EXHIBIT 1.1
▇▇▇▇▇▇ ▇▇▇▇▇▇ MANAGEMENT, LLC
[ ] SHARES
REPRESENTING LIMITED LIABILITY COMPANY INTERESTS
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UNDERWRITING AGREEMENT
[ ], 2002
▇▇▇▇▇▇▇, Sachs & Co.
[ ]
As representative(s) of the several Underwriters
named in Schedule I hereto,
c/o Goldman, ▇▇▇▇▇ & Co.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
▇▇▇▇▇▇ ▇▇▇▇▇▇ Management, LLC, a Delaware limited liability company
(the "Company"), proposes, subject to the terms and conditions stated herein, to
issue and sell to the Underwriters named in Schedule I hereto (the
"Underwriters") an aggregate of [ ] shares (the "Firm Shares") and, at the
election of the Underwriters, up to [ ] additional shares (the "Optional
Shares") of the Company (the Firm Shares and the Optional Shares that the
Underwriters elect to purchase pursuant to Section 2 hereof being collectively
called the "Shares").
The Company, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Services LLC, a Delaware limited liability
company, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Energy Partners, L.P., a Delaware limited partnership
(the "Partnership"), the Operating Partnerships listed on Schedule II (the
"Operating Partnerships"), Kinder ▇▇▇▇▇▇ ▇.▇., 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, and
each of their direct and indirect subsidiaries are collectively referred to
herein as the "▇▇▇▇▇▇ ▇▇▇▇▇▇ Entities."
▇▇▇▇▇▇ ▇▇▇▇▇▇, Inc., a Kansas corporation ("KMI"), ▇▇▇▇▇▇ ▇▇▇▇▇▇
(Delaware), Inc., a Delaware corporation, and those subsidiaries listed on
Schedule III are herein referred to as the "KMI Entities."
1. Each of the Company, the Partnership, the General Partner and, with
respect to information regarding itself and other KMI Entities in the
Registration Statement or provided below, KMI, represents and warrants to, and
agrees with, each of the Underwriters that:
(a) Registration statements on Form S-3, (File Nos. 333-[ ], 333-[ ] and
333-[ ]) (the "Initial Registration Statement"), in respect of, in each case as
described in the Initial Registration Statement, the Shares, [ ] i-units
(the "i-units") and the obligation of KMI to purchase the Shares,
have 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 to you, excluding exhibits thereto but
including all documents incorporated by reference in the prospectus contained
therein, 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 with the
Commission; 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, to the knowledge of the
Company, the General Partner and KMI, 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) of the rules and regulations of the Commission under the Act is
hereinafter called a "Preliminary Prospectus", the various parts of the Initial
Registration Statement and the Rule 462(b) Registration Statement, if any,
including all exhibits thereto and including (i) the information contained in
the form of final prospectus filed with the Commission pursuant to Rule 424(b)
under the Act in accordance with Section 5(a) hereof and deemed by virtue of
Rule 430A under the Act to be part of the Initial Registration Statement at the
time it was declared effective and (ii) 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"; such final prospectus, in the form first filed
pursuant to Rule 424(b) under the Act, is 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 Item 12 of Form S-3 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; and
any reference to any amendment to the Registration Statement shall be deemed to
refer to and include any annual report of the Company filed pursuant to Section
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); each of the Company, the Partnership and KMI meets the requirements
for Form S-3 under the Act.
(b) 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 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 Company, the Partnership or KMI by
an Underwriter through ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. expressly for use therein; (c) 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,
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as applicable, and the rules and regulations of the Commission thereunder, 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 there are no 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 or required to
be described in the Registration Statement or the Prospectus which are not filed
or incorporated by reference or described as required; 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 Company, the Partnership or KMI by an Underwriter
through ▇▇▇▇▇▇▇, Sachs & Co. expressly for use therein;
(d) The Registration Statement conforms, and the Prospectus 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
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 Company, the Partnership or KMI by an Underwriter through ▇▇▇▇▇▇▇, ▇▇▇▇▇ &
Co. expressly for use therein;
(e) None of the ▇▇▇▇▇▇ ▇▇▇▇▇▇ Entities or the KMI 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇ Entities or
the KMI Entities or any material adverse change, or any development involving a
prospective material adverse change, in or affecting the general affairs,
management, financial position, shareholders', interestholders' or unitholders'
equity or results of operations of the ▇▇▇▇▇▇ ▇▇▇▇▇▇ Entities, taken as a whole,
or the KMI Entities, taken as a whole, otherwise than as set forth or
contemplated in the Prospectus;
(f) Each of the ▇▇▇▇▇▇ ▇▇▇▇▇▇ Entities and the KMI Entities own or
lease all properties as are necessary to the conduct of their operations as
described in the Prospectus, except where the failure to own or lease any of
such properties would not individually or in the aggregate have a material
adverse effect on the consolidated financial condition, results of operations or
business of the ▇▇▇▇▇▇ ▇▇▇▇▇▇ Entities, taken as a whole, or the KMI Entities,
taken as a whole, or subject the partners of the Partnership to unlimited
personal liability (a "Material Adverse Effect");
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(g) Each of the Company and ▇▇▇▇▇▇ ▇▇▇▇▇▇ Services LLC has been duly
formed and is validly existing as a limited liability company in good standing
under the laws of Delaware, with all necessary limited liability company power
and authority to own or lease its properties and conduct its business as
described in the Prospectus, and has been duly qualified as a foreign limited
liability company for the transaction of business and is in good standing under
the laws of each other jurisdiction in which it owns or leases properties or
conducts any business so as to require such qualification (except where the
failure to be so licensed or qualified would not, individually or in the
aggregate, have a Material Adverse Effect. Each of the Company and ▇▇▇▇▇▇ ▇▇▇▇▇▇
Services LLC was organized in connection with the Company's initial public
offering (the "IPO"). The Company owns [ ] i-units of the Partnership and
manages and controls its business and affairs. The Company is the sole member of
▇▇▇▇▇▇ ▇▇▇▇▇▇ Services LLC and owns all of its issued and outstanding equity
securities free and clear of any lien, encumbrance, security interest, equity or
charge (except for such liens, encumbrances, security interest, equities or
charges as are not, individually or in the aggregate, material to such interest
ownership or as described in the Prospectus). Complete and correct copies of the
Certificate of Formation and the Limited Liability Company Agreement of each of
the Company and ▇▇▇▇▇▇ ▇▇▇▇▇▇ Services LLC have been delivered to the
Underwriters;
(h) Each of the Company, the Partnership and KMI has an authorized
capitalization as set forth in the Prospectus, and all of the issued equity
securities of the Company and the Partnership have been duly and validly
authorized and issued and are fully paid and (except as required to the contrary
by the Delaware Limited Liability Company Act (the "Delaware LLC Act") or the
Delaware Revised Uniform Limited Partnership Act (the "Delaware LP Act" ))
non-assessable and substantially conform to the descriptions thereof in the
Prospectus;
(i) The Partnership has been duly formed and is validly existing as a
limited partnership in good standing under the laws of Delaware, with all
necessary partnership power and authority to own its properties and conduct its
business as described in the Prospectus, and has been duly qualified as a
foreign limited partnership for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it owns or leases
properties or conducts any business so as to require such qualification (except
where the failure to be so licensed or qualified would not individually or in
the aggregate have a Material Adverse Effect). 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;
(j) Each of KMI and ▇▇▇▇▇▇ ▇▇▇▇▇▇ (Delaware), Inc. has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of their respective states of incorporation, with all necessary corporate
power and authority to own its properties and conduct its business as described
in the Prospectus, and has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties or conducts any business so
as to require such qualification (except where the failure to be so licensed or
qualified would not individually or in the aggregate have a Material Adverse
Effect). KMI owns, directly or indirectly, [ ] Company shares, [ ] Common
Units and [ ] class B units of the Partnership ("Class B Units") free and clear
of any lien, encumbrance, security interest, equity or charge (except for such
liens, encumbrances, security interest, equities or charges as are not,
individually or
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in the aggregate, material to such interest ownership or as described in the
Prospectus). KMI wholly owns ▇▇▇▇▇▇ ▇▇▇▇▇▇ (Delaware), Inc., which wholly owns
the General Partner, in each case, free and clear of any lien, encumbrance,
security interest, equity or charge (except for such liens, encumbrances,
security interest, equities or charges as are not, individually or in the
aggregate, material to such interest ownership or as described in the
Prospectus). Such Company shares, Common Units, Class B Units and shares of
stock in ▇▇▇▇▇▇ ▇▇▇▇▇▇ (Delaware), Inc. and the General Partner have been duly
and validly authorized and issued and are fully paid and (except (i) as required
to the contrary by the Delaware LP Act), non-assessable. Complete and correct
copies of the Certificate of Incorporation of KMI and ▇▇▇▇▇▇ ▇▇▇▇▇▇ (Delaware),
Inc., and all amendments thereto, and of the By-Laws of KMI and ▇▇▇▇▇▇ ▇▇▇▇▇▇
(Delaware), Inc., as amended, have been delivered to the Underwriters;
(k) The General Partner has been duly incorporated and is validly
existing as a corporation in good standing under the laws of Delaware, with all
necessary corporate power and authority to own its properties and conduct its
business as described in the Prospectus, and has been duly qualified as a
foreign corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases properties
or conducts any business so as to require such qualification (except where the
failure to be so licensed or qualified would not individually or in the
aggregate have a Material Adverse Effect). The General Partner owns all equity
securities of the Company entitled to vote for the election of directors free
and clear of any lien, encumbrance, security interest, equity or charge (except
for such liens, encumbrances, security interest, equities or charges as are not,
individually or in the aggregate, material to such interest ownership or as
described in the Prospectus) and such equity securities have been duly and
validly authorized and issued and are fully paid and (except (i) as required to
the contrary by the Delaware LLC Act), non-assessable. Other than its ownership
interests in the Partnership and the Operating Partnerships (as described in the
next paragraph) and the Company, the General Partner does not own interests in
any other entity. Except as described in the Prospectus or as set forth in the
Partnership Agreement or the Delegation of Control Agreement, the General
Partner has delegated all of its power to control and manage the business and
affairs of the Partnership and the Operating Partnerships to the Company.
Complete and correct copies of the Certificate of Incorporation of the General
Partner, as amended, and of the By-Laws of the General Partner, as amended, have
been delivered to the Underwriters;
(l) The General Partner is the sole general partner of the Partnership
and each of the Operating Partnerships; the General Partner owns a 1% general
partner interest in the Partnership and a 1.0101% general partner interest in
each of the Operating Partnerships; such general partner interests are duly
authorized by the Partnership Agreement and the Agreements of Limited
Partnership of the respective Operating Partnerships, as the case may be, and
were validly issued to the General Partner; and the General Partner owns each
such general partner interest free and clear of all liens, encumbrances,
security interests, equities or charges (except for such liens, encumbrances,
security interests, equities or charges as are not, individually or in the
aggregate, material to such ownership or as described in the Prospectus);
(m) The only material and active subsidiaries (as such term is defined
in the rules and regulations of the Commission under the Act and the Exchange
Act) in which the Partnership directly or indirectly owns 50% or more of the
equity interests and that own assets or conduct business are those listed on
Schedule II hereto (the "Partnership Subsidiaries"). The only material and
active subsidiaries (as such term is defined in the rules and regulations of the
Commission under the Act) which KMI directly or indirectly owns 50% or more of
the equity interests and that own assets or conduct business (other than the
Partnership, the General Partner, ▇▇▇▇▇▇ ▇▇▇▇▇▇ (Delaware), Inc., the Company
and the Partnership Subsidiaries) are those listed on Schedule III hereto (the
"KMI Subsidiaries"). All of the outstanding shares of capital stock, limited
partner interests, general partner interests or limited liability company
interests, as applicable, of each of the Partnership Subsidiaries
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and KMI Subsidiaries have been duly and validly authorized and issued and are
fully paid and (except (i) as required to the contrary by the Delaware LLC Act
and the Delaware LP Act and (ii) with respect to any general partner interests)
non-assessable, and are (unless otherwise stated on Schedule II or III) owned by
the Partnership or KMI, as applicable, directly or indirectly through one or
more wholly-owned subsidiaries, free and clear of any lien, encumbrance,
security interest, equity or charge (except for such liens, encumbrances,
security interest, equities or charges as are not, individually or in the
aggregate, material to such interest ownership or as described in the
Prospectus);
(n) Each of the Partnership Subsidiaries and the KMI Subsidiaries has
been duly formed or incorporated and is validly existing as a corporation,
limited partnership, general partnership or limited liability company, as the
case may be, in good standing under the laws of the jurisdiction in which it is
chartered or organized, with full entity power and authority to own or lease, as
the case may be, and to operate its properties and conduct its business as
described in the Prospectus, and is duly qualified to do business as a
corporation, limited partnership, general partnership or limited liability
company, as the case may be, and is in good standing under the laws of each
jurisdiction which requires such qualification, other than any jurisdiction
where the failure to be so qualified would not, individually or in the
aggregate, have a Material Adverse Effect;
(o) The Shares and i-units have been duly and validly authorized and,
when issued and delivered against payment therefor as provided herein (or in the
case of the i-units in the Prospectus), will be duly and validly issued and
fully paid and (except as non-assessability may be affected by the Delaware LLC
Act and the Delaware LP Act) non-assessable and will conform in all material
respects to the descriptions thereof contained in the Prospectus;
(p) The issue and sale of the Shares by the Company and the i-units by
the Partnership, the execution of this Agreement, the adoption of the Second
Amended and Restated Limited Liability Company Agreement of the Company dated as
of [ ], 2002 and the compliance by the Company, the General Partner, the
Partnership, the Operating Partnerships and KMI (as applicable) with all of the
applicable provisions of, this Agreement, the Tax Indemnification Agreement
between the Company and KMI dated as of May 18, 2001 (the "Tax Indemnification
Agreement"), the Delegation of Control Agreement among the General Partner, the
Company, the Partnership and the Operating Partnerships dated as of May 18, 2001
(the "Delegation of Control Agreement"), the Third Amended and Restated
Agreement of Limited Partnership of the Partnership dated as of May 18, 2001,
the Amended and Restated Agreements of Limited Partnership of the Operating
Partnerships (as amended by Amendment No.1 thereto dated as of May 18, 2001) and
the Second Amended and Restated Limited Liability Company Agreement of the
Company dated as of [ ] (all as described in the Prospectus) (the "Transaction
Documents") and the consummation of the transactions contemplated herein,
therein and in the Prospectus 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇ Entities or KMI Entities is a party
or by which any of the ▇▇▇▇▇▇ ▇▇▇▇▇▇ Entities or KMI Entities is bound or to
which any of the property or assets of any of the ▇▇▇▇▇▇ ▇▇▇▇▇▇ Entities or KMI
Entities is subject, except where any such foregoing occurrence in this
paragraph will not prevent the consummation of the transactions contemplated
herein or in the Prospectus and would not, individually or in the aggregate,
have a Material Adverse Effect; nor will such action result in any violation of
the provisions of any of the formation or incorporation, as applicable, or
governing documents of any of the ▇▇▇▇▇▇ ▇▇▇▇▇▇ Entities or KMI Entities or any
statute or any order, rule or regulation of any court or governmental agency or
body having jurisdiction over any of the ▇▇▇▇▇▇ ▇▇▇▇▇▇ Entities or KMI Entities
or any of the properties of such entities; and no consent, approval,
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authorization, order, registration or qualification of or with any such court or
governmental agency or body having jurisdiction over any of the ▇▇▇▇▇▇ ▇▇▇▇▇▇
Entities or KMI Entities or any of the properties of such entities is required
for the issue and sale of the Shares or the consummation by the Company, the
Partnership, the General Partner, the Operating Partnerships and KMI (as
applicable) of the transactions contemplated by this Agreement or the
Prospectus, except the registration under the Act as described in Section 1(a)
herein 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 Shares by the Underwriters;
(q) None of the ▇▇▇▇▇▇ ▇▇▇▇▇▇ Entities or KMI Entities is (a) in
violation of its formation or incorporation, as applicable, or governing
documents 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 or defaults as would not, individually or in the aggregate, have a
Material Adverse Effect;
(r) The statements set forth or incorporated by reference in the
Prospectus under the captions "Description of Our Shares," "Description of the
i-Units" "Our Policy Regarding Share Distributions" and "▇▇▇▇▇▇ ▇▇▇▇▇▇ Energy
Partners, L.P.'s Distribution Policy," insofar as they purport to constitute a
summary of the terms of the Shares, i-units and Common Units, are accurate,
complete and fair in all material respects;
(s) Other than as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which any of the ▇▇▇▇▇▇ ▇▇▇▇▇▇ Entities or
KMI Entities is a party or of which any property of the ▇▇▇▇▇▇ ▇▇▇▇▇▇ Entities
or KMI Entities is the subject which, if determined adversely to such ▇▇▇▇▇▇
▇▇▇▇▇▇ Entity or KMI Entity, would individually or in the aggregate have a
Material Adverse Effect; and, to the Company's and KMI's knowledge, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others;
(t) Each of the Company, the Partnership, the General Partner, ▇▇▇▇▇▇
▇▇▇▇▇▇ (Delaware), Inc. and KMI is, and after giving effect to the offering and
sale of the Shares and other related transactions contemplated in the
Prospectus, will be, exempt from regulation as (i) a "holding company" or a
"subsidiary company" of a "holding company" thereof within the meaning of the
Public Utility Holding Company Act of 1935, as amended, or (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 (the
"Investment Company Act");
(u) PricewaterhouseCoopers LLP and Ernst & Young LLP, who have
certified certain financial statements of the ▇▇▇▇▇▇ ▇▇▇▇▇▇ Entities and the KMI
Entities, are each independent public accountants as required by the Act and the
rules and regulations of the Commission thereunder. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, LLP, who
certified certain financial statements of the ▇▇▇▇▇▇ ▇▇▇▇▇▇ Entities and the KMI
Entities, was during the periods in which it certified such financial
statements, an independent public accountant as required by the Act and the
rules and regulations of the Commission thereunder;
(v) The financial statements and schedules included or incorporated by
reference in the Registration Statement or the Prospectus present fairly the
consolidated financial conditions of the Company, the Partnership, the General
Partner and KMI as of the respective dates thereof and the consolidated results
of operations and cash flows of such entities 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
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financial statements or schedules 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. Any statements made in the Prospectus or documents incorporated by
reference that are covered by Rule 175(b) under the Act were made or will be
made with a reasonable basis and in good faith;
(w) Any summary and selected financial and statistical data included or
incorporated by reference in the Registration Statement or Prospectus present
fairly the information shown therein and, to the extent based upon or derived
from the financial statements, have been compiled on a basis consistent with the
financial statements presented therein except as otherwise stated therein or the
notes thereto. The pro forma financial statements included in or incorporated by
reference in the Registration Statement and the Prospectus 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 Company, the Partnership and KMI (as applicable) and
give effect to the assumptions used in the preparation thereof on a reasonable
basis and in good faith; and the historical financial statements upon which the
pro forma financial statements included in the Registration Statement and the
Prospectus are based present fairly the consolidated results of operations of
the applicable entities for the period covered thereby, all in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the entire period involved;
(x) Each of the Company, the Partnership, the General Partner and KMI
has all of the necessary limited liability company, partnership and corporate
power and authority to enter into this Agreement and consummate the transactions
contemplated hereby. This Agreement has been duly authorized, executed and
delivered by the Company, the Partnership, the General Partner and KMI;
(y) Each of the Company, the General Partner, the Partnership, and KMI
(as applicable) had and has all of the necessary limited liability company,
partnership and corporate power and authority, as applicable, to enter into,
continue to be a party to and comply with the Transaction Documents and to
consummate the transactions contemplated thereby. Such Transaction Documents
have been duly authorized, adopted, executed and delivered and conform to the
descriptions thereof in the Prospectus. Each of such agreements constitutes a
valid and legally binding agreement of the parties thereto, enforceable against
the each of such parties in accordance with its terms, subject, as to
enforcement, (i) to bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors' rights, (ii) to
general equity principles and (iii) as the rights to indemnification or
contribution thereunder may be limited by federal or state securities laws.
(z) 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 or membership interests (including the Shares) of either the Company
or the Partnership pursuant to any partnership or limited liability company
agreement or other governing documents or any agreement or other instrument to
which either the Company or the Partnership is a party or by which either of
such entities may be bound (other than (a) the General Partner's preemptive
right contained in the Partnership Agreement, or (b) as set forth in or
incorporated by reference into the Prospectus). Neither the offering and sale of
Shares, as contemplated by this Agreement, nor the other related transactions
described in the Prospectus or the Transaction Documents, gives rise to any
rights, other than those which have been waived or satisfied, for or relating to
the registration of any securities of the Partnership, the Company
8
or the General Partner (except as otherwise described in the Prospectus). There
are no other rights entitling any holder of securities of the Partnership or the
Company to register any of such securities. Except for certain grants made under
the Partnership's Executive Compensation Plan and the Partnership Common Unit
Option Plan, there are no outstanding options or warrants to purchase any
Shares, Common Units or other securities of the Company, the Partnership or any
of the Operating Partnerships.
(aa) Each of the ▇▇▇▇▇▇ ▇▇▇▇▇▇ Entities and KMI Entities maintains (or
is the beneficiary of) insurance (issued by insurers of recognized financial
responsibility) of the types and in the amounts generally deemed adequate for
their respective businesses and, to the knowledge of the Partnership and KMI,
consistent with insurance coverage maintained by similar companies in similar
businesses, including, but not limited to, insurance covering real and personal
property owned or leased by it against theft, damage, destruction, acts of
vandalism and all other risks customarily insured against, all of which
insurance is in full force and effect.
(bb) Except as disclosed in the Prospectus, none of the ▇▇▇▇▇▇ ▇▇▇▇▇▇
Entities or KMI Entities has violated any federal or state law or regulation
relating to the protection of human health or the environment except for any
violations and remedial actions as would not, individually or in the aggregate,
have a Material Adverse Effect;
(cc) Prior to the date hereof, none of the ▇▇▇▇▇▇ ▇▇▇▇▇▇ Entities or
KMI Entities has taken any action that is designed to or that has constituted or
that might have reasonably been expected to cause or result in stabilization or
manipulation of the price of any security of the Partnership or the Company in
connection with the offering of the Shares;
(dd) None of the ▇▇▇▇▇▇ ▇▇▇▇▇▇ Entities or KMI Entities is involved in
any labor dispute and, to the knowledge of the Company, no such dispute has been
threatened, except for such disputes as would not, individually or in the
aggregate, have a Material Adverse Effect;
(ee) None of the ▇▇▇▇▇▇ ▇▇▇▇▇▇ Entities or KMI Entities is in violation
or default of any statute, law, rule, regulation, judgment, order or decree of
any court, regulatory body, administrative agency, governmental body, arbitrator
or other authority having jurisdiction over such ▇▇▇▇▇▇ ▇▇▇▇▇▇ Entity or KMI
Entity or any of its properties, as applicable, except where such violation or
default would not, individually or in the aggregate, have a Material Adverse
Effect.
2. Subject to the terms and conditions herein set forth, (a) the Company
agrees to issue and sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Company, at
a purchase price per share of $[ ], the number of Firm Shares 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 election to purchase
Optional Shares as provided below, the Company agrees to issue and sell to each
of the Underwriters, and each of the Underwriters agrees, severally and not
jointly, to purchase from the Company, at the purchase price per share set forth
in clause (a) of this Section 2, that portion of the number of Optional Shares
as to which such election shall have been exercised (to be adjusted by you so as
to eliminate fractional shares) determined by multiplying such number of
Optional Shares by a fraction, the numerator of which is the maximum number of
Optional Shares which such Underwriter is entitled to purchase as set forth
opposite the name of such Underwriter in Schedule I hereto and the denominator
of which is the maximum number of Optional Shares that all of the Underwriters
are entitled to purchase hereunder.
9
The Company hereby grants to the Underwriters the right to purchase at
their election up to [ ] Optional Shares, at the purchase price per share set
forth in the paragraph above, for the sole purpose of covering sales of shares
in excess of the number of Firm Shares. Any such election to purchase Optional
Shares may be exercised only by written notice from you to the Company, given
within a period of 30 calendar days after the date of this Agreement, setting
forth the aggregate number of Optional Shares to be purchased and the date on
which such Optional Shares are to be delivered, as determined by you but in no
event earlier than the First Time of Delivery (as defined in Section 4 hereof)
or, unless you and the Company otherwise agree in writing, earlier than two or
later than ten business days after the date of such notice.
The Underwriters undertake to offer the Shares in accordance with the
"Professionals only Exemption" pursuant to ▇▇▇▇▇▇▇ ▇ ▇▇. ▇ of the German
Securities Sales Prospectus Act (Wertpapier-Verkaufsprospektgesetz) of July 17,
1996, as amended, only to persons who purchase and sell securities as part of
their profession or business.
The Underwriters represent and agree that they (i) have not offered or
sold and, prior to the expiration of a period of six months from the closing
date, will not offer or sell any Shares to persons in the United Kingdom except
to persons whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments (as principal or agent) for the purposes of
their businesses or otherwise in circumstances which have not resulted and will
not result in an offer to the public in the United Kingdom within the meaning of
the Public Offers at Securities Regulations 1995, (ii) have only communicated or
caused to be communicated and will only communicate or cause to be communicated
any invitation or inducement to engage in investment activity (within the
meaning of section 21 of the Financial Services and Markets Act 2000 (the
"FSMA") received by them in connection with the issue or sale of any Shares in
circumstances in which Section 21(1) of the FSMA does not apply to the issuer,
and (iii) have complied and will comply with all applicable provisions of the
FSMA with respect to anything done by them in relation to the Shares in, from or
otherwise involving the United Kingdom.
3. Upon the authorization by you of the release of the Firm Shares, the
several Underwriters propose to offer the Firm Shares for sale upon the terms
and conditions set forth in the Prospectus.
4. (a) The Shares to be purchased by each Underwriter hereunder, in
definitive form, and in such authorized denominations and registered in such
names as ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. may request upon at least forty-eight hours' prior
notice to the Company shall be delivered by or on behalf of the Company to
▇▇▇▇▇▇▇, Sachs & Co., through the facilities of the Depository Trust Company
("DTC"), for the account of such Underwriter, against payment by or on behalf of
such Underwriter of the purchase price therefor by wire transfer of Federal
(same-day) funds to the account specified by the Company to ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.
at least forty-eight hours in advance. The Company will cause the certificates
representing the Shares to be made available for checking and packaging at least
twenty-four hours prior to the Time of Delivery (as defined below) with respect
thereto at the office of DTC or its designated custodian (the "Designated
Office"). The time and date of such delivery and payment shall be, with respect
to the Firm Shares, 9:30 a.m., New York City time, on [ ], 2002 or such other
time and date as ▇▇▇▇▇▇▇, Sachs & Co. and the Company may agree upon in writing,
and, with respect to the Optional Shares, 9:30 a.m., New York time, on the date
specified by ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. in the written notice given by ▇▇▇▇▇▇▇, Sachs
& Co. of the Underwriters' election to purchase such Optional Shares, or such
other time and date as ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. and the Company may agree upon in
writing. Such time and date for delivery of the Firm Shares is herein called the
"First Time of Delivery", such time and date for delivery of the Optional
Shares, if not
10
the First Time of Delivery, is herein called the "Second Time of Delivery", and
each such time and date for delivery is herein called a "Time of Delivery".
(b) The documents to be delivered at each Time of Delivery by or
on behalf of the parties hereto pursuant to Section 7 hereof, including the
cross receipt for the Shares and any additional documents requested by the
Underwriters pursuant to Section 7(k) hereof, will be delivered at the offices
of Bracewell & ▇▇▇▇▇▇▇▇▇, L.L.P., ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇-▇▇▇▇ (the "Closing Location"), and the Shares will be delivered at the
Designated Office, all at such Time of Delivery. A meeting will be held at the
Closing Location at 3:00p.m., Houston time, on the Houston Business Day next
preceding such Time of Delivery, at which meeting the final drafts of the
documents to be delivered pursuant to the preceding sentence will be available
for review by the parties hereto. For the purposes of this Section 4, "Houston
Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in Houston are generally
authorized or obligated by law or executive order to close.
5. Each of the Company, the General Partner, the Partnership and,
except in the case of (d), (f), (g), (h) and (m), KMI, agrees with each of the
Underwriters:
(a) To prepare the Prospectus in a form approved by you 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 this Agreement, or, if applicable, such earlier time
as may be required by Rule 430A(a)(3) under the Act; to make no further
amendment or any supplement to the Registration Statement or Prospectus prior to
the last Time of Delivery which shall be disapproved by you promptly after
reasonable notice thereof; to advise you, 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 and to furnish you with copies thereof; to file
promptly all reports and any definitive proxy or information statements required
to be filed with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Exchange Act subsequent to the date of the Prospectus and for so long as the
delivery of a prospectus is required in connection with the transactions
contemplated by the Prospectus; to advise you, promptly after it receives notice
thereof, of the issuance by the Commission of any stop order or of any order
preventing or suspending the use of any Preliminary Prospectus or prospectus, of
the suspension of the qualification of the Shares, i-units or 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 stop order or
of any order preventing or suspending the use of any Preliminary Prospectus or
prospectus or suspending any such qualification, promptly to use its best
efforts to obtain the withdrawal of such order;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Shares and i-units for offering and sale under
the securities laws of such jurisdictions as you 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
the Shares and i-units, provided that in connection therewith the Company 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 written and electronic copies of the Prospectus
in New York City in such quantities as you may reasonably request, and, if the
delivery of a prospectus is required at any time prior to the expiration of nine
months after the time of issue of the Prospectus in connection with the offering
or sale of the Shares
11
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 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 or the Exchange Act,
to notify you and upon your request to file such document and to prepare and
furnish without charge to each Underwriter and to any dealer in securities as
many written and electronic copies as you 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, and in case any
Underwriter is required to deliver a prospectus in connection with sales of any
of the Shares at any time nine months or more after the time of issue of the
Prospectus, upon your request but at the expense of such Underwriter, to prepare
and deliver to such Underwriter as many written and electronic copies as you may
request of an amended or supplemented Prospectus complying with Section 10(a)(3)
of the Act;
(d) To make generally available to the Company's Shareholders 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 (which need not be audited) complying with
Section 11(a) of the Act and the rules and regulations thereunder (including, at
the option of the Company, Rule 158);
(e) During the period beginning from the date hereof and
continuing to and including the date (i) 60 days after the date of the
Prospectus with respect to Common Units or any securities substantially similar
thereto or (ii) 90 days after the date of the Prospectus with respect to Shares,
i-units or any securities substantially similar thereto (but not including
Common Units), not to, directly or indirectly, offer, sell, contract to sell,
pledge, grant any option to purchase, make any short sale or otherwise dispose
of, except as provided hereunder, any securities of the Company or the
Partnership that are, or are substantially similar to, Shares, i-units or Common
Units, or any options or warrants to purchase any such securities including but
not limited to any securities that are convertible into or exchangeable for, or
that represent the right to receive, Shares, i-units or Common Units or any such
substantially similar securities whether now owned (beneficially or otherwise,
including holding as a custodian) or hereinafter acquired (other than (A) the
sale of i-units by ▇▇▇▇▇▇ ▇▇▇▇▇▇ Energy Partners to the Company and subsequent
quarterly distributions of i-units and Shares as contemplated by the Prospectus,
(B) in connection with the acquisition of assets (other than cash), businesses
or the capital stock or other ownership interests of businesses by any of ▇▇▇▇▇▇
▇▇▇▇▇▇, Inc., ▇▇▇▇▇▇ ▇▇▇▇▇▇ Energy Partners, L.P., any subsidiary of ▇▇▇▇▇▇
▇▇▇▇▇▇, Inc. owning Common Units or Class B Units on the date hereof, or any
operating subsidiary of ▇▇▇▇▇▇ ▇▇▇▇▇▇ Energy Partners, L.P. owning Common Units
or Class B Units on the date hereof, if the recipient(s) of such securities
agree(s) not to offer, sell, contract to sell, or otherwise dispose of during
such lock-up period any such securities received in connection with such
acquisition(s) and (C) pursuant to employee unit option plans existing on, or
upon the conversion or exchange of convertible or exchangeable securities
outstanding as of, the date of this Agreement) without your prior written
consent, it being expressly agreed that the foregoing restriction shall preclude
the Partnership, the General Partner, KMI and the Company from engaging,
directly or indirectly, in any hedging or other transaction which is designed to
or reasonably expected to lead to or result in a sale or disposition of Shares,
i-units or Common Units, or even if such Shares, i-units or Common Units would
be disposed of by someone other than the Partnership, the General Partner, KMI
or the Company, including, without limitation, any short sale or any purchase,
sale or grant of any right (including, without
12
limitation, any put or call option) with respect to any of the Shares, i-units
or Common Units or with respect to any security that includes, relates to, or
derives any significant part of its value from such Shares, i-units or Common
Units;
(f) To furnish to the Shareholders as soon as practicable after
the end of each fiscal year an annual report (including a balance sheet and
statements of income, shareholders' equity and cash flows of the Company and its
consolidated subsidiaries certified by independent public accountants) and, as
soon as practicable after the end of each of the first three quarters of each
fiscal year (beginning with the fiscal quarter ending after the effective date
of the Registration Statement), to make available to the Shareholders
consolidated summary financial information of the Company and its subsidiaries
for such quarter in reasonable detail;
(g) During a period of five years from the effective date of the
Registration Statement, to furnish to you copies of all reports or other
communications (financial or other) furnished to Shareholders, and to deliver to
you (i) as soon as they are available, copies of any reports and financial
statements furnished to or filed with the Commission or any national securities
exchange on which any class of securities of the Company is listed; and (ii)
such additional information concerning the business and financial condition of
the Company as you may from time to time reasonably request (such financial
statements to be on a consolidated basis to the extent the accounts of the
Company and its subsidiaries are consolidated in reports furnished to its
Shareholders generally or to the Commission);
(h) To use the net proceeds received by them from the sale of the
Shares pursuant to this Agreement in the manner specified in the Prospectus
under the caption "Use of Proceeds" (including the purchase by the Company of
i-units with the proceeds of the sale of Shares, and the use by the Partnership
of such proceeds to pay down its outstanding indebtedness);
(i) To use its best efforts to list, subject to notice of
issuance, the Shares on the New York Stock Exchange (the "Exchange");
(j) To file with the Commission such information on Form 10-Q or
Form 10-K as may be required by Rule 463 under the Act;
(k) If the Company, the Partnership or KMI elects to rely upon
Rule 462(b), the Company, the Partnership and KMI shall file a Rule 462(b)
Registration Statement with the Commission in compliance with Rule 462(b), and
the Company, the Partnership and KMI 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;
(l) Upon request of any Underwriter, to furnish, or cause to be
furnished, to such Underwriter an electronic version of the Company's
trademarks, servicemarks and corporate logo for use on the website, if any,
operated by such Underwriter for the purpose of facilitating the on-line
offering of the Shares (the "License"); provided, however, that the License
shall be used solely for the purpose described above, is granted without any fee
and may not be assigned or transferred;
(m) The Partnership shall duly authorize and issue i-units to the
Partnership as contemplated in the Prospectus under "Use of Proceeds;" and
(n) To comply with each of the Transaction Documents.
6. The Company covenants and agrees with the several Underwriters that
the Company will pay or cause to be paid the following: (i) the fees,
disbursements and expenses of the Company's
13
counsel and accountants in connection with the registration described in Section
1(a) 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, the Blue Sky
Memorandum, closing documents (including any compilations thereof) and any other
documents in connection with the offering, purchase, sale and delivery of the
Shares or i-units; (iii) all expenses in connection with the qualification of
the Shares or i-units for offering and sale under state securities laws as
provided in Section 5(b) hereof, but not including the fees and disbursements of
counsel for the Underwriters in connection with such qualification and in
connection with the Blue Sky and legal investment memoranda; (iv) all fees and
expenses in connection with listing the Shares on the New York Stock Exchange;
(v) the filing fees incident to securing any required review by the National
Association of Securities Dealers, Inc. of the terms of the sale of the Shares;
(vi) the cost of preparing certificates representing the Shares or i-units;
(vii) the cost and charges of any transfer agent or registrar; 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, stock transfer taxes on resale of any of
the Shares by them, and any advertising expenses connected with any offers they
may make.
7. The obligations of the Underwriters hereunder, as to the Shares to
be delivered at each Time of Delivery, shall be subject, in their discretion, to
the condition that all representations and warranties and other statements of
the Company, the Partnership, the General Partner and KMI herein are, at and as
of such Time of Delivery, true and correct, the condition that each of the
Company, the Partnership, the General Partner and KMI shall have performed all
of its obligations hereunder theretofore to be performed, and the following
additional conditions:
(a) The Prospectus 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 Company, the Partnership or KMI 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 your
reasonable satisfaction;
(b) ▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P., counsel for the Underwriters, shall
have furnished to you such written opinion, dated such Time of Delivery, with
respect to the matters covered in paragraphs (i) (insofar as it relates to the
due formation, valid existence and good standing of the Company, the valid
existence and good standing of the Partnership and KMI and each of the Company's
and the Partnership's power and authority to conduct its business as described
in the Prospectus), (v), and (xv) of the opinion attached hereto as Annex I, and
a letter substantially similar to the letter required to be delivered by
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, L.L.P. as described in Annex I, as well as such other
related matters as you may reasonably request, and such counsel shall have
received such papers and information as they may reasonably request to enable
them to pass upon such matters;
(c) ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, L.L.P., counsel for the Company, the
Partnership, the General Partner and KMI, shall have furnished to you their
written opinion, dated such Time of Delivery, in form and substance satisfactory
to you, to the effect set forth in Annex I hereto.
14
(d) On the date of the Prospectus, at a time prior to the
execution of this Agreement, at 9:30 a.m., New York City time, on the effective
date of any post-effective amendment to the Registration Statement filed
subsequent to the date of this Agreement and also at each Time of Delivery,
PricewaterhouseCoopers LLP and Ernst & Young LLP shall have furnished to you a
letter or letters, dated the respective dates of delivery thereof, in form and
substance satisfactory to you, to the effect set forth in Annex II and III,
respectively, hereto;
(e) Shearman & Sterling, special counsel for the Company, shall
have furnished to you a letter confirming and entitling you to rely on their
written opinion, dated such Time of Delivery, in form and substance satisfactory
to you, to the effect that the Company is exempt from registration as an
"investment company" or an entity "controlled by" an "investment company," as
such terms are defined in the Investment Company Act of 1940, as amended.
(f) (i) None of the ▇▇▇▇▇▇ ▇▇▇▇▇▇ Entities or the KMI Entities
shall have sustained since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus 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,
and (ii) since the respective dates as of which information is given in the
Prospectus there shall not have been any change in the partners' capital or
capital stock, as applicable, or long-term debt of any of the ▇▇▇▇▇▇ ▇▇▇▇▇▇
Entities or the KMI Entities or any change, or any development involving a
prospective change, in or affecting the general affairs, management, financial
position, stockholders', unitholders' or interestholders' equity or results of
operations of any of the ▇▇▇▇▇▇ ▇▇▇▇▇▇ Entities or the KMI Entities, otherwise
than as set forth or contemplated in the Prospectus, 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 Shares
being delivered at such Time of Delivery on the terms and in the manner
contemplated in the Prospectus;
(g) On or after the date hereof (i) no downgrading shall have
occurred in the rating accorded to any of the ▇▇▇▇▇▇ ▇▇▇▇▇▇ Entities' or KMI
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 ▇▇▇▇▇▇ ▇▇▇▇▇▇ Entities' or KMI
Entities' debt securities or preferred stock;
(h) On or after the date hereof 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 Company's, the Partnership's or KMI's
securities on the NYSE; (iii) a general moratorium on commercial banking
activities declared by either Federal or New York or Texas State authorities or
a material disruption in commercial banking or securities settlement or
clearance services in the United States; (iv) the outbreak or escalation of
hostilities involving the United States or the declaration by the United States
of a national emergency or war; or (v) the occurrence of any other calamity or
crisis or any change in financial, political or economic conditions in the
United States or elsewhere, if the effect of any such event specified in clause
(iv) or (v) in the judgment of the Representatives makes it impracticable or
inadvisable to proceed with the public offering or the delivery of the Shares
being delivered at such Time of Delivery on the terms and in the manner
contemplated in the Prospectus;
(i) The Shares to be sold at such Time of Delivery shall have been
duly listed, subject to notice of issuance, on the Exchange;
15
(j) The Company has obtained and delivered to the Underwriters
executed copies of an agreement from each executive officer and director of the
Company and the Partnership substantially to the effect set forth in Subsection
5(e) hereof in form and substance satisfactory to you;
(k) The Company, the Partnership and KMI 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 this
Agreement;
(l) The Company, the General Partner, the Partnership and KMI
shall have furnished or caused to be furnished to you at such Time of Delivery
certificates of officers of the Company, the Partnership, the General Partner
and KMI satisfactory to you as to the accuracy of the representations and
warranties of the Company, the Partnership, the General Partner and KMI herein
at and as of such Time of Delivery, as to the performance by each of the
Company, the Partnership, the General Partner and KMI 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 (f) of this Section and as to such
other matters as you may reasonably request;
(m) Each of the Transaction Documents shall have been duly
authorized, executed and delivered and be in full force and effect and shall not
have been amended or waived in whole or in part;
(n) The successful delegation of the General Partner's control and
management of the business and affairs of the Partnership and the Operating
Partnerships shall be in full force and effect; and
(o) The Partnership shall have duly and validly authorized and
issued, and the Company shall have purchased and shall own, the i-units, as
contemplated by the Prospectus.
8. (a) Each of the Company, the Partnership and, with respect to
information regarding itself, KMI, will indemnify and hold harmless each
Underwriter against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement or the Prospectus, 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 Company, the Partnership and
KMI 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, the Registration Statement or the Prospectus or any such amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company by any Underwriter through ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.
expressly for use therein.
(b) Each Underwriter will indemnify and hold harmless the Company,
the Partnership and KMI against any losses, claims, damages or liabilities to
which the Company the Partnership and KMI 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, the
Registration Statement or the Prospectus, or any amendment or supplement
thereto, or arise out of or are based
16
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, the Registration Statement or the Prospectus or any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by such Underwriter through ▇▇▇▇▇▇▇, Sachs
& Co. expressly for use therein; and will reimburse the Company for any legal or
other expenses reasonably incurred by the Company in connection with
investigating or defending any such action or claim as such expenses are
incurred.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the indemnifying
party), and, after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party shall
not be liable to such indemnified party under such subsection for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation. No indemnifying party shall, without the
written consent of the indemnified party, effect the settlement or compromise
of, or consent to the entry of any judgment with respect to, any pending or
threatened action or claim in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified party is an actual or
potential party to such action or claim) unless such settlement, compromise or
judgment (i) includes an unconditional release of the indemnified party from all
liability arising out of such action or claim and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act, by or
on behalf of any indemnified party.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company, the Partnership and KMI on the one
hand and the Underwriters on the other from the offering of the Shares. 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 Company, the Partnership and KMI on the one hand and
the Underwriters 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 Company, the Partnership and KMI on the one
hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company bear to the total underwriting discounts and
17
commissions received by the Underwriters, in each case as set forth in the table
on the cover page of the Prospectus. 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 Company, the Partnership or KMI on the
one hand or the Underwriters on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company, the Partnership, KMI and the Underwriters
agree that it would not be just and equitable if contributions 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 Shares 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 Underwriters' obligations in this subsection (d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) The obligations of the Company, the Partnership and KMI under
this Section 8 shall be in addition to any liability which the Company, the
Partnership or KMI 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 Company, the Partnership and KMI (including any
person who, with his or her consent, is named in the Registration Statement as
about to become a director of the Company the Partnership and KMI) and to each
person, if any, who controls the Company, the Partnership or KMI within the
meaning of the Act.
9. (a) If any Underwriter shall default in its obligation to purchase
the Shares which it has agreed to purchase hereunder at a Time of Delivery, you
may in your discretion arrange for you or another party or other parties to
purchase such Shares on the terms contained herein. If within thirty-six hours
after such default by any Underwriter you do not arrange for the purchase of
such Shares, then the Company shall be entitled to a further period of
thirty-six hours within which to procure another party or other parties
satisfactory to you to purchase such Shares on such terms. In the event that,
within the respective prescribed periods, you notify the Company that you have
so arranged for the purchase of such Shares, or the Company notifies you that it
has so arranged for the purchase of such Shares, you or the Company shall have
the right to postpone such Time of Delivery 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, or in any other documents or
arrangements, and the Company agrees to file promptly any amendments to the
Registration Statement or the Prospectus which in your opinion 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 this Agreement with respect to such Shares.
18
(b) If, after giving effect to any arrangements for the purchase
of the Shares of a defaulting Underwriter or Underwriters by you and the Company
as provided in subsection (a) above, the aggregate number of such Shares which
remains unpurchased does not exceed one-eleventh of the aggregate number of all
the Shares to be purchased at such Time of Delivery, then the Company shall have
the right to require each non-defaulting Underwriter to purchase the number of
Shares which such Underwriter agreed to purchase hereunder at such Time of
Delivery and, in addition, to require each non-defaulting Underwriter to
purchase its pro rata share (based on the number of Shares which such
Underwriter agreed to purchase hereunder) of the Shares of such defaulting
Underwriter or Underwriters for which such arrangements have not been made; but
nothing herein shall relieve a defaulting Underwriter from liability for its
default.
(c) If, after giving effect to any arrangements for the purchase
of the Shares of a defaulting Underwriter or Underwriters by you and the Company
as provided in subsection (a) above, the aggregate number of such Shares which
remains unpurchased exceeds one-eleventh of the aggregate number of all the
Shares to be purchased at such Time of Delivery, or if the Company shall not
exercise the right described in subsection (b) above to require non-defaulting
Underwriters to purchase Shares of a defaulting Underwriter or Underwriters,
then this Agreement (or, with respect to the Second Time of Delivery, the
obligations of the Underwriters to purchase and of the Company to sell the
Optional Shares) shall thereupon terminate, without liability on the part of any
non-defaulting Underwriter or the Company, except for the expenses to be borne
by the Company 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.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Company, the Partnership, the General Partner and
KMI 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, or the Company, the Partnership, the General Partner
or KMI or any officer or director or controlling person of the Company the
Partnership, the General Partner or KMI, and shall survive delivery of and
payment for the Shares.
11. If this Agreement shall be terminated pursuant to Section 9 hereof,
the Company shall not then be under any liability to any Underwriter except as
provided in Sections 6 and 8 hereof; but, if for any other reason, any Shares
are not delivered by or on behalf of the Company as provided herein, the Company
will reimburse the Underwriters through you for all out-of-pocket expenses
approved in writing by you, including fees and disbursements of counsel,
reasonably incurred by the Underwriters in making preparations for the purchase,
sale and delivery of the Shares not so delivered, but the Company shall then be
under no further liability to any Underwriter except as provided in Sections 6
and 8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
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 you by ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. on behalf of you as the representatives.
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 you as the representatives in care of ▇▇▇▇▇▇▇, Sachs &
Co., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
Registration Department; and if to the Company shall be delivered or sent by
mail to the address of the Company set forth in the Registration Statement,
Attention: Secretary; provided,
19
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
Company by you upon request. Any such statements, requests, notices or
agreements shall take effect upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriters, the Company, the Partnership, the General Partner
and KMI and, to the extent provided in Sections 8 and 10 hereof, the officers
and directors of the Company, the Partnership, the General Partner and KMI and
each person who controls the Company, the Partnership, the General Partner and
KMI or any Underwriter, and their respective heirs, executors, administrators,
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement. No purchaser of any of the Shares from any
Underwriter shall be deemed a successor or assign by reason merely of such
purchase.
14. Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
15. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
17. The Company is authorized, subject to applicable law, to disclose
any and all aspects of this potential transaction that are necessary to support
any U.S. federal income tax benefits expected to be claimed with respect to such
transaction, without the Underwriters imposing any limitation of any kind.
If the foregoing is in accordance with your understanding, please sign
and return to us one for the Company and 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 between each of the Underwriters and the Company.
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 Company for
examination upon request, but without warranty on your part as to the authority
of the signers thereof.
20
Very truly yours,
▇▇▇▇▇▇ ▇▇▇▇▇▇ Management, LLC
By:
----------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Vice President, General Counsel
and Secretary
▇▇▇▇▇▇ ▇▇▇▇▇▇ Energy Partners, L.P.
By: Kinder ▇▇▇▇▇▇ ▇.▇., Inc., its General
Partner
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇ Management, LLC, its
delegate
By:
----------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Vice President, General Counsel
and Secretary
Kinder ▇▇▇▇▇▇ ▇.▇., Inc.
By:
----------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Vice President, General Counsel
and Secretary
▇▇▇▇▇▇ ▇▇▇▇▇▇, Inc.
By:
----------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Vice President, General Counsel
and Secretary
21
Accepted as of the date hereof:
▇▇▇▇▇▇▇, ▇▇▇▇▇ & CO.
[ ]
BY:
-------------------------------------
On behalf of each of the Underwriters
22
SCHEDULE I
NUMBER OF OPTIONAL
SHARES TO BE
TOTAL NUMBER OF PURCHASED IF
FIRM SHARES MAXIMUM OPTION
UNDERWRITER TO BE PURCHASED EXERCISED
----------- --------------- ------------------
▇▇▇▇▇▇▇, Sachs & Co...............................
[ ]
---------- ---------- -----------
Total....................................
S-1
SCHEDULE II
Partnership Subsidiaries
▇▇▇▇▇▇ ▇▇▇▇▇▇ Operating L.P. "A," a Delaware limited partnership ("OLP-A")
▇▇▇▇▇▇ ▇▇▇▇▇▇ Operating L.P. "B," a Delaware limited partnership ("OLP-B")
▇▇▇▇▇▇ ▇▇▇▇▇▇ Operating L.P. "C," a Delaware limited partnership ("OLP-C")
▇▇▇▇▇▇ ▇▇▇▇▇▇ Operating L.P. "D," a Delaware limited partnership ("OLP-D")
▇▇▇▇▇▇ ▇▇▇▇▇▇ CO2 Company, L.P., a Texas limited partnership ( together with
OLP-A, OLP-B, OLP-C and OLP-D, the "Operating Partnerships," each of which is
owned 98.9899% by the Partnership and 1.0101% by the General Partner)
SFPP, L.P., a Delaware limited partnership (99.5%)
▇▇▇▇▇▇ ▇▇▇▇▇▇ Bulk Terminals, Inc., a Louisiana corporation
▇▇▇▇▇▇ ▇▇▇▇▇▇ Interstate Gas Transmission LLC, a Colorado limited liability
company
Plantation Pipe Line Company, a Delaware and Virginia corporation (51%)
▇▇▇▇▇▇ Pipeline Company, a Texas general partnership (50%)
Delta Terminal Services, LLC, a Delaware limited liability company
▇▇▇▇▇▇ ▇▇▇▇▇▇ Tank Storage Terminals, LLC, a Delaware limited liability company
▇▇▇▇▇▇ ▇▇▇▇▇▇ Liquids Terminals, LLC, a Delaware limited liability company
Central Florida Pipeline LLC, a Delaware limited liability company
▇▇▇▇▇▇ ▇▇▇▇▇▇ Pipeline LLC, a Delaware limited liability company
Calnev Pipeline LLC, a Delaware limited liability company
▇▇▇▇▇▇ ▇▇▇▇▇▇ Trailblazer, LLC, a Delaware limited liability company
CGT Trailblazer, L.L.C., a Delaware limited liability company,
Trailblazer Pipeline Company, an Illinois general partnership
▇▇▇▇▇▇ ▇▇▇▇▇▇ Texas Pipeline, L.P., a Delaware limited partnership
Tejas Gas, LLC, a Delaware limited liability company
KM Texas Pipeline, L.P. Delaware limited partnership
S-2
SCHEDULE III
KMI Subsidiaries
KN Cogeneration, Inc., a Colorado corporation
▇▇▇▇▇▇ ▇▇▇▇▇▇ Power Company, a Colorado corporation
▇▇▇▇▇▇ ▇▇▇▇▇▇ Michigan, LLC, a Delaware limited liability company
Wrightsville Power Facility, LLC, a Delaware limited liability company
KN TransColorado, Inc., a Colorado corporation
Northern Gas Company, a Wyoming corporation
Rocky Mountain Natural Gas Company, a Colorado corporation
KN Energy International, Inc., a Delaware corporation
MidCon Corp., a Delaware corporation
Natural Gas Pipeline Company of America, a Delaware corporation
S-3
ANNEX I
1. Each of the Company, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Services LLC, the Partnership,
the General Partner, ▇▇▇▇▇▇ ▇▇▇▇▇▇ (Delaware), Inc., KMI and the Subsidiaries is
validly existing and in good standing under the laws of its jurisdiction of
formation or incorporation, as the case may be, with full corporate, partnership
or limited liability company power and authority, as the case may be, to conduct
its business as described in the Prospectus; and each of the Company and ▇▇▇▇▇▇
▇▇▇▇▇▇ Services LLC has been duly formed as a Delaware limited liability
company;
2. (a) At the Time of Delivery after giving effect to the issuance of
the Shares being purchased by the Underwriters and the issuance of a similar
number of i-units being purchased by the Company, to our knowledge after due
inquiry, the capitalization of the Company will consist of [ ] Shares ([ ]
Shares if the over-allotment option granted to the Underwriters is exercised in
full) and two voting limited liability company interests owned by the General
Partner and the capitalization of the Partnership will consist of [ ] Common
Units, [ ] of which are owned, directly or indirectly through one or more
subsidiaries, by KMI, [ ] Class B Units, all of which are owned by KMI,
directly or indirectly, through one or more subsidiaries, a 1% general partner
interest owned by the General Partner, and [ ] (or [ ] if the over-allotment
option granted to the Underwriters is exercised in full) i-units, owned by the
Company, in each case free and clear of any lien, encumbrance, security
interest, equity or charge known to us after due inquiry (except for such liens,
encumbrances, security interests, equities, or charges as are not, individually
or in the aggregate, material to such interest ownership or as described in the
Prospectus); (b) to our knowledge after due inquiry, such securities will be the
only equity securities that are issued and outstanding of such entities at such
Time of Delivery; (c) all of such securities have been duly and validly
authorized and issued and are fully paid and (except (1) as affected by the
Delaware LLC Act or the Delaware LP Act and (2) with respect to any general
partner interests) nonassessable; (d) the Shares conform as to legal matters in
all material respects to the description of the Shares contained in the
Prospectus under the caption "Description of Our Shares"; (e) the i-units
conform as to legal matters in all material respects to the description of the
i-units contained in the Prospectus under the caption "Description of the
i-Units"; and (f) the Shares, i-units, Common Units and Class B Units conform as
to legal matters in all material respects to the descriptions thereof
incorporated in the Prospectus;
3. All of the outstanding shares, limited liability company interests,
limited partner interests and general partner interests, as applicable, of each
of ▇▇▇▇▇▇ ▇▇▇▇▇▇ Services LLC, the General Partner, ▇▇▇▇▇▇ ▇▇▇▇▇▇ (Delaware),
Inc. and the Subsidiaries, except as otherwise set forth in the Prospectus, are
owned by the Company, the Partnership or KMI, directly or indirectly, through
one or more wholly-owned subsidiaries or Operating Partnerships, free and clear
of any lien, encumbrance, security interest, equity or charge known to us after
due inquiry (except for such liens, encumbrances, security interests, equities,
or charges as are not, individually or in the aggregate, material to such
interest ownership or as described in the Prospectus); all of such securities
have been duly and validly authorized and issued and
Annex I-2
are fully paid and (except (i) as affected by the Delaware LLC Act or the
Delaware LP Act and (ii) with respect to any general partner interests)
nonassessable; and, to our knowledge after due inquiry, none of such outstanding
shares of stock, limited liability company interests or partnership interests,
as applicable, were issued in violation of any preemptive rights of any holder
of any security or other interest in such entities; pursuant to the terms of the
relevant partnership agreements, the General Partner is the sole general partner
of the Partnership and the Operating Partnerships;
4. To our knowledge after due inquiry and other than as set forth or
incorporated by reference in the Prospectus, there are no legal or governmental
proceedings pending or threatened to which any of the Company, the Partnership,
the General Partner, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Services LLC, ▇▇▇▇▇▇ ▇▇▇▇▇▇ (Delaware), Inc.,
KMI or the Subsidiaries is a party or of which any of their respective property
is subject, which, if determined adversely to them, would individually or in the
aggregate reasonably be expected to have a Material Adverse Effect;
5. The
Underwriting Agreement has been duly authorized, executed and
delivered by the Company, KMI and the General Partner on its own behalf and on
behalf of the Partnership;
6. Each of the Tax Indemnification Agreement, the Delegation of Control
Agreement, the Third Amended and Restated Agreement of Limited Partnership of
the Partnership dated as of May 18, 2001, the Amended and Restated Agreements of
Limited Partnership of the Operating Partnerships (as amended by Amendment No.1
thereto dated as of May 18, 2001) and the Second Amended and Restated Limited
Liability Company Agreement of the Company dated as of [ ] (all as described in
the Prospectus and collectively referred to herein as the "Transaction
Documents") has been duly authorized, adopted, executed and delivered; each of
such agreements constitutes a valid and legally binding agreement of the parties
thereto, enforceable against each of such parties in accordance with its terms;
and each of the Company, the Partnership, the General Partner, and KMI has all
necessary corporate, partnership or limited liability company power and
authority, as applicable, to consummate the transactions contemplated thereby;
7. The issue and sale by the Company of the Shares being delivered on
the date hereof, the issue and sale of the i-units by the Partnership to the
Company on the date hereof and the execution, delivery and performance by the
Company, the Partnership, the General Partner and KMI of the applicable
Transaction Documents and the
Underwriting Agreement, will not (i) conflict
with, or result in a breach or violation of any of the terms or provisions of,
or constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument filed or incorporated by reference as
an exhibit to the Partnership's 2001 Form 10-K, KMI's 2001 Form 10-K, the
Company's 2001 Form 10-K or the Company's, the Partnership's or KMI's Forms 8-A,
8-K or 10Q filed since January 1, 2002, (ii) result in any violation of the
provisions of any formation or incorporation documents, as applicable, or
governing organizational documents of any of the Company, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Services
LLC, the Partnership, the General Partner, ▇▇▇▇▇▇ ▇▇▇▇▇▇ (Delaware), Inc., KMI
or the Subsidiaries, (iii) breach or otherwise violate an existing obligation of
any of the Company, the Partnership, the General Partner, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Services
LLC, ▇▇▇▇▇▇ ▇▇▇▇▇▇ (Delaware), Inc., KMI or the Subsidiaries under any existing
court or administrative order, judgment or decree of which we have knowledge
after due inquiry, or (iv) violate any applicable provisions of the federal laws
of the United States (based on the limitations set forth below), the laws of the
State of Texas, the DGCL, the Delaware LLC Act or the Delaware LP Act;
Annex I-3
8. No consent, approval, registration, qualification, authorization or
order, or filing with, any federal, Delaware or Texas court or governmental
agency or body is required to be obtained or made by the Company, the
Partnership or KMI under federal or Texas law, the DGCL, the Delaware LLC Act or
the Delaware LP Act for the issue and sale of the Shares (including the purchase
obligation as described in the Prospectus) by the Company to the Underwriters
pursuant to the
Underwriting Agreement or for the issue and sale of the i-units
by the Partnership to the Company contemplated in the Prospectus except (i) as
has been obtained under the Act and the rules and regulations thereunder, (ii)
as may be required under state securities or blue sky laws or by the bylaws and
rules of the NASD in connection with the purchase and distribution of the Shares
by the Underwriters, and (iii) such as the failure to obtain or make would not
be reasonably expected, individually or in the aggregate, to have a Material
Adverse Effect;
9. The Registration Statement has been declared effective under the
Act; any filing of the Prospectus required to the date hereof pursuant to Rule
424(b) under the Act has been made in the manner and within the time period
required by Rule 424(b); and, to our knowledge after due inquiry, no stop order
suspending the effectiveness of the Registration Statement has been issued under
the Act and no proceeding for that purpose has been instituted or is threatened
by the Commission;
10. Each of the Company, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Services LLC, the Partnership,
▇▇▇▇▇▇ ▇▇▇▇▇▇ (Delaware), Inc., KMI and the General Partner is exempt from
regulation as a "holding company" under the Public Utility Holding Company Act
of 1935, as amended;
11. The Shares are approved for listing, subject to official notice of
issuance, on the New York Stock Exchange;
12. To our knowledge after due inquiry, except as disclosed in the
Registration Statement or the Prospectus, no person or entity has the right to
require the registration under the Act of Shares, i-units or Common Units or
other securities of the Company or the Partnership by reason of the filing or
effectiveness of the Registration Statement, which has not been waived;
13. Neither the Shares (including the purchase obligation as described
in the Prospectus) nor the i-units registered pursuant to the Registration
Statement will be issued in violation of any existing preemptive rights under
(i) the Delaware LLC Act or the Delaware LP Act, (ii) the Partnership Agreement
(except for the General Partner's pre-emptive right contained in Section 4.2 of
the Partnership Agreement, which has been waived with respect to the
transactions contemplated by the Prospectus) or (iii) any instrument, document,
contract or other agreement filed or incorporated by reference as an exhibit to
the Registration Statement; and except as (a) described in the Registration
Statement or Prospectus, (b) the Partnership's Executive Compensation Plan, and
(c) the Partnership's Common Unit Option Plan, to our knowledge after due
inquiry, there are no agreements to issue, and there are no outstanding options,
warrants or other rights calling for the issuance of, any Shares, i-units or
Common Units to any person, nor any security or other instrument that by its
terms is convertible into, exercisable for or exchangeable for interests of the
Company or the Partnership; to our knowledge after due inquiry, there are no
rights entitling any holder of the Shares, i-units, or Common Units to cause the
Company or the Partnership to register any of such interests (other than
pursuant to the
Underwriting Agreement);
Annex I-4
14. We hereby confirm (i) our opinion set forth in the Prospectus under
the caption "Material Tax Considerations" and (ii) that, based on the accuracy
of the representations made by the Company and the General Partner and subject
to the qualifications set forth therein, the discussion set forth in the
Prospectus under such caption is a summary of the United States federal income
tax matters described therein that is accurate in all material respects;
15. The Registration Statement and the Prospectus, excluding the
documents incorporated by reference therein, as of their respective effective or
issue dates (other than the financial statements and supporting schedules and
other financial data included therein or omitted therefrom as to which we
express no opinion) appeared on their face to comply as to form in all material
respects with the requirements of the Act and the rules and regulations
thereunder; and
16. The documents incorporated by reference in the Prospectus (other
than the financial statements and supporting schedules and other financial data
included therein or omitted therefrom, as to which we express no opinion), when
they became effective (if incorporated by reference to another registration
statement) or were filed with the Commission, as the case may be, appeared on
their face to comply as to form in all material respects with the requirements
of the Act and the rules and regulations thereunder or the Exchange Act and the
rules and regulations thereunder, as applicable.
Annex I-5
Exhibit I
▇▇▇▇▇▇ ▇▇▇▇▇▇ CO(2) Company, ▇.▇.
▇▇▇▇▇▇ ▇▇▇▇▇▇ Bulk Terminals, Inc.
▇▇▇▇▇▇ ▇▇▇▇▇▇ Interstate Gas Transmission LLC
▇▇▇▇▇▇ ▇▇▇▇▇▇ Operating L.P. "A"
▇▇▇▇▇▇ ▇▇▇▇▇▇ Operating L.P. "B"
▇▇▇▇▇▇ ▇▇▇▇▇▇ Operating L.P. "C"
▇▇▇▇▇▇ ▇▇▇▇▇▇ Operating L.P. "D"
SFPP, ▇.▇.
▇▇▇▇▇▇ ▇▇▇▇▇▇ Liquids Terminals LLC
▇▇▇▇▇▇ ▇▇▇▇▇▇ Tank Storage Terminals LLC
Central Florida Pipeline LLC
▇▇▇▇▇▇ ▇▇▇▇▇▇ Pipeline LLC
▇▇▇▇▇▇ ▇▇▇▇▇▇ Las Vegas LLC
Calnev Pipe Line LLC
Tejas Gas, LLC
KM Texas Pipeline, L.P.
KN Cogeneration, Inc.
▇▇▇▇▇▇ ▇▇▇▇▇▇ Power Company
▇▇▇▇▇▇ ▇▇▇▇▇▇ Michigan, LLC
Wrightsville Power Facility, LLC
KN TransColorado, Inc.
Northern Gas Company
Rocky Mountain Natural Gas Company
KN Energy International, Inc.
MidCon Corp.
Natural Gas Pipeline Company of America
Trailblazer Pipeline Company
Annex I-7
ANNEX II
[TO BE PROVIDED]
ANNEX III
[TO BE PROVIDED]