partnership
against delivery of the Securities to the Representatives in the manner set
forth below. It is understood that each Underwriter has authorized the
Representatives, for its account, to accept delivery of, receipt for, and make
payment of the purchase price for, the Securities which it has agreed to
purchase. JPMorgan, individually and not as representative of the Underwriters,
may (but shall not be obligated to) make payment of the purchase price for the
Securities to be purchased by any Underwriter whose funds have not been received
by the Closing Time, but such payment shall not relieve such Underwriter from
its obligations hereunder.
(b) The Securities to be purchased by the Underwriters hereunder will
be represented by one or more definitive global certificates in book-entry form
representing the Securities, which will be deposited by or on behalf of the
Partnership with The Depository Trust Company ("DTC") or its designated
custodian. The Partnership will deliver the global certificates representing the
Securities to the Representatives, for the respective accounts of the
Underwriters, against payment by or on behalf of the Representatives of the
purchase price therefor by causing DTC to credit the Securities to the account
of the Representatives at DTC. The Partnership will cause the global
certificates representing the Securities to be made available
8
to the Representatives for checking at least twenty-four hours prior to the
Closing Time at the office of DTC or its designated custodian (the "Designated
Office").
4. The documents to be delivered by or on behalf of the parties hereto
pursuant to Section 7 hereof, including the cross-receipt for the Securities and
any additional documents requested by the Representatives pursuant to Section
7(h) hereof, will be delivered at the offices of Bracewell & Patterson L.L.P. at
711 Louisiana Street Suite 2900, Houston, Texas 77002-2781 (the "Closing
Location"), and the Securities will be delivered at the Designated Office, all
at the Closing Time. A meeting will be held at the Closing Location at 4:00
p.m., Eastern Time, on the New York Business Day next preceding the Closing
Time, at which meeting the final drafts of the documents to be delivered
pursuant to the preceding sentence will be available for review by the parties
hereto. For the purposes of this Section 4, "New York Business Day" shall mean
each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which
banking institutions in New York are generally authorized or obligated by law or
executive order to close.
5. The Partnership agrees with each Underwriter as follows:
(a) The Partnership, subject to Section 5(b), will comply with the
requirements of Rule 430A and will notify the Representatives immediately, and
confirm the notice in writing, (i) when any post-effective amendment to the
Registration Statement shall become effective, or any supplement to the
Prospectus or any amended Prospectus shall have been filed, (ii) of the receipt
of any comments from the Commission, (iii) of any request by the Commission for
any amendment to the Registration Statement or any amendment or supplement to
the Prospectus or for additional information, and (iv) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or of any order preventing or suspending the use of any preliminary
prospectus, or of the suspension of the qualification of the Securities for
offering or sale in any jurisdiction, or of the initiation or threatening of any
proceedings for any of such purposes. The Partnership will promptly effect the
filings necessary pursuant to Rule 424(b) and will take such steps as it deems
necessary to ascertain promptly whether the form of prospectus transmitted for
filing under Rule 424(b) was received for filing by the Commission and, in the
event that it was not, it will promptly file such prospectus. The Partnership
will make every reasonable effort to prevent the issuance of any stop order and,
if any stop order is issued, to obtain the lifting thereof at the earliest
possible moment.
(b) The Partnership will give the Representatives notice of its
intention to file or prepare any amendment to the Registration Statement
(including any filing under Rule 462(b)) or any amendment, supplement or
revision to either the prospectus included in the Registration Statement at the
time it became effective or to the Prospectus, whether pursuant to the 1933 Act,
the 1934 Act or otherwise, will furnish the Representatives with copies of any
such documents a reasonable amount of time prior to such proposed filing or use,
as the case may be, and will not file or use any such document to which the
Representatives or counsel for the Underwriters shall reasonably object.
(c) The Partnership has furnished or will deliver to counsel for the
Underwriters, without charge, conformed copies of the Registration Statement as
originally filed and of each amendment thereto (including exhibits filed
therewith or incorporated by reference
9
therein and documents incorporated or deemed to be incorporated by reference
therein) and conformed copies of all consents and certificates of experts. The
copies of the Registration Statement and each amendment thereto furnished to
counsel for the Underwriters will be identical to the electronically transmitted
copies thereof filed with the Commission pursuant to EDGAR, except to the extent
permitted by Regulation S-T.
(d) The Partnership has delivered to each Underwriter, without charge,
as many copies of each preliminary prospectus as such Underwriter reasonably
requested, and the Partnership hereby consents to the use of such copies for
purposes permitted by the 1933 Act. The Partnership will furnish to each
Underwriter, without charge, during the period when the Prospectus is required
to be delivered under the 1933 Act, such number of copies of the Prospectus (as
amended or supplemented) as such Underwriter may reasonably request. The
Prospectus and any amendments or supplements thereto furnished to the
Underwriters will be identical to the electronically transmitted copies thereof
filed with the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.
(e) The Partnership will comply with the 1933 Act and the 1933 Act
Regulations, the 1934 Act and the 1934 Act Regulations and the 1939 Act and the
1939 Act Regulations so as to permit the completion of the distribution of the
Securities as contemplated in this Agreement and in the Prospectus. If at any
time when a prospectus is required by the 1933 Act to be delivered in connection
with sales of the Securities, any event shall occur or condition shall exist as
a result of which it is necessary, in the opinion of counsel for the
Underwriters or for the Partnership, to amend the Registration Statement or
amend or supplement the Prospectus in order that the Prospectus will not include
any untrue statements of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading in the light of
the circumstances existing at the time it is delivered to a purchaser, or if it
shall be necessary, in the opinion of such counsel, at any such time to amend
the Registration Statement or amend or supplement the Prospectus in order to
comply with the requirements of the 1933 Act or the 1933 Act Regulations, the
Partnership will promptly prepare and file with the Commission, subject to
Section 5(b), such amendment or supplement as may be necessary to correct such
statement or omission or to make the Registration Statement or the Prospectus
comply with such requirements, and the Partnership will furnish to the
Underwriters such number of copies of such amendment or supplement as the
Underwriters may reasonably request.
(f) The Partnership will use all reasonable efforts, in cooperation
with the Underwriters, to qualify the Securities for offering and sale under the
applicable securities laws of such states and other jurisdictions as the
Representatives may designate and to maintain such qualifications in effect for
a period of not less than one year from the later of the effective date of the
Registration Statement and any Rule 462(b) Registration Statement; provided,
however, that the Partnership shall not be obligated to file any general consent
to service of process or to qualify as a foreign limited partnership or as a
dealer in securities in any jurisdiction in which it is not so qualified or to
subject itself to taxation in respect of doing business in any jurisdiction in
which it is not otherwise so subject. The Partnership will also supply the
Underwriters with such information as is necessary for the determination of the
legality of the Securities for investment under the laws of such jurisdictions
as the Underwriters may request.
10
(g) The Partnership will timely file such reports pursuant to the 1934
Act as are necessary in order to make generally available to its unitholders as
soon as practicable an earnings statement for the purposes of, and to provide
the benefits contemplated by, the last paragraph of Section 11(a) of the 1933
Act.
(h) The Partnership, during the period when the Prospectus is required
to be delivered under the 1933 Act or the 1934 Act, will file all documents
required to be filed with the Commission pursuant to the 1934 Act within the
time periods required by the 1934 Act and the 1934 Act Regulations.
(i) During the period beginning from the date hereof and continuing to
and including the date of the Closing Time, the Partnership shall not directly
or indirectly offer, sell, contract to sell or otherwise dispose of, except as
provided hereunder, any securities of the Partnership that are substantially
similar to the Securities.
(j) During the period of five years from the date of the Prospectus,
the Partnership shall furnish to you copies of all reports or other
communications (financial or other) furnished to unitholders of the Partnership,
and shall deliver to you (i) as soon as they are available, copies of any
reports and financial statements furnished to or filed with the Commission or
any national securities exchange on which the Securities or any class of
securities of the Partnership is listed; and (ii) such additional information
concerning the business and financial condition of the Partnership as you may
from time to time reasonably request (such financial statements to be on a
consolidated basis to the extent the accounts of the Partnership and its
subsidiaries are consolidated in reports furnished to its unitholders generally
or to the Commission).
6. The Partnership covenants and agrees with each Underwriter that the
Partnership will pay or cause to be paid the following: (i) the fees,
disbursements and expenses of the Partnership's counsel and accountants in
connection with the issuance of the Securities and all other expenses in
connection with the preparation, printing and filing of the Registration
Statement (including exhibits and financial statements) as originally filed and
of any amendments and supplements thereto and the mailing and delivering of
copies thereof to the Underwriters, and of the preparation, printing and
delivering to the Underwriters of copies of each preliminary prospectus and of
the Prospectus and any amendments or supplements thereto; (ii) the cost of
preparing, printing and delivering to the Underwriters this Agreement, the
Indenture, the Blue Sky memoranda (and any supplements thereto), closing
documents (including any compilations thereof) and any other documents in
connection with the offering, purchase, sale and delivery of the Securities;
(iii) all reasonable expenses in connection with the qualification of the
Securities for offering and sale under state securities laws as provided in
Section 5(f) hereof; (iv) any fees charged by securities rating services for
rating the Securities; (v) the cost of preparing, issuing and delivering the
Securities; (vi) the fees and expenses of the Trustee and any agent of the
Trustee and the reasonable fees and disbursements of counsel for the Trustee in
connection with the Indenture and the Securities; and (vii) all other costs and
expenses incident to the performance of its obligations hereunder that are not
otherwise specifically provided for in this Section. It is understood, however,
that, except as provided in this Section, and Sections 8 and 10 hereof, the
Underwriters will pay all of their own costs and expenses, including the fees of
their counsel.
11
7. The obligations of the several Underwriters hereunder shall be subject,
in their discretion, to the condition that all representations and warranties
and other statements of the Partnership herein, or in certificates of any
officer of the General Partner or the Company on behalf of the Partnership or by
any officer of any subsidiary of the Partnership delivered pursuant to the
provisions hereof, are, at and as of the Closing Time, true and correct, the
condition that the Partnership shall have performed all of its obligations
hereunder theretofore to be performed, and the following additional conditions:
(a) The Registration Statement, including any Rule 462(b) Registration
Statement, has become effective and at Closing Time no stop order suspending the
effectiveness of the Registration Statement shall have been issued under the
1933 Act or proceedings therefor initiated or threatened by the Commission, and
any request on the part of the Commission for additional information shall have
been complied with to the reasonable satisfaction of counsel to the
Underwriters. A prospectus containing the information described under Rule
424(b)(2) shall have been filed with the Commission in accordance with Rule
424(b).
(b) Vinson & Elkins L.L.P., counsel for the Underwriters, shall have
furnished to you such written opinion or opinions, in form and substance
satisfactory to you, dated the Closing Time, with respect to the matters covered
in paragraphs (i) (insofar as it relates to the due formation and good standing
of the Partnership in Delaware and the Partnership's power and authority to
conduct its business as described in the Prospectus, as amended or
supplemented), (iv), (v), (vi), (vii), (xi) and (xii) of subsection (c) below
and a letter, in form and substance satisfactory to you, substantially similar
to the letter required to be delivered by Bracewell & Patterson, L.L.P. pursuant
to subsection (c) below as well as such other related matters as you may
reasonably request, and such counsel shall have received such papers and
information as they may reasonably request to enable them to pass upon such
matters;
(c) Bracewell & Patterson, L.L.P., counsel for the Partnership, shall
have furnished to you its written opinion, dated the Closing Time, in form and
substance satisfactory to you, to the collective effect that:
(i) Each of OLP-A, OLP-B, OLP-C, OLP-D, Kinder Morgan Interstate
Gas Transmission LLC, Kinder Morgan CO2 Company, L.P., Kinder Morgan Bulk
Terminals, Inc., SFPP, L.P. and Tejas Gas, LLC (collectively the "Subsidiaries")
and each of the Partnership, the General Partner and the Company is validly
existing and in good standing under the laws of its jurisdiction of formation or
incorporation, as applicable, and each such entity has the partnership,
corporate or limited liability company power and authority to conduct its
business as described in the Prospectus;
(ii) No consent, approval, authorization, order, or filing with,
any federal, Delaware or Texas court or governmental agency or body is required
under federal or Texas law, the Delaware General Corporation Law (the "DGCL"),
the Delaware Act or the Delaware Limited Liability Company Act for the issue and
sale of the Securities or the consummation by the Partnership of the
transactions contemplated by this Agreement or the Indenture, except (A) as may
be required under the 1933 Act and the 1933 Act Regulations, (B) as may be
required under state securities or Blue Sky laws in connection with the purchase
and distribution of the Securities by the Underwriters and (C) such as the
failure to obtain or
12
make would not reasonably be expected, individually or in the aggregate, to have
a Material Adverse Effect;
(iii) To the knowledge of such counsel after due inquiry and
other than as set forth in the Prospectus, there are no legal or governmental
proceedings pending or threatened to which the Partnership, the General Partner,
the Company or any of the Subsidiaries is a party or of which any of their
respective property is subject which, if determined adversely to the
Partnership, the General Partner, the Company or any of the Subsidiaries, would
individually or in the aggregate reasonably be expected to have a Material
Adverse Effect;
(iv) This Agreement has been duly authorized, executed and
delivered by the Partnership;
(v) The Partnership has all necessary partnership power and
authority to enter into this Agreement and consummate the transactions
contemplated hereby. The issuance and sale by the Partnership of the Securities
to the Underwriters pursuant to this Agreement has been duly authorized by all
necessary partnership action;
(vi) The Securities have been duly authorized by the Partnership
and when executed by the Partnership and authenticated by the Trustee and issued
and delivered, in the manner provided in the Indenture against payment of the
consideration thereof, will constitute valid and legally binding obligations of
the Partnership entitled to the benefits provided by the Indenture; and the
Securities and the Indenture conform as to legal matters in all material
respects to the descriptions under the caption "Description of Debt Securities"
in the Prospectus, as supplemented by the descriptions thereof under the caption
"Description of Notes" in the prospectus supplement to the Prospectus;
(vii) The Indenture has been duly authorized, executed and
delivered by the Partnership and, assuming the due authorization, execution and
delivery thereof by the Trustee, constitutes a valid and legally binding
agreement of the Partnership, enforceable against the Partnership in accordance
with its terms, and has been duly qualified under the 1939 Act;
(viii) All of the outstanding limited partner interests and
general partner interests of each of the partnership Subsidiaries have been duly
and validly authorized and issued and are fully paid and (except (A) as required
to the contrary by the Delaware Act and (B) with respect to any general partner
interests) nonassessable, and all of the issued and outstanding capital stock of
each of the corporate Subsidiaries and all of the issued and outstanding limited
liability company interests in each of the limited liability company
Subsidiaries have been duly authorized and validly issued, are fully paid and
non-assessable, and, except as otherwise set forth in the Prospectus all such
capital stock and partnership and limited liability company interests are owned
by the Partnership, directly or indirectly through one or more wholly-owned
subsidiaries or the General Partner, free and clear of any lien, encumbrance,
security interest, equity or charge (except for such liens, encumbrances,
security interest, equities, or charges as are not, individually or in the
aggregate, material to such interest ownership or as described in the
Prospectus); and none of the outstanding shares of any corporate Subsidiary,
limited liability company interests of any limited liability company Subsidiary
or partnership interests of any
13
partnership Subsidiary were issued in violation of any preemptive or similar
rights of any holder of any security or other interest of such Subsidiary, as
the case may be;
(ix) The execution, delivery and performance by the Partnership
of the Securities, the Indenture and this Agreement and the consummation of the
transactions contemplated herein and therein and in the Registration Statement
will not (A) conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument filed or
incorporated by reference as an exhibit to the Partnership's filing under the
1934 Act on Form 10-K for the year ended December 31, 2001 or filings under the
1934 Act on Form 8-K since December 31, 2001, (B) result in a violation of any
provision of the partnership agreement, charter, by-laws or other formation
document, as applicable, of any of the Partnership, the General Partner, the
Company or the Subsidiaries, (C) breach or otherwise violate an existing
obligation of any of the Partnership, the General Partner, the Company or the
Subsidiaries under any existing court or administrative order, judgment or
decree of which we have knowledge after due inquiry, or (D) violate any
applicable provisions of the federal laws of the United States (based on the
limitations set forth below), the laws of the State of Texas, the DGCL, the
Delaware Act or the Delaware Limited Liability Company Act;
(x) Each of the Partnership and the General Partner (A) is exempt
from regulation as a "holding company" under the Public Utility Holding Company
Act of 1935, as amended and (B) is not an "investment company," as such term is
defined in the Investment Company Act;
(xi) The Registration Statement has been declared effective under
the 1933 Act; any required filing of the Prospectus pursuant to Rule 424(b) has
been made in the manner and within the time period required by Rule 424(b); and,
to such counsel's knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued under the 1933 Act and no proceedings for
that purpose have been instituted or are pending or threatened by the
Commission;
(xii) The Registration Statement and the Prospectus, excluding
the documents incorporated by reference therein, as of their respective
effective or issue dates (other than the financial statements and supporting
schedules and other financial data included therein or omitted therefrom, and
the Trustee's Statement of Eligibility on Form T-1 (the "Form T-1"), as to which
such counsel need express no opinion) complied as to form in all material
respects with the requirements of the 1933 Act and the 1933 Act Regulations;
(xiii) The documents incorporated by reference in the Prospectus
(other than the financial statements and supporting schedules and other
financial data included therein or omitted therefrom, as to which such counsel
need express no opinion), when they became effective or (if incorporated by
reference to another registration statement) were filed with the Commission, as
the case may be, complied as to form in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations or the 1934 Act and
the 1934 Act Regulations, as applicable;
14
In addition, such counsel may state that the enforceability of obligations of
the Partnership under the Securities and the Indenture, as the case may be, is
subject to the effect of any applicable bankruptcy (including, without
limitation, fraudulent conveyance and preference), insolvency, reorganization,
rehabilitation, moratorium or similar laws and decisions relating to or
affecting the enforcement of creditors' rights generally, and to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law), including, without limitation, concepts of
good faith and fair dealing, and the possible unavailability of specific
performance or injunctive relief. Further, such counsel need not express an
opinion with respect to the enforceability of provisions in the Securities or
the Indenture with respect to delay, extension or omission of enforcement of
rights or remedies or waivers of defenses. Further, such counsel may state that
the enforceability of indemnification provisions contained in the Indenture may
be limited by applicable law or public policy.
Such counsel shall also deliver a letter to the effect, because the
primary purpose of such counsel's engagement was not to establish or confirm
factual matters or financial or accounting matters and because of the wholly or
partially non-legal character of many of the statements contained in the
Registration Statement and the Prospectus and any amendment thereto, such
counsel is not passing upon and does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement and the Prospectus and any amendment thereto (except to
the extent expressly set forth in the last clause of paragraph (vi) of this
Section 7(c)) and they have not independently verified the accuracy,
completeness or fairness of such statements (except as aforesaid); that, without
limiting the foregoing, they assume no responsibility for, have not
independently verified and have not been asked to comment on the accuracy,
completeness or fairness of the financial statements and other financial data
included in the Registration Statement, the Prospectus and any amendment
thereto, or the exhibits to the Registration Statement, and they have not
examined the accounting, financial or other records from which such financial
statements and other financial data contained therein were derived; and that
they are not experts with respect to any portion of the Registration Statement
and any amendment thereto, including, without limitation, such financial
statements and related data and other financial or accounting data; however,
they have participated in conferences with officers and other representatives of
the Company and the General Partner and representatives of the Underwriters,
including counsel for the Underwriters, at which the contents of the
Registration Statement and any amendment thereto and the Prospectus and related
matters were discussed; and, based upon such participation and review, and
relying as to materiality in part upon the factual statements of officers and
other representatives of the Company and the General Partner and representatives
of the Underwriters, no facts have come to their attention that have caused them
to believe that the Registration Statement or any amendment thereto (except in
each case for the financial statements and related data and other financial or
accounting data or exhibits contained or incorporated by reference therein or
omitted therefrom and the Form T-1, as to which such counsel need not comment),
at the time such Registration Statement or any such amendment became effective,
contained an untrue statement of a material fact or omitted to state a material
fact necessary in order to make the statements therein not misleading or that
the Prospectus or any amendment or supplement thereto (except in each case for
the financial statements and related data and other financial or accounting data
contained or incorporated by reference therein or omitted therefrom, as to which
such counsel need not comment), at the time the Prospectus was issued, at the
time any such amended or supplemented prospectus was issued or at the Closing
Time, included or includes an
15
untrue statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
In rendering such opinion, such counsel may state that they express no
opinion as to the laws of any jurisdiction other than federal law, Texas law,
New York law, the DGCL, the Delaware Limited Liability Company Act and the
Delaware Act.
(d) (i) At the time of the execution of this Agreement, the
Representatives shall have received from PricewaterhouseCoopers LLP, a letter
dated such date, in form and substance satisfactory to the Representatives,
together with signed or reproduced copies of such letter for each of the other
Underwriters to the effect set forth in Annex I hereto and to such further
effect as counsel to the Underwriters may reasonably request.
(ii) At Closing Time, the Representatives shall have received
from PricewaterhouseCoopers LLP a letter, dated as of Closing Time, to the
effect that they reaffirm the statements made in the letter furnished pursuant
to subsection (d)(i) of this Section, except that the specified date referred to
shall be a date not more than three business days prior to Closing Time.
(e) Since the time of execution of this Agreement or the respective
dates as of which such information is given in the Prospectus, (i) neither the
Partnership nor any of its subsidiaries shall have sustained any material loss
or interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, and (ii) there shall not have been any
material adverse change in the partners' capital or capital stock or limited
liability company interests, as applicable, or long-term debt of the Partnership
or any of its subsidiaries, or any change, or any development involving a
prospective change, in or affecting the general affairs, management, financial
position, stockholders', limited liability company interest holders' or
unitholders' equity or results of operations of the Partnership or any of its
subsidiaries, the effect of which, in any such case described in clause (i) or
(ii), is in the judgment of the Representatives so material and adverse as to
make it impracticable or inadvisable to proceed with the offering or the
delivery of the Securities being delivered at the Closing Time on the terms and
in the manner contemplated in the Prospectus;
(f) At Closing Time, the Securities shall be rated at least Baa1 by
Moody's Investor's Service Inc. and A- by Standard & Poor's Ratings Group, a
division of McGraw-Hill, Inc. On or after the date hereof (i) no downgrading
shall have occurred in the rating accorded any debt securities or preferred
stock of the Partnership or any of its subsidiaries by any "nationally
recognized statistical rating organization," as that term is defined by the
Commission for purposes of Rule 436(g)(2) under the 1933 Act, and (ii) no such
organization shall have publicly announced, beyond what it had announced prior
to the date hereof, that it has under surveillance or review, with possible
negative implications, its rating of debt securities or preferred stock of the
Partnership or any of its subsidiaries;
(g) The Partnership shall have furnished or caused to be furnished to
you at the Closing Time certificates of officers of the General Partner or the
Company satisfactory to
you as to the accuracy of the representations and warranties of the Partnership
herein at and as of the Closing Time, as to the performance by the Partnership
of all of its obligations hereunder to be performed at or prior to the Closing
Time, as to the matters set forth in subsection (e) of this Section and as to
such other matters as you may reasonably request.
(h) If any condition specified in this Section shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be terminated
by the Representatives by notice to the Partnership at any time at or prior to
Closing Time, and such termination shall be without liability of any party to
any other party except as provided in Section 6 or Section 11 and except that
Sections 1, 8 and 9 shall survive any such termination and remain in full force
and effect.
8. (a) The Partnership agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto) or the omission or
alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading or
arising out of any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto), or the omission
or alleged omission therefrom of a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or of any
claim whatsoever based upon any such untrue statement or omission, or
any such alleged untrue statement or omission; provided that (subject
to Section 8(d) below) any such settlement is effected with the
written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by JPMorgan
and reasonably acceptable to the Partnership), reasonably incurred in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i) or
(ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Partnership by
any Underwriter through JPMorgan expressly for use in the
17
Registration Statement (or any amendment thereto) or any preliminary prospectus
or the Prospectus (or any amendment or supplement thereto).
(b) Each Underwriter severally agrees to indemnify and hold harmless
the Partnership, the General Partner, the General Partner's directors, each of
their respective officers who signed the Registration Statement, the Company and
each of its directors, and each person, if any, who controls the Partnership,
the General Partner or the Company within the meaning of Section 15 of the 1933
Act or Section 20 of the 1934 Act against any and all loss, liability, claim,
damage and expense described in the indemnity contained in subsection (a) of
this section, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto) or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Partnership by such
Underwriter through JPMorgan expressly for use in the Registration Statement (or
any amendment thereto) or such preliminary prospectus or the Prospectus (or any
amendment or supplement thereto).
(c) Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve such indemnifying party from any liability
hereunder to the extent it is not materially prejudiced as a result thereof and
in any event shall not relieve it from any liability which it may have otherwise
than on account of this indemnity agreement. In the case of parties indemnified
pursuant to Section 8(a) above, counsel to the indemnified parties shall be
selected by JPMorgan and reasonably acceptable to the Partnership, and, in the
case of parties indemnified pursuant to Section 8(b) above, counsel to the
indemnified parties shall be selected by the Partnership and reasonably
acceptable to JPMorgan. An indemnifying party may participate at its own expense
in the defense of any such action; provided, however, that counsel to the
indemnifying party shall not (except with the consent of the indemnified party)
also be counsel to the indemnified party. In no event shall the indemnifying
parties be liable for fees and expenses of more than one counsel (in addition to
any local counsel) separate from their own counsel for all indemnified parties
in connection with any one action or separate but similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances. No indemnifying party shall, without the prior written consent of
the indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 8 (whether or not the indemnified parties are actual or
potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all liability
arising out of such litigation, investigation, proceeding or claim and (ii) does
not include a statement as to or an admission of fault, culpability or a failure
to act by or on behalf of any indemnified party.
(d) If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by Section 8(a)(ii) effected without its
written consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying
18
party shall have received notice of the terms of such settlement at least 30
days prior to such settlement being entered into and (iii) such indemnifying
party shall not have reimbursed such indemnified party in accordance with such
request prior to the date of such settlement.
(e) If the indemnification provided for in this Section 8 is for any
reason unavailable to or insufficient to hold harmless an indemnified party in
respect of any losses, liabilities, claims, damages or expenses referred to
therein, then each indemnifying party shall contribute to the aggregate amount
of such losses, liabilities, claims, damages and expenses incurred by such
indemnified party, as incurred, (i) in such proportion as is appropriate to
reflect the relative benefits received by the Partnership on the one hand and
the Underwriters on the other hand from the offering of the Securities pursuant
to this Agreement or (ii) if the allocation provided by clause (i) is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Partnership on the one hand and of the Underwriters on the other
hand in connection with the statements or omissions which resulted in such
losses, liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
The relative benefits received by the Partnership on the one hand and the
Underwriters on the other hand in connection with the offering of the Securities
pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Securities
pursuant to this Agreement (before deducting expenses) received by the
Partnership and the total underwriting discount received by the Underwriters, in
each case as set forth on the cover of the Prospectus.
The relative fault of the Partnership on the one hand and the Underwriters
on the other hand shall be determined by reference to, among other things,
whether any such untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
supplied by the Partnership or by the Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Partnership and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 8(e) were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 8(e). The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 8(e) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 8(e), no Underwriter shall
be required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of any such untrue or
alleged untrue statement or omission or alleged omission.
19
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 8(e), each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each director of the General Partner, each officer of the General Partner who
signed the Registration Statement, the Company and its directors, and each
person, if any, who controls the Partnership, the General Partner or the Company
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
shall have the same rights to contribution as the Partnership and General
Partner. The Underwriters' respective obligations to contribute pursuant to this
Section 8 are several in proportion to the principal amount of Securities set
forth opposite their respective names in Schedule II hereto and not joint.
(f) The obligations of the Partnership under this Section 8 shall be
in addition to any liability which the Partnership may otherwise have and shall
extend, upon the same terms and conditions, to each controlling person, if any,
of any Underwriter; and the obligations of the Underwriters under this Section 8
shall be in addition to any liability which the Underwriters may otherwise have
and shall extend, upon the same terms and conditions, to the General Partner,
each director of the General Partner, each officer of the General Partner who
signed the Registration Statement, the Company, each director of the Company and
to each controlling person, if any, of the Partnership, the General Partner and
the Company.
9. The respective indemnities, agreements, representations, warranties and
other statements of the Partnership and the Underwriters, as set forth in this
Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of the Underwriters or any controlling person of any Underwriter, or the
Partnership, or any officer or director or controlling person of the
Partnership, and shall survive delivery of and payment for the Securities to the
Underwriters.
10. (a) The Representatives may terminate this Agreement, by notice to the
Partnership, at any time at or prior to Closing Time (i) if there has been,
since the time of execution of this Agreement or since the respective dates as
of which information is given in the Prospectus, any material adverse change in
the condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Partnership and its subsidiaries taken as a whole,
whether or not arising in the ordinary course of business, (ii) if there has
occurred any outbreak of hostilities or escalation thereof or other calamity or
crisis or any change or development involving a prospective change in financial
markets, either within or outside the United States, in each case the effect of
which is such as to make it, in the judgment of the Representatives,
impracticable or inadvisable to proceed with the offering, sale or delivery of
the Securities on the terms and in the manner contemplated by this Agreement and
the Prospectus or to enforce contracts for the sale of the Securities, or (iii)
if trading in any securities of the Partnership has been suspended or materially
limited on any exchange or in the over-the-counter market, (iv) if trading
generally on the American Stock Exchange or the New York Stock Exchange or in
the over-the-counter market has been suspended or materially limited, or minimum
or maximum prices for trading have been fixed, or maximum ranges for prices have
20
been required, by any of said exchanges or by such over-the-counter market or by
order of the Commission, the National Association of Securities Dealers, Inc. or
any other governmental authority, or (v) if a banking moratorium has been
declared by either Federal or New York authorities.
(b) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party except as
provided in Section 6 hereof, and provided further that Sections 1, 8 and 9
shall survive such termination and remain in full force and effect.
11. If the Representatives elect not to purchase Securities hereunder
solely because the condition in Section 7(b) has not been satisfied or the
Representatives elect to terminate this Agreement pursuant to Section 10(a)(ii),
(iv) or (v), the Partnership shall not then be under any liability to the
Underwriters except as provided in Sections 6 and 8 hereof; but, if for any
other reason, the Securities are not delivered by or on behalf of the
Partnership as provided herein, the Partnership will reimburse the Underwriters
through you for all out-of-pocket expenses approved in writing by you, including
fees and disbursements of counsel, reasonably incurred by the Underwriters in
making preparations for the purchase, sale and delivery of the Securities, but
the Partnership shall then be under no further liability to the Underwriters
except as provided in Sections 6 and 8 hereof.
12. If one or more of the Underwriters shall fail at Closing Time to
purchase the Securities which it or they are obligated to purchase under this
Agreement (the "Defaulted Securities"), the Representatives shall have the
right, within 24 hours thereafter, to make arrangements for one or more of the
non-defaulting Underwriters, or any other underwriters, to purchase all, but not
less than all, of the Defaulted Securities in such amounts as may be agreed upon
and upon the terms herein set forth; if, however, the Representatives shall not
have completed such arrangements within such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10% of the
aggregate principal amount of the Securities to be purchased hereunder, each of
the non-defaulting Underwriters shall be obligated, severally and not jointly,
to purchase the full amount thereof in the proportions that their respective
underwriting obligations hereunder bear to the underwriting obligations of all
non-defaulting Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the aggregate
principal amount of the Securities to be purchased hereunder, this Agreement
shall terminate without liability on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement, either the Representatives or the Partnership shall have the
right to postpone the Closing Time for a period not exceeding seven days in
order to effect any required changes in the Registration Statement or Prospectus
or in any other documents or arrangements. As used herein, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section 11.
21
13. All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to J.P. Morgan Securities Inc., 270 Park Avenue, New
York, New York 10017, Attn: Transaction Execution Group, Fax: (212) 834-6702;
and if to the Partnership shall be delivered or sent by mail, telex or facsimile
transmission to the address of the Partnership set forth in the Prospectus,
Attention: Secretary. Any such statements, requests, notices or agreements shall
take effect upon receipt thereof.
14. This Agreement shall be binding upon, and inure solely to the benefit
of, the Underwriters, the Partnership and, to the extent provided in Sections 8
and 9 hereof, the General Partner, the officers and directors of the General
Partner, the Company and its directors, and each person who controls the
Partnership, the General Partner and the Company or any Underwriter, and their
respective heirs, executors, administrators, successors and assigns, and no
other person shall acquire or have any right under or by virtue of this
Agreement. No purchaser of any of the Securities from the Underwriters shall be
deemed a successor or assign by reason merely of such purchase.
15. Time shall be of the essence of this Agreement.
16. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
17. This Agreement may be executed by any one or more of the parties hereto
in any number of counterparts, each of which shall be deemed to be an original,
but all such respective counterparts shall together constitute one and the same
instrument.
22
If the foregoing is in accordance with your understanding, please sign and
return to us, one for the Partnership and one for each Underwriter, plus one for
each counsel, counterparts hereof, and, upon the acceptance hereof by you, this
letter and such acceptance hereof shall constitute a binding agreement between
the Underwriters and the Partnership.
Very truly yours,
KINDER MORGAN ENERGY PARTNERS, L.P.
By: Kinder Morgan G.P., Inc.,
its general partner
By: Kinder Morgan Management, LLC,
its delegate
By:__________________________________
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
J.P. MORGAN SECURITIES INC.
FIRST UNION SECURITIES, INC.
By: J.P. Morgan Securities Inc.
By:________________________________
Name:
Title:
For themselves and as Representatives of the
other Underwriters named in Schedule I hereto.
23
SCHEDULE I
Principal Principal
Amount of Amount of
7.125% 7.750%
Name of Underwriter Notes due 2012 Notes due 2032
- ------------------- -------------- --------------
J.P. Morgan Securities Inc. ............. 202,500,000 135,000,000
First Union Securities, Inc. ............ 157,500,000 105,000,000
Banc One Capital Markets, Inc. .......... 15,000,000 10,000,000
BMO Nesbitt Burns Corp. ................. 15,000,000 10,000,000
Commerzbank Capital Markets Corp. ....... 15,000,000 10,000,000
Credit Lyonnais Securities (USA) Inc..... 15,000,000 10,000,000
Scotia Capital (USA) Inc. ............... 15,000,000 10,000,000
Sun Trust Capital Markets, Inc. ......... 15,000,000 10,000,000
------------------------------------
$450,000,000 $300,000,000
Total....................................
====================================
Schedule I
SCHEDULE II
Kinder Morgan Energy Partners, L.P.
$450,000,000 7.125% Notes due 2012
$300,000,000 7.750% Notes due 2032
1. The initial public offering price of the 2012 Securities shall be
99.535% of the principal amount thereof, plus accrued interest, if any, from the
date of issuance. The initial public offering price of the 2032 Securities shall
be 99.492% of the principal amount thereof, plus accrued interest, if any, from
the date of issuance.
2. The purchase price to be paid by the Underwriters for the 2012
Securities shall be 98.885% of the principal amount thereof. The purchase price
to be paid by the Underwriters for the 2032 Securities shall be 98.617% of the
principal amount thereof.
3. The interest rate on the 2012 Securities shall be 7.125% per annum.
The interest rate on the 2032 Securities shall be 7.750% per annum.
4. The Partnership will have the right to redeem each series of the
Securities, in whole or in part at any time, at a redemption price equal to the
greater of (1) 100% of the principal amount of the Securities of such series to
be redeemed or (2) the sum of the present values of the remaining scheduled
payments of principal and interest on such series of Securities (exclusive of
interest accrued to the redemption date) discounted to the redemption date on a
semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at
the Treasury Rate plus 25 basis points in the case of the 2012 Securities, and
the Treasury Rate plus 30 basis points in the case of the 2032 Securities, plus,
in either case, accrued and unpaid interest on the principal amount being
redeemed to such redemption date as further described in the Prospectus. Terms
used in this paragraph that are not defined in this Agreement have the meaning
given them in the Prospectus.
Schedule III
ANNEX I
Pursuant to Section 7(d) of the Agreement, the accountants shall furnish
letters to the Representatives to the effect that:
(i) They are independent certified public accountants with respect to
the Partnership and its subsidiaries and the General Partner within the
meaning of the Securities Act of 1933 (the "Act") and the applicable rules
and regulations thereunder adopted by the Securities Exchange Commission
("SEC");
(ii) In their opinion, the financial statements and any supplementary
financial information and schedules (and, if applicable pro forma
financial information) examined by them and included in the Prospectus
comply as to form in all material respects with the applicable accounting
requirements of the 1934 Act and the 1934 Act Regulations; and, if
applicable, they have performed the procedures specified by the American
Institute of Certified Public Accountants for a review of the consolidated
interim financial statements, selected financial data, pro forma financial
information and/or condensed financial statements derived from audited
financial statements of the Partnership for the periods specified in such
letter, as indicated in their reports thereon, copies of which have been
separately furnished to the Representatives;
(iii)The unaudited selected financial information with respect to the
consolidated results of operations and financial position of the
Partnership for the five most recent fiscal years included in the
Prospectus agrees with the corresponding amounts (after restatement where
applicable) in the audited consolidated financial statements for such five
fiscal years, which were included or incorporated by reference in the
Partnership's Annual Reports on Form 10-K for such fiscal years;
(iv) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available interim
financial statements of the Partnership and its subsidiaries, inspection
of the minute books of the Partnership and its subsidiaries since the date
of the latest audited financial statements included in the Prospectus,
inquiries of officials of the Partnership and its subsidiaries responsible
for financial and accounting matters and such other inquiries and
procedures as may be specified in such letter, nothing came to their
attention that caused them to believe that:
(A) as of a specified date not more than five days prior to the
date of such letter, there have been any changes in the consolidated
partner's capital (other than issuances of capital stock upon
exercise of options and stock appreciation rights, upon earn-outs of
performance shares and upon conversions of convertible securities, in
each case that were outstanding on the date of the latest financial
statements included in the Prospectus) or any increase in the
consolidated long-term debt of the Partnership and its consolidated
subsidiaries, or any decreases in consolidated net current assets or
stockholders' or unitholders' equity or other items specified by the
Underwriters, or any increases in any items
Annex I-1
specified by the Purchaser, in each case as compared with amounts
shown in the latest balance sheet included in the Prospectus, except
in each case for changes, increases or decreases that the Prospectus
discloses have occurred or may occur or that are described in such
letter; and
(B) for the period from the date of the latest financial
statements included in the Prospectus to the specified date referred
to in clause (A) there were any decreases in consolidated net
revenues or operating profit or the total or per share amounts of
consolidated net income or other items specified by the Underwriters,
or any increases in any items specified by the Underwriters, in each
case as compared with the comparable period of the preceding year and
with any other period of corresponding length specified by the
Underwriters, except in each case for decreases or increases that the
Prospectus discloses have occurred or may occur or that are described
in such letter; and
(v) In addition to the examination referred to in their report(s)
included in the Prospectus and the limited procedures, inspection of
minute books, inquiries and other procedures referred to in paragraphs
(iii) and (iv) above, they have carried out certain specified procedures,
not constituting an examination in accordance with generally accepted
auditing standards, with respect to certain amounts, percentages and
financial information specified by the Underwriters, which are derived
from the general accounting records of the Partnership and its
subsidiaries, which appear in the Prospectus, and have compared certain of
such amounts, percentages and financial information with the accounting
records of the Partnership and its subsidiaries and have found them to be
in agreement.
Annex I-2