As filed with the Securities Exchange Commission on November 6, 1998
Registration No. 333-_____
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------------------
KINDER MORGAN ENERGY PARTNERS, L.P.
KINDER MORGAN OPERATING L.P. "A"
KINDER MORGAN OPERATING L.P. "B"
KINDER MORGAN OPERATING L.P. "C"
KINDER MORGAN OPERATING L.P. "D"
KINDER MORGAN NATURAL GAS LIQUIDS CORPORATION
KINDER MORGAN CO2, LLC
KINDER MORGAN BULK TERMINALS, INC.
(Exact name of registrant as specified in its charter)
Delaware 76-0380342
Delaware 76-0380015
Delaware 76-0414819
Delaware 76-0547319
Delaware 76-0561780
Delaware 76-0256928
Delaware 76-0563308
Louisiana 72-1073113
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
1301 McKinney Street, Suite 3450
Houston, Texas 77010
(713) 844-9500
(Address, zip code, and telephone number,
of registrant's principal executive offices)
Joseph Listengart
Kinder Morgan Energy Partners, L.P.
1301 McKinney Street, Suite 3450
Houston, Texas 77010
(713) 844-9500
(Name, address, zip code and telephone
number, of service agent)
Copy to:
George E. Rider
Patrick J. Respeliers
Morrison & Hecker L.L.P.
2600 Grand Avenue
Kansas City, Missouri 64108
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Approximate commencement date of proposed public sale: From time to time after
the effective date of this Registration Statement.
If the only securities being registered on this form are being offered by
dividend or interest reinvestment plans, check the following box. [ ]
<PAGE>
If any of the securities being registered on this form will be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. |X|
If this form is filed to register additional securities for an offering
pursuant to rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, please check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434
under the Securities Act of 1933, please check the following box. [ ]
<PAGE>
<TABLE>
REGISTRATION FEE CALCULATION
<CAPTION>
===================================================================================================
- ------------------------------------- --------------- -------------- -------------- ---------------
Title of each class of Amount to be Proposed Proposed Amount of
Securities to Registered maximum maximum registration
be registered offering aggregate fee
price per offering
unit <F1> price <F2>
- ------------------------------------- --------------- -------------- -------------- ---------------
- ------------------------------------- --------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
Common Units<F3>
<F6> <F6> <F6> <F6>
Debt Securities<F4>
Guaranty of Debt Securities by
Kinder Morgan Operating L.P. "A"<F5>
Guaranty of Debt Securities by
Kinder Morgan Operating L.P. "B"<F5>
Guaranty of Debt Securities by
Kinder Morgan Operating L.P. "C"<F5>
Guaranty of Debt Securities by
Kinder Morgan Operating L.P. "D"<F5>
Guaranty of Debt Securities by
Kinder Morgan Natural Gas Liquids
Corporation <F5>
Guaranty of Debt Securities by
Kinder Morgan CO2, LLC<F5>
Guaranty of Debt Securities by
Kinder Morgan Bulk Terminals, Inc.<F5>
- ------------------------------------- --------------- -------------- -------------- ---------------
- ------------------------------------- --------------- -------------- -------------- ---------------
TOTAL $600,000,000<F7> 100% $600,000,000 $172,200<F8>
- ------------------------------------- --------------- -------------- -------------- ---------------
===================================================================================================
<FN>
(1) The proposed maximum offering price per unit will be determined by us in
connection with the issuance of the securities.
(2) We have estimated the proposed maximum aggregate offering price solely to
calculate the registration fee under Rule 457(o).
(3) Subject to note (6) below, we are registering an indeterminate number of
Common Units.
(4) Subject to note (6) below, we are registering an indeterminate principal
amount of Debt Securities. If any Debt Securities are issued at an original
issue discount, then the offering price shall be in such greater principal
amount as shall result in an aggregate initial offering price not to exceed
$600,000,000 less the dollar amount of any securities previously issued.
(5) No separate consideration will be received for the Guaranty.
(6) Not applicable under General Instruction, II.D. of Form S-3.
(7) In no event will the aggregate initial offering price of all securities
issued exceed $600,000,000. The aggregate amount of Common Units registered is
further limited to that which is permissible under Rule 415(a)(4) under the
Securities Act. The registered securities may be sold separately or as units
with other registered securities.
(8) Pursuant to Rule 429, $113,368,736 of securities included in this
Registration Statement also relate to the 4,908,800 Common Units registered
under Registration Statement on Form S-3 (File No. 333-25997) declared effective
by the Securities and Exchange Commission on June 26, 1997. The registration fee
has already been paid with respect to such securities.
</FN>
</TABLE>
-----------------------------
The registrant amends this Registration Statement on such date or dates as may
be necessary to delay its effective date until the registrant files a further
amendment which specifically states that this Registration Statement shall
become effective according to Section 8(a) of the Securities Act or until the
Registration Statement shall become effective on such date as the Securities
Exchange Commission, acting under Section 8(a), may determine.
<PAGE>
Subject to completion, dated November 6, 1998
KINDER MORGAN ENERGY PARTNERS, L.P.
PROSPECTUS
$600,000,000
Common Units
Debt Securities
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We will provide the specific terms of these securities in supplements
to this prospectus.
You should read this prospectus and any supplement carefully before you invest.
- -----------------------------------------------------
This prospectus provides you with a general description of the
securities we may offer. Each time we sell securities we will provide a
prospectus supplement that will contain specific information about the terms of
that offering. The prospectus supplement may also add, update or change
information contained in this prospectus.
The Units are traded on the New York Stock Exchange ("NYSE") under the
symbol "ENP." On November 4, 1998, the last reported sales price for the Units
as reported on the NYSE Composite Transactions tape was $36 3/8 per Unit.
We will provide information in the prospectus supplement for the expected
trading market, if any, for the Debt Securities.
----------------------------------------------------------------------
This prospectus is not an offer to sell the securities and it is not
soliciting any offer to buy the securities in any state where the
offer and sale is not permitted. Neither the Securities and Exchange
Commission nor any state securities commission has approved or
disapproved these securities or determined if this prospectus is
truthful or complete. Any representation to the contrary is a criminal
offense.
----------------------------------------------------------------------
The Prospectus is dated ____________, 1998
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read our SEC filings over the Internet at the
SEC's website at http:\\www.sec.gov. You may also read and copy documents at the
SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms.
We also provide information to the NYSE because the Units are traded on
the NYSE. You may obtain reports and other information at the offices of the
NYSE at 20 Broad Street, New York, New York 10002.
We provide an annual report to Unitholders of record within 90 days after
the close of each calendar year. The annual report contains audited financial
statements and a related report by our independent public accountants. We will
also provide you with tax information within 90 days after the close of each
taxable year.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose to you important information
contained in other documents filed with the SEC by referring you to those
documents. The information incorporated by reference is an important part of
this prospectus. Information we later file with the SEC will automatically
update and supersede this information. We incorporate by reference the documents
listed below:
* annual report on Form 10-K for the year ended December 31, 1997;
* quarterly reports on Form 10-Q for the quarter ended March 31, 1998 and the
quarter ended June 30, 1998;
* current report on Form 8-K dated March 5, 1998, as amended;
* current report in Form 8-K dated November 6, 1998;
* the description of the Units in our Registration Statement on Form S-1
(File No. 33-48142) filed on June 1, 1992 and any amendments or reports
filed to update the description; and
* all documents filed under Section 13(e), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 between the date of this prospectus and the
termination of the Registration Statement.
If information in incorporated documents conflicts with information in
this prospectus you should rely on the most recent information. If information
in an incorporated document conflicts with information in another incorporated
document, you should rely on the most recent incorporated document.
You may request a copy of these filings at no cost, by writing or
telephoning us at the following address:
Kinder Morgan Energy Partners, L.P.
1301 McKinney Street, Suite 3450
Houston, Texas 77010
Attention: Carol Haskins
(713) 844-9500.
You should only rely on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
anyone else to provide you with different information. We are making offers of
the securities only in states where the offer is permitted. You should not
assume that the information in this prospectus or any prospectus supplement is
accurate as of any date other than the date on the front of those documents.
FORWARD LOOKING STATEMENTS
Some information in this prospectus or any prospectus supplement may
contain forward-looking statements. Such statements use forward-looking words
such as "anticipate," "continue," "estimate," "expect," "may," "will," or other
similar words. These statements discuss future expectations or contain
projections. Specific factors which could cause actual results to differ from
those in the forward-looking statements, include:
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<PAGE>
* price trends and overall demand for natural gas liquids, refined petroleum
products, carbon dioxide, and coal in the United States. Economic activity,
weather, alternative energy sources, conservation and technological
advances may affect price trends and demand;
* if the Federal Energy Regulatory Commission or the California Public
Utilities Commission changes our tariff rates;
* our ability to integrate any acquired operations into our existing
operations;
* if railroads experience difficulties or delays in delivering coal to our
coal terminals;
* our ability to successfully identify and close strategic acquisitions and
make cost saving changes in operations;
* shut-downs or cutbacks at major refineries, petrochemical plants,
utilities, military bases or other businesses that use our services;
* the condition of the capital markets and equity markets in the United
States; and
* the political and economic stability of the oil producing nations of the
world.
In addition, our classification as a partnership for federal income tax
purposes means that generally we do not pay federal income taxes on our net
income. We do, however, pay taxes on the net income of subsidiaries that are
corporations. We are relying on a legal opinion from our counsel, and not a
ruling from the Internal Revenue Service, as to our proper classification for
federal income tax purposes. See "Material Federal Income Tax Consequences."
When considering forward-looking statements, you should keep in mind the risk
factors referred to below. The risk factors could cause our actual results to
differ materially from those contained in any forward-looking statement. We
disclaim any obligation to update the above list or to announce publicly the
result of any revisions to any of the forward looking statements to reflect
future events or developments.
You should consider the above information when reading any forward looking
statements in:
* this prospectus;
* documents incorporated in this prospectus by reference;
* reports filed with the SEC;
* press releases; or
* oral statements made by us or any of our officers or other persons acting
on our behalf.
RISK FACTORS
Before you invest in our securities, you should carefully consider the
risks involved. We have described the risks associated with an investment in our
partnership in our reports filed with the SEC, which are incorporated by
reference.
THE PARTNERSHIP
We own and operate a wide range of energy assets, including:
* six refined products/liquids pipeline systems containing over 5,000 miles
of trunk pipeline and twenty-one truck loading terminals;
* two coal terminals;
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<PAGE>
* a dry bulk terminal operator;
* a 24% interest in Plantation Pipe Line Company which owns and operates a
3,100 mile pipeline system;
* a 20% interest in a joint venture that produces, markets and delivers CO2
for enhanced oil recovery (Shell CO2 Company); and
* a 25% interest in a Y-grade fractionation facility that separates energy
products.
We group our operations into three reportable business segments:
* Pacific Operations;
* Mid-Continent Operations; and
* Bulk Terminals.
We were formed in August, 1992, as a publicly traded master limited
partnership. We are currently the largest pipeline master limited partnership
and the second largest pipeline system in the United States in terms of volumes
delivered. Our goal is to operate as a growth-oriented master limited
partnership by:
* reducing operating costs;
* better utilizing and expanding our asset base; and
* making selective, strategic acquisitions that allow us to increase our
distributions to Unitholders.
We regularly evaluate potential acquisitions of assets and businesses that would
complement our existing business.
Our general partner receives incentive distributions that provide it with
a strong incentive to increase Unitholder distributions through successful
management and growth of our business.
Our address is 1301 McKinney Street, Suite 3450, Houston, Texas 77010. Our
telephone number is (713) 844-9500.
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges for each of the periods indicated
is as follows:
Nine
Months
Ended
September
Twelve Months Ended December 31 30, 1998
------------------------------- ---------
1993 1994 1995 1996 1997
---- ---- ---- ---- ----
2.01 2.16 2.05 2.14 2.65 3.05
These computations include us and our operating partnerships and
subsidiaries, and 50% or less equity companies. For these ratios, "earnings" is
the amount resulting from adding and subtracting the following items.
Add the following:
* pre-tax income from continuing operations before adjustment for minority
interests in consolidated subsidiaries or income or loss from equity
investees;
* fixed charges;
* amortization of capitalized interest; distributed income of equity
investees; and
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<PAGE>
* our share of pre-tax losses of equity investees for which charges arising
from guarantees are included in fixed charges.
From the total of the added items, subtract the following:
* interest capitalized;
* preference security dividend requirements of consolidated subsidiaries; and
* minority interest in pre-tax income of subsidiaries that have not incurred
fixed charges.
The term "fixed charges" means the sum of the following:
* interest expensed and capitalized;
* amortized premiums, discounts and capitalized expenses related to
indebtedness;
* an estimate of the interest within rental expenses; and preference security
dividend requirements of consolidated subsidiaries.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities will be our direct unsecured general obligations. The
Debt Securities will be either senior debt securities or subordinated debt
securities. The Debt Securities will be issued under one or more separate
indentures between us and a trustee to be named in the prospectus supplement.
Senior Debt Securities will be issued under a "Senior Indenture" and
Subordinated Debt Securities will be issued under a "Subordinated Indenture".
Together the Senior Indentures and the Subordinated Indentures are called
"Indentures".
We have summarized selected provisions of the Indentures below. The summary
is not complete. The forms of the Indentures have been filed as exhibits to the
registration statement and you should read the Indentures for provisions that
may be important to you. In the summary below, we have included references to
section numbers of the applicable Indentures so that you can easily locate these
provisions. Capitalized terms used in the summary have the meanings specified in
the Indentures.
General
The Debt Securities will be our direct, unsecured obligations. The Senior
Debt Securities will rank equally in right of payment with all of our other
senior and unsubordinated debt. The Subordinated Debt Securities will rank
junior in right of payment to all of our Senior Debt.
We are a holding company that conducts all of our operations through our
subsidiaries. The Senior Indenture will require any of our Subsidiaries which
are guarantors or co-obligors of our long term debt to fully and unconditionally
guarantee, as "Guarantors," our payment obligations on the Senior Debt
Securities. In particular, the Senior Indenture will require those Subsidiaries
who are guarantors or borrowers under our Credit Agreement to equally guarantee
the Senior Debt Securities. However, holders of Senior Debt Securities will
generally have a junior position to claims of creditors and preferred
stockholders of our subsidiaries who are not Guarantors. The Subordinated
Indenture will not require our Subsidiaries to guarantee the Subordinated Debt
Securities. As a result, the holders of Subordinated Debt Securities will
generally have a junior position to claims of all creditors and preferred
stockholders of our subsidiaries. Some of our operating subsidiaries have
outstanding debt. As of September 30, 1998, our subsidiaries had approximately
$379 million of outstanding debt. This amount includes $355 million that is owed
by subsidiaries that as of the date of this prospectus have not guaranteed any
Senior Debt of the Partnership. As a result, these subsidiaries would not be
required to be Guarantors.
A prospectus supplement and a supplemental indenture relating to any series
of Debt Securities being offered will include specific terms relating to the
offering. These terms will include some or all of the following:
* the form and title of the Debt Securities;
* the total principal amount of the Debt Securities;
* the portion of the principal amount which will be payable if the maturity
of the Debt Securities is accelerated;
* any right we may have to defer payments of interest by extending the dates
payments are due whether interest on those deferred amounts will be payable
as well;
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<PAGE>
* the dates on which the principal of the Debt Securities will be payable;
* the interest rate which the Debt Securities will bear and the interest
payment dates for the Debt Securities;
* any optional redemption provisions;
* any sinking fund or other provisions that would obligate us to repurchase
or otherwise redeem the Debt Securities;
* any changes to or additional Events of Default or covenants; and
* any other terms of the Debt Securities.
Neither of the Indentures limits the amount of Debt Securities that may be
issued. Each Indenture allows Debt Securities to be issued up to the principal
amount that may be authorized by us and may be in any currency or currency unit
designated by us.
Debt Securities of a series may be issued in registered, bearer, coupon or
global form. (Sections 201 & 202)
Denominations
The prospectus supplement for each issuance of Debt Securities will state
whether the securities will be issued in registered form in other amounts than
$1,000 each or multiples thereof.
No Personal Liability of General Partner
The General Partner and its directors, officers, employees and shareholders
will not have any liability for our obligations under the Indentures or the Debt
Securities. Each holder of Debt Securities by accepting a Debt Security waives
and releases all such liability. The waiver and release are part of the
consideration for the issuance of the Debt Securities.
Subordination
Under the Subordinated Indenture, payment of the principal, interest and any
premium on the Subordinated Debt Securities will generally be junior in right of
payment to the prior payment in full of all Senior Debt. The Subordinated
Indenture provides that no payment of principal, interest and any premium on the
Subordinated Debt Securities may be made in the event:
* we or our property are involved in any voluntary or involuntary liquidation
or bankruptcy; or
* we fail to pay the principal, interest, any premium or any other amounts on
any Senior Debt when due; or
* we have a nonpayment default on any Senior Debt that imposes a payment
blockage on the Subordinated Debt Securities for a maximum of 179 days at
any one time.
(Sections 1401, 1402 and 1403 of the Subordinated Indenture)
The Subordinated Indenture will not limit the amount of Senior Debt that we
may incur.
"Senior Debt" is defined to include all notes or other unsecured evidences of
indebtedness including guarantees of the Partnership for money borrowed by the
Partnership, not expressed to be subordinate or junior in right of payment to
any other indebtedness of the Partnership.
Consolidation, Merger or Sale
Each Indenture generally allows us to consolidate or merge with a domestic
partnership or corporation. They also allow us to sell, lease or transfer all or
substantially all of our property and assets. If this happens, the remaining or
acquiring partnership or corporation must assume all of our responsibilities and
liabilities under the
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<PAGE>
Indentures including the payment of all amounts due on the Debt Securities and
performance of the covenants in the Indentures.
However, we will only consolidate or merge with or into any other partnership
or corporation or sell, lease or transfer all or substantially all of our assets
according to the terms and conditions of the Indentures, which include the
following requirements:
* the remaining or acquiring partnership or corporation is organized under
the laws of the United States, any state or the District of Columbia;
* the remaining or acquiring partnership or corporation assumes the
Partnership's obligations under the Indentures; and
* immediately after giving effect to the transaction no Default or Event of
Default exists.
The remaining or acquiring partnership or corporation will be substituted for
us in the Indentures with the same effect as if it had been an original party to
the Indenture. Thereafter, the successor may exercise our rights and powers
under any Indenture, in our name or in its own name. Any act or proceeding
required or permitted to be done by our Board of Directors or any of our
officers may be done by the board or officers of the successor. If we sell or
transfer all or substantially all of our assets, we will be released from all
our liabilities and obligations under any Indenture and under the Debt
Securities. If we lease all or substantially all of our assets, we will not be
released from our obligations under the Indentures. (Sections 801 & 802)
The Senior Indenture contains similar provisions for the Guarantors.
Modification of Indentures
Under each Indenture, generally our rights and obligations, the Guarantors'
rights and obligations and the rights of the holders may be modified with the
consent of the holders of a majority in aggregate principal amount of the
outstanding Debt Securities of each series affected by the modification. No
modification of the principal or interest payment terms, and no modification
reducing the percentage required for modifications, is effective against any
holder without its consent. In addition, the Partnership and the trustee may
amend the Indentures without the consent of any holder of the Debt Securities to
make certain technical changes, such as:
* correcting errors;
* providing for a successor trustee;
* qualifying the Indentures under the Trust Indenture Act; or
* adding provisions relating to a particular series of Debt Securities.
(Sections 901 & 902)
Events of Default
"Event of Default" when used in an Indenture, will mean any of
the following:
* failure to pay the principal of or any premium on any Debt Security when
due;
* failure to pay interest on any Debt Security for 30 days;
* failure to perform any other covenant in the Indenture that continues for
60 days after being given written notice;
* certain events in bankruptcy, insolvency or reorganization of the
Partnership; or
* any other Event of Default included in any Indenture or supplemental
indenture. (Section 501)
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<PAGE>
An Event of Default for a particular series of Debt Securities does not
necessarily constitute an Event of Default for any other series of Debt
Securities issued under an Indenture. The Trustee may withhold notice to the
holders of Debt Securities of any default (except in the payment of principal or
interest) if it considers such withholding of notice to be in the best interests
of the holders. (Section 602)
If an Event of Default for any series of Debt Securities occurs and
continues, the Trustee or the holders of at least 25% in aggregate principal
amount of the Debt Securities of the series may declare the entire principal of
all the Debt Securities of that series to be due and payable immediately. If
this happens, subject to certain conditions, the holders of a majority of the
aggregate principal amount of the Debt Securities of that series can void the
declaration. (Section 502)
Other than its duties in case of a default, a Trustee is not obligated to
exercise any of its rights or powers under any Indenture at the request, order
or direction of any holders, unless the holders offer the Trustee reasonable
indemnity. (Section 601) If they provide this reasonable indemnification, the
holders of a majority in principal amount of any series of Debt Securities may
direct the time, method and place of conducting any proceeding or any remedy
available to the Trustee, or exercising any power conferred upon the Trustee,
for any series of Debt Securities. (Section 512)
Provisions only in the Senior Indenture
General. The Senior Indenture contains provisions that limit our ability to
put liens on our principal assets or to sell and lease back those assets. The
Senior Indenture also requires our Subsidiaries that guarantee our long term
debt to guarantee the Senior Debt Securities on an equal basis. The Subordinated
Indenture does not contain any similar provisions. We have described below these
provisions and some of the defined terms used in them. In this section,
references to the Partnership relate only to Kinder Morgan Energy Partners,
L.P., the issuer of the Debt Securities, and not our Subsidiaries.
Limitations on Liens. The Senior Indenture provides that the Partnership will
not, nor will it permit any Subsidiary to, create, assume, incur or suffer to
exist any Lien (as defined below) upon any Principal Property (as defined below)
or upon any shares of capital stock of any Subsidiary owning or leasing any
Principal Property, whether owned or leased on the date of the Senior Indenture
or thereafter acquired, to secure any Debt (as defined below) of the Partnership
or any other Person (as defined below) (other than the Senior Debt Securities
issued thereunder), without in any such case making effective provision whereby
all of the Senior Debt Securities Outstanding thereunder shall be secured
equally and ratably with, or prior to, such Debt so long as such Debt shall be
so secured. There is excluded from this restriction:
1. Permitted Liens (as defined below);
2. any Lien upon any property or assets created at the time of acquisition
of such property or assets by the Partnership or any Subsidiary or within one
year after such time to secure all or a portion of the purchase price for such
property or assets or Debt incurred to finance such purchase price, whether such
Debt was incurred prior to, at the time of or within one year after the date of
such acquisition;
3. any Lien upon any property or assets to secure all or part of the cost
of construction, development, repair or improvements thereon or to secure Debt
incurred prior to, at the time of, or within one year after completion of such
construction, development, repair or improvements or the commencement of full
operations thereof (whichever is later), to provide funds for any such purpose;
4. any Lien upon any property or assets existing thereon at the time of the
acquisition thereof by the Partnership or any Subsidiary; provided, however,
that such Lien only encumbers the property or assets so acquired;
5. any Lien upon any property or assets of a Person existing thereon at the
time such Person becomes a Subsidiary by acquisition, merger or otherwise;
provided, however, that such Lien only encumbers the property or assets of such
Person at the time such Person becomes a Subsidiary;
6. any Lien upon any property or assets of the Partnership or any
Subsidiary in existence on the Issue Date or provided for pursuant to agreements
existing on the Issue Date;
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<PAGE>
7. Liens imposed by law or order as a result of any proceeding before any
court or regulatory body that is being contested in good faith, and Liens which
secure a judgment or other court-ordered award or settlement as to which the
Partnership or the applicable Subsidiary has not exhausted its appellate rights;
8. any extension, renewal, refinancing, refunding or replacement (or
successive extensions, renewals, refinancing, refunding or replacements) of
Liens, in whole or in part, referred to in clauses (1) through (7) above;
provided, however, that any such extension, renewal, refinancing, refunding or
replacement Lien shall be limited to the property or assets covered by the Lien
extended, renewed, refinanced, refunded or replaced and that the obligations
secured by any such extension, renewal, refinancing, refunding or replacement
Lien shall be in an amount not greater than the amount of the obligations
secured by the Lien extended, renewed, refinanced, refunded or replaced and any
expenses of the Partnership and its subsidiaries (including any premium)
incurred in connection with such extension, renewal, refinancing, refunding or
replacement; or
9. any Lien resulting from the deposit of moneys or evidence of
indebtedness in trust for the purpose of defeasing Debt of the Partnership or
any Subsidiary.
Notwithstanding the foregoing, under the Senior Indenture, the Partnership
may, and may permit any Subsidiary to, create, assume, incur, or suffer to exist
any Lien upon any Principal Property to secure Debt of the Partnership or any
Person (other than the Senior Debt Securities) that is not excepted by clauses
(1) through (9), inclusive, above without securing the Senior Debt Securities
issued under the Senior Indenture, provided that the aggregate principal amount
of all Debt then outstanding secured by such Lien and all similar Liens,
together with all net sale proceeds from Sale-Leaseback Transactions (excluding
Sale-Leaseback Transactions permitted by clauses (1) through (4), inclusive, of
the first paragraph of the restriction on sale-leasebacks covenant described
below) does not exceed 10% of Consolidated Net Tangible Assets (as defined
below). (Section 1006)
Restriction on Sale-Leasebacks. The Senior Indenture provides that the
Partnership will not, and will not permit any Subsidiary to, engage in a
Sale-Leaseback Transaction, unless:
(1) such Sale-Leaseback Transaction occurs within one year from the date of
completion of the acquisition of the Principal Property subject thereto or the
date of the completion of construction, development or substantial repair or
improvement, or commencement of full operations on such Principal Property,
whichever is later;
(2) the Sale-Leaseback Transaction involves a lease for a period, including
renewals, of not more than three years;
(3) the Partnership or such Subsidiary would be entitled to incur Debt
secured by a Lien on the Principal Property subject thereto in a principal
amount equal to or exceeding the net sale proceeds from such Sale-Leaseback
Transaction without equally and ratably securing the Senior Debt Securities; or
(4) the Partnership or such Subsidiary, within a one-year period after such
Sale-Leaseback Transaction, applies or causes to be applied an amount not less
than the net sale proceeds from such Sale-Leaseback Transaction to (A) the
prepayment, repayment, redemption, reduction or retirement of any Pari Passu
Debt of the Partnership or any Subsidiary, or (B) the expenditure or
expenditures for Principal Property used or to be used in the ordinary course of
business of the Partnership or its Subsidiaries.
Notwithstanding the foregoing, under the Senior Indenture the Partnership
may, and may permit any Subsidiary to, effect any Sale-Leaseback Transaction
that is not excepted by clauses (1) through (4), inclusive, of the above
paragraph, provided that the net sale proceeds from such Sale-Leaseback
Transaction, together with the aggregate principal amount of outstanding Debt
(other than the Senior Debt Securities) secured by Liens upon Principal
Properties not excepted by clauses (1) through (9), inclusive, of the first
paragraph of the limitation on liens covenant described above, do not exceed 10%
of the Consolidated Net Tangible Assets. (Section 1007)
Addition and Release of Guarantees. The Senior Indenture will provide that
if any Subsidiary of the Partnership is a guarantor or obligor of any Funded
Debt of the Partnership at any time on or subsequent to the date on which the
Senior Debt Securities are originally issued (including, without limitation,
following any release of such Subsidiary from its Guarantee as described below),
then the Partnership will cause the Senior Debt Securities to be equally and
ratably guaranteed by such Subsidiary. Under the terms of the Senior Indenture,
a Guarantor may be released from its Guarantee if such Guarantor is not a
guarantor or obligor of any Funded Debt of the Partnership, provided that no
Default of Event of Default under the Senior Indenture has occurred or is
continuing. (Section 1008)
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On the Issue Date, we expect that the Guarantors will be Kinder Morgan
Operating L.P. "A," Kinder Morgan Operating L.P. "B," Kinder Morgan Operating
L.P. "C," Kinder Morgan Operating L.P. "D," Kinder Morgan Natural Gas Liquids
Corporation, Kinder Morgan CO2, LLC and Kinder Morgan Bulk Terminals, Inc. Each
of the Guarantees will be an unsecured obligation of a Guarantor and will rank
equally with that Guarantor's guarantee under the Partnership's existing credit
facility and existing and future unsecured debt that is not expressly
subordinated to its Guarantee.
Each Guarantor is obligated under its Guarantee only up to an amount that
will not constitute a fraudulent conveyance or fraudulent transfer under
federal, state or foreign law.
Certain Defined Terms. As used herein:
"Adjusted Net Assets" of a Guarantor at any date means the lesser of:
(1) the amount by which the fair value of the property of such Guarantor at
such date exceeds the total amount of liabilities, including, without
limitation, the probable amount of contingent liabilities (after giving effect
to all other fixed and contingent liabilities incurred or assumed on such date)
of such Guarantor at such date, but excluding liabilities under the Guarantee of
such Guarantor; and
(2) the amount by which the present fair saleable value of the assets of
such Guarantor at such date exceeds the amount that will be required to pay the
probable liability of such Guarantor on its debts (after giving effect to all
other fixed and contingent liabilities incurred or assumed on such date and
after giving effect to any collection from any Subsidiary of such Guarantor in
respect of any obligations of such Subsidiary under the Guarantee of such
Guarantor), excluding debt in respect of the Guarantee of such Guarantor, as
they become absolute and matured.
"Attributable Indebtedness," when used with respect to any to any
Sale-Leaseback Transaction, means, as at the time of determination, the present
value (discounted at the rate set forth or implicit in the terms of the lease
included in such transaction) of the total obligations of the lessee for rental
payments (other than amounts required to be paid on account of property taxes,
maintenance, repairs, insurance, assessments, utilities, operating and labor
costs and other items that do not constitute payments for property rights)
during the remaining term of the lease included in such Sale-Leaseback
Transaction (including any period for which such lease has been extended). In
the case of any lease that is terminable by the lessee upon the payment of a
penalty or other termination payment, such amount shall be the lesser of the
amount determined assuming termination upon the first date such lease may be
terminated (in which case the amount shall also include the amount of the
penalty or termination payment, but no rent shall be considered as required to
be paid under such lease subsequent to the first date upon which it may be so
terminated) or the amount determined assuming no such termination.
"Capital Interests" means any and all shares, interests, participations,
rights or other equivalents (however designated) of capital stock, including,
without limitation, with respect to partnerships, partnership interests (whether
general or limited) and any other interest or participation that confers on a
Person the right to receive a share of the profits and losses of, or
distributions of assets of, such partnership.
"Consolidated Net Tangible Assets" means, at any date of determination, the
total amount of assets after deducting therefrom:
(1) all current liabilities (excluding (A) any current liabilities that by
their terms are extendable or renewable at the option of the obligor thereon to
a time more than 12 months after the time as of which the amount thereof is
being computed, and (B) current maturities of long-term debt), and
(2) the value (net of any applicable reserves) of all goodwill, trade
names, trademarks, patents and other like intangible assets, all as set forth,
or on a proforma basis would be set forth, on the consolidated balance sheet of
the Partnership and its consolidated subsidiaries for the Partnership's most
recently completed fiscal quarter, prepared in accordance with generally
accepted accounting principles.
"Debt" means any obligation created or assumed by any Person for the
repayment of money borrowed, any purchase money obligation created or assumed by
such Person and any guarantee of the foregoing.
"Funded Debt" means all Debt maturing one year or more from the date of the
creation thereof, all Debt directly or indirectly renewable or extendible, at
the option of the debtor, by its terms or by the terms of any instrument or
agreement relating thereto, to a date one year or more from the date of the
creation thereof, and all Debt under a
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revolving credit or similar agreement obligating the lender or lenders to extend
credit over a period of one year or more.
"Issue Date" means with respect to any series of Debt Securities issued
under either Indenture the date on which Debt Securities of that series are
initially issued under that Indenture.
"Lien" means, as to any entity, any mortgage, lien, pledge, security
interest or other encumbrance in or on, or adverse interest or title of any
vendor, lessor, lender or other secured party to or of the entity under
conditional sale or other title retention agreement or capital lease with
respect to, any property or asset of the entity.
"Pari Passu Debt" means any Debt of the Partnership, whether outstanding on
the Issue Date or thereafter created, incurred or assumed, unless, in the case
of any particular Debt, the instrument creating or evidencing the same or
pursuant to which the same is outstanding expressly provides that such Debt
shall be subordinated in right of payment to the Securities.
"Permitted Liens" means:
(1) liens upon rights-of-way for pipeline purposes;
(2) any statutory or governmental Lien or Lien arising by operation of law,
or any mechanics', repairmen's, materialmen's, suppliers', carriers',
landlords', warehousemen's or similar Lien incurred in the ordinary course of
business which is not yet due or which is being contested in good faith by
appropriate proceedings and any undetermined Lien which is incidental to
construction, development, improvement or repair;
(3) the right reserved to, or vested in, any municipality or public
authority by the terms of any right, power, franchise, grant, license, permit or
by any provision of law, to purchase or recapture or to designate a purchaser
of, any property;
(4) liens of taxes and assessments which are (A) for the then current year,
(B) not at the time delinquent, or (C) delinquent but the validity of which is
being contested at the time by the Partnership or any Subsidiary in good faith;
(5) liens of, or to secure performance of, leases, other than capital
leases;
(6) any Lien upon, or deposits of, any assets in favor of any surety
company or clerk of court for the purpose of obtaining indemnity or stay of
judicial proceedings;
(7) any Lien upon property or assets acquired or sold by the Partnership or
any Subsidiary resulting from the exercise of any rights arising out of defaults
on receivables;
(8) any Lien incurred in the ordinary course of business in connection with
workmen's compensation, unemployment insurance, temporary disability, social
security, retiree health or similar laws or regulations or to secure obligations
imposed by statute or governmental regulations;
(9) any Lien in favor of the Partnership or any Subsidiary;
(10) any Lien in favor of the United States of America or any state
thereof, or any department, agency or instrumentality or political subdivision
of the United States of America or any state thereof, to secure partial,
progress, advance, or other payments pursuant to any contract or statute, or any
Debt incurred by the Partnership or any Subsidiary for the purpose of financing
all or any part of the purchase price of, or the cost of constructing,
developing, repairing or improving, the property or assets subject to such Lien;
(11) any Lien securing industrial development, pollution control or similar
revenue bonds;
(12) any Lien securing Debt of the Partnership or any Subsidiary, all or a
portion of the net proceeds of which are used, substantially concurrent with the
funding thereof (and for purposes of determining such "substantial concurrence,"
taking into consideration, among other things, required notices to be given to
Holders of outstanding securities under the Indenture (including the Debt
Securities) in connection with such refunding, refinancing or repurchase, and
the required corresponding durations thereof), to refinance, refund or
repurchase all outstanding securities under the Indenture (including the Debt
Securities), including the amount of all accrued interest thereon and reasonable
fees and expenses and premium, if any, incurred by the Partnership or any
Subsidiary in connection therewith;
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(13) liens in favor of any Person to secure obligations under the
provisions of any letters of credit, bank guarantees, bonds or surety
obligations required or requested by any governmental authority in connection
with any contract or statute; or
(14) any Lien upon or deposits of any assets to secure performance of bids,
trade contracts, leases or statutory obligations.
"Person" means any individual, corporation, partnership, joint venture,
limited liability company, association, joint-stock company, trust, other
entity, unincorporated organization or government or any agency or political
subdivision thereof.
"Principal Property" means, whether owned or leased on the date of the
Senior Indenture or thereafter acquired:
(a) any pipeline assets of the Partnership or any Subsidiary, including any
related facilities employed in the transportation, distribution, storage or
marketing of refined petroleum products, natural gas liquids, coal and carbon
dioxide, that are located in the United States of America or any territory or
political subdivision thereof; and
(b) any processing or manufacturing plant or terminal owned or leased by
the Partnership or any Subsidiary that is located in the United States or any
territory or political subdivision thereof,
except, in the case of either of the foregoing clauses (a) or (b):
(1) any such assets consisting of inventories, furniture, office fixtures
and equipment (including data processing equipment), vehicles and equipment used
on, or useful with, vehicles, and
(2) any such assets, plant or terminal which, in the opinion of the Board
of Directors, is not material in relation to the activities of the Partnership
or of the Partnership and its Subsidiaries, taken as a whole.
"Sale-Leaseback Transaction" means the sale or transfer by the Partnership
or any Subsidiary of any Principal Property to a Person (other than the
Partnership or a Subsidiary) and the taking back by the Partnership or any
Subsidiary, as the case may be, of a lease of such Principal Property.
"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Interests entitled (without regard to the occurrence
of any contingency) to vote in the election of directors, managers or trustees
thereof or, in the case of a partnership, more than 50% of the partners' Capital
Interests (considering all partners' Capital Interests as a single class), is at
the time owned or controlled, directly or indirectly, by such Person or one or
more of the other Subsidiaries of such Person or combination thereof.
Payment and Transfer
Principal, interest and any premium on fully registered securities will be
paid at designated places. Payment will be made by check mailed to the persons
in whose names the Debt Securities are registered on days specified in the
Indentures or any prospectus supplement. Debt Securities payments in other forms
will be paid at a place designated by us and specified in a prospectus
supplement. (Section 307)
Fully registered securities may be transferred or exchanged at the
corporate trust office of the Trustee or at any other office or agency
maintained by us for such purposes, without the payment of any service charge
except for any tax or governmental charge. (Section 305)
Defeasance
We and the Guarantors may choose to either discharge our obligations on the
Debt Securities of any series in a covenant defeasance, or to release ourselves
from our covenant restrictions on the Debt Securities of any series in a
covenant defeasance. We may do so at any time on the 91st day after we deposit
with the Trustee sufficient cash or government securities to pay the principal,
interest, any premium and any other sums due to the stated maturity date or a
redemption date of the Debt Securities of the series. If we choose the legal
defeasance option, the holders of the Debt Securities of the series will not be
entitled to the benefits of the Indenture except for registration of transfer
and
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exchange of Debt Securities, replacement of lost, stolen or mutilated Debt
Securities conversion or exchange of Debt Securities, sinking fund payments and
receipt of principal and interest on the original stated due dates or specified
redemption dates. (Section 1302)
We may discharge our obligations under the Indentures or release ourselves
from covenant restrictions only if we meet certain requirements. Among other
things, we must deliver an opinion of our legal counsel that the discharge will
not result in holders having to recognize taxable income or loss or subject then
to different tax treatment. In the case of legal defeasance, this opinion must
be based on either an IRS letter ruling or change in federal tax law. We may not
have a default on the Debt Securities discharged on the date of deposit. The
discharge may not violate any of our agreements. The discharge may not result in
our becoming an investment company in violation of the Investment Company Act of
1940.
Book Entry, Delivery and Form
The Debt Securities of a series may be issued in whole or in part in the
form of one or more global certificates that will be deposited with a depositary
identified in a prospectus supplement.
Unless otherwise stated in any prospectus supplement, The Depository Trust
Company, New York, New York ("DTC") will act as depositary. Book-entry notes of
a series will be issued in the form of a global note that will be deposited with
DTC. This means that we will not issue certificates to each holder. One global
note will be issued to DTC who will keep a computerized record of its
participants (for example, your broker) whose clients have purchased the notes.
The participant will then keep a record of its clients who purchased the notes.
Unless it is exchanged in whole or in part for a certificate note, a global note
may not be transferred; except that DTC, its nominees and their successors may
transfer a global note as a whole to one another.
Beneficial interests in global notes will be shown on, and transfers of
global notes will be made only through, records maintained by DTC and its
participants.
DTC has provided us the following information: DTC is a limited-purpose
trust company organized under the New York Banking Law, a "banking organization"
within the meaning of the New York Banking Law, a member of the United States
Federal Reserve System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code and a "clearing agency" registered under the
provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds
securities that its participants ("Direct Participants") deposit with DTC. DTC
also records the settlement among Direct Participants of securities
transactions, such as transfers and pledges, in deposited securities through
computerized records for Direct Participant's accounts. This eliminates the need
to exchange certificates. Direct Participants include securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations.
DTC's book-entry system is also used by other organizations such as
securities brokers and dealers, banks and trust companies that work through a
Direct Participant. The rules that apply to DTC and its participants are on file
with the SEC.
DTC is owned by a number of its Direct Participants and by the New York
Stock Exchange, Inc., The American Stock Exchange, Inc. and the National
Association of Securities Dealers, Inc.
We will wire principal and interest payments to DTC's nominee. We and the
Trustee will treat DTC's nominee as the owner of the global notes for all
purposes. Accordingly, we, the Trustee and any paying agent will have no direct
responsibility or liability to pay amounts due on the global notes to owners of
beneficial interests in the global notes.
It is DTC's current practice, upon receipt of any payment of principal or
interest, to credit Direct Participants' accounts on the payment date according
to their respective holdings of beneficial interests in the global notes as
shown on DTC's records. In addition, it is DTC's current practice to assign any
consenting or voting rights to Direct Participants whose accounts are credited
with notes on a record date, by using an omnibus proxy. Payments by participants
to owners of beneficial interests in the global notes, and voting by
participants, will be governed by the customary practices between the
participants and owners of beneficial interests, as is the case with notes held
for the account of customers registered in "street name." However, payments will
be the responsibility of the participants and not of DTC, the Trustee or us.
Notes represented by a global note will be exchangeable for certificate
notes with the same terms in authorized denominations only if:
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* DTC notifies us that it is unwilling or unable to continue as depositary or
if DTC ceases to be a clearing agency registered under applicable law and a
successor depositary is not appointed by us within 90 days; or
* we determine not to require all of the notes of a series to be represented
by a global note and notify the Trustee of our decision.
Certificates and Opinions to Be Furnished to Trustee
Each Indenture provides that, in addition to other certificates or opinions
that may be specifically required by other provisions of an Indenture, every
application by us for action by the Trustee shall be accompanied by a
certificate of certain of our officers and an opinion of counsel (who may be our
counsel) stating that, in the opinion of the signers, all conditions precedent
to such action have been complied with. (Section 102)
Report to Holders of Debt Securities
The Trustee is required to submit an annual report to the holders of the
Debt Securities regarding, among other things, the Trustee's eligibility to
serve as such, the priority of the Trustee's claims regarding certain advances
made by it, and any action taken by the Trustee materially affecting the Debt
Securities.
The Trustee
We will name the trustee for each Indenture in the applicable prospectus
supplement. We anticipate that the same person initially will act as trustee
under the Senior Indenture and the Subordinated Indenture.
Pursuant to the Indentures and the Trust Indenture Act of 1939, as amended,
governing trustee conflicts of interest, any uncured Event of Default with
respect to any series of Senior Debt Securities will force the trustee to resign
as trustee under either the Subordinated Indenture or the Senior Indenture.
Likewise, any uncured Event of Default with respect to any series of
Subordinated Debt Securities will force the trustee to resign as trustee under
either the Senior Indenture or the Subordinated Indenture. Any resignation will
require the appointment of a successor trustee under the applicable Indenture in
accordance with the terms and conditions.
The trustee may resign or be removed by us with respect to one or more
series of Debt Securities and a successor trustee may be appointed to act with
respect to any such series. The holders of a majority in aggregate principal
amount of the Debt Securities of any series may remove the trustee with respect
to the Debt Securities of such series. (Section 610)
Each Indenture contains certain limitations on the right of the trustee
thereunder, in the event that it becomes a creditor of the Partnership, to
obtain payment of claims in certain cases, or to realize on certain property
received in respect of any such claim as security or otherwise. (Section 613)
DESCRIPTION OF COMMON UNITS
Number of Units
As of September 30, 1998, we have 48,851,690 Units outstanding. Our
partnership agreement does not limit the number of Units we may issue.
Listing
Our outstanding Units are listed on the New York Stock Exchange under the
symbol "ENP". Any additional Units we issue will also be listed on the NYSE.
Distributions
Our partnership agreement requires us to distribute 100% of "Available
Cash" to the Partners within 45 days following the end of each calendar quarter.
"Available Cash" consists generally of all of our cash receipts, less cash
disbursements and net additions to reserves. In addition, when we acquired our
Pacific Operations from Santa Fe Pacific Pipeline Partners, L.P. ("Santa Fe"),
the general partner of Santa Fe retained a .5% interest in those operations.
"Available Cash" does not include amounts payable to the former Santa Fe general
partner due to this interest.
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We distribute Available Cash for each quarter as follows:
* first, 98% to the Limited Partners and 2% to the General Partner until the
Limited Partners have received a total of $.3025 per Unit for such quarter;
* second, 85% to the limited Partners and 15% to the General Partner until
the Limited Partners have received a total of $.3575 per Unit for such
quarter;
* third, 75% to the Limited Partners and 25% to the General Partner until the
Limited Partners have received a total of $.4675 per Unit for such quarter;
and
* fourth, thereafter 50% to the Limited Partners and 50% to the General
Partner.
Transfer Agent and Registrar
Our transfer agent and registrar for the Units is First Chicago Trust
Company of New York. You may contact them at the following address:
First Chicago Trust Company of New York
525 Washington Blvd.
Jersey City, NJ 07310
Summary of Partnership Agreement
A summary of the important provisions of our partnership agreement is
included in the reports filed with the SEC.
MATERIAL FEDERAL INCOME TAX CONSIDERATIONS
General
The following discussion is a summary of material tax considerations that
may be relevant to a prospective Unitholder. The discussion is the opinion of
Morrison & Hecker L.L.P. ("Counsel") as to the material federal income tax
consequences of the ownership and disposition of Units. Counsel's opinion does
not include portions of the discussion regarding factual matters or portions of
the discussion that specifically state that it is unable to opine. The IRS may
disagree with Counsel's opinion as to the tax consequences of ownership and
disposition of Units. The Partnership has not and will not request a ruling from
the IRS as to any matter addressed in this discussion.
The following discussion is based upon current provisions of the Code,
existing and proposed regulations under the Code and current administrative
rulings and court decisions, including modifications made by the Taxpayer Relief
Act of 1997 (the "1997 Act"), all as in effect on the date of this Prospectus.
This discussion is also based on the assumptions that the operation of the
Partnership and its operating partnerships (collectively, the "Operating
Partnerships") will be in accordance with the relevant partnership agreements.
This discussion is subject both to the accuracy of these assumptions and the
continued applicability of such legislative, administrative and judicial
authorities. Subsequent changes in such authorities may cause the tax
consequences to vary substantially from the consequences described below. Any
such change may be retroactively applied in a manner that could adversely affect
a holder of Units.
The discussion below is directed primarily to a Unitholder that is a United
States person (as determined for federal income tax purposes). Except as
specifically noted, the discussion does not address all of the federal income
tax consequences that may be relevant:
* to a holder in light of the holder's particular circumstances;
* to a holder that is a partnership, corporation, trust or estate (and their
partners, shareholders and beneficiaries);
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* to holders subject to special rules, such as certain financial
institutions, tax-exempt entities, foreign corporations, non-resident alien
individuals, regulated investment companies, insurance companies, dealers
in securities, or traders in securities who elect to mark to market; and
* persons holding Units as part of a "straddle," "synthetic security,"
"hedge" or "conversion transaction" or other integrated investment.
Moreover, the effect of any applicable state, local or foreign tax laws is not
discussed.
The discussion deals only with Units held as "capital assets" within the
meaning of Section 1221 of the Code.
The federal income tax treatment of holders of Units depends in some
instances on determinations of fact and interpretations of complex provisions of
federal income tax laws for which no clear precedent or authority may be
available. Accordingly, each prospective Unitholder should consult his own tax
advisors when determining the federal, state, local and any other tax
consequences of the ownership and disposition of Units.
Legal Opinions and Advice
The remainder of the discussion under this "Material Federal Income Tax
Considerations" section is the opinion of Counsel as to the material federal
income tax consequences of the ownership and disposition of Units.
Counsel has rendered its opinion to the Partnership to the effect that:
* the Partnership and the Operating Partnerships are and will continue to be
classified as partnerships for federal income tax purposes and will not be
classified as associations taxable as corporations, assuming that the
factual representations set forth in "-General Features of Partnership
Taxation-Partnership Status" are adhered to by such partnerships; and
* each person who (i) acquires beneficial ownership of Units pursuant to this
prospectus and either has been admitted or is pending admission to the
Partnership as an additional limited partner or (ii) acquired beneficial
ownership of Units and whose Units are held by a nominee (so long as such
person has the right to direct the nominee in the exercise of all
substantive rights attendant to the ownership of such Units) will be
treated as a partner of the Partnership for federal income tax purposes.
The following are material federal income tax issues associated with the
ownership of Units and the operation of the Partnership with respect to which
Counsel is unable to opine:
* whether a court would sustain the valuations of assets and allocations of
such amounts (the "Book-Tax Disparity") among tangible assets (and the
resulting net Curative Allocations) if the IRS challenged such valuations
and allocations;
* whether a court would sustain certain procedures utilized by the
Partnership in administering the Section 754 election and the resulting
Section 743(b) adjustments to any Unitholder's basis in its Units if the
IRS challenged such procedures. See "-Tax Treatment of Operations-Section
754 Election."; and
* whether a court would allow the Partnership's monthly convention for
allocating Partnership income, gain, loss, deduction or credit to Partners.
See "Disposition of Units--Allocations Between Transferors and
Transferees."
A more detailed discussion of these items is contained in the applicable
sections below.
The opinion of Counsel as to partnership classification is based on certain
representations of the Partnership and the General Partner. These
representations address the nature of the income of the Partnership which is
relevant to a determination of whether its income qualifies for the Natural
Resource Exception pursuant to Section 7704 of the Code. See "-General Features
of Partnership Taxation-Partnership Status." The opinion of Counsel is based
upon existing provisions of the Code and the Regulations, existing
administrative rulings and procedures of the IRS and existing court decisions.
Such authorities may change in the future, which change could be retroactively
applied. Such opinions represent only Counsel's best legal judgment as to the
particular issues and are not binding on the IRS or the courts.
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General Features of Partnership Taxation
Partnership Status. The applicability of the federal income tax
consequences described in this prospectus depends on the treatment of the
Partnership and the Operating Partnerships as partnerships for federal income
tax purposes and not as associations taxable as corporations. For federal income
tax purposes, a partnership is not a taxable entity. It is a conduit through
which all items of partnership income, gain, loss, deduction and credit are
passed through to its partners. Thus, income and deductions resulting from
partnership operations are allocated to the partners and are taken into account
by the partners on their individual federal income tax returns. In addition, a
partner generally is not taxed upon a distribution of money from a partnership
unless the amount of the distribution exceeds the partner's tax basis in the
partner's interest in the partnership. If the Partnership or any of the
Operating Partnerships were classified for federal income tax purposes as an
association taxable as a corporation, the entity would be a separate taxable
entity. In such a case, the entity, rather than its members, would be taxed on
the income and gains and would be entitled to claim the losses and deductions
resulting from its operations. A distribution from the entity to a member would
be taxable to the member in the same manner as a distribution from a corporation
to a shareholder (that is, as ordinary income to the extent of the current and
accumulated earnings and profits of the entity, then as a nontaxable reduction
of basis to the extent of the member's tax basis in the member's interest in the
entity and finally as gain from the sale or exchange of the member's interest in
the entity). Any such characterization of either the Partnership or one of the
Operating Partnerships as an association taxable as a corporation would likely
result in a material reduction of the anticipated cash flow and after-tax return
to the Unitholders.
Pursuant to Final Treasury Regulations 301.7701-1, 301.7701-2 and
301.7701-3, effective January 1, 1997 (the "Check-the-Box Regulations"), an
entity in existence on January 1, 1997, will generally retain its current
classification for federal income tax purposes. As of January 1, 1997, the
Partnership was classified and taxed as a partnership. Pursuant to the
Check-the-Box Regulations this prior classification will be respected for all
periods prior to January 1, 1997, if (1) the entity had a reasonable basis for
the claimed classification; (2) the entity recognized federal tax consequences
of any change in classification within five years prior to January 1, 1997; and
(3) the entity was not notified prior to May 8, 1996, that the entity
classification was under examination. Prior to the finalization of the
Check-the-Box Regulations, the classification of an entity as a partnership was
determined under a four factor test developed by a number of legal authorities.
Based on this four factor test, the Partnership had a reasonable basis for its
classification as a partnership. Moreover, the Partnership has not changed its
classification and the IRS has not notified the partnership that its
classification was under examination.
Section 7704 provides that publicly traded partnerships will, as a general
rule, be taxed as corporations. However, an exception exists with respect to
publicly traded partnerships 90% or more of the gross income of which for every
taxable year consists of "qualifying income" (the "Natural Resource Exception").
"Qualifying income" includes income and gains derived from the exploration,
development, mining or production, processing, refining, transportation
(including pipelines) or marketing of any mineral or natural resource including
oil, natural gas or products of oil and natural gas. Other types of "qualifying
income" include interest (other than from a financial business), dividends,
gains from the sale of real property and gains from the sale or other
disposition of capital assets held for the production of income that otherwise
constitute "qualifying income." The General Partner has represented that the
Partnership will derive more than 90% of its gross income from fees and charges
for transporting (through the Partnership's pipelines) natural gas liquids
("NGLs"), carbon dioxide ("CO2" ) and other hydrocarbons, dividends from the
corporation that owns the Mont Belvieu Fractionator and interest (other than
from a financial business). Based upon that representation, Counsel is of the
opinion that the Partnership's gross income derived from these sources will
constitute "qualifying income" and the Partnership will qualify for the Natural
Resource Exception.
If (a) a publicly traded partnership fails to meet the National Resource
Exception for any taxable year, (b) the IRS determines that the failure is
inadvertent, and (c) the partnership takes steps within a reasonable time to
once again meet the 90% gross income test and agrees to make such adjustments
and pay such amounts (including, possibly, the amount of tax liability that
would be imposed on the partnership if it were treated as a corporation during
the period of inadvertent failure) as the IRS requires, such failure will not
cause the partnership to be taxed as a corporation. The General Partner, as
general partner of the Partnership, will use its best efforts to assure that the
Partnership will continue to meet the gross income test for each taxable year.
The Partnership anticipates that it will continue to meet the gross income test.
If the Partnership fails to meet the gross income test for any taxable year, the
General Partner, as general partner of the Partnership, will use its best
efforts to assure that the Partnership will qualify under the inadvertent
failure exception discussed above.
If the Partnership fails to meet the Natural Resource Exception (other than
a failure the IRS determines was inadvertent that the Partnership cures within a
reasonable time after discovery), the Partnership will be treated as if it had
transferred all of its assets (subject to liabilities) to a newly-formed
corporation (on the first day of the year in which it
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fails to meet the Natural Resource Exception) in exchange for stock in such
corporation, and then distributed such stock to the partners in liquidation of
their interests in the Partnership. This contribution and liquidation should be
tax-free to the holders of Units and the Partnership, if the Partnership, at
such time, does not have liabilities in excess of the basis of its assets.
Thereafter, the Partnership would be treated as a corporation.
If the Partnership or any Operating Partnership were treated as an
association or otherwise taxable as a corporation in any taxable year, because
it failed to meet the Natural Resource Exception or for any other reason, its
items of income, gain, loss, deduction and credit would be reflected only on its
tax return rather than being passed through to the holders of Units, and its net
income would be taxed at the entity level at corporate rates. In addition, any
distribution made to a holder of Units would be treated as either taxable
dividend income (to the extent of the Partnership's current or accumulated
earnings and profits) or in the absence of earnings and profits as a nontaxable
return of capital (to the extent of the holder's basis in the Units) or taxable
capital gain (after the holder's basis in the Units is reduced to zero).
Accordingly, treatment of either the Partnership or any of the Operating
Partnerships as an association taxable as a corporation would materially reduce
a Unitholder's cash flow and after-tax economic return on an investment in the
Partnership.
Congress could change the tax laws to treat the Partnership as an
association taxable as a corporation for federal income tax purposes or
otherwise subject it to entity-level taxation. The Partnership Agreement
provides that, if a law is enacted that subjects the Partnership to taxation as
a corporation or otherwise subjects the Partnership to entity-level taxation for
federal income tax purposes, the General Partner will amend the Partnership
Agreement to reduce its incentive distributions.
Under current law, the Partnership and the Operating Partnerships are
classified and taxed as partnerships for federal income tax purposes and not as
associations taxable as corporations. This conclusion is based upon certain
factual representations and covenants made by the General Partner including:
* the General Partner will operate the Partnership and the Operating
Partnerships strictly in accordance with (i) all applicable partnership
statutes, and (ii) the Partnership Agreements;
* the General Partner will at all times act independently of the Unitholders;
* for each taxable year, the Partnership and the Operating Partnerships will
derive less than 10% of the aggregate gross income from sources other than
(i) the exploration, development, production, processing, refining,
transportation or marketing of any mineral or natural resource, including
oil, gas or products of oil and natural gas and naturally occurring carbon
dioxide or (ii) other items of "qualifying income" within the definition of
Section 7704(d);
* prior to January 1, 1997, the General Partner maintained throughout the
term of the Partnership and the Operating Partnerships substantial assets
(based upon the fair market value of its assets and excluding its interest
in, and any account or notes receivable from or payable to, any limited
partnership in which the General Partner has any interest) that creditors
of the Partnership and the Operating Partnerships could reach; and
* the Partnership and each of the Operating Partnerships have not elected
association classification under the Check-the-Box Regulations or otherwise
and will not elect such classification.
The Partnership has not requested or received any ruling from the IRS with
respect to the classification of the Partnership and the Operating Partnerships
for federal income tax purposes and the opinion of Counsel is not binding on the
IRS. The IRS imposed certain procedural requirements for years prior to 1997 to
be met before it would issue a ruling to the effect that a limited partnership
with a sole corporate general partner would be classified as a partnership for
federal income tax purposes. These procedural requirements were not rules of
substantive law to be applied on audit, but served more as a "safe-harbor" for
purposes of obtaining a ruling. The General Partner believes that the
Partnership and the Operating Partnerships did not satisfy all such procedural
requirements. The conclusion described above as to the partnership status of the
Partnership for years before January 1, 1997 does not depend upon the ability of
the Partnership to meet the criteria set forth in such procedural requirements.
The following discussion assumes that the Partnership and the Operating
Partnerships are, and will continue to be, treated as partnerships for federal
income tax purposes. If either assumption is incorrect, most, if not all, of the
tax consequences described in the prospectus would not apply to Unitholders. In
particular, if the Partnership is not a partnership, a Unitholder may for
federal income tax purposes (i) recognize ordinary income, as the result of any
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payments to him in respect of partnership distributions and (ii) not be entitled
to allocations of partnership income, gain, loss and deduction.
Limited Partner Status. Holders of Units who the General Partner has
admitted as limited partners will be treated as partners of the Partnership for
federal income tax purposes. Moreover, the IRS has ruled that assignees of
partnership interests who have not been admitted to a partnership as partners,
but who have the capacity to exercise substantial dominion and control over the
assigned partnership interests, will be treated as partners for federal income
tax purposes. On the basis of this ruling, except as otherwise described in this
prospectus, the General Partner will treat the following persons as partners of
the Partnership for federal income tax purposes, (a) assignees who have executed
and delivered Transfer Applications, and are awaiting admission as limited
partners and (b) holders of Units whose Units are held in street name or by a
nominee and who have the right to direct the nominee in the exercise of all
substantive rights attendant to the ownership of their Units. As this ruling
does not extend, on its facts, to assignees of Units who are entitled to execute
and deliver Transfer Applications and thereby become entitled to direct the
exercise of attendant rights, but who fail to execute and deliver Transfer
Applications, Counsel cannot opine as to the status of these persons as partners
of the Partnership. Income, gain, deductions, losses or credits would not appear
to be reportable by such a holder of Units, and any such holders of Units
receiving cash distributions would be fully taxable as ordinary income. These
holders should consult their own tax advisors with respect to their status as
partners in the Partnership for federal income tax purposes. A purchaser or
other transferee of Units who does not execute and deliver a Transfer
Application may not receive certain federal income tax information or reports
furnished to record holders of Units, unless the Units are held in a nominee or
street name account and the nominee or broker has executed and delivered a
Transfer Application with respect to such Units.
A beneficial owner of Units whose Units have been transferred to a short
seller to complete a short sale would appear to lose the status as a partner
with respect to such Units for federal income tax purposes. See "-Disposition of
Units-Treatment of Short Sales."
Tax Consequences of Unit Ownership
Basis of Units. A Unitholder's initial tax basis for a Unit is the amount
paid for the Unit plus his share, if any, of nonrecourse liabilities of the
Partnership. A partner also includes in the tax basis for such partnership
interest any capital contributions that the partner actually makes to the
Partnership and the partner's allocable share of all Partnership income and
gains, less the amount of all distributions that the partner receives from the
Partnership and such partner's allocable share of all Partnership losses. For
purposes of these rules, if a partner's share of Partnership liabilities is
reduced for any reason, the partner is deemed to have received a cash
distribution equal to the amount of the reduction. The partner will recognize
gain as a result of this deemed cash distribution if, and to the extent that,
the deemed cash distribution exceeds the partner's adjusted tax basis for his
partnership interest.
Flow-through of Taxable Income. The Partnership will not pay any federal
income tax. Instead, each holder of Units must report on such holder's income
tax return such holder's allocable share of the income, gains, losses and
deductions without regard to whether corresponding cash distributions are
received by such Unitholders. Consequently, the Partnership may allocate income
to a holder of Units even though the holder has not received a cash distribution
in respect of such income.
Treatment of Partnership Distributions. Under Section 731 of the Code, a
partner will recognize gain as a result of a distribution from a partnership if
the partnership distributes an amount of money to the partner which exceeds such
partner's adjusted tax basis in the partnership interest prior to the
distribution. The amount of gain is limited to this excess. Cash distributions
in excess of such Unitholder's basis generally will be considered to be gain
from the sale or exchange of the Units, taxable in accordance with the rules
described under "-Disposition of Units."
A decrease in a Unitholder's percentage interest in the Partnership,
because of the Partnership's issuance of additional Units, or otherwise, will
decrease a Unitholder's share of nonrecourse liabilities of the Partnership, if
any. This decrease will result in a corresponding deemed distribution of cash.
The Partnership does not currently have, and the General Partner does not
anticipate that it will have, any material nonrecourse liabilities.
A non-pro rata distribution of money or property may result in ordinary
income to a holder of Units, regardless of such holder's tax basis in Units, if
the distribution reduces such holder's share of the Partnership's "Section 751
Assets." "Section 751 Assets" are defined by the Code to include assets giving
rise to depreciation recapture or other "unrealized receivables" or
"substantially appreciated inventory." For this purpose, inventory is
substantially appreciated if its value exceeds 120% of its adjusted tax basis.
In addition to depreciation recapture, "unrealized receivables" include rights
to payment for goods (other than capital assets) or services to the extent not
previously includable in income under
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a partnership's method of accounting. To the extent that such a reduction in a
Unitholder's share of Section 751 Assets occurs, the Partnership will be deemed
to have distributed a proportionate share of the Section 751 Assets to the
Unitholder followed by a deemed exchange of such assets with the Partnership in
return for the non-pro rata portion of the actual distribution made to such
holder. This deemed exchange will generally result in the realization of
ordinary income under Section 751(b) by the Unitholder. Such income will equal
the excess of (1) the non-pro rata portion of such distribution over (2) the
Unitholder's tax basis in such holder's share of Section 751 Assets deemed
relinquished in the exchange.
Limitations on Deductibility of Losses. Generally, a Unitholder may deduct
his share of losses that the Partnership incurs only to the extent of his tax
basis in the Units which he holds. A further "at risk" limitation may operate to
limit deductibility of losses in the case of an individual holder of Units or a
corporate holder of Units (if five or fewer individuals or certain tax-exempt
organizations own directly or indirectly more than 50% in the value of its
stock) if the "at risk" amount is less than the holder's basis in the Units. A
holder of Units must recapture losses deducted in previous years to the extent
that the Partnership distributions cause such Unitholder's at risk amount to be
less than zero at the end of any taxable year. Losses disallowed to a holder of
Units or recaptured as a result of theses limitations will carry forward and
will be allowable to the extent that the Unitholder's basis or at risk amount
(whichever is the applicable limiting factor) is increased.
In general, a holder of Units will be "at risk" to the extent of the
purchase price of the holder's Units. The amount "at risk" may be less than the
Unitholder's basis for the Units in an amount equal to the Unitholder's share of
nonrecourse liabilities, if any, of the Partnership. A Unitholder's at risk
amount will increase or decrease as the basis of such Units held increases or
decreases (exclusive of any effect on basis attributable to changes in the
Unitholder's share of Partnership nonrecourse liabilities).
The passive loss limitations generally provide that individuals, estates,
trusts, certain closely-held corporations and personal service corporations can
only deduct losses from passive activities (generally, activities in which the
taxpayer does not materially participate) that are not in excess of the
taxpayer's income from such passive activities or investments. The passive loss
limitations are not applicable to a widely held corporation. The passive loss
limitations are to be applied separately with respect to each publicly traded
partnership. Consequently, a Unitholder can use the losses generated by the
Partnership, if any, only to offset future income generated by the Partnership.
A Unitholder cannot use such losses to offset income from other passive
activities or investments (including other publicly traded partnerships) or
salary or active business income. Passive losses that are not deductible,
because they exceed the Unitholder's allocable share of income generated by the
Partnership would be deductible in the case of a fully taxable disposition of
such Units to an unrelated party. The passive activity loss rules are applied
after other applicable limitations on deductions such as the at risk rules and
the basis limitation.
The IRS has announced that it will issue Treasury Regulations that
characterize net passive income from a publicly traded partnership as investment
income for purposes of the limitations on the deductibility of investment
interest.
Allocation of Income, Gain, Loss and Deduction. In general, the Partnership
will allocate items of income, gain, loss and deduction for book and tax
purposes, among the General Partner, in its capacity as general partner, and the
holders of Units in the same proportion that Available Cash is distributed (as
between the General Partner and the holders of Units) in respect of such taxable
year. If distributions of Available Cash are not made in respect of a particular
taxable year, the Partnership will allocate such items among the partners in
accordance with their respective percentage interests. If the Partnership has a
net loss, the Partnership will allocate items of income, gain, loss and
deduction first, to the General Partner and the Unitholders to the extent of
their positive book capital accounts, and second, to the General Partner. On a
liquidating sale of assets, the Partnership Agreement provides separate gain and
loss allocations, designed to the extent possible, (i) to eliminate a deficit in
any partner's book capital account and (ii) to produce book capital accounts
which, when followed on liquidation, will result in each holder of Units
recovering Unrecovered Capital, and a distributive share of any additional
value.
Under Section 704(b), a partnership's allocation of any item of income,
gain, loss or deduction to a partner will not be given effect for federal income
tax purposes, unless it has "substantial economic effect," or is otherwise
allocated in accordance with the partner's interest in the partnership. If the
allocation does not satisfy this standard, it will be reallocated among the
partners on the basis of their respective interests in the partnership, taking
into account all facts and circumstances.
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Regulations under Section 704(b) delineate the circumstances under which
the IRS will view partnership allocations as having an "economic effect" that is
"substantial." Generally, for an allocation to have "economic effect" under the
Regulations:
* the partnership must reflect the allocation as an appropriate increase or
decrease in a capital account maintained for each partner in accordance
with specific rules set forth in the Regulations;
* the partnership must, throughout the term of the partnership, make
liquidating distributions (including complete redemptions of a partner's
interest in the partnership) in accordance with the partner's positive
capital account balances; and
* any partner with a deficit balance in such partner's capital account
following a liquidating distribution must be unconditionally obligated
(either by contract or state law) to restore the amount of such deficit to
the partnership within a limited period of time.
If the first two of these requirements are met, but the partner to whom an
allocation of loss or deduction is made is not obligated to restore the full
amount of any deficit balance in such partner's capital account upon liquidation
of the partnership, an allocation of loss or deduction may still have economic
effect, if (1) the agreement contains a "qualified income offset" provision, and
(2) the allocation either does not (i) cause a deficit balance in a partner's
capital account (reduced by certain anticipated adjustments, allocations and
distributions specified in the Regulations) as of the end of the partnership
taxable year to which the allocation relates or (ii) increase any such deficit
balance in this specially adjusted capital account by more than the partner's
unpaid obligation to contribute additional capital to the partnership. A
qualified income offset provision requires that in the event of any unexpected
distribution (or specified adjustments or allocations) the partnership must make
an allocation of income or gain to the distributees that eliminates the
resulting capital account deficit as quickly as possible. This rule is referred
to in this prospectus as the "Alternate Economic Effect Rule."
The Regulations require that capital accounts be:
* credited with the fair market value of property contributed to the
partnership (net of liabilities encumbering the contributed property that
the partnership is considered to assume or take subject to pursuant to
Section 752) ("Contributed Property");
* credited with the amount of cash contributed to the partnership; and
* adjusted by items of depreciation, amortization, gain and loss attributable
to partnership properties that have been computed by taking into account
the book value (rather than tax basis) of such properties.
As a result, such capital accounts are often referred to as "book" capital
accounts. A partner's capital account must also be reduced by:
* the amount of money distributed to such partner by the partnership;
* the fair market value of property distributed to such partner by the
partnership (net of liabilities encumbering the distributed property that
such holder is considered to assume or take subject to pursuant to Section
752); and
* a distributive share of certain partnership expenses that are neither
deductible nor amortizable.
The "Book-Tax Disparities" created by crediting capital accounts with the
value of Contributed Properties are eliminated through tax allocations that
cause the partner whose book capital account reflects unrealized gain or loss to
bear the corresponding tax benefit or burden associated with the recognition of
such unrealized gain or loss in accordance with the principles of Section
704(c). The allocations of these tax items that differ in amount from their
correlative book items do not have economic effect, because they are not
reflected in the partners' capital accounts. However, the allocations of such
items will be deemed to be in accordance with the partners' interests in the
partnership if they are made in accordance with the Section 704(c) Regulations.
In addition, the Regulations permit a partnership to increase or decrease
partners' capital accounts to reflect the revaluation of partnership property
(at fair market value) if the adjustments are made for a substantial non-tax
business purpose in connection with a contribution or distribution of money or
other property in consideration for the acquisition
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or relinquishment of an interest in the partnership. These adjustments may also
create Book-Tax Disparities, which the Regulations require a partnership to
eliminate through tax allocations in accordance with Section 704(c) principles.
An allocation must not only have economic effect to be respected, but that
economic effect must also be "substantial." The economic effect of an allocation
is substantial if there is a reasonable possibility that the allocation will
affect substantially the dollar amounts the partners will receive from the
partnership, independent of tax consequences. As a general matter, however, the
economic effect of an allocation is not substantial if, at the time the
partnership adopts the allocation, the after-tax economic consequences of at
least one partner may, in present value terms, be enhanced by such allocation,
but there is a strong likelihood that the after-tax economic consequences of no
other partner will, in present value terms, be substantially diminished by such
allocation.
The Partnership Agreement requires that the Partnership maintain a capital
account for each partner, generally in accordance with the applicable tax
accounting principles set forth in the Regulations, and that the Partnership
reflect all allocations to a partner by an appropriate increase or decrease in
the partner's capital account. In addition, the General Partner will make
distributions upon liquidation of the Partnership in accordance with positive
capital account balances. The limited partners are not required to contribute
capital to the Partnership to restore deficit balances in their capital accounts
upon liquidation of the Partnership. However, the Partnership Agreement contains
qualified income offset and minimum gain chargeback provisions, which under the
Section 704(b) Regulations comply with the Alternate Economic Effect Rule and
will obviate the requirement to restore negative capital accounts. The
Partnership Agreement provides for the reallocation to the General Partner of
any losses or deductions otherwise allocable to a holder of Units that have the
effect of creating a deficit balance in such holder's capital account (as
specially adjusted).
Except as discussed below, items of income, gain, loss and deduction
allocated to the holders of Units, in the aggregate, will be allocated among the
holders of Units in accordance with the number of Units held by such Unitholder.
The Partnership will make special tax (but not book) allocations to reflect
Book-Tax Disparities with respect to Contributed Properties. The Partnership
Agreement also provides for certain special allocations of income and gain
required by the qualified income offset and minimum gain chargeback provisions.
In addition, the Partnership Agreement empowers the General Partner to allocate
various Partnership items other than in accordance with the percentage interests
of the General Partner and the holders of Units when, in its judgment, such
special allocations are necessary to comply with applicable provisions of the
Code and the Regulations and to achieve uniformity of Units. See "-Uniformity of
Units."
With respect to Contributed Property, the Partnership Agreement provides
that, for federal income tax purposes, items of income, gain, loss and deduction
are first allocated among the partners in a manner consistent with Section
704(c). In addition, the Partnership Agreement requires the Partnership to
allocate items of income, gain, loss and deduction attributable to any
properties in accordance with Section 704(c) principles when, upon the
subsequent issuance of any Units, the Partnership has adjusted the book value of
such properties to reflect unrealized appreciation or depreciation in value from
the later of the Partnership's acquisition date for such properties or the
latest date of a prior issuance of Units ("Adjusted Property"). Thus, the
Partnership will specially allocate deductions for the depreciation of
Contributed Property and Adjusted Property to the non-contributing Unitholders
and the Partnership will specially allocate gain or loss from the disposition of
such property attributable to the Book-Tax Disparity (the "Section 704(c) Gain")
to the contributing Unitholders so that the non-contributing Unitholders may
claim, to the extent possible, cost recovery and depreciation deductions and the
Partnership will allocate to them gain or loss from the sale of assets generally
as if they had purchased a direct interest in the Partnership's assets.
The Partnership Agreement also allocates gain from the sale of properties
that is characterized as recapture income among the holders of Units and the
General Partner (or its successors) in the same manner in which such partners
were allocated the deductions giving rise to such recapture income. Final
Treasury Regulations under Section 1245 provide that depreciation recapture will
be specially allocated based on the allocation of the deductions giving rise to
such recapture income, as provided for in the Partnership Agreement.
Items of gross income and deduction will be allocated in a manner intended
to eliminate Book-Tax Disparities, if any, that are not eliminated by Section
704(c) allocations as a result of the application of the Ceiling Rule with
respect to Contributed Property or Adjusted Property. Such Curative Allocations
of gross income and deductions to preserve the uniformity of the income tax
characteristics of Units will not have economic effect, because the capital
accounts of the holders of Units will not reflect such allocations. However,
such allocations will eliminate Book-Tax Disparities and are thus consistent
with the Regulations under Section 704(c). With the exception of certain
conventions adopted by the Partnership with respect to administration of the
Section 754 election and the attendant Section 743(b) basis adjustments
discussed at "-Tax Treatment of Operations-Section 754 Election"; and allocation
of the effect of unamortizable Section 197 Book-Up amounts and common inside
basis, allocations under the Partnership Agreement will be given
22
effect for federal income tax purposes in determining a holder's distributive
share of an item of income, gain, loss or deduction. There are, however,
uncertainties in the Regulations relating to allocations of partnership income,
and Unitholders should be aware that the IRS may successfully challenge some of
the allocations in the Partnership Agreement. See "-Tax Treatment of
Operations-Section 754 Election-" and "-Uniformity of Common Units" for a
discussion of such allocations.
Tax Treatment of Operations
Accounting Method and Taxable Year. The Partnership currently maintains the
calendar year as its taxable year and has adopted the accrual method of
accounting for federal income tax purposes.
Tax Basis, Depreciation and Amortization. The Partnership will use its tax
bases for its assets to compute depreciation and cost recovery deductions and,
ultimately, after adjustment for intervening depreciation or cost recovery
deductions, gain or loss on the disposition of such assets.
The Partnership and the Operating Partnerships will have tangible assets of
substantial value (including the pipelines and related equipment). A significant
portion of the assets were placed in service prior to the effective dates of the
accelerated cost recovery system and will be depreciated over a 171/2 year
period on a declining balance method. The General Partner will depreciate
certain assets using the accelerated methods provided for under Section 168 of
the Code. In addition, the Partnership, will use accelerated methods provided
for under Section 167 of the Code to depreciate certain other assets during the
early years of the depreciable lives of those assets, and then elect to use the
straight line method in subsequent years.
The Partnership allocated the capital account value among the Partnership's
assets after the acquisition of Santa Fe based upon their relative fair market
values established by an independent appraisal. Any amount in excess of the fair
market values of specific tangible assets may constitute non-amortizable
intangible assets (including goodwill).
The tax basis of goodwill and most other intangible assets used in a trade
or business acquired after August 10, 1993 (or prior to that time in certain
events), may be amortized over 15 years. The Partnership will not amortize the
goodwill, if any, created as a result of the acquisition of Santa Fe for tax
capital account or income tax purposes because of the Step-in-the Shoes and
Anti-Churning rules. However, see "-Section 754 Election" with respect to the
amortization of Section 743(b) adjustments available to purchasers of Units. The
IRS may challenge either the fair market values or the useful lives assigned to
such assets. If any such challenge or characterization were successful, the
Partnership would reduce the deductions allocated to a holder of Units in
respect of such assets and would increase by a like amount a Unitholder's share
of taxable income from the Partnership. Any such increase could be material.
If the Partnership disposes of depreciable property by sale, foreclosure or
otherwise, all or a portion of any gain (determined by reference to the amount
of depreciation previously deducted and the nature of the property) may be
subject to the recapture rules and taxed as ordinary income rather than capital
gain. Similarly, a partner that has taken cost recovery or depreciation
deductions with respect to Partnership property may be required to recapture
such deductions upon a sale of such partner's interest in the Partnership. See
"-Allocation of Partnership Income, Gain, Loss and Deduction" and "-Disposition
of Common Units-Recognition of Gain or Loss."
A partnership may amortize its organizational costs over any period
selected by the partnership not shorter than 60 months. A partnership must
capitalize the costs incurred in promoting the issuance of Units, including
underwriting commissions and discounts. The Partnership cannot deduct such costs
currently, ratably or upon termination of the Partnership. Uncertainties exist
regarding the classification of costs as organization expenses, which the
Partnership may amortize, and as syndication expenses which the Partnership may
not amortize.
Section 754 Election. The Partnership has previously made a Section 754
election and will make another Section 754 election for protective purposes.
This election is irrevocable without the consent of the IRS. The election will
generally permit a purchaser of Units to adjust such purchaser's share of the
basis in the Partnership's properties ("Common Basis") pursuant to Section
743(b) to reflect the purchase price paid for such Units. In the case of Units
purchased in the market, the Section 743(b) adjustment acts in concert with
Section 704(c) allocations (and Curative Allocations, if respected) in providing
the purchaser of such Units with the equivalent of a fair market value Common
Basis. See " -Allocation of Partnership Income, Gain, Loss and Deduction." The
Section 743(b) adjustment is attributed solely to a purchaser of Units and is
not added to the bases of the Partnership's assets associated with Units held by
other Unitholders. For purposes of this discussion, a Unitholder's inside basis
in the Partnership's assets is considered to have two components:
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* the Unitholder's share of the Partnership's actual basis in such assets
("Common Basis"); and
* the Unitholder's Section 743(b) adjustment allocated to each such asset.
A Section 754 election is advantageous if the transferee's basis in Units
is higher than the Partnership's aggregate Common Basis allocable to that
portion of its assets represented by such Units immediately prior to the
transfer. In such case, pursuant to the election, the transferee would take a
new and higher basis in the transferee's share of the Partnership's assets for
purposes of calculating, among other items, depreciation deductions and the
applicable share of any gain or loss on a sale of the Partnership's assets.
Conversely, a Section 754 election is disadvantageous if the transferee's basis
in such Units is lower than the Partnership's aggregate Common Basis allocable
to that portion of its assets represented by such Units immediately prior to the
transfer. Such election may affect either favorably or unfavorably, the amount
that a holder of Units may obtain upon the sale of Units. A constructive
termination of the Partnership will also cause a Section 708 termination of the
Operating Partnerships. Such a termination could also result in penalties or
loss of basis adjustments under Section 754, if the General Partner could not
determine that the termination had occurred and, therefore, did not timely file
a tax return or make appropriate Section 754 elections for the "new"
Partnership.
Proposed Treasury Regulation Section 1.743-1(j)(4)(B) generally requires
the Partnership to depreciate the Section 743(b) adjustment attributable to
recovery property as if the total amount of such adjustment were attributable to
newly-acquired recovery property placed in service when the purchase of a Unit
occurs. Under Treasury Regulation Section 1.167(c)-1(a)(6), a Section 743(b)
adjustment attributable to property subject to depreciation under Section 167
rather than cost recovery deductions under Section 168 is generally required to
be depreciated using either the straight-line method or the 150% declining
balance method. Although Counsel is unable to opine as to the validity of such
an approach, the Partnership intends to depreciate the portion of a Section
743(b) adjustment attributable to unrealized appreciation in the value of the
Partnership property (to the extent of any unamortized Book-Tax Disparity) using
a rate of depreciation derived from the depreciation method and useful life
applied to the Common Basis of such property, despite its inconsistency with
Proposed Treasury Regulation Section 1.743-1(j)(4)(B) and Treasury Regulation
Section 1.167(c)-1(a)(6). If an asset is not subject to depreciation or
amortization, no Section 743(b) adjustment would be available to that extent. If
the General Partner determines that the Partnership cannot reasonably take such
position, it may adopt a depreciation convention under which all purchasers
acquiring Units in the same month would receive depreciation, whether
attributable to Common Basis or Section 743(b) basis, based upon the same
applicable rate as if they had purchased a direct interest in the Partnership's
property. Such an aggregate approach, or any other method required as a result
of an IRS examination, may result in lower annual depreciation deductions than
would otherwise be allowable to certain holders of Units. See "-Uniformity of
Units."
The Partnership must allocate the Section 743(b) adjustment in accordance
with the principles of Section 1060. Based on these principles, the IRS may seek
to reallocate some or all of any Section 743(b) adjustment that the Partnership
does not allocate to intangible assets which have a longer 15 year amortization
period and which are not eligible for accelerated depreciation methods generally
applicable to other assets of the Partnership.
The calculations involved in the Section 754 election are complex and the
Partnership will make such calculations on the basis of certain assumptions as
to the value of the Partnership assets and other matters. The IRS may challenge
the General Partner's determinations and may seek to disallow or reduce the
deductions attributable to them.
Valuation of Property of the Partnership. The federal income tax
consequences of the acquisition, ownership and disposition of Units will depend
in part on estimates by the General Partner of the relative fair market values,
and determinations of the tax basis, of the assets of the Partnership. Although
the General Partner may from time to time consult with professional appraisers
with respect to valuation matters, the General Partner will make many of the
relative fair market value estimates by itself. These estimates are subject to
challenge and are not binding on the IRS or the courts. In the event the
determinations of fair market value are subsequently found to be incorrect, the
character and amount of items of income, gain, loss, deductions or credits
previously reported by Unitholders might change, and Unitholders might have
additional tax liability for such prior periods.
Corporate Interests. The Partnership owns an interest in several
corporations. As corporations these entities pay federal and state income taxes.
The Partnership, as a shareholder, will include in its income any amounts
distributed to it by such corporations to the extent of such corporations'
current and accumulated earnings and profits. The General Partner estimates that
a portion of the corporations' cash distributions to the Partnership will be
treated as taxable dividends.
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Alternative Minimum Tax. Each holder of Units must take into account such
holder's distributive share of any items of the Partnership's income, gain or
loss for purposes of the alternative minimum tax ("AMT"). The AMT currently is a
tax of 26% on the first $175,000 of alternative minimum taxable income in excess
of the exemption amount and 28% on any additional alternative minimum taxable
income of individuals. Alternative minimum taxable income is calculated using
the 150% declining balance method of depreciation with respect to personal
property and 40-year straight-line depreciation for real property. These
depreciation methods are not as favorable as the alternative straight line and
accelerated methods provided for under Section 168 which the Partnership will
use in computing its income for regular federal income tax purposes.
Accordingly, a Unitholder's AMT taxable income derived from the Partnership may
be higher than such holder's share of the Partnership's net income. Prospective
holders of Units should consult with their tax advisors as to the impact of an
investment in Units on their liability for the alternative minimum tax.
Disposition of Units
Recognition of Gain or Loss. A Unitholder will recognize gain or loss on a
sale of Units equal to the difference between the amount realized and a holder's
tax basis for the Units sold. A holder's amount realized will be measured by the
sum of the cash received or the fair market value of other property received,
plus such holder's share of the Partnership's nonrecourse liabilities. Because
the amount realized includes a Unitholder's share of the Partnership's
nonrecourse liabilities, the gain recognized on the sale of Units could result
in a tax liability in excess of any cash received from such sale.
In general, the Partnership will allocate items of income, gain, loss and
deduction for book and tax purposes among the General Partner, in its capacity
as general partner, and the holders of Units in the same proportion that
Available Cash is distributed. If distributions of Available Cash are not made
in respect of a particular taxable year, the Partnership will allocate such
items among the partners in accordance with their percentage interests.
Moreover, if a Unitholder has received distributions from the Partnership which
exceed the cumulative net taxable income allocated to him, his basis will
decrease to an amount less than his original purchase price for the Units. In
effect, this amount would increase the gain recognized on sale of the Unit(s).
Under such circumstances, a gain could result even if the Unit(s) are sold at a
price less than their original cost.
The IRS has ruled that a partner acquiring interests in a partnership in
separate transactions at different prices must maintain an aggregate adjusted
tax basis in a single partnership interest and that, upon sale or other
disposition of some of the interests, the partnership must allocate a portion of
such aggregate tax basis to the interests sold on the basis of some equitable
apportionment method. The ruling is unclear as to how this aggregation concept
affects the holding period. If this ruling is applicable to the holders of
Units, the aggregation of tax bases of a holder of Units effectively prohibits
such holder from choosing among Units with varying amounts of unrealized gain or
loss as would be possible in a stock transaction. Thus, the ruling may result in
an acceleration of gain or deferral of loss on a sale of a portion of a holder's
Units. It is not clear whether the ruling applies to publicly traded
partnerships, such as the Partnership, the interests in which are evidenced by
separate Units. Accordingly, Counsel is unable to opine as to the effect such
ruling will have on a holder of Units. A holder of Units considering the
purchase of additional Units or a sale of Units purchased at differing prices
should consult a tax advisor as to the possible consequences of such ruling.
Should the IRS successfully contest the convention used by the Partnership
to amortize only a portion of the Section 743(b) adjustment (described under
"-Tax Treatment of Operations--Section 754 Election") attributable to an
Amortizable Section 197 Intangible after a sale of Units, a holder of Units
could realize more gain from the sale of its Units than if such convention had
been respected. In that case, the holder of Units may be unable to claim
additional deductions against income in prior years to which they are entitled
with the result of greater overall taxable income than appropriate. Counsel is
unable to opine as to the validity of the convention because of the lack of
specific regulatory authority for its use.
Treatment of Short Sales and Deemed Sales. Under the 1997 Act, a taxpayer
is treated as having sold an "appreciated" partnership interest (one in which
gain would be recognized if such interest were sold), if such taxpayer or
related persons entered into one or more positions with respect to the same or
substantially identical property which, for some period, substantially
eliminated both the risk of loss and opportunity for gain on the appreciated
financial position, (This rule would include selling "short against the box"
transactions). Holders of Units should consult with their tax advisers in the
event they are considering entering into a short sale transaction or any other
risk arbitrage transaction involving Units.
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A holder that loans Units to a "short seller" to cover a short sale of
Units will be considered as having transferred beneficial ownership of those
Units. Such a holder will, thus, no longer be a partner with respect to those
Units during the period of the loan. As a result, during this period:
* any Partnership income, gain, deductions, losses or credits with respect to
those Units would appear not to be reportable by the holders thereof;
* any cash distributions received by such holders with respect to those Units
would be fully taxable; and
* all of such distributions would appear to be treated as ordinary income.
The IRS could also contend that a loan of Units to a "short seller" constitutes
a taxable exchange. If the IRS were successful, a lending holder of Units may be
required to recognize gain or loss. Holders of Units desiring to assure their
status as partners should modify their brokerage account agreements, if any, to
prohibit their brokers from borrowing their Units.
Character of Gain or Loss. Generally, a Unitholder (other than a "dealer"
in Units) will recognize capital gain or loss on the sale or exchange of a Unit.
For transactions in tax years ending after December 31, 1997, the 1998 Act
reduced the holding period required for long-term capital gain treatment to 12
months in order to qualify a gain for an effective maximum tax rate of 20%.
Capital assets sold at a profit within 12 months of purchase would result in
short term capital gains taxed at ordinary income tax rates. The Partnership
must separately compute any gain or loss. These gains or losses will be taxed as
ordinary income or loss under Section 751 to the extent attributable to assets
giving rise to depreciation recapture or other "unrealized receivables" or to
"inventory" owned by the Partnership. The 1997 Act provides for a maximum 25%
tax rate for depreciation recapture attributable to "unrecaptured Section 1250
gain". For this purpose, Section 1250 gain includes any gain which would have
been treated as ordinary income if the property had been Section 1245 property.
This provision would effectively tax all depreciation on Section 1250 property
at a 25% rate. The term "unrealized receivables" also includes potential
recapture items other than depreciation recapture. Ordinary income attributable
to unrealized receivables, inventory and depreciation recapture may exceed net
taxable gain realized upon the sale of a Unit. In such a case, a Unitholder will
recognize income even if there is a net taxable loss realized on the sale of a
Unit. Any loss recognized on the sale of Units will generally be a capital loss.
Thus, a holder of Units may recognize both ordinary income and a capital loss
upon a disposition of Units. Net capital loss may offset no more than $3,000 of
ordinary income in the case of individuals and may only offset capital gains in
the case of a corporation.
Allocations between Transferors and Transferees. In general, the
Partnership will determine taxable income and losses annually and will prorate
these amounts on a monthly basis. The Partnership will subsequently apportion
these amounts among the holders in proportion to the number of Units owned by
them as of the opening of the first business day of the month to which the
income and losses relate even though Unitholders may dispose of their Units
during the month in question. The Partnership will allocate gain or loss
realized on a sale or other disposition of Partnership assets other than in the
ordinary course of business among the Unitholders of record as of the opening of
the NYSE on the first business day of the month in which such gain or loss is
recognized. As a result of this monthly allocation, a holder of Units
transferring Units in the open market may be allocated income, gain, loss,
deduction, and credit accrued after the transfer.
Existing Treasury Regulations may not permit the use of the monthly
conventions discussed above. Accordingly, Counsel is unable to opine on the
validity of the method of allocating income and deductions between a transferor
and a transferee of Units. If a court determines the Treasury Regulations do not
allow a monthly convention (or that it only applies to transfers of less than
all of the holder's Units), it could reallocate taxable income or losses of the
Partnership among the holders of Units. The General Partner is authorized to
review the Partnership's method of allocation between transferors and
transferees (as well as among partners whose interests otherwise vary during a
taxable period) to conform to a method permitted by future Treasury Regulations.
If a holder disposes of Units prior to the record date for a quarterly
distribution, the Partnership will allocate to such holder items of income and
gain attributable to such quarter for the months during which such Units were
owned. However, such holder will not receive the cash distribution for such
quarter.
Notification Requirements. A Unitholder who sells or exchanges Units must
notify the Partnership in writing of such sale or exchange within 30 days of the
sale or exchange and in any event by January 15 of the following year. The
Partnership must notify the IRS of the transaction and furnish certain
information to the transferor and transferee. However, these reporting
requirements do not apply to a sale by an individual who is a United States
citizen and who
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effects such sale through a broker. Additionally, a transferor and a transferee
of a Unit must furnish statements to the IRS with their income tax returns for
the taxable year in which the sale or exchange occurred, which set forth the
amount of the consideration received for such Unit that is allocated to goodwill
or going concern value of the Partnership. A Unitholder may have to pay
substantial penalties if it fails to satisfy such reporting obligations.
Constructive Termination. The Partnership and the Operating Partnerships
will be considered to have been terminated if there is a sale or exchange of 50%
or more of the total interests in partnership capital and profits within a
12-month period. A constructive termination results in the closing of a
partnership's taxable year for all partners and the "old" Partnership (before
termination) is deemed to have contributed its assets to the "new" Partnership
and distributed interests in the "new" Partnership to the holders of Units. The
"new" Partnership is then treated as a new partnership for tax purposes. A
constructive termination of the Partnership will also cause a Section 708
termination of the Operating Partnerships. Such a termination could also result
in penalties or loss of basis adjustments under Section 754, if the Partnership
cannot determine that the termination had occurred and, therefore, did not
timely file a tax return and make the appropriate Section 754 elections for the
"new" Partnership.
In the case of a holder of Units reporting its taxable income on a fiscal
year other than a calendar year, the closing of a tax year of the Partnership
may result in more than 12 months' taxable income or loss of the Partnership
being includable in its taxable income for the year of termination. The
Partnership must make new tax elections, including a new election under Section
754, subsequent to the constructive termination. A constructive termination
would also result in a deferral of the Partnership's deductions for depreciation
and amortization. In addition, a termination might either accelerate the
application of or subject the Partnership to any tax legislation enacted with
effective dates after the date of the termination.
Entity-Level Collections. If applicable law so requires, the Partnership
must pay any federal, state or local income tax on behalf of any holder of Units
or the General Partner or former holders of Units. In such a case, the General
Partner may pay such taxes from Partnership funds. The Partnership will treat
such payments, if made, as current distributions of cash. The General Partner
may amend the Partnership Agreement to maintain uniformity of intrinsic tax
characteristics of Units and to adjust subsequent distributions so that after
giving effect to such deemed distributions, the priority and characterization of
distributions otherwise applicable under the Partnership Agreement is maintained
as nearly as is practicable. Payments by the Partnership as described above
could give rise to an overpayment of tax on behalf of an individual partner in
which event, the partner could file a claim for credit or refund.
Uniformity of Units. The Partnership cannot trace the chain of ownership of
any particular Unit. Therefore, it is unable to track the economic and tax
characteristics related to particular Units from owner to owner. Consequently,
the Partnership needs to maintain uniformity of the economic and tax
characteristics of the Units to a purchaser of Units. In order to achieve
uniformity, compliance with a number of federal income tax requirements, both
statutory and regulatory, could be substantially diminished. For example, a lack
of uniformity can result from a literal application of Proposed Treasury
Regulation Section 1.743-1(j)(4)(B) and Treasury Regulation Section
1.167(c)-1(a)(6) and from the effect of the Ceiling Rule on the Partnership's
ability to make allocations to eliminate Book-Tax Disparities attributable to
Contributed Properties and partnership property that the Partnership has
revalued and reflected in the partners' capital accounts. If the IRS
successfully challenged the conventions that are intended to achieve uniformity,
the tax consequences of holding particular Units could differ. Any such
non-uniformity could have a negative impact on the value of Units.
The Partnership intends to depreciate the portion of a Section 743(b)
adjustment attributable to unrealized appreciation in the value of Contributed
Property or Adjusted Property (to the extent of any unamortized Book-Tax
Disparity) using a rate of depreciation derived from the depreciation method and
useful life applied to the Common Basis of such property, despite its
inconsistency with Proposed Treasury Regulation Section 1.743-1(j)(4)(B) and
Treasury Regulation Section 1.167(c)-1(a)(6). See "Tax Treatment of
Operations-Section 754 Election." If the Partnership determines that it cannot
reasonably take this position, the Partnership will adopt a different
depreciation convention. For example, all purchasers acquiring Units in the same
month could receive depreciation, whether attributable to Common Basis or
Section 743(b) basis, based upon the same applicable rate as if they had
purchased a direct interest in the Partnership's property. If the Partnership
adopts such an aggregate approach, it may result in lower annual depreciation
deductions to certain holders of Units and risk the loss of depreciation
deductions not taken in the year that such deductions are otherwise allowable.
The Partnership will not adopt this convention if the Partnership determines
that the loss of depreciation deductions would have a material adverse effect on
a holder of Units. If the Partnership chooses not to utilize this aggregate
method, the Partnership may use any other reasonable depreciation convention to
preserve the uniformity of the intrinsic tax characteristics of Units that would
not have a material adverse effect on the holders of Units. The IRS may
challenge any method of depreciating the Section 743(b) adjustment described in
this paragraph. If such a challenge were sustained, the uniformity of Units
might be affected.
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The Partnership will specially allocate items of income and deduction,
including the effects of any unamortizable intangibles under the Proposed
Treasury Regulation Section 1.197-2(g)(1), in a manner that is intended to
preserve the uniformity of intrinsic tax characteristics among all Units,
despite the application of the Ceiling Rule to Contributed Properties and
Adjusted Properties. The Partnership will make the special allocations solely
for federal income tax purposes. See "-Tax Consequences of Ownership of Units"
and "-Allocations of Income, Gain, Loss and Deduction."
Tax-Exempt Organizations and Certain Other Investors. Ownership of Units by
certain tax-exempt entities, regulated investment companies and foreign persons
raises issues unique to such persons and, as described below, may have
substantial adverse tax consequences.
Employee benefit plans and most other organizations exempt from federal
income tax (including IRAs and other retirement plans) are subject to federal
income tax on unrelated business taxable income in excess of $1,000. Each such
entity must file a tax return for each year in which it has more than $1,000 of
gross income included in computing unrelated business taxable income.
Substantially all of the taxable income derived by such an organization from the
ownership of a Unit will be unrelated business taxable income and thus will be
taxable to such a holder of Units at the maximum corporate tax rate. Also, to
the extent that the Partnership holds debt financed property, the disposition of
a Unit could result in unrelated business taxable income.
A regulated investment company is required to derive 90% or more of its
gross income from interest, dividends, gains from the sale of stocks or
securities or foreign currency or certain related sources. The Partnership does
not anticipate that any significant amount of its gross income will include
those categories of income.
Non-resident aliens and foreign corporations, trusts or estates which
acquire Units will be considered to be engaged in business in the United States
on account of ownership of Units. As a result, they file federal tax returns for
their distributive shares of Partnership income, gain, loss, deduction or credit
and pay federal income tax at regular tax rates on such income. Generally, a
partnership must pay a withholding tax on the portion of the partnership income
which is effectively connected with the conduct of a United States trade or
business and which is allocable to the foreign partners, regardless of whether
the Partnership has made any actual distributions to such partners. However,
under procedural guidelines applicable to publicly traded partnerships, the
Partnership has elected instead to withhold (or a broker holding Units in street
name will withhold) at the rate of 39.6% on actual cash distributions made
quarterly to foreign holders of Units. Each foreign holder of Units must obtain
a taxpayer identification number from the IRS and submit that number to the
Transfer Agent on a Form W-8 in order to obtain credit for the taxes withheld.
Subsequent adoption of Treasury Regulations or the issuance of other
administrative pronouncements may require the Partnership to change these
procedures.
Because a foreign corporation which owns Units will be treated as engaged
in a United States trade or business, such a holder may have to pay a United
States branch profits tax at a rate of 30%, on its allocable share of the
Partnership's earnings and profits (as adjusted for changes in the foreign
corporation's "U.S. net equity") that are effectively connected with the conduct
of a United States trade or business. Such a tax may be reduced or eliminated by
an income tax treaty between the United States and the country where the foreign
corporate holder of Units is a "qualified resident." This tax is in addition to
regular federal income tax.
An interest in the Partnership may also constitute a "United States Real
Property Interest" ("USRPI") under Section 897(c) of the Code. For this purpose,
Treasury Regulation Section 1.897-1(c)(2)(iv) treats a publicly traded
partnership the same as a corporation. Assuming that the Units continue to be
regularly traded on an established securities market, a foreign holder of Units
who sells or otherwise disposes of a Unit and who has always held 5% or less in
value of the Units, including Units held by certain related individuals and
entities during the five-year period ending on the date of the disposition will
qualify for an exclusion from USRPI treatment and will not be subject to federal
income tax on gain realized on the disposition that is attributable to real
property held by the Partnership. However, such holder may have to pay federal
income tax on any gain realized on the disposition that is treated as
effectively connected with a United States trade or business of the foreign
holder of Units (regardless of a foreign Unitholder's percentage interest in the
Partnership or whether Units are regularly traded). A foreign holder of Units
will be subject to federal income tax on gain attributable to real property held
by the Partnership if the holder held more than 5% in value of the Units,
including Units held by certain related individuals and entities, during the
five-year period ending on the date of the disposition or if the Units were not
regularly traded on an established securities market at the time of the
disposition.
A foreign holder of Units will also be subject to withholding under Section
1445 of the Code if such holder owns, including Units held by certain related
individuals and entities, more than a 5% interest in the Partnership. Under
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Section 1445 a transferee of a USRPI is required to deduct and withhold a tax
equal to 10% of the amount realized on the disposition of a USRPI if the
transferor is a foreign person.
Administrative Matters
Information Returns and Audit Procedures. The Partnership intends to
furnish to each holder of Units within 90 days after the close of each
Partnership taxable year, certain tax information, including a Schedule K-1. The
Schedule K-1 will list each holder's allocable share of the Partnership's
income, gain, loss, deduction and credit. In preparing this information, which
counsel will generally not review, the General Partner will use various
accounting and reporting conventions to determine the respective Unitholder's
allocable share of income, gain, loss, deduction and credits. Some of these
conventions were discussed above. There is no assurance that any such
conventions will yield a result which conforms to the requirements of the Code,
the Regulations or administrative interpretations of the IRS. The General
Partner cannot assure a current or prospective holder of Units that the IRS will
not successfully contend in court that such accounting and reporting conventions
are impermissible.
The IRS may in the future audit the Partnership which could result in
adjustments to the Partnership's tax returns. A holder of Units owning less than
a 1% profits interest in the Partnership has limited rights to participate in
the income tax audit process. Further, any adjustments in the Partnership's
returns will lead to adjustments in Unitholder's returns and may lead to audits
of their returns and adjustments of items unrelated to the Partnership. Each
Unitholder would bear the cost of any expenses incurred in connection with an
examination of such holder's personal tax return.
Partnerships generally are treated as separate entities for purposes of
federal tax audits, judicial review of administrative adjustments by the IRS and
tax settlement proceedings. The tax treatment of partnership items of income,
gain, loss, deduction and credit are determined at the partnership level in a
unified partnership proceeding rather than in separate proceedings with the
partners. Under the 1997 Act, any penalty relating to an adjustment to a
partnership item is determined at the partnership level. The Code provides for
one partner to be designated as the "Tax Matters Partner" for these purposes.
The Partnership Agreement appoints the General Partner as the Tax Matters
Partner.
The Tax Matters Partner will make certain elections on behalf of the
Partnership and holders of Units and can extend the statute of limitations for
assessment of tax deficiencies against holders of Units with respect to the
Partnership items. The Tax Matters Partner may bind a holder of Units with less
than a 1% profits interest in the Partnership to a settlement with the IRS,
unless such holder elects, by filing a statement with the IRS, not to give such
authority to the Tax Matters Partner. The Tax Matters Partner may seek judicial
review (to which all the holders of Units are bound) of a final partnership
administrative adjustment. If the Tax Matters Partner fails to seek judicial
review, any holder having at least a 1% interest in the profits of the
Partnership or holders of Units having in the aggregate at least a 5% profits
interest may seek such a review. However, only one action for judicial review
will go forward, and each holder of Units with an interest in the outcome may
participate.
A holder of Units must file a statement with the IRS identifying the
treatment of any item on its federal income tax return that is inconsistent with
the treatment of the item on the Partnership's return to avoid the requirement
that all items be treated consistently on both returns. A holder of Units may
have to pay substantial penalties if it intentionally or negligently disregards
the consistency requirement.
Electing Large Partnerships. The 1997 Act provides that certain
partnerships with at least 100 partners may elect to be treated as an electing
large partnership ("ELP") for tax years ending after December 31, 1997. If
Congress makes further revisions to the law, it is possible that at some future
date the Partnership will make this election to be taxed as an electing large
partnership. However, based on current law, the Partnership does not intend to
make such an election for 1998 or any subsequent year.
Under the reporting provisions of the 1997 Act, each partner of an ELP will
take into account separately such partner's share of several designated items,
determined at the partnership level. The ELP procedures provide that any tax
adjustments generally would flow through to the holders of Units for the year in
which the adjustment takes effect, and the adjustments would not affect
prior-year returns of any holder, except in the case of changes to any holder's
distributive share. In lieu of passing through an adjustment to the holders of
Units, the Partnership may elect to pay an imputed underpayment. The
Partnership, and not the holders of Units, would be liable for any interest and
penalties resulting from a tax adjustment.
Nominee Reporting. Persons who hold an interest in the Partnership as a
nominee for another person are required to furnish to the Partnership:
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* the name, address and taxpayer identification number of the beneficial
owners and the nominee;
* whether the beneficial owner is (1) a person that is not a United States
person, (2) a foreign government, an international organization or any
wholly-owned agency or instrumentality of either of the foregoing or (3) a
tax-exempt entity;
* the amount and description of Units held, acquired or transferred for the
beneficial owners; and
* certain information including the dates of acquisitions and transfers,
means of acquisitions and transfers, and acquisition cost for purchases, as
well as the amount of net proceeds from sales.
Brokers and financial institutions are required to furnish additional
information, including whether they are a United States person and certain
information on Units they acquire, hold or transfer for their own account. A
Unitholder may have to pay a penalty of $50 per failure (up to a maximum of
$100,000 per calendar year) for failure to report such information to the
Partnership. The nominee must supply the beneficial owner of the Units with the
information furnished to the Partnership.
Registration as a Tax Shelter. The Code requires that "tax shelters" be
registered with the Secretary of the Treasury. The Treasury Regulations
interpreting the tax shelter registration provisions of the Code are extremely
broad. The Partnership may not be subject to the registration requirement on the
basis that (i) it does not constitute a tax shelter, or (ii) it constitutes a
projected income investment exempt from registration. However, the General
Partner registered the Partnership as a tax shelter with the IRS when it was
originally formed in the absence of assurance that the Partnership would not be
subject to tax shelter registration and in light of the substantial penalties
which might be imposed if registration was required and not undertaken. The
Partnership's tax shelter registration number with the IRS is 9228900496. The
Partnership will provide this number to every Unitholder with year-end tax
information. Issuance of the registration number does not indicate that an
investment in the Partnership or the claimed tax benefits have been reviewed,
examined or approved by the IRS. The Partnership must furnish the registration
number to the holder of Units, and a holder of Units who sells or otherwise
transfers a Unit in a subsequent transaction must furnish the registration
number to the transferee. The penalty for failure of the transferor of a Unit to
furnish such registration number to the transferee is $100 for each such
failure. The holder of Units must disclose the tax shelter registration number
of the Partnership on any tax return on which any deduction, loss, credit or
other benefit generated by the Partnership is claimed or income of the
Partnership is included. Form 8271 is used to disclose tax shelter registration
numbers. A holder of Units who fails to disclose the tax shelter registration
number on such holder's tax return, without reasonable cause for such failure,
may have to pay a $250 penalty for each such failure. Any penalties discussed in
this prospectus are not deductible for federal income tax purposes.
Accuracy-Related Penalties. An additional tax equal to 20% of the amount of
any portion of an underpayment of tax which is attributable to one or more of
certain listed causes, including substantial understatements of income tax and
substantial valuation misstatements, is imposed by the Code. A Unitholder will
not have to pay a penalty with respect to any portion of an underpayment if it
is shown that there was a reasonable cause for such portion and that the
taxpayer acted in good faith with respect to such portion.
A substantial understatement of income tax in any taxable year exists if
the amount of the understatement exceeds the greater of 10% of the tax required
to be shown on the return for the taxable year or $5,000 ($10,000 for most
corporations). The amount of any understatement subject to penalty generally is
reduced if any portion:
* is attributable to an item with respect to which there is, or was,
"substantial authority" for the position taken on the return; or
* is attributable to an item for which there was a reasonable basis for the
tax treatment of the items and as to which the pertinent facts are
disclosed on the return.
Certain more stringent rules apply to "tax shelters," which term includes a
partnership if a significant purpose of such entity is the avoidance or evasion
of income tax. This term does not appear to include the Partnership. If any
Partnership item of income, gain, loss, deduction or credit included in the
distributive shares of Unitholders might result in such an "understatement" of
income for which no "substantial authority" exists, the Partnership must
disclose the pertinent facts on its return. In addition, the Partnership will
make a reasonable effort to furnish sufficient information for holders of Units
to make adequate disclosure on their returns to avoid liability for this
penalty.
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A substantial valuation misstatement exists if the value of any property
(or the adjusted basis of any property) claimed on a tax return is 200% or more
of the amount determined to be the correct amount of such valuation or adjusted
basis. No penalty is imposed unless the portion of the underpayment attributable
to a substantial valuation misstatement is in excess of $5,000 ($10,000 for most
corporations). If the valuation claimed on a return is 400% or more than the
correct valuation, the penalty imposed increases to 40%.
State, Local and Other Taxes
Holders of Units may have to pay other taxes, such as:
* state and local taxes;
* unincorporated business taxes;
* estate or inheritance taxes; or
* intangible taxes
in the various jurisdictions in which the Partnership does business or owns
property. Unitholders should consider state and local tax consequences of an
investment in the Partnership. On November 6, 1998, the Partnership owned an
interest in the Operating Partnerships, which owned property or conducted
business in:
* Arizona;
* California;
* Illinois;
* Indiana;
* Iowa;
* Kansas;
* Kentucky;
* Louisiana;
* Missouri;
* Nebraska;
* Nevada;
* New Mexico;
* Oregon;
* Texas; and
* Wyoming.
A holder of Units will likely have to file state income tax returns and/or pay
taxes in most of these states and may be subject to penalties for failure to do
so. Some of the states may require the Partnership to withhold a percentage of
the distribution to a holder of Units that is not a resident of the state. Such
amounts withheld, if any, which may be greater or less than a particular
holder's income tax liability to the state, generally do not relieve the
non-resident Unitholder from the obligation to file a state income tax return.
Amounts withheld, if any, will be treated as if distributed to holders of Units
for purposes of determining the amounts distributed by the Partnership. Based on
current law and its estimate of future partnership operations, the General
Partner does not anticipate withholding any material amount. In addition, an
obligation to file tax returns or to pay taxes may arise in other states.
The Partnership also owns, directly or indirectly, interests in several
corporations which will be subject to state income tax on their income.
Each prospective holder of Units should investigate the legal and tax
consequences, under the laws of pertinent states or localities, of such
investment in the Partnership. Further, each holder of Units must file all
required state and local, as well as federal tax returns. Counsel has not
rendered an opinion on the state and local tax consequences of an investment in
the Partnership.
31
<PAGE>
USE OF PROCEEDS
We will use the net proceeds from the sale of the Units and Debt Securities
for general business purposes, including debt repayment, future acquisitions,
capital expenditures and working capital. We may change the potential uses of
the net proceeds in a prospectus supplement.
PLAN OF DISTRIBUTION
We may sell the Units or Debt Securities directly, through agents, or to
or through underwriters or dealers (possibly including our affiliates). Read the
prospectus supplement to find the terms of the Unit or Debt Securities offering,
including:
* the names of any underwriters, dealers or agents;
* the offering price;
* underwriting discounts;
* sales agents' commissions;
* other forms of underwriter or agent compensation;
* discounts, concessions or commissions that underwriters may pass on to
other dealers;
* any exchange on which the Units or Debt Securities are listed.
We may change the offering price, underwriter discounts or concessions, or
the price to dealers when necessary. Discounts or commissions received by
underwriters or agents and any profits on the resale of Units or Debt Securities
by them may constitute underwriting discounts and commissions under the
Securities Act of 1933.
Unless we state otherwise in the prospectus supplement, underwriters will
need to meet certain requirements before purchasing Units or Debt Securities.
Underwriters may only purchase all of the Units or Debt Securities. Agents will
act on a "best efforts" basis during their appointment. We will also state the
net proceeds from the sale in the prospectus supplement.
Any brokers or dealers that participate in the distribution of the Units
or Debt Securities may be "underwriters" within the meaning of the Securities
Act for such sales. Profits, commissions, discounts or concessions received by
any such broker or dealer may be underwriting discounts and commissions under
the Securities Act.
When necessary, we may fix Unit or Debt Securities distribution using
changeable, fixed prices, market prices at the time of sale, prices related to
market prices, or negotiated prices.
We may, through agreements, indemnify underwriters, dealers or agents who
participate in the distribution of the Units or Debt Securities against certain
liabilities including liabilities under the Securities Act. We may also provide
funds for payments such underwriters, dealers or agents may be required to make.
Underwriters, dealers and agents, and their affiliates may transact with us and
our affiliates in the ordinary course of their businesses.
LEGAL MATTERS
Morrison & Hecker L.L.P., our counsel, will issue an opinion for us about
the legality of the Units and Debt Securities and the material federal income
tax considerations regarding the Units. Any underwriter will be advised about
other issues relating to any offering by their own legal counsel.
EXPERTS
The consolidated financial statements as of and for the year ended
December 31, 1997 of the Partnership and its subsidiaries and the financial
statements as of and for the year ended December 31, 1997 of Mont Belvieu
Associates incorporated in this Prospectus by reference to the Partnership's
Annual Report on Form 10-K for the year ended December 31, 1997, have been so
incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
The consolidated financial statements of the Partnership and its
subsidiaries and the financial statements of Mont Belvieu Associates as of
December 31, 1996 and for the two years ended December 31, 1996 included in the
32
<PAGE>
Partnership's Annual Report on Form 10-K for the year ended December 31, 1997
and incorporated by reference in this Prospectus and elsewhere in the
Registration Statement have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their reports with respect thereto, and are
incorporated herein in reliance upon the authority of said firm as experts in
accounting and auditing in giving said reports.
The consolidated financial statements of Santa Fe as of December 31, 1997
and 1996 and for each of the three years in the period ended December 31, 1997
incorporated in this Prospectus by reference to the Partnership's Current Report
on Form 8-K, dated March 5, 1998, as amended, have been so incorporated in
reliance on the report of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting.
The balance sheet of the General Partner as of December 31, 1997,
incorporated by reference in the Registration Statement of which this Prospectus
is a part, has been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
33
<PAGE>
- ----------------------------------------------
-----------------------
TABLE OF CONTENTS
Page
----
Where You Can Find More Information 2
Forward Looking Statements 2
Risk Factors 3
The Partnership 3
Ratio Of Earnings To Fixed Charges 4
Description Of Debt Securities 5
Description of Common Units 14
Material Federal Income Tax Considerations 15
Use Of Proceeds 32
Plan Of Distribution 32
Legal Matters 32
Experts 32
- ----------------------------------------------
----------------------------------------------
$600,000,000
Common Units
Debt Securities
Kinder Morgan Energy Partners L.P.
-------------------------
PROSPECTUS
_______ ___, 1998
-------------------------
------------------------------------------
<PAGE>
II-8
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
We will incur and pay the following costs of this transaction. All amounts
other than the SEC registration fee are estimated.
Securities and Exchange Commission registration fee.. $172,200
Printing............................................. $ 20,000
Legal fees and expenses ............................. $ 40,000
Accounting fees and expenses ........................ $ 30,000
Miscellaneous........................................ $ 15,000
Rating Agencies...................................... $210,000
Trustee's Fees & Expenses............................ $ 15,000
Total............................................ $502,200
Item 15. Indemnification of Directors and Officers
The Partnership Agreement provides that the Partnership will indemnify any
person who is or was an officer or director of the General Partner or any
departing partner, to the fullest extent permitted by law. In addition, the
Partnership may indemnify, to the extent deemed advisable by the General Partner
and to the fullest extent permitted by law, any person who is or was serving at
the request of the General Partner or any affiliate of the General Partner or
any departing partner as an officer or director of the General Partner, a
departing partner or any of their Affiliates (as defined in the Partnership
Agreement) ("Indemnitees") from and against any and all losses, claims, damages,
liabilities (joint or several), expenses (including, without limitation, legal
fees and expenses), judgments, fines, settlements and other amounts arising from
any and all claims, demands, actions, suits or proceedings, whether civil,
criminal, administrative or investigative, in which any Indemnitee may be
involved, or is threatened to be involved, as a party or otherwise, by reason of
its status as an officer or director or a person serving at the request of the
Partnership in another entity in a similar capacity, provided that in each case
the Indemnitee acted in good faith and in a manner which such Indemnitee
believed to be in or not opposed to the best interests of the Partnership and,
with respect to any criminal proceeding, had no reasonable cause to believe its
conduct was unlawful. Any indemnification under these provisions will be only
out of the assets of the Partnership and the General Partner shall not be
personally liable for, or have any obligation to contribute or loan funds or
assets to the Partnership to enable it to effectuate, such indemnification. The
Partnership is authorized to purchase (or to reimburse the General Partner or
its affiliates for the cost of) insurance against liabilities asserted against
and expenses incurred by such person to indemnify such person against such
liabilities under the provisions described above.
Article XII(c) of the Certificate of Incorporation of the General Partner
(the "Corporation" therein) contains the following provisions relating to
indemnification of directors and officers:
(c) Each director and each officer of the corporation (and such holder's
heirs, executors and administrators) shall be indemnified by the
corporation against expenses reasonably incurred by him in connection with
any claim made against him or any action, suit or proceeding to which he
may be made party, by reason of such holder being or having been a
director or officer of the corporation (whether or not he continues to be
a director or officer of the corporation at the time of incurring such
expenses), except in cases where such action, suit or proceeding shall be
settled prior to adjudication by payment of all or a substantial portion
of the amount claimed, and except in cases in which he shall be adjudged
in such action, suit or proceeding to be liable or to have been derelict
in the performance of such holder's duty as such director or officer. Such
right of indemnification shall not be exclusive of other rights to which
he may be entitled as a matter of law.
II-1
<PAGE>
Richard D. Kinder, the Chairman of the Board of Directors and Chief
Executive Officer of the General Partner, and William V. Morgan, a Director and
Vice Chairman of the General Partner, are also officers and directors of Kinder,
Morgan, Inc. ("KMI") and are entitled to similar indemnification from KMI
pursuant to KMI's certificate of incorporation and bylaws.
Item 16. Exhibits
*1.1 - Form of Underwriting Agreement (for Units)
*1.2 - Form of Underwriting Agreement (for Debt Securities)
**3.1 - Second Amendment to Amended and Restated Agreement of Limited
Partnership dated as of February 14, 1997 (Exhibit 3.1 to the
Partnership's Registration Statement on Form S-4 (File No.
333-46709)).
**4.1 - Specimen Certificate representing Common Units (Exhibit 4.1 to the
Partnership's Registration Statement on Form S-4 (File No. 333-46709).
*4.2 - Form of Senior Indenture
*4.3 - Form of Subordinated Indenture
****5 - Opinion of Morrison & Hecker L.L.P. as to the legality of the
securities registered hereby
*8 - Opinion of Morrison & Hecker L.L.P. as to tax matters
*12 - Statement of Computation of ratio of earnings to fixed charges
*23.1 - Consent of Morrison & Hecker L.L.P. (included in Exhibits 5 and 8)
*23.2 - Consent of Arthur Andersen LLP
*23.3 - Consent of PriceWaterhouseCoopers LLP
*23.4 - Consent of PriceWaterhouseCoopers LLP
*24.1 - Power of Attorney (included on signature page)
***26.1 - Form T-1 Statement of Eligibility and Qualification
**99.1 - Balance Sheet of Kinder Morgan G.P., Inc., as of December 31, 1997
(Exhibit 99.1 to the Partnership's Registration Statement on Form S-4
(File No. 333-46709).
- ------------------------
* Filed herewith.
** Incorporated by reference.
*** To be filed with a Current Report on Form 8-K or a Post-Effective
Amendment to Registration Statement.
**** To be filed by amendment.
Item 17. Undertakings
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "Act"), may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is therefore unenforceable.
II-2
<PAGE>
In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
i) To include any prospectus required by section 10(a)(3) of
the Act;
ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement;
iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
Provided, however, that paragraphs (1)(i) and 1(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act")
that are incorporated by reference into the Registration Statement;
(2) That, for the purpose of determining any liability under the Act, each
such post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the Common Units which remain unsold at the termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Act, each filing of the Registrant's annual
report pursuant to Section 13(a) or Section 15(d) of the Exchange Act that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, each
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this to
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Houston, State of Texas, on November 6, 1998.
KINDER MORGAN ENERGY PARTNERS, L.P.
(A Delaware Limited Partnership)
By: KINDER MORGAN G.P., INC.
as General Partner
By: /s/ William V. Morgan
-------------------------------------
William V. Morgan,
Vice Chairman
KINDER MORGAN OPERATING L.P. "A"
(A Delaware Limited Partnership)
By: KINDER MORGAN G.P., INC.
as General Partner
By: /s/ William V. Morgan
-------------------------------------
William V. Morgan,
Vice Chairman
KINDER MORGAN OPERATING L.P. "B"
(A Delaware Limited Partnership)
By: KINDER MORGAN G.P., INC.
as General Partner
By: /s/ William V. Morgan
-------------------------------------
William V. Morgan,
Vice Chairman
KINDER MORGAN OPERATING L.P. "C"
(A Delaware Limited Partnership)
By: KINDER MORGAN G.P., INC.
as General Partner
By: /s/ William V. Morgan
-------------------------------------
William V. Morgan,
Vice Chairman
II-4
<PAGE>
KINDER MORGAN OPERATING L.P. "D"
(A Delaware Limited Partnership)
By: KINDER MORGAN G.P., INC.
as General Partner
By: /s/ William V. Morgan
-------------------------------------
William V. Morgan,
Vice Chairman
KINDER MORGAN ENERGY NATURAL GAS LIQUIDS
CORPORATION
(A Delaware Corporation)
By: /s/ William V. Morgan
-------------------------------------
William V. Morgan,
Vice Chairman
KINDER MORGAN CO2, LLC
(A Delaware Limited Liability Company)
By: KINDER MORGAN OPERATING L.P. "A"
as sole Member
By: KINDER MORGAN G.P., INC.
as General Partner
By: /s/ William V. Morgan
-------------------------------------
William V. Morgan,
Vice Chairman
KINDER MORGAN BULK TERMINALS, INC.
(A Louisiana Corporation)
By: /s/ William V. Morgan
-------------------------------------
William V. Morgan,
Vice Chairman
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Richard D. Kinder, Thomas B. King and William V.
Morgan, his true and lawful attorney in fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign and file (i) any or all amendments (including
post-effective amendments) to this Registration Statement and any and all other
documents in connection therewith, with all exhibits thereto, and (ii) a
Registration statement, and any and all amendments thereto, relating to the
offering covered hereby filed pursuant to Rule 462(b) under the Securities Act,
with the Securities and Exchange Commission granting unto said attorney-in-fact
and agent full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully to
all intents and purposes as might or could be done in person, hereby ratifying
and confirming all that said attorney in fact and agent or his substitute or
substitutes, may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
II-5
<PAGE>
KINDER MORGAN ENERGY PARTNERS G.P., Inc.
(General Partner to Kinder Morgan Operating L.P. "A", General Partner
to Kinder Morgan Operating L.P. "B", General Partner to Kinder Morgan
Operating L.P. "C", General Partner to Kinder Morgan Operating L.P.
"D", and Kinder Morgan Operating L.P. "A" is the sole Member of Kinder
Morgan CO2, LLC.)
Name Title Date
---- ----- ----
/s/ Richard D. Kinder Chairman of the Board and November 6, 1998
Richard D. Kinder Chief Executive Officer of
Kinder Morgan G.P., Inc.
/s/ William V. Morgan Director and Vice Chairman November 6, 1998
William V. Morgan of Kinder Morgan G.P., Inc.
/s/ Alan L. Atterbury Director of Kinder Morgan November 6. 1998
Alan L. Atterbury G.P., Inc.
/s/ Edward O. Gaylord Director of Kinder Morgan November 6, 1998
Edward O. Gaylord G.P., Inc.
/s/ Thomas B. King Director, President and November 6, 1998
Thomas B. King Chief Operating Officer of
Kinder Morgan G.P., Inc.
/s/ David G. Dehaemers, Jr. Vice President, Chief November 6, 1998
David G. Dehaemers,Jr. Financial Officer and Chief
Accounting Officer of
Kinder Morgan G.P., Inc.
KINDER MORGAN NATURAL GAS LIQUIDS CORPORATION
Name Title Date
---- ----- ----
/s/ Richard D. Kinder Director and Chief November 6, 1998
Richard D. Kinder Executive Officer of Kinder
Morgan Natural Gas Liquids
Corporation.
/s/ William V. Morgan Director of Kinder Morgan November 6, 1998
William V. Morgan Natural Gas Liquids
Corporation.
/s/ Thomas B. King Director of Kinder Morgan November 6, 1998
Thomas B. King Natural Gas Liquids
Corporation.
/s/ David G. Dehaemers, Jr. Chief Financial Officer of November 6, 1998
David G. Dehaemers, Jr. Kinder Morgan Natural Gas
Liquids Corporation.
II-6
<PAGE>
KINDER MORGAN BULK TERMINALS, INC.
Name Title Date
---- ----- ----
/s/ Richard D. Kinder Director of Kinder Morgan November 6, 1998
Richard D. Kinder Bulk Terminals, Inc.
/s/ William V. Morgan Director of Kinder Morgan November 6, 1998
William V. Morgan Bulk Terminals, Inc.
/s/ Thomas B. Stanley President and (chief November 6, 1998
Thomas B. Stanley executive officer) of
Kinder Morgan Bulk
Terminals, Inc.
/s/ David G. Dehaemers, Jr. Treasurer, (principle November 6, 1998
David G. Dehaemers, Jr. financial officer, and
principle accounting
officer) of Kinder Morgan
Bulk Terminals, Inc.
II-7
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number
-------
*1.1 - Form of Underwriting Agreement (for Units)
*1.2 - Form of Underwriting Agreement (for Debt Securities)
**3.1 - Second Amendment to Amended and Restated Agreement of Limited
Partnership dated as of February 14, 1997 (Exhibit 3.1 to the
Partnership's Registration Statement on Form S-4 (File No.
333-46709)).
**4.1 - Specimen Certificate representing Common Units (Exhibit 4.1 to the
Partnership's Registration Statement on Form S-4 (File No. 333-46709).
*4.2 - Form of Senior Indenture
*4.3 - Form of Subordinated Indenture
****5 - Opinion of Morrison & Hecker L.L.P. as to the legality of the
securities registered hereby
*8 - Opinion of Morrison & Hecker L.L.P. as to tax matters
*12 - Statement of Computation of ratio of earnings to fixed charges
*23.1 - Consent of Morrison & Hecker L.L.P. (included in Exhibits 5 and 8)
*23.2 - Consent of Arthur Andersen LLP
*23.3 - Consent of PriceWaterhouseCoopers LLP
*23.4 - Consent of PriceWaterhouseCoopers LLP
*24.1 - Power of Attorney (included on signature page)
***26.1 - Form T-1 Statement of Eligibility and Qualification
**99.1 - Balance Sheet of Kinder Morgan G.P., Inc., as of December 31, 1997
(Exhibit 99.1 to the Partnership's Registration Statement on Form S-4
(File No. 333-46709).
- --------------------------
* Filed herewith.
** Incorporated by reference.
*** To be filed with a Current Report on Form 8-K or a Post-Effective
Amendment to Registration Statement.
**** To be filed by amendment.
II-8
Kinder Morgan Energy Partners, L.P.
Common Units Representing Limited Partner Interests
Underwriting Agreement
_________, 1998
Goldman, Sachs & Co.,
[Name(s) of Co-Representative(s),]
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 common units (the "Common Units")
representing limited partner interests in the Partnership specified in Schedule
II to such Pricing Agreement (with respect to such Pricing Agreement, the "Firm
Units"). If specified in such Pricing Agreement, the Partnership may grant to
the Underwriters the right to purchase at their election an additional number of
units, specified in such Pricing Agreement as provided in Section 3 hereof (the
"Optional Units"). The Firm Units and the Optional Units, if any, which the
Underwriters elect to purchase pursuant to Section 3 hereof are collectively
called the "Designated Units."
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 Corporation, a Louisiana corporation ("KMBT Corp"), Kinder
Morgan Natural Gas Liquids Corporation, a Delaware corporation ("KMNGL Corp."),
Kinder Morgan CO2, L.L.C., 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 Units shall
be as specified in the Pricing Agreement relating thereto.
<PAGE>
1. Particular sales of Designated Units may be made from time to time to
the Underwriters of such Common Units, for whom the firms designated as
representatives of the Underwriters of such Common Units 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 Common Units or as an obligation of any of the
Underwriters to purchase the Common Units. The obligation of the Partnership to
issue and sell any of the Common Units and the obligation of any of the
Underwriters to purchase any of the Common Units shall be evidenced by the
Pricing Agreement with respect to the Designated Units specified therein. Each
Pricing Agreement shall specify the aggregate number of Firm Units, the maximum
number of Optional Units, if any, the initial public offering price of such Firm
and Optional Units or the manner of determining such price, the purchase price
to the Underwriters of such Designated Units, the names of the Underwriters of
such Designated Units, the names of the Representatives of such Underwriters and
the principal amount of such Designated Units to be purchased by each
Underwriter and shall set forth the date, time and manner of delivery of such
Firm and Optional Units and payment therefor. The Pricing Agreement shall also
specify (to the extent not set forth in the registration statement and
prospectus with respect thereto) the terms of such Designated Units. 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. 33-....) (the
"Initial Registration Statement") in respect of the Common Units 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 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
2
<PAGE>
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,
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 Common Units, 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 Units 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 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 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 Units
through Goldman, Sachs & Co. expressly for use in the Prospectus as amended or
supplemented relating to such Common Units;
(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 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
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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 Units through Goldman, Sachs &
Co. expressly for use in the Prospectus as amended or supplemented relating to
such Common Units;
(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 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;
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(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 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. KM-LLC is a limited liability company duly formed, validly
existing and in good standing under the laws of the State of Delaware. KMBT
Corp. is a corporation duly organized, validly existing and in good standing
under the laws of the State of Louisiana. Each of the General Partner, KMNGL
Corp., KMBT Corp. 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
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of the General Partner, KMNGL Corp., KMBT Corp. 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 Corp. and the limited liability agreement
of KM-LLC and all amendments to such documents have been delivered to the
Underwriter;
(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 or the limited partners of the Partnership to any
material liability or disability);
(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 are those
listed on Schedule III hereto;
(l) Kinder Morgan, Inc., a Delaware corporation ("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) Richard D. Kinder, Morgan Associates, Inc. ("MAI") and First
Union Corporation ("First Union") are the sole stockholders of KMI. Richard D.
Kinder owns 71.04% of the Class A voting stock of KMI. MAI owns 27.65% of the
Class A voting stock of KMI. First Union owns 1.30% of the Class A voting stock
and 100.0% of the Class B nonvoting stock of
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KMI. All of such shares of Class A voting and Class B nonvoting stock are duly
authorized, validly issued, fully paid and nonassessable;
(n) 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);;
(o) 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);
(p) 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);
(q) 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; and OLP-A owns such capital stock and such member 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);
(r) 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, including the
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security interest securing the guarantee of certain debt of OLP-D to the
Partnership); 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);
(s) 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);
(t) At the Time of Delivery after giving effect to the issuance of
the Firm Units, the Common Units will be the only limited partner interests of
the Partnership that are issued and outstanding at the applicable Time of
Delivery all of the issued and outstanding Common Units of the Partnership have
been duly and validly authorized and issued, and are fully paid and
nonassessable (except as nonassessability may be affected by certain provisions
of the Delaware Act) and substantially conform to the description of the Common
Units incorporated by reference into the Prospectus; and the unissued Designated
Units to be issued and sold by the Partnership to the Underwriters hereunder
will be duly and validly authorized, and when issued against payment therefor as
provided herein and in the applicable Pricing Agreement, will be duly and
validly authorized and, fully paid and nonassessable (except as nonassessability
may be affected by certain provisions of the Delaware Act) and will
substantially conform to the description of the Common Units incorporated by
reference into the Prospectus;
(u) 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;
(v) The issue and sale of the Common Units to be sold by the
Partnership hereunder, the compliance by the Kinder Morgan Entities with all of
the provisions of this Agreement and any Pricing Agreement, the consummation of
the transactions contemplated herein and the application by the Partnership of
the net proceeds from the offering and sale of the Designated Units in the
manner set forth in the Prospectus under "Use of Proceeds" 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 any of the Kinder Morgan
Entities is a party or by which any of the Kinder
8
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Morgan Entities is bound or to which any of the property or assets of the Kinder
Morgan Entities are subject, nor will such action result in any violation of the
provisions of the certificate of incorporation, by-laws, partnership agreement
or other organizational documents, as the case may be, of any of the Kinder
Morgan Entities or any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over any of the Kinder Morgan
Entities or any of the properties of any such entities, 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 or the limited partners of the Partnership to
any material liability or disability; and no consent, approval, authorization,
order, registration or qualification of or with any court or governmental agency
or body having jurisdiction over any of the Kinder Morgan Entities or any of the
properties of such entities is required for the issuance and sale of the
Designated Units or the consummation by the Kinder Morgan Entities of the
transactions contemplated by this Agreement, except the registration under the
Act of the Designated Units 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 Designated
Units by the Underwriters;
(w) 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 or the limited partners of 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;
(x) The statements set forth in the Prospectus under the captions
"Material Federal Income Tax Consideration," "Plan of Distribution" and
"Underwriting", insofar as they purport to describe the provisions of the laws
and documents referred to therein, 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;
(y) 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 or the limited partners
of 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;
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(z) 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;
(aa) None of the Kinder Morgan Entities or any of their affiliates
does business with the government of Cuba or with any person or affiliate
located in Cuba within the meaning of Section 517.075, Florida Statutes;
(bb) 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;
(cc) The Partnership has reviewed its operations and that of its
subsidiaries and any third parties with which the Partnership or any of its
subsidiaries has a material relationship 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;
(dd) There are no preemptive rights or other rights to subscribe
for or to purchase, nor any restrictions upon the voting or transfer of, any
partnership interests or shares of stock of any of the Kinder Morgan Entities
pursuant to any partnership agreement, any articles or certificates of
incorporation or other governing documents or any agreement or other instrument
to which any of the Kinder Morgan Entities is a party or by which any of such
entities may be bound (other than (a) the General Partner's preemptive right
contained in the Partnership Agreement, (b) the restrictions on transfer arising
from the pledge of the Common Units owned by the General Partner, (c) the
restrictions on transfer under the Partnership's credit facility, and (d) as set
forth in or incorporated by reference into the Prospectus). The offering and
sale of Common Units as contemplated by this Agreement does not give rise to any
rights, other than those which have been waived or satisfied, for or relating to
the registration of any Partnership interests or other securities of the
Partnership. Except for certain grants made under the Partnership's Executive
Compensation Plan and the Common Unit Option Plan, there are no outstanding
options or warrants to purchase any Common Units or other securities of any of
the Kinder Morgan Entities.
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(ee) 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 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;
(ff) Each of the Kinder Morgan Entities maintains a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences;
(gg) 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;
(hh) Each of the Kinder Morgan Entities (i) is in compliance with
any and all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
imposing liability or standards of conduct concerning any Hazardous Material (as
hereinafter defined) ("Environmental Laws"), (ii) has received all permits,
licenses or other approvals required of them under applicable Environmental Laws
to conduct their respective businesses and (iii) is in compliance with all terms
and conditions of any such permit, license or approval, except as disclosed in
the Prospectus or where such noncompliance with Environmental Laws, failure to
receive required permits, licenses or other approvals or failure to comply with
the terms and conditions of such permits, licenses or approvals would not result
in 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. The term "Hazardous Material" means (A) any "hazardous substance"
as defined by the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, (B) any "hazardous waste" as defined by the
Resource Conservation and Recovery Act, as amended, (C) any petroleum or
petroleum product, (D) any polychlorinated biphenyl and
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(E) any pollutant or contaminant or hazardous, dangerous, or toxic chemical,
material, waste or substance regulated under or within the meaning of any other
Environmental Law;
(ii) In the ordinary course of its business, each of the Kinder Morgan
Entities conducts a periodic review of the effect of Environmental Laws on the
business, operations and properties of such entity, in the course of which it
identifies and evaluates associated costs and liabilities (including, without
limitation, any capital or operating expenditures required for clean-up, closure
of properties or compliance with Environmental Laws or any permit, license or
approval, any related constraints on operating activities and any potential
liabilities to third parties). Except as set forth in the Registration Statement
and the Prospectus, there are no costs and liabilities associated with or
arising in connection with Environmental Laws as currently in effect (including,
without limitation, costs of compliance therewith) which would 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;
(jj) At each Time of Delivery, the Firm Units or the Optional Units,
as the case may be, will be approved for listing, subject to official notice of
issuance on The New York Stock Exchange;
(kk) Each of the Kinder Morgan Entities is in compliance with all
federal, state and local employment and labor laws, including, but not limited
to, laws relating to non-discrimination in hiring, promotion and pay of
employees (except where such noncompliance 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); no labor dispute with the employees of any of
the Kinder Morgan Entities exists or, to the knowledge of any of the Kinder
Morgan Entities, is imminent or threatened, except as would not have a material
adverse effect on the financial condition, results of operation 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; and
none of the Kinder Morgan Entities is aware of any existing, imminent or
threatened labor disturbance by the employees of any of its principal suppliers,
manufacturers or contractors that could result in 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;
(ll) None of the Kinder Morgan Entities has nor, to their knowledge,
has any employee or agent thereof made any payment of funds to any of the Kinder
Morgan Entities or received or retained any funds therefrom in violation of any
law, rule or regulation of a character required to be disclosed in the
Prospectus;
(mm) The Partnership maintains insurance with respect to its
properties and business of the types and in amounts generally deemed adequate
for its business and consistent with insurance coverage maintained by similar
companies and businesses, all of which insurance is in full force and effect;
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(nn) Each of the Kinder Morgan Entities has filed all material
federal, state and foreign income and franchise tax returns and has paid all
taxes shown as due thereon, other than taxes which are being contested in good
faith and for which adequate reserves have been established in accordance with
generally accepted accounting principles ("GAAP"). There are no tax returns of
any of the Kinder Morgan Entities that are currently being audited by state,
local or federal taxing authorities or agencies (and with respect to which any
of the Kinder Morgan Entities has received notice), where the findings of such
audit, if adversely determined, would result in 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;
(oo) With respect to each employee benefit plan, program and
arrangement (including, without limitation, any "employee benefit plan" as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) maintained or contributed to by the Partnership, or with
respect to which the Partnership could incur any liability under ERISA
(collectively, the "Benefit Plans"), no event has occurred, in connection with
which the Partnership could be subject to any liability under the terms of such
Benefit Plan, applicable law (including, without limitation, ERISA and the
Internal Revenue Code of 1986, as amended) or any applicable agreement that
could materially adversely affect 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.
(pp) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary Prospectus,
at the time of filing thereof, conformed in all material respects to the
requirements of the Act and the rules and regulations of the Commission
thereunder, and did 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 the 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 Partnership by an
Underwriter through the Representatives expressly for use therein
3. Upon the execution of the Pricing Agreement applicable to any Designated
Units and authorization by the Representatives of the release of such Designated
Units, the several Underwriters propose to offer the Firm Shares for sale upon
the terms and conditions set forth in the Prospectus as amended or supplemented.
The Partnership may specify in the Pricing Agreement applicable to any
Designated Units that the Partnership thereby grants to the Underwriters the
right (an "Overallotment Option") to purchase at their election up to the number
of Optional Units set forth in such Pricing Agreement, on the terms set forth in
the paragraph above, for the sole purpose of covering over-allotments in the
sale of the Firm Units. Any such election to purchase Optional Units may be
exercised by written notice from the Representatives to the Partnership, given
within a period specified in the Pricing Agreement, setting forth the aggregate
number of Optional Units to be purchased and the date on which such Optional
Units are to be delivered, as determined by the
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Representatives but in no event earlier than the First Time of Delivery (as
defined in Section 4 hereof) or, unless the Representatives and the Partnership
otherwise agree in writing, earlier than or later than the respective number of
business days after the date of such notice set forth in such Pricing Agreement.
The number of Optional Units to be added to the number of Firm Units to be
purchased by each Underwriter as set forth in Schedule I to the Pricing
Agreement applicable to such Designated Units shall be, in each case, the number
of Optional Units which the Partnership has been advised by the Representatives
have been attributed to such Underwriter; provided that, if the Partnership has
not been so advised, the number of Optional Units to be so added shall be, in
each case, that proportion of Optional Units which the number of Firm Units to
be purchased by such Underwriter under such Pricing Agreement bears to the
aggregate number of Firm Units (rounded as the Representatives may determine to
the nearest 100 Common Units). The total number of Designated Units to be
purchased by all the Underwriters pursuant to such Pricing Agreement shall be
the aggregate number of Firm Units set forth in Schedule I to such Pricing
Agreement plus the aggregate number of Optional Units which the Underwriters
elect to purchase.
1. Certificates for the Firm Units and the Optional Units 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 Goldman, Sachs & Co. 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 Goldman, Sachs & Co. at least
forty-eight hours in advance, (i) with respect to the Firm Shares, all in the
manner and at the place and time and date specified in such Pricing Agreement 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 "First
Time of Delivery" and (ii) with respect to the Optional Units, if any, in the
manner and at the time and date specified by the Representatives in the written
notice given by the Representatives of the Underwriters' election to purchase
such Optional Units, or at such other time and date as the Representatives and
the Partnership may agree upon in writing, such time and date, if not the First
Time of Delivery, herein called the "Second Time of Delivery". Each such time
and date for delivery is herein called a "Time of Delivery".
2. Each of the Kinder Morgan Entities agrees with each of the Underwriters
of any Designated Units:
(a) To prepare the Prospectus as amended or supplemented in rela-
tion to the applicable Designated Units 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 Units 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 Common Units and prior to the Time of
Delivery for such Common Units which
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shall be disapproved by the Representatives for such Common Units 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
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 Common Units, 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 Common Units, of the suspension of the qualification of such
Common Units 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 Common Units 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 Representa-
tives may reasonably request to qualify such Common Units 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 Common Units, 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 this Agreement and from time to time, to furnish
the Underwriters with copies of the Prospectus 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 Common Units 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
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its subsidiaries (which need not be audited) complying with Section 11(a) of the
Act and the 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 Units and continuing to and including the later of (i) the
termination of trading restrictions for such Designated Units, as notified to
the Partnership by the Representatives and (ii) the Time of Delivery for such
Designated Units, 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
Units, without the prior written consent of the Representatives; and
(f) If the Partnership elects to rely upon Rule 462(b), the Partner-
ship 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
this 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.
3. 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 Common Units 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 any Agreement among Underwriters, this Agreement, any Pricing
Agreement, closing documents (including any compilations thereof) and any other
documents in connection with the offering, purchase, sale and delivery of the
Common Units; (iii) any filing fees and expenses in connection with the
qualification of the Common Units for offering and sale under state securities
laws as provided in Section 5(b) hereof, 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 Common Units; (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 Common Units; (vi) the
cost of preparing the Common Units; (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 Common Units; 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
Common Units by them, and any advertising expenses connected with any offers
they may make.
4. The obligations of the Underwriters of any Designated Units under the
Pricing Agreement relating to such Designated Units 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
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relating to such Designated Units are, at and as of the Time of Delivery for
such Designated Units, 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 Units 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 this 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 Units, 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), (v), (xi) (insofar as it relates to the statements set forth in
the Prospectus under the caption "Underwriting"), (xiii) and (xxii) (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
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 Units, in form and substance satisfactory to the
Representatives, to the 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 the State of
Delaware 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 effect
on the financial condition, results of operations or business of the Kinder
Morgan
17
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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) At the Time of Delivery after giving effect to the issuance of the
Firm Units, to the knowledge of such counsel, the capitalization of the
Partnership will consist of ______ Common Units (______ Common Units if all
of the Optional Units are issued); to the knowledge of such counsel, such
Common Units will be the only limited partner interests of the Partnership
that are issued and outstanding at the applicable Time of Delivery; all of
such Common Units of the Partnership (including the Common Units being
delivered at such Time of Delivery) have been duly and validly authorized
and issued and are fully paid and non-assessable (except as such
nonassessability may be affected by certain provisions of the Delaware Act;
and the Common Units conform in all material respects to the description
thereof incorporated by reference in the Prospectus as amended or
supplemented;
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(vi) 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, (ii) as described in the
Registration Statement or the Prospectus, as amended or supplemented or
(iii) arising out of the pledge by the Partnership of the limited partner
interests of the Operating Partnerships to secure certain indebtedness of
the Partnership and OLP-B).
(vii) Based solely on such counsel's review of the stock transfer
records of KMNGL, OLP-A is the record owner of all of the issued and
outstanding capital stock of KMNGL Corp.; OLP-A is the sole member of
KM-LLC; all of such capital stock and such member interests are duly
authorized, validly issued, fully paid and nonassessable; and, to the
knowledge of such counsel, OLP-A owns all of such capital stock and such
member 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).
(viii)OLP-A is a general partner of Heartland with a ____% general
partner interest in Heartland, KMNGL Corp. is a general partner of Mont
Belvieu with a % 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);
(ix) None of the Common Units, when paid for by the Underwriters in
accordance with the terms of this Agreement, will be subject to any
preemptive or similar right under (i) the Delaware Act, (ii) the
Partnership Agreement (except for the General Partner's preemptive right
contained in Section 4.5 of the Partnership Agreement, which has been
waived with respect to the issuance and sale of the Common Units to the
Underwriters) or (iii) any instrument, document, contract or agreement
filed as an exhibit to or incorporated by reference in the Registration
Statement. Except as (i) described in the Registration Statement or the
Prospectus, (ii) the Partnership's Executive
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Compensation Plan, and (iii) the Common Unit Option Plan, to the knowledge
of such counsel, there is no commitment or arrangement to issue, and there
are no outstanding options, warrants or other rights calling for the
issuance of, any Common Units or any partnership interest or share of
capital stock of any of the Kinder Morgan Entities to any person or any
security or other instrument that by its terms is convertible into,
exercisable for and exchangeable into Common Units.
(x) 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 Common Units being delivered
at such Time of Delivery or the consummation by the Partnership of the
transactions contemplated by this Agreement, 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 by the Bylaws and rules of the National Association of
Securities Dealers, Inc. in connection with the purchase and distribution
of the Common Units by the Underwriters;
(xi) 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 as an
exhibit thereto or has been incorporated as an exhibit by reference in the
Registration Statement;
(xii) To the knowledge of such counsel, except as disclosed in the
Registration Statement or the Prospectus, as amended or supplemented, no
person or entity has the right to require the registration under the Act of
Common Units or other securities of the Partnership by reason of the filing
or effectiveness of the Registration Statement, which has not been waived;
(xiii)Upon delivery of the certificates evidencing the Common Units
against payment therefor as provided in this Agreement, the Underwriters
will acquire the Common Units free of all adverse claims (as such term is
defined in Section 8-302 of the Uniform Commercial Code as in effect in the
State of Delaware (the "UCC"), assuming (i) the Underwriters are acting in
good faith, (ii) the Underwriters have no notice of any adverse claim (as
such term is used in Section 8-302 of the UCC) and (iii) the certificates
evidencing the Common Units are registered in the names of the Underwriters
or endorsed to the Underwriters or nominees of the Underwriters;
(xiv) 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
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<PAGE>
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;
(xv) This Agreement and the Pricing Agreement have been duly
authorized, executed and delivered by each of the Kinder Morgan Entities;
(xvi) The issue and sale of the Common Units 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 and therein 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 the Delaware Act;
(xvii)(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 Common Units," "Material Federal Income
Tax Considerations," and under the caption "Plan of Distribution," insofar
as they purport to constitute a summary of the terms of the Designated
Units 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;
(xviii) The Designated Units have been approved for listing on the New
York Stock Exchange, subject only to official notice of issuance;
(xix) 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 "Investment Company" or an entity "controlled" by an
"Investment Company," as such terms are defined in the Investment Company
Act;
(xx) The Registration Statement was declared effective under the Act
by the Commission and to the knowledge of such counsel no order suspending
the
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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 the sale of
the Designated Units pursuant to Rule 424(b) under the Act has been made in
the manner and within the time period required by such rule and;
(xxi) 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 Prospectus, except for those referred to in the
opinion in subsection (xvii) 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
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<PAGE>
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.
(a) On the date of the Pricing Agreement for such Designated Units
at a time prior to the execution of the Pricing Agreement with respect to such
Designated Units and at each Time of Delivery for such Designated Units, 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 effective date of the Registration Statement
or the date of the most recent report filed with the Commission containing
financial statements and incorporated by reference in the Registration
Statement, if the date of such report is later than such effective date, 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);
(b) (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 Units 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
Units, 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 Units 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
Units, 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 Units on the terms and in the manner contemplated in the
Prospectus as first amended or supplemented relating to the Designated Units;
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(c) On or after the date of the Pricing Agreement relating to the
Designated Units (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;
(d) On or after the date of the Pricing Agreement relating to the
Designated Units 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 impracticable
or inadvisable to proceed with the public offering or the delivery of the
Designated Units on the terms and in the manner contemplated in the Prospectus
as first amended or supplemented relating to the Designated Units;
(e) 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 Units; and
(f) The Kinder Morgan Entities shall have furnished or caused to be
furnished to the Representatives at the Time of Delivery for the Designated
Units 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.
(g) Each of the Kinder Morgan Entities will indemnify and hold harm-
less 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
Units, 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
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<PAGE>
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 Units, or any
such amendment or supplement in reliance upon and in conformity with written
information furnished to the Partnership by any Underwriter of Designated Units
through the Representatives expressly for use in the Prospectus as amended or
supplemented relating to such Designated Units.
(h) 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 Units, 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, 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 Units, 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.
(i) 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
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<PAGE>
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.
(j) If the indemnification provided for in this Section 8 is unavail-
able 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 Units on the other from the offering of the Designated Units 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 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 Units 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
Units 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 Units in
this subsection (d) to contribute are several in proportion to their respective
underwriting obligations with respect to such Designated Units and not joint.
(k) 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
26
<PAGE>
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.
(l) If any Underwriter shall default in its obligation to purchase
the Firm Units or Optional Units which it has agreed to purchase under the
Pricing Agreement relating to such Designated Units, the Representatives may in
their discretion arrange for themselves or another party or other parties to
purchase such Designated Units 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 Firm Units or Optional Units, as the case
may be, 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 Units 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
Units, or the Partnership notifies the Representatives that it has so arranged
for the purchase of such Designated Units, the Representatives or the
Partnership shall have the right to postpone the Time of Delivery for such
Designated Units 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 Units.
(m) If, after giving effect to any arrangements for the purchase
of the Firm Units or Optional Units, as the case may be, of a defaulting
Underwriter or Underwriters by the Representatives and the Partnership as
provided in subsection (a) above, the aggregate number of such Designated Units
which remains unpurchased does not exceed one-eleventh of the aggregate number
of the Firm Units or Optional Units, then the Partnership shall have the right
to require each non-defaulting Underwriter to purchase the number of Firm Units
or Optional Units which such Underwriter agreed to purchase under the Pricing
Agreement relating to such Designated Units and, in addition, to require each
non-defaulting Underwriter to purchase its pro rata share (based on the number
of Firm Units or Optional Units which such Underwriter agreed to purchase under
such Pricing Agreement) of the Firm Units or Optional Units 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.
(n) If, after giving effect to any arrangements for the purchase
of the Designated Units of a defaulting Underwriter or Underwriters by the
Representatives and the Partnership as provided in subsection (a) above, the
aggregate principal amount of Firm Units or Optional Units, as the case may be,
which remains unpurchased exceeds one-eleventh of the aggregate number of the
Firm Units or Optional Units, as the case may be, as referred to in subsection
(b)
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<PAGE>
above, or if the Partnership shall not exercise the right described in
subsection (b) above to require non-defaulting Underwriters to purchase Firm
Units or Optional Units, as the case may be, of a defaulting Underwriter or
Underwriters, then the Pricing Agreement relating to such Firm Units or the
Over-allotment Option relating to such Optional Units, as the case may be, 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.
2. 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 Units.
3. If any Pricing Agreement or Over-allotment Option shall be terminated
pursuant to Section 9 hereof, the Kinder Morgan Entities shall not then be under
any liability to any Underwriter with respect to the Designated Units covered by
such Pricing Agreement except as provided in Sections 6 and 8 hereof; but, if
for any other reason Designated Units 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 Units, but the Kinder Morgan Entities shall
then be under no further liability to any Underwriter with respect to such
Designated Units except as provided in Sections 6 and 8 hereof.
4. In all dealings hereunder, the Representatives of the Underwriters of
Designated Units 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.
1. 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
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<PAGE>
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. No purchaser of any of the Common Units
from any Underwriter shall be deemed a successor or assign by reason merely of
such purchase.
2. 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.
3. THIS AGREEMENT AND EACH PRICING AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
4. 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: _______________________________
Richard D. Kinder
Chairman of the Board and
Chief Executive Officer
29
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KINDER MORGAN OPERATING L.P. "A"
By: Kinder Morgan G.P., Inc.
By: _______________________________
Richard D. Kinder
Chairman of the Board and
Chief Executive Officer
KINDER MORGAN OPERATING L.P. "B"
By: Kinder Morgan G.P., Inc.
By: _______________________________
Richard D. Kinder
Chairman of the Board and
Chief Executive Officer
KINDER MORGAN OPERATING L.P. "C"
By: Kinder Morgan G.P., Inc.
By: _______________________________
Richard D. Kinder
Chairman of the Board and
Chief Executive Officer
KINDER MORGAN OPERATING L.P. "D"
By: Kinder Morgan G.P., Inc.
By: _______________________________
Richard D. Kinder
Chairman of the Board and
Chief Executive Officer
30
<PAGE>
KINDER MORGAN G.P., INC.
By: _______________________________
Richard D. Kinder
Chairman of the Board and
Chief Executive Officer
SFPP, L.P.
By: Kinder Morgan Operating L.P.,
"D"
By: Kinder Morgan Inc.
By: _______________________________
Richard D. Kinder
Chairman of the Board and
Chief Executive Officer
KINDER MORGAN BULK TERMINALS
CORPORATION
By: _______________________________
Name:
Title:
KINDER MORGAN NATURAL GAS LIQUIDS
CORPORATION
By: _______________________________
Name:
Title:
31
<PAGE>
KINDER MORGAN CO(2), L.L.C.
By: Kinder Morgan Operating L.P.,
"A"
By: Kinder Morgan Inc.
By: _______________________________
Richard D. Kinder
Chairman of the Board and
Chief Executive Officer
Accepted as of the date hereof:
Goldman Sachs & Co.
[Co-Representative(s)]
By:_____________________________
(Goldman, Sachs & Co.)
32
<PAGE>
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.
_________, 19__
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____________, 1998 (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
Common Units specified in Schedule II hereto (the "Designated Units"). 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 Units which are the subject of this Pricing Agreement, unless
such representation or warranty is as of a specified date. 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
Units 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 Units, 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, [(a)] 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 Schedule II hereto, the number of Firm Units set forth opposite the
name of such Underwriter in Schedule I hereto [and, (b) in the event and to the
extent that the Underwriters shall exercise the
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<PAGE>
election to purchase Optional Units, as provided below, 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
purchase price to the Underwriters set forth in Schedule II hereto that portion
of the number of Optional Units as to which such election shall have been
exercised.
[The Partnership hereby grants to each of the Underwriters the right to
purchase at their election up to the number of Optional Units set forth opposite
the name of such Underwriter in Schedule I hereto on the terms referred to in
the paragraph above for the sole purpose of covering over-allotments in the sale
of the Firm Units. Any such election to purchase Optional Units may be exercised
by written notice from the Representatives to the Partnership given within a
period of 30 calendar days after the date of this Pricing Agreement, setting
forth the aggregate number of Optional Units to be purchased and the date on
which such Optional Units are to be delivered, as determined by the
Representatives, but in no event earlier than the First Time of Delivery or,
unless the Representatives and the Partnership otherwise agree in writing, no
earlier than two or later than ten business days after the date of such notice.
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: _______________________________
Name:
Title:
34
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KINDER MORGAN OPERATING L.P. "A"
By: Kinder Morgan G.P., Inc.
By: _______________________________
Richard D. Kinder
Chairman of the Board and
Chief Executive Officer
KINDER MORGAN OPERATING L.P. "B"
By: Kinder Morgan G.P., Inc.
By: _______________________________
Richard D. Kinder
Chairman of the Board and
Chief Executive Officer
KINDER
MORGAN OPERATING L.P. "C"
By: Kinder Morgan G.P., Inc.
By: _______________________________
Richard D. Kinder
Chairman of the Board and
Chief Executive Officer
35
<PAGE>
KINDER MORGAN OPERATING L.P. "D"
By: Kinder Morgan G.P., Inc.
By: _______________________________
Richard D. Kinder
Chairman of the Board and
Chief Executive Officer
KINDER MORGAN G.P., INC.
By: _______________________________
Richard D. Kinder
Chairman of the Board and
Chief Executive Officer
SFPP, L.P.
By: Kinder Morgan Operating L.P.,
"D"
By: Kinder Morgan Inc.
By: _______________________________
Richard D. Kinder
Chairman of the Board and
Chief Executive Officer
KINDER MORGAN BULK TERMINALS
CORPORATION
By: _______________________________
Name:
Title:
36
<PAGE>
KINDER MORGAN NATURAL GAS LIQUIDS
CORPORATION
By: _______________________________
Name:
Title:
KINDER MORGAN CO(2), L.L.C.
By: Kinder Morgan Operating L.P.,
"A"
By: Kinder Morgan Inc.
By: _______________________________
Richard D. Kinder
Chairman of the Board and
Chief Executive Officer
Accepted as of the date hereof:
Goldman, Sachs & Co.
[Name(s) of Co-Representative(s)]
By: _______________________________
(Goldman, Sachs & Co.)
37
<PAGE>
SCHEDULE I
Underwriter Number of [Maximum
[Firm] Units to Number of
be Purchased Optional Units
Which May Be
Purchased]
Goldman, Sachs & Co.
[Name(s) of Co-Representative(s)]
[Names of other Underwriters] ------- -------
Total ======= =======
38
<PAGE>
SCHEDULE II
Title of Designated Units:
Number of Designated Units
Number of Firm Units:
Maximum Number of Optional Units:
Initial Offering Price to Public:
[$_________] per Unit] [Formula]
Purchase Price by Underwriters:
[$_________] per Unit] [Formula]
[Commission Payable to Underwriters:
$______ per Unit [specify same form of funds as in Specified Funds
below]]
Form of Designated Units:
[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]]
Specified Funds for payment of purchase price:
Federal (same day) funds
[Describe any blackout provisions with respect to the Designated Units]
Time of Delivery:
_________ a.m. (New York City time), _________, 199__
Defeasance provisions:
Closing Location:
39
<PAGE>
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 Units should be set
forth, or referenced to an attached and accompanying description, if necessary,
to ensure agreement as to the terms of the Designated Units 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.
40
<PAGE>
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, financial
forecasts and/or 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 made a review in accordance with standards established by the
American Institute of Certified Public Accountants of the consolidated
interim financial statements, selected financial data, pro forma financial
information, financial forecasts 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 (vi)(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 the audited consolidated financial statements for five such fiscal years
which were
1
<PAGE>
included or incorporated by reference in the Partnership's Annual Reports
on Form 10-K for such fiscal years;
(v) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K and on
the basis of limited procedures specified in such letter nothing came to
their attention as a result of the foregoing procedures that caused them to
believe that this information does not conform in all material respects
with the disclosure requirements of Items 301, 302, 402 and 503(d),
respectively, of Regulation S-K;
(vi) 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
2
<PAGE>
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 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
capital stock (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
share 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
(vii) 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 (vi) 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
3
<PAGE>
information with the accounting records of the Partnership and its subsidiaries
and have found them to be in agreement.
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 Units for purposes
of the letter delivered at the Time of Delivery for such Designated Units.
4
Kinder Morgan Energy Partners, L.P.
Debt Securities
Underwriting Agreement
_________, 1998
Goldman, Sachs & Co.,
[Name(s) of Co-Representative(s),]
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 Corporation, a Louisiana corporation ("KMBT Corp."),
Kinder Morgan Natural Gas Liquids Corporation, a Delaware corporation ("KMNGL
Corp."), Kinder Morgan CO2, L.L.C., 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
<PAGE>
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. 33-....) (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 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
2
<PAGE>
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 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 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 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
3
<PAGE>
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 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
4
<PAGE>
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 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 Corp. 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 Corp. 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 Corp. 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
5
<PAGE>
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 Corp. and the limited liability agreement of KM-LLC and all
amendments to such documents have been delivered to the Underwriter;
(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);
(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 are those
listed on Schedule III hereto;
(l) Kinder Morgan, Inc., a Delaware corporation ("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) Richard D. Kinder, Morgan Associates, Inc. ("MAI") and First
Union Corporation ("First Union") are the sole stockholders of KMI. Richard D.
Kinder owns 71.04% of the Class A voting stock of KMI. MAI owns 27.65% of the
Class A voting stock of KMI. First Union owns 1.30% of the Class A voting stock
and 100.0% of the Class B nonvoting stock of KMI. All of such shares of Class A
voting and Class B nonvoting stock are duly authorized, validly issued, fully
paid and nonassessable;
(n) 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
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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);
(o) 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);
(p) 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);
(q) OLP-A owns, and at the applicable Time of Delivery will own, all
of the issued and outstanding capital stock of KMNGL Corp., all of the issued
and outstanding capital stock of KMBT 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; and OLP-A owns such capital stock and such member 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);
(r) 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, including the security interest securing the guarantee of certain
debt of OLP-D to the Partnership); 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);
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(s) 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);
(t) At each Time of Delivery, the Common Units will be the only
limited partner interests of the Partnership that are issued and outstanding at
the applicable Time of Delivery, all of the issued and outstanding Common Units
have been duly and validly authorized and issued, and are fully paid and
nonassessable (except as nonassessability may be affected by certain provisions
of the Delaware Act) and substantially conform to the description of the Common
Units incorporated by reference into the Prospectus;
(u) 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;
(v) 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 Indenture, which will be substantially in the form
filed as an exhibit to the Registration Statement; the Indenture has been duly
authorized and duly qualified under the Trust Indenture Act and, at the Time of
Delivery for such Designated Securities (as defined in Section 4 hereof), the
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
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;
(w) The issue and sale of the Securities and the compliance by the
Partnership with all of the provisions of the Securities, the Indenture, this
Agreement and any Pricing Agreement, and the consummation of the transactions
herein and therein 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
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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 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;
(x) 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;
(y) 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, 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;
(z) 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;
(aa) 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"
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<PAGE>
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;
(bb) None of the Kinder Morgan Entities or any of their affiliates
does business with the government of Cuba or with any person or affiliate
located in Cuba within the meaning of Section 517.075, Florida Statutes;
(cc) 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;
(dd) The Partnership has reviewed its operations and that of its
subsidiaries and any third parties with which the Partnership or any of its
subsidiaries has a material relationship 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;
(ee) 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 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;
(ff) Each of the Kinder Morgan Entities maintains a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management's general or specific
authorization; and (iv) the recorded
10
<PAGE>
accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences;
(gg) 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;
(hh) Each of the Kinder Morgan Entities (i) is in compliance with
any and all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
imposing liability or standards of conduct concerning any Hazardous Material (as
hereinafter defined) ("Environmental Laws"), (ii) has received all permits,
licenses or other approvals required of them under applicable Environmental Laws
to conduct their respective businesses and (iii) is in compliance with all terms
and conditions of any such permit, license or approval, except as disclosed in
the Prospectus or where such noncompliance with Environmental Laws, failure to
receive required permits, licenses or other approvals or failure to comply with
the terms and conditions of such permits, licenses or approvals would not result
in 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. The term "Hazardous Material" means (A) any "hazardous substance"
as defined by the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, (B) any "hazardous waste" as defined by the
Resource Conservation and Recovery Act, as amended, (C) any petroleum or
petroleum product, (D) any polychlorinated biphenyl and (E) any pollutant or
contaminant or hazardous, dangerous, or toxic chemical, material, waste or
substance regulated under or within the meaning of any other Environmental Law;
(ii) In the ordinary course of its business, each of the Kinder Morgan
Entities conducts a periodic review of the effect of Environmental Laws on the
business, operations and properties of such entity, in the course of which it
identifies and evaluates associated costs and liabilities (including, without
limitation, any capital or operating expenditures required for clean-up, closure
of properties or compliance with Environmental Laws or any permit, license or
approval, any related constraints on operating activities and any potential
liabilities to third parties). Except as set forth in the Registration Statement
and the Prospectus, there are no costs and liabilities associated with or
arising in connection with Environmental Laws as currently in effect (including,
without limitation, costs of compliance therewith) which would 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;
(jj) Each of the Kinder Morgan Entities is in compliance with all
federal, state and local employment and labor laws, including, but not limited
to, laws relating to non-discrimination in hiring, promotion and pay of
employees (except where such noncompliance will not have a material adverse
effect on the financial condition, results of
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<PAGE>
operations or business of the Kinder Morgan Entities, taken as a whole, or
subject the Partnership to any material liability or disability); no labor
dispute with the employees of any of the Kinder Morgan Entities exists or, to
the knowledge of any of the Kinder Morgan Entities, is imminent or threatened,
except as would not have a material adverse effect on the financial condition,
results of operation 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; and none of the Kinder Morgan Entities is
aware of any existing, imminent or threatened labor disturbance by the employees
of any of its principal suppliers, manufacturers or contractors that could
result in 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;
(kk) None of the Kinder Morgan Entities has nor, to their knowledge,
has any employee or agent thereof made any payment of funds to any of the Kinder
Morgan Entities or received or retained any funds therefrom in violation of any
law, rule or regulation of a character required to be disclosed in the
Prospectus;
(ll) The Partnership maintains insurance with respect to its
properties and business of the types and in amounts generally deemed adequate
for its business and consistent with insurance coverage maintained by similar
companies and businesses, all of which insurance is in full force and effect;
(mm) Each of the Kinder Morgan Entities has filed all material
federal, state and foreign income and franchise tax returns and has paid all
taxes shown as due thereon, other than taxes which are being contested in good
faith and for which adequate reserves have been established in accordance with
generally accepted accounting principles ("GAAP"). There are no tax returns of
any of the Kinder Morgan Entities that are currently being audited by state,
local or federal taxing authorities or agencies (and with respect to which any
of the Kinder Morgan Entities has received notice), where the findings of such
audit, if adversely determined, would result in 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;
(nn) With respect to each employee benefit plan, program and
arrangement (including, without limitation, any "employee benefit plan" as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) maintained or contributed to by the Partnership, or with
respect to which the Partnership could incur any liability under ERISA
(collectively, the "Benefit Plans"), no event has occurred, in connection with
which the Partnership could be subject to any liability under the terms of such
Benefit Plan, applicable law (including, without limitation, ERISA and the
Internal Revenue Code of 1986, as amended) or any applicable agreement that
could materially adversely affect 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.
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,
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<PAGE>
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 rela-
tion 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 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 Represent-
atives 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
13
<PAGE>
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 this Agreement and from time to time, to furnish
the Underwriters with copies of the Prospectus 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 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 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 Partner-
ship 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
this 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
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<PAGE>
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 any Agreement among Underwriters, 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,
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 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 this 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), (v), (xi) (insofar as it relates to the statements set
forth in the Prospectus under
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the caption "Underwriting"), (xiii) and (xxii) (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
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 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 the State
of Delaware 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 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);
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(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) At the applicable Time of Delivery, to the knowledge of such
counsel, the capitalization of the Partnership will consist of ______
Common Units; to the knowledge of such counsel, such Common Units will
be the only limited partner interests of the Partnership that are
issued and outstanding at the applicable Time of Delivery; all of such
Common Units of the Partnership (including the Units being delivered
at such Time of Delivery) have been duly and validly authorized and
issued and are fully paid and non-assessable (except as such
nonassessability may be affected by certain provisions of the Delaware
Act); and the Units conform in all material respects to the
description thereof incorporated by reference in the Prospectus as
amended or supplemented;
(vi) 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, (ii) as described in the Registration
Statement or the Prospectus, as amended or supplemented or (iii)
arising out of the pledge by the Partnership of the limited partner
interests of the Operating Partnerships to secure certain indebtedness
of the Partnership and OLP-B).
(vii) Based solely on such counsel's review of the stock transfer
records of KMNGL, OLP-A is the record owner of all of the issued and
outstanding capital stock of KMNGL Corp.; OLP-A is the record owner of
all of the issued and outstanding capital stock of KMBT Corp.; OLP-A
is the sole member of KM-LLC; all of such capital stock and such
member interests are duly authorized, validly issued, fully paid and
nonassessable; and, to the knowledge of such counsel, OLP-A owns all
of such capital stock and such member 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).
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(viii)OLP-A is a general partner of Heartland with a ____%
general partner interest in Heartland, KMNGL Corp. is a general
partner of Mont Belvieu with a % 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);
(ix) 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
Units by the Underwriters;
(x) 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 as an
exhibit thereto or has been incorporated as an exhibit by reference in
the Registration Statement;
(xi) 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;
(xii) 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
18
<PAGE>
provisions of this Agreement and the consummation of the transactions
herein and therein 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 the Delaware Act;
(xiii)(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;
(xiv) 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 "Investment Company" or an
entity "controlled" by an "Investment Company," as such terms are
defined in the Investment Company Act;
(xv) 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 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;
(xvi) This Agreement and the Pricing Agreement with respect to
the Designated Securities have been duly authorized, executed and
delivered by the Partnership;
(xvii)The Designated Securities have been duly authorized by the
Partnership, and when authenticated and issued in accordance with the
terms of the
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<PAGE>
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;
(xviii) 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;
(xix) 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 Prospectus, except for those referred to in the
opinion in subsection (xiii) 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
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<PAGE>
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.
(a) 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 effective date of the
Registration Statement or the date of the most recent report filed with the
Commission containing financial statements and incorporated by reference in the
Registration Statement, if the date of such report is later than such effective
date, 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);
(b) (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
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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;
(c) 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;
(d) 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 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;
(e) 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
(f) 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.
(g) Each of the Kinder Morgan Entities will indemnify and hold harm-
less 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,
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<PAGE>
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.
(h) 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 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.
(i) 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
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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.
(j) If the indemnification provided for in this Section 8 is unavail-
able 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 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
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<PAGE>
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.
(k) 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.
(l) 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 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.
(m) 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
25
<PAGE>
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.
(n) 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.
2. 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.
3. If any Pricing Agreement shall be terminated pursuant to Section 9
hereof, 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.
4. 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
26
<PAGE>
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.
1. 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. No purchaser of any of the Securities from any Underwriter
shall be deemed a successor or assign by reason merely of such purchase.
2. 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.
3. THIS AGREEMENT AND EACH PRICING AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
4. 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.
27
<PAGE>
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: _______________________________
Richard D. Kinder
Chairman of the Board and Chief
Executive Officer
KINDER MORGAN OPERATING L.P. "A"
By: Kinder Morgan G.P., Inc.
By: _______________________________
Richard D. Kinder
Chairman of the Board and Chief
Executive Officer
KINDER MORGAN OPERATING L.P. "B"
By: Kinder Morgan G.P., Inc.
By: _______________________________
Richard D. Kinder
Chairman of the Board and Chief
Executive Officer
28
<PAGE>
KINDER MORGAN OPERATING L.P. "C"
By: Kinder Morgan G.P., Inc.
By: _______________________________
Richard D. Kinder
Chairman of the Board and Chief
Executive Officer
KINDER MORGAN OPERATING L.P. "D"
By: Kinder Morgan G.P., Inc.
By: _______________________________
Richard D. Kinder
Chairman of the Board and Chief
Executive Officer
KINDER MORGAN G.P., INC.
By: _______________________________
Richard D. Kinder
Chairman of the Board and Chief
Executive Officer
SFPP, L.P.
By: Kinder Morgan Operating L.P., "D"
By: Kinder Morgan Inc.
By: _______________________________
Richard D. Kinder
Chairman of the Board and Chief
Executive Officer
29
<PAGE>
KINDER MORGAN BULK TERMINALS
CORPORATION
By: _______________________________
Name:
Title:
KINDER MORGAN NATURAL GAS LIQUIDS
CORPORATION
By: _______________________________
Name:
Title:
KINDER MORGAN CO(2), L.L.C.
By: Kinder Morgan Operating L.P., "A"
By: Kinder Morgan Inc.
By: _______________________________
Richard D. Kinder
Chairman of the Board and Chief
Executive Officer
Accepted as of the date hereof:
Goldman Sachs & Co.
[Co-Representative(s)]
By:_______________________________
(Goldman, Sachs & Co.)
30
<PAGE>
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.
_________, 19__
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 , 1998 (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. 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 Schedule II
hereto, the principal amount of Designated Securities set forth opposite the
name of such Underwriter in Schedule I hereto.
31
<PAGE>
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: ______________________________
Name:
Title:
KINDER MORGAN OPERATING L.P. "A"
By: Kinder Morgan G.P., Inc.
By: _______________________________
Richard D. Kinder
Chairman of the Board and Chief
Executive Officer
32
<PAGE>
KINDER MORGAN OPERATING L.P. "B"
By: Kinder Morgan G.P., Inc.
By: _______________________________
Richard D. Kinder
Chairman of the Board and Chief
Executive Officer
KINDER MORGAN OPERATING L.P. "C"
By: Kinder Morgan G.P., Inc.
By: ______________________________
Richard D. Kinder
Chairman of the Board and Chief
Executive Officer
KINDER MORGAN OPERATING L.P. "D"
By: Kinder Morgan G.P., Inc.
By: ______________________________
Richard D. Kinder
Chairman of the Board and Chief
Executive Officer
KINDER MORGAN G.P., INC.
By: ______________________________
Richard D. Kinder
Chairman of the Board and Chief
Executive Officer
33
<PAGE>
SFPP, L.P.
By: Kinder Morgan Operating L.P., "D"
By: Kinder Morgan Inc.
By: ______________________________
Richard D. Kinder
Chairman of the Board and Chief
Executive Officer
KINDER MORGAN BULK TERMINALS
CORPORATION
By: ______________________________
Name:
Title:
KINDER MORGAN NATURAL GAS LIQUIDS
CORPORATION
By: _______________________________
Name:
Title:
KINDER MORGAN CO(2), L.L.C.
By: Kinder Morgan Operating L.P., "A"
By: Kinder Morgan Inc.
By: _______________________________
Richard D. Kinder
Chairman of the Board and Chief
Executive Officer
34
<PAGE>
Accepted as of the date hereof:
Goldman, Sachs & Co.
[Name(s) of Co-Representative(s)]
By: ____________________________
(Goldman, Sachs & Co.)
35
<PAGE>
SCHEDULE I
Underwriter Principal Amount of Designated
Securities to be Purchased
Goldman, Sachs & Co. $
[Name(s) of Co-Representative(s)]
[Names of other Underwriters] $
--------
Total $
========
36
<PAGE>
SCHEDULE II
Title of Designated Securities:
[ %] [Senior] [Subordinated] [Floating Rate] [Zero Coupon] [Notes] due
Aggregate principal amount:
[$]
Price to Public:
% of the principal amount of the Designated Securities, plus accrued
interest[, if any,] from _________ to _________ [including accrued amortization
[, if any,] from _________ to _________]
Purchase Price by Underwriters:
% of the principal amount of the Designated Securities, plus accrued interest
from _________to _________ [and accrued amortization[, if any,] from _________
to _________]
Form of Designated Securities:
[Definitive form to be made available for checking and packaging at least
twenty-four hours prior to the Time of Delivery at the office of [The Depository
Trust Company or its designated custodian] [the Representatives]]
[Book-entry only form represented by one or more global securities
deposited with The Depository Trust Company ("DTC") or its designated custodian,
to be made available for checking by the Representatives at least twenty-four
hours prior to the Time of Delivery at the office of DTC.]
Specified funds for payment of purchase price:
Federal (same day) funds
Time of Delivery:
_________ a.m. (New York City time), _________, 199__
Indenture:
[Senior] [Subordinated] Indenture dated _________, 199__, among the
Partnership[, certain guarantors] and _________, as Trustee
37
<PAGE>
Maturity:
Interest Rate:
[ %] [Zero Coupon] [See Floating Rate Provisions]
Interest Payment Dates:
[months and dates, commencing ______________, 199__]
Redemption Provisions:
[No provisions for redemption]
[The Designated Securities may be redeemed, otherwise than through the
sinking fund, in whole or in part at the option of the Partnership, in the
amount of [$ ] 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--
38
<PAGE>
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]".
Names and addresses of Representatives:
Designated Representatives:
Address for Notices, etc.:
39
<PAGE>
[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.
40
<PAGE>
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, financial
forecasts and/or 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 made a review in accordance with standards established by the
American Institute of Certified Public Accountants of the consolidated
interim financial statements, selected financial data, pro forma financial
information, financial forecasts 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 (vi)(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 the audited consolidated financial statements for five such fiscal years
which were
1
<PAGE>
included or incorporated by reference in the Partnership's Annual Reports
on Form 10-K for such fiscal years;
(v) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K and on
the basis of limited procedures specified in such letter nothing came to
their attention as a result of the foregoing procedures that caused them to
believe that this information does not conform in all material respects
with the disclosure requirements of Items 301, 302, 402 and 503(d),
respectively, of Regulation S-K;
(vi) 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
2
<PAGE>
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 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
capital stock (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
share 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
(vii) 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 (vi) 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
3
<PAGE>
information with the accounting records of the Partnership and its
subsidiaries and have found them to be in agreement.
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.
4
Draft November 5, 1998
- -------------------------------------------------------------------------------
KINDER MORGAN
ENERGY PARTNERS, L.P.
Issuer
THE GUARANTORS NAMED HEREIN
as Guarantors
and
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Trustee
---------
INDENTURE
Dated as of , 1998
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SENIOR DEBT SECURITIES
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KINDER MORGAN ENERGY PARTNERS, L.P.
CERTAIN SECTIONS OF THIS INDENTURE RELATING TO
SECTIONS 310 THROUGH 318, INCLUSIVE, OF THE
TRUST INDENTURE ACT OF 1939:
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Trust Indenture
Act Section Indenture Section
- --------------- -----------------
ss. 310(a)(1)....................................... 609
(a)(2)...................................... 609
(a)(3)...................................... Not Applicable
(a)(4)...................................... Not Applicable
(b)......................................... 608; 610
ss. 311(a)........................................... 613
(b)......................................... 613
ss. 312(a)......................................... 701; 702
(b)......................................... 702
(c)......................................... 702
ss. 313(a)......................................... 703
(b)......................................... 703
(c)......................................... 703
(d)......................................... 703
ss. 314(a)......................................... 704
(a)(4)...................................... 104; 1004
(b)......................................... Not Applicable
(c)(1)...................................... 101
(c)(2)...................................... 101; 102
(c)(3)...................................... Not Applicable
(d)......................................... Not Applicable
(e)......................................... 102
ss. 315(a)......................................... 601
(b)......................................... 602
(c)......................................... 601
(d)......................................... 601
(e)......................................... 514
ss. 316(a)......................................... 101
(a)(1)(A)................................. 502; 512
(a)(1)(B)................................. 513
(a)(2).................................... Not Applicable
(b)....................................... 508
(c)....................................... 104
ss. 317(a)(1)...................................... 503
(a)(2)...................................... 504
(b)......................................... 1003
ss. 318(a)......................................... 107
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Indenture.
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. Definitions.......................................1
SECTION 102. Compliance Certificates and Opinions.............10
SECTION 103. Form of Documents Delivered to Trustee...........11
SECTION 104. Acts of Holders; Record Dates....................11
Section 105. Notices, Etc., to Trustee and Partnership........12
Section 106. Notice to Holders; Waiver........................13
Section 107. Conflict with Trust Indenture Act................13
Section 108. Effect of Headings and Table of Contents.........13
Section 109. Successors and Assigns...........................13
SECTION 110. Separability Clause..............................13
Section 111. Benefits of Indenture............................14
Section 112. Governing Law....................................14
Section 113. Legal Holidays...................................14
Section 114. Language of Notices, Etc.........................14
Section 115. Non-Recourse to the General Partner; No Personal
Liability of Officers, Directors, Employees or
Partners.........................................14
ARTICLE II
SECURITY FORMS
SECTION 201. Forms Generally..................................15
Section 202. Form of Face of Security.........................15
Section 203. Form of Reverse of Security......................18
Section 204. Global Securities................................23
Section 205. Form of Trustee's Certificate and Authorization..24
ARTICLE III
THE SECURITIES
SECTION 301. Amount Unlimited; Issuable in Series.............24
Section 302. Denominations....................................24
Section 303. Execution, Authentication, Delivery and Dating...27
Section 304. Temporary Securities ............................29
Section 305. Registration, Registration of Transfer and
Exchange ........................................29
Section 306. Mutilated, Destroyed, Lost and Stolen Securities.31
Section 307. Payment of Interest; Interest Rights Preserved...32
Section 308. Persons Deemed Owners............................33
SECTION 309. Cancellation.....................................33
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Section 310. Computation of Interest..........................34
SECTION 311. CUSIP Numbers....................................34
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture..........34
Section 402. Application of Trust Money.......................35
ARTICLE V
REMEDIES
SECTION 501. Events of Default................................35
Section 502. Acceleration of Maturity; Rescission and
Annulment........................................36
Section 503. Collection of Indebtedness and Suits for
Enforcement by Trustee...........................37
Section 504. Trustee May File Proofs of Claim.................38
Section 505. Trustee May Enforce Claims Without Possession
of Securities....................................38
Section 506. Application of Money Collected...................39
SECTION 507. Limitation on Suits..............................39
Section 508. Unconditional Right of Holders to Receive
Principal, Premium and Interest..................40
Section 509. Restoration of Rights and Remedies...............40
Section 510. Rights and Remedies Cumulative...................40
Section 511. Delay or Omission Not Waiver.....................40
Section 512. Control by Holders...............................40
Section 513. Waiver of Past Defaults..........................41
Section 514. Undertaking for Costs............................41
Section 515. Waiver of Usury, Stay or Extension Laws..........41
ARTICLE VI
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities..............42
Section 602. Notice of Defaults...............................42
Section 603. Certain Rights of Trustee........................42
Section 604. Not Responsible for Recitals or Issuance of
Securities.......................................43
Section 605. May Hold Securities..............................43
Section 606. Money Held in Trust..............................44
Section 607. Compensation and Reimbursement...................44
Section 608. Disqualification; Conflicting Interests..........44
Section 609. Corporate Trustee Required; Eligibility..........45
Section 610. Resignation and Removal; Appointment of
Successor........................................45
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Section 611. Acceptance of Appointment by Successor............46
SECTION 612. Merger, Conversion, Consolidation or Succession
to Business.......................................47
Section 613. Preferential Collection of Claims Against
Partnership.......................................47
Section 614. Appointment of Authenticating Agent...............48
ARTICLE VII
HOLDERS'LISTS AND REPORTS BY TRUSTEE AND PARTNERSHIP
SECTION 701. Partnership to Furnish Trustee Names and
Addresses of Holders..............................49
Section 702. Preservation of Information; Communications to
Holders...........................................50
Section 703 Reports by Trustee................................50
Section 704. Reports by Partnership............................50
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. Partnership and Guarantors May Consolidate,
Etc., Only on Certain Terms.......................51
Section 802. Successor Substituted.............................52
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of
Holders..........................................52
Section 902. Supplemental Indentures with Consent of
Holders..........................................53
Section 903. Execution of Supplemental Indentures.............54
Section 904. Effect of Supplemental Indentures................54
Section 905. Conformity with Trust Indenture Act..............54
Section 906. Reference in Securities to Supplemental
Indentures.......................................54
ARTICLE X
COVENANTS
SECTION 1001. Payment of Principal, Premium and Interest.......54
Section 1002. Maintenance of Office or Agency..................55
Section 1003. Money for Securities Payments to Be Held in
Trust............................................55
Section 1004 Statement by Officers as to Default..............56
Section 1005 Existence........................................56
Section 1006 Limitations on Liens.............................57
Section 1007 Restriction of Sale-Leaseback Transaction........58
Section 1008 Waiver of Certain Covenants......................59
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ARTICLE XI
REDEMPTION OF SECURITIES
Section 1101. Applicability of Article.........................59
Section 1102. Election to Redeem; Notice to Trustee............59
Section 1103. Selection by Trustee of Securities to be
Redeemed ........................................60
Section 1104. Notice of Redemption.............................60
Section 1105. Deposit of Redemption Price......................61
Section 1106. Securities Payable on Redemption Date............61
Section 1107. Securities Redeemed in Part......................61
ARTICLE XII
SINKING FUNDS
SECTION 1201. Applicability of Article.........................62
Section 1202. Satisfaction of Sinking Fund Payments with
Securities.......................................62
Section 1203. Redemption of Securities for Sinking Fund........62
ARTICLE XIII
DEFEASANCE
SECTION 1301. Applicability of Article.........................63
Section 1302. Legal Defeasance.................................63
Section 1303. Covenant Defeasance..............................64
Section 1304. Application by Trustee of Funds Deposited for
Payment of Securities............................66
Section 1305. Repayment to Partnership.........................66
ARTICLE XIV
GUARANTEES OF SECURITIES
SECTION 1401. Unconditional Guarantees.........................67
Section 1402. Limitation of Guarantor's Liability..............69
Section 1403. Contribution.....................................69
Section 1404. Execution and Delivery of Guarantees.............69
Section 1405. Addition of Guarantors...........................70
Section 1406. Release of Guarantee.............................70
Section 1407. Consent to Jurisdiction and Service of Process...71
Section 1408. Waiver of Immunity...............................71
Section 1409. Judgment Currency................................72
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INDENTURE dated as of __________, 1998, between KINDER MORGAN ENERGY
PARTNERS, L.P., a Delaware limited partnership (the "Partnership"), having its
principal office at 1301 Mckinney Street, Suite 3450, Houston Texas, 77010, the
Guarantors named herein and_____________, a ________ banking corporation, as
Trustee (the "Trustee").
RECITALS OF THE PARTNERSHIP
The Partnership has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured
debentures, notes or other evidences of indebtedness (the "Securities"), to be
issued in one or more series as in this Indenture provided.
All things necessary to make this Indenture a valid agreement of the
Partnership and the Guarantors, in accordance with its terms, have been done.
This Indenture is subject to the provisions of the Trust Indenture Act
that are required to be a part of this Indenture and, to the extent applicable,
shall be governed by such provisions.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually agreed, for the equal and
proportionate benefit of all Holders of the Securities or of any series thereof,
as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. Definitions.
For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to them
in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust Indenture
Act, either directly, or by reference therein, have the meanings assigned to
them therein;
(3) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles in
the United States, and, except as otherwise herein expressly provided, the term
"generally accepted accounting principles" with respect to any computation
required or permitted hereunder shall mean such accounting principles as are
generally accepted in the United States at the date of such computation;
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(4) the words "herein", "hereof" and "hereunder" and other words of similar
import refer to this Indenture as a whole and not to any particular Article,
Section or other subdivision; and
(5) the words "Article" and "Section" refer to an Article and Section,
respectively, of this Indenture.
"Act", when used with respect to any Holder, has the meaning specified in
Section 104.
"Adjusted Net Assets" of a Guarantor at any date means the lesser of (x)
the amount by which the fair value of the property of such Guarantor at such
date exceeds the total amount of liabilities, including, without limitation, the
probable amount of contingent liabilities (after giving effect to all other
fixed and contingent liabilities incurred or assumed on such date) of such
Guarantor at such date, but excluding liabilities under the Guarantee of such
Guarantor, and (y) the amount by which the present fair saleable value of the
assets of such Guarantor at such date exceeds the amount that will be required
to pay the probable liability of such Guarantor on its debts (after giving
effect to all other fixed and contingent liabilities incurred or assumed on such
date and after giving effect to any collection from any Subsidiary of such
Guarantor in respect of any obligations of such Subsidiary under the Guarantee
of such Guarantor), excluding debt in respect of the Guarantee of such
Guarantor, as they become absolute and matured.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Attributable Indebtedness", when used with respect to any to any
Sale-Leaseback Transaction, means, as at the time of determination, the present
value (discounted at the rate set forth or implicit in the terms of the lease
included in such transaction) of the total obligations of the lessee for rental
payments (other than amounts required to be paid on account of property taxes,
maintenance, repairs, insurance, assessments, utilities, operating and labor
costs and other items that do not constitute payments for property rights)
during the remaining term of the lease included in such Sale-Leaseback
Transaction (including any period for which such lease has been extended). In
the case of any lease that is terminable by the lessee upon the payment of a
penalty or other termination payment, such amount shall be the lesser of the
amount determined assuming termination upon the first date such lease may be
terminated (in which case the amount shall also include the amount of the
penalty or termination payment, but no rent shall be considered as required to
be paid under such lease subsequent to the first date upon which it may be so
terminated) or the amount determined assuming no such termination.
"Authenticating Agent" means any Person authorized by the Trustee pursuant
to Section 614 to act on behalf of the Trustee to authenticate Securities of one
or more series.
"Authorized Newspaper" means a newspaper, in the English language or in an
official language of the country of publication, customarily published on each
Business Day, whether or
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not published on Saturdays, Sundays or holidays, and of general circulation in
the place in connection with which the term is used or in the financial
community of such place.
"Bankruptcy Law" means Title 11, U.S. Code, or any similar federal or
state law for the relief of debtors or the protection of creditors.
"Board of Directors" means the board of directors of the General Partner,
or the executive or any other committee of that board duly authorized to act in
respect thereof. If the Partnership shall change its form of entity to other
than a limited partnership, the references to officers or the Board of Directors
of the General Partner shall mean the officers or the Board of Directors (or
other comparable governing body) of the Partnership.
"Board Resolution" means a copy of a resolution certified by the Corporate
Secretary of the General Partner, the principal financial officer of the General
Partner or any other authorized officer of the General Partner or a person duly
authorized by any of them, to have been duly adopted by the Board of Directors
and to be in full force and effect on the date of such certification, and
delivered to the Trustee.
"Business Day", when used with respect to any Place of Payment or other
location, means, except as otherwise provided as contemplated by Section 301
with respect to any series of Securities, each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a day on which banking institutions in that
Place of Payment or other location are authorized or obligated by law, executive
order or regulation to close.
"Capital Interests" means any and all shares, interests, participations,
rights or other equivalents (however designated) of capital stock, including,
without limitation, with respect to partnerships, partnership interests (whether
general or limited) and any other interest or participation that confers on a
Person the right to receive a share of the profits and losses of, or
distributions of assets of, such partnership.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act or, if at any time after the
execution of this instrument such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
"Consolidated Net Tangible Assets" means, at any date of determination,
the total amount of assets after deducting therefrom (x) all current liabilities
(excluding (A) any current liabilities that by their terms are extendable or
renewable at the option of the obligor thereon to a time more than 12 months
after the time as of which the amount thereof is being computed, and (B) current
maturities of long-term debt), and (y) the value (net of any applicable
reserves) of all goodwill, trade names, trademarks, patents and other like
intangible assets, all as set forth on the consolidated balance sheet of the
Partnership and its consolidated subsidiaries for the Partnership's most
recently completed fiscal quarter, prepared in accordance with generally
accepted accounting principles.
"Corporate Trust Office" means the office of the Trustee at which at any
particular time its corporate trust business shall be principally administered,
which at the date hereof is __________________________________.
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"corporation" includes corporations, associations, limited liability
companies, joint-stock companies and business trusts.
"covenant defeasance" has the meaning specified in Section 1303.
"Custodian" means any receiver, trustee, assignee, liquidator or similar
official under any Bankruptcy Law.
"Debt" means any obligation created or assumed by any Person for the
repayment of money borrowed, any purchase money obligation created or assumed by
such Person and any guarantee of the foregoing.
"Default" means, with respect to a series of Securities, any event which
is, or after notice or lapse of time or both would become, an Event of Default
with respect to Securities of such series.
"Defaulted Interest" has the meaning specified in Section 307.
"defeasance" has the meaning specified in Section 1302.
"Definitive Security" means a Security other than a Global Security or a
temporary Security.
"Depositary" means, with respect to Securities of any series issuable in
whole or in part in the form of one or more Global Securities, a clearing agency
registered under the Exchange Act that is designated to act as Depositary for
such Securities as contemplated by Section 301, until a successor Depositary
shall have become such pursuant to the applicable provisions of this Indenture,
and thereafter shall mean or include each Person which is then a Depositary
hereunder, and if at any time there is more than one such Person, shall be a
collective reference to such Persons.
"Dollar" or "$" means the coin or currency of the United States of America
as at the time of payment is legal tender for the payment of public and private
debts.
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, and any statute successor thereto.
"Funded Debt" means all Debt maturing one year or more from the date of
the creation thereof, all Debt directly or indirectly renewable or extendible,
at the option of the debtor, by its terms or by the terms of any instrument or
agreement relating thereto, to a date one year or more from the date of the
creation thereof, and all Debt under a revolving credit or similar agreement
obligating the lender or lenders to extend credit over a period of one year or
more.
"General Partner" means Kinder Morgan, G.P., Inc., a Delaware
corporation.
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"Global Security" means a Security in global form that evidences all or
part of the Securities of any series and is registered in the name of, the
Depositary for such Securities or a nominee thereof.
"Guarantor" means (i) each Subsidiary of the Partnership executing this
Indenture, (ii) each Subsidiary of the Partnership that becomes a guarantor of
the Securities pursuant to Section 1405, (iii) each Subsidiary of the
Partnership that executes a supplemental indenture in which such Subsidiary
agrees to be bound by Article 14 and (iv) any Subsidiary of the Partnership that
is a successor corporation of any Subsidiary of the Partnership referred to in
clauses (i) through (iii). The term "Guarantor" shall not include any Subsidiary
of the Partnership referred to in clauses (i) through (iv) that shall have been
released from its obligations under Article 14 pursuant to Section 1406.
"Holder" means a Person in whose name a Security is registered in the
Security Register.
"Indenture" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof, including, for
all purposes of this instrument, and any such supplemental indenture, the
provisions of the Trust Indenture Act that are deemed to be a part of and govern
this instrument and any such supplemental indenture, respectively. The term
"Indenture" also shall include the terms of particular series of Securities
established as contemplated by Section 301.
"interest", when used with respect to an Original Issue Discount Security
which by its terms bears interest only after Maturity, means interest payable
after Maturity.
"Interest Payment Date", when used with respect to any Security, means the
Stated Maturity of an installment of interest on such Security.
"Issue Date"means with respect to any series of Debt Securities issued
under either Indenture the date on which Debt Securities of that series are
initially issued under that Indenture.
"Lien" means, as to any entity, any mortgage, lien, pledge, security
interest or other encumbrance in or on, or adverse interest or title of any
vendor, lessor, lender or other secured party to or of the entity under
conditional sale or other title retention agreement or capital lease with
respect to, any property or asset of the entity.
"Maturity", when used with respect to any Security, means the date on
which the principal of such Security or an installment of principal becomes due
and payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.
"Notice of Default" means a written notice of the kind specified in
Section 501(3).
"Officers' Certificate" means a certificate signed by the Chairman of the
Board, the President or a Vice President, and by the Treasurer or the Secretary,
of the General Partner (or if the Partnership shall change its form of entity to
other than a limited partnership, by Persons or
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officers, members, agents and comparable positions as applicable to those of the
foregoing nature, as applicable), and delivered to the Trustee. One of the
officers or such other Persons (as applicable) signing an Officers' Certificate
given pursuant to Section 1004 shall be the principal executive, financial or
accounting officer of the General Partner (or if the Partnership shall change
its form of entity to other than a limited partnership, by Persons or officers,
members, agents and comparable positions as applicable to those of the foregoing
nature, as applicable).
"Opinion of Counsel" means a written opinion of legal counsel, who may be
an employee of or counsel for the Partnership or a Guarantor.
"Original Issue Discount Security" means any Security which provides for
an amount less than the stated principal amount thereof to be due and payable
upon a declaration of acceleration of the Maturity thereof pursuant to Section
502.
"Outstanding", when used with respect to Securities, means, as of the date
of determination, all Securities theretofore authenticated and delivered under
this Indenture, except:
(1) Securities theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
(2) Securities for whose payment or redemption money in the necessary
amount has been theretofore deposited with the Trustee or any Paying Agent
(other than the Partnership) in trust or set aside and segregated in trust by
the Partnership (if the Partnership shall act as its own Paying Agent) for the
Holders of such Securities; provided, however, that, if such Securities are to
be redeemed, notice of such redemption has been duly given pursuant to this
Indenture or provision therefor has been made;
(3) Securities which have been paid pursuant to Section 306 or in exchange
for or in lieu of which other Securities have been authenticated and delivered
pursuant to this Indenture, other than any such Securities in respect of which
there shall have been presented to the Trustee proof satisfactory to it that
such Securities are held by a bona fide purchaser in whose hands such Securities
are valid obligations of the Partnership; and
(4) Securities, except to the extent provided in Sections 1302 and 1303,
with respect to which the Partnership has effected defeasance or covenant
defeasance as provided in Article XIII;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, (A) the principal
amount of an Original Issue Discount Security that shall be deemed to be
Outstanding shall be the amount of the principal thereof that would be due and
payable as of the date of such determination upon acceleration of the Maturity
thereof on such date pursuant to Section 502, (B) the principal amount of a
Security denominated in one or more currencies or currency units other than U.S.
dollars shall be the U.S. dollar equivalent of such currencies or currency
units, determined in the manner provided as contemplated by Section 301 on the
date of original issuance of such Security, of the principal amount (or, in the
case of an Original Issue Discount Security, the U.S. dollar equivalent (as so
determined) on the date of
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original issuance of such Security, of the amount determined as provided in
Clause (A) above) of such Security, and (C) Securities owned by the Partnership
or any other obligor upon the Securities or any Affiliate of the Partnership or
of such other obligor shall be disregarded and deemed not to be Outstanding,
except that, in determining whether the Trustee shall be protected in relying
upon any such request, demand, authorization, direction, notice, consent or
waiver, only Securities which the Trustee knows to be so owned shall be so
disregarded. Securities so owned as described in Clause (C) above which have
been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Securities and that the pledgee is not the Partnership or
any other obligor upon the Securities or any Affiliate of the Partnership or of
such other obligor.
"Pari Passu Debt" means any Debt of the Partnership, whether outstanding
on the Issue Date or thereafter created, incurred or assumed, unless, in the
case of any particular Debt, the instrument creating or evidencing the same or
pursuant to which the same is outstanding expressly provides that such Debt
shall be subordinated in right of payment to the Securities.
"Partnership" means the Person named as the "Partnership" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Partnership" shall mean such successor Person.
"Partnership Request" or "Partnership Order" means a written request or
order signed in the name of the Partnership by the Chairman of the Board,
President or a Vice President of the General Partner, and by the Treasurer or
Secretary of the General Partner, and delivered to the Trustee, or if the
Partnership shall change its form of entity to other than a limited partnership,
by Persons or officers, members, agents and the like positions comparable to
those of the foregoing nature, as applicable.
"Paying Agent" means any Person authorized by the Partnership to pay the
principal of or any premium or interest on any Securities on behalf of the
Partnership.
"Periodic Offering" means an offering of Securities of a series from time
to time, the specific terms of which Securities, including, without limitation,
the rate or rates of interest or formula for determining the rate or rates of
interest thereon, if any, the Stated Maturity or Stated Maturities thereof, the
original issue date or dates thereof, the redemption provisions, if any, with
respect thereto, and any other terms specified as contemplated by Section 301
with respect thereto, are to be determined by the Partnership upon the issuance
of such Securities.
"Permitted Liens" means (i) Liens upon rights-of-way for pipeline
purposes; (ii any statutory or governmental Lien or Lien arising by operation of
law, or any mechanics', repairmen's, materialmen's, suppliers', carriers',
landlords', warehousemen's or similar Lien incurred in the ordinary course of
business which is not yet due or which is being contested in good faith by
appropriate proceedings and any undetermined Lien which is incidental to
construction, development, improvement or repair; (iii) the right reserved to,
or vested in, any municipality or public authority by the terms of any right,
power, franchise, grant, license, permit or by any provision of law, to purchase
or recapture or to designate a purchaser of, any property; (iv) Liens of taxes
and assessments which are (A) for the then current year, (B) not at the time
delinquent, or (C) delinquent but the validity of which is being contested at
the time by the
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Partnership or any Subsidiary in good faith; (v) Liens of, or to secure
performance of, leases, other than capital leases; (vi) any Lien upon, or
deposits of, any assets in favor of any surety company or clerk of court for the
purpose of obtaining indemnity or stay of judicial proceedings; (vii) any Lien
upon property or assets acquired or sold by the Partnership or any Subsidiary
resulting from the exercise of any rights arising out of defaults on
receivables; (viii) any Lien incurred in the ordinary course of business in
connection with workmen's compensation, unemployment insurance, temporary
disability, social security, retiree health or similar laws or regulations or to
secure obligations imposed by statute or governmental regulations; (ix) any Lien
in favor of the Partnership or any Subsidiary; (x) any Lien in favor of the
United States of America or any state thereof, or any department, agency or
instrumentality or political subdivision of the United States of America or any
state thereof, to secure partial, progress, advance, or other payments pursuant
to any contract or statute, or any Debt incurred by the Partnership or any
Subsidiary for the purpose of financing all or any part of the purchase price
of, or the cost of constructing, developing, repairing or improving, the
property or assets subject to such Lien; or (xi) any Lien securing industrial
development, pollution control or similar revenue bonds; (xii) any Lien securing
Debt of the Partnership or any Subsidiary, all or a portion of the net proceeds
of which are used, substantially concurrent with the funding thereof (and for
purposes of determining such "substantial concurrence," taking into
consideration, among other things, required notices to be given to Holders of
outstanding securities under this Indenture (including the Securities) in
connection with such refunding, refinancing or repurchase, and the required
corresponding durations thereof), to refinance, refund or repurchase all
outstanding securities under this Indenture (including the Securities),
including the amount of all accrued interest thereon and reasonable fees and
expenses and premium, if any, incurred by the Partnership or any Subsidiary in
connection therewith; (xiii) Liens in favor of any Person to secure obligations
under the provisions of any letters of credit, bank guarantees, bonds or surety
obligations required or requested by any governmental authority in connection
with any contract or statute; or (xiv) any Lien upon or deposits of any assets
to secure performance of bids, trade contracts, leases or statutory obligations.
"Person" means any individual, corporation, partnership, joint venture,
limited liability company, association, joint-stock company, trust, other
entity, unincorporated organization or government, or any agency or political
subdivision thereof.
"Place of Payment", when used with respect to the Securities of any
series, means, unless otherwise specifically provided for with respect to such
series as contemplated by Section 301, the office or agency of the Partnership
in The City of New York and such other place or places where, subject to the
provisions of Section 1002, the principal of and any premium and interest on the
Securities of that series are payable as specified as contemplated by Section
301.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same Debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same Debt as the mutilated, destroyed, lost or stolen Security.
"Principal Property" means, whether owned or leased on the date of this
Indenture or thereafter acquired, (i) any pipeline assets of the Partnership or
any Subsidiary, including any
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related facilities employed in the transportation, distribution, storage or
marketing of refined petroleum products, natural gas liquids and carbon dioxide,
that are located in the United States of America or any territory or political
subdivision thereof, and (ii) any processing or manufacturing plant or terminal
owned or leased by the Partnership or any Subsidiary that is located in the
United States or any territory or political subdivision thereof, except, in the
case of either of the foregoing clauses (i) or (ii), (A) any such assets
consisting of inventories, furniture, office fixtures and equipment (including
data processing equipment), vehicles and equipment used on, or useful with,
vehicles, and (B) any such assets, plant or terminal which, in the opinion of
the Board of Directors, is not material in relation to the activities of the
Partnership or of the Partnership and its Subsidiaries, taken as a whole.
"Redemption Date", when used with respect to any Security to be redeemed,
means the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price", when used with respect to any Security to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.
"Regular Record Date" for the interest payable on any Interest Payment
Date on the Securities of any series means the date specified for that purpose
as contemplated by Section 301.
"Sale-Leaseback Transaction" means the sale or transfer by the Partnership
or any Subsidiary of any Principal Property to a Person (other than the
Partnership or a Subsidiary) and the taking back by the Partnership or any
Subsidiary, as the case may be, of a lease of such Principal Property.
"Securities" has the meaning stated in the first recital of this Indenture
and more particularly means any Securities authenticated and delivered under
this Indenture.
"Security Register" and "Security Registrar" have the respective meanings
specified in Section 305.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 307.
"Stated Maturity", when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date specified
in such Security as the fixed date on which the principal of such Security or
such installment of principal or interest is due and payable.
"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Interests entitled (without regard to the occurrence
of any contingency) to vote in the election of directors, managers or trustees
thereof or, in the case of a partnership, more than 50% of the partners' Capital
Interests (considering all partners' Capital Interests as a single class), is at
the time owned or controlled, directly or indirectly, by such Person or one or
more of the other Subsidiaries of such Person or a combination thereof.
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"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at
the date as of which this instrument was executed, except as otherwise provided
in Section 905; provided, however, that if the Trust Indenture Act of 1939 is
amended after such date, "Trust Indenture Act" means, to the extent required by
any such amendment, the Trust Indenture Act of 1939 as so amended.
"Trustee" means the Person named as the "Trustee" in the first paragraph
of this instrument until a successor Trustee shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Trustee" shall mean
or include each Person who is then a Trustee hereunder, and if at any time there
is more than one such Person, "Trustee" as used with respect to the Securities
of any series shall mean each Trustee with respect to Securities of that series.
"U.S. Government Obligations" means securities which are (i) direct
obligations of the United States for the payment of which its full faith and
credit is pledged, or (ii) obligations of a Person controlled or supervised by
and acting as an agency or instrumentality of the United States, the payment of
which is unconditionally guaranteed as a full faith and credit obligation by the
United States, each of which are not callable or redeemable at the option of the
issuer thereof.
"Vice President", when used with respect to the Partnership, means any
vice president of the General Partner, or when used with respect to the Trustee,
means any vice president of the Trustee.
SECTION 102. Compliance Certificates and Opinions.
Upon any application or request by the Partnership to the Trustee to take
any action under any provision of this Indenture, the Partnership shall furnish
to the Trustee such certificates or opinions as may be required under the Trust
Indenture Act. Each such certificate or opinion shall be given in the form of an
Officers' Certificate, if to be given by an officer of the General Partner, or
an Opinion of Counsel, if to be given by counsel, and shall comply with the
requirements of the Trust Indenture Act and any other requirements set forth in
this Indenture.
Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture (except for certificates provided for
in Section 1004) shall include:
(1) a statement that each individual signing such certificate or opinion
has read such covenant or condition and the definitions herein relating thereto;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
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(4) a statement as to whether, in the opinion of each such individual, such
condition or covenant has been complied with.
SECTION 103. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Partnership or the General
Partner may be based, insofar as it relates to legal matters, upon a certificate
or opinion of, or representations by, counsel, unless such officer knows, or in
the exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate or opinion of counsel may
be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of the Partnership or
the General Partner stating that the information with respect to such factual
matters is in the possession of the Partnership or the General Partner, unless
such counsel knows that the certificate or opinion or representations with
respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. Acts of Holders; Record Dates.
Any request, demand, authorization, direction, notice, consent, waiver or
other action provided or permitted by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed (either physically or by means of a facsimile
or an electronic transmission, provided that such electronic transmission is
transmitted through the facilities of a Depositary) by such Holders in person or
by an agent duly appointed in writing; and, except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
are delivered (either physically or by means of a facsimile or an electronic
transmission, provided that such electronic transmission is transmitted through
the facilities of a Depositary) to the Trustee and, where it is hereby expressly
required, to the Partnership. Such instrument or instruments (and the action
embodied therein and evidenced thereby) are herein sometimes referred to as the
"Act" of the Holders signing such instrument or instruments. Proof of execution
of any such instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Indenture and (subject to Section 315 of the
Trust Indenture Act) conclusive in favor of the Trustee and the Partnership, if
made in the manner provided in this Section.
The fact and date of the execution by any Person of any such instrument or
writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or
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other officer authorized by law to take acknowledgments of deeds, certifying
that the individual signing such instrument or writing acknowledged to him the
execution thereof. Where such execution is by a signer acting in a capacity
other than his individual capacity, such certificate or affidavit shall also
constitute sufficient proof of his authority. The fact and date of the execution
of any such instrument or writing, or the authority of the Person executing the
same, may also be proved in any other manner which the Trustee deems sufficient.
The ownership, principal amount and serial numbers of Securities held by
any Person, and the date of commencement of such Person's holding the same,
shall be proved by the Security Register.
Any request, demand, authorization, direction, notice, consent, waiver or
other action of the Holder of any Security shall bind every future Holder of the
same Security and the Holder of every Security issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Trustee or the Partnership
in reliance thereon, whether or not notation of such action is made upon such
Security.
Without limiting the foregoing, a Holder entitled hereunder to give or
take any action hereunder with regard to any particular Security may do so with
regard to all or any part of the principal amount of such Security or by one or
more duly appointed agents each of which may do so pursuant to such appointment
with regard to all or any different part of such principal amount.
The Partnership may set any day as the record date for the purpose of
determining the Holders of Outstanding Securities of any series entitled to give
or take any request, demand, authorization, direction, notice, consent, waiver
or other action provided or permitted by this Indenture to be given or taken by
Holders of Securities of such series, but the Partnership shall have no
obligation to do so. With regard to any record date set pursuant to this
paragraph, the Holders of Outstanding Securities of the relevant series on such
record date (or their duly appointed agents), and only such Persons, shall be
entitled to give or take the relevant action, whether or not such Holders remain
Holders after such record date.
SECTION 105. Notices, Etc., to Trustee and Partnership.
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Holders or other document provided or permitted by this Indenture to be
made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Partnership shall be sufficient for
every purpose hereunder if made, given, furnished or filed in writing to or with
the Trustee at its Corporate Trust Office, Attention: Corporate Trustee
Administration, or
(2) the Partnership by the Trustee or by any Holder shall be sufficient for
every purpose hereunder (unless otherwise herein expressly provided) if in
writing and mailed, first-class postage prepaid, to the Partnership addressed to
it at 1301 Mckinney Street, Suite 3450, Houston Texas, 77010, to the attention
of the Corporate Secretary, or at any other address previously furnished in
writing to the Trustee by the Partnership.
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SECTION 106. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid (if international mail, by
air mail), to each Holder affected by such event, at his address as it appears
in the Security Register, not later than the latest date (if any), and not
earlier than the earliest date (if any), prescribed for the giving of such
notice. In any case where notice to Holders is given by mail, neither the
failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders. Any notice mailed to a Holder in the manner herein prescribed
shall be conclusively deemed to have been received by such Holder, whether or
not such Holder actually receives such notice.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by the Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Holders shall be filed with the Trustee, but such filing
shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
In case by reason of the suspension of regular mail service or by reason
of any other cause it shall be impracticable to give such notice by mail, then
such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
SECTION 107. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with a provision of
the Trust Indenture Act that is required under such Act to be a part of and
govern this Indenture, the latter provision shall control. If any provision of
this Indenture modifies or excludes any provision of the Trust Indenture Act
that may be so modified or excluded, the latter provision shall be deemed to
apply to this Indenture as so modified or excluded, as the case may be.
SECTION 108. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 109. Successors and Assigns.
All covenants and agreements in this Indenture by the Partnership shall
bind its successors and assigns, whether so expressed or not.
SECTION 110. Separability Clause.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
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SECTION 111. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied, shall
give to any Person, other than the parties hereto and their successors hereunder
and the Holders, any benefit or any legal or equitable right, remedy or claim
under this Indenture.
SECTION 112. Governing Law.
This Indenture and the Securities shall be governed by and construed in
accordance with the law of the State of New York.
SECTION 113. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security shall not be a Business Day at any Place of Payment,
then (notwithstanding any other provision of this Indenture or of the Securities
(other than a provision of the Securities of any series which specifically
states that such provision shall apply in lieu of this Section)) payment of
interest or principal (and premium, if any) need not be made at such Place of
Payment on such date, but may be made on the next succeeding Business Day at
such Place of Payment with the same force and effect as if made on the Interest
Payment Date or Redemption Date, or at the Stated Maturity, provided that no
interest shall accrue for the period from and after such Interest Payment Date,
Redemption Date or Stated Maturity, as the case may be.
SECTION 114. Language of Notices, Etc.
Any request, demand, authorization, direction, notice, consent, waiver or
Act required or permitted under this Indenture shall be in the English language,
except that any published notice may be in an official language of the country
of publication.
SECTION 115. Non-Recourse to the General Partner; No Personal Liability of
Officers, Directors, Employees or Partners .
Obligations of the Partnership, or any Guarantor, as such, under this
Indenture and the Securities hereunder are non-recourse to the General Partner,
and its respective Affiliates (other than the Partnership and the Guarantors),
and payable only out of cash flow and assets of the Partnership and the
Guarantors. The Trustee, and each Holder of a Security by its acceptance
thereof, will be deemed to have agreed in this Indenture that (1) neither the
General Partner nor its assets (nor any of its respective Affiliates other than
the Partnership or the Guarantors, nor their respective assets) shall be liable
for any of the obligations of the Partnership or the Guarantors under this
Indenture or such Securities, and (2) no director, officer, employee,
stockholder or unitholder, as such, of the Partnership, the Guarantors, the
Trustee, the General Partner or any Affiliate of any of the foregoing entities
shall have any personal liability in respect of the obligations of the
Partnership or the Guarantors under this Indenture or such Securities by reason
of his, her or its status.
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ARTICLE II
SECURITY FORMS
SECTION 201. Forms Generally.
The Securities of each series shall be in substantially the form set forth
in this Article, or in such other form as shall be established by or pursuant to
a Board Resolution or in one or more indentures supplemental hereto, in each
case with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with applicable tax
laws or the rules of any securities exchange or automated quotation system on
which the Securities of such series may be listed or traded or Depositary
therefor or as may, consistently herewith, be determined by the officers
executing such Securities, as evidenced by their execution of the Securities. If
the form of Securities of any series is established by action taken pursuant to
a Board Resolution, a copy of an appropriate record of such action shall be
certified by an authorized officer or other authorized Person on behalf of the
Partnership and delivered to the Trustee at or prior to the delivery of the
Partnership Order contemplated by Section 303 for the authentication and
delivery of such Securities.
The definitive Securities shall be printed, lithographed or engraved on
steel engraved borders or may be produced in any other manner, all as determined
by the officers executing such Securities, as evidenced by their execution of
such Securities.
SECTION 202. Form of Face of Security.
[Insert any legend required by the United States Internal Revenue Code
and the regulations thereunder.]
[If a Global Security,--insert legend required by Section 204 of the
Indenture] [If applicable, insert--UNLESS THIS SECURITY IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION, TO THE PARTNERSHIP OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE &
CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL IN AS MUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN.]
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KINDER MORGAN ENERGY PARTNERS, L. P.
[TITLE OF SECURITY]
NO. U.S.$
[CUSIP No. ]
KINDER MORGAN ENERGY PARTNERS, L. P., a Delaware limited partnership
(herein called the "Partnership", which term includes any successor Person under
the Indenture hereinafter referred to), for value received, hereby promises to
pay to , or registered assigns, the principal sum of United States Dollars on
[if the Security is to bear interest prior to Maturity,
insert--, and to pay interest thereon from , or from the most recent Interest
Payment Date to which interest has been paid or duly provided for, semi-annually
on and in each year, commencing , at the rate of % per annum, until the
principal hereof is paid or made available for payment [if applicable, insert--,
and at the rate of % per annum on any overdue principal and premium and on any
overdue installment of interest]. [If applicable, insert -- The amount of
interest payable for any period shall be computed on the basis of twelve 30-day
months and a 360-day year. The amount of interest payable for any partial period
shall be computed on the basis of a 360-day year of twelve 30-day months and the
days elapsed in any partial month. In the event that any date on which interest
is payable on this Security is not a Business Day, then a payment of the
interest payable on such date will be made on the next succeeding day which is a
Business Day (and without any interest or other payment in respect of any such
delay) with the same force and effect as if made on the date the payment was
originally payable. A "Business Day" shall mean, when used with respect to any
Place of Payment, each Monday, Tuesday, Wednesday, Thursday and Friday which is
not a day on which banking institutions in that Place of Payment are authorized
or obligated by law, executive order or regulation to close.] The interest so
payable, and punctually paid or duly provided for, on any Interest Payment Date
will, as provided in such Indenture, be paid to the Person in whose name this
Security (or one or more Predecessor Securities) is registered at the close of
business on the Regular Record Date for such interest, which shall be the
or (whether or not a Business
Day), as the case may be, next preceding such Interest Payment Date. Any such
interest not so punctually paid or duly provided for shall forthwith cease to be
payable to the Holder on such Regular Record Date and may either be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Trustee, notice of which shall be
given to Holders of Securities of this series not less than 10 days prior to
such Special Record Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange or automated
quotation system on which the Securities of this series may be listed or traded,
and upon such notice as may be required by such exchange or automated quotation
system, all as more fully provided in such Indenture].
[If the Security is not to bear interest prior to Maturity, insert--The
principal of this Security shall not bear interest except in the case of a
default in payment of principal upon acceleration, upon redemption or at Stated
Maturity and in such case the overdue principal of this Security shall bear
interest at the rate of % per annum, which shall accrue from the date of such
default in payment to the date payment of such principal has been made or duly
provided
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for. Interest on any overdue principal shall be payable on demand. Any such
interest on any overdue principal that is not so paid on demand shall bear
interest at the rate of % per annum, which shall accrue from the date of such
demand for payment to the date payment of such interest has been made or duly
provided for, and such interest shall also be payable on demand.]
[If a Global Security, insert--Payment of the principal of [(and premium,
if any)] and [if applicable, insert--any such] interest on this Security will be
made by transfer of immediately available funds to a bank account in
designated by the Holder in such coin or currency
of the United States of America as at the time of payment is legal tender for
payment of public and private debts [state other currency].]
[If a Definitive Security, insert--Payment of the principal of [(and
premium, if any)] and [if applicable, insert--any such] interest on this
Security will be made at the office or agency of the Partnership maintained for
that purpose in , [in such coin or currency of the United States of America as
at the time of payment is legal tender for payment of public and private debts]
[state other currency] [or subject to any laws or regulations applicable thereto
and to the right of the Partnership (as provided in the Indenture) to rescind
the designation of any such Paying Agent, at the [main] offices of in
and in , or at such other offices or agencies as the
Partnership may designate, by [United States Dollar] [state other currency]
check drawn on, or transfer to a [United States Dollar] account maintained by
the payee with, a bank in The City of New York [ ] (so long as the applicable
Paying Agent has received proper transfer instructions in writing at least [ ]
days prior to the payment date)] [if applicable, insert--; provided, however,
that payment of interest may be made at the option of the Partnership by [United
States Dollar] [state other currency] check mailed to the addresses of the
Persons entitled thereto as such addresses shall appear in the Security
Register] [or by transfer to a [United States Dollar] [state other currency]
account maintained by the payee with a bank in The City of New York [state other
Place of Payment] (so long as the applicable Paying Agent has received proper
transfer instructions in writing by the Record Date prior to the applicable
Interest Payment Date)].]
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Partnership has caused this instrument to be duly
executed.
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Dated:
KINDER MORGAN ENERGY PARTNERS, L. P.,
By: Kinder Morgan G.P., Inc.,
Its General Partner
By: _________________________
Name:
Title:
SECTION 203. Form of Reverse of Security.
This Security is one of a duly authorized issue of securities of the
Partnership (the "Securities"), issued and to be issued in one or more series
under an Indenture dated as of _________, 1998 (the "Indenture"), among the
Partnership, the Guarantors named therein, and ____________, as Trustee (the
"Trustee", which term includes any successor trustee under the Indenture), to
which Indenture and all indentures supplemental thereto reference is hereby made
for a statement of the respective rights, limitations of rights, obligations,
duties and immunities thereunder of the Partnership, the Guarantors, the Trustee
and the Holders of the Securities and of the terms upon which the Securities
are, and are to be, authenticated and delivered. As provided in the Indenture,
the Securities may be issued in one or more series, which different series may
be issued in various aggregate principal amounts, may mature at different times,
may bear interest, if any, at different rates, may be subject to different
redemption provisions, if any, may be subject to different sinking, purchase or
analogous funds, if any, may be subject to different covenants and Events of
Default and may otherwise vary as in the Indenture provided or permitted. This
Security is one of the series designated on the face hereof [if applicable,
insert--, limited in aggregate principal amount to U.S.$ ].
[If applicable, insert--The Securities of this series are subject to
redemption upon not less than 30 nor more than 60 days' notice by mail, [if
applicable, insert--(1) on in any year commencing with the year and ending with
the year through operation of the sinking fund for this series at a Redemption
Price equal to 100% of the principal amount, and (2)] at any time [if
applicable, insert--on or after , ], as a whole or in part, at the election of
the Partnership, at the following Redemption Prices (expressed as percentages of
the principal amount): If redeemed [if applicable, insert--on or before , %, and
if redeemed] during the 12-month period beginning of the years indicated,
Year Redemption Price Year Redemption Price
---- ---------------- ---- ----------------
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and thereafter at a Redemption Price equal to % of the principal amount,
together in the case of any such redemption [if applicable, insert--(whether
through operation of the sinking fund or otherwise)] with accrued interest to
the Redemption Date, but interest installments whose Stated Maturity is on or
prior to such Redemption Date will be payable to the Holders of such Securities,
or one or more Predecessor Securities, of record at the close of business on the
relevant Record Dates referred to on the face hereof, all as provided in the
Indenture.]
[If applicable, insert--The Securities of this series are subject to
redemption upon not less than 30 nor more than 60 days' notice by mail, (1) on
in any year commencing with the year and ending with the year through operation
of the sinking fund for this series at the Redemption Prices for redemption
through operation of the sinking fund (expressed as percentages of the principal
amount) set forth in the table below, and (2) at any time [if applicable,
insert--on or after
], as a whole or in part, at the election of the Partnership, at
the Redemption Prices for redemption otherwise than through operation of the
sinking fund (expressed as percentages of the principal amount) set forth in the
table below: If redeemed during the 12-month period beginning
of the years indicated,
Redemption Price for Redemption Price for
Redemption Through Redemption Otherwise
Operation of the Than Through
Sinking Operation of the
Year Fund Sinking Fund
---- ------------------- --------------------
and thereafter at a Redemption Price equal to % of the principal amount,
together in the case of any such redemption (whether through operation of the
sinking fund or otherwise) with accrued interest to the Redemption Date, but
interest installments whose Stated Maturity is on or prior to such Redemption
Date will be payable to the Holders of such Securities, or one or more
Predecessor Securities, of record at the close of business on the relevant
Record Dates referred to on the face hereof, all as provided in the Indenture.]
[If applicable, insert--The sinking fund for this series provides for the
redemption on in each year beginning with the year and ending with the year of
[if applicable,--not less than $ ("mandatory sinking fund") and not more than] $
aggregate principal amount of Securities of this series. Securities of this
series acquired or redeemed by the Partnership otherwise than through [if
applicable,--mandatory] sinking fund payments may be credited against subsequent
[if applicable,--mandatory] sinking fund payments otherwise required to be made
[if applicable,--in the inverse order in which they become due].]
[If the Security is subject to redemption in part of any kind, insert--In
the event of redemption of this Security in part only, a new Security or
Securities of this series and of like
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tenor for the unredeemed portion hereof will be issued in the name of the Holder
hereof upon the cancellation hereof.]
[If applicable, insert--The Securities of this series are not redeemable
prior to Stated Maturity.]
[If the Security is not an Original Issue Discount Security, insert--If an
Event of Default with respect to Securities of this series shall occur and be
continuing, the principal of the Securities of this series may be declared due
and payable in the manner and with the effect provided in the Indenture.]
[If the Security is an Original Issue Discount Security, insert--If an
Event of Default with respect to Securities of this series shall occur and be
continuing, an amount of principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture. Such amount shall be equal to--insert formula for determining the
amount. Upon payment (1) of the amount of principal so declared due and payable,
and (2) of interest on any overdue principal and overdue interest, all of the
Partnership's and the Guarantors' obligations in respect of the payment of the
principal of and interest, if any, on the Securities of this series shall
terminate.]
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Partnership or the Guarantors and the rights of the Holders of the Securities of
each series to be affected under the Indenture at any time by the Partnership,
the Guarantors and the Trustee with the consent of not less than the Holders of
a majority in aggregate principal amount of the Outstanding Securities of all
series to be affected (voting as one class). The Indenture also contains
provisions permitting the Holders of a majority in aggregate principal amount of
the Outstanding Securities of all affected series (voting as one class), on
behalf of the Holders of all Securities of such series, to waive compliance by
the Partnership and the Guarantors with certain provisions of the Indenture. The
Indenture permits, with certain exceptions as therein provided, the Holders of a
majority in principal amount of Securities of any series then Outstanding to
waive past defaults under the Indenture with respect to such series and their
consequences. Any such consent or waiver by the Holder of this Security shall be
conclusive and binding upon such Holder and upon all future Holders of this
Security and of any Security issued upon the registration of transfer hereof or
in exchange herefor or in lieu hereof, whether or not notation of such consent
or waiver is made upon this Security.
As provided in and subject to the provisions of the Indenture, the Holder
of this Security shall not have the right to institute any proceeding with
respect to the Indenture or for the appointment of a receiver or trustee or for
any other remedy thereunder, unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default with respect to the
Securities of this series, the Holders of not less than 25% in principal amount
of the Securities of this series at the time Outstanding shall have made written
request to the Trustee to institute proceedings in respect of such Event of
Default as Trustee and offered the Trustee reasonable indemnity and the Trustee
shall not have received from the Holders of a majority in principal amount of
Securities of this series at the time Outstanding a direction inconsistent with
such request, and shall have failed to institute any such proceeding, for 60
days after receipt of
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such notice, request and offer of indemnity. The foregoing shall not apply to
any suit instituted by the Holder of this Security for the enforcement of any
payment of principal hereof or [any premium or] interest hereon on or after the
respective due dates expressed herein.
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Partnership, which
is absolute and unconditional, to pay the principal of and [any premium and]
interest on this Security at the times, place(s) and rate, and in the coin or
currency, herein prescribed.
[If a Global Security, insert--This Global Security or portion hereof may
not be exchanged for Definitive Securities of this series except in the limited
circumstances provided in the Indenture.
The holders of beneficial interests in this Global Security will not be
entitled to receive physical delivery of Definitive Securities except as
described in the Indenture and will not be considered the Holders thereof for
any purpose under the Indenture.]
[If a Definitive Security, insert--As provided in the Indenture and
subject to certain limitations therein set forth, the transfer of this Security
is registerable in the Security Register, upon surrender of this Security for
registration of transfer at the office or agency of the Partnership in [if
applicable, insert -- any place where the principal of and any premium and
interest on this Security are payable] [if applicable, insert-- The City of New
York [, or, subject to any laws or regulations applicable thereto and to the
right of the Partnership (limited as provided in the Indenture) to rescind the
designation of any such transfer agent, at the [main] offices of in and in or at
such other offices or agencies as the Partnership may designate]], duly endorsed
by, or accompanied by a written instrument of transfer in form satisfactory to
the Partnership and the Security Registrar duly executed by, the Holder hereof
or his attorney duly authorized in writing, and thereupon one or more new
Securities of this series and of like tenor, of authorized denominations and for
the same aggregate principal amount, will be issued to the designated transferee
or transferees.]
The Securities of this series are issuable only in registered form without
coupons in denominations of U.S.$ [state other currency] and any integral
multiple thereof. As provided in the Indenture and subject to certain
limitations therein set forth, Securities of this series are exchangeable for a
like aggregate principal amount of Securities of this series and of like tenor
of a different authorized denomination, as requested by the Holder surrendering
the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Partnership may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer,
the Partnership, the Trustee and any agent of the Partnership or the Trustee may
treat the Person in whose name this Security is registered as the owner hereof
for all purposes, whether or not this Security is overdue, and neither the
Partnership, the Trustee nor any such agent shall be affected by notice to the
contrary.
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Obligations of the Partnership and the Guarantors under the Indenture and
the Securities thereunder, including this Security, are non-recourse to Kinder
Morgan, G.P., Inc. (the "General Partner") and its Affiliates (other than the
Partnership and the Guarantors), and payable only out of cash flow and assets of
the Partnership and the Guarantors. The Trustee, and each Holder of a Security
by its acceptance hereof, will be deemed to have agreed in the Indenture that
(1) neither the General Partner nor its assets (nor any of its Affiliates other
than the Partnership or the Guarantors, nor their respective assets) shall be
liable for any of the obligations of the Partnership or the Guarantors under the
Indenture or such Securities, including this Security, and (2) no director,
officer, employee, stockholder or unitholder, as such, of the Partnership, the
Guarantors, the Trustee, the General Partner or any Affiliate of any of the
foregoing entities shall have any personal liability in respect of the
obligations of the Partnership or the Guarantors under the Indenture or such
Securities by reason of his, her or its status.
The Indenture contains provisions that relieve the Partnership and the
Guarantors from the obligation to comply with certain restrictive covenants in
the Indenture and for satisfaction and discharge at any time of the entire
indebtedness upon compliance by the Partnership and the Guarantors with certain
conditions set forth in the Indenture.
[The obligations of the Partnership pursuant to the Indenture and the
Securities, including the repurchase obligations under the Indenture, will be
unconditionally guaranteed, on a senior unsecured basis, by each Guarantor.]
This Security shall be governed by and construed in accordance with the
laws of the State of New York.
All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
[If a Definitive Security, insert as a separate page--
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _____________________________________ (Please Print or
Typewrite Name and Address of Assignee) the within instrument of KINDER MORGAN
ENERGY PARTNERS, L. P. and does hereby irrevocably constitute and appoint
________________________ Attorney to transfer said instrument on the books of
the within-named Partnership, with full power of substitution in the premises.
Please Insert Social Security or
Other Identifying Number of Assignee:
- ------------------------------------- -----------
Dated: (Signature)
------------------------------ -----------
Signature Guarantee:
(Participant in a Recognized Signature
Guaranty Medallion Program)
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NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within instrument in every particular, without
alteration or enlargement or any change whatever.]
SECTION 204. Global Securities.
Every Global Security authenticated and delivered hereunder shall bear a
legend in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A
DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE TRANSFERRED
TO, OR REGISTERED OR EXCHANGED FOR SECURITIES REGISTERED IN THE NAME
OF, ANY PERSON OTHER THAN THE DEPOSITARY OR A NOMINEE THEREOF AND NO
SUCH TRANSFER MAY BE REGISTERED, EXCEPT IN THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE INDENTURE. EVERY SECURITY AUTHENTICATED AND
DELIVERED UPON REGISTRATION OF TRANSFER OF, OR IN EXCHANGE FOR OR IN
LIEU OF, THIS SECURITY SHALL BE A GLOBAL SECURITY SUBJECT TO THE
FOREGOING, EXCEPT IN SUCH LIMITED CIRCUMSTANCES.
If Securities of a series are issuable in whole or in part in the form of
one or more Global Securities, as specified as contemplated by Section 301,
then, notwithstanding Clause (9) of Section 301 and the provisions of Section
302, any Global Security shall represent such of the Outstanding Securities of
such series as shall be specified therein and may provide that it shall
represent the aggregate amount of Outstanding Securities from time to time
endorsed thereon and that the aggregate amount of Outstanding Securities
represented thereby may from time to time be reduced or increased, as the case
may be, to reflect exchanges. Any endorsement of a Global Security to reflect
the amount, or any reduction or increase in the amount, of Outstanding
Securities represented thereby shall be made in such manner and upon
instructions given by such Person or Persons as shall be specified therein or in
a Partnership Order. Subject to the provisions of Sections 303, 304 and 305, the
Trustee shall deliver and redeliver any Global Security in the manner and upon
instructions given by the Person or Persons specified therein or in the
applicable Partnership Order. Any instructions by the Partnership with respect
to endorsement or delivery or redelivery of a Global Security shall be in a
Partnership Order (which need not comply with Section 102 and need not be
accompanied by an Opinion of Counsel).
The provisions of the last sentence of Section 303 shall apply to any
Security represented by a Global Security if such Security was never issued and
sold by the Partnership and the Partnership delivers to the Trustee the Global
Security together with a Partnership Order (which need not comply with Section
102 and need not be accompanied by an Opinion of Counsel) with regard to the
reduction or increase, as the case may be, in the principal amount of Securities
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represented thereby, together with the written statement contemplated by the
last sentence of Section 303.
SECTION 205. Form of Trustee's Certificate and Authorization .
The Trustee's certificates of authentication shall be in substantially the
following form:
This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.
-------------------------,
As Trustee
By:
----------------------
Authorized Officer
ARTICLE III
THE SECURITIES
SECTION 301. Amount Unlimited; Issuable in Series.
The aggregate principal amount of Securities which may be authenticated
and delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be
established in or pursuant to a Board Resolution and, subject to Section 303,
set forth, or determined in the manner provided, in an Officers' Certificate, or
established in one or more indentures supplemental hereto, prior to the issuance
of Securities of any series,
(1) the form and title of the Securities of the series (which shall
distinguish the Securities of the series from Securities of any other series);
(2) any limit upon the aggregate principal amount of the Securities of the
series which may be authenticated and delivered under this Indenture (except for
Securities authenticated and delivered upon registration of transfer of, or in
exchange for, or in lieu of, other Securities of the series pursuant to Section
304, 305, 306, 906 or 1107 and except for any Securities which, pursuant to
Section 303, are deemed never to have been authenticated and delivered
hereunder);
(3) the Person to whom any interest on a Security of the series shall be
payable, if other than the Person in whose name that Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest;
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(4) the date or dates on which the Securities will be issued and on which
the principal of, and premium, if any, on the Securities of the series is
payable or the method of determination thereof;
(5) the rate or rates (which may be fixed or variable) at which the
Securities of the series shall bear interest, if any, or the method of
determination thereof, the date or dates from which such interest shall accrue,
or the method of determination thereof, the Interest Payment Dates on which any
such interest shall be payable and the Regular Record Date for any interest
payable on any Interest Payment Date;
(6) the place or places where, subject to the provisions of Section 1002,
the principal of and any premium and interest on Securities of the series shall
be payable, Securities of the series may be surrendered for registration of
transfer, Securities of the series may be surrendered for exchange and notices,
and demands to or upon the Partnership in respect of the Securities of the
series and this Indenture may be served;
(7) the period or periods, if any, within which, the price or prices at
which and the terms and conditions upon which Securities of the series may be
redeemed, in whole or in part, at the option of the Partnership or otherwise;
(8) the obligation, if any, of the Partnership to redeem or purchase
Securities of the series pursuant to any sinking fund or analogous provisions or
upon the happening of a specified event or at the option of a Holder thereof and
the period or periods within which, the price or prices at which and the terms
and conditions upon which Securities of the series shall be redeemed or
purchased, in whole or in part, pursuant to such obligation;
(9) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which Securities of the series shall be issuable;
(10) whether payment of principal of and premium, if any, and interest, if
any, on the Securities of the series shall be without deduction for taxes,
assessments or governmental charges paid by Holders of the series;
(11) the currency, currencies or currency units in which payment of the
principal of and any premium and interest on any Securities of the series shall
be denominated, payable, redeemable or purchasable if other than the currency of
the United States of America and the manner of determining the equivalent
thereof in the currency of the United States of America for purposes of the
definition of "Outstanding" in Section 101;
(12) if the amount of payments of principal of or any premium or interest
on any Securities of the series may be determined with reference to an index,
the manner in which such amounts shall be determined;
(13) if the principal of or any premium or interest on any Securities of
the series is to be payable, at the election of the Partnership or a Holder
thereof, in one or more currencies or currency units other than that or those in
which the Securities are stated to be payable, the currency, currencies or
currency units in which payment of the principal of and any premium and interest
on Securities of such series as to which such election is made shall be
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<PAGE>
payable, and the periods within which and the terms and conditions upon which
such election is to be made;
(14) the right, if any, of the Partnership to defer payments of interest by
extending the interest payment periods and specify the duration of such
extension, the Interest Payment Dates on which such interest shall be payable
and whether and under what circumstances additional interest on amounts deferred
shall be payable;
(15) if other than the principal amount thereof, the portion of the
principal amount of Securities of the series which shall be payable upon
declaration of acceleration of the Maturity thereof pursuant to Section 502 or
the method of determination thereof;
(16) if and as applicable, that the Securities of the series shall be
issuable in whole or in part in the form of one or more Global Securities (and
whether in temporary or permanent global form) and, in such case, the Depositary
or Depositaries for such Global Security or Global Securities and any
circumstances other than those set forth in Section 305 in which any such Global
Security may be transferred to, and registered and exchanged for Securities
registered in the name of, a Person other than the Depositary for such Global
Security or a nominee thereof and in which any such transfer may be registered;
(17) any deletions from, modifications of or additions to the Events of
Default set forth in Section 501 or the covenants of the Partnership set forth
in Article X pertaining to the Securities of the series;
(18) if and the terms and conditions upon which any Securities of the
series may be converted into or exchanged for securities, which may include,
without limitation, capital stock, of any class or series of the Partnership or
any other issuer;
(19) if other than as provided in Sections 1302 and 1303, the terms and
conditions upon which and the manner in which such series of Securities may be
defeased or discharged;
(20) if other than the Trustee, the identity of the Security Registrar and
any Paying Agent;
(21) any restrictions or other provisions with respect to the transfer or
exchange of the Securities; and
(22) any other terms of the Securities of the series (which terms shall not
be inconsistent with the provisions of this Indenture, except as permitted by
Section 901(5)).
All Securities of any one series shall be substantially identical except
as to denomination and except as may otherwise be provided in or pursuant to the
Board Resolution referred to above and (subject to Section 303) set forth, or
determined in the manner provided, in the Officers' Certificate referred to
above or in any such indenture supplemental hereto.
All Securities of any one series need not be issued at the same time and,
unless otherwise provided, a series may be reopened, without the consent of the
Holders, for increases in the
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<PAGE>
aggregate principal amount of such series of Securities and issuances of
additional Securities of such series or for the establishment of additional
terms with respect to the Securities of such series.
If any of the terms of the series are established by action taken by or
pursuant to a Board Resolution, a copy of an appropriate record of such action
shall be certified by an authorized officer or other authorized person of the
General Partner on behalf of the Partnership and delivered to the Trustee at or
prior to the delivery of the Officers' Certificate setting forth, or providing
the manner for determining, the terms of the series.
With respect to Securities of a series subject to a Periodic Offering,
such Board Resolution or Officers' Certificate may provide general terms for
Securities of such series and provide either that the specific terms of
particular Securities of such series shall be specified in a Partnership Order,
or that such terms shall be determined by the Partnership, or one or more of the
Partnership's agents designated in an Officers' Certificate, in accordance with
a Partnership Order.
SECTION 302. Denominations.
The Securities of each series shall be issuable only in registered form
without coupons in such denominations as shall be specified as contemplated by
Section 301. In the absence of any such specified denomination with respect to
the Securities of any series, the Securities of such series shall be issuable in
denominations of $1,000 and any integral multiple thereof.
SECTION 303. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Partnership by the
Chairman of the Board, Chief Executive Officer, Chief Financial Officer,
President or any Vice President of the General Partner and need not be attested.
The signature of any of these officers on the Securities may be manual or
facsimile.
Securities bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the General Partner shall bind the
Partnership, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Securities or
did not hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of this
Indenture, the Partnership may deliver Securities of any series executed by the
Partnership to the Trustee for authentication, together with a Partnership Order
for the authentication and delivery of such Securities, and the Trustee in
accordance with the Partnership Order shall authenticate and deliver such
Securities; provided, however, that in the case of Securities offered in a
Periodic Offering, the Trustee shall authenticate and deliver such Securities
from time to time in accordance with such other procedures (including, without
limitation, the receipt by the Trustee of oral or electronic instructions from
the Partnership or its duly authorized agents, thereafter promptly confirmed in
writing) acceptable to the Trustee as may be specified by or pursuant to a
Partnership Order delivered to the Trustee prior to the time of the first
authentication of Securities of such series. If the form or terms of the
Securities of the series have been established in or pursuant to one or more
Board Resolutions as permitted by Sections 201 and
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<PAGE>
301, in authenticating such Securities, and accepting the additional
responsibilities under this Indenture in relation to such Securities, the
Trustee shall be entitled to receive, and (subject to Section 601) shall be
fully protected in relying upon, an Opinion of Counsel stating,
(1) if the form or forms of such Securities have been established by or
pursuant to Board Resolution as permitted by Section 201, that such form or
forms have been established in conformity with the provisions of this Indenture;
(2) if the terms of such Securities have been, or in the case of Securities
of a series offered in a Periodic Offering, will be, established by or pursuant
to a Board Resolution as permitted by Section 301, that such terms have been, or
in the case of Securities of a series offered in a Periodic Offering, will be,
established in conformity with the provisions of this Indenture, subject, in the
case of Securities of a series offered in a Periodic Offering, to any conditions
specified in such Opinion of Counsel; and
(3) that such Securities, when authenticated and delivered by the Trustee
and issued by the Partnership in the manner and subject to any conditions
specified in such Opinion of Counsel, will constitute valid and legally binding
obligations of the Partnership enforceable in accordance with their terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
If such form or forms or terms have been so established, the Trustee shall
not be required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties or
immunities under the Securities and this Indenture or otherwise in a manner
which is not reasonably acceptable to the Trustee.
Notwithstanding the provisions of Section 301 and of the preceding
paragraph, if all Securities of a series are not to be originally issued at one
time, it shall not be necessary to deliver the Officers' Certificate otherwise
required pursuant to Section 301 or the Partnership Order and Opinion of Counsel
otherwise required pursuant to such preceding paragraph at or prior to the time
of authentication of each Security of such series if such documents are
delivered at or prior to the authentication upon original issuance of the first
Security of such series to be issued.
With respect to Securities of a series offered in a Periodic Offering, the
Trustee may rely, as to the authorization by the Partnership of any of such
Securities, the form or forms and terms thereof and the legality, validity,
binding effect and enforceability thereof, upon the Opinion of Counsel and the
other documents delivered pursuant to Sections 201 and 301 and this Section, as
applicable, in connection with the first authentication of Securities of such
series.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature of an authorized officer, and such
certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered
hereunder.
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<PAGE>
Notwithstanding the foregoing, if any Security shall have been authenticated and
delivered hereunder but never issued and sold by the Partnership, and the
Partnership shall deliver such Security to the Trustee for cancellation as
provided in Section 309 for all purposes of this Indenture, such Security shall
be deemed never to have been authenticated and delivered hereunder and shall
never be entitled to the benefits of this Indenture.
SECTION 304. Temporary Securities.
Pending the preparation of Definitive Securities of any series, the
Partnership may execute, and upon Partnership Order the Trustee shall
authenticate and deliver, temporary Securities which are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the Definitive Securities in lieu of which they
are issued and with such appropriate insertions, omissions, substitutions and
other variations as the officers executing such Securities may determine, as
evidenced by their execution of such Securities.
If temporary Securities of any series are issued, the Partnership will
cause Definitive Securities of that series to be prepared without unreasonable
delay. After the preparation of Definitive Securities of such series, the
temporary Securities of such series shall be exchangeable for Definitive
Securities of such series upon surrender of the temporary Securities of such
series at the office or agency of the Partnership maintained pursuant to Section
1002 for the purpose of exchanges of Securities of such series, without charge
to the Holder. Upon surrender for cancellation of any one or more temporary
Securities of any series the Partnership shall execute and the Trustee shall
authenticate and deliver in exchange therefor one or more Definitive Securities
of the same series, of any authorized denominations and of a like aggregate
principal amount and tenor. Until so exchanged the temporary Securities of any
series shall in all respects be entitled to the same benefits under this
Indenture as Definitive Securities of such series and tenor.
SECTION 305. Registration, Registration of Transfer and Exchange.
The Partnership shall cause to be kept at an office or agency of the
Partnership in The City of New York a register (the register maintained in such
office or in any other office or agency of the Partnership in a Place of Payment
being herein sometimes referred to as the "Security Register") in which, subject
to such reasonable regulations as it may prescribe, the Partnership shall
provide for the registration of Securities and of transfers of Securities. The
Partnership shall, prior to the issuance of any Securities hereunder, appoint
the Trustee as the initial "Security Registrar" for the purpose of registering
Securities and transfers of Securities as herein provided and its corporate
trust office which, at the date hereof, is located at _____________, as the
initial office or agency in The City of New York where the Security Register
will be maintained. The Partnership may at any time replace such Security
Registrar, change such office or agency or act as its own Security Registrar.
The Partnership will give prompt written notice to the Trustee of any change of
the Security Registrar or of the location of such office or agency.
Upon surrender for registration of transfer of any Security of any series
at the office or agency of the Partnership maintained pursuant to Section 1002
for such purpose, the Partnership
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<PAGE>
shall execute, and the Trustee shall authenticate and deliver, in the name of
the designated transferee or transferees, one or more new Securities of the same
series, of any authorized denominations and of a like aggregate principal amount
and tenor.
At the option of the Holder, Securities of any series (except a Global
Security) may be exchanged for other Securities of the same series, of any
authorized denominations and of a like aggregate principal amount and tenor,
upon surrender of the Securities to be exchanged at such office or agency.
Whenever any Securities are so surrendered for exchange, the Partnership shall
execute, and the Trustee shall authenticate and deliver, the Securities which
the Holder making the exchange is entitled to receive.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Partnership, evidencing the
same debt, and entitled to the same benefits under this Indenture, as the
Securities surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer or
for exchange shall (if so required by the Partnership or the Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Partnership and the Security Registrar duly executed, by the
Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Partnership may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Securities, other
than exchanges pursuant to Section 304 or 1107 not involving any transfer.
Neither the Trustee nor the Partnership shall be required (1) to issue,
register the transfer of or exchange Securities of any series (or of any series
and specified tenor, as the case may be) during a period beginning at the
opening of business 15 days before the day of mailing of a notice of redemption
of Securities of that series selected for redemption under Section 1103 and
ending at the close of business on the day of such mailing, or (2) to register
the transfer of or exchange any Security so selected for redemption in whole or
in part, except the unredeemed portion of any Security being redeemed in part.
Notwithstanding any other provision in this Indenture and except as
otherwise specified as contemplated by Section 301, no Global Security may be
transferred to, or registered or exchanged for Securities registered in the name
of, any Person other than the Depositary for such Global Security or any nominee
thereof, and no such transfer may be registered, except as provided in this
paragraph. Every Security authenticated and delivered upon registration or
transfer of, or in exchange for or in lieu of, a Global Security shall be a
Global Security, except as provided in this paragraph. If (1) (A) the Depositary
for a Global Security notifies the Partnership that it is unwilling or unable to
continue as Depositary for such Global Security or ceases to be a clearing
agency registered under the Exchange Act, and (B) a successor Depositary is not
appointed by the Partnership within 90 days, (2) an Event of Default has
occurred and is continuing with respect to the Securities of such series and the
Security Registrar has received a request from the Depositary to issue
certificated securities in lieu of all or a
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portion of the Global Securities of such series (in which case the Partnership
shall deliver certificated securities within 30 days of such request) or (3) the
Partnership determines in its sole discretion that Securities of a series issued
in global form shall no longer be represented by a Global Security, then such
Global Security may be exchanged by such Depositary for Definitive Securities of
the same series, of any authorized denomination and of a like aggregate
principal amount and tenor, registered in the names of, and the transfer of such
Global Security or portion thereof may be registered to, such Persons as such
Depositary shall direct.
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee, together with
such security or indemnity as may be required by the Partnership or the Trustee
to save each of them and any agent of either of them harmless, the Partnership
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Security of the same series and of like tenor and principal
amount and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Partnership and the Trustee (1)
evidence to their satisfaction of the destruction, loss or theft of any Security
and (2) such security or indemnity as may be required by them to save each of
them and any agent of either of them harmless, then, in the absence of notice to
the Partnership or the Trustee that such Security has been acquired by a bona
fide purchaser, the Partnership shall execute and the Trustee shall authenticate
and deliver, in lieu of any such destroyed, lost or stolen Security, a new
Security of the same series and of like tenor and principal amount and bearing a
number not contemporaneously outstanding. If, after the delivery of such new
Security, a bona fide purchaser of the original Security in lieu of which such
new Security was issued presents for payment or registration such original
Security, the Trustee shall be entitled to recover such new Security from the
party to whom it was delivered or any party taking therefrom, except a bona fide
purchaser, and shall be entitled to recover upon the security or indemnity
provided therefor to the extent of any loss, damage, cost or expense incurred by
the Partnership and the Trustee in connection therewith.
In case any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, the Partnership in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Partnership
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security of any series issued pursuant to this Section in exchange for
any mutilated Security or in lieu of any destroyed, lost or stolen Security
shall constitute an original additional contractual obligation of the
Partnership, whether or not the mutilated, destroyed, lost or stolen Security
shall be at any time enforceable by anyone, and shall be entitled to all the
benefits of this Indenture equally and proportionately with any and all other
Securities of that series duly issued hereunder.
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The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
SECTION 307. Payment of Interest; Interest Rights Preserved.
Except as otherwise provided as contemplated by Section 301 with respect
to any series of Securities, interest on any Security which is payable, and is
punctually paid or duly provided for, on any Interest Payment Date shall be paid
to the Person in whose name that Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest.
Any interest on any Security of any series which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the Holder
on the relevant Regular Record Date by virtue of having been such Holder, and
such Defaulted Interest may be paid by the Partnership, at its election in each
case, as provided in Clause (1) or (2) below:
(1) The Partnership may elect to make payment of any Defaulted Interest to
the Persons in whose names the Securities of such series (or their respective
Predecessor Securities) are registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest, which shall be fixed in
the following manner. The Partnership shall notify the Trustee in writing of the
amount of Defaulted Interest proposed to be paid on each Security of such series
and the date of the proposed payment, and at the same time the Partnership shall
deposit with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the date of
the proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this Clause
provided. Thereupon the Trustee shall fix a Special Record Date for the payment
of such Defaulted Interest which shall be not more than 15 days and not less
than 10 days prior to the date of the proposed payment and not less than 10 days
after the receipt by the Trustee of the notice of the proposed payment. The
Trustee shall promptly notify the Partnership of such Special Record Date and,
in the name and at the expense of the Partnership, shall cause notice of the
proposed payment of such Defaulted Interest and the Special Record Date therefor
to be mailed, first-class postage prepaid, to each Holder of Securities of such
series at his address as it appears in the Security Register, not less than 10
days prior to such Special Record Date. Notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor having been so mailed,
such Defaulted Interest shall be paid to the Persons in whose names the
Securities of such series (or their respective Predecessor Securities) are
registered at the close of business on such Special Record Date and shall no
longer be payable pursuant to the following Clause (2).
(2) The Partnership may make payment of any Defaulted Interest on the
Securities of any series in any other lawful manner not inconsistent with the
requirements of any securities exchange or automated quotation system on which
such Securities may be listed or traded, and upon such notice as may be required
by such exchange, if, after notice given by the
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Partnership to the Trustee of the proposed payment pursuant to this Clause, such
manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section and Section 305, each
Security delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Security, shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Security.
For each series of Securities, the Partnership shall, prior to 11:00 a.m.
(New York City time) on each payment date for principal and premium, if any, and
interest, if any, deposit with the Trustee money in immediately available funds
sufficient to make cash payments due on the applicable payment date.
SECTION 308. Persons Deemed Owners.
Except as otherwise provided as contemplated by Section 301 with respect
to any series of Securities, prior to due presentment of a Security for
registration of transfer, the Partnership, the Trustee and any agent of the
Partnership or the Trustee may treat the Person in whose name such Security is
registered as the owner of such Security for the purpose of receiving payment of
principal of and any premium and (subject to Sections 305 and 307) any interest
on such Security and for all other purposes whatsoever, whether or not such
Security is overdue, and neither the Partnership, the Trustee nor any agent of
the Partnership or the Trustee shall be affected by notice to the contrary.
No holder of any beneficial interest in any Global Security held on its
behalf by a Depositary shall have any rights under this Indenture with respect
to such Global Security, and such Depositary may be treated by the Partnership,
the Trustee and any agent of the Partnership or the Trustee as the owner of such
Global Security for all purposes whatsoever. None of the Partnership, the
Trustee nor any agent of the Partnership or the Trustee will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests of a Global Security
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
SECTION 309. Cancellation.
All Securities surrendered for payment, redemption, registration of
transfer or exchange or for credit against any sinking fund payment shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly canceled by it. The Partnership may at any time deliver to
the Trustee for cancellation any Securities previously authenticated and
delivered hereunder which the Partnership may have acquired in any manner
whatsoever, and may deliver to the Trustee (or to any other Person for delivery
to the Trustee) for cancellation any Securities previously authenticated
hereunder which the Partnership has not issued and sold, and all Securities so
delivered shall be promptly canceled by the Trustee. No Securities shall be
authenticated in lieu of or in exchange for any Securities canceled as provided
in this Section, except as expressly permitted by this Indenture. All canceled
Securities held by the Trustee shall be disposed of in accordance with its
customary procedures, and the Trustee shall thereafter deliver to the
Partnership a certificate with respect to such disposition.
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SECTION 310. Computation of Interest.
Except as otherwise specified as contemplated by Section 301 for
Securities of any series, interest on the Securities of each series shall be
computed on the basis of a 360-day year of twelve 30-day months and interest on
the Securities of each series for any partial period shall be computed on the
basis of a 360-day year of twelve 30-day months and the number of days elapsed
in any partial month.
SECTION 311. CUSIP Numbers.
The Partnership in issuing the Securities may use "CUSIP" numbers (in
addition to the other identification numbers printed on the Securities), and, if
so, the Trustee shall use "CUSIP" numbers in notices of redemption as a
convenience to Holders; provided, however, that any such notice may state that
no representation is made as to the correctness of such "CUSIP" numbers either
as printed on the Securities or as contained in any notice of a redemption and
that reliance may be placed only on the other identification numbers printed on
the Securities, and any such redemption shall not be affected by any defect in
or omission of such "CUSIP" numbers.
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture.
This Indenture shall upon Partnership Request cease to be of further
effect with respect to Securities of any series (except as to any surviving
rights of registration of transfer or exchange of such Securities herein
expressly provided for), and the Trustee, at the expense of the Partnership,
shall execute proper instruments acknowledging satisfaction and discharge of
this Indenture with respect to such Securities, when
(1) either
(A) all such Securities theretofore authenticated and delivered
(other than (i) such Securities which have been destroyed, lost or stolen and
which have been replaced or paid as provided in Section 306, and (ii) such
Securities for whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Partnership and thereafter repaid to the
Partnership or discharged from such trust, as provided in Section 1003) have
been delivered to the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the Trustee
for cancellation
(i) have become due and payable,
(ii) will become due and payable at their Stated Maturity
within one year, or
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(iii)are to be called for redemption within one year
under arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the Partnership,
and the Partnership in the case of (i), (ii) or (iii) above, has irrevocably
deposited or caused to be deposited with the Trustee as trust funds in trust for
this purpose an amount of money in the currency or currency units in which such
Securities are payable sufficient to pay and discharge the entire indebtedness
on such Securities not theretofore delivered to the Trustee for cancellation,
for principal and any premium and interest to the date of such deposit (in the
case of Securities which have become due and payable) or to the Stated Maturity
or Redemption Date, as the case may be;
(2) the Partnership has paid or caused to be paid all other sums payable
hereunder by the Partnership with respect to such Securities; and
(3) the Partnership has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture with
respect to such Securities have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture with
respect to Securities of any series, (x) the obligations of the Partnership and
the Guarantors to the Trustee under Section 607, the obligations of the
Guarantors under Section 1401, the obligations of the Trustee to any
Authenticating Agent under Section 614 and the right of the Trustee to resign
under Section 610 shall survive, and (y) if money shall have been deposited with
the Trustee pursuant to subclause (B) of Clause (1) of this Section, the
obligations of the Partnership and/or the Trustee under Sections 402, 606, 701
and 1002 and the last paragraph of Section 1003 shall survive.
SECTION 402. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 1003, all money
deposited with the Trustee pursuant to Section 401 shall be held in trust and
applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Partnership acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal and any premium and
interest for whose payment such money has been deposited with the Trustee.
ARTICLE V
REMEDIES
SECTION 501. Events of Default.
"Event of Default", wherever used herein with respect to Securities of any
series, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment,
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decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(1) default in the payment of any interest upon any Security of that series
when it becomes due and payable, and continuance of such default for a period of
30 days; or
(2) default in the payment of the principal of (or premium, if any, on) any
Security of that series at its Maturity; or
(3) default in the performance, or breach, of any term, covenant or
warranty of the Partnership or any Guarantor in this Indenture (other than a
term, covenant or warranty a default in whose performance or whose breach is
elsewhere in this Section specifically dealt with or which has expressly been
included in this Indenture solely for the benefit of series of Securities other
than that series) or the Guarantees, and continuance of such default or breach
for a period of 60 days after there has been given, by registered or certified
mail, to the Partnership or such Guarantor by the Trustee or to the Partnership
or such Guarantor and the Trustee by the Holders of at least 25% in principal
amount of the Outstanding Securities of that series a written notice specifying
such default or breach and requiring it to be remedied and stating that such
notice is a "Notice of Default" hereunder; or
(4) the Partnership pursuant to or within the meaning of any Bankruptcy Law
(A) commences a voluntary case, (B) consents to the entry of any order for
relief against it in an involuntary case, (C) consents to the appointment of a
Custodian of it or for all or substantially all of its property, or (D) makes a
general assignment for the benefit of its creditors; or
(5) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that (A) is for relief against the Partnership in an involuntary
case, (B) appoints a Custodian of the Partnership or for all or substantially
all of its property, or (C) orders the liquidation of the Partnership; and the
order or decree remains unstayed and in effect for 90 days; or
(6) any other Event of Default provided as contemplated by Section 301 with
respect to Securities of that series.
SECTION 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default with respect to Securities of any series at the
time Outstanding occurs and is continuing, then in every such case the Trustee
or the Holders of not less than 25% in principal amount of the Outstanding
Securities of that series may declare the principal amount of (or, if any of the
Securities of that series are Original Issue Discount Securities, such portion
of the principal amount of such Securities as may be specified in the terms
thereof), and accrued but unpaid interest, if any, on all of the Securities of
that series to be due and payable immediately, by a notice in writing to the
Partnership (and to the Trustee if given by Holders), and upon any such
declaration such principal amount (or specified amount) shall become immediately
due and payable.
At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgment or decree for
payment of the money due has been
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obtained by the Trustee as hereinafter in this Article provided, the Holders of
a majority in principal amount of the Outstanding Securities of that series, by
written notice to the Partnership and the Trustee, may rescind and annul such
declaration and its consequences if
(1) the Partnership has paid or deposited with the Trustee a sum sufficient
to pay
(A) all overdue interest on all Securities of that series,
(B) the principal of (and premium, if any, on) any Securities of
that series which have become due otherwise than by such declaration of
acceleration and any interest thereon at the rate or rates prescribed therefor
in such Securities,
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate or rates prescribed therefor in such
Securities, and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel; and
(2) all Events of Default with respect to Securities of that series, other
than the non-payment of the principal of Securities of that series which have
become due solely by such declaration of acceleration, have been cured or waived
as provided in Section 513.
No such rescission shall affect any subsequent Default or impair any right
consequent thereon.
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee.
The Partnership covenants that if
(1) default is made in the payment of any interest on any Security when
such interest becomes due and payable and such default continues for a period of
30 days, or
(2) default is made in the payment of the principal of (or premium, if any,
on) any Security at the Maturity thereof,
the Partnership will, upon demand of the Trustee, pay to it, for the benefit of
the Holders of such Securities, the whole amount then due and payable on such
Securities for principal and any premium and interest and, to the extent that
payment of such interest shall be legally enforceable, interest on any overdue
principal and premium and on any overdue interest, at the rate or rates
prescribed therefor in such Securities, and, in addition thereto, such further
amount as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel.
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If the Partnership fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Partnership, any Guarantor, or any other obligor upon such
Securities and collect the moneys adjudged or decreed to be payable in the
manner provided by law out of the property of the Partnership, any Guarantor, or
any other obligor upon such Securities, wherever situated.
If an Event of Default with respect to Securities of any series occurs and
is continuing, the Trustee may in its discretion proceed to protect and enforce
its rights and the rights of the Holders of Securities of such series by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy.
SECTION 504. Trustee May File Proofs of Claim.
In case of any judicial proceeding relative to the Partnership, any
Guarantor, or any other obligor upon the Securities, their property or their
creditors, the Trustee shall be entitled and empowered, by intervention in such
proceeding or otherwise, to take any and all actions authorized under the Trust
Indenture Act in order to have claims of the Holders and the Trustee allowed in
any such proceeding. In particular, the Trustee shall be authorized to collect
and receive any moneys or other property payable or deliverable on any such
claims and to distribute the same; and any custodian, receiver, assignee,
trustee, liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 607.
No provision of this Indenture shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding; provided, however,
that the Trustee may, on behalf of the Holders, vote for the election of a
trustee in bankruptcy or similar official and be a member of a creditors' or
other similar committee.
SECTION 505. Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities may
be prosecuted and enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, be for the ratable benefit of
the Holders of the Securities in respect of which such judgment has been
recovered.
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SECTION 506. Application of Money Collected.
Any money or property collected or to be applied by the Trustee pursuant
to this Article shall be applied in the following order, at the date or dates
fixed by the Trustee and, in case of the distribution of such money or property
on account of principal or any premium or interest, upon presentation of the
Securities and the notation thereon of the payment if only partially paid and
upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section 607;
SECOND: To the payment of the amounts then due and unpaid for principal of
and any premium and interest on the Securities in respect of which or for the
benefit of which such money has been collected, ratably, without preference or
priority of any kind, according to the amounts due and payable on such
Securities for principal and any premium and interest, respectively; and
THIRD: The balance, if any, to the Partnership.
SECTION 507. Limitation on Suits.
No Holder of any Security of any series shall have any right to institute
any proceeding, judicial or otherwise, with respect to this Indenture, or for
the appointment of a receiver or trustee, or for any other remedy hereunder,
unless
(1) such Holder has previously given written notice to the Trustee of a
continuing Event of Default with respect to the Securities of that series;
(2) the Holders of not less than 25% in principal amount of the Outstanding
Securities of that series shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name as
Trustee hereunder;
(3) such Holder or Holders have offered and, if requested, provided to the
Trustee reasonable security or indemnity against the costs, expenses and
liabilities to be incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request and
offer and, if requested, provision of security or indemnity has failed to
institute any such proceeding; and
(5) no direction inconsistent with such written request has been given to
the Trustee during such 60-day period by the Holders of a majority in principal
amount of the Outstanding Securities of that series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders, or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all of such
Holders.
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SECTION 508. Unconditional Right of Holders to Receive Principal, Premium
and Interest.
Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right, which is absolute and unconditional, to receive
payment of the principal of and any premium and (subject to Sections 305 and
307) interest on such Security on the respective Stated Maturities expressed in
such Security (or, in the case of redemption, on the Redemption Date) and to
institute suit for the enforcement of any such payment, and such rights shall
not be impaired without the consent of such Holder.
SECTION 509. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce any
right or remedy under this Indenture and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to the Trustee or
to such Holder, then in every such case, subject to any determination in such
proceeding, the Partnership, the Guarantors, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
SECTION 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities in the last paragraph of Section
306, no right or remedy herein conferred upon or reserved to the Trustee or to
the Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Securities to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Trustee or to the Holders may be exercised from time to time, and as often
as may be deemed expedient, by the Trustee or by the Holders, as the case may
be.
SECTION 512. Control by Holders.
The Holders of a majority in aggregate principal amount of the Outstanding
Securities of any series shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee, with respect to the
Securities of such series; provided, however, that
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(1) such direction shall not be in conflict with any rule of law or with
this Indenture;
(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction; and
(3) subject to the provisions of Section 601, the Trustee shall have the
right to decline to follow any such direction if the Trustee in good faith shall
determine that the proceeding so directed would involve the Trustee in personal
liability or would otherwise be contrary to applicable law.
SECTION 513. Waiver of Past Defaults.
The Holders of a majority in aggregate principal amount of the Outstanding
Securities of any series may on behalf of the Holders of all the Securities of
such series waive any past default hereunder with respect to such series and its
consequences, except
(1) a continuing default in the payment of the principal of or any premium
or interest on any Security of such series, or
(2) a default in respect of a covenant or provision hereof which under
Article IX cannot be modified or amended without the consent of the Holder of
each Outstanding Security of such series affected.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture, but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
SECTION 514. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken, suffered or
omitted by it as Trustee, a court may require any party litigant in such suit to
file an undertaking to pay the costs of such suit, and may assess costs against
any such party litigant, in the manner and to the extent provided in the Trust
Indenture Act; provided, however, that neither this Section nor the Trust
Indenture Act shall be deemed to authorize any court to require such an
undertaking or to make such an assessment in any suit instituted by the
Partnership.
SECTION 515. Waiver of Usury, Stay or Extension Laws.
The Partnership covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any usury, stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Partnership (to the extent that it
may lawfully do so) hereby expressly waives all benefit or advantage of any such
law and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
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ARTICLE VI
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities.
The duties and responsibilities of the Trustee shall be as provided by the
Trust Indenture Act. No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or security or indemnity satisfactory to it against such
risk or liability is not reasonably assured to it. Whether or not therein
expressly so provided, every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section.
SECTION 602. Notice of Defaults.
If a Default occurs and is continuing with respect to the Securities of
any series, the Trustee shall, within 90 days after it occurs, transmit, in the
manner and to the extent provided in Section 313(c) of the Trust Indenture Act,
notice of all uncured or unwaived Defaults known to it; provided, however, that,
except in the case of a Default in payment on the Securities of any series, the
Trustee may withhold the notice if it determines in good faith that withholding
such notice is in the interests of Holders of Securities of such series;
provided, further, however, that, in the case of any default or breach of the
character specified in Section 501(3) with respect to the Securities of such
series, no such notice to Holders shall be given until at least 60 days after
the occurrence thereof.
SECTION 603. Certain Rights of Trustee.
Subject to the provisions of Section 601:
(1) the Trustee may rely on and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;
(2) any request, direction, order or demand of the Partnership mentioned
herein shall be sufficiently evidenced by a Partnership Request or Partnership
Order (other than delivery of any Security to the Trustee for authentication and
delivery pursuant to Section 303, which shall be sufficiently evidenced as
provided therein) and any resolution of the Board of Directors shall be
sufficiently evidenced by a Board Resolution;
(3) whenever in the administration of this Indenture the Trustee shall deem
it desirable that a matter be proved or established prior to taking, suffering
or omitting any action hereunder, the Trustee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on its part, rely upon
an Officers' Certificate;
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(4) the Trustee may consult with counsel and the written advice of such
counsel or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon;
(5) the Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Holders pursuant to this Indenture, unless such Holders shall have offered
to the Trustee security or indemnity satisfactory to it against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction;
(6) the Trustee shall not be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, but the
Trustee, in its discretion, may, without obligation to do so, make such further
inquiry or investigation into such facts or matters as it may see fit;
(7) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder; and
(8) the Trustee may request that the Partnership deliver an Officers'
Certificate setting forth the names of individuals and/or titles of officers
authorized at such time to take specified actions pursuant to this Indenture,
which Officers' Certificate may be signed by any person authorized to sign an
Officers' Certificate, including any person specified as so authorized in any
such certificate previously delivered and not superseded.
SECTION 604. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the Trustee's
certificates of authentication, shall be taken as the statements of the
Partnership, and the Trustee or any Authenticating Agent assumes no
responsibility for their correctness. Neither the Trustee nor any Authenticating
Agent makes any representations as to the validity or sufficiency of this
Indenture or of the Securities. The Trustee or any Authenticating Agent shall
not be accountable for the use or application by the Partnership of Securities
or the proceeds thereof.
SECTION 605. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Partnership, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to Sections
608 and 613, may otherwise deal with the Partnership with the same rights it
would have if it were not Trustee, Authenticating Agent, Paying Agent, Security
Registrar or such other agent.
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SECTION 606. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed with the Partnership.
SECTION 607. Compensation and Reimbursement.
The Partnership and the Guarantors jointly and severally agree:
(1) to pay to the Trustee from time to time reasonable compensation for all
services rendered by it hereunder (which compensation shall not be limited by
any provision of law in regard to the compensation of a trustee of an express
trust);
(2) to reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any provision of this Indenture (including the reasonable compensation and the
expenses and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad faith;
and
(3) to indemnify the Trustee for, and to hold it harmless against, any
loss, liability or expense incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of the
trust or trusts hereunder, including the costs and expenses of defending itself
against any claim or liability in connection with the exercise or performance of
any of its powers or duties hereunder.
The obligations of the Partnership and the Guarantors under this Section
to compensate the Trustee and to pay or reimburse the Trustee for expenses,
disbursements and advances shall constitute additional indebtedness hereunder.
Without limiting any rights available to the Trustee under applicable law,
when the Trustee incurs expenses or renders services in connection with an Event
of Default specified in Section 501(4) or Section 501(5), the expenses
(including the reasonable charges and expenses of its counsel) and the
compensation for such services are intended to constitute expenses of
administration under any applicable Bankruptcy Law.
The provisions of this Section shall survive the satisfaction and
discharge of this Indenture and the defeasance of the Securities.
SECTION 608. isqualification; Conflicting Interests.
If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture.
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SECTION 609. Corporate Trustee Required; Eligibility.
There shall at all times be one or more Trustees hereunder with respect to
the Securities of each series, at least one of which shall be a Person that is
eligible pursuant to the Trust Indenture Act to act as such and has a combined
capital and surplus required by the Trust Indenture Act. If such Person
publishes reports of condition at least annually, pursuant to law or to the
requirements of a supervising or examining authority, then for the purposes of
this Section, the combined capital and surplus of such Person shall be deemed to
be its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, it shall resign immediately in
the manner and with the effect hereinafter specified in this Article.
SECTION 610. Resignation and Removal; Appointment of Successor.
No resignation or removal of the Trustee and no appointment of a successor
Trustee pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee in accordance with the applicable
requirements of Section 611.
The Trustee may resign at any time with respect to the Securities of one
or more series by giving written notice thereof to the Partnership and the
Guarantors. If the instrument of acceptance by a successor Trustee required by
Section 611 shall not have been delivered to the Trustee within 30 days after
the giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor Trustee with
respect to the Securities of such series.
The Trustee may be removed at any time with respect to the Securities of
any series by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series, delivered to the Trustee and to the
Partnership.
If at any time:
(1) the Trustee shall fail to comply with Section 608 after written request
therefor by the Partnership, any Guarantor, or by any Holder who has been a bona
fide Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 609 and shall fail
to resign after written request therefor by the Partnership, any Guarantor, or
by any such Holder, or
(3) the Trustee shall become incapable of acting or shall be adjudged a
bankrupt or insolvent or a receiver of the Trustee or of its property shall be
appointed or any public officer shall take charge or control of the Trustee or
of its property or affairs for the purpose of rehabilitation, conservation or
liquidation, then, in any such case, (A) the Partnership, acting pursuant to the
authority of a Board Resolution, may remove the Trustee with respect to all
Securities, or (B) subject to Section 514, any Holder who has been a bona fide
Holder of a Security for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee with respect to all Securities and the appointment of a
successor Trustee or Trustees.
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If the Trustee shall resign, be removed or become incapable of acting, or
if a vacancy shall occur in the office of Trustee for any cause, with respect to
the Securities of one or more series, the Partnership, by a Board Resolution,
shall promptly appoint a successor Trustee or Trustees with respect to the
Securities of that or those series (it being understood that any such successor
Trustee may be appointed with respect to the Securities of one or more or all of
such series and that at any time there shall be only one Trustee with respect to
the Securities of any particular series) and shall comply with the applicable
requirements of Section 611. If, within one year after such resignation, removal
or incapability, or the occurrence of such vacancy, a successor Trustee with
respect to the Securities of any series shall be appointed by Act of the Holders
of a majority in principal amount of the Outstanding Securities of such series
delivered to the Partnership, the Guarantors, and the retiring Trustee, the
successor Trustee so appointed shall, forthwith upon its acceptance of such
appointment in accordance with the applicable requirements of Section 611,
become the successor Trustee with respect to the Securities of such series and
to that extent supersede the successor Trustee appointed by the Partnership. If
no successor Trustee with respect to the Securities of any series shall have
been so appointed by the Partnership or the Holders and accepted appointment in
the manner required by Section 611, any Holder who has been a bona fide Holder
of a Security of such series for at least six months may, on behalf of himself
and all others similarly situated, petition any court of competent jurisdiction
for the appointment of a successor Trustee with respect to the Securities of
such series.
The Partnership shall give notice of each resignation and each removal of
the Trustee with respect to the Securities of any series and each appointment of
a successor Trustee with respect to the Securities of any series to all Holders
of Securities of such series in the manner provided in Section 106. Each notice
shall include the name of the successor Trustee with respect to the Securities
of such series and the address of its Corporate Trust Office.
SECTION 611. Acceptance of Appointment by Successor.
(1) In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Partnership, the Guarantors, and to the
retiring Trustee an instrument accepting such appointment, and thereupon the
resignation or removal of the retiring Trustee shall become effective and such
successor Trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts and duties of the retiring Trustee;
but, on the request of the Partnership, any Guarantor, or the successor Trustee,
such retiring Trustee shall, upon payment of its charges, execute and deliver an
instrument transferring to such successor Trustee all the rights, powers and
trusts of the retiring Trustee and shall duly assign, transfer and deliver to
such successor Trustee all property and money held by such retiring Trustee
hereunder.
(2) In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Partnership,
each Guarantor, the retiring Trustee and each successor Trustee with respect to
the Securities of one or more series shall execute and deliver an indenture
supplemental hereto wherein each successor Trustee shall accept such appointment
and which (A) shall contain such provisions as shall be necessary or desirable
to transfer and confirm to, and to vest in, each successor Trustee all the
rights, powers, trusts and duties of the retiring Trustee with respect to the
Securities of that or those series to which the appointment of such successor
Trustee relates, (B) if the retiring Trustee is not retiring
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with respect to all Securities, shall contain such provisions as shall be deemed
necessary or desirable to confirm that all the rights, powers, trusts and duties
of the retiring Trustee with respect to the Securities of that or those series
as to which the retiring Trustee is not retiring shall continue to be vested in
the retiring Trustee, and (C) shall add to or change any of the provisions of
this Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee, it being
understood that nothing herein or in such supplemental indenture shall
constitute such Trustees as co-trustees of the same trust and that each such
Trustee shall be trustee of a trust or trusts hereunder separate and apart from
any trust or trusts hereunder administered by any other such Trustee; and upon
the execution and delivery of such supplemental indenture the resignation or
removal of the retiring Trustee shall become effective to the extent provided
therein and each such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Trustee with respect to the Securities of that or those series
to which the appointment of such successor Trustee relates, but, on request of
the Partnership, any Guarantor, or any successor Trustee, such retiring Trustee
shall, upon payment of its charges, duly assign, transfer and deliver to such
successor Trustee all property and money held by such retiring Trustee hereunder
with respect to the Securities of that or those series to which the appointment
of such successor Trustee relates.
(3) Upon request of any such successor Trustee, the Partnership and the
Guarantors shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Trustee all such rights, powers and
trusts referred to in paragraph (1) or (2) of this Section, as the case may be.
(4) No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article.
SECTION 612. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been authenticated,
but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated with the same effect
as if such successor Trustee had itself authenticated such Securities.
SECTION 613. Preferential Collection of Claims Against Partnership.
If and when the Trustee shall be or become a creditor of the Partnership,
any Guarantor, or any other obligor upon the Securities, the Trustee shall be
subject to the provisions of the Trust Indenture Act regarding the collection of
claims against the Partnership, any such Guarantor, or any such other obligor.
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SECTION 614. Appointment of Authenticating Agent.
The Trustee (upon notice to the Partnership and the Guarantors) may
appoint an Authenticating Agent or Agents with respect to one or more series of
Securities which shall be authorized to act on behalf of the Trustee to
authenticate Securities of such series issued upon original issue (in accordance
with procedures acceptable to the Trustee) and upon exchange, registration of
transfer or partial redemption thereof or pursuant to Section 306, and
Securities so authenticated shall be entitled to the benefits of this Indenture
and shall be valid and obligatory for all purposes as if authenticated by the
Trustee hereunder. Wherever reference is made in this Indenture to the
authentication and delivery of Securities by the Trustee or the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating Agent
and a certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be acceptable to the
Partnership and shall at all times be a corporation organized and doing business
under the laws of the United States of America, any State thereof or the
District of Columbia, authorized under such laws to act as Authenticating Agent,
having a combined capital and surplus of not less than $50,000,000 and subject
to supervision or examination by Federal or State authority. If such
Authenticating Agent publishes reports of condition at least annually, pursuant
to law or to the requirements of said supervising or examining authority, then
for the purposes of this Section, the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time an
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, such Authenticating Agent shall resign immediately
in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to all or substantially all of
the corporate agency or corporate trust business of such Authenticating Agent,
shall continue to be an Authenticating Agent, provided such corporation shall be
otherwise eligible under this Section, without the execution or filing of any
paper or any further act on the part of the Trustee or such Authenticating
Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee, to the Partnership, and to the Guarantors. The Trustee
may at any time terminate the agency of an Authenticating Agent by giving
written notice thereof to such Authenticating Agent, to the Partnership, and to
the Guarantors. Upon receiving such a notice of resignation or upon such a
termination, or in case at any time such Authenticating Agent shall cease to be
eligible in accordance with the provisions of this Section, the Trustee may
appoint a successor Authenticating Agent which shall be acceptable to the
Partnership. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers and duties
of its predecessor hereunder, with like effect as if originally named as an
Authenticating Agent. No successor Authenticating Agent shall be appointed
unless eligible under the provisions of this Section.
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Except with respect to an Authenticating Agent appointed at the request of
the Partnership, the Trustee agrees to pay to each Authenticating Agent from
time to time reasonable compensation for its services under this Section.
If an appointment with respect to one or more series is made pursuant to
this Section, the Securities of such series may have endorsed thereon, in
addition to the Trustee's certificate of authentication, an alternative
certificate of authentication in the following form:
This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.
--------------------------------,
As Trustee
By:
----------------------------
As Authenticating Agent
By: ----------------------------
Authorized Officer
ARTICLE VII
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND PARTNERSHIP
SECTION 701. Partnership to Furnish Trustee Names and Addresses of Holders.
The Partnership will furnish or cause to be furnished to the Trustee
(1) semi-annually, not later than May 15 and November 15 in each year, a
list for each series of Securities, in such form as the Trustee may reasonably
require, of the names and addresses of the Holders of Securities of such series
as of the preceding April 30 or October 31, as the case may be, and
(2) at such other times as the Trustee may request in writing, within 30
days after the receipt by the Partnership of any such request, a list of similar
form and content as of a date not more than 15 days prior to the time such list
is furnished;
provided, however, that if and so long as the Trustee shall be the Security
Registrar for Securities of a series, no such list need be furnished with
respect to such series of Securities.
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SECTION 702. Preservation of Information; Communications to Holders.
The Trustee shall comply with the obligations imposed upon it pursuant to
Section 312 of the Trust Indenture Act.
The rights of the Holders to communicate with other Holders with respect
to their rights under this Indenture or under the Securities, and the
corresponding rights and privileges of the Trustee, shall be as provided by the
Trust Indenture Act.
Every Holder of Securities, by receiving and holding the same, agrees with
the Partnership and the Trustee that neither the Partnership nor the Trustee nor
any agent of either of them shall be held accountable by reason of any
disclosure of information as to the names and addresses of Holders made pursuant
to the Trust Indenture Act.
SECTION 703. Reports by Trustee.
The Trustee shall transmit to Holders such reports concerning the Trustee
and its actions under this Indenture as may be required pursuant to the Trust
Indenture Act at the times and in the manner provided pursuant thereto.
Reports so required to be transmitted at stated intervals of not more than
12 months shall be transmitted no later than July 15 in each calendar year with
respect to the 12-month period ending on the previous May 15, commencing May 15,
1999.
A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Trustee with each stock exchange upon which any
Securities are listed, with the Commission and with the Partnership. The
Partnership will notify the Trustee when any Securities are listed on any stock
exchange.
SECTION 704. Reports by Partnership.
The Partnership shall:
(1) file with the Trustee, within 15 days after the Partnership is required
to file the same with the Commission, copies of the annual reports and of the
information, documents and other reports (or copies of such portions of any of
the foregoing as the Commission may from time to time by rules and regulations
prescribe) which the Partnership may be required to file with the Commission
pursuant to Section 13 or Section 15(d) of the Exchange Act; or, if the
Partnership is not required to file information, documents or reports pursuant
to either of said Sections, then it shall file with the Trustee and the
Commission (unless the Commission will not accept such a filing), in accordance
with rules and regulations prescribed from time to time by the Commission, such
of the supplementary and periodic information, documents and reports which may
be required pursuant to Section 13 of the Exchange Act in respect of a security
listed and registered on a national securities exchange as may be prescribed
from time to time in such rules and regulations;
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(2) file with the Trustee and the Commission, in accordance with rules and
regulations prescribed from time to time by the Commission, such additional
information, documents and reports with respect to compliance by the Partnership
with the conditions and covenants of this Indenture as may be required from time
to time by such rules and regulations; and
(3) transmit by mail to all Holders, as their names and addresses appear in
the Security Register, within 30 days after the filing thereof with the Trustee,
such summaries of any information, documents and reports required to be filed by
the Partnership pursuant to paragraphs (1) and (2) of this Section as may be
required by rules and regulations prescribed from time to time by the
Commission.
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. Partnership and Guarantors May Consolidate, Etc., Only on
Certain Terms.
Neither the Partnership nor any Guarantor shall consolidate with or merge
into any other Person or sell, lease or transfer its properties and assets as,
or substantially as, an entirety to, any Person, unless:
(1) (A) in the case of a merger, the Partnership or such Guarantor, as the
case may be, is the surviving entity, or (B) the Person formed by such
consolidation or into which the Partnership or such Guarantor is merged or the
Person which acquires by sale or transfer, or which leases, the properties and
assets of the Partnership or such Guarantor as, or substantially as, an entirety
must expressly assume, by an indenture supplemental hereto, executed and
delivered to the Trustee, in form reasonably satisfactory to the Trustee, all of
the obligations of the Partnership or such Guarantor, as the case may be, under
this Indenture and the Securities;
(2) the surviving entity or successor Person is a Person organized and
existing under the laws of the U.S., any State thereof or the District of
Columbia;
(3) immediately after giving effect to such transaction, no Default or
Event of Default exists; and
(4) the Partnership has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that such consolidation, merger, sale,
transfer or lease and the supplemental indenture required in connection with
such transaction comply with this Article and that all conditions precedent
herein provided for relating to such transaction have been complied with.
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SECTION 802. Successor Substituted.
Upon any consolidation of the Partnership or any Guarantor with, or merger
of the Partnership or any Guarantor into, any other Person or any sale, transfer
or lease of the properties and assets of the Partnership or any Guarantor as, or
substantially as, an entirety in accordance with Section 801, the successor
Person formed by such consolidation or into which the Partnership or such
Guarantor is merged or to which such sale, transfer or lease is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Partnership or such Guarantor under this Indenture with the same effect as
if such successor Person had been named originally as the Partnership or such
Guarantor herein, and thereafter, except in the case of a lease, the predecessor
Person shall be relieved of all obligations and covenants under this Indenture
and the Securities.
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders of Securities, the Partnership, the
Guarantors and the Trustee, at any time and from time to time, may enter into
one or more indentures supplemental hereto, in form satisfactory to the Trustee,
for any of the following purposes:
(1) to secure any of such Securities;
(2) to evidence the succession of another Person to the Partnership or any
Guarantor under this Indenture and the Securities and the assumption by such
successor Person of the obligations of the Partnership or such Guarantor
hereunder;
(3) reflect the release of any Guarantor from its Guarantee, or the
addition of any Subsidiary of the Partnership as a Guarantor, in the manner
provided by this Indenture;
(4) to add covenants and Events of Default for the benefit of the Holders
of all or any series of such Securities or to surrender any right or power
conferred by this Indenture upon the Partnership or a Guarantor;
(5) to add to, change or eliminate any of the provisions of this Indenture,
provided that any such addition, change or elimination shall become effective
only after there are no such Securities of any series entitled to the benefit of
such provision outstanding;
(6) to establish the forms or terms of the Securities of any series issued
hereunder;
(7) to cure any ambiguity or correct any inconsistency in this Indenture;
(8) to evidence the acceptance of appointment by a successor Trustee;
(9) to qualify this Indenture under the Trust Indenture Act;
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(10) to provide for uncertificated securities in addition to certificated
securities;
(11) to supplement any provisions of this Indenture necessary to permit or
facilitate the defeasance and discharge of any series of Securities, provided
that such action does not adversely affect the interests of the Holders of
Securities of such series or any other series; and
(12) to comply with the rules or regulations of any securities exchange or
automated quotation system on which any of the Securities may be listed or
traded.
SECTION 902. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in aggregate
principal amount of all Outstanding Securities affected by such supplemental
indenture (voting as one class), the Partnership, the Guarantors and the Trustee
may enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to, or changing in any manner or eliminating any of the
provisions of, this Indenture, or modifying in any manner the rights of the
Holders of Securities of such series under this Indenture; provided that the
Partnership, the Guarantors and the Trustee may not, without the consent of the
Holder of each Outstanding Security affected thereby,
(1) change the Stated Maturity of the principal of, or any installment of
principal of or interest, if any, on, any Security, or reduce the principal
amount thereof or premium, if any, on or the rate of interest thereon or alter
the method of computation of interest;
(2) reduce the percentage in principal amount of Securities required for
any such supplemental indenture or for any waiver provided for in this
Indenture;
(3) change the Partnership's obligation to maintain an office or agency for
payment of Securities and the other matters specified herein;
(4) impair the right to institute suit for the enforcement of any payment
of principal of, premium, if any, or interest on, any Security; or
(5) modify any of the provisions of this Indenture relating to the
execution of supplemental indentures with the consent of Holders of Securities
which are discussed in this Section or modify any provisions relating to the
waiver by Holders of Securities of past defaults and covenants, except to
increase any required percentage or to provide that other provisions of this
Indenture cannot be modified or waived without the consent of the Holder of each
Outstanding Security affected thereby.
A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Securities, or which modifies the
rights of the Holders of Securities of such series with respect to such covenant
or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.
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It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
SECTION 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 601) shall be fully protected in relying upon, an
Officers' Certificate and an Opinion of Counsel stating that the execution of
such supplemental indenture is authorized or permitted by this Indenture. The
Trustee may, but shall not be obligated to, enter into any such supplemental
indenture which affects the Trustee's own rights, duties or immunities under
this Indenture or otherwise.
SECTION 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
SECTION 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
SECTION 906. Reference in Securities to Supplemental Indentures.
Securities of any series authenticated and delivered after the execution
of any supplemental indenture pursuant to this Article may, and shall if
required by the Trustee, bear a notation in form approved by the Trustee as to
any matter provided for in such supplemental indenture. If the Partnership shall
so determine, new Securities of any series so modified as to conform, in the
opinion of the Trustee, the Guarantors and the Partnership, to any such
supplemental indenture may be prepared and executed by the Partnership and
authenticated and delivered by the Trustee in exchange for Outstanding
Securities of such series.
ARTICLE X
COVENANTS
SECTION 1001. Payment of Principal, Premium and Interest.
The Partnership covenants and agrees for the benefit of each series of
Securities that it will duly and punctually pay the principal of and any premium
and interest on the Securities of that series in accordance with the terms of
the Securities and this Indenture.
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SECTION 1002. Maintenance of Office or Agency.
The Partnership will maintain in each Place of Payment for any series of
Securities an office or agency where Securities of that series may be presented
or surrendered for payment, where Securities of that series may be surrendered
for registration of transfer or exchange and where notices and demands to or
upon the Partnership in respect of the Securities of that series and this
Indenture may be served. The Partnership will give prompt written notice to the
Trustee of the location, and any change in the location, of such office or
agency. If at any time the Partnership shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee, and the Partnership hereby appoints the
Trustee as its agent to receive all such presentations, surrenders, notices and
demands.
The Partnership may also from time to time designate one or more other
offices or agencies where the Securities of one or more series may be presented
or surrendered for any or all such purposes and may from time to time rescind
such designations; provided, however, that no such designation or rescission
shall in any manner relieve the Partnership of its obligation to maintain an
office or agency in each Place of Payment for Securities of any series for such
purposes. The Partnership will give prompt written notice to the Trustee of any
such designation or rescission and of any change in the location of any such
other office or agency.
Except as otherwise specified with respect to a series of Securities as
contemplated by Section 301, the Partnership hereby initially designates as the
Place of Payment for each series of Securities The City and State of New York,
and initially appoints the Trustee at its Corporate Trust Office as the
Partnership's office or agency for each such purpose in such city.
SECTION 1003. Money for Securities Payments to Be Held in Trust.
If the Partnership or any of its Subsidiaries shall at any time act as
Paying Agent with respect to any series of Securities, it will, on or before
each due date of the principal of or any premium or interest on any of the
Securities of that series, segregate and hold in trust for the benefit of the
Persons entitled thereto a sum sufficient to pay the principal and any premium
and interest so becoming due until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and will promptly notify the Trustee of
its action or failure so to act.
Whenever the Partnership shall have one or more Paying Agents for any
series of Securities, it will, on or prior to each due date of the principal of
or any premium or interest on any Securities of that series, deposit with a
Paying Agent a sum sufficient to pay such amount, such sum to be held as
provided by the Trust Indenture Act, and (unless such Paying Agent is the
Trustee) the Partnership will promptly notify the Trustee of its action or
failure so to act.
The Partnership will cause each Paying Agent for any series of Securities
other than the Trustee to execute and deliver to the Trustee an instrument in
which such Paying Agent shall agree with the Trustee, subject to the provisions
of this Section, that such Paying Agent will (1) hold all sums held by it for
the payment of the principal of (and premium, if any) or interest, if any, on
Securities of that series in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise disposed of
as herein provided; (2) give the
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Trustee notice of any default by the Partnership or any Guarantor (or any other
obligor upon the Securities of that series) in the making of any payment of
principal (and premium, if any) or interest, if any, on the Securities of that
series; and (3) during the continuance of any such default, upon the written
request of the Trustee, forthwith pay to the Trustee all sums held in trust by
such Paying Agent for payment in respect of the Securities of that series.
The Partnership may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Partnership Order direct any Paying Agent to pay, to the Trustee all sums
held in trust by the Partnership, any Guarantor or such Paying Agent, such sums
to be held by the Trustee upon the same trusts as those upon which such sums
were held by the Partnership, such Guarantor or such Paying Agent; and, upon
such payment by any Paying Agent to the Trustee, such Paying Agent shall be
released from all further liability with respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Partnership, in trust for the payment of the principal of or any premium or
interest on any Security of any series and remaining unclaimed for two years
after such principal, premium or interest has become due and payable shall be
paid to the Partnership on Partnership Request, or (if then held by the
Partnership) shall be discharged from such trust; and the Holder of such
Security shall thereafter, as an unsecured general creditor, look only to the
Partnership or the Guarantors for payment thereof, and all liability of the
Trustee or such Paying Agent with respect to such trust money, and all liability
of the Partnership as trustee thereof, shall thereupon cease; provided, however,
that the Trustee or such Paying Agent, before being required to make any such
repayment, may at the expense of the Partnership cause to be published once, in
an Authorized Newspaper in each Place of Payment with respect to such series,
notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such publication,
any unclaimed balance of such money then remaining will be repaid to the
Partnership.
SECTION 1004. Statement by Officers as to Default.
The Partnership will deliver to the Trustee, within 150 days after the end
of each fiscal year of the Partnership ending after the date hereof, an
Officers' Certificate, stating whether or not to the best knowledge of the
signer thereof the Partnership or any Guarantor is in default in the performance
and observance of any of the terms, provisions and conditions of this Indenture
(without regard to any period of grace or requirement of notice provided
hereunder) and, if the Partnership or any Guarantor shall be in default,
specifying all such defaults and the nature and status thereof of which they may
have knowledge.
SECTION 1005. Existence.
Subject to Article VIII, the Partnership will do or cause to be done all
things necessary to preserve and keep in full force and effect its existence,
rights (charter and statutory) and franchises; provided, however, that the
Partnership shall not be required to preserve any such right or franchise if it
shall determine that the preservation thereof is no longer desirable in the
conduct of the business of the Partnership.
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SECTION 1006. Limitations on Liens.
The Partnership will not, nor will it permit any Subsidiary to, create,
assume, incur or suffer to exist any Lien upon any Principal Property, or upon
any shares of capital stock of any Subsidiary owning or leasing any Principal
Property, whether owned or leased on the date of this Indenture or thereafter
acquired, to secure any Debt of the Partnership or any other Person (other than
the Securities issued hereunder), without in any such case making effective
provision whereby all of the Securities Outstanding hereunder shall be secured
equally and ratably with, or prior to, such Debt so long as such Debt shall be
so secured. This restriction shall not apply to:
(1) Permitted Liens;
(2) any Lien upon any property or assets created at the time of acquisition
of such property or assets by the Partnership or any Subsidiary or within one
year after such time to secure all or a portion of the purchase price for such
property or assets or Debt incurred to finance such purchase price, whether such
Debt was incurred prior to, at the time of or within one year after the date of
such acquisition;
(3) any Lien upon any property or assets to secure all or part of the cost
of construction, development, repair or improvements thereon or to secure Debt
incurred prior to, at the time of, or within one year after completion of such
construction, development, repair or improvements or the commencement of full
operations thereof (whichever is later), to provide funds for any such purpose;
(4) any Lien upon any property or assets existing thereon at the time of
the acquisition thereof by the Partnership or any Subsidiary (whether or not the
obligations secured thereby are assumed by the Partnership or any Subsidiary);
provided, however, that such Lien only encumbers the property or assets so
acquired;
(5) any Lien upon any property or assets of a Person existing thereon at
the time such Person becomes a Subsidiary by acquisition, merger or otherwise;
provided, however, that such Lien only encumbers the property or assets of such
Person at the time such Person becomes a Subsidiary;
(6) any Lien upon any property or assets of the Partnership or any
Subsidiary in existence on the Issue Date or provided for pursuant to agreements
existing on the Issue Date;
(7) Liens imposed by law or order as a result of any proceeding before any
court or regulatory body that is being contested in good faith, and Liens which
secure a judgment or other court-ordered award or settlement as to which the
Partnership or the applicable Subsidiary, as the case may be, has not exhausted
its appellate rights;
(8) any extension, renewal, refinancing, refunding or replacement (or
successive extensions, renewals, refinancing, refunding or replacements) of
Liens, in whole or in part, referred to in Clauses (1) through (7), inclusive,
of this Section; provided, however, that any such extension, renewal,
refinancing, refunding or replacement Lien shall be limited to the property or
assets covered by the Lien extended, renewed, refinanced, refunded or replaced
and that the obligations secured by any such extension, renewal, refinancing,
refunding or
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replacement Lien shall be in an amount not greater than the amount of the
obligations secured by the Lien extended, renewed, refinanced, refunded or
replaced and any expenses of the Partnership and its Subsidiaries (including any
premium) incurred in connection with such extension, renewal, refinancing,
refunding or replacement; or
(9) any Lien resulting from the deposit of moneys or evidence of
indebtedness in trust for the purpose of defeasing Debt of the Partnership or
any Subsidiary.
Notwithstanding the foregoing provisions of this Section, the Partnership
may, and may permit any Subsidiary to, create, assume, incur or suffer to exist
any Lien upon any Principal Property to secure Debt of the Partnership or any
Person (other than the Securities) that is not excepted by Clauses (1) through
(9), inclusive, of this Section without securing the Securities issued
hereunder, provided that the aggregate principal amount of all Debt then
outstanding secured by such Lien and all similar Liens, together with all net
sale proceeds from Sale-Leaseback Transactions (excluding Sale-Leaseback
Transactions permitted by Clauses (1) through (4), inclusive, of Section 1007),
does not exceed 10% of Consolidated Net Tangible Assets.
SECTION 1007. Restriction of Sale-Leaseback Transaction.
The Partnership will not, and will not permit any Subsidiary to, engage in
a Sale-Leaseback Transaction, unless:
(1) such Sale-Leaseback Transaction occurs within one year from the date of
completion of the acquisition of the Principal Property subject thereto or the
date of the completion of construction, development or substantial repair or
improvement, or commencement of full operations on such Principal Property,
whichever is later;
(2) the Sale-Leaseback Transaction involves a lease for a period, including
renewals, of not more than three years;
(3) the Partnership or such Subsidiary would be entitled to incur Debt
secured by a Lien on the Principal Property subject thereto in a principal
amount equal to or exceeding the net sale proceeds from such Sale-Leaseback
Transaction without equally and ratably securing the Securities; or
(4) the Partnership or such Subsidiary, within a one-year period after such
Sale-Leaseback Transaction, applies or causes to be applied an amount not less
than the net sale proceeds from such Sale-Leaseback Transaction to (A) the
prepayment, repayment, redemption, reduction or retirement of Pari Passu Debt of
the Partnership or any Subsidiary, or (B) the expenditure or expenditures for
Principal Property used or to be used in the ordinary course of business of the
Partnership or its Subsidiaries.
Notwithstanding the foregoing provisions of this Section, the Partnership
may, and may permit any Subsidiary to, effect any Sale-Leaseback Transaction
that is not excepted by Clauses (1) through (4), inclusive, of this Section,
provided that the net sale proceeds from such Sale-Leaseback Transaction,
together with the aggregate principal amount of then outstanding Debt (other
than the Securities) secured by Liens upon Principal Properties not excepted by
Clauses
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(1) through (9), inclusive, of Section 1006, do not exceed 10% of the
Consolidated Net Tangible Assets.
SECTION 1008. Waiver of Certain Covenants.
The Partnership may omit in any particular instance to comply with any
term, provision or condition set forth in Section 1005, 1006 or 1007 with
respect to the Securities of any series if before the time for such compliance
the Holders of at least a majority in aggregate principal amount of the
Outstanding Securities of all affected series (voting as one class) shall, by
Act of such Holders, either waive such compliance in such instance or generally
waive compliance with such term, provision or condition, but no such waiver
shall extend to or affect such term, provision or condition except to the extent
so expressly waived, and, until such waiver shall become effective, the
obligations of the Partnership and the Guarantors and the duties of the Trustee
in respect of any such term, provision or condition shall remain in full force
and effect.
A waiver which changes or eliminates any term, provision or condition of
this Indenture which has expressly been included solely for the benefit of one
or more particular series of Securities, or which modifies the rights of the
Holders of Securities of such series with respect to such term, provision or
condition, shall be deemed not to affect the rights under this Indenture of the
Holders of Securities of any other series.
ARTICLE XI
REDEMPTION OF SECURITIES
SECTION 1101. Applicability of Article.
Securities of any series which are redeemable before their Stated Maturity
shall be redeemable in accordance with their terms and (except as otherwise
specified as contemplated by Section 301 for Securities of any series) in
accordance with this Article.
SECTION 1102. Election to Redeem; Notice to Trustee.
The election of the Partnership to redeem any Securities shall be
evidenced by a Board Resolution. In case of any redemption at the election of
the Partnership of less than all the Securities of any series, the Partnership
shall, not less than 30 nor more than 60 days prior to the Redemption Date fixed
by the Partnership (unless a shorter notice shall be satisfactory to the
Trustee), notify the Trustee of such Redemption Date, of the principal amount of
Securities of such series to be redeemed and, if applicable, of the tenor of the
Securities to be redeemed. In the case of any redemption of Securities (1) prior
to the expiration of any restriction on such redemption provided in the terms of
such Securities or elsewhere in this Indenture, or (2) pursuant to an election
of the Partnership which is subject to a condition specified in the terms of
such Securities, the Partnership shall furnish the Trustee with an Officers'
Certificate evidencing compliance with such restriction or condition.
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SECTION 1103. Selection by Trustee of Securities to be Redeemed.
If less than all the Securities of any series are to be redeemed (unless
all the Securities of such series and of a specified tenor are to be redeemed),
the particular Securities to be redeemed shall be selected not more than 45 days
prior to the Redemption Date by the Trustee, from the Outstanding Securities of
such series not previously called for redemption, by lottery for redemption of
portions (equal to the minimum authorized denomination for Securities of that
series or any integral multiple thereof) of the principal amount of Securities
of such series of a denomination larger than the minimum authorized denomination
for Securities of that series.
The Trustee shall promptly notify the Partnership in writing of the
Securities selected for redemption and, in the case of any Securities selected
for partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Securities redeemed or to be redeemed only in part, to the
portion of the principal amount of such Securities which has been or is to be
redeemed.
SECTION 1104. Notice of Redemption.
Notice of redemption shall be given by first-class mail (if international
mail, by air mail), postage prepaid, mailed not less than 30 nor more than 60
days prior to the Redemption Date, to each Holder of Securities to be redeemed,
at his address appearing in the Security Register.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all the Outstanding Securities of any series and of a
specified tenor are to be redeemed, the identification (and, in the case of
partial redemption of any Securities, the principal amounts) of the particular
Securities to be redeemed,
(4) that on the Redemption Date the Redemption Price will become due and
payable upon each such Security to be redeemed and that interest thereon will
cease to accrue on and after said date,
(5) the place or places where such Securities are to be surrendered for
payment of the Redemption Price, and
(6) that the redemption is for a sinking fund, if such is the case.
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Notice of redemption of Securities to be redeemed shall be given by the
Partnership or, at the Partnership's request, by the Trustee in the name and at
the expense of the Partnership.
SECTION 1105. Deposit of Redemption Price.
On or prior to any Redemption Date, the Partnership shall deposit with the
Trustee or with a Paying Agent (or, if the Partnership is acting as its own
Paying Agent, segregate and hold in trust as provided in Section 1003) an amount
of money sufficient to pay the Redemption Price of, and (except if the
Redemption Date shall be an Interest Payment Date) accrued interest on, all the
Securities which are to be redeemed on that date.
SECTION 1106. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities so to
be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Partnership shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security shall
be paid by the Partnership at the Redemption Price, together with accrued
interest to the Redemption Date; provided, however, that, unless otherwise
specified as contemplated by Section 301, installments of interest whose Stated
Maturity is on or prior to the Redemption Date shall be payable to the Holders
of such Securities, or one or more Predecessor Securities, registered as such at
the close of business on the relevant Record Dates according to their terms and
the provisions of Section 307.
If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal and any premium shall, until paid, bear
interest from the Redemption Date at the rate prescribed therefor in the
Security.
SECTION 1107. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be surrendered at
a Place of Payment therefor (with, if the Partnership or the Trustee so
requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Partnership and the Trustee duly executed by, the Holder
thereof or his attorney duly authorized in writing), and the Partnership shall
execute, and the Trustee shall authenticate and deliver to the Holder of such
Security without service charge, a new Security or Securities of the same series
and of like tenor, of any authorized denomination as requested by such Holder,
in aggregate principal amount equal to and in exchange for the unredeemed
portion of the principal of the Security so surrendered.
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ARTICLE XII
SINKING FUNDS
SECTION 1201. Applicability of Article.
The provisions of this Article shall be applicable to any sinking fund for
the retirement of Securities of a series except as otherwise specified as
contemplated by Section 301 for Securities of such series.
The minimum amount of any sinking fund payment provided for by the terms
of Securities of any series is herein referred to as a "mandatory sinking fund
payment," and any payment in excess of such minimum amount provided for by the
terms of Securities of any series is herein referred to as an "optional sinking
fund payment." If provided for by the terms of Securities of any series, the
cash amount of any sinking fund payment may be subject to reduction as provided
in Section 1202. Each sinking fund payment shall be applied to the redemption of
Securities of any series as provided for by the terms of Securities of such
series.
SECTION 1202. Satisfaction of Sinking Fund Payments with Securities.
The Partnership (1) may deliver Outstanding Securities of a series (other
than any previously called for redemption), and (2) may apply as a credit
Securities of a series which have been redeemed either at the election of the
Partnership pursuant to the terms of such Securities or through the application
of permitted optional sinking fund payments pursuant to the terms of such
Securities, in each case in satisfaction of all or any part of any sinking fund
payment with respect to the Securities of such series required to be made
pursuant to the terms of such Securities as provided for by the terms of such
series; provided that such Securities have not been previously so credited. Such
Securities shall be received and credited for such purpose by the Trustee at the
Redemption Price specified in such Securities for redemption through operation
of the sinking fund and the amount of such sinking fund payment shall be reduced
accordingly.
SECTION 1203. Redemption of Securities for Sinking Fund.
Not less than 45 days prior to each sinking fund payment date for any
series of Securities (unless a shorter period shall be satisfactory to the
Trustee), the Partnership will deliver to the Trustee an Officers' Certificate
specifying the amount of the next ensuing sinking fund payment for that series
pursuant to the terms of that series, the portion thereof, if any, which is to
be satisfied by payment of cash and the portion thereof, if any, which is to be
satisfied by delivering and crediting Securities of that series pursuant to
Section 1202 and stating the basis for such credit and that such Securities have
not been previously so credited, and will also deliver to the Trustee any
Securities to be so delivered. Not less than 30 days before each such sinking
fund payment date the Trustee shall select the Securities to be redeemed upon
such sinking fund payment date in the manner specified in Section 1103 and cause
notice of the redemption thereof to be given in the name of and at the expense
of the Partnership in the manner provided in Section 1104. Such notice having
been duly given, the
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redemption of such Securities shall be made upon the terms and in the manner
stated in Sections 1106 and 1107.
ARTICLE XIII
DEFEASANCE
SECTION 1301. Applicability of Article.
The provisions of this Article shall be applicable to each series of
Securities except as otherwise specified as contemplated by Section 301 for
Securities of such series.
SECTION 1302. Legal Defeasance.
In addition to discharge of the Indenture pursuant to Section 401, the
Partnership shall be deemed to have paid and discharged the entire indebtedness
on all the Securities of such a series on the 91st day after the date of the
deposit referred to in Clause (1) below, and the provisions of this Indenture
with respect to the Securities of such series shall no longer be in effect
(except as to (i) rights of registration of transfer and exchange of Securities
of such series and the Partnership's right of optional redemption, if any, (ii)
substitution of mutilated, destroyed, lost or stolen Securities, (iii) rights of
Holders of Securities to receive payments of principal thereof and interest
thereon, upon the original stated due dates therefor or on the specified
redemption dates therefor (but not upon acceleration), and remaining rights of
the holders to receive mandatory sinking fund payments, if any, (iv) the rights,
obligations, duties and immunities of the Trustee hereunder, and the
Partnership's and Guarantors' obligations in connection therewith (including,
but not limited to, Section 607), (v) the rights, if any, to convert or exchange
the Securities of such series, (vi) the rights of the Holders of Securities of
such series as beneficiaries hereof with respect to the property so deposited
with the Trustee payable to all or any of them, and (vii) the obligations of the
Partnership under Section 1002), and the Trustee, at the expense of the
Partnership, shall, upon a Partnership Request, execute proper instruments
acknowledging the same, if the conditions set forth below are satisfied
(hereinafter, "defeasance"):
(1) The Partnership has irrevocably deposited or caused to be deposited
with the Trustee as trust funds in trust, for the purposes of making the
following payments, specifically pledged as security for, and dedicated solely
to, the benefit of the Holders of the Securities of such series (A) cash in an
amount, or (B) in the case of any series of Securities the payments on which may
only be made in legal coin or currency of the United States, U.S. Government
Obligations, maturing as to principal and interest at such times and in such
amounts as will insure the availability of cash, or (C) a combination thereof,
certified to be sufficient, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, to pay (i) the principal and interest and premium, if
any, on all Securities of such series on each date that such principal, interest
or premium, if any, is due and payable or on any Redemption Date established
pursuant to Clause (3) below, and (ii) any mandatory sinking fund payments on
the dates on which such payments are due and payable in accordance with the
terms of the Indenture and the Securities of such series;
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(2) The Partnership has delivered to the Trustee an Opinion of Counsel
based on the fact that (A) the Partnership has received from, or there has been
published by, the Internal Revenue Service a ruling, or (B) since the date
hereof, there has been a change in the applicable federal income tax law, in
either case to the effect that, and such opinion shall confirm that, the Holders
of the Securities of such series will not recognize income, gain or loss for
federal income tax purposes as a result of such deposit, defeasance and
discharge and will be subject to federal income tax on the same amount and in
the same manner and at the same times, as would have been the case if such
deposit, defeasance and discharge had not occurred;
(3) If the Securities are to be redeemed prior to Stated Maturity (other
than from mandatory sinking fund payments or analogous payments), notice of such
redemption shall have been duly given pursuant to this Indenture or provision
therefor satisfactory to the Trustee shall have been made;
(4) No Event of Default or event which with notice or lapse of time or both
would become an Event of Default shall have occurred and be continuing on the
date of such deposit;
(5) Such defeasance shall not cause the Trustee to have a conflicting
interest within the meaning of the Trust Indenture Act (assuming all Securities
are in default within the meaning of such Act);
(6) Such defeasance shall not result in a breach or violation of, or
constitute a default under, any other agreement or instrument to which the
Partnership is a party or by which it is bound;
(7) Such defeasance shall not result in the trust arising from such deposit
constituting an investment company within the meaning of the Investment Company
Act of 1940, as amended, unless such trust shall be registered under such Act or
exempt from registration thereunder; and
(8) The Partnership has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent provided
for relating to the defeasance contemplated by this provision have been complied
with.
For this purpose, such defeasance means that the Partnership, the Guarantors,
and any other obligor upon the Securities of such series shall be deemed to have
paid and discharged the entire debt represented by the Securities of such
series, which shall thereafter be deemed to be "Outstanding" only for the
purposes of Section 1304 and the rights and obligations referred to in Clauses
(i) through (vii), inclusive, of the first paragraph of this Section, and to
have satisfied all its other obligations under the Securities of such series and
this Indenture insofar as the Securities of such series are concerned.
SECTION 1303. Covenant Defeasance.
The Partnership and any other obligor, including the Guarantors, shall be
released on the 91st day after the date of the deposit referred to in Clause (1)
below from its obligations under Sections 704, 801, 1005, 1006 and 1007 with
respect to the Securities of any series on and after
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the date the conditions set forth below are satisfied (hereinafter, "covenant
defeasance"), and the Securities of such series shall thereafter be deemed to be
not "Outstanding" for the purposes of any request, demand, authorization,
direction, notice, waiver, consent or declaration or other action or Act of
Holders (and the consequences of any thereof) in connection with such covenants,
but shall continue to be deemed Outstanding for all other purposes hereunder.
For this purpose, such covenant defeasance means that, with respect to the
Securities of such series, the Partnership and the Guarantors may omit to comply
with and shall have no liability in respect of any term, condition or limitation
set forth in any such Section, whether directly or indirectly by reason of any
reference elsewhere herein to such Section or by reason of any reference in such
Section to any other provision herein or in any other document and such omission
to comply shall not constitute a Default or an Event of Default under Section
501, but, except as specified above, the remainder of this Indenture and the
Securities of such series shall be unaffected thereby. The following shall be
the conditions to application of this Section 1303:
(1) The Partnership has irrevocably deposited or caused to be deposited
with the Trustee as trust funds in trust for the purpose of making the following
payments, specifically pledged as security for, and dedicated solely to, the
benefit of the Holders of the Securities of such series, (A) cash in an amount,
or (B) in the case of any series of Securities the payments on which may only be
made in legal coin or currency of the United States, U.S. Government
Obligations, maturing as to principal and interest at such times and in such
amounts as will insure the availability of cash, or (C) a combination thereof,
sufficient, in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee, to pay (i) the principal and interest and premium, if any, on all
Securities of such series on each date that such principal, interest or premium,
if any, is due and payable or on any Redemption Date established pursuant to
Clause (2) below, and (ii) any mandatory sinking fund payments on the day on
which such payments are due and payable in accordance with the terms of the
Indenture and the Securities of such series;
(2) If the Securities are to be redeemed prior to Stated Maturity (other
than from mandatory sinking fund payments or analogous payments), notice of such
redemption shall have been duly given pursuant to this Indenture or provision
therefor satisfactory to the Trustee shall have been made;
(3) No Event of Default or event which with notice or lapse of time or both
would become an Event of Default shall have occurred and be continuing on the
date of such deposit;
(4) The Partnership has delivered to the Trustee an Opinion of Counsel
which shall confirm that the Holders of the Securities of such series will not
recognize income, gain or loss for federal income tax purposes as a result of
such deposit and covenant defeasance and will be subject to federal income tax
on the same amount and in the same manner and at the same time as would have
been the case if such deposit and covenant defeasance had not occurred;
(5) Such covenant defeasance shall not cause the Trustee to have a
conflicting interest within the meaning of the Trust Indenture Act (assuming all
Securities are in default within the meaning of such Act);
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(6) Such covenant defeasance shall not result in a breach or violation of,
or constitute a default under, any other agreement or instrument to which the
Partnership is a party or by which it is bound;
(7) Such covenant defeasance shall not result in the trust arising from
such deposit constituting an investment company within the meaning of the
Investment Company Act of 1940, as amended, unless such trust shall be
registered under such Act or exempt from registration thereunder; and
(8) The Partnership has delivered to the Trustee an Officers' Certificate
stating that all conditions precedent provided for relating to the covenant
defeasance contemplated by this provision have been complied with.
SECTION 1304. Application by Trustee of Funds Deposited for Payment
of Securities.
Subject to the provisions of the last paragraph of Section 1003, all
moneys or U.S. Government Obligations deposited with the Trustee pursuant to
Section 1302 or 1303 (and all funds earned on such moneys or U.S. Government
Obligations) shall be held in trust and applied by it to the payment, either
directly or through any Paying Agent (including the Partnership acting as its
own Paying Agent), to the Holders of the particular Securities of such series
for the payment or redemption of which such moneys have been deposited with the
Trustee, of all sums due and to become due thereon for principal and interest;
but such money need not be segregated from other funds except to the extent
required by law. Subject to Sections 1302 and 1303, the Trustee shall promptly
pay to the Partnership upon request any excess moneys held by it at any time.
SECTION 1305. Repayment to Partnership.
The Trustee and any Paying Agent promptly shall pay or return to the
Partnership upon Partnership Request any money and U.S. Government Obligations
held by them at any time that are not required for the payment of the principal
of and any interest on the Securities of any series for which money or U.S.
Government Obligations have been deposited pursuant to Section 1302 or 1303.
The provisions of the last paragraph of Section 1003 shall apply to any
money held by the Trustee or any Paying Agent under this Article that remains
unclaimed for two years after the Maturity of any series of Securities for which
money or U.S. Government Obligations have been deposited pursuant to Section
1302 or 1303.
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ARTICLE XIV
GUARANTEES OF SECURITIES
SECTION 1401. Unconditional Guarantees.
(1) For value received, the Guarantors, jointly and severally, hereby
fully, unconditionally and absolutely guarantee (the "Guarantees") to the
Holders and to the Trustee the due and punctual payment of the principal of, and
premium, if any, and interest on the Securities and all other amounts due and
payable under this Indenture and the Securities by the Partnership, when and as
such principal, premium, if any, and interest shall become due and payable,
whether at the stated maturity or by declaration of acceleration, call for
redemption or otherwise, according to the terms of the Securities and this
Indenture.
(2) Failing payment when due of any amount guaranteed pursuant to the
Guarantees, for whatever reason, each Guarantor will be obligated to pay the
same immediately. Each Guarantee hereunder is intended to be a general,
unsecured, senior obligation of each Guarantor and will rank pari passu in right
of payment with all Debt of each such Guarantor that is not, by its terms,
expressly subordinated in right of payment to the Guarantee of such Guarantor.
Each of the Guarantors hereby agrees that its obligations hereunder shall be
full, unconditional and absolute, irrespective of the validity, regularity or
enforceability of the Securities, the Guarantees or this Indenture, the absence
of any action to enforce the same, any waiver or consent by any Holder of the
Securities with respect to any provisions hereof or thereof, any release of any
other Guarantor, the recovery of any judgment against the Partnership, any
action to enforce the same or any other circumstance which might otherwise
constitute a legal or equitable discharge or defense of a Guarantor. Each of the
Guarantors hereby agrees that in the event of a default in payment of the
principal of, or premium, if any, or interest on the Securities, whether at the
stated maturity or by declaration of acceleration, call for redemption or
otherwise, legal proceedings may be instituted by the Trustee on behalf of the
Holders or, subject to Section 507, by the Holders, on the terms and conditions
set forth in this Indenture, directly against each of the Guarantors to enforce
the Guarantees without first proceeding against the Partnership.
(3) The obligations of each Guarantor under this Article 14 shall be as
aforesaid full, unconditional and absolute and shall not be impaired, modified,
released or limited by any occurrence or condition whatsoever, including,
without limitation, (A) any compromise, settlement, release, waiver, renewal,
extension, indulgence or modification of, or any change in, any of the
obligations and liabilities of the Partnership or any Guarantor contained in the
Securities or this Indenture, (B) any impairment, modification, release or
limitation of the liability of the Partnership, any Guarantor or any of their
estates in bankruptcy, or any remedy for the enforcement thereof, resulting from
the operation of any present or future provision of any applicable Bankruptcy
Law, as amended, or other statute or from the decision of any court, (C) the
assertion or exercise by the Partnership, any Guarantor or the Trustee of any
rights or remedies under the Securities or this Indenture or their delay in or
failure to assert or exercise any such rights or remedies, (D) the assignment or
the purported assignment of any property as security for the Securities,
including all or any part of the rights of the Partnership or any Guarantor
under this Indenture, (E) the extension of the time for payment by the
Partnership or
67
<PAGE>
any Guarantor of any payments or other sums or any part thereof owing or payable
under any of the terms and provisions of the Securities or this Indenture or of
the time for performance by the Partnership or any Guarantor of any other
obligations under or arising out of any such terms and provisions or the
extension or the renewal of any thereof, (F) the modification or amendment
(whether material or otherwise) of any duty, agreement or obligation of the
Partnership or any Guarantor set forth in this Indenture, (G) the voluntary or
involuntary liquidation, dissolution, sale or other disposition of all or
substantially all of the assets, marshalling of assets and liabilities,
receivership, insolvency, bankruptcy, assignment for the benefit of creditors,
reorganization, arrangement, composition or readjustment of, or other similar
proceeding affecting, the Partnership or any of the Guarantors or any of their
respective assets, or the disaffirmance of the Securities, the Guarantees or
this Indenture in any such proceeding, (H) the release or discharge of the
Partnership or any Guarantor from the performance or observance of any
agreement, covenant, term or condition contained in any of such instruments by
operation of law, (I) the unenforceability of the Securities, the Guarantees or
this Indenture or (J) any other circumstance which might otherwise constitute a
legal or equitable discharge of a surety or guarantor.
(4) The Guarantors each hereby (A) waive diligence, presentment, demand of
payment, filing of claims with a court in the event of the merger, insolvency or
bankruptcy of the Partnership or a Guarantor, and all demands whatsoever, (B)
acknowledges that any agreement, instrument or document evidencing the
Guarantees may be transferred and that the benefit of its obligations hereunder
shall extend to each holder of any agreement, instrument or document evidencing
the Guarantees without notice to them and (C) covenants that its Guarantee will
not be discharged except by complete performance of the Guarantees. Each
Guarantor further agrees that if at any time all or any part of any payment
theretofore applied by any person to any Guarantee is, or must be, rescinded or
returned for any reason whatsoever, including without limitation, the
insolvency, bankruptcy or reorganization of the Partnership or any Guarantor,
such Guarantee shall, to the extent that such payment is or must be rescinded or
returned, be deemed to have continued in existence notwithstanding such
application, and the Guarantees shall continue to be effective or be reinstated,
as the case may be, as though such application had not been made.
(5) Each Guarantor shall be subrogated to all rights of the Holders and the
Trustee against the Partnership in respect of any amounts paid by such Guarantor
pursuant to the provisions of this Indenture, provided, however, that no
Guarantor shall be entitled to enforce or to receive any payments arising out
of, or based upon, such right of subrogation until all of the Securities and the
Guarantees shall have been paid in full or discharged.
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<PAGE>
(6) A director, officer, employee or stockholder, as such, of any Guarantor
shall not have any liability for any obligations of such Guarantor under this
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation.
SECTION 1402. Limitation of Guarantor's Liability.
Each Guarantor and by its acceptance hereof each Holder hereby confirms
that it is the intention of all such parties that the guarantee by such
Guarantor pursuant to its Guarantee not constitute a fraudulent transfer or
conveyance for purposes of any federal, state or foreign law. To effectuate the
foregoing intention, the Holders and each Guarantor hereby irrevocably agree
that the obligations of each Guarantor under its Guarantee shall be limited to
the maximum amount as will, after giving effect to all other contingent and
fixed liabilities of such Guarantor and after giving effect to any collections
from or payments made by or on behalf of any other Guarantor in respect of the
obligations of such other Guarantor under its Guarantee or pursuant to Section
1403, result in the obligations of such Guarantor under its Guarantee not
constituting a fraudulent conveyance or fraudulent transfer under federal, state
or foreign law.
SECTION 1403. Contribution.
In order to provide for just and equitable contribution among the
Guarantors, the Guarantors agree, inter se, that in the event any payment or
distribution is made by any Guarantor (a "Funding Guarantor") under its
Guarantee, such Funding Guarantor shall be entitled to a contribution from each
other Guarantor in a pro rata amount based on the Adjusted Net Assets of each
Guarantor (including the Funding Guarantor) for all payments, damages and
expenses incurred by the Funding Guarantor in discharging the Partnership's
obligations with respect to the Securities or any other Guarantor's obligations
with respect to its Guarantee.
SECTION 1404. Execution and Delivery of Guarantees.
To further evidence the Guarantees set forth in Section 1401, each
Guarantor hereby agrees that a notation relating to such Guarantees shall be
endorsed on each Security authenticated and delivered by the Trustee and
executed by either manual or facsimile signature of two officers of each
Guarantor.
Each of the Guarantors hereby agrees that its Guarantee set forth in
Section 1401 shall remain in full force and effect notwithstanding any failure
to endorse on each Security a notation relating to such Guarantee.
If an officer of a Guarantor whose signature is on this Indenture or a
Security no longer holds that office at the time the Trustee authenticates such
Security or at any time thereafter, such Guarantor's Guarantee of such Security
shall be valid nevertheless.
69
<PAGE>
The delivery of any Security by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of any Guarantee set forth in
this Indenture on behalf of the Guarantor.
SECTION 1405. Addition of Guarantors.
(1) If any Subsidiary of the Partnership guarantees any Funded Debt of the
Partnership other than the Securities at any time subsequent to the Issue Date
(including, without limitation, following any release of such Subsidiary
pursuant to Section 1406 from any Guarantee previously provided by it under this
Article 14), then the Partnership shall (A) cause the Securities to be equally
and ratably guaranteed by such Subsidiary, but only to the extent that the
Securities are not already guaranteed by such Subsidiary on reasonably
comparable terms and (B) cause such Subsidiary to execute and deliver a
supplemental indenture evidencing its provision of a Guarantee in accordance
with clause (2) below.
(2) Any Person that was not a Guarantor on the Issue Date may become a
Guarantor by executing and delivering to the Trustee (A) a supplemental
indenture in form and substance satisfactory to the Trustee, which subjects such
Person to the provisions (including the representations and warranties) of this
Indenture as a Guarantor and (B) an Opinion of Counsel and Officers' Certificate
to the effect that such supplemental indenture has been duly authorized and
executed by such Person and constitutes the legal, valid, binding and
enforceable obligation of such Person (subject to such customary exceptions
concerning creditors' rights and equitable principles as may be acceptable to
the Trustee in its discretion and provided that no opinion need be rendered
concerning the enforceability of the Guarantee).
SECTION 1406. Release of Guarantee.
Notwithstanding anything to the contrary in this Article 14, in the event
that any Guarantor shall no longer be a guarantor of any Funded Debt of the
Partnership other than the Securities, and so long as no Default or Event of
Default shall have occurred or be continuing, such Guarantor, upon giving notice
to the Trustee to the foregoing effect, shall be deemed to be released from all
of its obligations under this Indenture and the Guarantee of such Guarantor
shall be of no further force or effect. Following the receipt by the Trustee of
any such notice, the Partnership shall cause this Indenture to be amended as
provided in Section 901; provided, however, that the failure to so amend this
Indenture shall not affect the validity of the termination of the Guarantee of
such Guarantor.
70
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SECTION 1407. Consent to Jurisdiction and Service of Process.
Each Guarantor that is not organized under the laws of the United States
(including the States and the District of Columbia) (each a "Non-U.S.
Guarantor") hereby appoints the principal office of CT Corporation System in The
City of New York which, on the date hereof, is located at 1633 Broadway, New
York, New York 10019, as the authorized agent thereof (the "Authorized Agent")
upon whom process may be served in any action, suit or proceeding arising out of
or based on this Indenture or the Securities which may be instituted in the
Supreme Court of the State of New York or the United States District Court for
the Southern District of New York, in either case in The Borough of Manhattan,
The City of New York, by the Holder of any Security, and each Non-U.S. Guarantor
hereby waives any objection which it may now or hereafter have to the laying of
venue of any such proceeding and expressly and irrevocably accepts and submits,
for the benefit of the Holders from time to time of the Securities, to the
nonexclusive jurisdiction of any such court in respect of any such action, suit
or proceeding, for itself and with respect to its properties, revenues and
assets. Such appointment shall be irrevocable unless and until the appointment
of a successor authorized agent for such purpose, and such successor's
acceptance of such appointment, shall have occurred. Each Non-U.S. Guarantor
agrees to take any and all actions, including the filing of any and all
documents and instruments, that may be necessary to continue such appointment in
full force and effect as aforesaid. Service of process upon the Authorized Agent
with respect to any such action shall be deemed, in every respect, effective
service of process upon any such Non-U.S. Guarantor. Notwithstanding the
foregoing, any action against any Non-U.S. Guarantor arising out of or based on
any Security may also be instituted by the Holder of such Security in any court
in the jurisdiction of organization of such Non-U.S. Guarantor, and such
Non-U.S. Guarantor expressly accepts the jurisdiction of any such court in any
such action. The Partnership shall require the Authorized Agent to agree in
writing to accept the foregoing appointment as agent for service of process.
SECTION 1408. Waiver of Immunity.
To the extent that any Non-U.S. Guarantor or any of its properties, assets
or revenues may have or may hereafter become entitled to, or have attributed to
it, any right of immunity, on the grounds of sovereignty or otherwise, from any
legal action, suit or proceeding, from the giving of any relief in any thereof,
from set-off or counterclaim, from the jurisdiction of any court, from service
of process, from attachment upon or prior to judgment, from attachment in aid of
execution of judgment, or from execution of judgment, or other legal process or
proceeding for the giving of any relief or for the enforcement of any judgment,
in any jurisdiction in which proceedings may at any time be commenced, with
respect to its obligations, liabilities or any other matter under or arising out
of or in connection with this Indenture or the Securities, such Non-U.S.
Guarantor, to the maximum extent permitted by law, hereby irrevocably and
unconditionally waives, and agrees not to plead or claim, any such immunity and
consents to such relief and enforcement.
71
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SECTION 1409. Judgment Currency.
Each Non-U.S. Guarantor agrees to indemnify the Trustee and each Holder
against any loss incurred by it as a result of any judgment or order being given
or made and expressed and paid in a currency (the "Judgment Currency") other
than United States dollars and as a result of any variation as between (A) the
rate of exchange at which the United States dollar amount is converted into the
Judgment Currency for the purpose of such judgment or order and (B) the spot
rate of exchange in The City of New York at which the Trustee or such Holder on
the date of payment of such judgment or order is able to purchase United States
dollars with the amount of the Judgment Currency actually received by the
Trustee or such Holder. The foregoing indemnity shall constitute a separate and
independent obligation of each Non-U.S. Guarantor and shall continue in full
force and effect notwithstanding any such judgment or order as aforesaid. The
term "spot rate of exchange" shall include any premiums and costs of exchange
payable in connection with the purchase of, or conversion into, United States
dollars.
This instrument may be executed with counterpart signature pages or in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the day and year first above written.
KINDER MORGAN ENERGY
PARTNERS, L. P.
By: Kinder Morgan, G.P., Inc.,
Its General Partner
By:
-----------------------------------
Name:
Title:
[Trustee]
By:
-----------------------------------
Name:
Title:
72
<PAGE>
FORM OF GUARANTEES
Each Guarantor (which term includes any successor person under the
Indenture), has fully, unconditionally and absolutely guaranteed, to the extent
set forth in the Indenture and subject to the provisions in the Indenture, the
due and punctual payment of the principal of, and premium, if any, and interest
on the Securities and all other amounts due and payable under the Indenture and
the Securities by the Partnership.
The obligations of the Guarantors to the Holders of Securities and to the
Trustee pursuant to the Guarantees and the Indenture are expressly set forth in
Article 14 of the Indenture and reference is hereby made to the Indenture for
the precise terms of the Guarantees.
KINDER MORGAN OPERATING L.P. "A"
By: Kinder Morgan, G.P., Inc.
By:
-----------------------------------------
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 BULK TERMINALS
CORPORATION
73
<PAGE>
By:
----------------------------------------
KINDER MORGAN NATURAL GAS LIQUIDS
CORPORATION
By:
---------------------------------------
KINDER MORGAN CO2, LLC
By: Kinder Morgan Operating L.P. "A"
By: Kinder Morgan Inc.
By:
--------------------------------------
74
KINDER MORGAN
ENERGY PARTNERS, L.P.
Issuer
Trustee
INDENTURE
Dated as of , 1998
SUBORDINATED DEBT SECURITIES
<PAGE>
KINDER MORGAN ENERGY PARTNERS, L.P.
CERTAIN SECTIONS OF THIS INDENTURE RELATING TO
SECTIONS 310 THROUGH 318, INCLUSIVE, OF THE
TRUST INDENTURE ACT OF 1939:
Trust Indenture
Act Section Indenture Section
----------- -----------------
ss.310(a)(1)................................................ 609
(a)(2)................................................ 609
(a)(3)................................................ Not Applicable
(a)(4)................................................ Not Applicable
(b)................................................... 608; 610
ss.311(a)................................................... 613
(b)................................................... 613
ss.312(a)................................................... 701; 702
(b)................................................... 702
(c)................................................... 702
ss.313(a)................................................... 703
(b)................................................... 703
(c)................................................... 703
(d)................................................... 703
ss.314(a)................................................... 704
(a)(4)................................................ 104; 1004
(b)................................................... Not Applicable
(c)(1)................................................ 101
(c)(2)................................................ 101; 102
(c)(3)................................................ Not Applicable
(d)................................................... Not Applicable
(e)................................................... 102
ss.315(a)................................................... 601
(b)................................................... 602
(c)................................................... 601
(d)................................................... 601
(e)................................................... 514
ss.316(a)................................................... 101
(a)(1)(A)............................................. 502; 512
(a)(1)(B)............................................. 513
(a)(2)................................................ Not Applicable
(b)................................................... 508
(c)................................................... 104
ss.317(a)(1)................................................ 503
(a)(2)................................................ 504
(b)................................................... 1003
ss.318(a)................................................... 107
- --------------------
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to
be a part of the Indenture.
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL
APPLICATION
SECTION 101. Definitions..........................................1
SECTION 102. Compliance Certificates and Opinions.................8
SECTION 103. Form of Documents Delivered to Trustee...............8
SECTION 104. Acts of Holders; Record Dates........................9
SECTION 105. Notices, Etc., to Trustee and Partnership...........10
SECTION 106. Notice to Holders; Waiver...........................10
SECTION 107. Conflict with Trust Indenture Act...................11
SECTION 108. Effect of Headings and Table of Contents............11
SECTION 109. Successors and Assigns..............................11
SECTION 110. Separability Clause.................................11
SECTION 111. Benefits of Indenture...............................11
SECTION 112. Governing Law.......................................11
SECTION 113. Legal Holidays......................................11
SECTION 114. Language of Notices, Etc............................12
SECTION 115. Non-Recourse to the General Partner; No Personal
Liability of Officers, Directors, Employees or
Partners............................................12
ARTICLE II
SECURITY FORMS
SECTION 201. Forms Generally.....................................12
SECTION 202. Form of Face of Security............................13
SECTION 203. Form of Reverse of Security.........................16
SECTION 204. Global Securities...................................21
SECTION 205. Form of Trustee's Certificate and Authorization.....22
ARTICLE III
THE SECURITIES
SECTION 301. Amount Unlimited; Issuable in Series................22
SECTION 302. Denominations.......................................25
SECTION 303. Execution, Authentication, Delivery and Dating......25
SECTION 304. Temporary Securities................................27
SECTION 305. Registration, Registration of Transfer and Exchange.28
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities....29
SECTION 307. Payment of Interest; Interest Rights Preserved......30
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SECTION 308. Persons Deemed Owners...............................31
SECTION 309. Cancellation........................................32
SECTION 310. Computation of Interest.............................32
SECTION 311. Section CUSIP Numbers...............................32
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture.............32
SECTION 402. Application of Trust Money..........................34
ARTICLE V
REMEDIES
SECTION 501. Events of Default...................................34
SECTION 502. Acceleration of Maturity; Rescission and Annulment..35
SECTION 503. Collection of Indebtedness and Suits for
Enforcement by Trustee..............................36
SECTION 504. Trustee May File Proofs of Claim....................37
SECTION 505. Trustee May Enforce Claims Without Possession of
Securities..........................................37
SECTION 506. Application of Money Collected......................37
SECTION 507. Limitation on Suits.................................38
SECTION 508. Unconditional Right of Holders to Receive
Principal, Premium and Interest.....................38
SECTION 509. Restoration of Rights and Remedies..................39
SECTION 510. Rights and Remedies Cumulative......................39
SECTION 511. Delay or Omission Not Waiver........................39
SECTION 512. Control by Holders..................................39
Section 513. Waiver of Past Defaults.............................40
SECTION 514. Undertaking for Costs...............................40
SECTION 515. Waiver of Usury, Stay or Extension Laws.............40
ARTICLE VI
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities.................41
SECTION 602. Notice of Defaults..................................41
SECTION 603. Certain Rights of Trustee...........................41
SECTION 604. Not Responsible for Recitals or Issuance of
Securities..........................................42
SECTION 605. May Hold Securities.................................42
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SECTION 606. Money Held in Trust.................................43
SECTION 607. Compensation and Reimbursement......................43
SECTION 608. Disqualification; Conflicting Interests.............44
SECTION 609. Corporate Trustee Required; Eligibility.............44
SECTION 610. Resignation and Removal; Appointment of Successor...44
SECTION 611. Acceptance of Appointment by Successor..............46
SECTION 612. Merger, Conversion, Consolidation or Succession to
Business............................................47
SECTION 613. Preferential Collection of Claims Against
Partnership.........................................47
SECTION 614. Appointment of Authenticating Agent.................47
ARTICLE VII
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND PARTNERSHIP
SECTION 701. Partnership to Furnish Trustee Names and Addresses
of Holders..........................................49
SECTION 702. Preservation of Information; Communications to
Holders.............................................49
SECTION 703. Reports by Trustee..................................49
SECTION 704. Reports by Partnership..............................50
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. Partnership May Consolidate, Etc., Only on Certain
Terms...............................................51
SECTION 802. Successor Substituted...............................52
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of Holders..52
SECTION 902. Supplemental Indentures with Consent of Holders.....53
SECTION 903. Execution of Supplemental Indentures................54
SECTION 904. Effect of Supplemental Indentures...................54
SECTION 905. Conformity with Trust Indenture Act.................54
SECTION 906. Reference in Securities to Supplemental Indentures..54
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ARTICLE X
COVENANTS
SECTION 1001. Payment of Principal, Premium and Interest............55
SECTION 1002. Maintenance of Office or Agency.......................55
SECTION 1003. Money for Securities Payments to Be Held in Trust.....55
SECTION 1004. Statement by Officers as to Default...................56
SECTION 1005. Existence.............................................57
SECTION 1006. Waiver of Certain Covenants...........................57
ARTICLE XI
REDEMPTION OF SECURITIES
SECTION 1101. Applicability of Article..............................57
SECTION 1102. Election to Redeem; Notice to Trustee.................57
SECTION 1103. Selection by Trustee of Securities to be Redeemed.....58
SECTION 1104. Notice of Redemption..................................58
SECTION 1105. Deposit of Redemption Price...........................59
SECTION 1106. Securities Payable on Redemption Date.................59
SECTION 1107. Securities Redeemed in Part...........................59
ARTICLE XII
SINKING FUNDS
SECTION 1201. Applicability of Article..............................60
SECTION 1202. Satisfaction of Sinking Fund Payments with
Securities............................................60
SECTION 1203. Redemption of Securities for Sinking Fund.............60
ARTICLE XIII
DEFEASANCE
SECTION 1301. Applicability of Article..............................61
SECTION 1302. Legal Defeasance......................................61
SECTION 1303. Covenant Defeasance...................................63
SECTION 1304. Application by Trustee of Funds Deposited for
Payment of Securities.................................64
SECTION 1305. Repayment to Partnership..............................64
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<PAGE>
ARTICLE XIV
SUBORDINATION OF SECURITIES
SECTION 1401. Securities Subordinated to Senior Debt................65
SECTION 1402. Distribution on Dissolution, Liquidation and
Reorganization; Subrogation of Securities.............66
SECTION 1403. Payments on Securities Permitted......................68
SECTION 1404. Authorization of Holders of Securities to Trustee
to Effect Subordination...............................68
SECTION 1405. Notices to Trustee....................................68
SECTION 1406. Trustee as Holder of Senior Debt......................69
SECTION 1407. Modification of Terms of Senior Debt..................69
vi
<PAGE>
INDENTURE dated as of ___________, 1998, between KINDER MORGAN ENERGY
PARTNERS, L.P., a Delaware limited partnership (the "Partnership"), having its
principal office at 1301 Mckinney Street, Suite 3450, Houston Texas, 77010, and
_______________, a _________ banking corporation, as Trustee (the "Trustee").
RECITALS OF THE PARTNERSHIP
The Partnership has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured
subordinated debentures, notes or other evidences of indebtedness (the
"Securities"), to be issued in one or more series as in this Indenture provided.
All things necessary to make this Indenture a valid agreement of the
Partnership, in accordance with its terms, have been done.
This Indenture is subject to the provisions of the Trust Indenture Act
that are required to be a part of this Indenture and, to the extent applicable,
shall be governed by such provisions.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually agreed, for the equal and
proportionate benefit of all Holders of the Securities or of any series thereof,
as follows:
ARTICLE 1
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. Definitions.
For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly, or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles in the United States, and, except as otherwise herein expressly
provided, the term "generally accepted accounting principles" with respect to
any computation required or permitted hereunder shall mean such accounting
principles as are generally accepted in the United States at the date of such
computation;
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(4) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision; and
(5) the words "Article" and "Section" refer to an Article and
Section, respectively, of this Indenture.
"Act", when used with respect to any Holder, has the meaning specified in
Section 104.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Authenticating Agent" means any Person authorized by the Trustee pursuant
to Section 614 to act on behalf of the Trustee to authenticate Securities of one
or more series.
"Authorized Newspaper" means a newspaper, in the English language or in an
official language of the country of publication, customarily published on each
Business Day, whether or not published on Saturdays, Sundays or holidays, and of
general circulation in the place in connection with which the term is used or in
the financial community of such place.
"Bankruptcy Law" means Title 11, U.S. Code, or any similar federal or
state law for the relief of debtors or the protection of creditors.
"Board of Directors" means the board of directors of the General Partner,
or the executive or any other committee of that board duly authorized to act in
respect thereof. If the Partnership shall change its form of entity to other
than a limited partnership, the references to officers or the Board of Directors
of the General Partner shall mean the officers or the Board of Directors (or
other comparable governing body) of the Partnership.
"Board Resolution" means a copy of a resolution certified by the Corporate
Secretary of the General Partner, the principal financial officer of the General
Partner or any other authorized officer of the General Partner or a person duly
authorized by any of them, to have been duly adopted by the Board of Directors
and to be in full force and effect on the date of such certification, and
delivered to the Trustee.
"Business Day", when used with respect to any Place of Payment or other
location, means, except as otherwise provided as contemplated by Section 301
with respect to any series of Securities, each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a day on which banking institutions in that
Place of Payment or other location are authorized or obligated by law, executive
order or regulation to close.
"Capital Interests" means any and all shares, interests, participations,
rights or other equivalents (however designated) of capital stock, including,
without limitation, with respect to partnerships, partnership interests (whether
general or limited) and any other interest or
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participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, such partnership.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act or, if at any time after the
execution of this instrument such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
"Corporate Trust Office" means the office of the Trustee at which at any
particular time its corporate trust business shall be principally administered,
which at the date hereof is ______________.
"corporation" includes corporations, associations, limited liability
companies, joint-stock companies and business trusts.
"covenant defeasance" has the meaning specified in Section 1303.
"Custodian" means any receiver, trustee, assignee, liquidator or similar
official under any Bankruptcy Law.
"Debt" means any obligation created or assumed by any Person for the
repayment of money borrowed, any purchase money obligation created or assumed by
such Person and any guarantee of the foregoing.
"Default" means, with respect to a series of Securities, any event which
is, or after notice or lapse of time or both would become, an Event of Default
with respect to Securities of such series.
"Defaulted Interest" has the meaning specified in Section 307.
"defeasance" has the meaning specified in Section 1302.
"Definitive Security" means a Security other than a Global Security or a
temporary Security.
"Depositary" means, with respect to Securities of any series issuable in
whole or in part in the form of one or more Global Securities, a clearing agency
registered under the Exchange Act that is designated to act as Depositary for
such Securities as contemplated by Section 301, until a successor Depositary
shall have become such pursuant to the applicable provisions of this Indenture,
and thereafter shall mean or include each Person which is then a Depositary
hereunder, and if at any time there is more than one such Person, shall be a
collective reference to such Persons.
"Dollar" or "$" means the coin or currency of the United States of America
as at the time of payment is legal tender for the payment of public and private
debts.
"Event of Default" has the meaning specified in Section 501.
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"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, and any statute successor thereto.
"General Partner" means Kinder Morgan, G.P., Inc., a Delaware
corporation.
"Global Security" means a Security in global form that evidences all or
part of the Securities of any series and is registered in the name of, the
Depositary for such Securities or a nominee thereof.
"Holder" means a Person in whose name a Security is registered in the
Security Register.
"Indenture" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof, including, for
all purposes of this instrument, and any such supplemental indenture, the
provisions of the Trust Indenture Act that are deemed to be a part of and govern
this instrument and any such supplemental indenture, respectively. The term
"Indenture" also shall include the terms of particular series of Securities
established as contemplated by Section 301.
"interest", when used with respect to an Original Issue Discount Security
which by its terms bears interest only after Maturity, means interest payable
after Maturity.
"Interest Payment Date", when used with respect to any Security, means the
Stated Maturity of an installment of interest on such Security.
"Maturity", when used with respect to any Security, means the date on
which the principal of such Security or an installment of principal becomes due
and payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.
"Notice of Default" means a written notice of the kind specified in
Section 501(3).
"Officers' Certificate" means a certificate signed by the Chairman of the
Board, the President or a Vice President, and by the Treasurer or the Secretary,
of the General Partner (or if the Partnership shall change its form of entity to
other than a limited partnership, by Persons or officers, members, agents and
comparable positions as applicable to those of the foregoing nature, as
applicable), and delivered to the Trustee. One of the officers or such other
Persons (as applicable) signing an Officers' Certificate given pursuant to
Section 1004 shall be the principal executive, financial or accounting officer
of the General Partner (or if the Partnership shall change its form of entity to
other than a limited partnership, by Persons or officers, members, agents and
comparable positions as applicable to those of the foregoing nature, as
applicable).
"Opinion of Counsel" means a written opinion of legal counsel, who may be
an employee of or counsel for the Partnership.
"Original Issue Discount Security" means any Security which provides for
an amount less than the stated principal amount thereof to be due and payable
upon a declaration of acceleration of the Maturity thereof pursuant to Section
502."Outstanding", when used with
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respect to Securities, means, as of the date of determination, all Securities
theretofore authenticated and delivered under this Indenture, except:
(i) Securities theretofore canceled by the Trustee or delivered to
the Trustee for cancellation;
(ii) Securities for whose payment or redemption money in the necessary
amount has been theretofore deposited with the Trustee or any Paying Agent
(other than the Partnership) in trust or set aside and segregated in trust by
the Partnership (if the Partnership shall act as its own Paying Agent) for the
Holders of such Securities; provided, however, that, if such Securities are to
be redeemed, notice of such redemption has been duly given pursuant to this
Indenture or provision therefor has been made;
(iii) Securities which have been paid pursuant to Section 306 or in
exchange for or in lieu of which other Securities have been authenticated and
delivered pursuant to this Indenture, other than any such Securities in respect
of which there shall have been presented to the Trustee proof satisfactory to it
that such Securities are held by a bona fide purchaser in whose hands such
Securities are valid obligations of the Partnership; and
(iv) Securities, except to the extent provided in Sections 1302 and 1303,
with respect to which the Partnership has effected defeasance or covenant
defeasance as provided in Article XIII;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, (A) the principal
amount of an Original Issue Discount Security that shall be deemed to be
Outstanding shall be the amount of the principal thereof that would be due and
payable as of the date of such determination upon acceleration of the Maturity
thereof on such date pursuant to Section 502, (B) the principal amount of a
Security denominated in one or more currencies or currency units other than U.S.
dollars shall be the U.S. dollar equivalent of such currencies or currency
units, determined in the manner provided as contemplated by Section 301 on the
date of original issuance of such Security, of the principal amount (or, in the
case of an Original Issue Discount Security, the U.S. dollar equivalent (as so
determined) on the date of original issuance of such Security, of the amount
determined as provided in Clause (A) above) of such Security, and (C) Securities
owned by the Partnership or any other obligor upon the Securities or any
Affiliate of the Partnership or of such other obligor shall be disregarded and
deemed not to be Outstanding, except that, in determining whether the Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Securities which the Trustee knows to
be so owned shall be so disregarded. Securities so owned as described in Clause
(C) above which have been pledged in good faith may be regarded as Outstanding
if the pledgee establishes to the satisfaction of the Trustee the pledgee's
right so to act with respect to such Securities and that the pledgee is not the
Partnership or any other obligor upon the Securities or any Affiliate of the
Partnership or of such other obligor.
"Partnership" means the Person named as the "Partnership" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Partnership" shall mean such successor Person.
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"Partnership Request" or "Partnership Order" means a written request
or order signed in the name of the Partnership by the Chairman of the Board,
President or a Vice President of the General Partner, and by the Treasurer or
Secretary of the General Partner, and delivered to the Trustee, or if the
Partnership shall change its form of entity to other than a limited partnership,
by Persons or officers, members, agents and the like positions comparable to
those of the foregoing nature, as applicable.
"Paying Agent" means any Person authorized by the Partnership to pay the
principal of or any premium or interest on any Securities on behalf of the
Partnership.
"Periodic Offering" means an offering of Securities of a series from time
to time, the specific terms of which Securities, including, without limitation,
the rate or rates of interest or formula for determining the rate or rates of
interest thereon, if any, the Stated Maturity or Stated Maturities thereof, the
original issue date or dates thereof, the redemption provisions, if any, with
respect thereto, and any other terms specified as contemplated by Section 301
with respect thereto, are to be determined by the Partnership upon the issuance
of such Securities.
"Person" means any individual, corporation, partnership, joint venture,
limited liability company, association, joint-stock company, trust, other
entity, unincorporated organization or government, or any agency or political
subdivision thereof.
"Place of Payment", when used with respect to the Securities of any
series, means, unless otherwise specifically provided for with respect to such
series as contemplated by Section 301, the office or agency of the Partnership
in The City of New York and such other place or places where, subject to the
provisions of Section 1002, the principal of and any premium and interest on the
Securities of that series are payable as specified as contemplated by Section
301.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same Debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same Debt as the mutilated, destroyed, lost or stolen Security.
"Redemption Date", when used with respect to any Security to be redeemed,
means the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price", when used with respect to any Security to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.
"Regular Record Date" for the interest payable on any Interest Payment
Date on the Securities of any series means the date specified for that purpose
as contemplated by Section 301.
"Securities" has the meaning stated in the first recital of this Indenture
and more particularly means any Securities authenticated and delivered under
this Indenture.
"Security Register" and "Security Registrar" have the respective meanings
specified in Section 305.
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"Senior Debt" of the Partnership, unless otherwise provided with respect
to the Securities of a series as contemplated by Section 301, means (1) all Debt
of the Partnership, whether currently outstanding or hereafter issued, unless,
by the terms of the instrument creating or evidencing such Debt, it is provided
that such Debt is not superior in right of payment to the Securities or to other
Debt which is pari passu with or subordinated to the Securities, and (2) any
modifications, refunding, deferrals, renewals or extensions of any such Debt or
securities, notes or other evidence of Debt issued in exchange for such Debt;
provided that in no event shall "Senior Debt" include (a) Debt of the
Partnership owed or owing to any Subsidiary of the Partnership or any officer,
director or employee of the Partnership or any Subsidiary of the Partnership,
(b) Debt to trade creditors or (c) any liability for taxes owed or owing by the
Partnership.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 307.
"Stated Maturity", when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date specified
in such Security as the fixed date on which the principal of such Security or
such installment of principal or interest is due and payable.
"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Interests entitled (without regard to the occurrence
of any contingency) to vote in the election of directors, managers or trustees
thereof or, in the case of a partnership, more than 50% of the partners' Capital
Interests (considering all partners' Capital Interests as a single class), is at
the time owned or controlled, directly or indirectly, by such Person or one or
more of the other Subsidiaries of such Person or a combination thereof.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at
the date as of which this instrument was executed, except as otherwise provided
in Section 905; provided, however, that if the Trust Indenture Act of 1939 is
amended after such date, "Trust Indenture Act" means, to the extent required by
any such amendment, the Trust Indenture Act of 1939 as so amended.
"Trustee" means the Person named as the "Trustee" in the first paragraph
of this instrument until a successor Trustee shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Trustee" shall mean
or include each Person who is then a Trustee hereunder, and if at any time there
is more than one such Person, "Trustee" as used with respect to the Securities
of any series shall mean each Trustee with respect to Securities of that series.
"U.S. Government Obligations" means securities which are (i) direct
obligations of the United States for the payment of which its full faith and
credit is pledged, or (ii) obligations of a Person controlled or supervised by
and acting as an agency or instrumentality of the United States, the payment of
which is unconditionally guaranteed as a full faith and credit obligation by the
United States, each of which are not callable or redeemable at the option of the
issuer thereof.
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"Vice President", when used with respect to the Partnership, means any
vice president of the General Partner, or when used with respect to the Trustee,
means any vice president of the Trustee.
SECTION 102. Compliance Certificates and Opinions.
Upon any application or request by the Partnership to the Trustee to take
any action under any provision of this Indenture, the Partnership shall furnish
to the Trustee such certificates or opinions as may be required under the Trust
Indenture Act. Each such certificate or opinion shall be given in the form of an
Officers' Certificate, if to be given by an officer of the General Partner, or
an Opinion of Counsel, if to be given by counsel, and shall comply with the
requirements of the Trust Indenture Act and any other requirements set forth in
this Indenture.
Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture (except for certificates provided for
in Section 1004) shall include:
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein relating
thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 103. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Partnership or the General
Partner may be based, insofar as it relates to legal matters, upon a certificate
or opinion of, or representations by, counsel, unless such officer knows, or in
the exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate or opinion of counsel may
be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of the Partnership or
the General Partner stating that the information with respect to such factual
matters is in the possession of the Partnership or the General Partner, unless
such counsel
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knows that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. Acts of Holders; Record Dates.
Any request, demand, authorization, direction, notice, consent, waiver or
other action provided or permitted by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed (either physically or by means of a facsimile
or an electronic transmission, provided that such electronic transmission is
transmitted through the facilities of a Depositary) by such Holders in person or
by an agent duly appointed in writing; and, except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
are delivered (either physically or by means of a facsimile or an electronic
transmission, provided that such electronic transmission is transmitted through
the facilities of a Depositary) to the Trustee and, where it is hereby expressly
required, to the Partnership. Such instrument or instruments (and the action
embodied therein and evidenced thereby) are herein sometimes referred to as the
"Act" of the Holders signing such instrument or instruments. Proof of execution
of any such instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Indenture and (subject to Section 315 of the
Trust Indenture Act) conclusive in favor of the Trustee and the Partnership, if
made in the manner provided in this Section.
The fact and date of the execution by any Person of any such instrument or
writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Where such execution is by
a signer acting in a capacity other than his individual capacity, such
certificate or affidavit shall also constitute sufficient proof of his
authority. The fact and date of the execution of any such instrument or writing,
or the authority of the Person executing the same, may also be proved in any
other manner which the Trustee deems sufficient.
The ownership, principal amount and serial numbers of Securities held by
any Person, and the date of commencement of such Person's holding the same,
shall be proved by the Security Register.
Any request, demand, authorization, direction, notice, consent, waiver or
other action of the Holder of any Security shall bind every future Holder of the
same Security and the Holder of every Security issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Trustee or the Partnership
in reliance thereon, whether or not notation of such action is made upon such
Security.
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Without limiting the foregoing, a Holder entitled hereunder to give or
take any action hereunder with regard to any particular Security may do so with
regard to all or any part of the principal amount of such Security or by one or
more duly appointed agents each of which may do so pursuant to such appointment
with regard to all or any different part of such principal amount.
The Partnership may set any day as the record date for the purpose of
determining the Holders of Outstanding Securities of any series entitled to give
or take any request, demand, authorization, direction, notice, consent, waiver
or other action provided or permitted by this Indenture to be given or taken by
Holders of Securities of such series, but the Partnership shall have no
obligation to do so. With regard to any record date set pursuant to this
paragraph, the Holders of Outstanding Securities of the relevant series on such
record date (or their duly appointed agents), and only such Persons, shall be
entitled to give or take the relevant action, whether or not such Holders remain
Holders after such record date.
SECTION 105. Notices, Etc., to Trustee and Partnership.
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Holders or other document provided or permitted by this Indenture to be
made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Partnership shall be
sufficient for every purpose hereunder if made, given, furnished or filed in
writing to or with the Trustee at its Corporate Trust Office, Attention:
Corporate Trustee Administration, or
(2) the Partnership by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to the
Partnership addressed to it at 1301 Mckinney Street, Suite 3450, Houston Texas,
77010, to the attention of the Corporate Secretary, or at any other address
previously furnished in writing to the Trustee by the Partnership.
SECTION 106. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid (if international mail, by
air mail), to each Holder affected by such event, at his address as it appears
in the Security Register, not later than the latest date (if any), and not
earlier than the earliest date (if any), prescribed for the giving of such
notice. In any case where notice to Holders is given by mail, neither the
failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders. Any notice mailed to a Holder in the manner herein prescribed
shall be conclusively deemed to have been received by such Holder, whether or
not such Holder actually receives such notice.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by the Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Holders shall be filed with
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the Trustee, but such filing shall not be a condition precedent to the validity
of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by reason
of any other cause it shall be impracticable to give such notice by mail, then
such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
SECTION 107. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with a provision of
the Trust Indenture Act that is required under such Act to be a part of and
govern this Indenture, the latter provision shall control. If any provision of
this Indenture modifies or excludes any provision of the Trust Indenture Act
that may be so modified or excluded, the latter provision shall be deemed to
apply to this Indenture as so modified or excluded, as the case may be.
SECTION 108. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 109. Successors and Assigns.
All covenants and agreements in this Indenture by the Partnership shall
bind its successors and assigns, whether so expressed or not.
SECTION 110. Separability Clause.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 111. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied, shall
give to any Person, other than the parties hereto and their successors
hereunder, the holders of Senior Debt and the Holders, any benefit or any legal
or equitable right, remedy or claim under this Indenture.
SECTION 112. Governing Law.
This Indenture and the Securities shall be governed by and construed in
accordance with the law of the State of New York.
SECTION 113. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security shall not be a Business Day at any Place of Payment,
then (notwithstanding any other
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provision of this Indenture or of the Securities (other than a provision of the
Securities of any series which specifically states that such provision shall
apply in lieu of this Section)) payment of interest or principal (and premium,
if any) need not be made at such Place of Payment on such date, but may be made
on the next succeeding Business Day at such Place of Payment with the same force
and effect as if made on the Interest Payment Date or Redemption Date, or at the
Stated Maturity, provided that no interest shall accrue for the period from and
after such Interest Payment Date, Redemption Date or Stated Maturity, as the
case may be.
SECTION 114. Language of Notices, Etc.
Any request, demand, authorization, direction, notice, consent, waiver or
Act required or permitted under this Indenture shall be in the English language,
except that any published notice may be in an official language of the country
of publication.
SECTION 115. Non-Recourse to the General Partner; No Personal Liability
of Officers, Directors, Employees or Partners.
Obligations of the Partnership under this Indenture and the Securities
hereunder are non-recourse to the General Partner, and its respective Affiliates
(other than the Partnership), and payable only out of cash flow and assets of
the Partnership. The Trustee, and each Holder of a Security by its acceptance
thereof, will be deemed to have agreed in this Indenture that (1) neither the
General Partner nor its assets (nor any of its respective Affiliates other than
the Partnership, nor their respective assets) shall be liable for any of the
obligations of the Partnership under this Indenture or such Securities, and (2)
no director, officer, employee, stockholder or unitholder, as such, of the
Partnership, the Trustee, the General Partner or any Affiliate of any of the
foregoing entities shall have any personal liability in respect of the
obligations of the Partnership under this Indenture or such Securities by reason
of his, her or its status.
ARTICLE II
SECURITY FORMS
SECTION 201. Forms Generally.
The Securities of each series shall be in substantially the form set forth
in this Article, or in such other form as shall be established by or pursuant to
a Board Resolution or in one or more indentures supplemental hereto, in each
case with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with applicable tax
laws or the rules of any securities exchange or automated quotation system on
which the Securities of such series may be listed or traded or Depositary
therefor or as may, consistently herewith, be determined by the officers
executing such Securities, as evidenced by their execution of the Securities. If
the form of Securities of any series is established by action taken pursuant to
a Board Resolution, a copy of an appropriate record of such action shall be
certified by an authorized officer or other authorized Person on behalf of the
Partnership and delivered to the Trustee at or prior to the
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delivery of the Partnership Order contemplated by Section 303 for the
authentication and delivery of such Securities.
The definitive Securities shall be printed, lithographed or engraved on
steel engraved borders or may be produced in any other manner, all as determined
by the officers executing such Securities, as evidenced by their execution of
such Securities.
SECTION 202. Form of Face of Security.
[ Insert any legend required by the United States Internal Revenue Code
and the regulations thereunder.]
[If a Global Security,--insert legend required by Section 204 of the
Indenture] [If applicable, insert--UNLESS THIS SECURITY IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION, TO THE PARTNERSHIP OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE &
CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL IN AS MUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN.]
KINDER MORGAN ENERGY PARTNERS, L. P.
[TITLE OF SECURITY]
No. U.S. $_________
--------
[CUSIP No. ]
-------
KINDER MORGAN ENERGY PARTNERS, L. P., a Delaware limited partnership
(herein called the "Partnership", which term includes any successor Person under
the Indenture hereinafter referred to), for value received, hereby promises to
pay to , or registered assigns, the principal sum of United States
Dollars on [if the Security is to bear interest prior to
Maturity, insert--, and to pay interest thereon from , or from the most
recent Interest Payment Date to which interest has been paid or duly provided
for, semi-annually on and in each year, commencing
, at the rate of % per annum, until the principal hereof is
paid or made available for payment [if applicable, insert--, and at the rate of
% per annum on any overdue principal and premium and on any overdue
installment of interest]. [If applicable, insert -- The amount of interest
payable for any period shall be computed on the basis of twelve 30-day months
and a 360-day year. The amount of interest payable for any partial period shall
be computed on the
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<PAGE>
basis of a 360-day year of twelve 30-day months and the days elapsed in any
partial month. In the event that any date on which interest is payable on this
Security is not a Business Day, then a payment of the interest payable on such
date will be made on the next succeeding day which is a Business Day (and
without any interest or other payment in respect of any such delay) with the
same force and effect as if made on the date the payment was originally payable.
A "Business Day" shall mean, when used with respect to any Place of Payment,
each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in that Place of Payment are authorized or obligated by
law, executive order or regulation to close.] The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date will, as
provided in such Indenture, be paid to the Person in whose name this Security
(or one or more Predecessor Securities) is registered at the close of business
on the Regular Record Date for such interest, which shall be the or
(whether or not a Business Day), as the case may be, next preceding
such Interest Payment Date. Any such interest not so punctually paid or duly
provided for shall forthwith cease to be payable to the Holder on such Regular
Record Date and may either be paid to the Person in whose name this Security (or
one or more Predecessor Securities) is registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest to be fixed by
the Trustee, notice of which shall be given to Holders of Securities of this
series not less than 10 days prior to such Special Record Date, or be paid at
any time in any other lawful manner not inconsistent with the requirements of
any securities exchange or automated quotation system on which the Securities of
this series may be listed or traded, and upon such notice as may be required by
such exchange or automated quotation system, all as more fully provided in such
Indenture].
[If the Security is not to bear interest prior to Maturity, insert--The
principal of this Security shall not bear interest except in the case of a
default in payment of principal upon acceleration, upon redemption or at Stated
Maturity and in such case the overdue principal of this Security shall bear
interest at the rate of % per annum, which shall accrue from the date of
such default in payment to the date payment of such principal has been made or
duly provided for. Interest on any overdue principal shall be payable on demand.
Any such interest on any overdue principal that is not so paid on demand shall
bear interest at the rate of % per annum, which shall accrue from the date
of such demand for payment to the date payment of such interest has been made or
duly provided for, and such interest shall also be payable on demand.]
[If a Global Security, insert--Payment of the principal of [(and premium,
if any)] and [if applicable, insert--any such] interest on this Security will be
made by transfer of immediately available funds to a bank account in
designated by the Holder in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts [state other currency].]
[If a Definitive Security, insert--Payment of the principal of [(and
premium, if any)] and [if applicable, insert--any such] interest on this
Security will be made at the office or agency of the Partnership maintained for
that purpose in , [in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts] [state other currency] [or subject to any laws or
regulations applicable thereto and to the right of the Partnership (as provided
in the Indenture) to rescind the designation of any such Paying Agent, at the
[main] offices of in and in
14
<PAGE>
, or at such other offices or agencies as the Partnership may
designate, by [United States Dollar] [state other currency] check drawn on, or
transfer to a [United States Dollar] account maintained by the payee with, a
bank in The City of New York [ ] (so long as the applicable Paying Agent has
received proper transfer instructions in writing at least [ ] days prior to the
payment date)] [if applicable, insert--; provided, however, that payment of
interest may be made at the option of the Partnership by [United States Dollar]
[state other currency] check mailed to the addresses of the Persons entitled
thereto as such addresses shall appear in the Security Register] [or by transfer
to a [United States Dollar] [state other currency] account maintained by the
payee with a bank in The City of New York [state other Place of Payment] (so
long as the applicable Paying Agent has received proper transfer instructions in
writing by the Record Date prior to the applicable Interest Payment Date)].]
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Partnership has caused this instrument to be duly
executed.
Dated:
KINDER MORGAN ENERGY PARTNERS, L.P.,
By: Kinder Morgan G.P., Inc.,
Its General Partner
By: _______________________________
Name:
Title:
15
<PAGE>
SECTION 203. Form of Reverse of Security.
This Security is one of a duly authorized issue of securities of the
Partnership (the "Securities"), issued and to be issued in one or more series
under an Indenture dated as of ________, 1998 (the "Indenture"), between the
Partnership and ____________, as Trustee (the "Trustee", which term includes any
successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights, limitations of rights, obligations, duties and immunities thereunder of
the Partnership, the Trustee and the Holders of the Securities and of the terms
upon which the Securities are, and are to be, authenticated and delivered. As
provided in the Indenture, the Securities may be issued in one or more series,
which different series may be issued in various aggregate principal amounts, may
mature at different times, may bear interest, if any, at different rates, may be
subject to different redemption provisions, if any, may be subject to different
sinking, purchase or analogous funds, if any, may be subject to different
covenants and Events of Default and may otherwise vary as in the Indenture
provided or permitted. This Security is one of the series designated on the face
hereof [if applicable, insert--, limited in aggregate principal amount to
U.S.$ ].
[If applicable, insert--The Securities of this series are subject to
redemption upon not less than 30 nor more than 60 days' notice by mail, [if
applicable, insert--(1) on in any year commencing with the year and ending
with the year through operation of the sinking fund for this series at a
Redemption Price equal to 100% of the principal amount, and (2)] at any
time [if applicable, insert--on or after , ], as a whole or in part,
at the election of the Partnership, at the following Redemption Prices
expressed as percentages of the principal amount): If redeemed [if applicable,
insert--on or before , %, and if redeemed] during the 12-month period
beginning of the years indicated,
Year Redemption Price Year
---- ---------------- ----
and thereafter at a Redemption Price equal to % of the principal
amount, together in the case of any such redemption [if applicable,
insert--(whether through operation of the sinking fund or otherwise)] with
accrued interest to the Redemption Date, but interest installments whose Stated
Maturity is on or prior to such Redemption Date will be payable to the Holders
of such Securities, or one or more Predecessor Securities, of record at the
close of business on the relevant Record Dates referred to on the face hereof,
all as provided in the Indenture.]
[If applicable, insert--The Securities of this series are subject to
redemption upon not less than 30 nor more than 60 days' notice by mail, (1) on
in any year commencing with the year and ending with the year through
operation of the sinking fund for this series at the Redemption Prices for
redemption through operation of the sinking fund (expressed
16
<PAGE>
as percentages of the principal amount) set forth in the table below, and (2) at
any time [if applicable, insert--on or after ], as a whole or in part,
at the election of the Partnership, at the Redemption Prices for redemption
otherwise than through operation of the sinking fund (expressed as percentages
of the principal amount) set forth in the table below: If redeemed during the
12-month period beginning of the years indicated,
Redemption Price for Redemption Price for
Redemption Through Redemption Otherwise
Operation of the Sinking Than Through Operation
Year Fund of the Sinking Fund
---- ---- -------------------
and thereafter at a Redemption Price equal to % of the principal
amount, together in the case of any such redemption (whether through operation
of the sinking fund or otherwise) with accrued interest to the Redemption Date,
but interest installments whose Stated Maturity is on or prior to such
Redemption Date will be payable to the Holders of such Securities, or one or
more Predecessor Securities, of record at the close of business on the relevant
Record Dates referred to on the face hereof, all as provided in the Indenture.]
[If applicable, insert--The sinking fund for this series provides for the
redemption on in each year beginning with the year
and ending with the year of [if applicable,--not less than $ ("mandatory
sinking fund") and not more than] $ aggregate principal amount of Securities of
this series. Securities of this series acquired or redeemed by the Partnership
otherwise than through [if applicable,--mandatory] sinking fund payments may be
credited against subsequent [if applicable,--mandatory] sinking fund payments
otherwise required to be made [if applicable,--in the inverse order in which
they become due].]
[If the Security is subject to redemption in part of any kind, insert--In
the event of redemption of this Security in part only, a new Security or
Securities of this series and of like tenor for the unredeemed portion hereof
will be issued in the name of the Holder hereof upon the cancellation hereof.]
[If applicable, insert--The Securities of this series are not redeemable
prior to Stated Maturity.]
[If the Security is not an Original Issue Discount Security, insert--If an
Event of Default with respect to Securities of this series shall occur and be
continuing, the principal of the Securities of this series may be declared due
and payable in the manner and with the effect provided in the Indenture.]
[If the Security is an Original Issue Discount Security, insert--If an
Event of Default with respect to Securities of this series shall occur and be
continuing, an amount of principal of
17
<PAGE>
the Securities of this series may be declared due and payable in the manner and
with the effect provided in the Indenture. Such amount shall be equal to--insert
formula for determining the amount. Upon payment (1) of the amount of principal
so declared due and payable, and (2) of interest on any overdue principal and
overdue interest, all of the Partnership's obligations in respect of the payment
of the principal of and interest, if any, on the Securities of this series shall
terminate.]
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Partnership and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Partnership and the Trustee with
the consent of not less than the Holders of a majority in aggregate principal
amount of the Outstanding Securities of all series to be affected (voting as one
class). The Indenture also contains provisions permitting the Holders of a
majority in aggregate principal amount of the Outstanding Securities of all
affected series (voting as one class), on behalf of the Holders of all
Securities of such series, to waive compliance by the Partnership with certain
provisions of the Indenture. The Indenture permits, with certain exceptions as
therein provided, the Holders of a majority in principal amount of Securities of
any series then Outstanding to waive past defaults under the Indenture with
respect to such series and their consequences. Any such consent or waiver by the
Holder of this Security shall be conclusive and binding upon such Holder and
upon all future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Security.
As provided in and subject to the provisions of the Indenture, the Holder
of this Security shall not have the right to institute any proceeding with
respect to the Indenture or for the appointment of a receiver or trustee or for
any other remedy thereunder, unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default with respect to the
Securities of this series, the Holders of not less than 25% in principal amount
of the Securities of this series at the time Outstanding shall have made written
request to the Trustee to institute proceedings in respect of such Event of
Default as Trustee and offered the Trustee reasonable indemnity and the Trustee
shall not have received from the Holders of a majority in principal amount of
Securities of this series at the time Outstanding a direction inconsistent with
such request, and shall have failed to institute any such proceeding, for 60
days after receipt of such notice, request and offer of indemnity. The foregoing
shall not apply to any suit instituted by the Holder of this Security for the
enforcement of any payment of principal hereof or [any premium or] interest
hereon on or after the respective due dates expressed herein.
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Partnership, which
is absolute and unconditional, to pay the principal of and [any premium and]
interest on this Security at the times, place(s) and rate, and in the coin or
currency, herein prescribed.
[If a Global Security, insert--This Global Security or portion hereof may
not be exchanged for Definitive Securities of this series except in the limited
circumstances provided in the Indenture.
18
<PAGE>
The holders of beneficial interests in this Global Security will not be
entitled to receive physical delivery of Definitive Securities except as
described in the Indenture and will not be considered the Holders thereof for
any purpose under the Indenture.]
[If a Definitive Security, insert--As provided in the Indenture and
subject to certain limitations therein set forth, the transfer of this Security
is registerable in the Security Register, upon surrender of this Security for
registration of transfer at the office or agency of the Partnership in [if
applicable, insert -- any place where the principal of and any premium and
interest on this Security are payable] [if applicable, insert-- The City of New
York [, or, subject to any laws or regulations applicable thereto and to the
right of the Partnership (limited as provided in the Indenture) to rescind the
designation of any such transfer agent, at the [main] offices of in and in or at
such other offices or agencies as the Partnership may designate]], duly endorsed
by, or accompanied by a written instrument of transfer in form satisfactory to
the Partnership and the Security Registrar duly executed by, the Holder hereof
or his attorney duly authorized in writing, and thereupon one or more new
Securities of this series and of like tenor, of authorized denominations and for
the same aggregate principal amount, will be issued to the designated transferee
or transferees.]
The Securities of this series are issuable only in registered form without
coupons in denominations of U.S.$ [state other currency] and any integral
multiple thereof. As provided in the Indenture and subject to certain
limitations therein set forth, Securities of this series are exchangeable for a
like aggregate principal amount of Securities of this series and of like tenor
of a different authorized denomination, as requested by the Holder surrendering
the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Partnership may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer,
the Partnership, the Trustee and any agent of the Partnership or the Trustee may
treat the Person in whose name this Security is registered as the owner hereof
for all purposes, whether or not this Security is overdue, and neither the
Partnership, the Trustee nor any such agent shall be affected by notice to the
contrary.
This Security is subordinated in right of payment to Senior Debt, to the
extent provided in the Indenture.
Obligations of the Partnership under the Indenture and the Securities
thereunder, including this Security, are non-recourse to Kinder Morgan, G.P.,
Inc. (the "General Partner") and its Affiliates (other than the Partnership),
and payable only out of cash flow and assets of the Partnership. The Trustee,
and each Holder of a Security by its acceptance hereof, will be deemed to have
agreed in the Indenture that (1) neither the General Partner nor its assets (nor
any of its Affiliates other than the Partnership, nor their respective assets)
shall be liable for any of the obligations of the Partnership under the
Indenture or such Securities, including this Security, and (2) no director,
officer, employee, stockholder or unitholder, as such, of the Partnership, the
Trustee, the General Partner or any Affiliate of any of the foregoing entities
shall have any
19
<PAGE>
personal liability in respect of the obligations of the Partnership under the
Indenture or such Securities by reason of his, her or its status.
The Indenture contains provisions that relieve the Partnership from the
obligation to comply with certain restrictive covenants in the Indenture and for
satisfaction and discharge at any time of the entire indebtedness upon
compliance by the Partnership with certain conditions set forth in the
Indenture.
This Security shall be governed by and construed in accordance with the
laws of the State of New York.
All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
[If a Definitive Security, insert as a separate page--
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _____________________________________ (Please Print or
Typewrite Name and Address of Assignee) the within instrument of KINDER MORGAN
ENERGY PARTNERS, L. P. and does hereby irrevocably constitute and appoint
________________________ Attorney to transfer said instrument on the books of
the within-named Partnership, with full power of substitution in the premises.
Please Insert Social Security or
Other Identifying Number of Assignee:
- ------------------------------------- ----------------------------------------
Dated: ------------------------------ -----------------------------(Signature)
Signature Guarantee: ___________________________________
(Participant in a Recognized Signature
Guaranty Medallion Program)
20
<PAGE>
NOTICE: The signature to this assignment must correspond with the name
as written upon the face of the within instrument in every particular,
without alteration or enlargement or any change whatever.]
SECTION 204. Global Securities .
Every Global Security authenticated and delivered hereunder shall bear a
legend in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A
DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE
TRANSFERRED TO, OR REGISTERED OR EXCHANGED FOR SECURITIES REGISTERED
IN THE NAME OF, ANY PERSON OTHER THAN THE DEPOSITARY OR A NOMINEE
THEREOF AND NO SUCH TRANSFER MAY BE REGISTERED, EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE. EVERY SECURITY
AUTHENTICATED AND DELIVERED UPON REGISTRATION OF TRANSFER OF, OR IN
EXCHANGE FOR OR IN LIEU OF, THIS SECURITY SHALL BE A GLOBAL SECURITY
SUBJECT TO THE FOREGOING, EXCEPT IN SUCH LIMITED CIRCUMSTANCES.
If Securities of a series are issuable in whole or in part in the form of
one or more Global Securities, as specified as contemplated by Section 301,
then, notwithstanding Clause (9) of Section 301 and the provisions of Section
302, any Global Security shall represent such of the Outstanding Securities of
such series as shall be specified therein and may provide that it shall
represent the aggregate amount of Outstanding Securities from time to time
endorsed thereon and that the aggregate amount of Outstanding Securities
represented thereby may from time to time be reduced or increased, as the case
may be, to reflect exchanges. Any endorsement of a Global Security to reflect
the amount, or any reduction or increase in the amount, of Outstanding
Securities represented thereby shall be made in such manner and upon
instructions given by such Person or Persons as shall be specified therein or in
a Partnership Order. Subject to the provisions of Sections 303, 304 and 305, the
Trustee shall deliver and redeliver any Global Security in the manner and upon
instructions given by the Person or Persons specified therein or in the
applicable Partnership Order. Any instructions by the Partnership with respect
to endorsement or delivery or redelivery of a Global Security shall be in a
Partnership Order (which need not comply with Section 102 and need not be
accompanied by an Opinion of Counsel).
21
<PAGE>
The provisions of the last sentence of Section 303 shall apply to any
Security represented by a Global Security if such Security was never issued and
sold by the Partnership and the Partnership delivers to the Trustee the Global
Security together with a Partnership Order (which need not comply with Section
102 and need not be accompanied by an Opinion of Counsel) with regard to the
reduction or increase, as the case may be, in the principal amount of Securities
represented thereby, together with the written statement contemplated by the
last sentence of Section 303.
SECTION 205. Form of Trustee's Certificate and Authorization .
The Trustee's certificates of authentication shall be in substantially the
following form:
This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.
---------------,
As Trustee
By:
--------------------------------
Authorized Officer
ARTICLE III
THE SECURITIES
SECTION 301. Amount Unlimited; Issuable in Series .
The aggregate principal amount of Securities which may be authenticated
and delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be
established in or pursuant to a Board Resolution and, subject to Section 303,
set forth, or determined in the manner provided, in an Officers' Certificate, or
established in one or more indentures supplemental hereto, prior to the issuance
of Securities of any series,
(1) the form and title of the Securities of the series (which shall
distinguish the Securities of the series from Securities of any other series);
(2) any limit upon the aggregate principal amount of the Securities
of the series which may be authenticated and delivered under this Indenture
(except for Securities authenticated and delivered upon registration of transfer
of, or in exchange for, or in lieu of, other Securities of the series pursuant
to Section 304, 305, 306, 906 or 1107 and except for any Securities which,
pursuant to Section 303, are deemed never to have been authenticated and
delivered hereunder);
22
<PAGE>
(3) the Person to whom any interest on a Security of the series
shall be payable, if other than the Person in whose name that Security (or one
or more Predecessor Securities) is registered at the close of business on the
Regular Record Date for such interest;
(4) the date or dates on which the Securities will be issued and on
which the principal of, and premium, if any, on the Securities of the series is
payable or the method of determination thereof;
(5) the rate or rates (which may be fixed or variable) at which the
Securities of the series shall bear interest, if any, or the method of
determination thereof, the date or dates from which such interest shall accrue,
or the method of determination thereof, the Interest Payment Dates on which any
such interest shall be payable and the Regular Record Date for any interest
payable on any Interest Payment Date;
(6) the place or places where, subject to the provisions of Section
1002, the principal of and any premium and interest on Securities of the series
shall be payable, Securities of the series may be surrendered for registration
of transfer, Securities of the series may be surrendered for exchange and
notices, and demands to or upon the Partnership in respect of the Securities of
the series and this Indenture may be served;
(7) the period or periods, if any, within which, the price or prices
at which and the terms and conditions upon which Securities of the series may be
redeemed, in whole or in part, at the option of the Partnership or otherwise;
(8) the obligation, if any, of the Partnership to redeem or purchase
Securities of the series pursuant to any sinking fund or analogous provisions or
upon the happening of a specified event or at the option of a Holder thereof and
the period or periods within which, the price or prices at which and the terms
and conditions upon which Securities of the series shall be redeemed or
purchased, in whole or in part, pursuant to such obligation;
(9) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which Securities of the series shall be issuable;
(10) whether payment of principal of and premium, if any, and
interest, if any, on the Securities of the series shall be without deduction for
taxes, assessments or governmental charges paid by Holders of the series;
(11) the currency, currencies or currency units in which payment of
the principal of and any premium and interest on any Securities of the series
shall be denominated, payable, redeemable or purchasable if other than the
currency of the United States of America and the manner of determining the
equivalent thereof in the currency of the United States of America for purposes
of the definition of "Outstanding" in Section 101;
(12) if the amount of payments of principal of or any premium or
interest on any Securities of the series may be determined with reference to an
index, the manner in which such amounts shall be determined;
23
<PAGE>
(13) if the principal of or any premium or interest on any
Securities of the series is to be payable, at the election of the Partnership or
a Holder thereof, in one or more currencies or currency units other than that or
those in which the Securities are stated to be payable, the currency, currencies
or currency units in which payment of the principal of and any premium and
interest on Securities of such series as to which such election is made shall be
payable, and the periods within which and the terms and conditions upon which
such election is to be made;
(14) the right, if any, of the Partnership to defer payments of
interest by extending the interest payment periods and specify the duration of
such extension, the Interest Payment Dates on which such interest shall be
payable and whether and under what circumstances additional interest on amounts
deferred shall be payable;
(15) if other than the principal amount thereof, the portion of the
principal amount of Securities of the series which shall be payable upon
declaration of acceleration of the Maturity thereof pursuant to Section 502 or
the method of determination thereof;
(16) if and as applicable, that the Securities of the series shall
be issuable in whole or in part in the form of one or more Global Securities
(and whether in temporary or permanent global form) and, in such case, the
Depositary or Depositaries for such Global Security or Global Securities and any
circumstances other than those set forth in Section 305 in which any such Global
Security may be transferred to, and registered and exchanged for Securities
registered in the name of, a Person other than the Depositary for such Global
Security or a nominee thereof and in which any such transfer may be registered;
(17) any deletions from, modifications of or additions to the Events
of Default set forth in Section 501 or the covenants of the Partnership set
forth in Article X pertaining to the Securities of the series;
(18) if and the terms and conditions upon which any Securities of
the series may be converted into or exchanged for securities, which may include,
without limitation, capital stock, of any class or series of the Partnership or
any other issuer;
(19) if other than as provided in Sections 1302 and 1303, the terms
and conditions upon which and the manner in which such series of Securities may
be defeased or discharged;
(20) if other than the Trustee, the identity of the Security
Registrar and any Paying Agent;
(21) any restrictions or other provisions with respect to the
transfer or exchange of the Securities; and
(22) any other terms of the Securities of the series (which terms
shall not be inconsistent with the provisions of this Indenture, except as
permitted by Section 901(5)).
24
<PAGE>
All Securities of any one series shall be substantially identical except
as to denomination and except as may otherwise be provided in or pursuant to the
Board Resolution referred to above and (subject to Section 303) set forth, or
determined in the manner provided, in the Officers' Certificate referred to
above or in any such indenture supplemental hereto.
All Securities of any one series need not be issued at the same time and,
unless otherwise provided, a series may be reopened, without the consent of the
Holders, for increases in the aggregate principal amount of such series of
Securities and issuances of additional Securities of such series or for the
establishment of additional terms with respect to the Securities of such series.
If any of the terms of the series are established by action taken by or
pursuant to a Board Resolution, a copy of an appropriate record of such action
shall be certified by an authorized officer or other authorized person of the
General Partner on behalf of the Partnership and delivered to the Trustee at or
prior to the delivery of the Officers' Certificate setting forth, or providing
the manner for determining, the terms of the series.
With respect to Securities of a series subject to a Periodic Offering,
such Board Resolution or Officers' Certificate may provide general terms for
Securities of such series and provide either that the specific terms of
particular Securities of such series shall be specified in a Partnership Order,
or that such terms shall be determined by the Partnership, or one or more of the
Partnership's agents designated in an Officers' Certificate, in accordance with
a Partnership Order.
SECTION 302. Denominations.
The Securities of each series shall be issuable only in registered form
without coupons in such denominations as shall be specified as contemplated by
Section 301. In the absence of any such specified denomination with respect to
the Securities of any series, the Securities of such series shall be issuable in
denominations of $1,000 and any integral multiple thereof.
SECTION 303. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Partnership by the
Chairman of the Board, Chief Executive Officer, Chief Financial Officer,
President or any Vice President of the General Partner and need not be attested.
The signature of any of these officers on the Securities may be manual or
facsimile.
Securities bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the General Partner shall bind the
Partnership, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Securities or
did not hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of this
Indenture, the Partnership may deliver Securities of any series executed by the
Partnership to the Trustee for authentication, together with a Partnership Order
for the authentication and delivery of such Securities, and the Trustee in
accordance with the Partnership Order shall authenticate and deliver such
Securities; provided, however, that in the case of Securities offered in a
Periodic
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Offering, the Trustee shall authenticate and deliver such Securities from time
to time in accordance with such other procedures (including, without limitation,
the receipt by the Trustee of oral or electronic instructions from the
Partnership or its duly authorized agents, thereafter promptly confirmed in
writing) acceptable to the Trustee as may be specified by or pursuant to a
Partnership Order delivered to the Trustee prior to the time of the first
authentication of Securities of such series. If the form or terms of the
Securities of the series have been established in or pursuant to one or more
Board Resolutions as permitted by Sections 201 and 301, in authenticating such
Securities, and accepting the additional responsibilities under this Indenture
in relation to such Securities, the Trustee shall be entitled to receive, and
(subject to Section 601) shall be fully protected in relying upon, an Opinion of
Counsel stating,
(1) if the form or forms of such Securities have been established by
or pursuant to Board Resolution as permitted by Section 201, that such form or
forms have been established in conformity with the provisions of this Indenture;
(2) if the terms of such Securities have been, or in the case of
Securities of a series offered in a Periodic Offering, will be, established by
or pursuant to a Board Resolution as permitted by Section 301, that such terms
have been, or in the case of Securities of a series offered in a Periodic
Offering, will be, established in conformity with the provisions of this
Indenture, subject, in the case of Securities of a series offered in a Periodic
Offering, to any conditions specified in such Opinion of Counsel; and
(3) that such Securities, when authenticated and delivered by the
Trustee and issued by the Partnership in the manner and subject to any
conditions specified in such Opinion of Counsel, will constitute valid and
legally binding obligations of the Partnership enforceable in accordance with
their terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles.
If such form or forms or terms have been so established, the Trustee shall
not be required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties or
immunities under the Securities and this Indenture or otherwise in a manner
which is not reasonably acceptable to the Trustee.
Notwithstanding the provisions of Section 301 and of the preceding
paragraph, if all Securities of a series are not to be originally issued at one
time, it shall not be necessary to deliver the Officers' Certificate otherwise
required pursuant to Section 301 or the Partnership Order and Opinion of Counsel
otherwise required pursuant to such preceding paragraph at or prior to the time
of authentication of each Security of such series if such documents are
delivered at or prior to the authentication upon original issuance of the first
Security of such series to be issued.
With respect to Securities of a series offered in a Periodic Offering, the
Trustee may rely, as to the authorization by the Partnership of any of such
Securities, the form or forms and terms thereof and the legality, validity,
binding effect and enforceability thereof, upon the Opinion of Counsel and the
other documents delivered pursuant to Sections 201 and 301 and this Section, as
applicable, in connection with the first authentication of Securities of such
series.
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Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature of an authorized officer, and such
certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered
hereunder. Notwithstanding the foregoing, if any Security shall have been
authenticated and delivered hereunder but never issued and sold by the
Partnership, and the Partnership shall deliver such Security to the Trustee for
cancellation as provided in Section 309 for all purposes of this Indenture, such
Security shall be deemed never to have been authenticated and delivered
hereunder and shall never be entitled to the benefits of this Indenture.
SECTION 304. Temporary Securities.
Pending the preparation of Definitive Securities of any series, the
Partnership may execute, and upon Partnership Order the Trustee shall
authenticate and deliver, temporary Securities which are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the Definitive Securities in lieu of which they
are issued and with such appropriate insertions, omissions, substitutions and
other variations as the officers executing such Securities may determine, as
evidenced by their execution of such Securities.
If temporary Securities of any series are issued, the Partnership will
cause Definitive Securities of that series to be prepared without unreasonable
delay. After the preparation of Definitive Securities of such series, the
temporary Securities of such series shall be exchangeable for Definitive
Securities of such series upon surrender of the temporary Securities of such
series at the office or agency of the Partnership maintained pursuant to Section
1002 for the purpose of exchanges of Securities of such series, without charge
to the Holder. Upon surrender for cancellation of any one or more temporary
Securities of any series the Partnership shall execute and the Trustee shall
authenticate and deliver in exchange therefor one or more Definitive Securities
of the same series, of any authorized denominations and of a like aggregate
principal amount and tenor. Until so exchanged the temporary Securities of any
series shall in all respects be entitled to the same benefits under this
Indenture as Definitive Securities of such series and tenor.
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SECTION 305. Registration, Registration of Transfer and Exchange.
The Partnership shall cause to be kept at an office or agency of the
Partnership in The City of New York a register (the register maintained in such
office or in any other office or agency of the Partnership in a Place of Payment
being herein sometimes referred to as the "Security Register") in which, subject
to such reasonable regulations as it may prescribe, the Partnership shall
provide for the registration of Securities and of transfers of Securities. The
Partnership shall, prior to the issuance of any Securities hereunder, appoint
the Trustee as the initial "Security Registrar" for the purpose of registering
Securities and transfers of Securities as herein provided and its corporate
trust office which, at the date hereof, is located at ______________________, as
the initial office or agency in The City of New York where the Security Register
will be maintained. The Partnership may at any time replace such Security
Registrar, change such office or agency or act as its own Security Registrar.
The Partnership will give prompt written notice to the Trustee of any change of
the Security Registrar or of the location of such office or agency.
Upon surrender for registration of transfer of any Security of any series
at the office or agency of the Partnership maintained pursuant to Section 1002
for such purpose, the Partnership shall execute, and the Trustee shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Securities of the same series, of any authorized
denominations and of a like aggregate principal amount and tenor.
At the option of the Holder, Securities of any series (except a Global
Security) may be exchanged for other Securities of the same series, of any
authorized denominations and of a like aggregate principal amount and tenor,
upon surrender of the Securities to be exchanged at such office or agency.
Whenever any Securities are so surrendered for exchange, the Partnership shall
execute, and the Trustee shall authenticate and deliver, the Securities which
the Holder making the exchange is entitled to receive.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Partnership, evidencing the
same debt, and entitled to the same benefits under this Indenture, as the
Securities surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer or
for exchange shall (if so required by the Partnership or the Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Partnership and the Security Registrar duly executed, by the
Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Partnership may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Securities, other
than exchanges pursuant to Section 304 or 1107 not involving any transfer.
Neither the Trustee nor the Partnership shall be required (1) to issue,
register the transfer of or exchange Securities of any series (or of any series
and specified tenor, as the case may be)
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during a period beginning at the opening of business 15 days before the day of
mailing of a notice of redemption of Securities of that series selected for
redemption under Section 1103 and ending at the close of business on the day of
such mailing, or (2) to register the transfer of or exchange any Security so
selected for redemption in whole or in part, except the unredeemed portion of
any Security being redeemed in part.
Notwithstanding any other provision in this Indenture and except as
otherwise specified as contemplated by Section 301, no Global Security may be
transferred to, or registered or exchanged for Securities registered in the name
of, any Person other than the Depositary for such Global Security or any nominee
thereof, and no such transfer may be registered, except as provided in this
paragraph. Every Security authenticated and delivered upon registration or
transfer of, or in exchange for or in lieu of, a Global Security shall be a
Global Security, except as provided in this paragraph. If (1) (A) the Depositary
for a Global Security notifies the Partnership that it is unwilling or unable to
continue as Depositary for such Global Security or ceases to be a clearing
agency registered under the Exchange Act, and (B) a successor Depositary is not
appointed by the Partnership within 90 days, (2) an Event of Default has
occurred and is continuing with respect to the Securities of such series and the
Security Registrar has received a request from the Depositary to issue
certificated securities in lieu of all or a portion of the Global Securities of
such series (in which case the Partnership shall deliver certificated securities
within 30 days of such request) or (3) the Partnership determines in its sole
discretion that Securities of a series issued in global form shall no longer be
represented by a Global Security, then such Global Security may be exchanged by
such Depositary for Definitive Securities of the same series, of any authorized
denomination and of a like aggregate principal amount and tenor, registered in
the names of, and the transfer of such Global Security or portion thereof may be
registered to, such Persons as such Depositary shall direct.
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee, together with
such security or indemnity as may be required by the Partnership or the Trustee
to save each of them and any agent of either of them harmless, the Partnership
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Security of the same series and of like tenor and principal
amount and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Partnership and the Trustee (1)
evidence to their satisfaction of the destruction, loss or theft of any Security
and (2) such security or indemnity as may be required by them to save each of
them and any agent of either of them harmless, then, in the absence of notice to
the Partnership or the Trustee that such Security has been acquired by a bona
fide purchaser, the Partnership shall execute and the Trustee shall authenticate
and deliver, in lieu of any such destroyed, lost or stolen Security, a new
Security of the same series and of like tenor and principal amount and bearing a
number not contemporaneously outstanding. If, after the delivery of such new
Security, a bona fide purchaser of the original Security in lieu of which such
new Security was issued presents for payment or registration such original
Security, the Trustee shall be entitled to recover such new Security from the
party to whom it was delivered or any party taking therefrom, except a bona fide
purchaser, and shall be entitled to recover upon the security or indemnity
provided therefor to the extent of any loss, damage, cost or expense incurred by
the Partnership and the Trustee in connection therewith.
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In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Partnership in its discretion
may, instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Partnership
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security of any series issued pursuant to this Section in
exchange for any mutilated Security or in lieu of any destroyed, lost or stolen
Security shall constitute an original additional contractual obligation of the
Partnership, whether or not the mutilated, destroyed, lost or stolen Security
shall be at any time enforceable by anyone, and shall be entitled to all the
benefits of this Indenture equally and proportionately with any and all other
Securities of that series duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
SECTION 307. Payment of Interest; Interest Rights Preserved.
Except as otherwise provided as contemplated by Section 301 with respect
to any series of Securities, interest on any Security which is payable, and is
punctually paid or duly provided for, on any Interest Payment Date shall be paid
to the Person in whose name that Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest.
Any interest on any Security of any series which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the Holder
on the relevant Regular Record Date by virtue of having been such Holder, and
such Defaulted Interest may be paid by the Partnership, at its election in each
case, as provided in Clause (1) or (2) below:
(1) The Partnership may elect to make payment of any Defaulted
Interest to the Persons in whose names the Securities of such series (or their
respective Predecessor Securities) are registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest, which shall be
fixed in the following manner. The Partnership shall notify the Trustee in
writing of the amount of Defaulted Interest proposed to be paid on each Security
of such series and the date of the proposed payment, and at the same time the
Partnership shall deposit with the Trustee an amount of money equal to the
aggregate amount proposed to be paid in respect of such Defaulted Interest or
shall make arrangements satisfactory to the Trustee for such deposit prior to
the date of the proposed payment, such money when deposited to be held in trust
for the benefit of the Persons entitled to such Defaulted Interest as in this
Clause provided. Thereupon the Trustee shall fix a Special Record Date for the
payment of such Defaulted Interest which shall be not more than 15 days and not
less than 10 days prior to the date of the proposed payment and not less than 10
days after the receipt by the Trustee of the
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notice of the proposed payment. The Trustee shall promptly notify the
Partnership of such Special Record Date and, in the name and at the expense of
the Partnership, shall cause notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor to be mailed, first-class postage
prepaid, to each Holder of Securities of such series at his address as it
appears in the Security Register, not less than 10 days prior to such Special
Record Date. Notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor having been so mailed, such Defaulted Interest
shall be paid to the Persons in whose names the Securities of such series (or
their respective Predecessor Securities) are registered at the close of business
on such Special Record Date and shall no longer be payable pursuant to the
following Clause (2).
(2) The Partnership may make payment of any Defaulted Interest on
the Securities of any series in any other lawful manner not inconsistent with
the requirements of any securities exchange or automated quotation system on
which such Securities may be listed or traded, and upon such notice as may be
required by such exchange, if, after notice given by the Partnership to the
Trustee of the proposed payment pursuant to this Clause, such manner of payment
shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section and Section 305, each
Security delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Security, shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Security.
For each series of Securities, the Partnership shall, prior to 11:00 a.m.
(New York City time) on each payment date for principal and premium, if any, and
interest, if any, deposit with the Trustee money in immediately available funds
sufficient to make cash payments due on the applicable payment date.
SECTION 308. Persons Deemed Owners.
Except as otherwise provided as contemplated by Section 301 with respect
to any series of Securities, prior to due presentment of a Security for
registration of transfer, the Partnership, the Trustee and any agent of the
Partnership or the Trustee may treat the Person in whose name such Security is
registered as the owner of such Security for the purpose of receiving payment of
principal of and any premium and (subject to Sections 305 and 307) any interest
on such Security and for all other purposes whatsoever, whether or not such
Security is overdue, and neither the Partnership, the Trustee nor any agent of
the Partnership or the Trustee shall be affected by notice to the contrary.
No holder of any beneficial interest in any Global Security held on its
behalf by a Depositary shall have any rights under this Indenture with respect
to such Global Security, and such Depositary may be treated by the Partnership,
the Trustee and any agent of the Partnership or the Trustee as the owner of such
Global Security for all purposes whatsoever. None of the Partnership, the
Trustee nor any agent of the Partnership or the Trustee will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests of a Global Security
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
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SECTION 309. Cancellation.
All Securities surrendered for payment, redemption, registration of
transfer or exchange or for credit against any sinking fund payment shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly canceled by it. The Partnership may at any time deliver to
the Trustee for cancellation any Securities previously authenticated and
delivered hereunder which the Partnership may have acquired in any manner
whatsoever, and may deliver to the Trustee (or to any other Person for delivery
to the Trustee) for cancellation any Securities previously authenticated
hereunder which the Partnership has not issued and sold, and all Securities so
delivered shall be promptly canceled by the Trustee. No Securities shall be
authenticated in lieu of or in exchange for any Securities canceled as provided
in this Section, except as expressly permitted by this Indenture. All canceled
Securities held by the Trustee shall be disposed of in accordance with its
customary procedures, and the Trustee shall thereafter deliver to the
Partnership a certificate with respect to such disposition.
SECTION 310. Computation of Interest.
Except as otherwise specified as contemplated by Section 301 for
Securities of any series, interest on the Securities of each series shall be
computed on the basis of a 360-day year of twelve 30-day months and interest on
the Securities of each series for any partial period shall be computed on the
basis of a 360-day year of twelve 30-day months and the number of days elapsed
in any partial month.
SECTION 311. Section CUSIP Numbers.
The Partnership in issuing the Securities may use "CUSIP" numbers (in
addition to the other identification numbers printed on the Securities), and, if
so, the Trustee shall use "CUSIP" numbers in notices of redemption as a
convenience to Holders; provided, however, that any such notice may state that
no representation is made as to the correctness of such "CUSIP" numbers either
as printed on the Securities or as contained in any notice of a redemption and
that reliance may be placed only on the other identification numbers printed on
the Securities, and any such redemption shall not be affected by any defect in
or omission of such "CUSIP" numbers.
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture.
This Indenture shall upon Partnership Request cease to be of further
effect with respect to Securities of any series (except as to any surviving
rights of registration of transfer or exchange of such Securities herein
expressly provided for), and the Trustee, at the expense of the Partnership,
shall execute proper instruments acknowledging satisfaction and discharge of
this Indenture with respect to such Securities, when
(1) either
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(A) all such Securities theretofore authenticated and
delivered (other than (i) such Securities which have been destroyed, lost or
stolen and which have been replaced or paid as provided in Section 306, and (ii)
such Securities for whose payment money has theretofore been deposited in trust
or segregated and held in trust by the Partnership and thereafter repaid to the
Partnership or discharged from such trust, as provided in Section 1003) have
been delivered to the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the
Trustee for cancellation
(i) have become due and payable,
(ii) will become due and payable at their Stated
Maturity within one year, or
(iii) are to be called for redemption within one year
under arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the Partnership,
and the Partnership in the case of (i), (ii) or (iii) above, has irrevocably
deposited or caused to be deposited with the Trustee as trust funds in trust for
this purpose an amount of money in the currency or currency units in which such
Securities are payable sufficient to pay and discharge the entire indebtedness
on such Securities not theretofore delivered to the Trustee for cancellation,
for principal and any premium and interest to the date of such deposit (in the
case of Securities which have become due and payable) or to the Stated Maturity
or Redemption Date, as the case may be;
(2) the Partnership has paid or caused to be paid all other sums
payable hereunder by the Partnership with respect to such Securities; and
(3) the Partnership has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of this
Indenture with respect to such Securities have been complied with.
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Notwithstanding the satisfaction and discharge of this Indenture with
respect to Securities of any series, (x) the obligations of the Partnership to
the Trustee under Section 607, the obligations of the Trustee to any
Authenticating Agent under Section 614 and the right of the Trustee to resign
under Section 610 shall survive, and (y) if money shall have been deposited with
the Trustee pursuant to subclause (B) of Clause (1) of this Section, the
obligations of the Partnership and/or the Trustee under Sections 402, 606, 701
and 1002 and the last paragraph of Section 1003 shall survive.
SECTION 402. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 1003, all money
deposited with the Trustee pursuant to Section 401 shall be held in trust and
applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Partnership acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal and any premium and
interest for whose payment such money has been deposited with the Trustee.
ARTICLE V
REMEDIES
SECTION 501. Events of Default.
"Event of Default", wherever used herein with respect to Securities of any
series, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(1) default in the payment of any interest upon any Security of that
series when it becomes due and payable, and continuance of such default for a
period of 30 days (whether or not such payment is prohibited by the provisions
of Article XIV hereof); or
(2) default in the payment of the principal of (or premium, if any,
on) any Security of that series at its Maturity (whether or not such payment is
prohibited by the provisions of Article XIV hereof); or
(3) default in the performance, or breach, of any term, covenant or
warranty of the Partnership in this Indenture (other than a term, covenant or
warranty a default in whose performance or whose breach is elsewhere in this
Section specifically dealt with or which has expressly been included in this
Indenture solely for the benefit of series of Securities other than that
series), and continuance of such default or breach for a period of 60 days after
there has been given, by registered or certified mail, to the Partnership by the
Trustee or to the Partnership and the Trustee by the Holders of at least 25% in
principal amount of the Outstanding Securities of that series a written notice
specifying such default or breach and requiring it to be remedied and stating
that such notice is a "Notice of Default" hereunder; or
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(4) the Partnership pursuant to or within the meaning of any
Bankruptcy Law (A) commences a voluntary case, (B) consents to the entry of any
order for relief against it in an involuntary case, (C) consents to the
appointment of a Custodian of it or for all or substantially all of its
property, or (D) makes a general assignment for the benefit of its creditors; or
(5) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that (A) is for relief against the Partnership in an
involuntary case, (B) appoints a Custodian of the Partnership or for all or
substantially all of its property, or (C) orders the liquidation of the
Partnership; and the order or decree remains unstayed and in effect for 90 days;
or
(6) any other Event of Default provided as contemplated by Section
301 with respect to Securities of that series.
SECTION 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default with respect to Securities of any series at the
time Outstanding occurs and is continuing, then in every such case the Trustee
or the Holders of not less than 25% in principal amount of the Outstanding
Securities of that series may declare the principal amount of (or, if any of the
Securities of that series are Original Issue Discount Securities, such portion
of the principal amount of such Securities as may be specified in the terms
thereof), and accrued but unpaid interest, if any, on all of the Securities of
that series to be due and payable immediately, by a notice in writing to the
Partnership (and to the Trustee if given by Holders), and upon any such
declaration such principal amount (or specified amount) shall become immediately
due and payable.
At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in this
Article provided, the Holders of a majority in principal amount of the
Outstanding Securities of that series, by written notice to the Partnership and
the Trustee, may rescind and annul such declaration and its consequences if
(1) the Partnership has paid or deposited with the Trustee a
sum sufficient to pay
(A) all overdue interest on all Securities of that series,
(B) the principal of (and premium, if any, on) any Securities
of that series which have become due otherwise than by such declaration of
acceleration and any interest thereon at the rate or rates prescribed therefor
in such Securities,
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate or rates prescribed therefor in such
Securities, and
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(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel; and
(2) all Events of Default with respect to Securities of that series,
other than the non-payment of the principal of Securities of that series which
have become due solely by such declaration of acceleration, have been cured or
waived as provided in Section 513.
No such rescission shall affect any subsequent Default or impair any right
consequent thereon.
SECTION 503. Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Partnership covenants that if
(1) default is made in the payment of any interest on any Security
when such interest becomes due and payable and such default continues for a
period of 30 days (whether or not such payment is prohibited by the provisions
of Article XIV hereof), or
(2) default is made in the payment of the principal of (or premium,
if any, on) any Security at the Maturity thereof (whether or not such payment is
prohibited by the provisions of Article XIV hereof),
the Partnership will, upon demand of the Trustee, pay to it, for the benefit of
the Holders of such Securities, the whole amount then due and payable on such
Securities for principal and any premium and interest and, to the extent that
payment of such interest shall be legally enforceable, interest on any overdue
principal and premium and on any overdue interest, at the rate or rates
prescribed therefor in such Securities, and, in addition thereto, such further
amount as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel.
If the Partnership fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Partnership or any other obligor upon such Securities and collect
the moneys adjudged or decreed to be payable in the manner provided by law out
of the property of the Partnership or any other obligor upon such Securities,
wherever situated.
If an Event of Default with respect to Securities of any series occurs and
is continuing, the Trustee may in its discretion proceed to protect and enforce
its rights and the rights of the Holders of Securities of such series by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy.
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SECTION 504. Trustee May File Proofs of Claim.
In case of any judicial proceeding relative to the Partnership or any
other obligor upon the Securities, their property or their creditors, the
Trustee shall be entitled and empowered, by intervention in such proceeding or
otherwise, to take any and all actions authorized under the Trust Indenture Act
in order to have claims of the Holders and the Trustee allowed in any such
proceeding. In particular, the Trustee shall be authorized to collect and
receive any moneys or other property payable or deliverable on any such claims
and to distribute the same; and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 607.
No provision of this Indenture shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding; provided, however,
that the Trustee may, on behalf of the Holders, vote for the election of a
trustee in bankruptcy or similar official and be a member of a creditors' or
other similar committee.
SECTION 505. Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities may
be prosecuted and enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, be for the ratable benefit of
the Holders of the Securities in respect of which such judgment has been
recovered.
SECTION 506. Application of Money Collected.
Any money or property collected or to be applied by the Trustee pursuant
to this Article shall be applied in the following order, at the date or dates
fixed by the Trustee and, in case of the distribution of such money or property
on account of principal or any premium or interest, upon presentation of the
Securities and the notation thereon of the payment if only partially paid and
upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section 607;
SECOND: Subject to Article XIV, to the payment of the amounts then due and
unpaid for principal of and any premium and interest on the Securities in
respect of which or for the benefit of which such money has been collected,
ratably, without preference or priority of any kind, according to the amounts
due and payable on such Securities for principal and any premium and interest,
respectively; and
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THIRD: The balance, if any, to the Partnership.
SECTION 507. Limitation on Suits.
No Holder of any Security of any series shall have any right to institute
any proceeding, judicial or otherwise, with respect to this Indenture, or for
the appointment of a receiver or trustee, or for any other remedy hereunder,
unless
(1) such Holder has previously given written notice to the Trustee
of a continuing Event of Default with respect to the Securities of that series;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default in its own
name as Trustee hereunder;
(3) such Holder or Holders have offered and, if requested, provided
to the Trustee reasonable security or indemnity against the costs, expenses and
liabilities to be incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer and, if requested, provision of security or indemnity has
failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a majority in
principal amount of the Outstanding Securities of that series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders, or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all of such
Holders.
SECTION 508. Unconditional Right of Holders to Receive Principal,
Premium and Interest.
Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right, which is absolute and unconditional, to receive
payment of the principal of and any premium and (subject to Sections 305 and
307) interest on such Security on the respective Stated Maturities expressed in
such Security (or, in the case of redemption, on the Redemption Date) and to
institute suit for the enforcement of any such payment, and such rights shall
not be impaired without the consent of such Holder.
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SECTION 509. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce any
right or remedy under this Indenture and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to the Trustee or
to such Holder, then in every such case, subject to any determination in such
proceeding, the Partnership, the Trustee and the Holders shall be restored
severally and respectively to their former positions hereunder, and thereafter
all rights and remedies of the Trustee and the Holders shall continue as though
no such proceeding had been instituted.
SECTION 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities in the last paragraph of Section
306, no right or remedy herein conferred upon or reserved to the Trustee or to
the Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Securities to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Trustee or to the Holders may be exercised from time to time, and as often
as may be deemed expedient, by the Trustee or by the Holders, as the case may
be.
SECTION 512. Control by Holders.
The Holders of a majority in aggregate principal amount of the Outstanding
Securities of any series shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee, with respect to the
Securities of such series; provided, however, that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture;
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction; and
(3) subject to the provisions of Section 601, the Trustee shall have
the right to decline to follow any such direction if the Trustee in good faith
shall determine that the proceeding so directed would involve the Trustee in
personal liability or would otherwise be contrary to applicable law.
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SECTION 513. Waiver of Past Defaults.
The Holders of a majority in aggregate principal amount of the Outstanding
Securities of any series may on behalf of the Holders of all the Securities of
such series waive any past default hereunder with respect to such series and its
consequences, except
(1) a continuing default in the payment of the principal of or any
premium or interest on any Security of such series, or
(2) a default in respect of a covenant or provision hereof which
under Article IX cannot be modified or amended without the consent of the Holder
of each Outstanding Security of such series affected.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture, but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
SECTION 514. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken, suffered or
omitted by it as Trustee, a court may require any party litigant in such suit to
file an undertaking to pay the costs of such suit, and may assess costs against
any such party litigant, in the manner and to the extent provided in the Trust
Indenture Act; provided, however, that neither this Section nor the Trust
Indenture Act shall be deemed to authorize any court to require such an
undertaking or to make such an assessment in any suit instituted by the
Partnership.
SECTION 515. Waiver of Usury, Stay or Extension Laws.
The Partnership covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any usury, stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Partnership (to the extent that it
may lawfully do so) hereby expressly waives all benefit or advantage of any such
law and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
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ARTICLE VI
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities.
The duties and responsibilities of the Trustee shall be as provided by the
Trust Indenture Act. No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or security or indemnity satisfactory to it against such
risk or liability is not reasonably assured to it. Whether or not therein
expressly so provided, every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section.
SECTION 602. Notice of Defaults.
If a Default occurs and is continuing with respect to the Securities of
any series, the Trustee shall, within 90 days after it occurs, transmit, in the
manner and to the extent provided in Section 313(c) of the Trust Indenture Act,
notice of all uncured or unwaived Defaults known to it; provided, however, that,
except in the case of a Default in payment on the Securities of any series, the
Trustee may withhold the notice if it determines in good faith that withholding
such notice is in the interests of Holders of Securities of such series;
provided, further, however, that, in the case of any default or breach of the
character specified in Section 501(3) with respect to the Securities of such
series, no such notice to Holders shall be given until at least 60 days after
the occurrence thereof.
SECTION 603. Certain Rights of Trustee.
Subject to the provisions of Section 601:
(1) the Trustee may rely on and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties;
(2) any request, direction, order or demand of the Partnership
mentioned herein shall be sufficiently evidenced by a Partnership Request or
Partnership Order (other than delivery of any Security to the Trustee for
authentication and delivery pursuant to Section 303, which shall be sufficiently
evidenced as provided therein) and any resolution of the Board of Directors
shall be sufficiently evidenced by a Board Resolution;
(3) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action
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hereunder, the Trustee (unless other evidence be herein specifically prescribed)
may, in the absence of bad faith on its part, rely upon an Officers'
Certificate;
(4) the Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon;
(5) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee security or indemnity satisfactory to it against the
costs, expenses and liabilities which might be incurred by it in compliance with
such request or direction;
(6) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document, but
the Trustee, in its discretion, may, without obligation to do so, make such
further inquiry or investigation into such facts or matters as it may see fit;
(7) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder; and
(8) the Trustee may request that the Partnership deliver an
Officers' Certificate setting forth the names of individuals and/or titles of
officers authorized at such time to take specified actions pursuant to this
Indenture, which Officers' Certificate may be signed by any person authorized to
sign an Officers' Certificate, including any person specified as so authorized
in any such certificate previously delivered and not superseded.
SECTION 604. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the Trustee's
certificates of authentication, shall be taken as the statements of the
Partnership, and the Trustee or any Authenticating Agent assumes no
responsibility for their correctness. Neither the Trustee nor any Authenticating
Agent makes any representations as to the validity or sufficiency of this
Indenture or of the Securities. The Trustee or any Authenticating Agent shall
not be accountable for the use or application by the Partnership of Securities
or the proceeds thereof.
SECTION 605. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Partnership, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to Sections
608 and 613, may otherwise deal with the Partnership with the same rights it
would have if it were not Trustee, Authenticating Agent, Paying Agent, Security
Registrar or such other agent.
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SECTION 606. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed with the Partnership.
SECTION 607. Compensation and Reimbursement.
The Partnership agrees:
(1) to pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust);
(2) to reimburse the Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the reasonable
compensation and the expenses and disbursements of its agents and counsel),
except any such expense, disbursement or advance as may be attributable to its
negligence or bad faith; and
(3) to indemnify the Trustee for, and to hold it harmless against,
any loss, liability or expense incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or administration of
the trust or trusts hereunder, including the costs and expenses of defending
itself against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder.
The obligations of the Partnership under this Section to compensate the
Trustee and to pay or reimburse the Trustee for expenses, disbursements and
advances shall constitute additional indebtedness hereunder.
Without limiting any rights available to the Trustee under applicable law,
when the Trustee incurs expenses or renders services in connection with an Event
of Default specified in Section 501(4) or Section 501(5), the expenses
(including the reasonable charges and expenses of its counsel) and the
compensation for such services are intended to constitute expenses of
administration under any applicable Bankruptcy Law.
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The provisions of this Section shall survive the satisfaction and
discharge of this Indenture and the defeasance of the Securities.
SECTION 608. Disqualification; Conflicting Interests.
If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture.
SECTION 609. Corporate Trustee Required; Eligibility.
There shall at all times be one or more Trustees hereunder with respect to
the Securities of each series, at least one of which shall be a Person that is
eligible pursuant to the Trust Indenture Act to act as such and has a combined
capital and surplus required by the Trust Indenture Act. If such Person
publishes reports of condition at least annually, pursuant to law or to the
requirements of a supervising or examining authority, then for the purposes of
this Section, the combined capital and surplus of such Person shall be deemed to
be its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, it shall resign immediately in
the manner and with the effect hereinafter specified in this Article.
SECTION 610. Resignation and Removal; Appointment of Successor.
No resignation or removal of the Trustee and no appointment of a successor
Trustee pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee in accordance with the applicable
requirements of Section 611.
The Trustee may resign at any time with respect to the Securities of one
or more series by giving written notice thereof to the Partnership. If the
instrument of acceptance by a successor Trustee required by Section 611 shall
not have been delivered to the Trustee within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the
Securities of such series.
The Trustee may be removed at any time with respect to the Securities of
any series by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series, delivered to the Trustee and to the
Partnership.
If at any time:
(1) the Trustee shall fail to comply with Section 608 after written
request therefor by the Partnership or by any Holder who has been a bona fide
Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 609 and
shall fail to resign after written request therefor by the Partnership or by any
such Holder, or
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(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property
shall be appointed or any public officer shall take charge or control of the
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then, in any such case, (A) the Partnership, acting
pursuant to the authority of a Board Resolution, may remove the Trustee with
respect to all Securities, or (B) subject to Section 514, any Holder who has
been a bona fide Holder of a Security for at least six months may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee with respect to all Securities and
the appointment of a successor Trustee or Trustees.
If the Trustee shall resign, be removed or become incapable of acting, or
if a vacancy shall occur in the office of Trustee for any cause, with respect to
the Securities of one or more series, the Partnership, by a Board Resolution,
shall promptly appoint a successor Trustee or Trustees with respect to the
Securities of that or those series (it being understood that any such successor
Trustee may be appointed with respect to the Securities of one or more or all of
such series and that at any time there shall be only one Trustee with respect to
the Securities of any particular series) and shall comply with the applicable
requirements of Section 611. If, within one year after such resignation, removal
or incapability, or the occurrence of such vacancy, a successor Trustee with
respect to the Securities of any series shall be appointed by Act of the Holders
of a majority in principal amount of the Outstanding Securities of such series
delivered to the Partnership and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment in accordance
with the applicable requirements of Section 611, become the successor Trustee
with respect to the Securities of such series and to that extent supersede the
successor Trustee appointed by the Partnership. If no successor Trustee with
respect to the Securities of any series shall have been so appointed by the
Partnership or the Holders and accepted appointment in the manner required by
Section 611, any Holder who has been a bona fide Holder of a Security of such
series for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Securities of such
series.
The Partnership shall give notice of each resignation and each removal of
the Trustee with respect to the Securities of any series and each appointment of
a successor Trustee with respect to the Securities of any series to all Holders
of Securities of such series in the manner provided in Section 106. Each notice
shall include the name of the successor Trustee with respect to the Securities
of such series and the address of its Corporate Trust Office.
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SECTION 611. Acceptance of Appointment by Successor.
(1) In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Partnership and to the retiring Trustee
an instrument accepting such appointment, and thereupon the resignation or
removal of the retiring Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Trustee; but, on the
request of the Partnership or the successor Trustee, such retiring Trustee
shall, upon payment of its charges, execute and deliver an instrument
transferring to such successor Trustee all the rights, powers and trusts of the
retiring Trustee and shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder.
(2) In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Partnership,
the retiring Trustee and each successor Trustee with respect to the Securities
of one or more series shall execute and deliver an indenture supplemental hereto
wherein each successor Trustee shall accept such appointment and which (A) shall
contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor Trustee all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of that
or those series to which the appointment of such successor Trustee relates, (B)
if the retiring Trustee is not retiring with respect to all Securities, shall
contain such provisions as shall be deemed necessary or desirable to confirm
that all the rights, powers, trusts and duties of the retiring Trustee with
respect to the Securities of that or those series as to which the retiring
Trustee is not retiring shall continue to be vested in the retiring Trustee, and
(C) shall add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, it being understood that nothing herein or
in such supplemental indenture shall constitute such Trustees as co-trustees of
the same trust and that each such Trustee shall be trustee of a trust or trusts
hereunder separate and apart from any trust or trusts hereunder administered by
any other such Trustee; and upon the execution and delivery of such supplemental
indenture the resignation or removal of the retiring Trustee shall become
effective to the extent provided therein and each such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee with respect to the
Securities of that or those series to which the appointment of such successor
Trustee relates, but, on request of the Partnership or any successor Trustee,
such retiring Trustee shall, upon payment of its charges, duly assign, transfer
and deliver to such successor Trustee all property and money held by such
retiring Trustee hereunder with respect to the Securities of that or those
series to which the appointment of such successor Trustee relates.
(3) Upon request of any such successor Trustee, the Partnership
shall execute any and all instruments for more fully and certainly vesting in
and confirming to such successor Trustee all such rights, powers and trusts
referred to in paragraph (1) or (2) of this Section, as the case may be.
(4) No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified and eligible
under this Article.
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SECTION 612. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been authenticated,
but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated with the same effect
as if such successor Trustee had itself authenticated such Securities.
SECTION 613. Preferential Collection of Claims Against Partnership.
If and when the Trustee shall be or become a creditor of the Partnership
or any other obligor upon the Securities, the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Partnership or any such other obligor.
SECTION 614. Appointment of Authenticating Agent.
The Trustee (upon notice to the Partnership) may appoint an Authenticating
Agent or Agents with respect to one or more series of Securities which shall be
authorized to act on behalf of the Trustee to authenticate Securities of such
series issued upon original issue (in accordance with procedures acceptable to
the Trustee) and upon exchange, registration of transfer or partial redemption
thereof or pursuant to Section 306, and Securities so authenticated shall be
entitled to the benefits of this Indenture and shall be valid and obligatory for
all purposes as if authenticated by the Trustee hereunder. Wherever reference is
made in this Indenture to the authentication and delivery of Securities by the
Trustee or the Trustee's certificate of authentication, such reference shall be
deemed to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Partnership and shall at all times be a corporation organized
and doing business under the laws of the United States of America, any State
thereof or the District of Columbia, authorized under such laws to act as
Authenticating Agent, having a combined capital and surplus of not less than
$50,000,000 and subject to supervision or examination by Federal or State
authority. If such Authenticating Agent publishes reports of condition at least
annually, pursuant to law or to the requirements of said supervising or
examining authority, then for the purposes of this Section, the combined capital
and surplus of such Authenticating Agent shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time an Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section, such Authenticating Agent shall
resign immediately in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or
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consolidation to which such Authenticating Agent shall be a party, or any
corporation succeeding to all or substantially all of the corporate agency or
corporate trust business of such Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or such Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Partnership. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice thereof
to such Authenticating Agent and to the Partnership. Upon receiving such a
notice of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Partnership. Any successor Authenticating
Agent upon acceptance of its appointment hereunder shall become vested with all
the rights, powers and duties of its predecessor hereunder, with like effect as
if originally named as an Authenticating Agent. No successor Authenticating
Agent shall be appointed unless eligible under the provisions of this Section.
Except with respect to an Authenticating Agent appointed at the request of
the Partnership, the Trustee agrees to pay to each Authenticating Agent from
time to time reasonable compensation for its services under this Section.
If an appointment with respect to one or more series is made pursuant to
this Section, the Securities of such series may have endorsed thereon, in
addition to the Trustee's certificate of authentication, an alternative
certificate of authentication in the following form:
This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.
--------------------------,
As Trustee
By:
--------------------------------
As Authenticating Agent
By:
--------------------------------
Authorized Officer
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ARTICLE VII
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND
PARTNERSHIP
SECTION 701. Partnership to Furnish Trustee Names and Addresses of
Holders.
The Partnership will furnish or cause to be furnished to the Trustee
(1) semi-annually, not later than May 15 and November 15 in each
year, a list for each series of Securities, in such form as the Trustee may
reasonably require, of the names and addresses of the Holders of Securities of
such series as of the preceding April 30 or October 31, as the case may be, and
(2) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Partnership of any such request, a list
of similar form and content as of a date not more than 15 days prior to the time
such list is furnished;
provided, however, that if and so long as the Trustee shall be the Security
Registrar for Securities of a series, no such list need be furnished with
respect to such series of Securities.
SECTION 702. Preservation of Information; Communications to Holders .
The Trustee shall comply with the obligations imposed upon it pursuant to
Section 312 of the Trust Indenture Act.
The rights of the Holders to communicate with other Holders with respect
to their rights under this Indenture or under the Securities, and the
corresponding rights and privileges of the Trustee, shall be as provided by the
Trust Indenture Act.
Every Holder of Securities, by receiving and holding the same, agrees with
the Partnership and the Trustee that neither the Partnership nor the Trustee nor
any agent of either of them shall be held accountable by reason of any
disclosure of information as to the names and addresses of Holders made pursuant
to the Trust Indenture Act.
SECTION 703. Reports by Trustee.
The Trustee shall transmit to Holders such reports concerning the Trustee
and its actions under this Indenture as may be required pursuant to the Trust
Indenture Act at the times and in the manner provided pursuant thereto.
Reports so required to be transmitted at stated intervals of not more than
12 months shall be transmitted no later than July 15 in each calendar year with
respect to the 12-month period ending on the previous May 15, commencing May 15,
1999.
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A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Trustee with each stock exchange upon which any
Securities are listed, with the Commission and with the Partnership. The
Partnership will notify the Trustee when any Securities are listed on any stock
exchange.
SECTION 704. Reports by Partnership.
The Partnership shall:
(1) file with the Trustee, within 15 days after the Partnership is
required to file the same with the Commission, copies of the annual reports and
of the information, documents and other reports (or copies of such portions of
any of the foregoing as the Commission may from time to time by rules and
regulations prescribe) which the Partnership may be required to file with the
Commission pursuant to Section 13 or Section 15(d) of the Exchange Act; or, if
the Partnership is not required to file information, documents or reports
pursuant to either of said Sections, then it shall file with the Trustee and the
Commission (unless the Commission will not accept such a filing), in accordance
with rules and regulations prescribed from time to time by the Commission, such
of the supplementary and periodic information, documents and reports which may
be required pursuant to Section 13 of the Exchange Act in respect of a security
listed and registered on a national securities exchange as may be prescribed
from time to time in such rules and regulations;
(2) file with the Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance by the
Partnership with the conditions and covenants of this Indenture as may be
required from time to time by such rules and regulations; and
(3) transmit by mail to all Holders, as their names and addresses
appear in the Security Register, within 30 days after the filing thereof with
the Trustee, such summaries of any information, documents and reports required
to be filed by the Partnership pursuant to paragraphs (1) and (2) of this
Section as may be required by rules and regulations prescribed from time to time
by the Commission.
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ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. Partnership May Consolidate, Etc., Only on Certain Terms.
The Partnership shall not consolidate with or merge into any other Person
or sell, lease or transfer its properties and assets as, or substantially as, an
entirety to, any Person, unless:
(1) (A) in the case of a merger, the Partnership is the surviving
entity, or (B) the Person formed by such consolidation or into which the
Partnership is merged or the Person which acquires by sale or transfer, or which
leases, the properties and assets of the Partnership as, or substantially as, an
entirety must expressly assume, by an indenture supplemental hereto, executed
and delivered to the Trustee, in form reasonably satisfactory to the Trustee,
all of the obligations of the Partnership under this Indenture and the
Securities;
(2) the surviving entity or successor Person is a Person organized
and existing under the laws of the U.S., any State thereof or the District of
Columbia;
(3) immediately after giving effect to such transaction, no Default
or Event of Default exists; and
(4) the Partnership has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger, sale, transfer or lease and the supplemental indenture required in
connection with such transaction comply with this Article and that all
conditions precedent herein provided for relating to such transaction have been
complied with.
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SECTION 802. Successor Substituted.
Upon any consolidation of the Partnership with, or merger of the
Partnership into, any other Person or any sale, transfer or lease of the
properties and assets of the Partnership as, or substantially as, an entirety in
accordance with Section 801, the successor Person formed by such consolidation
or into which the Partnership is merged or to which such sale, transfer or lease
is made shall succeed to, and be substituted for, and may exercise every right
and power of, the Partnership under this Indenture with the same effect as if
such successor Person had been named originally as the Partnership herein, and
thereafter, except in the case of a lease, the predecessor Person shall be
relieved of all obligations and covenants under this Indenture and the
Securities.
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders of Securities, the Partnership and the
Trustee, at any time and from time to time, may enter into one or more
indentures supplemental hereto, in form satisfactory to the Trustee, for any of
the following purposes:
(1) to evidence the succession of another Person to the Partnership
under this Indenture and the Securities and the assumption by such successor
Person of the obligations of the Partnership hereunder;
(2) to add covenants and Events of Default for the benefit of the
Holders of all or any series of such Securities or to surrender any right or
power conferred by this Indenture upon the Partnership;
(3) to add to, change or eliminate any of the provisions of this
Indenture, provided that any such addition, change or elimination shall become
effective only after there are no such Securities of any series entitled to the
benefit of such provision outstanding;
(4) to establish the forms or terms of the Securities of any series
issued hereunder;
(5) to cure any ambiguity or correct any inconsistency in this
Indenture;
(6) to evidence the acceptance of appointment by a successor
Trustee;
(7) to qualify this Indenture under the Trust Indenture Act;
(8) to provide for uncertificated securities in addition to
certificated securities;
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(9) to supplement any provisions of this Indenture necessary to
permit or facilitate the defeasance and discharge of any series of Securities,
provided that such action does not adversely affect the interests of the Holders
of Securities of such series or any other series; and
(10) to comply with the rules or regulations of any securities
exchange or automated quotation system on which any of the Securities may be
listed or traded.
SECTION 902. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in aggregate
principal amount of all Outstanding Securities affected by such supplemental
indenture (voting as one class), the Partnership and the Trustee may enter into
an indenture or indentures supplemental hereto for the purpose of adding any
provisions to, or changing in any manner or eliminating any of the provisions
of, this Indenture, or modifying in any manner the rights of the Holders of
Securities of such series under this Indenture; provided that the Partnership
and the Trustee may not, without the consent of the Holder of each Outstanding
Security affected thereby,
(1) change the Stated Maturity of the principal of, or any
installment of principal of or interest, if any, on, any Security, or reduce the
principal amount thereof or premium, if any, on or the rate of interest thereon
or modify the provisions of this Indenture with respect to the subordination of
the Securities in a manner adverse to the Holders or adversely affect any right
to convert or exchange any Security into any other security, or alter the method
of computation of interest;
(2) reduce the percentage in principal amount of Securities required
for any such supplemental indenture or for any waiver provided for in this
Indenture;
(3) change the Partnership's obligation to maintain an office or
agency for payment of Securities and the other matters specified herein;
(4) impair the right to institute suit for the enforcement of any
payment of principal of, premium, if any, or interest on, any Security;
(5) modify the provisions of this Indenture with respect to the
subordination of any Security in a manner adverse to the Holder thereof; or
(6) modify any of the provisions of this Indenture relating to the
execution of supplemental indentures with the consent of Holders of Securities
which are discussed in this Section or modify any provisions relating to the
waiver by Holders of Securities of past defaults and covenants, except to
increase any required percentage or to provide that other provisions of this
Indenture cannot be modified or waived without the consent of the Holder of each
Outstanding Security affected thereby.
A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Securities, or which modifies the
rights of the Holders of Securities of such series with
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respect to such covenant or other provision, shall be deemed not to affect the
rights under this Indenture of the Holders of Securities of any other series.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
SECTION 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 601) shall be fully protected in relying upon, an
Officers' Certificate and an Opinion of Counsel stating that the execution of
such supplemental indenture is authorized or permitted by this Indenture. The
Trustee may, but shall not be obligated to, enter into any such supplemental
indenture which affects the Trustee's own rights, duties or immunities under
this Indenture or otherwise.
SECTION 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
SECTION 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
SECTION 906. Reference in Securities to Supplemental Indentures.
Securities of any series authenticated and delivered after the execution
of any supplemental indenture pursuant to this Article may, and shall if
required by the Trustee, bear a notation in form approved by the Trustee as to
any matter provided for in such supplemental indenture. If the Partnership shall
so determine, new Securities of any series so modified as to conform, in the
opinion of the Trustee and the Partnership, to any such supplemental indenture
may be prepared and executed by the Partnership and authenticated and delivered
by the Trustee in exchange for Outstanding Securities of such series.
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ARTICLE X
COVENANTS
SECTION 1001. Payment of Principal, Premium and Interest .
The Partnership covenants and agrees for the benefit of each series of
Securities that it will duly and punctually pay the principal of and any premium
and interest on the Securities of that series in accordance with the terms of
the Securities and this Indenture.
SECTION 1002. Maintenance of Office or Agency.
The Partnership will maintain in each Place of Payment for any series of
Securities an office or agency where Securities of that series may be presented
or surrendered for payment, where Securities of that series may be surrendered
for registration of transfer or exchange and where notices and demands to or
upon the Partnership in respect of the Securities of that series and this
Indenture may be served. The Partnership will give prompt written notice to the
Trustee of the location, and any change in the location, of such office or
agency. If at any time the Partnership shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee, and the Partnership hereby appoints the
Trustee as its agent to receive all such presentations, surrenders, notices and
demands.
The Partnership may also from time to time designate one or more other
offices or agencies where the Securities of one or more series may be presented
or surrendered for any or all such purposes and may from time to time rescind
such designations; provided, however, that no such designation or rescission
shall in any manner relieve the Partnership of its obligation to maintain an
office or agency in each Place of Payment for Securities of any series for such
purposes. The Partnership will give prompt written notice to the Trustee of any
such designation or rescission and of any change in the location of any such
other office or agency.
Except as otherwise specified with respect to a series of Securities as
contemplated by Section 301, the Partnership hereby initially designates as the
Place of Payment for each series of Securities The City and State of New York,
and initially appoints the Trustee at its Corporate Trust Office as the
Partnership's office or agency for each such purpose in such city.
SECTION 1003. Money for Securities Payments to Be Held in Trust.
If the Partnership or any of its Subsidiaries shall at any time act as
Paying Agent with respect to any series of Securities, it will, on or before
each due date of the principal of or any premium or interest on any of the
Securities of that series, segregate and hold in trust for the benefit of the
Persons entitled thereto a sum sufficient to pay the principal and any premium
and interest so becoming due until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and will promptly notify the Trustee of
its action or failure so to act.
Whenever the Partnership shall have one or more Paying Agents for any
series of Securities, it will, on or prior to each due date of the principal of
or any premium or interest on any Securities of that series, deposit with a
Paying Agent a sum sufficient to pay such amount,
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such sum to be held as provided by the Trust Indenture Act, and (unless
such Paying Agent is the Trustee) the Partnership will promptly notify the
Trustee of its action or failure so to act.
The Partnership will cause each Paying Agent for any series of Securities
other than the Trustee to execute and deliver to the Trustee an instrument in
which such Paying Agent shall agree with the Trustee, subject to the provisions
of this Section, that such Paying Agent will (1) hold all sums held by it for
the payment of the principal of (and premium, if any) or interest, if any, on
Securities of that series in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise disposed of
as herein provided; (2) give the Trustee notice of any default by the
Partnership (or any other obligor upon the Securities of that series) in the
making of any payment of principal (and premium, if any) or interest, if any, on
the Securities of that series; and (3) during the continuance of any such
default, upon the written request of the Trustee, forthwith pay to the Trustee
all sums held in trust by such Paying Agent for payment in respect of the
Securities of that series.
The Partnership may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Partnership Order direct any Paying Agent to pay, to the Trustee all sums
held in trust by the Partnership or such Paying Agent, such sums to be held by
the Trustee upon the same trusts as those upon which such sums were held by the
Partnership or such Paying Agent; and, upon such payment by any Paying Agent to
the Trustee, such Paying Agent shall be released from all further liability with
respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Partnership, in trust for the payment of the principal of or any premium or
interest on any Security of any series and remaining unclaimed for two years
after such principal, premium or interest has become due and payable shall be
paid to the Partnership on Partnership Request, or (if then held by the
Partnership) shall be discharged from such trust; and the Holder of such
Security shall thereafter, as an unsecured general creditor, look only to the
Partnership for payment thereof, and all liability of the Trustee or such Paying
Agent with respect to such trust money, and all liability of the Partnership as
trustee thereof, shall thereupon cease; provided, however, that the Trustee or
such Paying Agent, before being required to make any such repayment, may at the
expense of the Partnership cause to be published once, in an Authorized
Newspaper in each Place of Payment with respect to such series, notice that such
money remains unclaimed and that, after a date specified therein, which shall
not be less than 30 days from the date of such publication, any unclaimed
balance of such money then remaining will be repaid to the Partnership.
SECTION 1004. Statement by Officers as to Default.
The Partnership will deliver to the Trustee, within 150 days after the end
of each fiscal year of the Partnership ending after the date hereof, an
Officers' Certificate, stating whether or not to the best knowledge of the
signer thereof the Partnership is in default in the performance and observance
of any of the terms, provisions and conditions of this Indenture (without regard
to any period of grace or requirement of notice provided hereunder) and, if the
Partnership shall be in default, specifying all such defaults and the nature and
status thereof of which they may have knowledge.
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SECTION 1005. Existence.
Subject to Article VIII, the Partnership will do or cause to be done all
things necessary to preserve and keep in full force and effect its existence,
rights (charter and statutory) and franchises; provided, however, that the
Partnership shall not be required to preserve any such right or franchise if it
shall determine that the preservation thereof is no longer desirable in the
conduct of the business of the Partnership.
SECTION 1006. Waiver of Certain Covenants.
The Partnership may omit in any particular instance to comply with any
term, provision or condition set forth in Section 1005, with respect to the
Securities of any series if before the time for such compliance the Holders of
at least a majority in aggregate principal amount of the Outstanding Securities
of all affected series (voting as one class) shall, by Act of such Holders,
either waive such compliance in such instance or generally waive compliance with
such term, provision or condition, but no such waiver shall extend to or affect
such term, provision or condition except to the extent so expressly waived, and,
until such waiver shall become effective, the obligations of the Partnership and
the duties of the Trustee in respect of any such term, provision or condition
shall remain in full force and effect.
A waiver which changes or eliminates any term, provision or condition of
this Indenture which has expressly been included solely for the benefit of one
or more particular series of Securities, or which modifies the rights of the
Holders of Securities of such series with respect to such term, provision or
condition, shall be deemed not to affect the rights under this Indenture of the
Holders of Securities of any other series.
ARTICLE XI
REDEMPTION OF SECURITIES
SECTION 1101. Applicability of Article.
Securities of any series which are redeemable before their Stated Maturity
shall be redeemable in accordance with their terms and (except as otherwise
specified as contemplated by Section 301 for Securities of any series) in
accordance with this Article.
SECTION 1102. Election to Redeem; Notice to Trustee.
The election of the Partnership to redeem any Securities shall be
evidenced by a Board Resolution. In case of any redemption at the election of
the Partnership of less than all the Securities of any series, the Partnership
shall, not less than 30 nor more than 60 days prior to the Redemption Date fixed
by the Partnership (unless a shorter notice shall be satisfactory to the
Trustee), notify the Trustee of such Redemption Date, of the principal amount of
Securities of such series to be redeemed and, if applicable, of the tenor of the
Securities to be redeemed. In the case of any redemption of Securities (1) prior
to the expiration of any restriction on such redemption provided in the terms of
such Securities or elsewhere in this Indenture, or (2) pursuant to an election
of the Partnership which is subject to a condition specified in the terms of
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such Securities, the Partnership shall furnish the Trustee with an Officers'
Certificate evidencing compliance with such restriction or condition.
SECTION 1103. Selection by Trustee of Securities to be Redeemed.
If less than all the Securities of any series are to be redeemed (unless
all the Securities of such series and of a specified tenor are to be redeemed),
the particular Securities to be redeemed shall be selected not more than 45 days
prior to the Redemption Date by the Trustee, from the Outstanding Securities of
such series not previously called for redemption, by lottery for redemption of
portions (equal to the minimum authorized denomination for Securities of that
series or any integral multiple thereof) of the principal amount of Securities
of such series of a denomination larger than the minimum authorized denomination
for Securities of that series.
The Trustee shall promptly notify the Partnership in writing of the
Securities selected for redemption and, in the case of any Securities selected
for partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to the redemption of Securities shall relate, in the
case of any Securities redeemed or to be redeemed only in part, to the portion
of the principal amount of such Securities which has been or is to be redeemed.
SECTION 1104. Notice of Redemption.
Notice of redemption shall be given by first-class mail (if international
mail, by air mail), postage prepaid, mailed not less than 30 nor more than 60
days prior to the Redemption Date, to each Holder of Securities to be redeemed,
at his address appearing in the Security Register.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all the Outstanding Securities of any series and of
a specified tenor are to be redeemed, the identification (and, in the case of
partial redemption of any Securities, the principal amounts) of the particular
Securities to be redeemed,
(4) that on the Redemption Date the Redemption Price will become due
and payable upon each such Security to be redeemed and that interest thereon
will cease to accrue on and after said date,
(5) the place or places where such Securities are to be surrendered
for payment of the Redemption Price, and
(6) that the redemption is for a sinking fund, if such is the case.
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Notice of redemption of Securities to be redeemed shall be given by the
Partnership or, at the Partnership's request, by the Trustee in the name and at
the expense of the Partnership.
SECTION 1105. Deposit of Redemption Price.
On or prior to any Redemption Date, the Partnership shall deposit with the
Trustee or with a Paying Agent (or, if the Partnership is acting as its own
Paying Agent, segregate and hold in trust as provided in Section 1003) an amount
of money sufficient to pay the Redemption Price of, and (except if the
Redemption Date shall be an Interest Payment Date) accrued interest on, all the
Securities which are to be redeemed on that date.
SECTION 1106. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities so to
be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Partnership shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security shall
be paid by the Partnership at the Redemption Price, together with accrued
interest to the Redemption Date; provided, however, that, unless otherwise
specified as contemplated by Section 301, installments of interest whose Stated
Maturity is on or prior to the Redemption Date shall be payable to the Holders
of such Securities, or one or more Predecessor Securities, registered as such at
the close of business on the relevant Record Dates according to their terms and
the provisions of Section 307.
If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal and any premium shall, until paid, bear
interest from the Redemption Date at the rate prescribed therefor in the
Security.
SECTION 1107. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be surrendered at
a Place of Payment therefor (with, if the Partnership or the Trustee so
requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Partnership and the Trustee duly executed by, the Holder
thereof or his attorney duly authorized in writing), and the Partnership shall
execute, and the Trustee shall authenticate and deliver to the Holder of such
Security without service charge, a new Security or Securities of the same series
and of like tenor, of any authorized denomination as requested by such Holder,
in aggregate principal amount equal to and in exchange for the unredeemed
portion of the principal of the Security so surrendered.
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ARTICLE XII
SINKING FUNDS
SECTION 1201. Applicability of Article.
The provisions of this Article shall be applicable to any sinking fund for
the retirement of Securities of a series except as otherwise specified as
contemplated by Section 301 for Securities of such series.
The minimum amount of any sinking fund payment provided for by the terms
of Securities of any series is herein referred to as a "mandatory sinking fund
payment," and any payment in excess of such minimum amount provided for by the
terms of Securities of any series is herein referred to as an "optional sinking
fund payment." If provided for by the terms of Securities of any series, the
cash amount of any sinking fund payment may be subject to reduction as provided
in Section 1202. Each sinking fund payment shall be applied to the redemption of
Securities of any series as provided for by the terms of Securities of such
series.
SECTION 1202. Satisfaction of Sinking Fund Payments with Securities.
The Partnership (1) may deliver Outstanding Securities of a series (other
than any previously called for redemption), and (2) may apply as a credit
Securities of a series which have been redeemed either at the election of the
Partnership pursuant to the terms of such Securities or through the application
of permitted optional sinking fund payments pursuant to the terms of such
Securities, in each case in satisfaction of all or any part of any sinking fund
payment with respect to the Securities of such series required to be made
pursuant to the terms of such Securities as provided for by the terms of such
series; provided that such Securities have not been previously so credited. Such
Securities shall be received and credited for such purpose by the Trustee at the
Redemption Price specified in such Securities for redemption through operation
of the sinking fund and the amount of such sinking fund payment shall be reduced
accordingly.
SECTION 1203. Redemption of Securities for Sinking Fund.
Not less than 45 days prior to each sinking fund payment date for any
series of Securities (unless a shorter period shall be satisfactory to the
Trustee), the Partnership will deliver to the Trustee an Officers' Certificate
specifying the amount of the next ensuing sinking fund payment for that series
pursuant to the terms of that series, the portion thereof, if any, which is to
be satisfied by payment of cash and the portion thereof, if any, which is to be
satisfied by delivering and crediting Securities of that series pursuant to
Section 1202 and stating the basis for such credit and that such Securities have
not been previously so credited, and will also deliver to the Trustee any
Securities to be so delivered. Not less than 30 days before each such sinking
fund payment date the Trustee shall select the Securities to be redeemed upon
such sinking fund payment date in the manner specified in Section 1103 and cause
notice of the redemption thereof to be given in the name of and at the expense
of the Partnership in the manner provided in Section 1104. Such notice having
been duly given, the redemption of such Securities shall be made upon the terms
and in the manner stated in Sections 1106 and 1107.
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ARTICLE XIII
DEFEASANCE
SECTION 1301. Applicability of Article.
The provisions of this Article shall be applicable to each series of
Securities except as otherwise specified as contemplated by Section 301 for
Securities of such series.
SECTION 1302. Legal Defeasance.
In addition to discharge of the Indenture pursuant to Section 401, the
Partnership shall be deemed to have paid and discharged the entire indebtedness
on all the Securities of such a series on the 91st day after the date of the
deposit referred to in Clause (1) below, and the provisions of this Indenture
with respect to the Securities of such series shall no longer be in effect
(except as to (i) rights of registration of transfer and exchange of Securities
of such series and the Partnership's right of optional redemption, if any, (ii)
substitution of mutilated, destroyed, lost or stolen Securities, (iii) rights of
Holders of Securities to receive payments of principal thereof and interest
thereon, upon the original stated due dates therefor or on the specified
redemption dates therefor (but not upon acceleration), and remaining rights of
the holders to receive mandatory sinking fund payments, if any, (iv) the rights,
obligations, duties and immunities of the Trustee hereunder, and the
Partnership's obligations in connection therewith (including, but not limited
to, Section 607), (v) the rights, if any, to convert or exchange the Securities
of such series, (vi) the rights of the Holders of Securities of such series as
beneficiaries hereof with respect to the property so deposited with the Trustee
payable to all or any of them, and (vii) the obligations of the Partnership
under Section 1002), and the Trustee, at the expense of the Partnership, shall,
upon a Partnership Request, execute proper instruments acknowledging the same,
if the conditions set forth below are satisfied (hereinafter, "defeasance"):
(1) The Partnership has irrevocably deposited or caused to be
deposited with the Trustee as trust funds in trust, for the purposes of making
the following payments, specifically pledged as security for, and dedicated
solely to, the benefit of the Holders of the Securities of such series (A) cash
in an amount, or (B) in the case of any series of Securities the payments on
which may only be made in legal coin or currency of the United States, U.S.
Government Obligations, maturing as to principal and interest at such times and
in such amounts as will insure the availability of cash, or (C) a combination
thereof, certified to be sufficient, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee, to pay (i) the principal and interest and
premium, if any, on all Securities of such series on each date that such
principal, interest or premium, if any, is due and payable or on any Redemption
Date established pursuant to Clause (3) below, and (ii) any mandatory sinking
fund payments on the dates on which such payments are due and payable in
accordance with the terms of the Indenture and the Securities of such series;
(2) The Partnership has delivered to the Trustee an Opinion of
Counsel based on the fact that (A) the Partnership has received from, or there
has been published by, the Internal Revenue Service a ruling, or (B) since the
date hereof, there has been a change in the
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applicable federal income tax law, in either case to the effect that, and such
opinion shall confirm that, the Holders of the Securities of such series will
not recognize income, gain or loss for federal income tax purposes as a result
of such deposit, defeasance and discharge and will be subject to federal income
tax on the same amount and in the same manner and at the same times, as would
have been the case if such deposit, defeasance and discharge had not occurred;
(3) If the Securities are to be redeemed prior to Stated Maturity
(other than from mandatory sinking fund payments or analogous payments), notice
of such redemption shall have been duly given pursuant to this Indenture or
provision therefor satisfactory to the Trustee shall have been made;
(4) No Event of Default or event which with notice or lapse of time
or both would become an Event of Default shall have occurred and be continuing
on the date of such deposit;
(5) Such defeasance shall not cause the Trustee to have a
conflicting interest within the meaning of the Trust Indenture Act (assuming all
Securities are in default within the meaning of such Act);
(6) Such defeasance shall not result in a breach or violation of, or
constitute a default under, any other agreement or instrument to which the
Partnership is a party or by which it is bound;
(7) Such defeasance shall not result in the trust arising from such
deposit constituting an investment company within the meaning of the Investment
Company Act of 1940, as amended, unless such trust shall be registered under
such Act or exempt from registration thereunder; and
(8) The Partnership has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for relating to the defeasance contemplated by this provision
have been complied with.
For this purpose, such defeasance means that the Partnership and any other
obligor upon the Securities of such series shall be deemed to have paid and
discharged the entire debt represented by the Securities of such series, which
shall thereafter be deemed to be "Outstanding" only for the purposes of Section
1304 and the rights and obligations referred to in Clauses (i) through (vii),
inclusive, of the first paragraph of this Section, and to have satisfied all its
other obligations under the Securities of such series and this Indenture insofar
as the Securities of such series are concerned.
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<PAGE>
SECTION 1303. Covenant Defeasance.
The Partnership and any other obligor, if any, shall be released on the
91st day after the date of the deposit referred to in Clause (1) below from its
obligations under Sections 704, 801 and 1005 with respect to the Securities of
any series on and after the date the conditions set forth below are satisfied
(hereinafter, "covenant defeasance"), and the Securities of such series shall
thereafter be deemed to be not "Outstanding" for the purposes of any request,
demand, authorization, direction, notice, waiver, consent or declaration or
other action or Act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed Outstanding for
all other purposes hereunder. For this purpose, such covenant defeasance means
that, with respect to the Securities of such series, the Partnership may omit to
comply with and shall have no liability in respect of any term, condition or
limitation set forth in any such Section, whether directly or indirectly by
reason of any reference elsewhere herein to such Section or by reason of any
reference in such Section to any other provision herein or in any other document
and such omission to comply shall not constitute a Default or an Event of
Default under Section 501, but, except as specified above, the remainder of this
Indenture and the Securities of such series shall be unaffected thereby. The
following shall be the conditions to application of this Section 1303:
(1) The Partnership has irrevocably deposited or caused to be
deposited with the Trustee as trust funds in trust for the purpose of making the
following payments, specifically pledged as security for, and dedicated solely
to, the benefit of the Holders of the Securities of such series, (A) cash in an
amount, or (B) in the case of any series of Securities the payments on which may
only be made in legal coin or currency of the United States, U.S. Government
Obligations, maturing as to principal and interest at such times and in such
amounts as will insure the availability of cash, or (C) a combination thereof,
sufficient, in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee, to pay (i) the principal and interest and premium, if any, on all
Securities of such series on each date that such principal, interest or premium,
if any, is due and payable or on any Redemption Date established pursuant to
Clause (2) below, and (ii) any mandatory sinking fund payments on the day on
which such payments are due and payable in accordance with the terms of the
Indenture and the Securities of such series;
(2) If the Securities are to be redeemed prior to Stated Maturity
(other than from mandatory sinking fund payments or analogous payments), notice
of such redemption shall have been duly given pursuant to this Indenture or
provision therefor satisfactory to the Trustee shall have been made;
(3) No Event of Default or event which with notice or lapse of time
or both would become an Event of Default shall have occurred and be continuing
on the date of such deposit;
(4) The Partnership has delivered to the Trustee an Opinion of
Counsel which shall confirm that the Holders of the Securities of such series
will not recognize income, gain or loss for federal income tax purposes as a
result of such deposit and covenant defeasance and will be subject to federal
income tax on the same amount and in the same manner and at the same time as
would have been the case if such deposit and covenant defeasance had not
occurred;
63
<PAGE>
(5) Such covenant defeasance shall not cause the Trustee to have a
conflicting interest within the meaning of the Trust Indenture Act (assuming all
Securities are in default within the meaning of such Act);
(6) Such covenant defeasance shall not result in a breach or
violation of, or constitute a default under, any other agreement or instrument
to which the Partnership is a party or by which it is bound;
(7) Such covenant defeasance shall not result in the trust arising
from such deposit constituting an investment company within the meaning of the
Investment Company Act of 1940, as amended, unless such trust shall be
registered under such Act or exempt from registration thereunder; and
(8) The Partnership has delivered to the Trustee an Officers'
Certificate stating that all conditions precedent provided for relating to the
covenant defeasance contemplated by this provision have been complied with.
SECTION 1304. Application by Trustee of Funds Deposited for Payment
of Securities.
Subject to the provisions of the last paragraph of Section 1003, all
moneys or U.S. Government Obligations deposited with the Trustee pursuant to
Section 1302 or 1303 (and all funds earned on such moneys or U.S. Government
Obligations) shall be held in trust and applied by it to the payment, either
directly or through any Paying Agent (including the Partnership acting as its
own Paying Agent), to the Holders of the particular Securities of such series
for the payment or redemption of which such moneys have been deposited with the
Trustee, of all sums due and to become due thereon for principal and interest;
but such money need not be segregated from other funds except to the extent
required by law. Subject to Sections 1302 and 1303, the Trustee shall promptly
pay to the Partnership upon request any excess moneys held by it at any time.
SECTION 1305. Repayment to Partnership.
The Trustee and any Paying Agent promptly shall pay or return to the
Partnership upon Partnership Request any money and U.S. Government Obligations
held by them at any time that are not required for the payment of the principal
of and any interest on the Securities of any series for which money or U.S.
Government Obligations have been deposited pursuant to Section 1302 or 1303.
The provisions of the last paragraph of Section 1003 shall apply to any
money held by the Trustee or any Paying Agent under this Article that remains
unclaimed for two years after the Maturity of any series of Securities for which
money or U.S. Government Obligations have been deposited pursuant to Section
1302 or 1303.
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<PAGE>
ARTICLE XIV
SUBORDINATION OF SECURITIES
SECTION 1401. Securities Subordinated to Senior Debt.
(1) The Partnership, for itself, its successors and assigns,
covenants and agrees, and each Holder of Securities, by his acceptance thereof,
likewise covenants and agrees, that the payment of the principal of (and
premium, if any), and interest on each and all of the Securities is hereby
expressly subordinated, to the extent and in the manner hereinafter set forth,
in right of payment to the prior payment in full of all Senior Debt of the
Partnership.
(2) If (A) the Partnership shall default in the payment of any
principal of, premium, if any, or interest, if any, on any Senior Debt of the
Partnership when the same becomes due and payable, whether at maturity or at a
date fixed for prepayment or by declaration of acceleration or otherwise, or (B)
any other default shall occur with respect to Senior Debt of the Partnership and
the maturity of such Senior Debt has been accelerated in accordance with its
terms, then, upon written notice of such default to the Partnership and the
Trustee by the holders of Senior Debt of the Partnership or any trustee
therefor, unless and until, in either case, the default has been cured or waived
or has ceased to exist, or, any such acceleration has been rescinded or such
Senior Debt has been paid in full, no direct or indirect payment (in cash,
property, securities, by set-off or otherwise) shall be made or agreed to be
made on account of the principal of, premium, if any, or interest, if any, on
any of the Securities, or in respect of any redemption, retirement, purchase or
other acquisition of any of the Securities other than those made in capital
stock of the Partnership (or cash in lieu of fractional shares thereof).
(3) If any default occurs (other than a default described in
paragraph (2) of this Section 1401) under the Senior Debt of the Partnership,
pursuant to which the maturity thereof may be accelerated immediately without
further notice (except such notice as may be required to effect such
acceleration) or at the expiration of any applicable grace periods (a "Senior
Nonmonetary Default"), then, upon the receipt by the Partnership and the Trustee
of written notice thereof (a "Payment Blockage Notice") from or on behalf of
holders of such Senior Debt of the Partnership specifying an election to
prohibit such payment and other action by the Partnership in accordance with the
following provisions of this paragraph (3), the Partnership may not make any
payment or take any other action that would be prohibited by paragraph (2) of
this Section 1401 during the period (the "Payment Blockage Period") commencing
on the date of receipt of such Payment Blockage Notice and ending on the earlier
of (A) the date, if any, on which the holders of such Senior Debt or their
representative notifies the Trustee that such Senior Nonmonetary Default is
cured or waived or ceases to exist or the Senior Debt to which such Senior
Nonmonetary Default relates is discharged or (B) the 179th day after the date of
receipt of such Payment Blockage Notice. Notwithstanding the provisions
described in the immediately preceding sentence, the Partnership may resume
payments on the Securities following such Payment Blockage Period.
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<PAGE>
SECTION 1402. Distribution on Dissolution, Liquidation and
Reorganization; Subrogation of Securities.
Upon any distribution of assets of the Partnership upon any dissolution,
winding up, liquidation or reorganization of the Partnership, whether in
bankruptcy, insolvency, reorganization or receivership proceedings or upon an
assignment for the benefit of creditors or any other marshalling of the assets
and liabilities of the Partnership or otherwise (subject to the power of a court
of competent jurisdiction to make other equitable provision reflecting the
rights conferred in this Indenture upon the Senior Debt of the Partnership and
the holders thereof with respect to the Securities and the Holders thereof by a
lawful plan or reorganization under applicable bankruptcy law),
(1) the holders of all Senior Debt of the Partnership shall be
entitled to receive payment in full of the principal thereof, premium, if any,
interest, and any interest thereon, due thereon before the Holders of the
Securities are entitled to receive any payment upon the principal, premium,
interest of or on the Securities or interest on overdue amounts thereof; and
(2) any payment or distribution of assets of the Partnership of any
kind or character, whether in cash, property or securities, to which the Holders
of the Securities or the Trustee (on behalf of the Holders) would be entitled
except for the provisions of this Article XIV shall be paid by the liquidating
trustee or agent or other person making such payment or distribution, whether a
trustee in bankruptcy, a receiver or liquidating trustee or otherwise, directly
to the holders of Senior Debt of the Partnership or their representative or
representatives or to the trustee or trustees under any indenture under which
any instruments evidencing any of such Senior Debt may have been issued, ratably
according to the aggregate amounts remaining unpaid on account of the principal
of, premium, if any, interest, and any interest thereon, on the Senior Debt of
the Partnership held or represented by each, to the extent necessary to make
payment in full of all Senior Debt of the Partnership remaining unpaid, after
giving effect to any concurrent payment or distribution to the holders of such
Senior Debt; and
(3) in the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Partnership of any kind or character, whether in
cash, property or securities, shall be received by the Trustee (on behalf of the
Holders) or the Holders of the Securities before all Senior Debt of the
Partnership is paid in full, such payment or distribution shall be paid over to
the holders of such Senior Debt or their representative or representatives or to
the trustee or trustees under any indenture under which any instruments
evidencing any of such Senior Debt may have been issued, ratably as aforesaid,
for application to the payment of all Senior Debt remaining unpaid until all
such Senior Debt shall have been paid in full, after giving effect to any
concurrent payment or distribution to the holders of such Senior Debt.
Subject to the payment in full of all Senior Debt of the Partnership, the
Holders of the Securities shall be subrogated to the rights of the holders of
such Senior Debt to receive payments or distributions of cash, property or
securities of the Partnership applicable to Senior Debt of the Partnership until
the principal, premium, interest, and any interest thereon, of or on the
Securities shall be paid in full and no such payments or distributions to the
Holders of the Securities of cash, property or securities otherwise
distributable to the Senior Debt of the Partnership shall, as between the
Partnership, its creditors other than the holders of Senior Debt
66
<PAGE>
of the Partnership, and the Holders of the Securities, be deemed to be a payment
by the Partnership to or on account of the Securities. It is understood that the
provisions of this Article XIV are and are intended solely for the purpose of
defining the relative rights of the Holders of the Securities, on the one hand,
and the holders of Senior Debt of the Partnership, on the other hand. Nothing
contained in this Article XIV or elsewhere in this Indenture or in the
Securities is intended to or shall impair, as between the Partnership, its
creditors other than the holders of Senior Debt of the Partnership, and the
Holders of the Securities, the obligation of the Partnership, which is
unconditional and absolute, to pay to the Holders of the Securities the
principal, premium, interest, and any interest thereon, of or on the Securities
as and when the same shall become due and payable in accordance with their
terms, or to affect the relative rights of the Holders of the Securities and
creditors of the Partnership other than the holders of Senior Debt of the
Partnership, nor shall anything herein or in the Securities prevent the Trustee
or the Holder of any Security from exercising all remedies otherwise permitted
by applicable law upon default under this Indenture, subject to the rights, if
any, under this Article XIV of the holders of such Senior Debt in respect of
cash, property or securities of the Partnership received upon the exercise of
any such remedy. Upon any payment or distribution of assets of the Partnership
referred to in this Article XIV, the Trustee shall be entitled to conclusively
rely upon a certificate of the liquidating trustee or agent or other person
making any distribution to the Trustee for the purpose of ascertaining the
persons entitled to participate in such distribution, the holders of Senior Debt
of the Partnership and other indebtedness of the Partnership, the amount thereof
or payable thereon, the amount or amounts paid or distributed thereon, and all
other facts pertinent thereto or to this Article XIV.
The Trustee, however, shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt of the Partnership. The Trustee shall not be liable to
any such holder if it shall pay over or distribute to or on behalf of Holders of
Securities or the Partnership moneys or assets to which any holder of Senior
Debt of the Partnership shall be entitled by virtue of this Article XIV. The
rights and claims of the Trustee under Section 607 shall not be subject to the
provisions of this Article XIV.
67
<PAGE>
If the Trustee or any Holder of Securities does not file a proper claim or
proof of debt in the form required in any proceeding referred to above prior to
30 days before the expiration of the time to file such claim in such proceeding,
then the holder of any Senior Debt of the Partnership is hereby authorized, and
has the right, to file an appropriate claim or claims for or on behalf of such
Holder of Securities.
SECTION 1403. Payments on Securities Permitted.
Nothing contained in this Indenture or in any of the Securities shall (1)
affect the obligation of the Partnership to make, or prevent the Partnership
from making, at any time except as provided in Sections 1401 and 1402, payments
of principal, premium, interest, and any interest thereon, of or on the
Securities or (2) prevent the application by the Trustee of any moneys deposited
with it hereunder to the payment of or on account of the principal, premium,
interest or other amounts, and any interest thereon, of or on the Securities
unless the Trustee shall have received at its Corporate Trust Office written
notice of any event prohibiting the making of such payment two Business Days (A)
prior to the date fixed for such payment, (B) prior to the execution of an
instrument to satisfy and discharge this Indenture based upon the deposit of
funds under Section 401(1)(b), (C) prior to the execution of an instrument
acknowledging the defeasance of such Securities pursuant to Section 1302 or (D)
prior to any deposit pursuant to clause (1) of Section 1303 with respect to such
Securities.
SECTION 1404. Authorization of Holders of Securities to Trustee to
Effect Subordination.
Each Holder of Securities by his acceptance thereof, whether upon original
issue or upon transfer or assignment, authorizes and directs the Trustee on his
behalf to take such action as may be necessary or appropriate to effectuate the
subordination as provided in this Article XIV and appoints the Trustee his
attorney-in-fact for any and all such purposes.
SECTION 1405. Notices to Trustee.
The Partnership shall give prompt written notice to a Responsible Officer
of the Trustee located at the Corporate Trust Office of the Trustee of any fact
known to the Partnership which would prevent the making of any payment to or by
the Trustee in respect of the Securities. Notwithstanding the provisions of this
Article XIV or any other provisions of this Indenture, neither the Trustee nor
any Paying Agent (other than the Partnership) shall be charged with knowledge of
the existence of any Senior Debt of the Partnership or of any event which would
prohibit the making of any payment of moneys to or by the Trustee or such Paying
Agent, unless and until the Trustee or such Paying Agent shall have received (in
the case of the Trustee, at its Corporate Trust Office) written notice thereof
from the Partnership or from the holder of any Senior Debt of the Partnership or
from the trustee for or representative of any Senior Debt of the Partnership
together with proof satisfactory to the Trustee of such holding of such Senior
Debt or of the authority of such trustee or representative; provided, however,
that if at least two Business Days prior to the date upon which by the terms
hereof any such moneys may become payable for any purpose (including, without
limitation, the payment of the principal, premium, interest, of or on any
Security, or any interest thereon) or the date on which the Trustee shall
execute an instrument acknowledging satisfaction and discharge of this Indenture
or the defeasance of Securities pursuant to Section 1302 or the date on which a
deposit pursuant to clause (1) of
68
<PAGE>
Section 1303 is made, the Trustee shall not have received with respect to such
moneys or the moneys deposited with it as a condition to such satisfaction and
discharge or defeasance the notice provided for in this Section 1405, then,
anything herein contained to the contrary notwithstanding, the Trustee shall
have full power and authority to receive such moneys and to apply the same to
the purpose for which they were received, and shall not be affected by any
notice to the contrary, which may be received by it on or after such two
Business Days prior to such date. The Trustee shall be entitled to conclusively
rely on the delivery to it of a written notice by a person representing himself
to be a holder of Senior Debt of the Partnership (or a trustee or representative
on behalf of such holder) to establish that such a notice has been given by a
holder of Senior Debt of the Partnership or a trustee or representative on
behalf of any such holder. In the event that the Trustee determines in good
faith that further evidence is required with respect to the right of any Person
as a holder of Senior Debt of the Partnership to participate in any payment or
distribution pursuant to this Article XIV, the Trustee may request such Person
to furnish evidence to the reasonable satisfaction of the Trustee as to the
amount of Senior Debt of the Partnership held by such Person, the extent to
which such Person is entitled to participate in such payment or distribution and
any other facts pertinent to the rights of such Person under this Article XIV
and, if such evidence is not furnished, the Trustee may defer any payment to
such Person pending judicial determination as to the right of such Person to
receive such payment.
SECTION 1406. Trustee as Holder of Senior Debt.
The Trustee shall be entitled to all the rights set forth in this Article
XIV in respect of any Senior Debt of the Partnership at any time held by it to
the same extent as any other holder of Senior Debt of the Partnership and
nothing in this Indenture shall be construed to deprive the Trustee of any of
its rights as such holder.
SECTION 1407. Modification of Terms of Senior Debt.
Any renewal or extension of the time of payment of any Senior Debt of the
Partnership or the exercise by the holders of Senior Debt of the Partnership of
any of their rights under any instrument creating or evidencing such Senior
Debt, including without limitation the waiver of default thereunder, may be made
or done all without notice to or assent from Holders of the Securities or the
Trustee.
No compromise, alteration, amendment, modification, extension, renewal or
other change of, or waiver, consent or other action in respect of, any liability
or obligation under or in respect of, or of any of the terms, covenants or
conditions of any indenture or other instrument under which any Senior Debt of
the Partnership is outstanding or of such Senior Debt, whether or not such
release is in accordance with the provisions of any applicable document, shall
in any way alter or affect any of the provisions of this Article XIV or of the
Securities relating to the subordination thereof.
This instrument may be executed with counterpart signature pages or in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the day and year first above written.
KINDER MORGAN ENERGY PARTNERS, L. P.
By: Kinder Morgan, G.P., Inc.,
Its General Partner
By: _______________________________
Name:
Title:
[Trustee]
By: _______________________________
Name:
Title:
MORRISON & HECKER L.L.P.
ATTORNEYS AT LAW
2600 Grand Avenue
Kansas City, Missouri
64108-4606
Telephone (816) 691-2600
Telefax (816) 474-4208
November 6, 1998
Kinder Morgan Energy Partners, L.P.
1301 McKinney Street, Suite 3450
Houston, Texas 77010
Re: Kinder Morgan Energy Partners, L.P.: Form S-3 Registration Statement
Ladies and Gentlemen:
We have acted as your counsel in connection with the preparation of a
Registration Statement on Form S-3, as amended, (Registration No. 333-_______)
(the "Registration Statement") filed with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended (the "Act"). The Registration
Statement covers up to $600 million of Common Units ("Common Units")
representing limited partner interests in the Partnership and/or Debt Securities
of the Partnership.
In rendering the opinions set forth below, we have examined and relied on
the following: (1) the Registration Statement and the Prospectus included as a
part thereof; (2) the Partnership's Second Amended and Restated Agreement of
Limited Partnership dated January 14, 1998; and (3) such other documents,
materials, and authorities as we have deemed necessary in order to enable us to
render our opinions set forth below.
In addition, our opinions are based on the facts and circumstances set
forth in the Prospectus and on certain representations made by the Partnership,
Kinder Morgan G.P., Inc., and the Partnership's general partner. We have not
made an independent investigation of such facts. Our opinion as to the matters
set forth herein could change as a result of changes in facts and circumstances,
changes in the terms of the documents reviewed by us, or changes in the law
subsequent to the date hereof.
Our opinion is based on the provisions of the Internal Revenue Code of
1986, as amended (the "Code"), regulations under such Code, judicial authority
and current administrative rulings and practice, all as of the date of this
letter, and all of which may change at any time.
Based upon and subject to the foregoing and assuming compliance with all
provisions of the documents referenced above, we are of the opinion that for
federal income tax purposes (i) the Partnership and its operating partnerships
are and will continue to be classified as partnerships and not as associations
taxable as corporations; and (ii) each purchaser of Common Units who acquires
beneficial ownership of the Partnership's Common Units, and either has been
admitted or is pending admission to the Partnership as an additional limited
partner, or if the
Washington, D.C. / Phoenix, Arizona / Overland Park, Kansas / Wichita, Kansas
<PAGE>
Kinder Morgan Energy Partners, L.P.
November 6, 1998
Page 2
Common Units are held by a nominee, each purchaser of such Common Units (so long
as such person has the right to direct the nominee in the exercise of all
substantive rights attendant to the ownership of such Units) will be treated as
a partner of the Partnership for federal income tax purposes.
Further, we are of the opinion that the discussion of federal income tax
consequences set forth in the Prospectus under the heading "Material Federal
Income Tax Considerations" is accurate in all material respects as to matters of
law and legal conclusions.
This opinion may be relied upon by the purchasers of Common Units and the
Partnership. We hereby consent to the filing of this opinion as an Exhibit to
the Registration Statement and to all references to this firm under the headings
"Material Federal Income Tax Considerations" and "Legal Matters" in the
Prospectus forming part of the Registration Statement. This consent is not to be
construed as an admission that we are a person whose consent is required to be
filed with the Registration Statement under the provisions of the Act.
Very truly yours,
/s/ Morrison & Hecker L.L.P.
Morrison & Hecker L.L.P.
Kinder Morgan Energy Partners, L.P.
Calculation of Earnings to Fixed Charges
(000-$)
<TABLE>
<CAPTION>
Nine Mos.
YTD
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
After Tax Net Income 8,574 11,102 11,314 11,900 17,737 65,782
Add: Tax Expense (benefit) (83) 1,389 1,432 1,343 (740) 168
--------------------------------------------------------------------------
Pre-Tax Net Income 8,491 12,491 12,746 13,243 16,997 65,950
Equity earnings in subsidiary (1,835) (5,867) (5,755) (5,675) (5,724) (16,417)
Interest expense 10,302 11,989 12,455 12,634 12,605 30,139
--------------------------------------------------------------------------
Net income b/f adjustments 16,958 18,613 19,446 20,202 23,878 79,672
Add: Distributed equity earnings 3,743 7,336 6,061 6,791 9,588 12,248
--------------------------------------------------------------------------
20,701 25,949 25,507 26,993 33,466 91,920
Subtract: Capitalized interest (immaterial) - - - - - -
--------------------------------------------------------------------------
Net earnings after adjustments 20,701 25,949 25,507 26,993 33,466 91,920
==========================================================================
Estimated Fixed Charges: 10,302 11,989 12,455 12,634 12,605 30,139
--------------------------------------------------------------------------
Multiple Earnings to Fixed Charges 2.01 2.16 2.05 2.14 2.65 3.05
==========================================================================
</TABLE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement of our reports dated February 21, 1997
included in Kinder Morgan Energy Partners, L.P.'s Annual Report on Form 10-K for
the fiscal year ended December 31, 1997, and to all references to our Firm
included in this Registration Statement.
ARTHUR ANDERSEN LLP
/s/ Arthur Andersen LLP
---------------------------------
Houston, Texas
November 5, 1998
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3of Kinder Morgan
Energy Partners, L.P. of our report dated March 6, 1998 relating to the
consolidated financial statements of Kinder Morgan Energy Partners, L.P.
appearing on page F-2 and of our report dated March 6, 1998 relating to the
financial statements of Mont Belvieu Associates appearing on page F-20 of Kinder
Morgan Energy Partners, L.P.'s Annual Report on Form 10-K for the year ended
December 31, 1997. We also hereby consent to the incorporation by reference in
this Registration Statement on Form S-3 of Kinder Morgan Energy Partners, L.P.
of our report dated March 6, 1998 relating to the balance sheet of Kinder Morgan
G.P., Inc., appearing in Exhibit 99.1 of Kinder Morgan Energy Partners, L.P.'s
Amendment 1 to Form S-4 (No. 333-46709). We also consent to the reference to us
under the heading "Experts" in such Prospectus.
/s/ PRICEWATERHOUSECOOPERS LLP
PRICEWATERHOUSECOOPERS LLP
Houston, Texas
November 5, 1998
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of Kinder Morgan
energy Partners, L.P. of our report dated January 30, 1998 appearing on page F-1
of Kinder Morgan Energy Partners, L.P.'s Current Report on Form 8-K dated March
5, 1998, as amended. We also consent to the references to us under the heading
"Experts" in such Prospectus.
/s/ PRICEWATERHOUSECOOPERS LLP
________________________________
PRICEWATERHOUSECOOPERS LLP
Los Angeles, California
November 5, 1998
