Kinder Morgan Energy Partners, L.P.
Debt Securities
Underwriting Agreement
----------------------
January 26, 1999
Goldman, Sachs & Co.
A.G. Edwards & Sons, Inc.
NationsBanc Montgomery Securities LLC
Prudential Securities Incorporated
Salomon Smith Barney Inc.
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Ladies and Gentlemen:
From time to time Kinder Morgan Energy Partners, L.P. a Delaware limited
partnership (the "Partnership"), proposes to enter into one or more Pricing
Agreements (each a "Pricing Agreement") in the form of Annex I hereto, with such
additions and deletions as the parties thereto may determine, and, subject to
the terms and conditions stated herein and therein, to issue and sell to the
firms named in Schedule I to the applicable Pricing Agreement (such firms
constituting the "Underwriters" with respect to such Pricing Agreement and the
securities specified therein) certain of its debt securities (the "Securities")
specified in Schedule II to such Pricing Agreement (with respect to such Pricing
Agreement, the "Designated Securities").
The Partnership, 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"), 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"), SFPP, L.P., a Delaware limited partnership ("SFPP"), Kinder
Morgan Bulk Terminals, Inc., a Louisiana corporation ("KMBT"), Kinder Morgan
Natural Gas Liquids Corporation, a Delaware corporation ("KMNGL Corp."), Kinder
Morgan CO2, LLC, a Delaware limited liability company ("KM-LLC"), and Kinder
Morgan G.P., Inc., a Delaware corporation (the "General Partner"), in its
individual capacity and in its capacity as the general partner of the
Partnership and each of the Operating Partnerships, are collectively referred to
herein as the "Kinder Morgan Entities."
The terms and rights of any particular issuance of Designated Securities
shall be as specified in the Pricing Agreement relating thereto and in or
pursuant to the indenture (the "Indenture") identified in such Pricing
Agreement.
1. Particular sales of Designated Securities may be made from time to
time to the Underwriters of such Securities, for whom the firms designated as
representatives of the Underwriters of such Securities in the Pricing Agreement
relating thereto will act as representatives (the "Representatives"). The term
"Representatives" also refers to a single firm acting as sole representative of
the Underwriters and to an Underwriter or Underwriters who act without any firm
being designated as its or their representatives. This Underwriting Agreement
shall not be construed as an obligation of the Partnership to sell any of the
Securities or as an obligation of any of the Underwriters to purchase the
Securities. The obligation of the Partnership to issue and sell any of the
Securities and the obligation of any of the Underwriters to purchase any of the
Securities shall be evidenced by the Pricing Agreement with respect to the
Designated Securities specified therein. Each Pricing Agreement shall specify
the aggregate principal amount of such Designated Securities, the initial public
offering price of such Designated Securities, the purchase price to the
Underwriters of such Designated Securities, the names of the Underwriters of
such Designated Securities, the names of the Representatives of such
Underwriters and the principal amount of such Designated Securities to be
purchased by each Underwriter and shall set forth the date, time and manner of
delivery of such Designated Securities and payment therefor. The Pricing
Agreement shall also specify (to the extent not set forth in the Indenture and
the registration statement and prospectus with respect thereto) the terms of
such Designated Securities. A Pricing Agreement shall be in the form of an
executed writing (which may be in counterparts), and may be evidenced by an
exchange of telegraphic communications or any other rapid transmission device
designed to produce a written record of communications transmitted. The
obligations of the Underwriters under this Agreement and each Pricing Agreement
shall be several and not joint.
2. Each of the Kinder Morgan Entities represents and warrants to, and
agrees with, each of the Underwriters that:
(a) A registration statement on Form S-3 (File No. 333-66931 (01-07))
(the "Initial Registration Statement") in respect of the Securities has been
filed with the Securities and Exchange Commission (the "Commission"); the
Initial Registration Statement and any post-effective amendment thereto (each in
the form heretofore delivered or to be delivered to the Representatives,
excluding exhibits to the Initial Registration Statement, but including all
documents incorporated by reference in the prospectus contained therein to the
Representatives for each of the other Underwriters) have been declared effective
by the Commission in such form; other than a registration statement, if any,
increasing the size of the offering (a "Rule 462(b) Registration Statement"),
filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended (the
"Act"), which became effective upon filing, no other document with respect to
the Initial Registration Statement or document incorporated by reference therein
has heretofore been filed or transmitted for filing with the Commission (other
than prospectuses filed pursuant to Rule 424(b) of the rules and regulations of
the Commission under the Act, each in the form heretofore delivered to the
Representatives); and no stop order suspending the effectiveness of
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the Initial Registration Statement, any post-effective amendment thereto or the
Rule 462(b) Registration Statement, if any, has been issued and no proceeding
for that purpose has been initiated or threatened by the Commission (any
preliminary prospectus included in the Initial Registration Statement or filed
with the Commission pursuant to Rule 424(a) under the Act, is hereinafter called
a "Preliminary Prospectus"; the various parts of the Initial Registration
Statement, any post-effective amendment thereto and the Rule 462(b) Registration
Statement, if any, including all exhibits thereto and the documents incorporated
by reference in the prospectus contained in the Initial Registration Statement
at the time such part of the Initial Registration Statement became effective but
excluding Form T-1, each as amended at the time such part of the Initial
Registration Statement became effective or such part of the Rule 462(b)
Registration Statement, if any, became or hereafter becomes effective, are
hereinafter collectively called the "Registration Statement"; the prospectus
relating to the Securities, in the form in which it has most recently been
filed, or transmitted for filing, with the Commission on or prior to the date of
this Agreement, being hereinafter called the "Prospectus"; any reference herein
to any Preliminary Prospectus or the Prospectus shall be deemed to refer to and
include the documents incorporated by reference therein pursuant to the
applicable form under the Act, as of the date of such Preliminary Prospectus or
Prospectus, as the case may be; any reference to any amendment or supplement to
any Preliminary Prospectus or the Prospectus shall be deemed to refer to and
include any documents filed after the date of such Preliminary Prospectus or
Prospectus, as the case may be, under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and incorporated by reference in such Preliminary
Prospectus or Prospectus, as the case may be; any reference to any amendment to
the Initial Registration Statement shall be deemed to refer to and include any
annual report of the Partnership filed pursuant to Sections 13(a) or 15(d) of
the Exchange Act after the effective date of the Initial Registration Statement
that is incorporated by reference in the Registration Statement; and any
reference to the Prospectus as amended or supplemented shall be deemed to refer
to the Prospectus as amended or supplemented in relation to the applicable
Designated Securities in the form in which it is filed with the Commission
pursuant to Rule 424(b) under the Act in accordance with Section 5(a) hereof,
including any documents incorporated by reference therein as of the date of such
filing);
(b) The documents incorporated by reference in the Prospectus, when
they became effective or were filed with the Commission, as the case may be,
conformed in all material respects to the requirements of the Act or the
Exchange Act, as applicable, and the rules and regulations of the Commission
thereunder, and none of such documents contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; and any further documents so filed and
incorporated by reference in the Prospectus or any further amendment or
supplement thereto, when such documents become effective or are filed with the
Commission, as the case may be, will conform in all material respects to the
requirements of the Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder 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, in light of the
circumstances under which they, were made not misleading; provided, however,
that this representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information furnished in
writing to the
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Partnership by an Underwriter of Designated Securities through the Goldman,
Sachs & Co. expressly for use in the Prospectus as amended or supplemented
relating to such Securities;
(c) The Registration Statement and the Prospectus conform, and any
further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements of the Act
and the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act") and
the rules and regulations of the Commission thereunder and do not and will not,
as of the applicable effective date as to the Registration Statement and any
amendment thereto and as of the applicable filing date as to the Prospectus and
any amendment or supplement thereto, 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; provided, however, that this
representation and warranty shall not apply to any statements or omissions made
in reliance upon and in conformity with information furnished in writing to the
Partnership by an Underwriter of Designated Securities through the
Representatives expressly for use in the Prospectus as amended or supplemented
relating to such Securities;
(d) None of the Kinder Morgan Entities has sustained since the date
of the latest audited financial statements included or incorporated by reference
in the Prospectus 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, since the respective
dates as of which information is given in the Registration Statement and the
Prospectus, there has not been any material change in the capitalization or
long-term debt of the Kinder Morgan Entities or any material adverse change, or
any development involving a prospective material adverse change, in or affecting
the general affairs, management, financial position, unitholders' equity or
results of operations of the Kinder Morgan Entities, taken as a whole, otherwise
than as set forth or contemplated in the Prospectus;
(e) Each of the Kinder Morgan Entities has good and marketable title
(or indefeasible title in the State of Texas) in fee simple to all real property
and good and marketable title to all personal property owned by them, in each
case free and clear of all liens, encumbrances and defects except such as are
described in the Prospectus or such as do not materially affect the value of
such property and do not materially interfere with the use made and proposed to
be made of such property by the Kinder Morgan Entities; and any real property
and buildings held under lease by a Kinder Morgan Entity is held under valid,
subsisting and enforceable leases with such exceptions as are not material and
do not materially interfere with the use made and proposed to be made of such
property and buildings by the Kinder Morgan Entities;
(f) The Partnership is, and at each Time of Delivery will be, a
limited partnership duly formed, validly existing and in good standing under the
laws of the State of Delaware. The Partnership has, and at each Time of Delivery
will have, 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 Registration Statement and the
Prospectus. The Partnership is, and at each Time of Delivery will be, duly
licensed or qualified to do business and in good standing as a foreign limited
partnership in all jurisdictions
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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 will not have a
material adverse effect on the financial condition, results of operations or
business of the Kinder Morgan Entities, taken as a whole, or subject the
Partnership or the limited partners of the Partnership to any material liability
or disability). Complete and correct copies of the Certificate of Limited
Partnership of the Partnership, and all amendments thereto, and of the Agreement
of Limited Partnership of the Partnership, as amended and restated (the
"Partnership Agreement"), have been delivered to the Underwriters;
(g) Each of the Operating Partnerships is, and at the applicable Time
of Delivery will be, a limited partnership duly formed, validly existing and in
good standing under the laws of the State of Delaware. Each of the Operating
Partnerships has, and at the applicable Time of Delivery will have, 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 Registration Statement and the Prospectus. Each of
the Operating Partnerships is, and at the applicable Time of Delivery will be,
duly licensed or qualified to do business and 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 will not have a material adverse effect on the financial condition,
results of operations or business of the Kinder Morgan Entities, taken as a
whole, or subject the Partnership or the limited partners of the Partnership to
any material liability or disability). Complete and correct copies of the
Certificate of Limited Partnership of each of the Operating Partnerships, and
all amendments thereto, and of the Agreement of Limited Partnership of OLP-A, as
amended and restated (the "OLP-A Agreement"), the Agreement of Limited
Partnership of OLP-B, as amended and restated (the "OLP-B Agreement"), the
Agreement of Limited Partnership of OLP-C, as amended and restated (the "OLP-C
Agreement"), and the Agreement of Limited Partnership of OLP-D, as amended and
restated (the "OLP-D Agreement" and, together with the OLP-A Agreement, the
OLP-B Agreement and the OLP-C Agreement, the "Operating Partnership
Agreements"), have been delivered to the Underwriters;
(h) SFPP is, and at the applicable Time of Delivery will be, a
limited partnership duly formed, validly existing and in good standing under the
laws of the State of Delaware. SFPP has, and at the applicable Time of Delivery
will have, 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 Registration Statement and the
Prospectus. SFPP is, and at the applicable Time of Delivery will be, duly
licensed or qualified to do business and 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 will not have a material adverse effect on the financial condition,
results of operations or business of the Kinder Morgan Entities, taken as a
whole, or subject the Partnership or the limited partners of the Partnership to
any material liability or disability). Complete and correct copies of the
Certificate of Limited Partnership of SFPP and of the
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Agreement of Limited Partnership of SFPP, as amended and restated (the "SFPP
Agreement"), and all amendments thereto have been delivered to the Underwriters;
(i) Each of the General Partner and KMNGL Corp., is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. KMBT is a corporation duly organized, validly existing and in
good standing under the laws of the State of Louisiana. KM-LLC is a limited
liability company duly formed, validly existing and in good standing under the
laws of the State of Delaware. Each of the General Partner, KMNGL Corp., KMBT
and KM-LLC has, and at the applicable Time of Delivery will have, all necessary
corporate or limited liability company power and authority, as the case may be,
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
Registration Statement and the Prospectus. Each of the General Partner, KMNGL
Corp., KMBT and KM-LLC is, and at the applicable Time of Delivery will be, duly
licensed or qualified to do business and in good standing as a foreign
corporation or foreign limited liability company, as the case may be, 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
will not have a material adverse effect on the financial condition, results of
operations or business of the Kinder Morgan Entities, taken as a whole, or
subject the Partnership or the limited partners of the Partnership to any
material liability or disability). Complete and correct copies of the
certificate of incorporation and of the by-laws of the General Partner, KMNGL
Corp. and KMBT. and the limited liability agreement of KM-LLC and all amendments
to such documents have been delivered to the Underwriters;
(j) To the knowledge of the Kinder Morgan Entities, each of
Heartland Partnership ("Heartland") and Mont Belvieu Associates ("Mont Belvieu")
is, and at the applicable Time of Delivery will be, a general partnership duly
formed and validly existing under the laws of the State of Texas and Shell CO2
Company Ltd. ("Shell CO2") is, and at the applicable Time of Delivery will be, a
limited partnership duly formed, validly existing and in good standing under the
laws of the State of Delaware. To the knowledge of the Kinder Morgan Entities,
each of Heartland, Mont Belvieu and Shell CO2 has, and at the applicable Time of
Delivery will have, 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 Registration Statement and
the Prospectus, except as would not have a material adverse effect on the
financial condition, results of operations or business of such entities. To the
knowledge of the Kinder Morgan Entities, each of Heartland, Mont Belvieu and
Shell CO2 is, and at the applicable Time of Delivery will be, duly licensed or
qualified to do business and in good standing as a foreign 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
will not have a material adverse effect on the financial condition, results of
operations or business of the Kinder Morgan Entities, taken as a whole, or
subject the Partnership to any material liability or disability);
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(k) The only subsidiaries (as such term is defined in the rules and
regulations of the Commission under the Act and the Exchange Act) of the
Partnership or other entities in which the Partnership, any of the Operating
Partnerships or SFPP has an equity ownership interest of 50% or more and which
owns assets or conduct business are those listed on Schedule III hereto;
(l) Richard D. Kinder, Morgan Associates, Inc., First Union
Corporation and certain employees of First Union Corporation and its affiliates
are the sole stockholders of Kinder Morgan, Inc., a Delaware corporation
("KMI"). KMI owns, and at the applicable Time of Delivery will own, all of the
issued and outstanding shares of capital stock of the General Partner; such
shares of capital stock are duly authorized, validly issued, fully paid and
nonassessable;
(m) The General Partner is the sole general partner of the Partnership
with a 1% general partner interest in the Partnership; such general partner
interest is duly authorized by the Partnership Agreement and was validly issued
to the General Partner; and, the General Partner owns such general partner
interest free and clear of all liens, encumbrances, security interests,
equities, charges or claims (except for such liens, encumbrances, security
interests, equities, charges or claims as are not, individually or in the
aggregate, material or as described in the Registration Statement or the
Prospectus);
(n) The General Partner is the sole general partner of each of the
Operating Partnerships with a 1.0101% general partner interest in each of the
Operating Partnerships; such general partner interests are duly authorized by
the respective Operating Partnership Agreement, and were validly issued to the
General Partner; and the General Partner owns such general partner interests
free and clear of all liens, encumbrances, security interests, equities, charges
or claims (except for such liens, encumbrances, security interests, equities,
charges or claims as are not, individually or in the aggregate, material or as
described in the Registration Statement or the Prospectus);
(o) The Partnership is the sole limited partner of each of the
Operating Partnerships with a 98.9899% limited partner interest in each of the
Operating Partnerships; such limited partner interests, in each of such
Partnerships, are duly authorized by the respective Operating Partnership
Agreement, and were validly issued to the Partnership and are fully paid and
nonassessable (except as nonassessability may be affected by certain provisions
of the Delaware Revised Limited Partnership Act (the "Delaware Act")); and the
Partnership owns such limited partner interests free and clear of all liens,
encumbrances, security interests, equities, charges or claims (except for such
liens, encumbrances, security interests, equities, charges or claims as are not,
individually or in the aggregate, material or as described in the Registration
Statement or the Prospectus, including the security interest securing certain
debt of the Partnership and OLP-B);
(p) OLP-A owns, and at the applicable Time of Delivery will own, all
of the issued and outstanding capital stock of KMNGL Corp. and all of the issued
and outstanding member interests of KM-LLC; all of such capital stock and such
member interests are duly authorized, validly issued, fully paid and
nonassessable; OLP-C owns all of the issued and
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outstanding capital stock of KMBT; all of such capital stock is duly authorized,
validly issued, fully paid and nonassessable. OLP-A owns all of such capital
stock of KMNGL, OLP-A owns the sole member interest of KM-LLC, and OLP-C owns
all of such captial stock of KMBT, in each case free and clear of all liens,
encumbrances, security interests, equities, charges or claims (except for such
liens, encumbrances, security interests, equities, charges or claims as are not,
individually or in the aggregate, material or as described in the Registration
Statement or the Prospectus);
(q) OLP-D is the sole general partner of SFPP with a 99.5% general
partner interest; such general partner interest is duly authorized by the SFPP
Agreement, and was validly issued to OLP-D; and OLP-D owns such general partner
interest free and clear of all liens, encumbrances, security interests,
equities, charges or claims (except for such liens, encumbrances, security
interests, equities, charges or claims as are not, individually or in the
aggregate, material or as described in the Registration Statement or the
Prospectus); Santa Fe Pacific Pipelines, Inc. (the "SF Limited Partner") is the
sole limited partner of SFPP with a 0.5% non-voting, limited partner interest;
such limited partner interest is duly authorized by the SFPP Agreement, and
validly issued to the SF Limited Partner and fully paid and nonassessable
(except as nonassessability may be affected by certain provisions of the
Delaware Act);
(r) OLP-A is a general partner of Heartland with a 50% general partner
interest in Heartland, KMNGL Corp. is a general partner of Mont Belvieu with a
50% general partner interest in Mont Belvieu, and KM-LLC is a limited partner of
Shell CO2, with a 20% limited partner interest in Shell CO2; such general
partner interests and such limited partner interests are duly authorized by the
respective partnership agreement of Heartland, Mont Belvieu and Shell CO2, and
were validly issued by each of Heartland, Mont Belvieu and Shell CO2,
respectively, and in the case of such limited partner interests is fully paid
and nonassessable (except as such nonassessability may be affected by certain
provisions of the Delaware Act); and, OLP-A and KMNGL Corp. own such general
partner interests in Heartland and Mont Belvieu, respectively, and KM-LLC owns
such limited partner interest, free and clear of all liens, encumbrances,
security interests, equities, charges or claims (except for such liens,
encumbrances, security interests, equities, charges or claims as are not,
individually or in the aggregate, material or as described in the Registration
Statement or the Prospectus);
(s) Each of the Kinder Morgan Entities has all necessary partnership,
corporate or limited liability company power and authority, as the case may be,
to enter into this Agreement. This Agreement has been duly authorized, executed
and delivered by each of the Kinder Morgan Entities and constitutes a valid and
binding agreement with respect to each of such entities and is enforceable
against each of them in accordance with the terms hereof;
(t) The Securities have been duly authorized, and, when Designated
Securities are issued and delivered pursuant to this Agreement and the Pricing
Agreement with respect to such Designated Securities, such Designated Securities
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 applicable Indenture, which will be substantially
in the form filed as an exhibit to the Registration Statement; the applicable
Indenture has been duly authorized and duly qualified under the Trust Indenture
Act and, at the
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Time of Delivery for such Designated Securities (as defined in Section 4
hereof), the applicable Indenture will constitute a valid and legally binding
instrument, enforceable in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to general equity
principles; and the applicable Indenture conforms, and the Designated Securities
will conform, to the descriptions thereof contained in the Prospectus as amended
or supplemented with respect to such Designated Securities;
(u) The issue and sale of the Securities and the compliance by the
Partnership with all of the provisions of the Securities, the applicable
Indenture, this Agreement and any Pricing Agreement, and the consummation of the
transactions herein contemplated will not 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 is a party or by which the Partnership is
bound or to which any of the property or assets of the Partnership is subject,
nor will such action result in any violation of the provisions of the
Partnership Agreement of the Partnership 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 properties, except where such occurrence will not
prevent the consummation of the transactions contemplated herein and will not
have a material adverse effect on the financial condition, results of operations
or business of the Kinder Morgan Entities, taken as a whole, or subject the
Partnership to any material liability or disability; and no consent, approval,
authorization, order, registration or qualification of or with any such court or
governmental agency or body is required for the issue and sale of the Securities
or the consummation by the Partnership of the transactions contemplated by this
Agreement or any Pricing Agreement or the applicable Indenture, except such as
have been, or will have been prior to the Time of Delivery, obtained under the
Act and the Trust Indenture Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under state securities or
Blue Sky laws in connection with the purchase and distribution of the Securities
by the Underwriters;
(v) None of the Kinder Morgan Entities is (a) in violation of its
Certificate of Incorporation, By-laws, Partnership Agreement or other
organizational 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 (i)
would not have a material adverse effect on the financial condition, results of
operations or business of the Kinder Morgan Entities, taken as a whole, or
subject the Partnership to any material liability or disability and (ii) in the
case of such violations, have been disclosed in writing to Goldman, Sachs & Co.
prior to the execution of this Agreement;
(w) The statements set forth in the Prospectus under the captions
"Description of Debt Securities" and "Description of Notes", insofar as they
purport to constitute a summary of the terms of the Securities, and under the
captions "Plan of Distribution" and "Underwriting", insofar as they purport to
describe the provisions of the laws and documents referred to therein,
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are accurate, complete and fair; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in reliance upon
and in conformity with information furnished in writing to the Partnership by an
Underwriter through Goldman, Sachs & Co. expressly for use therein;
(x) Other than as set forth in the Prospectus, there are no
legal or governmental proceedings pending to which any of the Kinder Morgan
Entities is a party or of which any property of any Kinder Morgan Entity is the
subject which, if determined adversely to the respective Kinder Morgan Entity,
would individually or in the aggregate have a material adverse effect on the
financial condition, results of operations or business of the Kinder Morgan
Entities, taken as a whole, or subject the Partnership to any material liability
or disability; and, to the knowledge of the Kinder Morgan Entities, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others;
(y) None of the Kinder Morgan Entities is, nor at each Time of
Delivery will be, (i) a "holding company" or a "subsidiary company" of a
"holding company" or an "affiliate" thereof, within the meaning of the Public
Utility Holding Company Act of 1935, as amended, or (ii) 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;
(z) Arthur Andersen LLP and PricewaterhouseCoopers LLP, who have
certified certain financial statements of the Kinder Morgan Entities, and in the
case of PricewaterhouseCoopers LLP, who has also certified certain financial
statements of Santa Fe Pacific Pipeline Partners, L.P. ("Santa Fe"), are each
independent public accountants as required by the Act and the rules and
regulations of the Commission thereunder;
(aa) The Partnership has reviewed its operations and that of its
subsidiaries to evaluate the extent to which the business or operations of the
Partnership or any of its subsidiaries will be affected by the Year 2000
Problem. As a result of such review, the Partnership does not believe that the
Year 2000 Problem will have a material adverse effect on the financial
condition, results of operation or business of the Kinder Entities, taken as a
whole, or result in any material loss or interference with their business or
operations. The "Year 2000 Problem" as used herein means any significant risk
that computer hardware or software used in the receipt, transmission,
processing, manipulation, storage, retrieval, retransmission or other
utilization of data or in the operation of mechanical or electrical systems of
any kind will not, in the case of dates or time periods occurring after December
31, 1999, function at least as effectively as in the case of dates or time
periods occurring prior to January 1, 2000;
(bb) The financial statements and schedules included or incorporated
by reference in the Registration Statement or the Prospectus present fairly the
consolidated financial condition of the Partnership, the General Partner and
Santa Fe as of the respective dates thereof and the consolidated results of
operations and cash flows of the Partnership and Santa Fe for the respective
periods covered thereby, all in conformity with generally accepted accounting
principles applied on a consistent basis throughout the entire period involved,
except as otherwise disclosed in the Prospectus. No other financial statements
or schedules of the
10
Partnership, the General Partner and Santa Fe are required by the Act, the
Exchange Act or the rules and regulations of the Commission under such acts to
be included in the Registration Statement or the Prospectus. The statements
included in the Registration Statement with respect to the Accountants pursuant
to Rule 509 of Regulation S-K of the Rules and Regulations are true and correct
in all material respects;
(cc) The pro forma financial statements included in or incorporated by
reference in the Registration Statement and the Prospectus, including the
presentation of the acquisition of SFPP contained in such pro forma financial
statements, comply as to form in all material respects with the applicable
accounting requirements of the Act, the Exchange Act and the rules and
regulations of the Commission under such acts, have been prepared on a basis
consistent with the historical consolidated financial statements of the
Partnership and Santa Fe and give effect to the assumptions used in the
preparation thereof on a reasonable basis and in good faith.
3. Upon the execution of the Pricing Agreement applicable to any
Designated Securities and authorization by the Representatives of the release of
such Designated Securities, the several Underwriters propose to offer such
Designated Securities for sale upon the terms and conditions set forth in the
Prospectus as amended or supplemented.
4. Designated Securities to be purchased by each Underwriter pursuant to
the Pricing Agreement relating thereto, in the form specified in such Pricing
Agreement, and in such authorized denominations and registered in such names as
the Representatives may request upon at least forty-eight hours' prior notice to
the Partnership, shall be delivered by or on behalf of the Partnership to the
Representatives for the account of such Underwriter, against payment by such
Underwriter or on its behalf of the purchase price therefor by wire transfer of
Federal (same-day) funds to the account specified by the Partnership to the
Representatives at least forty-eight hours in advance or at such other place and
time and date as the Representatives and the Partnership may agree upon in
writing, such time and date being herein called the "Time of Delivery" for such
Securities.
5. Each of the Kinder Morgan Entities agrees with each of the Underwriters
of any Designated Securities:
(a) To prepare the Prospectus as amended or supplemented in relation
to the applicable Designated Securities in a form approved by the
Representatives and to file such Prospectus pursuant to Rule 424(b) under the
Act not later than the Commission's close of business on the second business day
following the execution and delivery of the Pricing Agreement relating to the
applicable Designated Securities or, if applicable, such earlier time as may be
required by Rule 424(b); to make no further amendment or any supplement to the
Registration Statement or Prospectus as amended or supplemented after the date
of the Pricing Agreement relating to such Securities and prior to the Time of
Delivery for such Securities which shall be disapproved by the Representatives
for such Securities promptly after reasonable notice thereof; to advise the
Representatives promptly of any such amendment or supplement after such Time of
Delivery and furnish the Representatives with copies thereof; to file promptly
all reports and any definitive proxy or information statements required to be
filed by the
11
Partnership with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Exchange Act for so long as the delivery of a prospectus is required in
connection with the offering or sale of such Securities, and during such same
period to advise the Representatives, promptly after it receives notice thereof,
of the time when any amendment to the Registration Statement has been filed or
becomes effective or any supplement to the Prospectus or any amended Prospectus
has been filed with the Commission, of the issuance by the Commission of any
stop order or of any order preventing or suspending the use of any prospectus
relating to the Securities, of the suspension of the qualification of such
Securities for offering or sale in any jurisdiction, of the initiation or
threatening of any proceeding for any such purpose, or of any request by the
Commission for the amending or supplementing of the Registration Statement or
Prospectus or for additional information; and, in the event of the issuance of
any such stop order or of any such order preventing or suspending the use of any
prospectus relating to the Securities or suspending any such qualification, to
promptly use its best efforts to obtain the withdrawal of such order;
(b) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify such Securities for offering
and sale under the securities laws of such jurisdictions as the Representatives
may request and to comply with such laws so as to permit the continuance of
sales and dealings therein in such jurisdictions for as long as may be necessary
to complete the distribution of such Securities, provided that in connection
therewith the Partnership shall not be required to qualify as a foreign
corporation or to file a general consent to service of process in any
jurisdiction;
(c) Prior to 10:00 a.m., New York City time, on the New York Business
Day next succeeding the date of each Pricing Agreement and from time to time, to
furnish the Underwriters with copies of the Prospectus for the applicable
Designed Securities in New York City as amended or supplemented in such
quantities as the Representatives may reasonably request, and, if the delivery
of a prospectus is required at any time in connection with the offering or sale
of the Securities and if at such time any event shall have occurred as a result
of which the Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made when such Prospectus is delivered, not misleading, or, if
for any other reason it shall be necessary during such same period to amend or
supplement the Prospectus or to file under the Exchange Act any document
incorporated by reference in the Prospectus in order to comply with the Act, the
Exchange Act or the Trust Indenture Act, to notify the Representatives and upon
their request to file such document and to prepare and furnish without charge to
each Underwriter and to any dealer in securities as many copies as the
Representatives may from time to time reasonably request of an amended
Prospectus or a supplement to the Prospectus which will correct such statement
or omission or effect such compliance;
(d) To make generally available to its securityholders as soon as
practicable, but in any event not later than eighteen months after the effective
date of the Registration Statement (as defined in Rule 158(c) under the Act), an
earnings statement of the Partnership and its subsidiaries (which need not be
audited) complying with Section 11(a) of the Act and the
12
rules and regulations of the Commission thereunder (including, at the option
of the Partnership, Rule 158);
(e) During the period beginning from the date of the Pricing Agreement
for such Designated Securities and continuing to and including the later of (i)
the termination of trading restrictions under Regulation M under the Exchange
Act for such Designated Securities, as notified to the Partnership by the
Representatives and (ii) the Time of Delivery for such Designated Securities,
not to offer, sell, contract to sell or otherwise dispose of any debt securities
of the Partnership which mature more than one year after such Time of Delivery
and which are substantially similar to such Designated Securities, without the
prior written consent of the Representatives; and
(f) If the Partnership elects to rely upon Rule 462(b), the
Partnership shall file a Rule 462(b) Registration Statement with the Commission
in compliance with Rule 462(b) by 10:00 P.M., Washington, D.C. time, on the date
of the applicable Pricing Agreement, and the Partnership shall at the time of
filing either pay to the Commission the filing fee for the Rule 462(b)
Registration Statement or give irrevocable instructions for the payment of such
fee pursuant to Rule 111(b) under the Act.
6. The Kinder Morgan Entities covenant and agree with the several
Underwriters that the Kinder Morgan Entities 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 registration of the Securities under the
Act and all other expenses in connection with the preparation, printing and
filing of the Registration Statement, any Preliminary Prospectus and the
Prospectus and amendments and supplements thereto and the mailing and delivering
of copies thereof to the Underwriters and dealers; (ii) the cost of printing or
producing this Agreement, any Pricing Agreement, any Indenture, closing
documents (including any compilations thereof) and any other documents in
connection with the offering, purchase, sale and delivery of the Securities;
(iii) any filing fees and expenses in connection with the qualification of the
Securities for offering and sale under state securities laws as provided in
Section 5(b) hereof, but not including the fees and disbursements of counsel for
the Underwriters in connection with such qualification; (iv) any fees charged by
securities rating services for rating the Securities; (v) any filing fees
incident to any required review by the National Association of Securities
Dealers, Inc. of the terms of the sale of the Securities; (vi) the cost of
preparing the Securities; (vii) the fees and expenses of any Trustee and any
agent of any Trustee and the fees and disbursements of counsel for any Trustee
in connection with any Indenture and the Securities; and (viii) all other costs
and expenses incident to the performance of its obligations hereunder which are
not otherwise specifically provided for in this Section. It is understood,
however, that, except as provided in this Section, and Sections 8 and 11 hereof,
the Underwriters will pay all of their own costs and expenses, including the
fees of their counsel, transfer taxes on resale of any of the Securities by
them, and any advertising expenses connected with any offers they may make.
7. The obligations of the Underwriters of any Designated Securities under
the Pricing Agreement relating to such Designated Securities shall be subject,
in the discretion of the Representatives, to the condition that all
representations and warranties and other statements of each of the Kinder Morgan
Entities in or incorporated by reference in the Pricing Agreement
13
relating to such Designated Securities are, at and as of the Time of Delivery
for such Designated Securities, true and correct, the condition that each of the
Kinder Morgan Entities shall have performed all of its obligations hereunder
theretofore to be performed, and the following additional conditions:
(a) The Prospectus as amended or supplemented in relation to the
applicable Designated Securities shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed for such
filing by the rules and regulations under the Act and in accordance with Section
5(a) hereof; if the Partnership has elected to rely upon Rule 462(b), the Rule
462(b) Registration Statement shall have become effective by 10:00 P.M.,
Washington, D.C. time, on the date of the applicable Pricing Agreement; no stop
order suspending the effectiveness of the Registration Statement or any part
thereof shall have been issued and no proceeding for that purpose shall have
been initiated or threatened by the Commission; and all requests for additional
information on the part of the Commission shall have been complied with to the
Representatives' reasonable satisfaction;
(b) Andrews & Kurth L.L.P., counsel for the Underwriters, shall have
furnished to the Representatives such written opinion or opinions (a draft of
each such opinion is attached as Annex II(a) hereto), dated the Time of Delivery
for such Designated Securities, 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 Registration Statement and the Prospectus, as
amended or supplemented), (xii) (insofar as it relates to the statements set
forth in the Prospectus under the caption "Underwriting"), (xv), (xvi), (xvii),
and (xviii) (insofar as it relates to the Registration Statement and the
Prospectus) of subsection (c) below and a letter substantially similar to the
letter required to be delivered by Morrison & Hecker L.L.P. pursuant to
subsection (c) below as well as such other related matters as the
Representatives 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) Morrison & Hecker L.L.P., counsel for the Kinder Morgan Entities
and Correro Fishman Haygood Phelps Walmsley & Casteix, L.L.P., with respect to
certain Louisiana law, shall have furnished to the Representatives their written
opinion (a draft of such opinion is attached as Annex II(b) hereto), dated the
Time of Delivery for such Designated Securities, in form and substance
satisfactory to the Representatives, to the collective effect that:
(i) Each of the Kinder Morgan Entities has been duly formed
and is validly existing and in good standing under the laws of its
jurisdiction of incorporation and each Kinder Morgan Entity has the
partnership or corporate power and authority, as the case may be, to
conduct its business as described in the Registration Statement and the
Prospectus, as amended or supplemented. To the knowledge of such counsel,
each of the Kinder Morgan Entities is duly qualified to do business and is
in good standing as a foreign corporation or foreign limited partnership,
as the case may be, 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 in the case
where the failure to be so qualified cannot reasonably be expected to have
a material adverse
14
effect on the financial condition, results of operations or business of
the Kinder Morgan Entities, taken as a whole, or subject the Partnership
or the limited partners of the Partnership to any material liability or
disability;
(ii) The General Partner is the sole general partner of the
Partnership with a 1% general partner interest in the Partnership; such
general partner interest is duly authorized by the Partnership Agreement
and was validly issued to the General Partner; and, to the knowledge of
such counsel, the General Partner owns such general partner interest free
and clear of all liens, encumbrances, security interests, equities, charges
or claims (except for such liens, encumbrances, security interests,
equities, charges or claims as are not, individually or in the aggregate,
material or as described in the Registration Statement or the Prospectus,
as amended or supplemented);
(iii) The General Partner is the sole general partner of each of the
Operating Partnerships with a 1.0101% general partner interest in each of
the Operating Partnerships; such general partner interests are duly
authorized by the respective Operating Partnership Agreements and were
validly issued to the General Partner; and to the knowledge of such
counsel, the General Partner owns such general partner interests free and
clear of all liens, encumbrances, security interests, equities, charges or
claims (except for such liens, encumbrances, security interests, equities,
charges or claims as are not, individually or in the aggregate, material or
as described in the Registration Statement or the Prospectus, as amended or
supplemented, and except as provided in the Operating Partnership
Agreements);
(iv) OLP-D is the sole general partner of SFPP with a 99.5% general
partner interest in SFPP; such general partner interest is duly authorized
by the SFPP Agreement and was validly issued to OLP-D; and to the knowledge
of such counsel, OLP-D owns such general partner interest free and clear of
all liens, encumbrances, security interests, equities, charges or claims as
are not, individually or in the aggregate, material or as described in the
Registration Statement or the Prospectus, as amended or supplemented, or
the OLP-D Agreement); the SF Limited Partner is the sole limited partner of
SFPP with a 0.5% non-voting, limited partner interest in SFPP; and such
limited partner interest is duly authorized by the SFPP Agreement and was
validly issued to the SF Limited Partner;
(v) The Partnership is the sole limited partner of each of the
Operating Partnerships with a 98.9899% limited partner interest in each of
the Operating Partnerships; such limited partnership interests, in the case
of each of the Operating Partnerships, are duly authorized by the
respective Operating Partnership Agreements, were validly issued to the
Partnership and are fully paid and non-assessable (except as
nonassessability may be affected by certain provisions of the Delaware
Act); and, to the knowledge of such counsel, the Partnership owns such
limited partner interests free and clear of all liens, encumbrances,
security interests, equities, charges or claims (except for such liens,
encumbrances, security interests, equities, charges or claims (i) as are
not, individually or in the aggregate, material or (ii) as described in the
Registration Statement or the Prospectus, as amended or supplemented.
15
(vi) Based solely on such counsel's review of the applicable stock
transfer records, OLP-A is the record owner of all of the issued and
outstanding capital stock of KMNGL Corp. and is the sole member of KM-LLC;
all of such capital stock and such member interest are duly authorized,
validly issued, fully paid and nonassessable. OLP-C is the record owner of
all of the issued and outstanding capital stock of KMBT. To the knowledge
of such counsel, OLP-A owns all of such capital stock of KMNGL, OLP-A owns
the sole member interest of KM-LLC, and OLP-C owns all of such capital
stock of KMBT, in each case free and clear of all liens, encumbrances,
security interests, equities, charges or claims (except for such liens,
encumbrances, security interests, equities, charges or claims as are not,
individually or in the aggregate, material or as described in the
Registration Statement or the Prospectus).
(vii) OLP-A is a general partner of Heartland with a 50% general
partner interest in Heartland, KMNGL Corp. is a general partner of Mont
Belvieu with a 50% general partner interest in Mont Belvieu, and KM-LLC is
a limited partner of Shell CO2, with a 20% limited partner interest in
Shell CO2; such general partner interests and such limited partner interest
are duly authorized by the respective partnership agreements of Heartland,
Mont Belvieu and Shell CO2, and were validly issued by each of Heartland,
Mont Belvieu and Shell CO2, respectively, and in the case of such limited
partner interest, is fully paid and nonassessable (except as such
nonassessability may be affected by certain provisions of the Delaware
Act); and, OLP-A and KMNGL Corp. own such general partner interests in
Heartland and Mont Belvieu, respectively, and KM-LLC owns such limited
partner interest in Shell CO2, free and clear of all liens, encumbrances,
security interests, equities, charges or claims (except for such liens,
encumbrances, security interests, equities, charges or claims as are not,
individually or in the aggregate, material or as described in the
Registration Statement or the Prospectus);
(viii) No consent, approval, authorization, order, registration or
qualification of or with any federal, Delaware or New York court or
governmental agency or body is required under Federal or New York law or
the Delaware Act for the issue and sale of the Securities being delivered
at such Time of Delivery or the consummation by the Partnership of the
transactions contemplated by this Agreement, the Pricing Agreement, the
Securities or the Indenture, except such as have been obtained under the
Act and such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or Blue Sky laws
or the Trust Indenture Act or by the Bylaws and rules of the National
Association of Securities Dealers, Inc. in connection with the purchase and
distribution of the Designated Securities by the Underwriters;
(ix) To the knowledge of such counsel, any instrument, document,
lease, license or other agreement required to be described or referred to
in the Registration Statement or the Prospectus, as amended or
supplemented, has been described or referred to therein and any such
instrument, document, lease, license or other agreement required to be
filed as an exhibit to the Registration Statement has been filed
16
as an exhibit thereto or has been incorporated as an exhibit by reference
in the Registration Statement;
(x) To the best of such counsel's knowledge and other than as set
forth in the Prospectus, there are no legal or governmental proceedings
pending to which the Kinder Morgan Entities or any of its subsidiaries is a
party or of which any property of the Kinder Morgan Entities or any of its
subsidiaries is the subject which, if determined adversely to the Kinder
Morgan Entities or any of its subsidiaries, would individually or in the
aggregate have a material adverse effect on the current or future
consolidated financial position, unitholders' equity or results of
operations of the Kinder Morgan Entities and their subsidiaries; and, to
the best of such counsel's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others;
(xi) The issue and sale of the Designated Securities being delivered
at such Time of Delivery and the compliance by the Kinder Morgan Entities
with all of the provisions of this Agreement and the consummation of the
transactions herein contemplated will not (a) 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 as an exhibit to the Registration Statement
or filed as an exhibit to any document incorporated by reference in the
Registration Statement, (b) result in any violation of the provisions of
the Certificate of Incorporation, by-laws or other formation document, as
applicable, of any of the Kinder Morgan Entities, Mont Belvieu, Heartland
or Shell CO2, (c) breach or otherwise violate an existing obligation of any
of the Kinder Morgan Entities under any court or administrative order,
judgment or decree of which such counsel has knowledge, or (d) violate any
applicable provisions of the federal laws of the United States, the laws of
the State of New York (or in the case of KMBT, the State of Louisiana), or
the Delaware Act;
(xii) (A) The statements set forth in the Partnership's Annual Report
on Form 10-K for the year ended December 31, 1997 under the caption "Item
1: Business-Regulation" and (B) the statements set forth in the Prospectus
under the captions "Description of Notes," "Description of Debt
Securities," "Material Federal Income Tax Considerations," and under the
captions "Underwriting" and "Plan of Distribution," insofar as they purport
to constitute a summary of the terms of the Designated Securities or
describe the provisions of federal law, New York law and the Delaware Act
and documents referred to therein, in each case, are accurate summaries and
fairly and correctly present in all material respects the information
called for with respect to such matters; provided, however, that such
counsel's opinion need not cover any statements or omissions made in
reliance upon and in conformity with information furnished in writing to
the Partnership by an Underwriter through Goldman, Sachs & Co., expressly
for use therein;
(xiii) None of the Kinder Morgan Entities is (a) a "holding company"
or a "subsidiary company" of a "holding company" or an "affiliate" thereof,
within the meaning of the Public Utility Holding Company Act of 1935, as
amended, or (b) an
17
"Investment Company" or an entity "controlled" by an "Investment Company,"
as such terms are defined in the Investment Company Act;
(xiv) The Registration Statement was declared effective under the
Act by the Commission and to the knowledge of such counsel no order
suspending the effectiveness of the Registration Statement has been issued
and no proceeding for that purpose has been instituted or is pending,
threatened or contemplated. Any required filing of the Prospectus relating
to the sale of the Designated Securities pursuant to Rule 424(b) under the
Act has been made in the manner and within the time period required by such
rule;
(xv) This Agreement and the Pricing Agreement with respect to the
Designated Securities have been duly authorized, executed and delivered by
the Partnership and the Kinder Morgan Entities;
(xvi) The Designated Securities have been duly authorized by the
Partnership and each of the Guarantors, and when authenticated and issued
in accordance with the terms of the Indenture and paid for by the
Underwriters in accordance with the terms of the Pricing Agreement will
constitute valid and legally binding obligations of the Partnership and the
Guarantors entitled to the benefits provided by the Indenture; and the
Designated Securities and the Indenture conform to the descriptions thereof
in the Prospectus as amended or supplemented;
(xvii) The Indenture has been duly authorized, executed and
delivered by the Partnership and each of the Guarantors and constitutes a
valid and legally binding instrument of the Partnership and each of the
Guarantors, enforceable against the Partnership and each of the Guarantors
in accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general applicability relating
to or affecting creditors' rights and to general equity principles; and the
Indenture has been duly qualified under the Trust Indenture Act;
(xviii) The Registration Statement and the Prospectus (including any
documents incorporated by reference in the Prospectus, when such documents
became effective or were filed with the Commission), as amended or
supplemented, comply in all material respects as to form with the
requirements of the Act or the Exchange Act, as applicable, and the rules
and regulations of the Commission thereunder (other than the financial
statements and related schedules and other financial data contained
therein, as to which such counsel need express no opinion).
Such counsel shall also deliver a letter to the effect that they have
participated in conferences with officers and other representatives of the
Partnership, representatives of the Partnership's accountants, representatives
of the Underwriters and counsel for the Underwriters, at which conferences the
contents of the Registration Statement and Prospectus and related matters were
discussed and, although such counsel is not passing on and does not assume any
responsibility for and shall not be deemed to have independently verified the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or the
18
Prospectus, except for those referred to in the opinion in subsection (xii) of
this Section 7(c), and relying as to facts necessary to the determination as to
materiality, to the extent such counsel may do so in the exercise of its
professional responsibility, upon statements of the officers and other
representatives of the Partnership, on the basis of the foregoing, no facts have
come to such counsel's attention that lead it to believe that, as of its
effective date, the Registration Statement or any further amendment thereto made
by the Partnership prior to such Time of Delivery (other than the financial
statements and related schedules and other financial data contained therein, as
to which such counsel need not comment) contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading; or that, as of its
date, the Prospectus as amended or supplemented or any further amendment or
supplement thereto made by the Partnership prior to such Time of Delivery (other
than the financial statements and related schedules and other financial data
contained therein, as to which such counsel need not comment) contained an
untrue statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; or that, as of such Time of
Delivery, either the Registration Statement or the Prospectus as amended or
supplemented or any further amendment or supplement thereto made by the
Partnership to such Time of Delivery (other than the financial statements and
related schedules and other financial data contained therein, as to which such
counsel need express no opinion) contains an untrue statement of a material fact
or omits to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading; and
such counsel have no reason to believe that any documents incorporated by
reference in the Prospectus, when such documents became effective or were so
filed, as the case may be, contained, in the case of a registration statement
which became effective under the Act, an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, or, in the case of other documents
which were filed under the Act or the Exchange Act with the Commission, an
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made when such documents were so filed, not
misleading; and they do not know of any contracts or other documents of a
character required to be filed as an exhibit to the Registration Statement or
required to be incorporated by reference into the Prospectus as amended or
supplemented or required to be described in the Registration Statement or the
Prospectus as amended or supplemented which are not filed or incorporated by
reference or described as required.
In rendering such opinion, such counsel may state that they express no
opinion as to the laws of any jurisdiction other than federal law, New York law
and the Delaware Act.
(d) On the date of the Pricing Agreement for such Designated
Securities at a time prior to the execution of the Pricing Agreement with
respect to such Designated Securities and at each Time of Delivery for such
Designated Securities, the independent accountants of the Partnership who have
certified the financial statements of the Partnership and its subsidiaries
included or incorporated by reference in the Registration Statement shall have
furnished to the Representatives a letter, dated the latest of the effective
date of the Registration Statement, the date of the most recent report filed
with the Commission containing financial statements and
20
incorporated by reference in the Registration Statement or the date of the
Pricing Agreement, and a letter dated such Time of Delivery, respectively, to
the effect set forth in Annex II hereto, and with respect to such letter dated
such Time of Delivery, as to such other matters as the Representatives may
reasonably request and in form and substance satisfactory to the Representatives
(the executed copy of the letter delivered prior to the execution of this
Agreement is attached as Annex I(a) hereto and a draft of the form of letter to
be delivered on the effective date of any post-effective amendment to the
Registration Statement and as of each Time of Delivery is attached as Annex I(b)
hereto);
(e) (i) None of the Kinder Morgan Entities shall have sustained since
the date of the latest audited financial statements included or incorporated by
reference in the Prospectus as amended prior to the date of the Pricing
Agreement relating to the Designated Securities any 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
as amended prior to the date of the Pricing Agreement relating to the Designated
Securities, and (ii) since the respective dates as of which information is given
in the Prospectus as amended prior to the date of the Pricing Agreement relating
to the Designated Securities there shall not have been any change in the capital
stock or long-term debt of the Partnership (or any of the other Kinder Morgan
Entities) or any change, or any development involving a prospective change, in
or affecting the general affairs, management, financial position, unitholders'
equity or results of operations of the Partnership (or any of the other Kinder
Morgan Entities), otherwise than as set forth or contemplated in the Prospectus
as amended prior to the date of the Pricing Agreement relating to the Designated
Securities, 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 public offering or the
delivery of the Designated Securities on the terms and in the manner
contemplated in the Prospectus as first amended or supplemented relating to the
Designated Securities;
(f) On or after the date of the Pricing Agreement relating to the
Designated Securities (i) no downgrading shall have occurred in the rating
accorded any of the Kinder Morgan Entities debt securities or preferred stock by
any "nationally recognized statistical rating organization", as that term is
defined by the Commission for purposes of Rule 436(g)(2) under the Act, and (ii)
no such organization shall have publicly announced that it has under
surveillance or review, with possible negative implications, its rating of any
of the Partnership's debt securities or preferred stock;
(g) On or after the date of the Pricing Agreement relating to the
Designated Securities there shall not have occurred any of the following: (i) a
suspension or material limitation in trading in securities generally on the New
York Stock Exchange; (ii) a suspension or material limitation in trading in the
Partnership's securities on the New York Stock Exchange; (iii) a general
moratorium on commercial banking activities declared by either Federal or New
York or Texas State authorities; or (iv) the outbreak or escalation of
hostilities involving the United States or the declaration by the United States
of a national emergency or war, if the effect of any such event specified in
this Clause (iv) in the judgment of the Representatives makes it
20
impracticable or inadvisable to proceed with the public offering or the delivery
of the Designated Securities on the terms and in the manner contemplated in the
Prospectus as first amended or supplemented relating to the Designated
Securities;
(h) The Partnership shall have complied with the provisions of
Section 5(c) hereof with respect to the furnishing of prospectuses on the New
York Business Day next succeeding the date of the Pricing Agreement relating to
the Designated Securities; and
(i) The Kinder Morgan Entities shall have furnished or caused to be
furnished to the Representatives at the Time of Delivery for the Designated
Securities a certificate or certificates of officers of the General Partner
satisfactory to the Representatives as to the accuracy of the representations
and warranties of the Kinder Morgan Entities herein at and as of such Time of
Delivery, as to the performance by the Kinder Morgan Entities of all of its
obligations hereunder to be performed at or prior to such Time of Delivery, as
to the matters set forth in subsections (a) and (e) of this Section and as to
such other matters as the Representatives may reasonably request.
8. (a) Each of the Kinder Morgan Entities will indemnify and hold harmless
each Underwriter against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus, any
preliminary prospectus supplement, the Registration Statement, the Prospectus as
amended or supplemented and any other prospectus relating to the Designated
Securities, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and will reimburse each Underwriter for any legal or other expenses reasonably
incurred by such Underwriter in connection with investigating or defending any
such action or claim as such expenses are incurred; provided, however, that the
Kinder Morgan Entities shall not be liable in any such case to the extent that
any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in any Preliminary Prospectus, any preliminary prospectus supplement, the
Registration Statement, the Prospectus as amended or supplemented and any other
prospectus relating to the Designated Securities, or any such amendment or
supplement in reliance upon and in conformity with written information furnished
to the Partnership by any Underwriter of Designated Securities through the
Representatives expressly for use in the Prospectus as amended or supplemented
relating to such Securities.
(b) Each Underwriter will indemnify and hold harmless the Kinder
Morgan Entities against any losses, claims, damages or liabilities to which the
Kinder Morgan Entities may become subject, under the Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon an untrue statement or alleged untrue statement
of a material fact contained in any Preliminary Prospectus, any preliminary
prospectus supplement, the Registration Statement, the Prospectus as amended or
supplemented and any other prospectus relating to the Designated Securities, or
any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state
21
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in any Preliminary Prospectus, any preliminary
prospectus supplement, the Registration Statement, the Prospectus as amended or
supplemented and any other prospectus relating to the Designated Securities, or
any such amendment or supplement in reliance upon and in conformity with written
information furnished to the Partnership by such Underwriter through the
Representatives expressly for use therein; and will reimburse the Kinder Morgan
Entities for any legal or other expenses reasonably incurred by the Kinder
Morgan Entities in connection with investigating or defending any such action or
claim as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the indemnifying
party), and, after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party shall
not be liable to such indemnified party under such subsection for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation. No indemnifying party shall, without the
written consent of the indemnified party, effect the settlement or compromise
of, or consent to the entry of any judgment with respect to, any pending or
threatened action or claim in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified party is an actual or
potential party to such action or claim) unless such settlement, compromise or
judgment (i) includes an unconditional release of the indemnified party from all
liability arising out of such action 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 the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Partnership on the one hand and the
Underwriters of the Designated Securities on the other from the offering of the
Designated Securities to which such loss, claim, damage or liability (or action
in respect thereof) relates. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law or if the
indemnified party failed to give the notice required under
22
subsection (c) above, then each indemnifying party shall contribute to such
amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Partnership on the one hand and the Underwriters of the Designated
Securities on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Partnership on the one hand and such Underwriters on
the other shall be deemed to be in the same proportion as the total net proceeds
from such offering (before deducting expenses) received by the Partnership bear
to the total underwriting discounts and commissions received by such
Underwriters. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Partnership on the one hand or such Underwriters on
the other and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Kinder Morgan
Entities and the Underwriters agree that it would not be just and equitable if
contribution pursuant to this subsection (d) 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 subsection (d). The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages or liabilities (or actions in respect thereof) referred to above in this
subsection (d) shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any such action or claim. Notwithstanding the provisions of this subsection (d),
no Underwriter shall be required to contribute any amount in excess of the
amount by which the total price at which the applicable Designated 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 such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
obligations of the Underwriters of Designated Securities in this subsection (d)
to contribute are several in proportion to their respective underwriting
obligations with respect to such Designated Securities and not joint.
(e) The obligations of the Kinder Morgan Entities under this Section 8
shall be in addition to any liability which the Kinder Morgan Entities may
otherwise have and shall extend, upon the same terms and conditions, to each
person, if any, who controls any Underwriter within the meaning of the Act; and
the obligations of the Underwriters under this Section 8 shall be in addition to
any liability which the respective Underwriters may otherwise have and shall
extend, upon the same terms and conditions, to each officer and director of the
General Partner and to each person, if any, who controls the Kinder Morgan
Entities within the meaning of the Act.
9. (a) If any Underwriter shall default in its obligation to purchase
the Designated Securities which it has agreed to purchase under the Pricing
Agreement relating to such Designated Securities, the Representatives may in
their discretion arrange for themselves or
23
another party or other parties to purchase such Designated Securities on the
terms contained herein. If within thirty-six hours after such default by any
Underwriter the Representatives do not arrange for the purchase of such
Designated Securities, then the Partnership shall be entitled to a further
period of thirty-six hours within which to procure another party or other
parties satisfactory to the Representatives to purchase such Designated
Securities on such terms. In the event that, within the respective prescribed
period, the Representatives notify the Partnership that they have so arranged
for the purchase of such Designated Securities, or the Partnership notifies the
Representatives that it has so arranged for the purchase of such Designated
Securities, the Representatives or the Partnership shall have the right to
postpone the Time of Delivery for such Designated Securities for a period of not
more than seven days, in order to effect whatever changes may thereby be made
necessary in the Registration Statement or the Prospectus as amended or
supplemented, or in any other documents or arrangements, and the Partnership
agrees to file promptly any amendments or supplements to the Registration
Statement or the Prospectus which in the opinion of the Representatives may
thereby be made necessary. The term "Underwriter" as used in this Agreement
shall include any person substituted under this Section with like effect as if
such person had originally been a party to the Pricing Agreement with respect to
such Designated Securities.
(b) If, after giving effect to any arrangements for the purchase
of the Designated Securities of a defaulting Underwriter or Underwriters by the
Representatives and the Partnership as provided in subsection (a) above, the
aggregate principal amount of such Designated Securities which remains
unpurchased does not exceed one-eleventh of the aggregate principal amount of
the Designated Securities, then the Partnership shall have the right to require
each non-defaulting Underwriter to purchase the principal amount of Designated
Securities which such Underwriter agreed to purchase under the Pricing Agreement
relating to such Designated Securities and, in addition, to require each
non-defaulting Underwriter to purchase its pro rata share (based on the
principal amount of Designated Securities which such Underwriter agreed to
purchase under such Pricing Agreement) of the Designated Securities of such
defaulting Underwriter or Underwriters for which such arrangements have not been
made; but nothing herein shall relieve a defaulting Underwriter from liability
for its default.
(c) If, after giving effect to any arrangements for the purchase
of the Designated Securities of a defaulting Underwriter or Underwriters by the
Representatives and the Partnership as provided in subsection (a) above, the
aggregate principal amount of Designated Securities which remains unpurchased
exceeds one-eleventh of the aggregate principal amount of the Designated
Securities, as referred to in subsection (b) above, or if the Partnership shall
not exercise the right described in subsection (b) above to require
non-defaulting Underwriters to purchase Designated Securities of a defaulting
Underwriter or Underwriters, then the Pricing Agreement relating to such
Designated Securities shall thereupon terminate, without liability on the part
of any non-defaulting Underwriter or the Partnership, except for the expenses to
be borne by the Partnership and the Underwriters as provided in Section 6 hereof
and the indemnity and contribution agreements in Section 8 hereof; but nothing
herein shall relieve a defaulting Underwriter from liability for its default.
24
10. The respective indemnities, agreements, representations, warranties
and other statements of the Kinder Morgan Entities and the several 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 any Underwriter or any controlling person of any Underwriter, any of
the Kinder Morgan Entities, or any officer or director or controlling person of
the Kinder Morgan Entities, and shall survive delivery of and payment for the
Designated Securities.
11. If any Pricing Agreement shall be terminated pursuant to Section 9
hereof, or if the Underwriters elect not to purchase the Designated Securities
hereunder solely because one or more of the conditions in section 7(b), 7(g)(i),
7(g)(iii) or 7(g)(iv) have not been satisfied, the Kinder Morgan Entities shall
not then be under any liability to any Underwriter with respect to the
Designated Securities covered by such Pricing Agreement except as provided in
Sections 6 and 8 hereof; but, if for any other reason Designated Securities are
not delivered by or on behalf of the Partnership as provided herein, the Kinder
Morgan Entities will reimburse the Underwriters through the Representatives for
all out-of-pocket expenses approved in writing by the Representatives, including
fees and disbursements of counsel, reasonably incurred by the Underwriters in
making preparations for the purchase, sale and delivery of such Designated
Securities, but the Kinder Morgan Entities shall then be under no further
liability to any Underwriter with respect to such Designated Securities except
as provided in Sections 6 and 8 hereof.
12. In all dealings hereunder, the Representatives of the Underwriters
of Designated Securities shall act on behalf of each of such Underwriters, and
the parties hereto shall be entitled to act and rely upon any statement,
request, notice or agreement on behalf of any Underwriter made or given by such
Representatives jointly or by such of the Representatives, if any, as may be
designated for such purpose in the Pricing Agreement.
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 the address of the Representatives as set forth in
the Pricing Agreement; and if to any of the Kinder Morgan Entities shall be
delivered or sent by mail, telex or facsimile transmission to the address of the
Partnership set forth in the Registration Statement: Attention: Secretary;
provided, however, that any notice to an Underwriter pursuant to Section 8(c)
hereof shall be delivered or sent by mail, telex or facsimile transmission to
such Underwriter at its address set forth in its Underwriters' Questionnaire, or
telex constituting such Questionnaire, which address will be supplied to the
Partnership by the Representatives upon request. Any such statements, requests,
notices or agreements shall take effect upon receipt thereof.
13. This Agreement and each Pricing Agreement shall be binding upon, and
inure solely to the benefit of, the Underwriters, each of the Kinder Morgan
Entities and, to the extent provided in Sections 8 and 10 hereof, the officers
and directors of the General Partner and each person who controls the any of the
Kinder Morgan Entities 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 or any such
Pricing Agreement.
25
No purchaser of any of the Securities from any Underwriter shall be deemed a
successor or assign by reason merely of such purchase.
14. Time shall be of the essence of each Pricing Agreement. As used
herein, "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
15. THIS AGREEMENT AND EACH PRICING AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
16. This Agreement and each Pricing Agreement may be executed by any one or
more of the parties hereto and thereto 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.
If the foregoing is in accordance with your understanding, please
sign and return to us one for the Kinder Morgan Entities and for each of the
Representatives plus one for each counsel counterparts hereof, and upon the
acceptance hereof by you, on behalf of each of the Underwriters, this letter and
such acceptance hereof shall constitute a binding agreement among each of the
Underwriters and each of the Kinder Morgan Entities. It is understood that your
acceptance of this letter on behalf of each of the Underwriters is pursuant to
the authority set forth in a form of Agreement among Underwriters, the form of
which shall be submitted to the Partnership for examination upon request, but
without warranty on your part as to the authority of the signers thereof.
Very truly yours,
KINDER MORGAN ENERGY PARTNERS, L.P.
By: Kinder Morgan G.P., Inc.
By: /s/ Richard D. Kinder
----------------------------------------
Richard D. Kinder
Chairman of the Board and Chief
Executive Officer
26
KINDER MORGAN OPERATING L.P. "A"
By: Kinder Morgan G.P., Inc.
By: /s/ Richard D. Kinder
----------------------------------------
Richard D. Kinder
Chairman of the Board and Chief
Executive Officer
KINDER MORGAN OPERATING L.P. "B"
By: Kinder Morgan G.P., Inc.
By: /s/ Richard D. Kinder
----------------------------------------
Richard D. Kinder
Chairman of the Board and Chief
Executive Officer
KINDER MORGAN OPERATING L.P. "C"
By: Kinder Morgan G.P., Inc.
By: /s/ Richard D. Kinder
----------------------------------------
Richard D. Kinder
Chairman of the Board and Chief
Executive Officer
KINDER MORGAN OPERATING L.P. "D"
By: Kinder Morgan G.P., Inc.
By: /s/ Richard D. Kinder
----------------------------------------
Richard D. Kinder
Chairman of the Board and Chief
Executive Officer
27
KINDER MORGAN G.P., INC.
By: /s/ Richard D. Kinder
----------------------------------------
Richard D. Kinder
Chairman of the Board and Chief
Executive Officer
SFPP, L.P.
By: Kinder Morgan Operating L.P., "D"
By: Kinder Morgan G.P., Inc.
By: /s/ Richard D. Kinder
----------------------------------------
Richard D. Kinder
Chairman of the Board and Chief
Executive Officer
KINDER MORGAN BULK TERMINALS, INC.
By: /s/ Richard D. Kinder
----------------------------------------
Richard D. Kinder
Chairman
KINDER MORGAN NATURAL GAS LIQUIDS
CORPORATION
By: /s/ Richard D. Kinder
----------------------------------------
Richard D. Kinder
Chairman
28
KINDER MORGAN CO2, L.L.C.
By: Kinder Morgan Operating L.P., "A"
By: Kinder Morgan G.P., Inc.
By: /s/ Richard D. Kinder
----------------------------------------
Richard D. Kinder
Chairman of the Board and Chief
Executive Officer
Accepted as of the date hereof:
Goldman Sachs & Co.
A.G. Edwards & Sons, Inc.
NationsBanc Montgomery Securities LLC
Prudential Securities Incorporated
Salomon Smith Barney Inc.
By: /s/ (Goldman, Sachs & Co.)
----------------------------------
(Goldman, Sachs & Co.)
29
ANNEX I
Pricing Agreement
-----------------
Goldman, Sachs & Co.
[Name(s) of Co-Representative(s)]
As Representatives of the several
Underwriters named in Schedule I hereto,
c/o Goldman, Sachs & Co.
85 Broad Street,
New York, New York 10004.
---------
Ladies and Gentlemen:
Kinder Morgan Energy Partners, L.P., a Delaware limited partnership (the
"Partnership"), proposes, subject to the terms and conditions stated herein and
in the Underwriting Agreement, dated January 26, 1999 (the "Underwriting
Agreement"), among the Partnership and the other Kinder Morgan Entities (as
defined in the Underwriting Agreement) on the one hand and Goldman, Sachs & Co.
[and (names of Co-Representatives named therein)] on the other hand, to issue
and sell to the Underwriters named in Schedule I hereto (the "Underwriters") the
Securities specified in Schedule II hereto (the "Designated Securities"). Each
of the provisions of the Underwriting Agreement is incorporated herein by
reference in its entirety, and shall be deemed to be a part of this Agreement to
the same extent as if such provisions had been set forth in full herein; and
each of the representations and warranties set forth therein shall be deemed to
have been made at and as of the date of this Pricing Agreement, except that each
representation and warranty which refers to the Prospectus in Section 2 of the
Underwriting Agreement shall be deemed to be a representation or warranty as of
the date of the Underwriting Agreement in relation to the Prospectus (as therein
defined), and also a representation and warranty as of the date of this Pricing
Agreement in relation to the Prospectus as amended or supplemented relating to
the Designated Securities which are the subject of this Pricing Agreement,
unless such representation or warranty is as of a specified date or is updated
on schedules to this Pricing Agreement. Each reference to the Representatives
herein and in the provisions of the Underwriting Agreement so incorporated by
reference shall be deemed to refer to you. Unless otherwise defined herein,
terms defined in the Underwriting Agreement are used herein as therein defined.
The Representatives designated to act on behalf of the Representatives and on
behalf of each of the Underwriters of the Designated Securities pursuant to
Section 12 of the Underwriting Agreement and the address of the Representatives
referred to in such Section 12 are set forth at the end of Schedule II hereto.
An amendment to the Registration Statement, or a supplement to the
Prospectus, as the case may be, relating to the Designated Securities, in the
form heretofore delivered to you is now proposed to be filed with the
Commission.
Subject to the terms and conditions set forth herein and in the
Underwriting Agreement incorporated herein by reference, the Partnership agrees
to issue and sell to each of the Underwriters, and each of the Underwriters
agrees, severally and not jointly, to purchase from the Partnership, at the time
and place and at the purchase price to the Underwriters set forth in
30
Schedule II hereto, the principal amount of Designated Securities set forth
opposite the name of such Underwriter in Schedule I hereto.
If the foregoing is in accordance with your understanding, please sign and
return to us one for the Partnership and each of the Representatives plus one
for each counsel counterparts hereof, and upon acceptance hereof by you, on
behalf of each of the Underwriters, this letter and such acceptance hereof,
including the provisions of the Underwriting Agreement incorporated herein by
reference, shall constitute a binding agreement between each of the Underwriters
and the Partnership. It is understood that your acceptance of this letter on
behalf of each of the Underwriters is or will be pursuant to the authority set
forth in a form of Agreement among Underwriters, the form of which shall be
submitted to the Partnership for examination upon request, but without warranty
on the part of the Representatives as to the authority of the signers thereof.
Very truly yours,
KINDER MORGAN ENERGY PARTNERS, L.P.
By: Kinder Morgan G.P., Inc.
By:
----------------------------------------
KINDER MORGAN OPERATING L.P. "A"
By: Kinder Morgan G.P., Inc.
By:
----------------------------------------
31
KINDER MORGAN OPERATING L.P. "B"
By: Kinder Morgan G.P., Inc.
By:
----------------------------------------
KINDER MORGAN OPERATING L.P. "C"
By: Kinder Morgan G.P., Inc.
By:
----------------------------------------
KINDER MORGAN OPERATING L.P. "D"
By: Kinder Morgan G.P., Inc.
By:
----------------------------------------
KINDER MORGAN G.P., INC.
By:
----------------------------------------
32
SFPP, L.P.
By: Kinder Morgan Operating L.P., "D"
By: Kinder Morgan G.P., Inc.
By:
----------------------------------------
KINDER MORGAN BULK TERMINALS, INC.
By:
----------------------------------------
KINDER MORGAN NATURAL GAS LIQUIDS
CORPORATION
By:
----------------------------------------
KINDER MORGAN CO2, L.L.C.
By: Kinder Morgan Operating L.P., "A"
By: Kinder Morgan G.P., Inc.
By:
----------------------------------------
33
Accepted as of the date hereof:
Goldman, Sachs & Co.
[Name(s) of Co-Representative(s)]
By:
----------------------------------------
(Goldman, Sachs & Co.)
34
SCHEDULE I
-------------------------
Principal Amount of
Designated Securities to
Underwriter be Purchased
- --------------------------------------------------------------------------------
$
Goldman, Sachs & Co..........................
A.G. Edwards & Sons, Inc.....................
NationsBanc Montgomery Securities LLC........
Prudential Securities Incorporated...........
Salomon Smith Barney Inc..................... -------------------------
Total....................................... $
=========================
35
SCHEDULE II
Title of Designated Securities:
[ %] [Senior] [Subordinated] [Floating Rate] [Zero Coupon] [Notes] due
Aggregate principal amount:
[$]
Price to Public:
% of the principal amount of the Designated Securities, plus accrued
interest[, if any,] from _________ to _________ [including accrued amortization
[, if any,] from _________ to _________]
Purchase Price by Underwriters:
% of the principal amount of the Designated Securities, plus accrued interest
from _________to _________ [and accrued amortization[, if any,] from _________
to _________]
Form of Designated Securities:
[Definitive form to be made available for checking and packaging at least
twenty-four hours prior to the Time of Delivery at the office of [The Depository
Trust Company or its designated custodian] [the Representatives]]
[Book-entry only form represented by one or more global securities
deposited with The Depository Trust Company ("DTC") or its designated custodian,
to be made available for checking by the Representatives at least twenty-four
hours prior to the Time of Delivery at the office of DTC.]
Specified funds for payment of purchase price:
Federal (same day) funds
Time of Delivery:
_________ a.m. (New York City time), _________, 199__
Indenture:
[Senior] [Subordinated] Indenture dated _________, 199__, among the
Partnership[, certain guarantors] and _________, as Trustee
36
Maturity:
Interest Rate:
[ %] [Zero Coupon] [See Floating Rate Provisions]
Interest Payment Dates:
[months and dates, commencing ....................., 199..]
Redemption Provisions:
[No provisions for redemption]
[The Designated Securities may be redeemed, otherwise than through the
sinking fund, in whole or in part at the option of the Partnership, in the
amount of [$ ] or an integral multiple thereof, [on or after _________,at the
following redemption prices (expressed in percentages of principal amount). If
[redeemed on or before _________, __%, and if] redeemed during the 12-month
period beginning _________,
Year Redemption Price
and thereafter at 100% of their principal amount, together in each case with
accrued interest to the redemption date.]
[on any interest payment date falling on or after , , at the election of
the Partnership, at a redemption price equal to the principal amount thereof,
plus accrued interest to the date of redemption.]]
[Other possible redemption provisions, such as mandatory redemption upon
occurrence of certain events or redemption for changes in tax law]
[Restriction on refunding]
Sinking Fund Provisions:
[No sinking fund provisions]
[The Designated Securities are entitled to the benefit of a sinking fund
to retire [$_________] principal amount of Designated Securities on _________ in
each of the years _________ through _________ at 100% of their principal amount
plus accrued interest[, together with [cumulative] [noncumulative] redemptions
at the option of the Partnership to retire an additional [$_________] principal
amount of Designated Securities in the years _________ through _________ at 100%
of their principal amount plus accrued interest.]
[If Designated Securities are extendable debt securities, insert--
37
Extendable provisions:
Designated Securities are repayable on _________, ______ [insert date and
years], at the option of the holder, at their principal amount with accrued
interest. The initial annual interest rate will be %, and thereafter the annual
interest rate will be adjusted on _________, _________and _________ to a rate
not less than ___% of the effective annual interest rate on U.S. Treasury
obligations with _________-year maturities as of the [insert date 15 days prior
to maturity date] prior to such [insert maturity date].]
[If Designated Securities are floating rate debt securities, insert--
Floating rate provisions:
Initial annual interest rate will be ___% through _________ [and
thereafter will be adjusted [monthly] [on each _________, _________, and
_________ ] [to an annual rate of ___% above the average rate for _________-year
[month][securities][certificates of deposit] issued by __________________ and
__________________ [insert names of banks].] [and the annual interest rate
[thereafter] [from _________ through _________] will be the interest yield
equivalent of the weekly average per annum market discount rate for
_________-month Treasury bills plus ___% of Interest Differential (the excess,
if any, of (i) the then current weekly average per annum secondary market yield
for-month certificates of deposit over (ii) the then current interest yield
equivalent of the weekly average per annum market discount rate for
_________-month Treasury bills); [from _________ and thereafter the rate will be
the then current interest yield equivalent plus ___% of Interest Differential].]
Defeasance provisions:
Closing location for delivery of Designated Securities:
Additional Closing Conditions:
Paragraph 7(g) of the Underwriting Agreement should be modified in the
event that the Securities are denominated in, indexed to, or principal or
interest are paid in, a currency other than the U.S. dollar, more than one
currency or in a composite currency. The country or countries issuing such
currency should be added to the banking moratorium and hostilities clauses and
the following additional clause should be added to the paragraph (the entire
paragraph should be restated, as amended):
"; ( ) the imposition of the proposal of exchange controls by any
governmental authority in [insert the country or countries issuing such
currency, currencies or composite currency]".
38
Names and addresses of Representatives:
Designated Representatives:
Address for Notices, etc.:
[Other Terms]* :
- -----------------------
* A description of particular tax, accounting or other unusual features (such as
the addition of event risk provisions) of the Designated Securities should be
set forth, or referenced to an attached and accompanying description, if
necessary, to ensure agreement as to the terms of the Designated Securities to
be purchased and sold. Such a description might appropriately be in the form in
which such features will be described in the Prospectus Supplement for the
offering.
39
SCHEDULE III
List of subsidiaries (as such term is defined in the rules and regulations
of the Commission under the Act and the Exchange Act) of the Partnership or
other entities in which the Partnership, any of the Operating Partnerships or
SFPP, L.P. has an equity ownership interest of at least 50% and which owns
assets or conducts business:
Heartland Partnership
Mont Belvieu Associates
Kinder Morgan CO2, LLC
Kinder Morgan Natural Gas Liquids Corporation
Kinder Morgan Bulk Terminals, Inc.
Kinder Morgan Operating L.P. "A"
Kinder Morgan Operating L.P. "B"
Kinder Morgan Operating L.P. "C"
Kinder Morgan Operating L.P. "D"
River Consulting, Inc.
SFPP, L.P.
Western Plant Services, Inc.
1
ANNEX II
Pursuant to Section 7(d) of the Underwriting Agreement, the accountants
shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with respect
to the Partnership and its subsidiaries within the meaning of the Act and
the applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules audited (and, if
applicable pro forma financial information) examined by them and included
or incorporated by reference in the Registration Statement or the
Prospectus comply as to form in all material respects with the applicable
accounting requirements of the Act or the Exchange Act, as applicable, and
the related published rules and regulations thereunder; 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 representative or representatives of the
Underwriters (the "Representatives") such term to include an Underwriter or
Underwriters who act without any firm being designated as its or their
representatives [and are attached hereto];
(iii) They have made a review in accordance with standards established
by the American Institute of Certified Public Accountants of the unaudited
condensed consolidated statements of income, consolidated balance sheets
and consolidated statements of cash flows included in the Prospectus and/or
included in the Partnership's quarterly report on Form 10-Q incorporated by
reference into the Prospectus as indicated in their reports thereon copies
of which [have been separately furnished to the Representatives][are
attached hereto]; and on the basis of specified procedures including
inquiries of officials of the Partnership who have responsibility for
financial and accounting matters regarding whether the unaudited condensed
consolidated financial statements referred to in paragraph (v)(A)(i) below
comply as to form in all material respects with the applicable accounting
requirements of the Act and the related published rules and regulations,
nothing came to their attention that caused them to believe that the
unaudited condensed consolidated financial statements do not comply as to
form in all material respects with the applicable accounting requirements
of the Act and the related published rules and regulations;
(iv) 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 and included or incorporated by reference in Item 6 of the
Partnership's Annual Report on Form 10-K for the most recent fiscal year
agrees with the corresponding amounts (after restatement where applicable)
in
2
the audited consolidated financial statements for five such fiscal years
which were included or incorporated by reference in the Partnership's
Annual Reports on Form 10-K for such fiscal years;
(v) 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 or incorporated by
reference 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) (i) the unaudited condensed consolidated statements of
income, consolidated balance sheets and consolidated statements of
cash flows included in the Prospectus and/or included or incorporated
by reference in the Partnership's Quarterly Reports on Form 10-Q
incorporated by reference in the Prospectus do not comply as to form
in all material respects with the applicable accounting requirements
of the Exchange Act and the related published rules and regulations,
or (ii) any material modifications should be made to the unaudited
condensed consolidated statements of income, consolidated balance
sheets and consolidated statements of cash flows included in the
Prospectus or included in the Partnership's Quarterly Reports on Form
10-Q incorporated by reference in the Prospectus for them to be in
conformity with generally accepted accounting principles;
(B) any other unaudited income statement data and balance
sheet items included in the Prospectus do not agree with the
corresponding items in the unaudited consolidated financial statements
from which such data and items were derived, and any such unaudited
data and items were not determined on a basis substantially consistent
with the basis for the corresponding amounts in the audited
consolidated financial statements included or incorporated by
reference in the Partnership's Annual Report on Form 10-K for the most
recent fiscal year;
(C) the unaudited financial statements which were not included
in the Prospectus but from which were derived the unaudited condensed
financial statements referred to in clause (A) and any unaudited
income statement data and balance sheet items included in the
Prospectus and referred to in Clause (B) were not determined on a
basis substantially consistent with the basis for the audited
financial statements included or incorporated by reference in the
Partnership's Annual Report on Form 10-K for the most recent fiscal
year;
(D) any unaudited pro forma consolidated condensed financial
statements included or incorporated by reference in the Prospectus do
not comply
3
as to form in all material respects with the applicable accounting
requirements of the Act and the published rules and regulations
thereunder or the pro forma adjustments have not been properly
applied to the historical amounts in the compilation of those
statements;
(E) 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
partners' capital (other than issuances of capital stock upon exercise
of options and unit appreciation rights, upon earn-outs of performance
shares and upon conversions of convertible securities, in each case
which were outstanding on the date of the latest balance sheet
included or incorporated by reference in the Prospectus) or any
increase in the consolidated long-term debt of the Partnership and its
subsidiaries, or any decreases in consolidated net current assets or
unitholders' equity or other items specified by the Representatives,
or any increases in any items specified by the Representatives, in
each case as compared with amounts shown in the latest balance sheet
included or incorporated by reference in the Prospectus, except in
each case for changes, increases or decreases which the Prospectus
discloses have occurred or may occur or which are described in such
letter; and
(F) for the period from the date of the latest financial
statements included or incorporated by reference in the Prospectus to
the specified date referred to in Clause (E) there were any decreases
in consolidated net revenues or operating profit or the total or per
unit amounts of consolidated net income or other items specified by
the Representatives, or any increases in any items specified by the
Representatives, in each case as compared with the comparable period
of the preceding year and with any other period of corresponding
length specified by the Representatives, except in each case for
increases or decreases which the Prospectus discloses have occurred or
may occur or which are described in such letter; and
(vi) In addition to the audit referred to in their report(s)
included or incorporated by reference in the Prospectus and the limited
procedures, inspection of minute books, inquiries and other procedures referred
to in paragraphs (iii) and (v) above, they have carried out certain specified
procedures, not constituting an audit in accordance with generally accepted
auditing standards, with respect to certain amounts, percentages and financial
information specified by the Representatives which are derived from the general
accounting records of the Partnership and its subsidiaries, which appear in the
Prospectus (excluding documents incorporated by reference), or in Part II of, or
in exhibits and schedules to, the Registration Statement specified by the
Representatives or in documents incorporated by reference in the Prospectus
specified by the Representatives, 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.
4
All references in this Annex II to the Prospectus shall be deemed to refer
to the Prospectus (including the documents incorporated by reference therein) as
defined in the Underwriting Agreement as of the date of the letter delivered on
the date of the Pricing Agreement for purposes of such letter and to the
Prospectus as amended or supplemented (including the documents incorporated by
reference therein) in relation to the applicable Designated Securities for
purposes of the letter delivered at the Time of Delivery for such Designated
Securities.
5