UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________
Form 10-K
[X]
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2018
or
[ ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____to_____
Commission file number: 001-35081
Kinder Morgan, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
80-0682103
(I.R.S. Employer
Identification No.)
1001 Louisiana Street, Suite 1000, Houston, Texas 77002
(Address of principal executive offices) (zip code)
Registrant’s telephone number, including area code: 713-369-9000
____________
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Class P Common Stock
1.500% Senior Notes due 2022
2.250% Senior Notes due 2027
Name of each exchange on which registered
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act of 1933. Yes
No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934. Yes
No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes
No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). Yes
No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K(§229.405 of this chapter) is not contained herein, and will
not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or
any amendment to this Form 10-K.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an
emerging growth company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).
Large accelerated filer
Non-accelerated filer
Accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new
or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes
No
Aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant, based on closing prices in the daily composite
list for transactions on the New York Stock Exchange on June 29, 2018 was approximately $33,499,494,320. As of February 7, 2019, the registrant had
2,263,656,419 Class P shares outstanding.
Portions of the Registrant’s definitive proxy statement for the 2019 Annual Meeting of Stockholders, which shall be filed no later than April 30, 2019, are
incorporated into PART III, as specifically set forth in PART III.
DOCUMENTS INCORPORATED BY REFERENCE
KINDER MORGAN, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
Page
Number
Glossary
Information Regarding Forward-Looking Statements
PART I
Items 1. and 2. Business and Properties
General Development of Business
Organizational Structure
Recent Developments
2019 Outlook
Financial Information about Segments
Narrative Description of Business
Business Strategy
Business Segments
Natural Gas Pipelines
Products Pipelines
Terminals
CO2
Major Customers
Regulation
Environmental Matters
Other
Financial Information about Geographic Areas
Available Information
Risk Factors
Unresolved Staff Comments
Legal Proceedings
Mine Safety Disclosures
PART II
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases
of Equity Securities
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of Operations
General
Critical Accounting Policies and Estimates
Results of Operations
Overview
Consolidated Earnings Results
Non-GAAP Financial Measures
Segment Earnings Results
Income Taxes
Liquidity and Capital Resources
Recent Accounting Pronouncements
Item 1A.
Item 1B.
Item 3.
Item 4.
Item 5.
Item 6.
Item 7.
1
2
4
4
4
4
6
7
7
7
7
8
10
11
11
13
14
17
20
21
21
21
33
33
33
34
35
35
36
39
42
42
42
43
45
56
57
64
KINDER MORGAN, INC. AND SUBSIDIARIES
TABLE OF CONTENTS (continued)
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
Energy Commodity Market Risk
Interest Rate Risk
Foreign Currency Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
PART III
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accounting Fees and Services
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
PART IV
Item 15.
Exhibits, Financial Statement Schedules
Index to Financial Statements
Form 10-K Summary
Item 16.
Signatures
64
64
65
66
66
66
66
67
67
67
67
67
67
67
72
153
154
KINDER MORGAN, INC. AND SUBSIDIARIES
GLOSSARY
Company Abbreviations
= Calnev Pipe Line LLC
Calnev
= Colorado Interstate Gas Company, L.L.C.
CIG
= Cheyenne Plains Gas Pipeline Company, L.L.C.
CPGPL
EagleHawk
= EagleHawk Field Services LLC
Elba Express = Elba Express Company, L.L.C.
ELC
EPB
= Elba Liquefaction Company, L.L.C.
= El Paso Pipeline Partners, L.P. and its majority-
owned and controlled subsidiaries
= El Paso Natural Gas Company, L.L.C.
EPNG
= Fayetteville Express Pipeline LLC
FEP
= Hiland Partners, LP
Hiland
KinderHawk = KinderHawk Field Services LLC
KMEP
KMGP
KMI
= Kinder Morgan Energy Partners, L.P.
= Kinder Morgan G.P., Inc.
= Kinder Morgan, Inc. and its majority-owned and/or Mountain
controlled subsidiaries
WIC
KML
= Kinder Morgan Canada Limited and its majority- WYCO
owned and/or controlled subsidiaries
KMLP
KMP
= Kinder Morgan Louisiana Pipeline LLC
= Kinder Morgan Energy Partners, L.P. and its
majority-owned and controlled subsidiaries
KMTP
MEP
NGPL
Ruby
SFPP
SLNG
SNG
TGP
TMEP
TMPL
Trans
= Kinder Morgan Texas Pipeline LLC
= Midcontinent Express Pipeline LLC
= Natural Gas Pipeline Company of America LLC
= Ruby Pipeline Holding Company, L.L.C.
= SFPP, L.P.
= Southern LNG Company, L.L.C.
= Southern Natural Gas Company, L.L.C.
= Tennessee Gas Pipeline Company, L.L.C.
= Trans Mountain Expansion Project
= Trans Mountain Pipeline System
= Trans Mountain Pipeline ULC
= Wyoming Interstate Company, L.L.C.
= WYCO Development L.L.C.
Unless the context otherwise requires, references to “we,” “us,” “our,” or “the Company” are intended to mean Kinder Morgan, Inc. and its
majority-owned and/or controlled subsidiaries.
2017 Tax
Reform
/d
AFUDC
BBtu
Bcf
CERCLA
C$
CO2
CPUC
DCF
DD&A
Dth
EBDA
EPA
FASB
FERC
GAAP
Common Industry and Other Terms
= The Tax Cuts & Jobs Act of 2017
= per day
= allowance for funds used during construction
= billion British Thermal Units
= billion cubic feet
= Comprehensive Environmental Response,
Compensation and Liability Act
= Canadian dollars
= carbon dioxide or our CO2 business segment
= California Public Utilities Commission
= distributable cash flow
= depreciation, depletion and amortization
= dekatherms
= earnings before depreciation, depletion and
amortization expenses, including amortization of
excess cost of equity investments
= United States Environmental Protection Agency
= Financial Accounting Standards Board
= Federal Energy Regulatory Commission
= United States Generally Accepted Accounting
Principles
IPO
LIBOR
LLC
LNG
MBbl
MDth
MLP
MMBbl
MMcf
NEB
NGL
NYMEX
NYSE
OTC
PHMSA
U.S.
SEC
TBtu
WTI
= Initial Public Offering
= London Interbank Offered Rate
= limited liability company
= liquefied natural gas
= thousand barrels
= thousand dekatherms
= master limited partnership
= million barrels
= million cubic feet
= Canadian National Energy Board
= natural gas liquids
= New York Mercantile Exchange
= New York Stock Exchange
= over-the-counter
= United States Department of Transportation
Pipeline and Hazardous Materials Safety
Administration
= United States of America
= United States Securities and Exchange
Commission
= trillion British Thermal Units
= West Texas Intermediate
When we refer to cubic feet measurements, all measurements are at a pressure of 14.73 pounds per square inch.
1
Information Regarding Forward-Looking Statements
This report includes forward-looking statements. These forward-looking statements are identified as any statement that
does not relate strictly to historical or current facts. They use words such as “anticipate,” “believe,” “intend,” “plan,”
“projection,” “forecast,” “strategy,” “outlook,” “continue,” “estimate,” “expect,” “may,” or the negative of those terms or other
variations of them or comparable terminology. In particular, expressed or implied statements concerning future actions,
conditions or events, future operating results or the ability to generate sales, income or cash flow, service debt or pay dividends,
are forward-looking statements. Forward-looking statements are not guarantees of performance. They involve risks,
uncertainties and assumptions. Future actions, conditions or events and future results may differ materially from those
expressed in our forward-looking statements. Many of the factors that will determine these results are beyond our ability to
control or accurately predict. Specific factors that could cause actual results to differ from those in our forward-looking
statements include:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
changes in supply of and demand for NGL, refined petroleum products, oil, CO2, natural gas, electricity, coal, steel
and other bulk materials and chemicals and certain agricultural products in North America;
economic activity, weather, alternative energy sources, conservation and technological advances that may affect price
trends and demand;
changes in our tariff rates required by the FERC, the CPUC, Canada’s NEB or another regulatory agency;
our ability to acquire new businesses and assets and integrate those operations into our existing operations, and make
cost-saving changes in operations, particularly if we undertake multiple acquisitions in a relatively short period of
time, as well as our ability to expand our facilities;
our ability to safely operate and maintain our existing assets and to access or construct new assets including pipelines,
terminals, gas processing, gas storage and NGL fractionation capacity;
our ability to attract and retain key management and operations personnel;
difficulties or delays experienced by railroads, barges, trucks, ships or pipelines in delivering products to or from our
terminals or pipelines;
shut-downs or cutbacks at major refineries, petrochemical or chemical plants, natural gas processing plants, ports,
utilities, military bases or other businesses that use our services or provide services or products to us;
changes in crude oil and natural gas production (and the NGL content of natural gas production) from exploration and
production areas that we serve, such as the Permian Basin area of West Texas, the shale plays in North Dakota,
Oklahoma, Ohio, Pennsylvania and Texas, and the U.S. Rocky Mountains;
changes in laws or regulations, third-party relations and approvals, and decisions of courts, regulators and
governmental bodies that may increase our compliance costs, restrict our ability to provide or reduce demand for our
services, or otherwise adversely affect our business;
interruptions of operations at our facilities due to natural disasters, damage by third parties, power shortages, strikes,
riots, terrorism (including cyber attacks), war or other causes;
the uncertainty inherent in estimating future oil, natural gas, and CO2 production or reserves;
issues, delays or stoppage associated with new construction or expansion projects;
regulatory, environmental, political, grass roots opposition, legal, operational and geological uncertainties that could
affect our ability to complete our expansion projects on time and on budget or at all;
the timing and success of our business development efforts, including our ability to renew long-term customer
contracts at economically attractive rates;
•
the ability of our customers and other counterparties to perform under their contracts with us;
2
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
competition from other pipelines, terminals or other forms of transportation;
changes in accounting pronouncements that impact the measurement of our results of operations, the timing of when
such measurements are to be made and recorded, and the disclosures surrounding these activities;
changes in tax laws;
our ability to access external sources of financing in sufficient amounts and on acceptable terms to the extent needed
to fund acquisitions of operating businesses and assets and expansions of our facilities;
our indebtedness, which could make us vulnerable to general adverse economic and industry conditions, limit our
ability to borrow additional funds, place us at a competitive disadvantage compared to our competitors that have less
debt, or have other adverse consequences;
our ability to obtain insurance coverage without significant levels of self-retention of risk;
natural disasters, sabotage, terrorism (including cyber attacks) or other similar acts or accidents causing damage to our
properties greater than our insurance coverage limits;
possible changes in our and our subsidiaries’ credit ratings;
conditions in the capital and credit markets, inflation and fluctuations in interest rates;
political and economic instability of the oil producing nations of the world;
national, international, regional and local economic, competitive and regulatory conditions and developments,
including the effects of any enactment of import or export duties, tariffs or similar measures;
our ability to achieve cost savings and revenue growth;
foreign exchange fluctuations;
the extent of our success in developing and producing CO2 and oil and gas reserves, including the risks inherent in
development drilling, well completion and other development activities;
engineering and mechanical or technological difficulties that we may experience with operational equipment, in well
completions and work-overs, and in drilling new wells; and
unfavorable results of litigation and the outcome of contingencies referred to in Note 18 “Litigation, Environmental
and Other Contingencies” to our consolidated financial statements.
The foregoing list should not be construed to be exhaustive. We believe the forward-looking statements in this report are
reasonable. However, there is no assurance that any of the actions, events or results expressed in forward-looking statements
will occur, or if any of them do, of their timing or what impact they will have on our results of operations or financial
condition. Because of these uncertainties, you should not put undue reliance on any forward-looking statements.
Additional discussion of factors that may affect our forward-looking statements appears elsewhere in this report, including
in Item 1A “Risk Factors,” Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations,”
and Item 7A “Quantitative and Qualitative Disclosures About Market Risk—Energy Commodity Market Risk.” In addition,
there is a general level of uncertainty regarding the extent to which potential positive or negative changes to fiscal, tax and
trade policies may impact us and those with whom we do business. It is not possible at this time to predict the extent of any
such impact. When considering forward-looking statements, you should keep in mind the factors described in this section and
the other sections referenced above. These factors could cause our actual results to differ materially from those contained in
any forward-looking statement. We disclaim any obligation, other than as required by applicable law, and described below
under Items 1 and 2 “Business and Properties —(a) General Development of Business—2019 Outlook,” to update the above list
or to announce publicly the result of any revisions to any of our forward-looking statements to reflect future events or
developments.
3
Items 1 and 2. Business and Properties.
PART I
We are one of the largest energy infrastructure companies in North America. We own an interest in or operate
approximately 84,000 miles of pipelines and 153 terminals. Our pipelines transport natural gas, refined petroleum products,
crude oil, condensate, CO2 and other products, and our terminals transload and store liquid commodities including petroleum
products, ethanol and chemicals, and bulk products, including petroleum coke, metals and ores. Our common stock trades on
the NYSE under the symbol “KMI.”
(a) General Development of Business
Organizational Structure
We are a Delaware corporation and our common stock has been publicly traded since February 2011.
You should read the following in conjunction with our audited consolidated financial statements and the notes thereto. We
have prepared our accompanying consolidated financial statements under GAAP and the rules and regulations of the SEC. Our
accounting records are maintained in U.S. dollars and all references to dollars in this report are to U.S. dollars, except where
stated otherwise. Our consolidated financial statements include our accounts and those of our majority-owned and/or
controlled subsidiaries, and all significant intercompany items have been eliminated in consolidation. The address of our
principal executive offices is 1001 Louisiana Street, Suite 1000, Houston, Texas 77002, and our telephone number at this
address is (713) 369-9000.
Recent Developments
The following is a brief listing of significant developments and updates related to our major projects and other
transactions. Additional information regarding most of these items may be found elsewhere in this report. “Capital Scope” is
estimated for our share of the described project which may include portions not yet completed.
Asset or project
Description
Activity
Approx.
Capital
Scope
Divestitures
TMPL(a)
Sold interests in TMPL, TMEP, Puget Sound system and
Kinder Morgan Canada Inc. to the Government of Canada.
Completed in August 2018.
n/a
Placed in service or acquisitions
TGP Broad Run
Expansion
Second of two projects to create a total of 790,000 Dth/d of
incremental firm transportation capacity from the
southwest Marcellus and Utica supply basins to delivery
points in Mississippi and Louisiana. Subscribed under
long-term firm transportation contracts.
KM Base Line Terminal
Development(b)
Elba Express and SNG
Expansion
A 12 tank, 4.8 MMBbl, new-build merchant crude oil
storage facility in Edmonton, Alberta. Developed as part
of a 50-50 joint venture with Keyera Corp. Capital figure
includes costs associated with the construction of a
pipeline segment funded solely by Kinder Morgan.
Subscribed under long-term contracts with an average
initial term of 7.5 years.
Expansion project that provides 854,000 Dth/d of
incremental natural gas transportation service supporting
the needs of customers in Georgia, South Carolina and
northern Florida, and also serving ELC. Supported by
long-term firm transportation contracts.
Broad Run Expansion
(200,000 Dth/d) was placed
in service October 2018.
Broad Run Flexibility
facilities (590,000 Dth/d)
were placed in service
November 2015.
First 6 tanks placed in
service in first quarter 2018
with balance placed in
service in the third and
fourth quarters of 2018.
Initial service began in
December 2016 and as of
December 31, 2017, more
than 70% of capacity had
been placed in service. The
final portion was placed in
service November 2018.
$463
million
C$357
million
$284
million
4
Activity
Placed in service January
2018.
Approx.
Capital
Scope
$275
million
Placed in service March
2018.
Placed in service December
2018.
Placed in service December
2018.
Placed in service December
2018.
Partially in service April
2017 (75,000 Dth/d).
Remaining (385,000 Dth/d)
placed in service October
2018.
First of 10 liquefaction units
expected to be placed in
service at the end of first
quarter 2019 with the
remaining 9 units to come
online throughout 2019.
Expected in-service date
fourth quarter 2020, pending
regulatory approvals.
The first 9 miles of the
Midland Lateral were placed
in service in August 2018
with the remaining 40 miles
to be placed in-service in
April 2019. Expected full
in-service date of the project
is October 2019.
Phase 1 was placed in
service in September 2016.
Phase 2 is expected to be
placed in service by second
quarter 2020.
$175
million
$133
million
$122
million
$106
million
$88
million
$1.2
billion
$572
million
$637
million
$298
million
Asset or project
Utopia Pipeline
TGP Southwest Louisiana
Supply
KMLP Sabine Pass
Expansion
SNG Fairburn Expansion
TGP Lone Star
NGPL Gulf Coast
Southbound Expansion
Other Announcements
Natural Gas Pipelines
ELC and SLNG
Expansion
Permian Highway
Pipeline Project (PHP
Project)(c)
Gulf Coast Express
Pipeline Project (GCX
Project)
Texas Intrastate Crossover
Expansion
Description
New 270 mile pipeline, supported by long-term
transportation contracts, to transport ethane and ethane-
propane mixtures from the prolific Utica Shale, with a
design capacity of 50 MBbl/d, expandable to more than 75
MBbl/d. We own a 50% interest in and operate Utopia
Holding L.L.C. Riverstone Investment Group LLC owns
the remaining 50% interest.
Expansion project to provide 900,000 Dth/d of incremental
firm transportation capacity from multiple supply basins to
the Cameron LNG export facility in Cameron Parish,
Louisiana. Subscribed under long-term firm transportation
contracts.
Expansion project to provide 600,000 Dth/d of incremental
firm transportation capacity from various receipt points to
Cheniere’s Sabine Pass Liquefaction Terminal in Cameron
Parish, Louisiana. Subscribed under long-term firm
transportation contracts.
Expansion project in Georgia to provide 370,000 Dth/d of
incremental long-term firm transportation capacity into the
Southeast market, and includes the construction of a new
compressor station, 6.5 miles of new pipeline and new
meter stations.
Expansion project to provide 300,000 Dth/d of incremental
firm transportation capacity from Mississippi receipt points
to Cheniere’s Corpus Christi LNG export facility in
Jackson County, Texas. Subscribed under long-term firm
transportation contracts.
Expansion project to provide 460,000 Dth/d of incremental
firm transportation capacity from various interstate
pipeline interconnects in Illinois, Arkansas and Texas, to
points south on NGPL’s pipeline system to serve growing
demand in the Gulf Coast area. Subscribed under long-
term firm transportation contracts.
Building of new natural gas liquefaction and export
facilities at our SLNG natural gas terminal on Elba Island,
near Savannah, Georgia, with a total capacity of 2.5
million tonnes per year of LNG, equivalent to
approximately 357,000 Dth/d of natural gas. Supported by
a long-term firm contract with Shell.
Joint venture pipeline project (KMTP 50% and BCP PHP,
LLC (BCP) 50% ownership interest) is designed to
transport up to 2.1 Bcf/d of natural gas through
approximately 430 miles of 42-inch pipeline from the
Waha, Texas area to the U.S. Gulf Coast and Mexico
markets. Subscribed under long-term firm transportation
contracts.
Joint venture pipeline project (KMTP 35%, DCP
Midstream, LP 25%, an affiliate of Targa Resources Corp.
25% and Altus Midstream Company 15% ownership
interest) to provide up to 1.98 Bcf/d of transportation
capacity from the Permian Basin to the Agua Dulce, Texas
area. Subscribed under long-term firm transportation
contracts.
Expansion project that provides over 1,000,000 Dth/d of
transportation capacity from the Katy Hub, the Company’s
Houston Central processing plant, and other third-party
receipt points to serve customers in Texas and Mexico.
Phase I is supported by long-term firm transportation
contracts of nearly 700,000 Dth/d, including a contract
with Comisión Federal de Electricidad. Phase 2, which is
supported by long-term firm transportation contracts with
Cheniere Energy, Inc. at its Corpus Christi LNG facility
and SK E&S LNG, LLC, that will provide service to the
Freeport LNG export facility and other domestic markets.
5
Asset or project
EPNG South Mainline
Expansion
NGPL Gulf Coast
Southbound Expansion
(second phase)
Description
Expansion project that provides 471,000 Dth/d of firm
transportation capacity with a first phase of system
improvements to deliver volumes to the Sierrita pipeline
and the second phase for incremental deliveries of natural
gas to Arizona and California. Subscribed under long-term
firm transportation contracts.
Expansion project to increase southbound capacity on
NGPL’s Gulf Coast System to serve Corpus Christi
Liquefaction. Subscribed under a long-term firm
transportaton contract.
Activity
Phase 1 placed in service
October 2014, phase 2
expected to be in service
third quarter 2020.
Approx.
Capital
Scope
$138
million
Expected in-service date
June 2021, pending
regulatory approvals.
$114
million
_______
n/a - not applicable
(a) These assets were included in KML and were partially owned by KML’s Restricted Voting Stockholders.
(b) These assets are included in KML and are partially owned by KML’s Restricted Voting Stockholders.
(c) An affiliate of an anchor shipper exercised its option in January 2019 to acquire 20% equity interest in the project, bringing KMTP’s and
BCP’s ownership interest to 40% each. Altus Midstream Company (Altus Midstream) (a gas gathering, processing and transportation
company formed by shipper Apache Corporation) has an option to acquire an equity interest in the project from the initial partners by
September 2019. If Altus Midstream exercises its option, KMTP, BCP and Altus Midstream will each hold a 26.67% ownership interest
in the project. Our share of capital scope is adjusted to reflect the potential exercise of Altus Midstream’s option.
Financings
On January 3, 2019, KML distributed to us our approximately 70% portion of the proceeds from the TMPL Sale of
approximately $1.9 billion (after Canadian tax) which we used to repay our outstanding balance of commercial paper
borrowings, and then in February 2019, to repay $500 million of maturing 9.00% senior notes and $800 million of maturing
2.65% senior notes.
In December 2018 and January 2019, we repurchased approximately 1.5 million and 0.1 million, respectively, of our Class
P shares for approximately $23 million and $2 million, respectively, at an average price of $15.54 per share, as part of our $2
billion common share buy-back program approved by our board of directors in December 2017.
On November 16, 2018, we entered into (i) a new five-year $4.0 billion revolving credit agreement and (ii) a new 364-day
$500 million revolving credit agreement with a syndicate of lenders and replaced the prior KMI credit agreement.
2019 Outlook
We expect to declare dividends of $1.00 per share for 2019, a 25% increase from the 2018 declared dividends of $0.80 per
share, and generate approximately $5.0 billion of DCF in 2019. We also expect to invest $3.1 billion in expansion projects and
contributions to joint ventures during 2019. Our discretionary spending will be primarily funded with excess, internally
generated cash flow, with no need to access equity markets during 2019.
We are unable to provide budgeted net income attributable to common stockholders (the GAAP financial measure most
directly comparable to DCF) due to the impracticality of predicting certain amounts required by GAAP, such as unrealized
gains and losses on derivatives marked to market, and potential changes in estimates for certain contingent liabilities. See Item
7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—Non-
GAAP Financial Measures.”
Our expectations for 2019 assume average annual prices for WTI crude oil and Henry Hub natural gas of $60.00 per barrel
and $3.15 per MMBtu, respectively, consistent with forward pricing during our 2019 budget process. The vast majority of
revenue we generate is supported by multi-year fee-based customer arrangements and therefore is not directly exposed to
commodity prices. The primary area where we have direct commodity price sensitivity is in our CO2 segment, in which we
hedge the majority of the next 12 months of oil and NGL production to minimize this sensitivity. For 2019, we estimate that
every $1 change in the average WTI crude oil price per barrel from our budget of $60.00 per barrel would impact our budgeted
DCF by approximately $8 million and each $0.10 per MMBtu change in the average price of natural gas from our budget of
$3.15 per MMBtu would impact budgeted DCF by approximately $1 million.
In addition, our expectations for 2019 discussed above involve risks, uncertainties and assumptions, and are not guarantees
of performance. Many of the factors that will determine these expectations are beyond our ability to control or predict, and
6
because of these uncertainties, it is advisable not to put undue reliance on any forward-looking statement. Please read our Item
1A “Risk Factors” below for more information. Furthermore, we plan to provide updates to our 2019 expectations when we
believe previously disclosed expectations no longer have a reasonable basis.
(b) Financial Information about Segments
For financial information on our reportable business segments, see Note 17 “Reportable Segments” to our consolidated
financial statements.
(c) Narrative Description of Business
Business Strategy
Our business strategy is to:
•
•
•
focus on stable, fee-based energy transportation and storage assets that are central to the energy infrastructure of
growing markets within North America;
increase utilization of our existing assets while controlling costs, operating safely, and employing environmentally
sound operating practices;
leverage economies of scale from incremental acquisitions and expansions of assets that fit within our strategy and are
accretive to cash flow; and
• maintain a strong balance sheet and return value to our stockholders.
It is our intention to carry out the above business strategy, modified as necessary to reflect changing economic conditions
and other circumstances. However, as discussed under Item 1A. “Risk Factors” below, there are factors that could affect our
ability to carry out our strategy or affect its level of success even if carried out.
We regularly consider and enter into discussions regarding potential acquisitions, and full and partial divestitures, and we
are currently contemplating potential transactions. Any such transaction would be subject to negotiation of mutually agreeable
terms and conditions, and, as applicable, receipt of fairness opinions, and approval of our board of directors. While there are
currently no unannounced purchase or sale agreements for the acquisition or sale of any material business or assets, such
transactions can be effected quickly, may occur at any time and may be significant in size relative to our existing assets or
operations.
Business Segments
Our business segments and their primary activities and sources of revenues are as follows:
• Natural Gas Pipelines—the ownership and operation of (i) major interstate and intrastate natural gas pipeline and
•
storage systems; (ii) natural gas and crude oil gathering systems and natural gas processing and treating facilities; (iii)
NGL fractionation facilities and transportation systems; and (iv) LNG facilities;
Products Pipelines—the ownership and operation of refined petroleum products, NGL and crude oil and condensate
pipelines that primarily deliver, among other products, gasoline, diesel and jet fuel, propane, ethane, crude oil and
condensate to various markets, plus the ownership and/or operation of associated product terminals and petroleum
pipeline transmix facilities;
• Terminals—the ownership and/or operation of (i) liquids and bulk terminal facilities located throughout the U.S. and
portions of Canada that transload and store refined petroleum products, crude oil, ethanol and chemicals, and bulk
products, including petroleum coke, metals and ores; and (ii) Jones Act tankers;
• CO2—(i) the production, transportation and marketing of CO2 to oil fields that use CO2 as a flooding medium to
increase recovery and production of crude oil from mature oil fields; (ii) ownership interests in and/or operation of oil
fields and gas processing plants in West Texas; and (iii) the ownership and operation of a crude oil pipeline system in
West Texas; and
• Kinder Morgan Canada (prior to August 31, 2018)—the ownership and operation of the Trans Mountain pipeline
system that transports crude oil and refined petroleum products from Edmonton, Alberta, Canada to marketing
terminals and refineries in British Columbia, Canada and the state of Washington. As a result of the TMPL Sale, this
segment does not have results of operations on a prospective basis.
7
Natural Gas Pipelines
Our Natural Gas Pipelines business segment includes interstate and intrastate pipelines and our LNG terminals, and
includes both FERC regulated and non-FERC regulated assets.
Our primary businesses in this segment consist of natural gas transportation, storage, sales, gathering, processing and
treating, and various LNG services. Within this segment are: (i) approximately 46,000 miles of wholly owned natural gas
pipelines and (ii) our equity interests in entities that have approximately 26,000 miles of natural gas pipelines, along with
associated storage and supply lines for these transportation networks, which are strategically located throughout the North
American natural gas pipeline grid. Our transportation network provides access to the major natural gas supply areas and
consumers in the western U.S., Louisiana, Texas, the Midwest, Northeast, Rocky Mountain, Midwest and Southeastern regions.
Our LNG terminals also serve natural gas market areas in the southeast. The following tables summarize our significant
Natural Gas Pipelines business segment assets, as of December 31, 2018. The Design Capacity represents transmission,
gathering or liquefaction capacity, depending on the nature of the asset.
Asset (KMI
ownership shown if
not 100%)
Natural Gas Pipelines
Miles
of
Pipeline
Design
(Bcf/d)
Capacity
TGP
11,775
12.10
EPNG/Mojave
pipeline system
NGPL (50%)
SNG (50%)
Florida Gas
Transmission
(Citrus) (50%)
CIG
WIC
Ruby (50%)(a)
MEP (50%)
CPGPL
TransColorado Gas
WYCO (50%)
Elba Express
FEP (50%)
KMLP
Sierrita Gas Pipeline
LLC (35%)
Young Gas Storage
(48%)
Keystone Gas
Storage
10,660
5.65
9,100
6,950
7.60
4.32
5,350
3.90
4,280
850
680
510
410
310
224
200
185
135
60
17
15
5.15
3.83
1.53
1.80
1.20
0.80
1.20
1.06
2.00
2.95
0.20
—
—
Storage
(Bcf)
[Processing
(Bcf/d)]
Capacity
Supply and Market Region
Marcellus, Utica, Gulf Coast, Haynesville, and Eagle Ford shale
supply basins; Northeast, Southeast U.S., Gulf Coast and U.S.-
Mexico border
Northern New Mexico, Texas, Oklahoma, to California, connects
to San Juan, Permian and Anadarko basins
Chicago and other Midwest markets and all central U.S. supply
basins; north to south for LNG and to U.S.-Mexico border
Louisiana, Mississippi, Alabama, Florida, Georgia, South Carolina
and Tennessee; basins in Texas, Louisiana, Mississippi and
Alabama
Texas to Florida; basins along Louisiana and Texas Gulf Coast,
Mobile Bay and offshore Gulf of Mexico
Colorado and Wyoming; Rocky Mountains and the Anadarko Basin
Wyoming, Colorado and Utah; Overthrust, Piceance, Uinta,
Powder River and Green River Basins
Wyoming to Oregon with interconnects supplying California and
the Pacific Northwest; Rocky Mountain basins
Oklahoma and north Texas supply basins to interconnects with
deliveries to interconnects with Transco, Columbia Gulf and
various other pipelines
Colorado and Kansas, natural gas basins in the Central Rocky
Mountain area
Colorado and New Mexico; connects to San Juan, Paradox and
Piceance basins
Northeast Colorado; interconnects with CIG, WIC, Rockies
Express Pipeline, Young Gas Storage and PSCo’s pipeline system
Georgia; connects to SNG (Georgia), Transco (Georgia/South
Carolina), SLNG (Georgia) and Dominion Energy Carolina Gas
Transmission (Georgia)
Arkansas to Mississippi; connects to NGPL, Trunkline Gas
Company, Texas Gas Transmission and ANR Pipeline Company
Columbia Gulf, ANR Pipeline Company and various other pipeline
interconnects; Cheniere Sabine Pass LNG and industrial markets
Near Tucson, Arizona, to the U.S.-Mexico border near Sasabe,
Arizona; connects to EPNG and via an international border
crossing with a third-party natural gas pipeline in Mexico
Morgan County, Colorado, capacity is committed to CIG and
Colorado Springs Utilities
Located in the Permian Basin and near the WAHA natural gas
trading hub in West Texas
76
44
288
66
—
38
—
—
—
—
—
7
—
—
—
—
5.8
6.4
8
Midstream Natural Gas Assets
KM Texas and Tejas
5,640
7.00
Asset (KMI
ownership shown if
not 100%)
Gulf LNG Holdings
(50%)
Bear Creek Storage
(75%)
SLNG
ELC (51%)
pipelines
Mier-Monterrey
pipeline
KM North Texas
pipeline
Oklahoma
Oklahoma
System
Cedar Cove
(70%)
South Texas
South Texas
System
Webb/Duval gas
gathering
system (63%)
EagleHawk (25%)
KM Altamont
Red Cedar (49%)
Rocky Mountain
Fort Union
(37%)
Bighorn (51%)
KinderHawk
North Texas
Camino Real
KM Treating
Hiland - Williston
Miles
of
Pipeline
5
Design
(Bcf/d)
Capacity
1.50
Storage
(Bcf)
[Processing
(Bcf/d)]
Capacity
6.6
—
—
—
—
1.76
0.35
90
80
0.65
0.33
59.2
11.5
—
134
[0.51]
—
—
Supply and Market Region
Near Pascagoula, Mississippi; connects to four interstate pipelines
and a natural gas processing plant
Located in Louisiana; provides storage capacity to SNG and TGP
Georgia; connects to Elba Express, SNG and Dominion Energy
Carolina Gas Transmission
Georgia; expect phased in-service Q1 2019 through Q4 2019
Texas Gulf Coast
Starr County, Texas to Monterrey, Mexico; connect to CENEGAS
national system and multiple power plants in Monterrey
Interconnect from NGPL; connects to 1,750-megawatt Forney,
Texas, power plant and a 1,000-megawatt Paris, Texas, power plant
4,075
0.75
[0.14]
Hunton Dewatering, Woodford Shale, Anadarko Basin and
Mississippi Lime, Arkoma Basin
115
0.03
—
Oklahoma STACK, capacity excludes third-party offloads
1,300
1.93
[1.02]
Eagle Ford shale, Woodbine and Eaglebine formations
145
0.15
—
South Texas
530
1,370
900
1.20
0.08
0.55
—
[0.08]
—
South Texas, Eagle Ford shale formation
Utah, Uinta Basin
La Plata County, Colorado, Ignacio Blanco Field
310
1.25
—
Powder River Basin (Wyoming)
290
520
550
70
—
2,030
0.60
2.35
0.14
0.15
—
0.37
—
—
[0.10]
—
—
[0.20]
Powder River Basin (Wyoming)
Northwest Louisiana, Haynesville and Bossier shale formations
North Barnett Shale Combo
South Texas, Eagle Ford shale formation
Odessa, Texas, other locations in Tyler and Victoria, Texas
Bakken/Three Forks shale formations (North Dakota/Montana)
Midstream Liquids/Oil/Condensate Pipelines
Liberty Pipeline
(50%)
South Texas NGL
Pipelines
Camino Real -
Condensate(b)
Hiland - Williston -
Oil(b)
EagleHawk -
Condensate
(25%)
(MBbl/d)
140
87
(MBbl)
—
340
115
70
1,587
400
110
282
220
—
60
—
60
Y-grade pipeline from Houston Central complex to the Texas Gulf
Coast
Ethane and propane pipelines from Houston Central complex to the
Texas Gulf Coast
South Texas, Eagle Ford shale formation
Bakken/Three Forks shale formations (North Dakota/Montana)
South Texas, Eagle Ford shale formation
_______
(a) We operate Ruby and own the common interest in Ruby. Pembina Pipeline Corporation (Pembina) owns the remaining interest in Ruby
in the form of a convertible preferred interest and has 50% voting rights. If Pembina converted its preferred interest into common
interest, we and Pembina would each own a 50% common interest in Ruby.
9
(b) Effective January 1, 2019, these assets were transferred from the Natural Gas Pipelines business segment to the Products Pipelines
business segment.
Competition
The market for supply of natural gas is highly competitive, and new pipelines, storage facilities, treating facilities, and
facilities for related services are currently being built to serve the growing demand for natural gas in each of the markets served
by the pipelines in our Natural Gas Pipelines business segment. Our operations compete with interstate and intrastate pipelines,
and their shippers, for connections to new markets and supplies and for transportation, processing and treating services. We
believe the principal elements of competition in our various markets are location, rates, terms of service and flexibility and
reliability of service. From time to time, other projects are proposed that would compete with us. We do not know whether or
when any such projects would be built, or the extent of their impact on our operations or profitability.
Shippers on our natural gas pipelines compete with other forms of energy available to their natural gas customers and end
users, including electricity, coal, propane, fuel oils and renewables such as wind and solar. Several factors influence the
demand for natural gas, including price changes, the availability of natural gas and other forms of energy, the level of business
activity, conservation, legislation and governmental regulations, the ability to convert to alternative fuels and weather.
Products Pipelines
Our Products Pipelines business segment consists of our refined petroleum products, crude oil and condensate, and NGL
pipelines and associated terminals, Southeast terminals, our condensate processing facility and our transmix processing
facilities. The following summarizes our significant Products Pipelines business segment assets we own and operate as of
December 31, 2018:
Asset (KMI ownership shown if
not 100%)
Plantation pipeline (51%)
West Coast Products Pipelines(b)
Miles of
Pipeline
3,182
Pacific (SFPP)
Calnev
West Coast Terminals
Cochin pipeline(c)
Utopia pipeline (50%)(c)
KM Crude & Condensate pipeline
Double H Pipeline
Central Florida pipeline
Double Eagle pipeline (50%)
Cypress pipeline (50%)(c)
Southeast Terminals(d)
KM Condensate Processing
Facility
Transmix Operations
2,845
566
64
1,525
270
264
512
206
204
104
—
—
—
Number of
Terminals
(a) or
locations
—
Terminal
Capacity
(MMBbl)
—
Supply and Market Region
Louisiana to Washington D.C.
13
2
7
4
—
5
2
2
32
1
5
—
—
15.1
Six western states
2.0 Colton, CA to Las Vegas, NV; Mojave region
10.0
Seattle, Portland, San Francisco and Los Angeles
areas, Vancouver Jet Fuel pipeline
1.1 Three provinces in Canada and seven states in the U.S.
— Harrison County, Ohio extending to Windsor, Ontario
2.6 Eagle Ford shale field in South Texas (Dewitt, Karnes,
and Gonzales Counties) to the Houston ship channel
refining complex
Bakken shale in Montana and North Dakota to
Guernsey, Wyoming
—
2.5 Tampa to Orlando
0.6 Live Oak County, Texas; Corpus Christi, Texas;
Karnes County, Texas; and LaSalle County
Mont Belvieu, Texas to Lake Charles, Louisiana
—
10.8
From Mississippi through Virginia, including
Tennessee
2.0 Houston Ship Channel, Galena Park, Texas
0.6 Colton, California; Richmond, Virginia; Dorsey
Junction, Maryland; St. Louis, Missouri; and
Greensboro, North Carolina
_______
(a) The terminals provide services including short-term product storage, truck loading, vapor handling, additive injection, dye injection and
ethanol blending.
(b) Our West Coast Products Pipelines assets include interstate common carrier pipelines rate-regulated by the FERC, intrastate pipelines in
the state of California rate-regulated by the CPUC, and certain non rate-regulated operations and terminal facilities.
10
(c) Effective January 1, 2019, these assets were transferred from the Products Pipelines business segment to the Natural Gas Pipelines
business segment.
(d) Effective January 1, 2019, a small number of terminals were transferred between the Products Pipelines and Terminals business
segments.
Competition
Our Products Pipelines’ pipeline operations compete against proprietary pipelines owned and operated by major oil
companies, other independent products pipelines, trucking and marine transportation firms (for short-haul movements of
products) and railcars. Our Products Pipelines’ terminal operations compete with proprietary terminals owned and operated by
major oil companies and other independent terminal operators, and our transmix operations compete with refineries owned by
major oil companies and independent transmix facilities.
Terminals
Our Terminals business segment includes the operations of our refined petroleum product, crude oil, chemical, ethanol and
other liquid terminal facilities (other than those included in the Products Pipelines business segment) and all of our petroleum
coke, metal and ores facilities. Our terminals are located throughout the U.S. and in portions of Canada. We believe the
location of our facilities and our ability to provide flexibility to customers help attract new and retain existing customers at our
terminals and provide expansion opportunities. We often classify our terminal operations based on the handling of either
liquids or dry-bulk material products. In addition, Terminals’ marine operations include Jones Act-qualified product tankers
that provide marine transportation of crude oil, condensate and refined petroleum products between U.S. ports. The following
summarizes our Terminals business segment assets, as of December 31, 2018:
Liquids terminals(a)
Bulk terminals
Jones Act tankers
Number
52
34
16
Capacity
(MMBbl)
89.6
—
5.3
_______
(a) Effective January 1, 2019, a small number of terminals were transferred between the Terminals and Products Pipelines business
segments.
Competition
We are one of the largest independent operators of liquids terminals in North America, based on barrels of liquids
terminaling capacity. Our liquids terminals compete with other publicly or privately held independent liquids terminals, and
terminals owned by oil, chemical, pipeline, and refining companies. Our bulk terminals compete with numerous independent
terminal operators, terminals owned by producers and distributors of bulk commodities, stevedoring companies and other
industrial companies opting not to outsource terminaling services. In some locations, competitors are smaller, independent
operators with lower cost structures. Our Jones Act-qualified product tankers compete with other Jones Act qualified vessel
fleets.
CO2
Our CO2 business segment produces, transports, and markets CO2 for use in enhanced oil recovery projects as a flooding
medium for recovering crude oil from mature oil fields. Our CO2 pipelines and related assets allow us to market a complete
package of CO2 supply and transportation services to our customers. We also hold ownership interests in several oil-producing
fields and own a crude oil pipeline, all located in the Permian Basin region of West Texas.
11
Sales and Transportation Activities
Our principal market for CO2 is for injection into mature oil fields in the Permian Basin. Our ownership of CO2 resources
as of December 31, 2018 includes:
Ownership
Interest %
45
87
11
Compression
Capacity (Bcf/d)
Location
1.5 Colorado
0.2 Colorado
0.3 New Mexico
McElmo Dome unit
Doe Canyon Deep unit
Bravo Dome unit(a)
_______
(a) We do not operate this unit.
CO2 Business Segment Pipelines
The principal market for transportation on our CO2 pipelines is to customers, including ourselves, using CO2 for enhanced
recovery operations in mature oil fields in the Permian Basin, where industry demand is expected to remain stable for the next
several years. The tariffs charged on (i) the Wink crude oil pipeline system are regulated by both the FERC and the Texas Railroad
Commission; (ii) the Pecos Carbon Dioxide Pipeline are regulated by the Texas Railroad Commission; and (iii) the Cortez pipeline
are based on a consent decree. Our other CO2 pipelines are not regulated.
Our ownership of CO2 and crude oil pipelines as of December 31, 2018 includes:
Asset (KMI ownership shown if not
100%)
Miles of
Pipeline
Transport
Capacity
(Bcf/d)
Supply and Market Region
CO2 pipelines
Cortez pipeline (53%)
Central Basin pipeline
Bravo pipeline (13%)(a)
Canyon Reef Carriers pipeline (98%)
Centerline CO2 pipeline
Eastern Shelf CO2 pipeline
Pecos pipeline (95%)
Crude oil pipeline
Wink pipeline
_______
(a) We do not operate Bravo pipeline.
569
334
218
163
113
98
25
1.5 McElmo Dome and Doe Canyon source fields to the
Denver City, Texas hub
0.7 Cortez, Bravo, Sheep Mountain, Canyon Reef Carriers, and
Pecos pipelines
0.4 Bravo Dome to the Denver City, Texas hub
0.3 McCamey, Texas, to the SACROC, Sharon Ridge, Cogdell
and Reinecke units
0.3
0.1
between Denver City, Texas and Snyder, Texas
between Snyder, Texas and Knox City, Texas
0.1 McCamey, Texas, to Iraan, Texas, delivers to the Yates unit
(Bbls/d)
457
145,000 West Texas to Western Refining’s refinery in El Paso, Texas
12
Oil and Gas Producing Activities
Oil Producing Interests
Our ownership interests in oil-producing fields located in the Permian Basin of West Texas include the following:
SACROC
Yates
Goldsmith Landreth San Andres
Katz Strawn
Sharon Ridge
Tall Cotton
MidCross
Reinecke
Working
Interest %
97
KMI Gross
Developed
Acres
49,156
50
99
99
14
100
13
70
9,576
6,166
7,194
2,619
641
320
3,793
Our oil and gas producing activities are not significant, and therefore, we do not include the supplemental information on oil
and gas producing activities under Accounting Standards Codification Topic 932, Extractive Activities - Oil and Gas.
Gas and Gasoline Plant Interests
Operated gas plants in the Permian Basin of West Texas:
Snyder gasoline plant(a)
Diamond M gas plant
North Snyder plant
Ownership
Interest %
Source
22 The SACROC unit and neighboring CO2 projects, specifically the Sharon Ridge and
Cogdell units
51
100
Snyder gasoline plant
Snyder gasoline plant
_______
(a) This is a working interest, in addition, we have a 28% net profits interest.
Competition
Our primary competitors for the sale of CO2 include suppliers that have an ownership interest in McElmo Dome, Bravo
Dome and Sheep Mountain CO2 resources. Our ownership interests in the Central Basin, Cortez and Bravo pipelines are in
direct competition with other CO2 pipelines. We also compete with other interest owners in the McElmo Dome unit and the
Bravo Dome unit for transportation of CO2 to the Denver City, Texas market area.
Major Customers
Our revenue is derived from a wide customer base. For each of the years ended December 31, 2018, 2017 and 2016, no
revenues from transactions with a single external customer accounted for 10% or more of our total consolidated revenues. We
do not believe that a loss of revenues from any single customer would have a material adverse effect on our business, financial
position, results of operations or cash flows.
Our Texas Intrastate Natural Gas Pipeline operations (includes the operations of Kinder Morgan Tejas Pipeline LLC,
Kinder Morgan Border Pipeline LLC, Kinder Morgan Texas Pipeline LLC, Kinder Morgan North Texas Pipeline LLC and the
Mier-Monterrey Mexico pipeline system) buys and sells significant volumes of natural gas within the state of Texas, and, to a
far lesser extent, the CO2 business segment also sells natural gas. Combined, total revenues from the sales of natural gas from
the Natural Gas Pipelines and CO2 business segments in 2018, 2017 and 2016 accounted for 23%, 22% and 19%, respectively,
of our total consolidated revenues. To the extent possible, we attempt to balance the pricing and timing of our natural gas
purchases to our natural gas sales, and these contracts are often settled in terms of an index price for both purchases and sales.
13
Regulation
Interstate Common Carrier Refined Petroleum Products and Oil Pipeline Rate Regulation - U.S. Operations
Some of our U.S. refined petroleum products and crude oil gathering and transmission pipelines are interstate common
carrier pipelines, subject to regulation by the FERC under the Interstate Commerce Act, or ICA. The ICA requires that we
maintain our tariffs on file with the FERC. Those tariffs set forth the rates we charge for providing gathering or transportation
services on our interstate common carrier pipelines as well as the rules and regulations governing these services. The ICA
requires, among other things, that such rates on interstate common carrier pipelines be “just and reasonable” and
nondiscriminatory. The ICA permits interested persons to challenge newly proposed or changed rates and authorizes the FERC
to suspend the effectiveness of such rates for a period of up to seven months and to investigate such rates. If, upon completion
of an investigation, the FERC finds that the new or changed rate is unlawful, it is authorized to require the carrier to refund the
revenues in excess of the prior tariff collected during the pendency of the investigation. The FERC also may investigate, upon
complaint or on its own motion, rates that are already in effect and may order a carrier to change its rates prospectively. Upon
an appropriate showing, a shipper may obtain reparations for damages sustained during the two years prior to the filing of a
complaint.
The Energy Policy Act of 1992 deemed petroleum products pipeline tariff rates that were in effect for the 365-day period
ending on the date of enactment or that were in effect on the 365th day preceding enactment and had not been subject to
complaint, protest or investigation during the 365-day period to be just and reasonable or “grandfathered” under the ICA. The
Energy Policy Act also limited the circumstances under which a complaint can be made against such grandfathered rates.
Certain rates on our Pacific operations’ pipeline system were subject to protest during the 365-day period established by the
Energy Policy Act. Accordingly, certain of the Pacific pipelines’ rates have been, and continue to be, the subject of complaints
with the FERC, as is more fully described in Note 18 “Litigation, Environmental and Other Contingencies” to our consolidated
financial statements.
Petroleum products and crude oil pipelines may change their rates within prescribed ceiling levels that are tied to an
inflation index. Shippers may protest rate increases made within the ceiling levels, but such protests must show that the portion
of the rate increase resulting from application of the index is substantially in excess of the pipeline’s increase in costs from the
previous year. A petroleum products or crude oil pipeline must, as a general rule, utilize the indexing methodology to change
its rates. Cost-of-service ratemaking, market-based rates and settlement rates are alternatives to the indexing approach and may
be used in certain specified circumstances to change rates.
Common Carrier Pipeline Rate Regulation - Canadian Operations
The Canadian portion of our condensate Cochin pipeline system is under the regulatory jurisdiction of the NEB. The
National Energy Board Act gives the NEB power to authorize pipeline construction and to establish tolls and conditions of
service.
Interstate Natural Gas Transportation and Storage Regulation
As an owner and operator of natural gas companies subject to the Natural Gas Act of 1938, we are required to provide
service to shippers on our interstate natural gas pipelines and storage facilities at regulated rates that have been determined by
the FERC to be just and reasonable. Recourse rates and general terms and conditions for service are set forth in posted tariffs
approved by the FERC for each pipeline (including storage facilities or companies as used herein). Generally, recourse rates
are based on our cost of service, including recovery of and a return on our investment. Posted tariff rates are deemed just and
reasonable and cannot be changed without FERC authorization following an evidentiary hearing or settlement. The FERC can
initiate proceedings, on its own initiative or in response to a shipper complaint, that could result in a rate change or confirm
existing rates.
Posted tariff rates set the general range of maximum and minimum rates we charge shippers on our interstate natural gas
pipelines. Within that range, each pipeline is permitted to charge discounted rates, so long as such discounts are offered to all
similarly situated shippers and granted without undue discrimination. Apart from discounted rates, upon mutual agreement, the
pipeline is permitted to charge negotiated rates that are not bound by and are irrespective of changes that may occur to the
range of tariff-based maximum and minimum rate levels. Negotiated rates provide certainty to the pipeline and the shipper of
agreed-upon rates during the term of the transportation agreement, regardless of changes to the posted tariff rates. The actual
negotiated rate agreement or a summary of such agreement must be posted as part of the pipelines’ tariffs. While pipelines and
their shippers may agree to a variety of negotiated rate structures depending on the shipper and circumstance, pipelines
14
generally must use for all shippers the form of service agreement that is contained within their FERC-approved tariff. Any
deviation from the pro forma service agreements must be filed with the FERC and only certain types of deviations in the terms
and conditions of service are acceptable to the FERC.
The FERC regulates the rates, terms and conditions of service, construction and abandonment of facilities by companies
performing interstate natural gas transportation services, including storage services, under the Natural Gas Act of 1938. To a
lesser extent, the FERC regulates interstate transportation rates, terms and conditions of service under the Natural Gas Policy
Act of 1978. Beginning in the mid-1980’s, the FERC initiated a number of regulatory changes intended to ensure that interstate
natural gas pipelines operated on a not unduly discriminatory basis and to create a more competitive and transparent
environment in the natural gas marketplace. Among the most important of these changes were:
• Order No. 436 (1985) which required open-access, nondiscriminatory transportation of natural gas;
• Order No. 497 (1988) which set forth new standards and guidelines imposing certain constraints on the interaction
between interstate natural gas pipelines and their marketing affiliates and imposing certain disclosure requirements
regarding that interaction;
• Order Nos. 587, et seq., Order No. 809 (1996-2015) which adopt regulations to standardize the business practices and
communication methodologies of interstate natural gas pipelines to create a more integrated and efficient pipeline grid
and wherein the FERC has incorporated by reference in its regulations standards for interstate natural gas pipeline
business practices and electronic communications that were developed and adopted by the North American Energy
Standards Board (NAESB). Interstate natural gas pipelines are required to incorporate by reference or verbatim in
their respective tariffs the applicable version of the NAESB standards;
• Order No. 636 (1992) which required interstate natural gas pipelines that perform open-access transportation under
blanket certificates to “unbundle” or separate their traditional merchant sales services from their transportation and
storage services and to provide comparable transportation and storage services with respect to all natural gas supplies.
Natural gas pipelines must now separately state the applicable rates for each unbundled service they provide (i.e., for
transportation services and storage services for natural gas);
• Order No. 637 (2000) which revised, among other things, FERC regulations relating to scheduling procedures,
capacity segmentation, and pipeline penalties in order to improve the competitiveness and efficiency of the interstate
pipeline grid; and
• Order No. 717 (2008) amending the Standards of Conduct for Transmission Providers (the Standards of Conduct or
the Standards) to make them clearer and to refocus the marketing affiliate rules on the areas where there is the greatest
potential for abuse.
In addition to regulatory changes initiated by the FERC, the U.S. Congress passed the Energy Policy Act of 2005. Among
other things, the Energy Policy Act amended the Natural Gas Act to: (i) prohibit market manipulation by any entity; (ii) direct
the FERC to facilitate market transparency in the market for sale or transportation of physical natural gas in interstate
commerce; and (iii) significantly increase the penalties for violations of the Natural Gas Act, the Natural Gas Policy Act of
1978, or FERC rules, regulations or orders thereunder.
CPUC Rate Regulation
The intrastate common carrier operations of our Pacific operations’ pipelines in California are subject to regulation by the
CPUC under a “depreciated book plant” methodology, which is based on an original cost measure of investment. Intrastate
tariffs filed by us with the CPUC have been established on the basis of revenues, expenses and investments allocated as
applicable to the California intrastate portion of the Pacific operations’ business. Tariff rates with respect to intrastate pipeline
service in California are subject to challenge by complaint by interested parties or by independent action of the CPUC. A
variety of factors can affect the rates of return permitted by the CPUC, and certain other issues similar to those which have
arisen with respect to our FERC regulated rates also could arise with respect to its intrastate rates. The intrastate rates for
movements in California on our SFPP and Calnev systems have been, and may in the future be, subject to complaints before
the CPUC, as is more fully described in Note 18 “Litigation, Environmental and Other Contingencies” to our consolidated
financial statements.
Railroad Commission of Texas (RCT) Rate Regulation
The intrastate operations of our crude oil and liquids pipelines and natural gas pipelines and storage facilities in Texas are
subject to regulation with respect to such intrastate transportation by the RCT. The RCT has the authority to regulate our rates,
though it generally has not investigated the rates or practices of our intrastate pipelines in the absence of shipper complaints.
15
Mexico - Energy Regulatory Commission
The Mier-Monterrey Pipeline has a natural gas transportation permit granted by the Energy Regulatory Commission of
Mexico (the Commission) that defines the conditions for the pipeline to carry out activity and provide natural gas transportation
service. This permit expires in 2026.
This permit establishes certain restrictive conditions, including without limitation: (i) compliance with the general
conditions for the provision of natural gas transportation service; (ii) compliance with certain safety measures, contingency
plans, maintenance plans and the official standards of Mexico regarding safety; (iii) compliance with the technical and
economic specifications of the natural gas transportation system authorized by the Commission; (iv) compliance with certain
technical studies established by the Commission; and (v) compliance with a minimum contributed capital not entitled to
withdrawal of at least the equivalent of 10% of the investment proposed in the project.
Mexico - National Agency for Industrial Safety and Environmental Protection (ASEA)
ASEA regulates environmental compliance and industrial and operational safety. The Mier-Monterrey Pipeline must
satisfy and maintain ASEA’s requirements, including compliance with certain safety measures, contingency plans, maintenance
plans and the official standards of Mexico regarding safety, including a Safety Administration Program.
Safety Regulation
We are also subject to safety regulations issued by PHMSA, including those requiring us to develop and maintain pipeline
Integrity Management programs to evaluate areas along our pipelines and take additional measures to protect pipeline segments
located in what are referred to as High Consequence Areas, or HCAs, where a leak or rupture could potentially do the most
harm.
The ultimate costs of compliance with pipeline Integrity Management rules are difficult to predict. Changes such as
advances of in-line inspection tools, identification of additional integrity threats and changes to the amount of pipe determined
to be located in HCAs can have a significant impact on costs to perform integrity testing and repairs. We will continue our
pipeline integrity testing programs to assess and maintain the integrity of our existing and future pipelines as required by
PHMSA regulations. These tests could result in significant and unanticipated capital and operating expenditures for repairs or
upgrades deemed necessary to continue the safe and reliable operation of our pipelines.
The Protecting our Infrastructure of Pipelines and Enhancing Safety Act of 2016 or “PIPES Act of 2016” requires
PHMSA, among other regulators, to set minimum safety standards for underground natural gas storage facilities and allows
states to set more stringent standards for intrastate pipelines. In compliance with the PIPES Act of 2016, we have implemented
procedures for underground natural gas storage facilities.
The Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011, which was signed into law in 2012, increased
penalties for violations of safety laws and rules and may result in the imposition of more stringent regulations in the future. In
2012, PHMSA issued an Advisory Bulletin which, among other things, advises pipeline operators that if they are relying on
design, construction, inspection, testing, or other data to determine maximum pressures at which their pipelines should operate,
the records of that data must be traceable, verifiable and complete. Locating such records and, in the absence of any such
records, verifying maximum pressures through physical testing or modifying or replacing facilities to meet the Advisory
Bulletin requirements, could significantly increase our costs. Additionally, failure to locate such records to verify maximum
pressures could result in reductions of allowable operating pressures, which would reduce available capacity on our pipelines.
There can be no assurance as to the amount or timing of future expenditures for pipeline Integrity Management regulation, and
actual expenditures may be different from the amounts we currently anticipate. Regulations, changes to regulations or an
increase in public expectations for pipeline safety may require additional reporting, the replacement of some of our pipeline
segments, addition of monitoring equipment and more frequent inspection or testing of our pipeline facilities. Repair,
remediation, and preventative or mitigating actions may require significant capital and operating expenditures.
From time to time, our pipelines or facilities may experience leaks and ruptures. These leaks and ruptures may cause
explosions, fire, damage to the environment, damage to property and/or personal injury or death. In connection with these
incidents, we may be sued for damages. Depending upon the facts and circumstances of a particular incident, state and federal
regulatory authorities may seek civil and/or criminal fines and penalties.
We are also subject to the requirements of the Occupational Safety and Health Administration (OSHA) and other federal
and state agencies that address employee health and safety. In general, we believe current expenditures are fulfilling the OSHA
16
requirements and protecting the health and safety of our employees. Based on new regulatory developments, we may increase
expenditures in the future to comply with higher industry and regulatory safety standards. However, such increases in our
expenditures, and the extent to which they might be offset, cannot be estimated at this time.
State, Provincial and Local Regulation
Certain of our activities are subject to various state or provincial and local laws and regulations, as well as orders of
regulatory bodies, governing a wide variety of matters, including marketing, production, pricing, pollution, protection of the
environment, and human health and safety.
Marine Operations
The operation of tankers and marine equipment create maritime obligations involving property, personnel and cargo under
General Maritime Law. These obligations create a variety of risks including, among other things, the risk of collision, which
may result in claims for personal injury, cargo, contract, pollution, third-party claims and property damages to vessels and
facilities.
We are subject to the Jones Act and other federal laws that restrict maritime transportation (between U.S. departure and
destination points) to vessels built and registered in the U.S. and owned and crewed by U.S. citizens. As a result, we monitor
the foreign ownership of our common stock and under certain circumstances consistent with our certificate of incorporation, we
have the right to redeem shares of our common stock owned by non-U.S. citizens. If we do not comply with such requirements,
we would be prohibited from operating our vessels in U.S. coastwise trade, and under certain circumstances we would be
deemed to have undertaken an unapproved foreign transfer, resulting in severe penalties, including permanent loss of U.S.
coastwise trading rights for our vessels, fines or forfeiture of the vessels. Furthermore, from time to time, legislation has been
introduced unsuccessfully in Congress to amend the Jones Act to ease or remove the requirement that vessels operating
between U.S. ports be built and registered in the U.S. and owned and crewed by U.S. citizens. If the Jones Act were amended
in such fashion, we could face competition from foreign-flagged vessels.
In addition, the U.S. Coast Guard and the American Bureau of Shipping maintain the most stringent regime of vessel
inspection in the world, which tends to result in higher regulatory compliance costs for U.S.-flag operators than for owners of
vessels registered under foreign flags of convenience. The Jones Act and General Maritime Law also provide damage remedies
for crew members injured in the service of the vessel arising from employer negligence or vessel unseaworthiness.
The Merchant Marine Act of 1936 is a federal law that provides the U.S. Secretary of Transportation, upon proclamation
by the U.S. President of a national emergency or a threat to the national security, the authority to requisition or purchase any
vessel or other watercraft owned by U.S. citizens (including us, provided that we are considered a U.S. citizen for this purpose).
If one of our vessels were purchased or requisitioned by the U.S. government under this law, we would be entitled to be paid
the fair market value of the vessel in the case of a purchase or, in the case of a requisition, the fair market value of charter hire.
However, we would not be entitled to compensation for any consequential damages suffered as a result of such purchase or
requisition.
Environmental Matters
Our business operations are subject to federal, state, provincial and local laws and regulations relating to environmental
protection, pollution and human health and safety in the U.S. and Canada. For example, if an accidental leak, release or spill of
liquid petroleum products, chemicals or other hazardous substances occurs at or from our pipelines, or at or from our storage or
other facilities, we may experience significant operational disruptions, and we may have to pay a significant amount to clean up
the leak, release or spill, pay for government penalties, address natural resource damages, compensate for human exposure or
property damage, install costly pollution control equipment or a combination of these and other measures. Furthermore, new
projects may require approvals and environmental analysis under federal and state or provincial laws, including the National
Environmental Policy Act and the Endangered Species Act. The resulting costs and liabilities could materially and negatively
affect our business, financial condition, results of operations and cash flows. In addition, emission controls required under
federal, state and provincial environmental laws could require significant capital expenditures at our facilities.
Environmental and human health and safety laws and regulations are subject to change. The clear trend in environmental
regulation is to place more restrictions and limitations on activities that may be perceived to affect the environment, wildlife,
natural resources and human health. There can be no assurance as to the amount or timing of future expenditures for
environmental regulation compliance or remediation, and actual future expenditures may be different from the amounts we
currently anticipate. Revised or additional regulations that result in increased compliance costs or additional operating
17
restrictions, particularly if those costs are not fully recoverable from our customers, could have a material adverse effect on our
business, financial position, results of operations and cash flows.
In accordance with GAAP, we accrue liabilities for environmental matters when it is probable that obligations have been
incurred and the amounts can be reasonably estimated. This policy applies to assets or businesses currently owned or
previously disposed. We have accrued liabilities for estimable and probable environmental remediation obligations at various
sites, including multi-party sites where the EPA, or similar state or Canadian agency has identified us as one of the potentially
responsible parties. The involvement of other financially responsible companies at these multi-party sites could increase or
mitigate our actual joint and several liability exposures.
We believe that the ultimate resolution of these environmental matters will not have a material adverse effect on our
business, financial position, results of operations or cash flows. However, it is possible that our ultimate liability with respect
to these environmental matters could exceed the amounts accrued in an amount that could be material to our business, financial
position, results of operations or cash flows in any particular reporting period. We have accrued an environmental reserve in
the amount of $271 million as of December 31, 2018. Our aggregate reserve estimate ranges in value from approximately $271
million to approximately $448 million, and we recorded our liability equal to the low end of the range, as we did not identify
any amounts within the range as a better estimate of the liability. For additional information related to environmental matters,
see Note 18 “Litigation, Environmental and Other Contingencies” to our consolidated financial statements.
Hazardous and Non-Hazardous Waste
We generate both hazardous and non-hazardous wastes that are subject to the requirements of the Federal Resource
Conservation and Recovery Act and comparable state and Canadian federal and provincial statutes. From time to time, the
EPA, as well as other U.S. federal and state regulators and Canadian federal and provincial regulators, consider the adoption of
stricter disposal standards for non hazardous waste. Furthermore, it is possible that some wastes that are currently classified as
non-hazardous, which could include wastes currently generated during our pipeline or liquids or bulk terminal operations or
wastes from oil and gas facilities that are currently exempt as exploration and production waste, may in the future be designated
as hazardous wastes. Hazardous wastes are subject to more rigorous and costly handling and disposal requirements than non-
hazardous wastes. Such changes in the regulations may result in additional capital expenditures or operating expenses for us.
Superfund
The CERCLA or the Superfund law, and analogous state laws, impose joint and several liability, without regard to fault or
the legality of the original conduct, on certain classes of potentially responsible persons for releases of hazardous substances
into the environment. These persons include the owner or operator of a site and companies that disposed or arranged for the
disposal of the hazardous substances found at the site. CERCLA authorizes the EPA and, in some cases, third parties to take
actions in response to threats to public health or the environment and to seek to recover from the responsible classes of persons
the costs they incur, in addition to compensation for natural resource damages, if any. Although petroleum is excluded from
CERCLA’s definition of a hazardous substance, in the course of our ordinary operations, we have and will generate materials
that may fall within the definition of “hazardous substance.” By operation of law, if we are determined to be a potentially
responsible person, we may be responsible under CERCLA for all or part of the costs required to clean up sites at which such
materials are present, in addition to compensation for natural resource damages, if any.
Clean Air Act
Our operations are subject to the Clean Air Act, its implementing regulations, and analogous state and Canadian statutes
and regulations. The EPA regulations under the Clean Air Act contain requirements for the monitoring, reporting, and control
of GHG emissions from stationary sources. For further information, see “—Climate Change” below.
Clean Water Act
Our operations can result in the discharge of pollutants. The Federal Water Pollution Control Act of 1972, as amended,
also known as the Clean Water Act, and analogous state laws impose restrictions and controls regarding the discharge of
pollutants into waters of the U.S. The discharge of pollutants into regulated waters is prohibited, except in accordance with the
terms of a permit issued by applicable federal, state or Canadian authorities. The Oil Pollution Act was enacted in 1990 and
amends provisions of the Clean Water Act pertaining to prevention of and response to oil spills. Spill prevention, control and
countermeasure requirements of the Clean Water Act and some state and Canadian laws require containment and similar
structures to help prevent contamination of navigable waters in the event of an overflow or release of oil.
18
EPA Revisions to Ozone National Ambient Air Quality Standard (NAAQS)
As required by the Clean Air Act, the EPA establishes National Ambient Air Quality Standards (NAAQS) for how much
pollution is permissible, and the states then have to adopt rules so their air quality meets the NAAQS. In October 2015, the
EPA published a rule lowering the ground level ozone NAAQS from 75 ppb to a more stringent 70 ppb standard. This change
triggered a process under which the EPA designated the areas of the country in or out of compliance with the new NAAQS
standard. Now, certain states will have to adopt more stringent air quality regulations to meet the new NAAQS standard.
These new state rules, which are expected in 2020 or 2021, will likely require the installation of more stringent air pollution
controls on newly-installed equipment and possibly require the retrofitting of existing KMI facilities with air pollution controls.
Given the nationwide implications of the new rule, it is expected that it will have financial impacts for each of our business
units.
Climate Change
Studies have suggested that emissions of certain gases, commonly referred to as GHGs, may be contributing to warming of
the Earth’s atmosphere. Methane, a primary component of natural gas, and CO2, which is naturally occurring and also a
byproduct of the burning of natural gas, are examples of GHGs. Various laws and regulations exist or are under development
to regulate the emission of such GHGs, including the EPA programs to report GHG emissions and state actions to develop
statewide or regional programs. The U.S. Congress has in the past considered legislation to reduce emissions of GHGs.
Beginning in December 2009, EPA published several findings and rulemakings under the Clean Air Act requiring the
permitting and reporting of certain GHGs including CO2 and methane. Our facilities are subject to these requirements.
Operational and/or regulatory changes could require additional facilities to comply with GHG emissions reporting and
permitting requirements.
On October 23, 2015, the EPA published as a final rule the Clean Power Plan, which sets interim and final CO2 emission
performance rates for power generating units that are fueled by coal, oil or natural gas. The final rule is the focus of legislative
discussion in the U.S. Congress and litigation in federal court. On February 10, 2016, the U.S. Supreme Court stayed the final
rule, effectively suspending the duty to comply with the rule until certain legal challenges are resolved. In October 2017, the
EPA proposed to repeal the Clean Power Plan. In August 2018, the EPA proposed to replace the Clean Power Plan and
Affordable Clean Energy rule. The ultimate determination of the Clean Power Plan and Affordable Clean Energy rule remains
uncertain. While we do not operate power plants that would be subject to the Clean Power Plan or the Affordable Clean Energy
rule, it remains unclear what effect a final rule, if it comes into force, might have on the anticipated demand for natural gas,
including natural gas that we gather, process, store and transport.
At the state level, more than one-third of the states, either individually or through multi-state regional initiatives, already
have begun implementing legal measures to reduce emissions of GHGs, primarily through the planned development of
emission inventories or regional GHG “cap and trade” programs. Although many of the state-level initiatives have to date been
focused on large sources of GHG emissions, such as electric power plants, it is possible that sources such as our gas-fueled
compressors and processing plants could become subject to related state regulations. Various states are also proposing or have
implemented more strict regulations for GHGs that go beyond the requirements of the EPA. Some of the states have
implemented regulations that require additional monitoring and reporting of methane emissions. Depending on the state
programs pending implementation, we could be required to conduct additional monitoring, do additional emissions reporting
and/or purchase and surrender emission allowances.
Because our operations, including the compressor stations and processing plants, emit various types of GHGs, primarily
methane and CO2, such new legislation or regulation could increase the costs related to operating and maintaining the facilities.
Depending on the particular law, regulation or program, we or our subsidiaries could be required to incur capital expenditures
for installing new monitoring equipment of emission controls on the facilities, acquire and surrender allowances for the GHG
emissions, pay taxes related to the GHG emissions and administer and manage a GHG emissions program. We are not able at
this time to estimate such increased costs; however, as is the case with similarly situated entities in the industry, they could be
significant to us. While we may be able to include some or all of such increased costs in the rates charged by our or our
subsidiaries’ pipelines, recovery of costs in all cases is uncertain and may depend on events beyond their control, including the
outcome of future rate proceedings before the FERC or other regulatory bodies, and the provisions of any final legislation or
other regulations. Any of the foregoing could have an adverse effect on our business, financial position, results of operations
and prospects.
19
Many climate models indicate that global warming is likely to result in rising sea levels, increased intensity of hurricanes
and tropical storms, and increased frequency of extreme precipitation and flooding. We may experience increased insurance
premiums and deductibles, or a decrease in available coverage, for our assets in areas subject to severe weather. These climate-
related changes could damage our physical assets, especially operations located in low-lying areas near coasts and river banks,
and facilities situated in hurricane-prone and rain-susceptible regions. However, the timing, severity and location of these
climate change impacts are not known with certainty and, these impacts are expected to manifest themselves over varying time
horizons.
Because natural gas produces less GHG emissions per unit of energy than competing fossil fuels, cap-and-trade legislation
or EPA regulatory initiatives such as the Clean Power Plan or Affordable Clean Energy rule could stimulate demand for natural
gas by increasing the relative cost of competing fuels such as coal and oil. In addition, we anticipate that GHG regulations will
increase demand for carbon sequestration technologies, such as the techniques we have successfully demonstrated in our
enhanced oil recovery operations within our CO2 business segment. However, these potential positive effects on our markets
may be offset if these same regulations also cause the cost of natural gas to increase relative to competing non-fossil
fuels. Although we currently cannot predict the magnitude and direction of these impacts, GHG regulations could have
material adverse effects on our business, financial position, results of operations or cash flows.
Department of Homeland Security
The Department of Homeland Security, referred to in this report as the DHS, has regulatory authority over security at
certain high-risk chemical facilities. The DHS has promulgated the Chemical Facility Anti-Terrorism Standards and required
all high-risk chemical and industrial facilities, including oil and gas facilities, to comply with the regulatory requirements of
these standards. This process includes completing security vulnerability assessments, developing site security plans, and
implementing protective measures necessary to meet DHS-defined, risk-based performance standards. The DHS has not
provided final notice to all facilities that it determines to be high risk and subject to the rule; therefore, neither the extent to
which our facilities may be subject to coverage by the rules nor the associated costs to comply can currently be determined, but
it is possible that such costs could be substantial.
Other
Employees
We employed 11,012 full-time personnel at December 31, 2018, including approximately 936 full-time hourly personnel at
certain terminals and pipelines covered by collective bargaining agreements that expire between 2019 and 2022. We consider
relations with our employees to be good.
Most of our employees are employed by us and a limited number of our subsidiaries and provide services to one or more of
our business units. The direct costs of compensation, benefits expenses, employer taxes and other employer expenses for these
employees are allocated to our subsidiaries. Our human resources department provides the administrative support necessary to
implement these payroll and benefits services, and the related administrative costs are allocated to our subsidiaries pursuant to
our board-approved expense allocation policy. The effect of these arrangements is that each business unit bears the direct
compensation and employee benefits costs of its assigned or partially assigned employees, as the case may be, while also
bearing its allocable share of administrative costs.
Properties
We believe that we generally have satisfactory title to the properties we own and use in our businesses, subject to liens for
current taxes, liens incident to minor encumbrances, and easements and restrictions, which do not materially detract from the
value of such property, the interests in those properties or the use of such properties in our businesses. Our terminals, storage
facilities, treating and processing plants, regulator and compressor stations, oil and gas wells, offices and related facilities are
located on real property owned or leased by us. In some cases, the real property we lease is on federal, state, provincial or local
government land.
We generally do not own the land on which our pipelines are constructed. Instead, we obtain and maintain rights to
construct and operate the pipelines on other people’s land generally under agreements that are perpetual or provide for renewal
rights. Substantially all of our pipelines are constructed on rights-of-way granted by the apparent record owners of such
property. In many instances, lands over which rights-of-way have been obtained are subject to prior liens that have not been
subordinated to the right-of-way grants. In some cases, not all of the apparent record owners have joined in the right-of-way
grants, but in substantially all such cases, signatures of the owners of a majority of the interests have been obtained. Permits
20
have been obtained from public authorities to cross over or under, or to lay facilities in or along, water courses, county roads,
municipal streets and state highways, and in some instances, such permits are revocable at the election of the grantor, or, the
pipeline may be required to move its facilities at its own expense. Permits also have been obtained from railroad companies to
run along or cross over or under lands or rights-of-way, many of which are also revocable at the grantor’s election. Some such
permits require annual or other periodic payments. In a few minor cases, property for pipeline purposes was purchased by the
Company.
(d) Financial Information about Geographic Areas
For geographic information concerning our assets and operations, see Note 17 “Reportable Segments” to our consolidated
financial statements.
(e) Available Information
We make available free of charge on or through our internet website, at www.kindermorgan.com, our annual reports on
Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after we
electronically file such material with, or furnish it to, the SEC. The information contained on or connected to our internet
website is not incorporated by reference into this Form 10-K and should not be considered part of this or any other report that
we file with or furnish to the SEC.
Item 1A. Risk Factors.
You should carefully consider the risks described below, in addition to the other information contained in this document.
Realization of any of the following risks could have a material adverse effect on our business, financial condition, cash flows
and results of operations.
Risks Related to Operating our Business
Our businesses are dependent on the supply of and demand for the products that we handle.
Our pipelines, terminals and other assets and facilities depend in part on continued production of natural gas, oil and other
products in the geographic areas that they serve. Our business also depends in part on the levels of demand for natural gas, oil,
NGL, refined petroleum products, CO2, coal, steel, chemicals and other products in the geographic areas to which our pipelines,
terminals, shipping vessels and other facilities deliver or provide service, and the ability and willingness of our shippers and
other customers to supply such demand. For example, without additions to oil and gas reserves, production will decline over
time as reserves are depleted, and production costs may rise. Producers may reduce or shut down production during times of
lower product prices or higher production costs to the extent they become uneconomic. Producers in areas served by us may
not be successful in exploring for and developing additional reserves, and our pipelines and related facilities may not be able to
maintain existing volumes of throughput. Commodity prices and tax incentives may not remain at levels that encourage
producers to explore for and develop additional reserves, produce existing marginal reserves or renew transportation contracts
as they expire.
Changes in the business environment, such as declining or sustained low commodity prices, supply disruptions, or higher
development or production costs, could result in a slowing of supply to our pipelines, terminals and other assets. In addition,
changes in the overall demand for hydrocarbons, the regulatory environment or applicable governmental policies, including in
relation to climate change or other environmental concerns, may have a negative impact on the supply of crude oil and other
products. In recent years, a number of initiatives and regulatory changes relating to reducing GHG emissions have been
undertaken by federal, provincial, state and municipal governments and oil and gas industry participants. In addition, emerging
technologies and public opinion have resulted in increasing demand for energy efficiency, including energy provided from
renewable energy sources rather than fossil fuels and fuel-efficient alternatives such as hybrid and electric vehicles. These
factors could result in not only increased costs for producers of hydrocarbons but also an overall decrease in the demand for
hydrocarbons. Each of the foregoing could negatively impact our business directly as well as our shippers and other customers,
which in turn could negatively impact our prospects for new contracts for transportation, terminaling or other midstream
services, or renewals of existing contracts or the ability of our customers and shippers to honor their contractual commitments.
See “—Financial distress experienced by our customers or other counterparties could have an adverse impact on us in the
event they are unable to pay us for the products or services we provide or otherwise fulfill their obligations to us” below.
21
We cannot predict the impact of future economic conditions, fuel conservation measures, alternative fuel requirements,
governmental regulation or technological advances in fuel economy and energy generation devices, all of which could reduce
the production of and/or demand for the products we handle. In addition, irrespective of supply of or demand for products we
handle, implementation of new regulations or changes to existing regulations affecting the energy industry could have a
material adverse effect on us. See “—The FERC, the CPUC, or the NEB may establish pipeline tariff rates that have a
negative impact on us. In addition, the FERC, the CPUC, the NEB, or our customers could initiate proceedings or file
complaints challenging the tariff rates charged by our pipelines, which could have an adverse impact on us.”
Expanding our existing assets and constructing new assets is part of our growth strategy. Our ability to begin and
complete construction on expansion and new-build projects may be inhibited by difficulties in obtaining, or our inability to
obtain, permits and rights-of-way, as well as public opposition, increases in costs of construction materials, cost overruns,
inclement weather and other delays. Should we pursue expansion of or construction of new projects through joint ventures with
others, we will share control and benefits from those projects.
We regularly undertake major construction projects to expand our existing assets and to construct new assets. New growth
projects generally will be subject to, among other things, the receipt of regulatory approvals, feasibility and cost analyses,
funding availability and industry, market and demand conditions. If we pursue joint ventures with third parties, those parties
may share approval rights over major decisions, and may act in their own interests. Their views may differ from our own or
our views of the interests of the venture which could result in operational delays or impasses, which in turn could affect the
financial expectations of and our benefits from the venture. A variety of factors outside of our control, such as difficulties in
obtaining permits and rights-of-way or other regulatory approvals, have caused, and may continue to cause, delays in or
cancellations of our construction projects. Regulatory authorities may modify their permitting policies in ways that
disadvantage our construction projects, such as the FERC’s consideration of changes to its Certificate Policy Statement. Such
factors can be exacerbated by public opposition to our projects. See “—We are subject to reputational risks and risks related to
public opinion.” For example, changing public attitudes toward pipelines bearing fossil fuels may impede our ability to secure
rights of way or governmental reviews and authorizations on a timely basis or at all. Inclement weather, natural disasters and
delays in performance by third-party contractors have also resulted in, and may continue to result in, increased costs or delays
in construction. Significant increases in costs of construction materials, cost overruns or delays, or our inability to obtain a
required permit or right-of-way, could have a material adverse effect on our return on investment, results of operations and cash
flows, and could result in project cancellations or limit our ability to pursue other growth opportunities.
We face competition from other pipelines and terminals, as well as other forms of transportation and storage.
Any current or future pipeline system or other form of transportation (such as barge, rail or truck) that delivers the products
we handle into the areas that our pipelines serve could offer transportation services that are more desirable to shippers than
those we provide because of price, location, facilities or other factors. Likewise, competing terminals or other storage options
may become more attractive to our customers. To the extent that competitors offer the markets we serve more desirable
transportation or storage options, this could result in unused capacity on our pipelines and in our terminals. We also could
experience competition for the supply of the products we handle from both existing and proposed pipeline systems; for
example, several pipelines access many of the same areas of supply as our pipeline systems and transport to destinations not
served by us. If capacity on our assets remains unused, our ability to re-contract for expiring capacity at favorable rates or
otherwise retain existing customers could be impaired.
The volatility of oil, NGL and natural gas prices could adversely affect our CO2 business segment and businesses within
our Natural Gas Pipelines and Products Pipelines business segments.
The revenues, cash flows, profitability and future growth of some of our businesses depend to a large degree on prevailing
oil, NGL and natural gas prices. Our CO2 business segment (and the carrying value of its oil, NGL and natural gas producing
properties) and certain midstream businesses within our Natural Gas Pipelines business segment depend to a large degree, and
certain businesses within our Product Pipelines business segment depend to a lesser degree, on prevailing oil, NGL and natural
gas prices. For 2019, we estimate that every $1 change in the average WTI crude oil price per barrel would impact our DCF by
approximately $8 million, each $0.10 per MMBtu change in the average price of natural gas would impact DCF by
approximately $1 million, and each 1% change in the ratio of the weighted-average NGL price per barrel to the WTI crude oil
price per barrel would impact DCF by approximately $3 million.
Prices for oil, NGL and natural gas are subject to large fluctuations in response to relatively minor changes in the supply of
and demand for oil, NGL and natural gas, uncertainties within the market and a variety of other factors beyond our control.
These factors include, among other things (i) weather conditions and events such as hurricanes in the U.S.; (ii) domestic and
global economic conditions; (iii) the activities of the Organization of Petroleum Exporting Countries; (iv) governmental
22
regulation; (v) political instability in oil producing countries; (vi) the foreign supply of and demand for oil and natural gas; (vii)
the price of foreign imports; (viii) the proximity and availability of storage and transportation infrastructure and processing and
treating facilities; and (ix) the availability and prices of alternative fuel sources. We use hedging arrangements to partially
mitigate our exposure to commodity prices, but these arrangements also are subject to inherent risks. Please read “—Our use of
hedging arrangements does not eliminate our exposure to commodity price risks and could result in financial losses or
volatility in our income.”
A sharp decline in the prices of oil, NGL or natural gas, or a prolonged unfavorable price environment, would result in a
commensurate reduction in our revenues, income and cash flows from our businesses that produce, process, or purchase and
sell oil, NGL, or natural gas, and could have a material adverse effect on the carrying value of our CO2 business segment’s
proved reserves. If prices fall substantially or remain low for a sustained period and we are not sufficiently protected through
hedging arrangements, we may be unable to realize a profit from these businesses and would operate at a loss.
In recent decades, there have been periods worldwide of both overproduction and underproduction of hydrocarbons, and
periods of both increased and relaxed energy conservation efforts. Such conditions have resulted in periods of excess supply
of, and reduced demand for, crude oil on a worldwide basis and for natural gas on a domestic basis. These periods have been
followed by periods of short supply of, and increased demand for, crude oil and natural gas. The cycles of excess or short
supply of crude oil or natural gas have placed pressures on prices and resulted in dramatic price fluctuations even during
relatively short periods of seasonal market demand. These fluctuations impact the accuracy of assumptions used in our
budgeting process. For more information about our energy and commodity market risk, see Item 7A “Quantitative and
Qualitative Disclosures About Market Risk-Energy Commodity Market Risk.”
Commodity transportation and storage activities involve numerous risks that may result in accidents or otherwise
adversely affect our operations.
There are a variety of hazards and operating risks inherent to the transportation and storage of the products we handle, such
as leaks; releases; the breakdown, underperformance or failure of equipment, facilities, information systems or processes;
damage to our pipelines caused by third-party construction; the compromise of information and control systems; spills at
terminals and hubs; spills associated with the loading and unloading of harmful substances at rail facilities; adverse sea
conditions (including storms and rising sea levels) and releases or spills from our shipping vessels or vessels loaded at our
marine terminals; operator error; labor disputes/work stoppages; disputes with interconnected facilities and carriers; operational
disruptions or apportionment on third-party systems or refineries on which our assets depend; and catastrophic events such as
natural disasters, fires, floods, explosions, earthquakes, acts of terrorists and saboteurs, cyber security breaches, and other
similar events, many of which are beyond our control. Additional risks to our vessels include capsizing, grounding and
navigation errors.
The occurrence of any of these risks could result in serious injury and loss of human life, significant damage to property
and natural resources, environmental pollution, significant reputational damage, impairment or suspension of operations, fines
or other regulatory penalties, and revocation of regulatory approvals or imposition of new requirements, any of which also
could result in substantial financial losses, including lost revenue and cash flow to the extent that an incident causes an
interruption of service. For pipeline and storage assets located near populated areas, including residential areas, commercial
business centers, industrial sites and other public gathering areas, the level of damage resulting from these risks may be greater.
In addition, the consequences of any operational incident (including as a result of adverse sea conditions) at one of our marine
terminals may be even more significant as a result of the complexities involved in addressing leaks and releases occurring in
the ocean or along coastlines and/or the repair of marine terminals.
Our operating results may be adversely affected by unfavorable economic and market conditions.
Unfavorable economic conditions worldwide have from time to time contributed to slowdowns in several industries,
including the oil and gas industry, the steel industry, the coal industry and in specific segments and markets in which we
operate, resulting in reduced demand and increased price competition for our products and services. In addition, uncertain or
changing economic conditions within one or more geographic regions may affect our operating results within the affected
regions. Volatility in commodity prices or changes in markets for a given commodity might also have a negative impact on
many of our customers, which could impair their ability to meet their obligations to us. See “—Financial distress experienced
by our customers or other counterparties could have an adverse impact on us in the event they are unable to pay us for the
products or services we provide or otherwise fulfill their obligations to us.” In addition, decreases in the prices of crude oil,
NGL and natural gas will have a negative impact on our operating results and cash flow. See “—The volatility of oil, NGL and
natural gas prices could adversely affect our CO2 business segment and businesses within our Natural Gas Pipelines and
Products Pipelines business segments.”
23
If economic and market conditions (including volatility in commodity markets) globally, in the U.S. or in other key
markets become more volatile or deteriorate, we may experience material impacts on our business, financial condition and
results of operations.
Financial distress experienced by our customers or other counterparties could have an adverse impact on us in the event
they are unable to pay us for the products or services we provide or otherwise fulfill their obligations to us.
We are exposed to the risk of loss in the event of nonperformance by our customers or other counterparties, such as
hedging counterparties, joint venture partners and suppliers. Many of our counterparties finance their activities through cash
flow from operations or debt or equity financing, and some of them may be highly leveraged. Our counterparties are subject to
their own operating, market, financial and regulatory risks, and some are experiencing, or may experience in the future, severe
financial problems that have had or may have a significant impact on their creditworthiness. For example, PG&E, a customer
of Ruby, filed for Chapter 11 bankruptcy protection in January 2019. See Item 7 “Management’s Discussion and Analysis of
Financial Condition and Results of Operations—General—Investment in Ruby.” Further, the security that is permitted to be
obtained from such customers may be limited by FERC regulation. While certain of our customers are subsidiaries of an entity
that has an investment grade credit rating, in many cases the parent entity has not guaranteed the obligations of the subsidiary
and, therefore, the parent’s credit ratings may have no bearing on such customers’ ability to pay us for the services we provide
or otherwise fulfill their obligations to us. Furthermore, financially distressed customers might be forced to reduce or curtail
their future use of our products and services, which also could have a material adverse effect on our results of operations,
financial condition, and cash flows.
We cannot provide any assurance that such customers and key counterparties will not become financially distressed or that
such financially distressed customers or counterparties will not default on their obligations to us or file for bankruptcy
protection. If one of such customers or counterparties files for bankruptcy protection, we likely would be unable to collect all,
or even a significant portion, of amounts owed to us. Significant customer and other counterparty defaults and bankruptcy
filings could have a material adverse effect on our business, financial position, results of operations or cash flows.
The acquisition of additional businesses and assets is part of our growth strategy. We may experience difficulties
completing acquisitions or integrating new businesses and properties, and we may be unable to achieve the benefits we expect
from any future acquisitions.
Part of our business strategy includes acquiring additional businesses and assets. We evaluate and pursue assets and
businesses that we believe will complement or expand our operations in accordance with our growth strategy. We cannot
provide any assurance that we will be able to complete acquisitions in the future or achieve the desired results from any
acquisitions we do complete. Any acquired business or assets will be subject to many of the same risks as our existing
businesses and may not achieve the levels of performance that we anticipate.
If we do not successfully integrate acquisitions, we may not realize anticipated operating advantages and cost savings.
Integration of acquired companies or assets involves a number of risks, including (i) the loss of key customers of the acquired
business; (ii) demands on management related to the increase in our size; (iii) the diversion of management’s attention from the
management of daily operations; (iv) difficulties in implementing or unanticipated costs of accounting, budgeting, reporting,
internal controls and other systems; and (v) difficulties in the retention and assimilation of necessary employees.
We may not be able to maintain the levels of operating efficiency that acquired companies have achieved or might achieve
separately. Successful integration of each acquisition will depend upon our ability to manage those operations and to eliminate
redundant and excess costs. Difficulties in integration may be magnified if we make multiple acquisitions over a relatively
short period of time. Because of difficulties in combining and expanding operations, we may not be able to achieve the cost
savings and other size-related benefits that we hoped to achieve after these acquisitions, which would harm our financial
condition and results of operations.
We are subject to reputational risks and risks relating to public opinion.
Our business, operations or financial condition generally may be negatively impacted as a result of negative public
opinion. Public opinion may be influenced by negative portrayals of the industry in which we operate as well as opposition to
development projects. In addition, market events specific to us could result in the deterioration of our reputation with key
stakeholders. Potential impacts of negative public opinion or reputational issues may include delays or stoppages in expansion
projects, legal or regulatory actions or challenges, blockades, increased regulatory oversight, reduced support from regulatory
24
authorities, challenges to regulatory approvals, difficulty securing financing for and cost overruns affecting expansion projects
and the degradation of our business generally.
Reputational risk cannot be managed in isolation from other forms of risk. Credit, market, operational, insurance,
regulatory and legal risks, among others, must all be managed effectively to safeguard our reputation. Our reputation and public
opinion could also be impacted by the actions and activities of other companies operating in the energy industry, particularly
other energy infrastructure providers, over which we have no control. In particular, our reputation could be impacted by
negative publicity related to pipeline incidents or unpopular expansion projects and due to opposition to development of
hydrocarbons and energy infrastructure, particularly projects involving resources that are considered to increase GHG
emissions and contribute to climate change. Negative impacts from a compromised reputation or changes in public opinion
(including with respect to the production, transportation and use of hydrocarbons generally) could include revenue loss,
reduction in customer base, delays in obtaining, or challenges to, regulatory approvals with respect to growth projects and
decreased value of our securities and our business.
The future success of our oil and gas development and production operations depends in part upon our ability to develop
additional oil and gas reserves that are economically recoverable.
The rate of production from oil and natural gas properties declines as reserves are depleted. Without successful
development activities, the reserves, revenues and cash flows of the oil and gas producing assets within our CO2 business
segment will decline. We may not be able to develop or acquire additional reserves at an acceptable cost or have necessary
financing for these activities in the future. Additionally, if we do not realize production volumes greater than, or equal to, our
hedged volumes, we may suffer financial losses not offset by physical transactions.
The development of crude oil and gas properties involves risks that may result in a total loss of investment.
The business of developing and operating oil and gas properties involves a high degree of business and financial risk that
even a combination of experience, knowledge and careful evaluation may not be able to overcome. Acquisition and
development decisions generally are based on subjective judgments and assumptions that, while they may be reasonable, are by
their nature speculative. It is impossible to predict with certainty the production potential of a particular property or well.
Furthermore, the successful completion of a well does not ensure a profitable return on the investment. A variety of geological,
operational and market-related factors, including, but not limited to, unusual or unexpected geological formations, pressures,
equipment failures or accidents, fires, explosions, blowouts, cratering, pollution and other environmental risks, shortages or
delays in the availability of drilling rigs and the delivery of equipment, loss of circulation of drilling fluids or other conditions,
may substantially delay or prevent completion of any well or otherwise prevent a property or well from being profitable. A
productive well may become uneconomic in the event water or other deleterious substances are encountered, which impair or
prevent the production of oil and/or gas from the well. In addition, production from any well may be unmarketable if it is
contaminated with water or other deleterious substances.
Our use of hedging arrangements does not eliminate our exposure to commodity price risks and could result in financial
losses or volatility in our income.
We engage in hedging arrangements to reduce our exposure to fluctuations in the prices of crude oil, natural gas and NGL.
These hedging arrangements expose us to risk of financial loss in some circumstances, including when production is less than
expected, when the counterparty to the hedging contract defaults on its contract obligations, or when there is a change in the
expected differential between the underlying price in the hedging agreement and the actual price received. In addition, these
hedging arrangements may limit the benefit we would otherwise receive from increases in prices for crude oil and natural gas.
The markets for instruments we use to hedge our commodity price exposure generally reflect then-prevailing conditions in
the underlying commodity markets. As our existing hedges expire, we will seek to replace them with new hedging
arrangements. To the extent underlying market conditions are unfavorable, new hedging arrangements available to us will
reflect such unfavorable conditions.
The accounting standards regarding hedge accounting are very complex, and even when we engage in hedging transactions
(for example, to mitigate our exposure to fluctuations in commodity price or currency exchange rates or to balance our
exposure to fixed and variable interest rates) that are effective economically, these transactions may not be considered effective
for accounting purposes. Accordingly, our consolidated financial statements may reflect some volatility due to these hedges,
even when there is no underlying economic impact at the dates of those statements. In addition, it may not be possible for us to
engage in hedging transactions that completely eliminate our exposure to commodity prices; therefore, our consolidated
financial statements may reflect a gain or loss arising from an exposure to commodity prices for which we are unable to enter
25
into a completely effective hedge. For more information about our hedging activities, see Item 7 “Management’s Discussion
and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates—Hedging
Activities” and Note 14 “Risk Management” to our consolidated financial statements.
A breach of information security or failure of one or more key information technology or operational (IT) systems, or those
of third parties, may adversely affect our business, results of operations or business reputation.
Our business is dependent upon our operational systems to process a large amount of data and complex transactions. The
various uses of these IT systems, networks and services include, but are not limited to, controlling our pipelines and terminals
with industrial control systems, collecting and storing information and data, processing transactions, and handling other
processing necessary to manage our business.
If any of our systems are damaged, fail to function properly or otherwise become unavailable, we may incur substantial
costs to repair or replace them and may experience loss or corruption of critical data and interruptions or delays in our ability to
perform critical functions, which could adversely affect our business and results of operations. A significant failure,
compromise, breach or interruption in our systems could result in a disruption of our operations, customer dissatisfaction,
damage to our reputation and a loss of customers or revenues. Efforts by us and our vendors to develop, implement and
maintain security measures may not be successful in preventing these events from occurring, and any network and information
systems-related events could require us to expend significant resources to remedy such event. In the future, we may be required
to expend additional resources to continue to enhance our information security measures and/or to investigate and remediate
information security vulnerabilities.
Attacks, including acts of terrorism or cyber sabotage, or the threat of such attacks, may adversely affect our business or
reputation.
The U.S. government has issued public warnings that indicate that pipelines and other infrastructure assets might be
specific targets of terrorist organizations or “cyber sabotage” events. For example, in 2018, a cyberattack on a shared data
network forced four U.S. natural gas pipeline operators to temporarily shut down computer communications with their
customers. Potential targets include our pipeline systems, terminals, processing plants or operating systems. The occurrence of
an attack could cause a substantial decrease in revenues and cash flows, increased costs to respond or other financial loss,
damage to our reputation, increased regulation or litigation or inaccurate information reported from our operations. There is no
assurance that adequate cyber sabotage and terrorism insurance will be available at rates we believe are reasonable in the near
future. These developments may subject our operations to increased risks, as well as increased costs, and, depending on their
ultimate magnitude, could have a material adverse effect on our business, results of operations and financial condition or could
harm our business reputation.
Hurricanes, earthquakes, flooding and other natural disasters, as well as subsidence and coastal erosion, could have an
adverse effect on our business, financial condition and results of operations.
Some of our pipelines, terminals and other assets are located in, and our shipping vessels operate in, areas that are
susceptible to hurricanes, earthquakes, flooding and other natural disasters or could be impacted by subsidence and coastal
erosion. These natural disasters and phenomena could potentially damage or destroy our assets and disrupt the supply of the
products we transport. In the third quarter of 2017, Hurricane Harvey caused disruptions in our operations and damage to our
assets near the Texas Gulf Coast requiring approximately $45 million in repair costs, approximately $10 million of which was
not recoverable through insurance. For more information regarding the impact of Hurricane Harvey on our assets and
operating results, see Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Many climate models indicate that global warming is likely to result in rising sea levels, increased intensity of weather, and
increased frequency of extreme precipitation and flooding. These climate-related changes could damage physical assets,
especially operations located in low-lying areas near coasts and river banks, and facilities situated in hurricane-prone and rain-
susceptible regions. In addition, we may experience increased insurance premiums and deductibles, or a decrease in available
coverage, for our assets in areas subject to severe weather. Natural disasters and phenomena can similarly affect the facilities
of our customers. In either case, losses could exceed our insurance coverage and our business, financial condition and results
of operations could be adversely affected, perhaps materially. See Items 1 and 2 “Business and Properties—(c) Narrative
Description of Business—Environmental Matters.”
26
Substantially all of the land on which our pipelines are located is owned by third parties. If we are unable to procure and
maintain access to land owned by third parties, our revenue and operating costs, and our ability to complete construction
projects, could be adversely affected.
We must obtain and maintain the rights to construct and operate pipelines on other owners’ land, including private
landowners, railroads, public utilities and others. While our interstate natural gas pipelines in the U.S. have federal eminent
domain authority, the availability of eminent domain authority for our other pipelines varies from state to state depending upon
the type of pipeline—petroleum liquids, natural gas, CO2, or crude oil—and the laws of the particular state. In any case, we
must compensate landowners for the use of their property, and in eminent domain actions, such compensation may be
determined by a court. If we are unable to obtain rights-of-way on acceptable terms, our ability to complete construction
projects on time, on budget, or at all, could be adversely affected. In addition, we are subject to the possibility of increased
costs under our right-of-way or rental agreements with landowners, primarily through renewals of expiring agreements and
rental increases. If we were to lose these rights, our operations could be disrupted or we could be required to relocate the
affected pipelines, which could cause a substantial decrease in our revenues and cash flows and a substantial increase in our
costs.
Our business requires the retention and recruitment of a skilled workforce, and difficulties recruiting and retaining our
workforce could result in a failure to implement our business plans.
Our operations and management require the retention and recruitment of a skilled workforce, including engineers,
technical personnel and other professionals. We and our affiliates compete with other companies in the energy industry for this
skilled workforce. In addition, many of our current employees are retirement eligible and have significant institutional
knowledge that must be transferred to other employees. If we are unable to (i) retain current employees; (ii) successfully
complete the knowledge transfer; and/or (iii) recruit new employees of comparable knowledge and experience, our business
could be negatively impacted. In addition, we could experience increased costs to retain and recruit these professionals.
The increased financial reporting and other obligations of management resulting from KML’s obligations as a public
company may divert management’s attention away from other business operations.
KML, in which we own an approximate 70% interest, completed its IPO in Canada in May of 2017 and in 2018, completed
the sale of its interest in the TMPL as described under Item 7 “Management’s Discussion and Analysis of Financial Condition
and Results of Operations—General—KML—Sale of Trans Mountain Pipeline System and Its Expansion Project.” Certain of
our officers and directors also serve as officers and directors of KML, and we provide financial reporting support and other
services as requested by KML and its controlled affiliates pursuant to a Services Agreement. The increased obligations
associated with providing support to KML as a public company may divert our management’s attention from other business
concerns and may adversely affect our business, financial condition and results of operations. We are subject to financial
reporting and other obligations that place significant demands on our management, administrative, operational, legal, internal
audit and accounting resources. The demands on our personnel related to KML’s obligations as a public company will be
intensified as a result of the management and personnel departures and related transition following the sale of our interest in the
TMPL.
If we are unable to retain our executive officers, our ability to execute our business strategy, including our growth strategy,
may be hindered.
Our success depends in part on the performance of and our ability to retain our executive officers, particularly Richard D.
Kinder, our Executive Chairman and one of our founders, Steve Kean, our Chief Executive Officer, and Kim Dang, our
President. Along with the other members of our senior management, Mssrs. Kinder and Kean and Ms. Dang have been
responsible for developing and executing our growth strategy. If we are not successful in retaining Mr. Kinder, Mr. Kean, Ms.
Dang or our other executive officers, or replacing them, our business, financial condition or results of operations could be
adversely affected. We do not maintain key personnel insurance.
Our Terminals business segment is subject to U.S. dollar/Canadian dollar exchange rate fluctuations as a result of
operations in Canada.
We are a U.S. dollar reporting company. As a result of the operations of our Terminals business segment in Canada, a
portion of our consolidated assets, liabilities, revenues, cash flows and expenses are denominated in Canadian dollars.
Fluctuations in the exchange rate between U.S. and Canadian dollars could expose us to reductions in the U.S. dollar value of
our earnings and cash flows and a reduction in our stockholders’ equity under applicable accounting rules.
27
Our insurance policies do not cover all losses, costs or liabilities that we may experience, and insurance companies that
currently insure companies in the energy industry may cease to do so or substantially increase premiums.
Our insurance program may not cover all operational risks and costs and may not provide sufficient coverage in the event
of a claim. We do not maintain insurance coverage against all potential losses and could suffer losses for uninsurable or
uninsured risks or in amounts in excess of existing insurance coverage. Losses in excess of our insurance coverage could have
a material adverse effect on our business, financial condition and results of operations.
Changes in the insurance markets subsequent to certain hurricanes and natural disasters have made it more difficult and
more expensive to obtain certain types of coverage. The occurrence of an event that is not fully covered by insurance, or
failure by one or more of our insurers to honor its coverage commitments for an insured event, could have a material adverse
effect on our business, financial condition and results of operations. Insurance companies may reduce the insurance capacity
they are willing to offer or may demand significantly higher premiums or deductibles to cover our assets. If significant changes
in the number or financial solvency of insurance underwriters for the energy industry occur, we may be unable to obtain and
maintain adequate insurance at a reasonable cost. There is no assurance that our insurers will renew their insurance coverage
on acceptable terms, if at all, or that we will be able to arrange for adequate alternative coverage in the event of non-renewal.
The unavailability of full insurance coverage to cover events in which we suffer significant losses could have a material
adverse effect on our business, financial condition and results of operations.
Risks Related to Financing Our Business
Our substantial debt could adversely affect our financial health and make us more vulnerable to adverse economic
conditions.
As of December 31, 2018, we had approximately $36.6 billion of consolidated debt (excluding debt fair value
adjustments). Additionally, we and substantially all of our wholly owned U.S. subsidiaries are parties to a cross guarantee
agreement under which each party to the agreement unconditionally guarantees the indebtedness of each other party, which
means that we are liable for the debt of each of such subsidiaries. This level of consolidated debt and the cross guarantee
agreement could have important consequences, such as (i) limiting our ability to obtain additional financing to fund our
working capital, capital expenditures, debt service requirements or potential growth, or for other purposes; (ii) increasing the
cost of our future borrowings; (iii) limiting our ability to use operating cash flow in other areas of our business or to pay
dividends because we must dedicate a substantial portion of these funds to make payments on our debt; (iv) placing us at a
competitive disadvantage compared to competitors with less debt; and (v) increasing our vulnerability to adverse economic and
industry conditions.
Our ability to service our consolidated debt, and our ability to meet our consolidated leverage targets, will depend upon,
among other things, our future financial and operating performance, which will be affected by prevailing economic conditions
and financial, business, regulatory and other factors, many of which are beyond our control. If our consolidated cash flow is
not sufficient to service our consolidated debt, and any future indebtedness that we incur, we will be forced to take actions such
as reducing dividends, reducing or delaying our business activities, acquisitions, investments or capital expenditures, selling
assets or seeking additional equity capital. We may also take such actions to reduce our indebtedness if we determine that our
earnings (or consolidated earnings before interest, taxes, depreciation and amortization, or EBITDA, as calculated in
accordance with our revolving credit facility) may not be sufficient to meet our consolidated leverage targets, or to comply with
consolidated leverage ratios required under certain of our debt agreements. We may not be able to effect any of these actions
on satisfactory terms or at all. For more information about our debt, see Note 9 “Debt” to our consolidated financial
statements.
Our business, financial condition and operating results may be affected adversely by increased costs of capital or a
reduction in the availability of credit.
Adverse changes to the availability, terms and cost of capital, interest rates or our credit ratings (which would have a
corresponding impact on the credit ratings of our subsidiaries that are party to the cross guarantee agreement) could cause our
cost of doing business to increase by limiting our access to capital, including our ability to refinance maturities of existing
indebtedness on similar terms, which could in turn reduce our cash flows and limit our ability to pursue acquisition or
expansion opportunities. Our credit ratings may be impacted by our leverage, liquidity, credit profile and potential transactions.
Although the ratings from credit agencies are not recommendations to buy, sell or hold our securities, our credit ratings will
generally affect the market value of our and our subsidiaries’ debt securities and the terms available to us for future issuances of
debt securities.
28
Also, disruptions and volatility in the global financial markets may lead to an increase in interest rates or a contraction in
credit availability, impacting our ability to finance our operations on favorable terms. A significant reduction in the availability
of credit could materially and adversely affect our business, financial condition and results of operations.
Our large amount of variable rate debt makes us vulnerable to increases in interest rates.
As of December 31, 2018, approximately $11.4 billion of our approximately $36.6 billion of consolidated debt (excluding
debt fair value adjustments) was subject to variable interest rates, either as short-term or long-term variable-rate debt
obligations, or as long-term fixed-rate debt effectively converted to variable rates through the use of interest rate swaps.
Should interest rates increase, the amount of cash required to service variable-rate debt would increase, as would our costs to
refinance maturities of existing indebtedness, and our earnings and cash flows could be adversely affected. For more
information about our interest rate risk, see Item 7A “Quantitative and Qualitative Disclosures About Market Risk—Interest
Rate Risk.”
Acquisitions and growth capital expenditures may require access to external capital. Limitations on our access to external
financing sources could impair our ability to grow.
We have limited amounts of internally generated cash flows to fund acquisitions and growth capital expenditures. If our
internally generated cash flows are not sufficient to fund one or more capital projects or acquisitions, we may have to rely on
external financing sources, including commercial borrowings and issuances of debt and equity securities, to fund our
acquisitions and growth capital expenditures. Limitations on our access to external financing sources, whether due to tightened
capital markets, more expensive capital or otherwise, could impair our ability to execute our growth strategy.
Our debt instruments may limit our financial flexibility and increase our financing costs.
The instruments governing our debt contain restrictive covenants that may prevent us from engaging in certain transactions
that may be beneficial to us. Some of the agreements governing our debt generally require us to comply with various
affirmative and negative covenants, including the maintenance of certain financial ratios and restrictions on (i) incurring
additional debt; (ii) entering into mergers, consolidations and sales of assets; (iii) granting liens; and (iv) entering into sale-
leaseback transactions. The instruments governing any future debt may contain similar or more limiting restrictions. Our
ability to respond to changes in business and economic conditions and to obtain additional financing, if needed, may be
restricted.
Our and our customer’s access to capital could be affected by evolving financial institutions’ policies concerning
businesses linked to fossil fuels.
Our and our customer’s access to capital could be affected by evolving financial institutions’ policies concerning
businesses linked to fossil fuels. Public opinion toward industries linked to fossil fuels continues to evolve. Concerns about
the potential effects of climate change have caused some to direct their attention towards sources of funding for fossil-fuel
energy companies, which has resulted in certain financial institutions, funds and other sources of capital restricting or
eliminating their investment in energy-related activities. Ultimately, this could make it more difficult for our customers to
secure funding for exploration and production activities, and consequently could both indirectly affect demand for our services
and directly affect our ability to fund construction or other capital projects.
Risks Related to Ownership of Our Capital Stock
The guidance we provide for our anticipated dividends is based on estimates. Circumstances may arise that lead to
conflicts between using funds to pay anticipated dividends or to invest in our business.
We disclose in this report and elsewhere the expected cash dividends on our common stock. These reflect our current
judgment, but as with any estimate, they may be affected by inaccurate assumptions and other risks and uncertainties, many of
which are beyond our control. See “Information Regarding Forward-Looking Statements” at the beginning of this report. If
our board of directors elects to pay dividends at the anticipated level and that action would leave us with insufficient cash to
take timely advantage of growth opportunities (including through acquisitions), to meet any large unanticipated liquidity
requirements, to fund our operations, to maintain our leverage metrics or otherwise to address properly our business prospects,
our business could be harmed.
29
Conversely, a decision to address such needs might lead to the payment of dividends below the anticipated levels. As
events present themselves or become reasonably foreseeable, our board of directors, which determines our business strategy
and our dividends, may decide to address those matters by reducing our anticipated dividends. Alternatively, because nothing
in our governing documents or credit agreements prohibits us from borrowing to pay dividends, we could choose to incur debt
to enable us to pay our anticipated dividends. This would add to our substantial debt discussed above under “—Risks Related to
Financing Our Business—Our substantial debt could adversely affect our financial health and make us more vulnerable to
adverse economic conditions.”
Our certificate of incorporation restricts the ownership of our common stock by non-U.S. citizens within the meaning of
the Jones Act. These restrictions may affect the liquidity of our common stock and may result in non-U.S. citizens being
required to sell their shares at a loss.
The Jones Act requires, among other things, that at least 75% of our common stock be owned at all times by U.S. citizens,
as defined under the Jones Act, in order for us to own and operate vessels in the U.S. coastwise trade. As a safeguard to help us
maintain our status as a U.S. citizen, our certificate of incorporation provides that, if the number of shares of our common stock
owned by non-U.S. citizens exceeds 22%, we have the ability to redeem shares owned by non-U.S. citizens to reduce the
percentage of shares owned by non-U.S. citizens to 22%. These redemption provisions may adversely impact the marketability
of our common stock, particularly in markets outside of the U.S. Further, those stockholders would not have control over the
timing of such redemption, and may be subject to redemption at a time when the market price or timing of the redemption is
disadvantageous. In addition, the redemption provisions might have the effect of impeding or discouraging a merger, tender
offer or proxy contest by a non-U.S. citizen, even if it were favorable to the interests of some or all of our stockholders.
Risks Related to Regulation
The FERC, the CPUC, or the NEB may establish pipeline tariff rates that have a negative impact on us. In addition, the
FERC, the CPUC, the NEB, or our customers could initiate proceedings or file complaints challenging the tariff rates charged
by our pipelines, which could have an adverse impact on us.
The profitability of our regulated pipelines is influenced by fluctuations in costs and our ability to recover any increases in
our costs in the rates charged to our shippers. To the extent that our costs increase in an amount greater than what we are
permitted by the FERC, the CPUC, or the NEB to recover in our rates, or to the extent that there is a lag before we can file for
and obtain rate increases, such events can have a negative impact on our operating results.
Our existing rates may also be challenged by complaint. Regulators and shippers on our pipelines have rights to challenge,
and have challenged, the rates we charge under certain circumstances prescribed by applicable regulations. Some shippers on
our pipelines have filed complaints with the regulators that seek substantial refunds for alleged overcharges during the years in
question and prospective reductions in the tariff rates. Further, the FERC may continue to initiate investigations to determine
whether interstate natural gas pipelines have over-collected on rates charged to shippers. We may face challenges, similar to
those described in Note 18 “Litigation, Environmental and Other Contingencies” to our consolidated financial statements, to
the rates we charge on our pipelines. In addition, following the 2017 Tax Reform, which reduced the corporate tax rate from
35% to 21%, the FERC initiated the Form 501-G process to review the estimated impact of the 2017 Tax Reform on interstate
pipelines with respect to tax recovery in existing jurisdictional rates. See Note 18 “Litigation, Environmental and Other
Contingencies—FERC Proceedings” to our consolidated financial statements. Any successful challenge to our rates could
materially adversely affect our future earnings, cash flows and financial condition.
New laws, policies, regulations, rulemaking and oversight, as well as changes to those currently in effect, could adversely
impact our earnings, cash flows and operations.
Our assets and operations are subject to regulation and oversight by federal, state, provincial and local regulatory
authorities. Legislative changes, as well as regulatory actions taken by these agencies, have the potential to adversely affect our
profitability. In addition, a certain degree of regulatory uncertainty is created by the current U.S. presidential administration
because it remains unclear specifically what the current administration may do with respect to future policies and regulations
that may affect us. Regulation affects almost every part of our business and extends to such matters as (i) federal, state,
provincial and local taxation; (ii) rates (which include tax, reservation, commodity, surcharges, fuel and gas lost and
unaccounted for), operating terms and conditions of service; (iii) the types of services we may offer to our customers; (iv) the
contracts for service entered into with our customers; (v) the certification and construction of new facilities; (vi) the costs of
raw materials, such as steel, which may be affected by tariffs or otherwise; (vii) the integrity, safety and security of facilities
and operations; (viii) the acquisition of other businesses; (ix) the acquisition, extension, disposition or abandonment of services
30
or facilities; (x) reporting and information posting requirements; (xi) the maintenance of accounts and records; and (xii)
relationships with affiliated companies involved in various aspects of the energy businesses.
Should we fail to comply with any applicable statutes, rules, regulations, and orders of regulatory authorities, we could be
subject to substantial penalties and fines and potential loss of government contracts. Furthermore, new laws, regulations or
policy changes sometimes arise from unexpected sources. New laws or regulations, unexpected policy changes or
interpretations of existing laws or regulations, such as the 2017 Tax Reform and the resulting Form 501-G process initiated by
FERC, applicable to our income, operations, assets or another aspect of our business, could have a material adverse impact on
our earnings, cash flow, financial condition and results of operations. For more information, see Items 1 and 2 “Business and
Properties—(c) Narrative Description of Business—Regulation.”
Environmental, health and safety laws and regulations could expose us to significant costs and liabilities.
Our operations are subject to federal, state, provincial and local laws, regulations and potential liabilities arising under or
relating to the protection or preservation of the environment, natural resources and human health and safety. Such laws and
regulations affect many aspects of our present and future operations, and generally require us to obtain and comply with various
environmental registrations, licenses, permits, inspections and other approvals. Liability under such laws and regulations may
be incurred without regard to fault under CERCLA, the Resource Conservation and Recovery Act, the Federal Clean Water Act,
the Oil Pollution Act or analogous state or provincial laws as a result of the presence or release of hydrocarbons and other
hazardous substances into or through the environment, and these laws may require response actions and remediation and may
impose liability for natural resource and other damages. Private parties, including the owners of properties through which our
pipelines pass, also may have the right to pursue legal actions to enforce compliance as well as to seek damages for non-
compliance with such laws and regulations or for personal injury or property damage. Our insurance may not cover all
environmental risks and costs and/or may not provide sufficient coverage in the event an environmental claim is made against
us.
Failure to comply with these laws and regulations including required permits and other approvals also may expose us to
civil, criminal and administrative fines, penalties and/or interruptions in our operations that could harm our business, financial
position, results of operations and prospects. For example, if an accidental leak, release or spill of liquid petroleum products,
chemicals or other hazardous substances occurs at or from our pipelines, shipping vessels or storage or other facilities, we may
experience significant operational disruptions and we may have to pay a significant amount to clean up or otherwise respond to
the leak, release or spill, pay government penalties, address natural resource damage, compensate for human exposure or
property damage, install costly pollution control equipment or undertake a combination of these and other measures. The
resulting costs and liabilities could materially and negatively affect our earnings and cash flows.
We own and/or operate numerous properties that have been used for many years in connection with our business activities.
While we believe we have utilized operating, handling, and disposal practices that were consistent with industry practices at the
time, hydrocarbons or other hazardous substances may have been released at or from properties owned, operated or used by us
or our predecessors, or at or from properties where our or our predecessors’ wastes have been taken for disposal. In addition,
many of these properties have been owned and/or operated by third parties whose management, handling and disposal of
hydrocarbons or other hazardous substances were not under our control. These properties and the hazardous substances
released and wastes disposed on them may be subject to laws in the U.S. such as CERCLA, which impose joint and several
liability without regard to fault or the legality of the original conduct. Under the regulatory schemes of the various Canadian
provinces, such as British Columbia’s Environmental Management Act, Canada has similar laws with respect to properties
owned, operated or used by us or our predecessors. Under such laws and implementing regulations, we could be required to
remove or remediate previously disposed wastes or property contamination, including contamination caused by prior owners or
operators. Imposition of such liability schemes could have a material adverse impact on our operations and financial position.
Further, we cannot ensure that such existing laws and regulations will not be revised or that new laws or regulations will
not be adopted or become applicable to us. For example, the Federal Clean Air Act and other similar federal, state and
provincial laws are subject to periodic review and amendment, which could result in more stringent emission control
requirements obligating us to make significant capital expenditures at our facilities. There can be no assurance as to the
amount or timing of future expenditures for environmental compliance or remediation, and actual future expenditures may be
different from the amounts we currently anticipate. Revised or additional regulations that result in increased compliance costs
or additional operating restrictions, particularly if those costs are not fully recoverable from our customers, could have a
material adverse effect on our business, financial position, results of operations and prospects. For more information, see Items
1 and 2 “Business and Properties—(c) Narrative Description of Business—Environmental Matters.”
31
Increased regulatory requirements relating to the integrity of our pipelines may require us to incur significant capital and
operating expense outlays to comply.
We are subject to extensive laws and regulations related to pipeline integrity at the federal, state and provincial level.
There are, for example, federal guidelines issued by the U.S. Department of Transportation (DOT) for pipeline companies in
the areas of testing, education, training and communication. The ultimate costs of compliance with the integrity management
rules are difficult to predict. The majority of compliance costs relate to pipeline integrity testing and repairs. Technological
advances in in-line inspection tools, identification of additional threats to a pipeline’s integrity and changes to the amount of
pipeline determined to be located in “High Consequence Areas” can have a significant impact on integrity testing and repair
costs. We plan to continue our integrity testing programs to assess and maintain the integrity of our existing and future
pipelines as required by the DOT rules. The results of these tests could cause us to incur significant and unanticipated capital
and operating expenditures for repairs or upgrades deemed necessary to ensure the continued safe and reliable operation of our
pipelines.
Further, additional laws and regulations that may be enacted in the future or a new interpretation of existing laws and
regulations could significantly increase the amount of these expenditures. There can be no assurance as to the amount or
timing of future expenditures for pipeline integrity regulation, and actual future expenditures may be different from the
amounts we currently anticipate. Revised or additional regulations that result in increased compliance costs or additional
operating restrictions, particularly if those costs are not deemed by regulators to be fully recoverable from our customers, could
have a material adverse effect on our business, financial position, results of operations and prospects.
Climate change and related regulation could result in significantly increased operating and capital costs for us and could
reduce demand for our products and services.
Various laws and regulations exist or are under development that seek to regulate the emission of GHGs such as methane
and CO2, including the EPA programs to control GHG emissions and state actions to develop statewide or regional programs.
Existing EPA regulations require us to report GHG emissions in the U.S. from sources such as our larger natural gas
compressor stations, fractionated NGL, and production of naturally occurring CO2 (for example, from our McElmo Dome CO2
field), even when such production is not emitted to the atmosphere. Proposed approaches to further regulate GHG emissions
include establishing GHG “cap and trade” programs, increased efficiency standards, and incentives or mandates for pollution
reduction, use of renewable energy sources, or use of alternative fuels with lower carbon content. For more information about
climate change regulation, see Items 1 and 2 “Business and Properties—(c) Narrative Description of Business—Environmental
Matters—Climate Change.”
Adoption of any such laws or regulations could increase our costs to operate and maintain our facilities and could require
us to install new emission controls on our facilities, acquire allowances for our GHG emissions, pay taxes related to our GHG
emissions and administer and manage a GHG emissions program, and such increased costs could be significant. Recovery of
such increased costs from our customers is uncertain in all cases and may depend on events beyond our control, including the
outcome of future rate proceedings before the FERC. Such laws or regulations could also lead to reduced demand for
hydrocarbon products that are deemed to contribute to GHGs, or restrictions on their use, which in turn could adversely affect
demand for our products and services.
Finally, many climate models indicate that global warming is likely to result in rising sea levels and increased frequency
and severity of weather events, which may lead to higher insurance costs, or a decrease in available coverage, for our assets in
areas subject to severe weather. These climate-related changes could damage our physical assets, especially operations located
in low-lying areas near coasts and river banks, and facilities situated in hurricane-prone and rain-susceptible regions.
Any of the foregoing could have adverse effects on our business, financial position, results of operations or cash flows.
Increased regulation of exploration and production activities, including hydraulic fracturing, could result in reductions or
delays in drilling and completing new oil and natural gas wells, as well as reductions in production from existing wells, which
could adversely impact the volumes of natural gas transported on our natural gas pipelines and our own oil and gas
development and production activities.
We gather, process or transport crude oil, natural gas or NGL from several areas in which the use of hydraulic fracturing is
prevalent. Oil and gas development and production activities are subject to numerous federal, state, provincial and local laws
and regulations relating to environmental quality and pollution control. The oil and gas industry is increasingly relying on
supplies of hydrocarbons from unconventional sources, such as shale, tight sands and coal bed methane. The extraction of
hydrocarbons from these sources frequently requires hydraulic fracturing. Hydraulic fracturing involves the pressurized
32
injection of water, sand, and chemicals into the geologic formation to stimulate gas production and is a commonly used
stimulation process employed by oil and gas exploration and production operators in the completion of certain oil and gas
wells. There have been initiatives at the federal and state levels to regulate or otherwise restrict the use of hydraulic fracturing.
Adoption of legislation or regulations placing restrictions on hydraulic fracturing activities could impose operational delays,
increased operating costs and additional regulatory burdens on exploration and production operators, which could reduce their
production of crude oil, natural gas or NGL and, in turn, adversely affect our revenues, cash flows and results of operations by
decreasing the volumes of these commodities that we handle.
In addition, many states are promulgating stricter requirements not only for wells but also compressor stations and other
facilities in the oil and gas industry sector. These laws and regulations increase the costs of these activities and may prevent or
delay the commencement or continuance of a given operation. Specifically, these activities are subject to laws and regulations
regarding the acquisition of permits before drilling, restrictions on drilling activities and location, emissions into the
environment, water discharges, transportation of hazardous materials, and storage and disposition of wastes. In addition,
legislation has been enacted that requires well and facility sites to be abandoned and reclaimed to the satisfaction of state
authorities. These laws and regulations may adversely affect our oil and gas development and production activities.
Derivatives regulation could have an adverse effect on our ability to hedge risks associated with our business.
The Dodd-Frank Act requires the U.S. Commodity Futures Trading Commission (CFTC) and the SEC to promulgate rules
and regulations establishing federal oversight and regulation of the OTC derivatives market and entities that participate in that
market. Those rules and regulations are largely complete; although in December 2016, the CFTC re-proposed new rules
pursuant to the Dodd-Frank Act that would institute broad new aggregate position limits for OTC swaps and futures and
options traded on regulated exchanges. Thus, we cannot predict how further rules and regulations will affect us.
If we reduce our use of derivatives as a result of the legislation and regulations, our results of operations may become more
volatile and our cash flows may be less predictable, which could adversely affect our ability to plan for and fund capital
expenditures. Increased volatility may make us less attractive to certain types of investors. Any of these consequences could
have a material adverse effect on our financial condition and results of operations.
The Jones Act includes restrictions on ownership by non-U.S. citizens of our U.S. point to point maritime shipping vessels,
and failure to comply with the Jones Act, or changes to or a repeal of the Jones Act, could limit our ability to operate our
vessels in the U.S. coastwise trade, result in the forfeiture of our vessels or otherwise adversely impact our earnings, cash flows
and operations.
We are subject to the Jones Act, which generally restricts U.S. point-to-point maritime shipping to vessels operating under
the U.S. flag, built in the U.S., owned and operated by U.S.-organized companies that are controlled and at least 75% owned by
U.S. citizens and crewed by predominately U.S. citizens. Our business would be adversely affected if we fail to comply with
the Jones Act provisions on coastwise trade. If we do not comply with any of these requirements, we would be prohibited from
operating our vessels in the U.S. coastwise trade and, under certain circumstances, we could be deemed to have undertaken an
unapproved transfer to non-U.S. citizens that could result in severe penalties, including permanent loss of U.S. coastwise
trading rights for our vessels, fines or forfeiture of vessels. Our business could be adversely affected if the Jones Act were to be
modified or repealed so as to permit foreign competition that is not subject to the same U.S. government imposed burdens.
Item 1B. Unresolved Staff Comments.
None.
Item 3. Legal Proceedings.
See Note 18 “Litigation, Environmental and Other Contingencies” to our consolidated financial statements.
Item 4. Mine Safety Disclosures.
We no longer own or operate mines for which reporting requirements apply under the mine safety disclosure requirements
of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), except for one terminal that is in temporary
idle status with the Mine Safety and Health Administration. We have not received any specified health and safety violations,
orders or citations, related assessments or legal actions, mining-related fatalities, or similar events requiring disclosure pursuant
to the mine safety disclosure requirements of Dodd-Frank for the year ended December 31, 2018.
33
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Our Class P common stock is listed for trading on the NYSE under the symbol “KMI.”
As of February 7, 2019, we had 11,434 holders of our Class P common stock, which does not include beneficial owners
whose shares are held by a nominee, such as a broker or bank.
For information on our equity compensation plans, see Note 10 “Share-based Compensation and Employee Benefits—
Share-based Compensation” to our consolidated financial statements.
Our Purchases of Our Class P Shares
Period
Total number
of securities
purchased(a)
Average
price paid per
security
Total number of
securities
purchased as part
of publicly
announced plans(a)
Maximum number (or
approximate dollar value) of
securities that may yet be
purchased under the plans or
programs
October 1 to October 31, 2018
November 1 to November 30, 2018
— $
— $
December 1 to December 31, 2018(b)
1,473,120
Total
1,473,120
$
$
—
—
15.56
15.56
— $
— $
1,473,120
1,473,120
$
$
1,500,000,715
1,500,000,715
1,477,062,687
1,477,062,687
_______
(a) On July 19, 2017, our board of directors approved a $2 billion common share buy-back program that began in December 2017. After
repurchase, the shares are cancelled and no longer outstanding.
(b) Excludes repurchases made in December 2018 of 0.1 million shares for approximately $2 million which settled on January 2, 2019.
34
Item 6. Selected Financial Data.
The following table sets forth, for the periods and at the dates indicated, our summary historical financial data. The table is
derived from our consolidated financial statements and notes thereto, and should be read in conjunction with those audited
financial statements. See also Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” in this report for more information.
Five-Year Review
Kinder Morgan, Inc. and Subsidiaries
Income and Cash Flow Data:
Revenues
Operating income
Earnings from equity investments
Net income
Net income attributable to Kinder Morgan, Inc.
Net income available to common stockholders
Class P Shares
Basic and Diluted Earnings Per Common Share From
Continuing Operations
As of or for the Year Ended December 31,
2018
2017
2016
2015
2014
(In millions, except per share amounts)
$
14,144
$
13,705
$
13,058
$
14,403
$
16,226
3,794
887
1,919
1,609
1,481
3,529
3,538
2,378
578
223
183
27
497
721
708
552
414
208
253
227
$
0.66
$
0.01
$
0.25
$
0.10
$
Basic Weighted Average Common Shares Outstanding
2,216
2,230
2,230
2,187
Dividends per common share declared for the period(a)
$
0.80
$
Dividends per common share paid in the period(a)
0.725
$
0.50
0.50
$
0.50
0.50
$
1.61
1.93
Balance Sheet Data (at end of period):
Property, plant and equipment, net
$
37,897
$
40,155
$
38,705
$
40,547
$
Total assets
Current portion of debt(b)
Long-term debt(c)
78,866
3,388
33,205
79,055
2,828
34,088
80,305
2,696
36,205
84,104
821
40,732
4,387
406
2,443
1,026
1,026
0.89
1,137
1.74
1.70
38,564
83,049
2,717
38,312
_______
(a) Dividends for the fourth quarter of each year are declared and paid during the first quarter of the following year.
(b) Using part of our portion of proceeds from the TMPL Sale that KML distributed to us in January 2019, we immediately repaid our
outstanding balance of commercial paper of $409 million and then repaid $500 million of maturing 9.00% senior notes and $800 million
of maturing 2.65% senior notes in February 2019.
(c) Excludes debt fair value adjustments.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis should be read in conjunction with our consolidated financial statements and the
notes thereto. We prepared our consolidated financial statements in accordance with GAAP. Additional sections in this report
which should be helpful to the reading of our discussion and analysis include the following: (i) a description of our business
strategy found in Items 1 and 2 “Business and Properties—(c) Narrative Description of Business—Business Strategy;” (ii) a
description of developments during 2018, found in Items 1 and 2 “Business and Properties—(a) General Development of
Business—Recent Developments;” and (iii) a description of risk factors affecting us and our business, found in Item 1A “Risk
Factors.”
Inasmuch as the discussion below and the other sections to which we have referred you pertain to management’s comments
on financial resources, capital spending, our business strategy and the outlook for our business, such discussions contain
forward-looking statements. These forward-looking statements reflect the expectations, beliefs, plans and objectives of
management about future financial performance and assumptions underlying management’s judgment concerning the matters
discussed, and accordingly, involve estimates, assumptions, judgments and uncertainties. Our actual results could differ
materially from those discussed in the forward-looking statements. Factors that could cause or contribute to any differences
35
include, but are not limited to, those discussed below and elsewhere in this report, particularly in Item 1A “Risk Factors” and at
the beginning of this report in “Information Regarding Forward-Looking Statements.”
General
Our reportable business segments are:
• Natural Gas Pipelines—the ownership and operation of (i) major interstate and intrastate natural gas pipeline and
storage systems; (ii) natural gas and crude oil gathering systems and natural gas processing and treating facilities; (iii)
NGL fractionation facilities and transportation systems; and (iv) LNG facilities;
•
Products Pipelines—the ownership and operation of refined petroleum products, NGL and crude oil and condensate
pipelines that primarily deliver, among other products, gasoline, diesel and jet fuel, propane, ethane, crude oil and
condensate to various markets, plus the ownership and/or operation of associated product terminals and petroleum
pipeline transmix facilities;
• Terminals—the ownership and/or operation of (i) liquids and bulk terminal facilities located throughout the U.S. and
portions of Canada that transload and store refined petroleum products, crude oil, ethanol and chemicals, and bulk
products, including petroleum coke, metals and ores; and (ii) Jones Act tankers;
• CO2—(i) the production, transportation and marketing of CO2 to oil fields that use CO2 as a flooding medium to
increase recovery and production of crude oil from mature oil fields; (ii) ownership interests in and/or operation of oil
fields and gasoline processing plants in West Texas; and (iii) the ownership and operation of a crude oil pipeline
system in West Texas; and
• Kinder Morgan Canada (prior to August 31, 2018)—the ownership and operation of the Trans Mountain pipeline
system that transports crude oil and refined petroleum products from Edmonton, Alberta, Canada to marketing
terminals and refineries in British Columbia, Canada and the state of Washington. As a result of the TMPL Sale, this
segment does not have results of operations on a prospective basis.
As an energy infrastructure owner and operator in multiple facets of the various U.S. and Canadian energy industries and
markets, we examine a number of variables and factors on a routine basis to evaluate our current performance and our
prospects for the future.
With respect to our interstate natural gas pipelines, related storage facilities and LNG terminals, the revenues from these
assets are primarily received under contracts with terms that are fixed for various and extended periods of time. To the extent
practicable and economically feasible in light of our strategic plans and other factors, we generally attempt to mitigate risk of
reduced volumes and prices by negotiating contracts with longer terms, with higher per-unit pricing and for a greater
percentage of our available capacity. These long-term contracts are typically structured with a fixed fee reserving the right to
transport or store natural gas and specify that we receive the majority of our fee for making the capacity available, whether or
not the customer actually chooses to utilize the capacity. Similarly, the Texas Intrastate Natural Gas Pipeline operations,
currently derives approximately 76% of its sales and transport margins from long-term transport and sales contracts. As
contracts expire, we have additional exposure to the longer term trends in supply and demand for natural gas. As of
December 31, 2018, the remaining weighted average contract life of our natural gas transportation contracts (including
intrastate pipelines’ sales portfolio) was approximately six years.
Our midstream assets provide gathering and processing services for natural gas and gathering services for crude oil. These
assets are mostly fee-based and the revenues and earnings we realize from gathering natural gas, processing natural gas in order
to remove NGL from the natural gas stream, and fractionating NGL into their base components, are affected by the volumes of
natural gas made available to our systems. Such volumes are impacted by producer rig count and drilling activity. In addition
to fee based arrangements, some of which may include minimum volume commitments, we also provide some services based
on percent-of-proceeds, percent-of-index and keep-whole contracts. Our service contracts may rely solely on a single type of
arrangement, but more often they combine elements of two or more of the above, which helps us and our counterparties
manage the extent to which each shares in the potential risks and benefits of changing commodity prices.
The profitability of our refined petroleum products pipeline transportation and storage business generally is driven by the
volume of refined petroleum products that we transport and the prices we receive for our services. We also have approximately
55 liquids terminals in this business segment that store fuels and offer blending services for ethanol and biofuels.
The transportation and storage volume levels are primarily driven by the demand for the refined petroleum products being
36
shipped or stored. Demand for refined petroleum products tends to track in large measure demographic and economic growth,
and, with the exception of periods of time with very high product prices or recessionary conditions, demand tends to be
relatively stable. Because of that, we seek to own refined petroleum products pipelines located in, or that transport to, stable or
growing markets and population centers. The prices for shipping are generally based on regulated tariffs that are adjusted
annually based on changes in the U.S. Producer Price Index.
Our crude and condensate transportation services are primarily provided either pursuant to (i) long-term contracts that
normally contain minimum volume commitments or (ii) through terms prescribed by the toll settlements with shippers and
approved by regulatory authorities. As a result of these contracts, our settlement volumes are generally not sensitive to
changing market conditions in the shorter term; however, in the longer term the revenues and earnings we realize from our
crude oil and condensate pipelines are affected by the volumes of crude oil and condensate available to our pipeline systems,
which are impacted by the level of oil and gas drilling activity in the respective producing regions that we serve. Our
petroleum condensate processing facility splits condensate into its various components, such as light and heavy naphtha, under
a long-term fee-based agreement with a major integrated oil company.
The factors impacting our Terminals business segment generally differ between liquid and bulk terminals, and in the case
of a bulk terminal, the type of product being handled or stored. Our liquids terminals business generally has long-term
contracts that require the customer to pay regardless of whether they use the capacity. Thus, similar to our natural gas pipelines
business, our liquids terminals business is less sensitive to short-term changes in supply and demand. Therefore, the extent to
which changes in these variables affect our terminals business in the near term is a function of the length of the underlying
service contracts (which on average is approximately four years), the extent to which revenues under the contracts are a
function of the amount of product stored or transported, and the extent to which such contracts expire during any given period
of time. As with our refined petroleum products pipelines transportation business, the revenues from our bulk terminals
business are generally driven by the volumes we handle and/or store, as well as the prices we receive for our services, which in
turn are driven by the demand for the products being shipped or stored. While we handle and store a large variety of products
in our bulk terminals, the primary products are petroleum coke, metals and ores. For the most part, we have contracts for this
business that contain minimum volume guarantees and/or service exclusivity arrangements under which customers are required
to utilize our terminals for all or a specified percentage of their handling and storage needs. The profitability of our minimum
volume contracts is generally unaffected by short-term variation in economic conditions; however, to the extent we expect
volumes above the minimum and/or have contracts which are volume-based, we can be sensitive to changing market
conditions. To the extent practicable and economically feasible in light of our strategic plans and other factors, we generally
attempt to mitigate the risk of reduced volumes and pricing by negotiating contracts with longer terms, with higher per-unit
pricing and for a greater percentage of our available capacity. In addition, weather-related factors such as hurricanes and other
weather related events may impact our facilities and access to them and, thus, the profitability of certain terminals for limited
periods of time or, in relatively rare cases of severe damage to facilities, for longer periods. In addition to liquid and bulk
terminals, we also own Jones Act tankers in our Terminals business segment. As of December 31, 2018, we have sixteen Jones
Act qualified tankers that operate in the marine transportation of crude oil, condensate and refined products in the U.S. and are
currently operating pursuant to multi-year fixed price charters with major integrated oil companies, major refiners and the U.S.
Military Sealift Command.
The CO2 source and transportation business primarily has third-party contracts with minimum volume requirements, which
as of December 31, 2018, had a remaining average contract life of approximately nine years. CO2 sales contracts vary from
customer to customer and have evolved over time as supply and demand conditions have changed. Our recent contracts have
generally provided for a delivered price tied to the price of crude oil, but with a floor price. On a volume-weighted basis, for
third-party contracts making deliveries in 2019, and utilizing the average oil price per barrel contained in our 2019 budget,
approximately 97% of our revenue is based on a fixed fee or floor price, and 3% fluctuates with the price of oil. In the long-
term, our success in this portion of the CO2 business segment is driven by the demand for CO2. However, short-term changes in
the demand for CO2 typically do not have a significant impact on us due to the required minimum sales volumes under many of
our contracts. In the CO2 business segment’s oil and gas producing activities, we monitor the amount of capital we expend in
relation to the amount of production that we expect to add. In that regard, our production during any period is an important
measure. In addition, the revenues we receive from our crude oil and NGL sales are affected by the prices we realize from the
sale of these products. Over the long-term, we will tend to receive prices that are dictated by the demand and overall market
price for these products. In the shorter term, however, market prices are likely not indicative of the revenues we will receive
due to our risk management, or hedging, program, in which the prices to be realized for certain of our future sales quantities are
fixed, capped or bracketed through the use of financial derivative contracts, particularly for crude oil. The realized weighted
average crude oil price per barrel, with the hedges allocated to oil, was $57.83 per barrel in 2018, $58.40 per barrel in 2017 and
$61.52 per barrel in 2016. Had we not used energy derivative contracts to transfer commodity price risk, our crude oil sales
prices would have averaged $58.63 per barrel in 2018, $49.61 per barrel in 2017 and $41.36 per barrel in 2016.
37
Also, see Note 16 “Revenue Recognition” to our consolidated financial statements for more information about the types of
contracts and revenues recognized for each of our segments.
Investment in Ruby
In January 2019, Pacific Gas and Electric (PG&E) filed for Chapter 11 bankruptcy protection. Our exposure to PG&E is
limited to our $750 million equity investment in Ruby and an approximate $55 million note receivable from Ruby, where
PG&E is Ruby’s largest customer. PG&E represents approximately $93 million of annual revenues on Ruby, and our partner’s
preferred equity interest in Ruby is senior to our interest. Despite the bankruptcy filing, Ruby continues to perform under its
existing service contracts with PG&E, and PG&E has provided credit support on its trade payables to Ruby through a
prepayment arrangement. While the ultimate outcome of the bankruptcy proceedings remains uncertain, there is the potential
for Ruby’s existing contracts with PG&E to be canceled in the bankruptcy process. Any cancellation of these contracts could
negatively impact Ruby’s future revenues and require us to evaluate our investment in Ruby for an other than temporary
impairment. This could result in a material impairment of our investment in Ruby at the time such events become known.
KML
Sale of Trans Mountain Pipeline System and Its Expansion Project
On August 31, 2018, KML completed the sale of the TMPL, the TMEP, the Puget Sound pipeline system and Kinder
Morgan Canada Inc., the Canadian employer of our staff that operate the business, which were indirectly acquired by the
Government of Canada through Trans Mountain Corporation (a subsidiary of the Canada Development Investment
Corporation) for cash consideration of C$4.43 billion (U.S.$3.4 billion), which is the contractual purchase price of C$4.5
billion net of a preliminary working capital adjustment (the “TMPL Sale”). These assets comprised our Kinder Morgan Canada
business segment. We recognized a pre-tax gain from the TMPL Sale of $596 million within “Loss on impairments and
divestitures, net” in our accompanying consolidated statement of income during the year ended December 31, 2018, including
an incremental working capital adjustment of $26 million accrued as of December 31, 2018.
On January 3, 2019, pursuant to KML’s shareholders’ approval on November 29, 2018, KML distributed to its shareholders
as a return of capital, the net proceeds from the TMPL Sale, after capital gains taxes, customary purchase price adjustments and
the repayment of debt outstanding under a temporary KML credit facility (see Note 9 “Debt—Credit Facilities and Restrictive
Covenants—KML”). KML’s public owners of its restricted voting shares, reflected as noncontrolling interests by us, received
approximately $0.9 billion (C$1.2 billion), and part of our approximate 70% portion of the net proceeds of $1.9 billion (C$2.5
billion) (after Canadian tax) were used to immediately repay our outstanding commercial paper borrowings of $0.4 billion, and
in February 2019, to pay down approximately $1.3 billion of maturing long-term debt. To facilitate the return of capital and
provide flexibility for KML’s dividends going forward, KML’s shareholders also approved a reduction in the stated capital of
its restricted voting shares by C$1.45 billion, which was recorded in the fourth quarter of 2018, along with a “reverse stock
split” of KML’s restricted voting shares, and KML’s special voting shares that we own, on a one-for-three basis (three shares
consolidating to one share) which occurred on January 4, 2019.
KML continues to manage a portfolio of strategic infrastructure assets across Western Canada, including (i) the crude
terminal facilities, which constitute the largest merchant terminal storage position in the Edmonton market and the largest
origination crude by rail loading facility in North America; (ii) the Vancouver Wharves Terminal, the largest mineral
concentrate export/import facility on the west coast of North America; (iii) the Jet Fuel pipeline system; and (iv) the Canadian
portion of the U.S. and Canadian Cochin pipeline system. These KML assets are part of our Products Pipelines and Terminals
business segments.
KML IPO
The interest in the Canadian business operations that we sold to the public on May 30, 2017 in KML’s IPO represented an
interest in all our operating assets in our Kinder Morgan Canada business segment and our operating Canadian assets in our
Terminals and Products Pipelines business segments. These Canadian assets included the TMPL, TMEP and the Puget Sound
pipeline system, all of which have been sold in the TMPL Sale, the Jet Fuel pipeline system, the Canadian portion of the
Cochin pipeline system, the Vancouver Wharves Terminal and the North 40 Terminal; as well as three jointly controlled
investments: the Edmonton Rail Terminal, the Alberta Crude Terminal and the Base Line Terminal.
Subsequent to the IPO, we retained control of KML, and as a result, it remains consolidated in our consolidated financial
statements. The public ownership of the KML restricted voting shares is reflected within “Noncontrolling interests” in our
38
consolidated statements of stockholders’ equity and consolidated balance sheets. Earnings attributable to the public ownership
of KML are presented in “Net income attributable to noncontrolling interests” in our consolidated statements of income for the
periods presented after May 30, 2017. KML transacts in and/or uses the Canadian dollar as the functional currency, which
affects our segment results due to the variability in U.S. - Canadian dollar exchange rates.
Subsequent to its IPO, KML has obtained a credit facility and completed two preferred share offerings. KML continues to
be a self-funding entity and we do not anticipate making contributions to fund its growth or operations.
2017 Tax Reform
While the 2017 Tax Reform will ultimately be moderately positive for us, the reduced corporate income tax rate caused
certain of our deferred-tax assets to be revalued at 21% versus 35% at the end of 2017. Although there is no impact to the
underlying related deductions, which can continue to be used to offset future taxable income, we took an estimated
approximately $1.4 billion non-cash accounting charge in 2017. The positive impacts of the law include the reduced corporate
income tax rate and the fact that several of our U.S. business units (essentially all but our interstate natural gas pipelines) will
be able to deduct 100% of their capital expenditures through 2022. See Note 5 “Income Taxes” to our consolidated financial
statements.
Critical Accounting Policies and Estimates
Accounting standards require information in financial statements about the risks and uncertainties inherent in significant
estimates, and the application of GAAP involves the exercise of varying degrees of judgment. Certain amounts included in or
affecting our consolidated financial statements and related disclosures must be estimated, requiring us to make certain
assumptions with respect to values or conditions that cannot be known with certainty at the time our financial statements are
prepared. These estimates and assumptions affect the amounts we report for our assets and liabilities, our revenues and
expenses during the reporting period, and our disclosure of contingent assets and liabilities at the date of our financial
statements. We routinely evaluate these estimates, utilizing historical experience, consultation with experts and other methods
we consider reasonable in the particular circumstances. Nevertheless, actual results may differ significantly from our estimates,
and any effects on our business, financial position or results of operations resulting from revisions to these estimates are
recorded in the period in which the facts that give rise to the revision become known.
In preparing our consolidated financial statements and related disclosures, examples of certain areas that require more
judgment relative to others include our use of estimates in determining: (i) revenue recognition; (ii) income taxes; (iii) the
economic useful lives of our assets and related depletion rates; (iv) the fair values used to (a) assign purchase price from
business combinations, (b) determine possible asset and equity investment impairment charges, and (c) calculate the annual
goodwill impairment test; (v) reserves for environmental claims, legal fees, transportation rate cases and other litigation
liabilities; (vi) provisions for uncollectible accounts receivables; (vii) computing the gain or loss, if any, on assets sold in whole
or in part; and (viii) exposures under contractual indemnifications.
For a summary of our significant accounting policies, see Note 2 “Summary of Significant Accounting Policies” to our
consolidated financial statements. We believe that certain accounting policies are of more significance in our consolidated
financial statement preparation process than others, which policies are discussed as follows.
Environmental Matters
With respect to our environmental exposure, we utilize both internal staff and external experts to assist us in identifying
environmental issues and in estimating the costs and timing of remediation efforts. We expense or capitalize, as appropriate,
environmental expenditures that relate to current operations, and we record environmental liabilities when environmental
assessments and/or remedial efforts are probable and we can reasonably estimate the costs. Generally, we do not discount
environmental liabilities to a net present value, and we recognize receivables for anticipated associated insurance recoveries
when such recoveries are deemed to be probable. We record at fair value, where appropriate, environmental liabilities assumed
in a business combination.
Our recording of our environmental accruals often coincides with our completion of a feasibility study or our commitment
to a formal plan of action, but generally, we recognize and/or adjust our environmental liabilities following routine reviews of
potential environmental issues and claims that could impact our assets or operations. These adjustments may result in increases
in environmental expenses and are primarily related to quarterly reviews of potential environmental issues and resulting
environmental liability estimates. In making these liability estimations, we consider the effect of environmental compliance,
pending legal actions against us, and potential third party liability claims. For more information on environmental matters, see
39
Part I, Items 1 and 2 “Business and Properties—(c) Narrative Description of Business—Environmental Matters.” For more
information on our environmental disclosures, see Note 18 “Litigation, Environmental and Other Contingencies” to our
consolidated financial statements.
Legal and Regulatory Matters
Many of our operations are regulated by various U.S. and Canadian regulatory bodies and we are subject to legal and
regulatory matters as a result of our business operations and transactions. We utilize both internal and external counsel in
evaluating our potential exposure to adverse outcomes from orders, judgments or settlements. In general, we expense legal
costs as incurred. When we identify contingent liabilities, we identify a range of possible costs expected to be required to
resolve the matter. Generally, if no amount within this range is a better estimate than any other amount, we record a liability
equal to the low end of the range. Any such liability recorded is revised as better information becomes available. Accordingly,
to the extent that actual outcomes differ from our estimates, or additional facts and circumstances cause us to revise our
estimates, our earnings will be affected. For more information on legal proceedings, see Note 18 “Litigation, Environmental
and Other Contingencies” to our consolidated financial statements.
Intangible Assets
Intangible assets are those assets which provide future economic benefit but have no physical substance. Identifiable
intangible assets having indefinite useful economic lives, including goodwill, are not subject to regular periodic amortization,
and such assets are not to be amortized until their lives are determined to be finite. Instead, the carrying amount of a
recognized intangible asset with an indefinite useful life must be tested for impairment annually or on an interim basis if events
or circumstances indicate that the fair value of the asset has decreased below its carrying value. We evaluate goodwill for
impairment on May 31 of each year. At year end and during other interim periods we evaluate our reporting units for events
and changes that could indicate that it is more likely than not that the fair value of a reporting unit could be less than its
carrying amount.
Excluding goodwill, our other intangible assets include customer contracts, relationships and agreements, and technology-
based assets. These intangible assets have definite lives, are being amortized in a systematic and rational manner over their
estimated useful lives, and are reported separately as “Other intangibles, net” in our accompanying consolidated balance sheets.
Hedging Activities
We engage in a hedging program that utilizes derivative contracts to mitigate (offset) our exposure to fluctuations in energy
commodity prices, foreign currency exposure on Euro denominated debt and net investments in foreign operations, and to
balance our exposure to fixed and variable interest rates, and we believe that these hedges are generally effective in realizing
these objectives. According to the provisions of GAAP, to be considered effective, changes in the value of a derivative contract
or its resulting cash flows must substantially offset changes in the value or cash flows of the item being hedged, and any
ineffective portion of the hedge gain or loss and any component excluded from the computation of the effectiveness of the
derivative contract must be reported in earnings immediately.
All of our derivative contracts are recorded at estimated fair value. We utilize published prices, broker quotes, and
estimates of market prices to estimate the fair value of these contracts; however, actual amounts could vary materially from
estimated fair values as a result of changes in market prices. In addition, changes in the methods used to determine the fair
value of these contracts could have a material effect on our results of operations. We do not anticipate future changes in the
methods used to determine the fair value of these derivative contracts. For more information on our hedging activities, see Note
14 “Risk Management” to our consolidated financial statements.
Employee Benefit Plans
We reflect an asset or liability for our pension and other postretirement benefit plans based on their overfunded or
underfunded status. As of December 31, 2018, our pension plans were underfunded by $702 million, and our other
postretirement benefits plans were underfunded by $33 million. Our pension and other postretirement benefit obligations and
net benefit costs are primarily based on actuarial calculations. We use various assumptions in performing these calculations,
including those related to the return that we expect to earn on our plan assets, the rate at which we expect the compensation of
our employees to increase over the plan term, the estimated cost of health care when benefits are provided under our plan and
other factors. A significant assumption we utilize is the discount rate used in calculating our benefit obligations. We utilize a
full yield curve approach in the estimation of the service and interest cost components of net periodic benefit cost (credit) for
our pension and other postretirement benefit plans which applies the specific spot rates along the yield curve used in the
40
determination of the benefit obligation to their underlying projected cash flows. The selection of these assumptions is further
discussed in Note 10 “Share-based Compensation and Employee Benefits” to our consolidated financial statements.
Actual results may differ from the assumptions included in these calculations, and as a result, our estimates associated with
our pension and other postretirement benefits can be, and often are, revised in the future. The income statement impact of the
changes in the assumptions on our related benefit obligations are deferred and amortized into income over either the period of
expected future service of active participants, or over the expected future lives of inactive plan participants. As of
December 31, 2018, we had deferred net losses of approximately $536 million in pre-tax accumulated other comprehensive
loss related to our pension and other postretirement benefits.
The following table shows the impact of a 1% change in the primary assumptions used in our actuarial calculations
associated with our pension and other postretirement benefits for the year ended December 31, 2018:
One percent increase in:
Discount rates
Expected return on plan assets
Rate of compensation increase
Health care cost trends
One percent decrease in:
Discount rates
Expected return on plan assets
Rate of compensation increase
Health care cost trends
Pension Benefits
Other Postretirement
Benefits
Net benefit
cost
(income)
Change in
funded
status(a)
Net benefit
cost
(income)
Change in
funded
status(a)
(In millions)
$
(11) $
(21)
2
—
$
183
—
(7)
—
13
21
(2)
—
(214)
—
7
—
(1) $
(3)
—
3
1
3
—
(3)
25
—
—
(16)
(29)
—
—
14
_______
(a) Includes amounts deferred as either accumulated other comprehensive income (loss) or as a regulatory asset or liability for
certain of our regulated operations.
Income Taxes
Income tax expense is recorded based on an estimate of the effective tax rate in effect or to be in effect during the
relevant periods. Changes in tax legislation are included in the relevant computations in the period in which such changes are
enacted. We do business in a number of states with differing laws concerning how income subject to each state’s tax
structure is measured and at what effective rate such income is taxed. Therefore, we must make estimates of how our income
will be apportioned among the various states in order to arrive at an overall effective tax rate. Changes in our effective rate,
including any effect on previously recorded deferred taxes, are recorded in the period in which the need for such change is
identified.
Deferred income tax assets and liabilities are recognized for temporary differences between the basis of assets and
liabilities for financial reporting and tax purposes. Deferred tax assets are reduced by a valuation allowance for the amount
that is more likely than not to not be realized. While we have considered estimated future taxable income and prudent and
feasible tax planning strategies in determining the amount of our valuation allowance, any change in the amount that we
expect to ultimately realize will be included in income in the period in which such a determination is reached.
In determining the deferred income tax asset and liability balances attributable to our investments, we apply an
accounting policy that looks through our investments. The application of this policy resulted in no deferred income taxes
being provided on the difference between the book and tax basis on the non-tax-deductible goodwill portion of our
investments, including KMI’s investment in its wholly-owned subsidiary, KMP.
41
Results of Operations
Overview
Our management evaluates our performance primarily using the measures of Segment EBDA and, as discussed below
under “—Non-GAAP Financial Measures,” DCF, and Segment EBDA before certain items. Segment EBDA is a useful
measure of our operating performance because it measures the operating results of our segments before DD&A and certain
expenses that are generally not controllable by our business segment operating managers, such as general and administrative
expenses, interest expense, net, and income taxes. Our general and administrative expenses include such items as unallocated
employee benefits, insurance, rentals, unallocated litigation and environmental expenses, and shared corporate services
including accounting, information technology, human resources and legal services.
In our discussions of the operating results of individual businesses that follow, we generally identify the important
fluctuations between periods that are attributable to dispositions and acquisitions separately from those that are attributable to
businesses owned in both periods.
Effective January 1, 2019, certain assets were transferred between Natural Gas Pipelines, Products Pipelines and Terminals
business segments, which are not reflected in the following business segment Management Discussion and Analysis tables
below.
Consolidated Earnings Results
Year Ended December 31,
2018
2017
2016
(In millions)
Segment EBDA(a)
Natural Gas Pipelines
Products Pipelines
Terminals
CO2
Kinder Morgan Canada(b)
Total segment EBDA(c)
DD&A
Amortization of excess cost of equity investments
General and administrative and corporate charges(d)
Interest, net(e)
Income before income taxes
Income tax expense(f)
Net income
Net income attributable to noncontrolling interests
Net income attributable to Kinder Morgan, Inc.
Preferred stock dividends
$
3,580
$
3,487
$
1,173
1,171
759
720
7,403
(2,297)
(95)
(588)
(1,917)
2,506
(587)
1,919
(310)
1,609
(128)
1,481
$
1,231
1,224
847
186
6,975
(2,261)
(61)
(660)
(1,832)
2,161
(1,938)
223
(40)
183
(156)
27
$
3,211
1,067
1,078
827
181
6,364
(2,209)
(59)
(652)
(1,806)
1,638
(917)
721
(13)
708
(156)
552
Net income available to common stockholders
$
_______
(a) Includes revenues, earnings from equity investments, and other, net, less operating expenses, loss on impairments and divestitures, net,
loss on impairments and divestitures of equity investments, net and other income, net. Operating expenses include costs of sales,
operations and maintenance expenses, and taxes, other than income taxes.
(b) As a result of the TMPL Sale on August 31, 2018, this segment does not have results of operations on a prospective basis.
Certain items affecting Total Segment EBDA (see “—Non-GAAP Measures” below)
(c) 2018, 2017 and 2016 amounts include net decreases in earnings of $269 million, $384 million and $1,121 million, respectively, related
to the combined net effect of the certain items impacting Total Segment EBDA. The extent to which these items affect each of our
business segments is discussed below in the footnotes to the tables within “—Segment Earnings Results.”
42
(d) 2018, 2017 and 2016 amounts include net increases in expense of $24 million and $15 million and a net decrease in expense of $13
million, respectively, related to the combined net effect of the certain items related to general and administrative and corporate charges
disclosed below in “—General and Administrative and Corporate Charges, Interest, net and Noncontrolling Interests.”
(e) 2018, 2017 and 2016 amounts include a net increase in expense of $26 million and net decreases in expense of $39 million and $193
million, respectively, related to the combined net effect of the certain items related to interest expense, net disclosed below in “—
General and Administrative and Corporate Charges, Interest, net and Noncontrolling Interests.”
(f) 2018, 2017 and 2016 amounts include a net decrease of $58 million and net increases in expense of $1,085 million and $18 million,
respectively, related to the combined net effect of the certain items related to income tax expense representing the income tax provision
on certain items plus discrete income tax items.
Year Ended December 31, 2018 vs. 2017
The certain item totals reflected in footnotes (c) through (e) to the table above accounted for $41 million of the increase in
income before income taxes in 2018 as compared to 2017 (representing the difference between decreases of $319 million and
$360 million from certain items in income before income taxes for 2018 and 2017, respectively). After giving effect to these
certain items, which are discussed in more detail in the discussion that follows, the remaining increase of $304 million (12%)
from the prior year in income before income taxes is primarily attributable to increased performance from our Natural Gas
Pipelines, Products Pipelines, and CO2 business segments and decreased general and administrative expense partially offset by
increased DD&A expense, interest expense, net and lower earnings from our Kinder Morgan Canada business segment as a
result of the TMPL Sale and our Terminals business segment.
Year Ended December 31, 2017 vs. 2016
The certain item totals reflected in footnotes (c) through (e) to the table above accounted for $555 million of the increase in
income before income taxes in 2017 as compared to 2016 (representing the difference between decreases of $360 million and
$915 million from certain items in income before income taxes for 2017 and 2016, respectively). After giving effect to these
certain items, which are discussed in more detail in the discussion that follows, the remaining decrease of $32 million (1%)
from the prior year in income before income taxes is primarily attributable to decreased performance from our Natural Gas
Pipelines business segment, largely associated with our sale of a 50% interest in SNG to The Southern Company (Southern
Company) on September 1, 2016, and increased DD&A expense partially offset by decreased general and administrative
expense and decreased interest expense.
Non-GAAP Financial Measures
Our non-GAAP performance measures are DCF, both in the aggregate and per share, and Segment EBDA before certain
items. Certain items, as used to calculate our non-GAAP measures, are items that are required by GAAP to be reflected in net
income, but typically either (i) do not have a cash impact (for example, asset impairments), or (ii) by their nature are separately
identifiable from our normal business operations and in our view are likely to occur only sporadically (for example, certain
legal settlements, enactment of new tax legislation and casualty losses).
Our non-GAAP performance measures described below should not be considered alternatives to GAAP net income or
other GAAP measures and have important limitations as analytical tools. Our computations of DCF and Segment EBDA
before certain items may differ from similarly titled measures used by others. You should not consider these non-GAAP
performance measures in isolation or as substitutes for an analysis of our results as reported under GAAP. DCF should not be
used as an alternative to net cash provided by operating activities computed under GAAP. Management compensates for the
limitations of these non-GAAP performance measures by reviewing our comparable GAAP measures, understanding the
differences between the measures and taking this information into account in its analysis and its decision making processes.
DCF
DCF is calculated by adjusting net income available to common stockholders before certain items for DD&A, total book
and cash taxes, sustaining capital expenditures and other items. DCF is a significant performance measure useful to
management and external users of our financial statements in evaluating our performance and in measuring and estimating the
ability of our assets to generate cash earnings after servicing our debt and preferred stock dividends, paying cash taxes and
expending sustaining capital that could be used for discretionary purposes such as common stock dividends, stock repurchases,
retirement of debt, or expansion capital expenditures. We believe the GAAP measure most directly comparable to DCF is net
income available to common stockholders. A reconciliation of DCF to net income available to common stockholders is
provided in the table below. DCF per common share is DCF divided by average outstanding common shares, including
restricted stock awards that participate in dividends.
43
Reconciliation of Net Income Available to Common Stockholders to DCF
2018
Year Ended December 31,
2017
(In millions)
2016
Net Income Available to Common Stockholders
$
1,481
$
27
$
552
Add/(Subtract):
Certain items before book tax(a)
Noncontrolling interest certain items(b)
Book tax certain items(c)
Impact of 2017 Tax Reform(d)
Total certain items
355
240
(58)
(36)
501
141
—
(77)
1,381
1,445
915
(8)
18
—
925
Net income available to common stockholders before certain items
1,982
1,472
1,477
Add/(Subtract):
DD&A expense(e)
Total book taxes(f)
Cash taxes(g)
Other items(h)
Sustaining capital expenditures(i)
DCF
Weighted average common shares outstanding for dividends(j)
DCF per common share
Declared dividend per common share
2,752
710
(77)
15
(652)
4,730
2,228
2.12
0.80
$
$
2,684
957
(72)
29
(588)
4,482
2,240
2.00
0.50
$
$
2,617
993
(79)
43
(540)
4,511
2,238
2.02
0.50
$
$
_______
(a) Consists of certain items summarized in footnotes (c) through (e) to the “—Results of Operations—Consolidated Earnings Results” table
included above, and described in more detail below in the footnotes to tables included in “—Segment Earnings Results” and “—General
and Administrative and Corporate Charges, Interest, net and Noncontrolling Interests.”
(b) Represents noncontrolling interests share of certain items. 2018 includes KML shareholders’ approximately 30% share of the gain on
the TMPL Sale.
(c) Represents income tax provision on certain items plus discrete income tax items.
(d) 2018 amount represents 2017 Tax Reform provisional adjustments including our share of certain equity investees’ 2017 Tax Reform
provisional adjustments related to our FERC regulated business. 2017 amount includes book tax certain items and $219 million pre-tax
certain items related to our FERC regulated business. See Note 5 “Income Taxes” to our consolidated financial statements.
(e) Includes DD&A and amortization of excess cost of equity investments. Also includes our share of certain equity investee’s DD&A, net
of the noncontrolling interests’ portion of KML DD&A and consolidating joint venture partners’ share of DD&A of $360 million, $362
million and $349 million in 2018, 2017 and 2016, respectively.
(f) Excludes book tax certain items of $58 million, $(1,085) million and $(18) million for 2018, 2017 and 2016, respectively. 2018, 2017
and 2016 amounts also include $65 million, $104 million and $94 million, respectively, of our share of taxable equity investees’ book
taxes, net of the noncontrolling interests’ portion of KML book taxes.
(g) Includes our share of taxable equity investees’ cash taxes of $(68) million, $(69) million and $(76) million in 2018, 2017 and 2016,
respectively.
(h) Includes pension contributions and non-cash compensation associated with our restricted stock program.
(i)
Includes our share of (i) certain equity investees’; (ii) KML’s; and (iii) certain consolidating joint venture subsidiaries’ sustaining capital
expenditures of $(105) million, $(107) million and $(90) million in 2018, 2017 and 2016, respectively.
Includes restricted stock awards that participate in common share dividends.
(j)
Segment EBDA Before Certain Items
Segment EBDA before certain items is used by management in its analysis of segment performance and management of
our business. General and administrative expenses generally are not under the control of our segment operating managers, and
therefore, are not included when we measure business segment operating performance. We believe Segment EBDA before
certain items is a significant performance metric because it provides us and external users of our financial statements additional
44
insight into the ability of our business segments to generate segment cash earnings on an ongoing basis. We believe it is useful
to investors because it is a performance measure that management uses to allocate resources to our segments and assess each
segment’s performance. We believe the GAAP measure most directly comparable to Segment EBDA before certain items is
Segment EBDA.
In the tables for each of our business segments under “— Segment Earnings Results” below, Segment EBDA before
certain items and Revenues before certain items are calculated by adjusting the Segment EBDA and Revenues for the
applicable certain item amounts, which are totaled in the tables and described in the footnotes to those tables. Revenues before
certain items is provided to further enhance our analysis of Segment EBDA before certain items and is not a performance
measure.
Segment Earnings Results
Natural Gas Pipelines
Revenues(a)
Operating expenses(b)
Loss on impairments and divestitures, net(c)
Other income
Earnings (losses) from equity investments(d)
Other, net(e)
Segment EBDA(a)(b)(c)(d)(e)
Certain items(a)(b)(c)(d)(e)
Segment EBDA before certain items
Change from prior period
Revenues before certain items
Segment EBDA before certain items
Natural gas transport volumes (BBtu/d)(f)
Natural gas sales volumes (BBtu/d)
Natural gas gathering volumes (BBtu/d)(f)
Crude/condensate gathering volumes (MBbl/d)(f)
Year Ended December 31,
2018
2017
2016
(In millions, except operating statistics)
8,005
(4,393)
(200)
1
(221)
19
3,211
825
4,036
$
$
$
$
$
9,015
(5,353)
(594)
1
474
37
3,580
622
$
8,618
(5,457)
(27)
1
303
49
3,487
392
4,202
$
3,879
$
Increase/(Decrease)
363
323
$
$
594
(157)
32,821
29,108
28,095
2,472
2,972
307
2,341
2,647
273
2,335
2,963
292
_______
Certain items affecting Segment EBDA
(a) 2018 and 2017 amounts include an increases in revenues of $24 million and $8 million, respectively, and 2016 amount includes a
decrease in revenues of $50 million, all related to non-cash mark-to-market derivative contracts used to hedge forecasted natural gas,
NGL and crude oil sales. 2018 amount also includes increases in revenue of (i) $9 million related to a transportation contract refund; (ii)
$5 million related to the early termination of a long-term natural gas transportation contract; and (iii) $4 million from other certain items.
2016 amount also includes an increase in revenue of $39 million associated with revenue collected on a customer’s early buyout of a
long-term natural gas storage contract.
(b) 2018 amount includes (i) an increase in earnings of $7 million as a result of a property tax refund; (ii) an increase in earnings of $6
million related to the release of certain sales and use tax reserves; and (iii) a decrease in earnings of $2 million related to other certain
items. 2017 amount includes a decrease in earnings of (i) $166 million related to the impact of the 2017 Tax Reform; (ii) $3 million
related to the non-cash impairment loss associated with the Colden storage field; and (iii) $3 million from other certain items. 2016
amount includes a decrease in earnings of $3 million from other certain items.
(c) 2018 amount includes a decrease in earnings of $600 million related to a non-cash loss on impairment of certain gathering and
processing assets in Oklahoma and an increase in earnings of $1 million related to other certain item. 2017 amount includes a decrease
in earnings of $27 million related to the non-cash impairment loss associated with the Colden storage field. 2016 amount includes (i) a
decrease in earnings of $106 million of project write-offs; (ii) an $84 million pre-tax loss on the sale of a 50% interest in our SNG
natural gas pipeline system; and (iii) an $11 million decrease in earnings from other certain items.
(d) 2018 amount includes (i) a net loss of $89 million in our equity investment in Gulf LNG Holdings Group, LLC (Gulf LNG), due to a
ruling by an arbitration panel affecting a customer contract, which resulted in a non-cash impairment of our investment partially offset
45
by our share of earnings recognized by Gulf LNG on the respective customer contract; (ii) an increase in earnings of $41 million for our
share of certain equity investees’ 2017 Tax Reform provisional adjustments; and (iii) a decrease in earnings of $4 million related to other
certain items. 2017 amount includes (i) a $150 million non-cash impairment loss related to our investment in FEP; (ii) a decrease in
earnings of $58 million related to 2017 Tax Reform adjustments recorded by equity investees; (iii) an increase in earnings from an equity
investment of $22 million on the sale of a claim related to the early termination of a long-term natural gas transportation contract; (iv) an
increase in earnings from an equity investment of $12 million related to a customer contract settlement; (v) a decrease in earnings of $12
million related to early termination of debt at an equity investee; and (vi) a decrease in earnings of $10 million related to a non-cash
impairment at an equity investee. 2016 amount includes (i) $606 million of non-cash impairment losses primarily related to our
investments in MEP and Ruby; (ii) an increase in earnings of $18 million related to the early termination of a customer contract at an
equity investee; and (iii) a decrease in earnings of $12 million related to other certain items at equity investees.
(e) 2018, 2017 and 2016 amounts include decreases in earnings of $24 million, $5 million and $10 million, respectively, related to certain
litigation matters.
Other
(f) Joint venture throughput is reported at our ownership share.
Below are the changes in both Segment EBDA before certain items and revenues before certain items in 2018 and 2017,
when compared with the respective prior year:
Year Ended December 31, 2018 versus Year Ended December 31, 2017
Midstream
West Region
North Region
South Region
Other
Intrasegment eliminations
Total Natural Gas Pipelines
Segment EBDA before
certain items
increase/(decrease)
Revenues before
certain items
increase/(decrease)
(In millions, except percentages)
$
150
100
43
33
(3)
—
$
323
14%
11%
4%
5%
150%
—%
8%
$
142
95
103
7
(3)
19
$
363
3%
8%
7%
2%
150%
43%
4%
The changes in Segment EBDA for our Natural Gas Pipelines business segment are further explained by the following
discussion of the significant factors driving Segment EBDA before certain items in the comparable years of 2018 and 2017:
• Midstream’s increase of $150 million (14%) was primarily due to increased earnings from Texas intrastate natural gas
pipeline operations, KinderHawk, Hiland Midstream and South Texas Midstream. Texas intrastate natural gas pipeline
operations were favorably impacted by higher volumes with new and existing customers serving the Mexico and
Texas Gulf Coast industrial markets partially offset by lower park and loan revenues and storage margins.
KinderHawk and South Texas Midstream benefited from increased drilling and production in the Haynesville and
Eagle Ford basins, respectively. Hiland Midstream increased earnings were primarily due to higher gas and crude oil
volumes and higher NGL sales prices. While these factors also drove an increase in revenue, these increases in
revenues were partially offset by the effect of the January 1, 2018 adoption of Topic 606 which caused a
corresponding decrease in cost of goods sold;
• West Region’s increase of $100 million (11%) was primarily due to higher earnings from EPNG, CIG and CPGPL.
EPNG experienced higher volumes in 2018 from increased Permian basin-related activity and associated capacity
sales. CIG and CPGPL earnings were higher due to continued growing production in the Denver Julesburg basin;
• North Region’s increase of $43 million (4%) was primarily due to an increase in equity earnings from NGPL, and
•
higher earnings from TGP and KMLP. NGPL increase in earnings was due to increased Permian basin-related activity
and lower interest expense resulting from a 2017 refinancing, partially offset by lower storage-related revenue. TGP
and KMLP contributed increased earnings primarily from expansion projects recently placed in service; and
South Region’s increase of $33 million (5%) was primarily due to increases in equity earnings from Citrus and SNG,
and an increase in earnings from SLNG, partially offset by a decrease in earnings from Southern Gulf LNG due to a
loss of revenues from an arbitration ruling calling for a contract termination. Citrus had lower income tax expense due
to the 2017 Tax Reform, and SNG increased earnings were from higher transportation revenues from increased system
usage and non-recurring 2017 operating expenses. SLNG earnings were driven by higher capitalized AFUDC equity
associated with the Elba Liquefaction project.
46
Year Ended December 31, 2017 versus Year Ended December 31, 2016
South Region
Midstream
West Region
North Region
Other
Intrasegment eliminations
Total Natural Gas Pipelines
Segment EBDA before
certain items
increase/(decrease)
Revenues before
certain items
increase/(decrease)
(In millions, except percentages)
$
$
(143)
(66)
(38)
84
—
6
(157)
(18)%
$
(6)%
(4)%
7%
—%
100%
(4)%
$
(311)
887
(39)
84
(1)
(26)
594
(48)%
19%
(3)%
6%
50%
(144)%
7%
The changes in Segment EBDA for our Natural Gas Pipelines business segment are further explained by the following
discussion of the significant factors driving Segment EBDA before certain items in the comparable years of 2017 and 2016:
•
South Region’s decrease of $143 million (18%) was primarily due to the sale of a 50% interest in SNG to Southern
Company on September 1, 2016, partially offset by an increase in earnings from Elba Express primarily due to an
expansion project placed in service in December 2016;
• Midstream’s decrease of $66 million (6%) was primarily due to decreases in earnings from South Texas Midstream,
KinderHawk and Oklahoma Midstream, partially offset by increased earnings from Texas intrastate natural gas
pipeline operations and Altamont Midstream. South Texas Midstream lower earnings were primarily due to lower
commodity based service revenues and residue gas sales as a result of lower volumes partially offset by higher NGL
sales gross margin primarily due to rising NGL prices. KinderHawk experienced lower volumes, which lowered its
earnings and Oklahoma Midstream’s lower earnings were primarily due to lower volumes and unfavorable producer
mix. Texas intrastate natural gas pipeline operations increased earnings were primarily due to higher transportation
margins as a result of higher volumes and higher park and loan revenues partially offset by lower storage and sales
margins. Altamont Midstream primarily increased earnings were due to higher natural gas and liquids revenues due to
higher commodity prices and volumes. Texas intrastate natural gas pipeline operations, Hiland Midstream and
Oklahoma Midstream had increases in revenues due to higher commodity prices which was largely offset by a
corresponding increases in costs of sales;
• West Region’s decrease of $38 million (4%) was primarily due to a decrease in earnings at CIG, partially offset by
higher earnings at EPNG. CIG lower earnings were primarily due to a decrease in tariff rates effective January 1,
2017 as a result of a rate case settlement entered into in 2016. EPNG had higher earnings primarily due to higher
transportation revenues driven by incremental Permian basin capacity sales and an increase in volumes due to the
ramp up of existing customer volumes associated with an expansion project partially offset by increased operations
and maintenance expense; and
• North Region’s increase of $84 million (7%) was primarily due to higher earnings from TGP and an increase in equity
earnings from NGPL. TGP’s increase in earnings was primarily due to higher firm transportation revenues driven by
incremental capacity sales and expansion projects recently placed in service. NGPL higher earnings were primarily
due to lower interest expense due to a reduction in interest rates due to debt refinancing and the repayment of bank
borrowings in 2017.
47
Products Pipelines
Revenues
Operating expenses(a)
Loss on impairments and divestitures, net(b)
Other income
Earnings from equity investments(c)
Other, net
Segment EBDA(a)(b)(c)
Certain items(a)(b)(c)
Segment EBDA before certain items
Change from prior period
Revenues
Segment EBDA before certain items
Gasoline (MBbl/d)(d)
Diesel fuel (MBbl/d)
Jet fuel (MBbl/d)
Total refined product volumes (MBbl/d)(e)
NGL (MBbl/d)(e)
Crude and condensate (MBbl/d)(e)
Total delivery volumes (MBbl/d)
Ethanol (MBbl/d)(f)
Year Ended December 31,
2018
2017
2016
(In millions, except operating statistics)
$
$
$
$
$
1,713
(594)
(36)
2
85
3
1,173
61
1,234
$
1,661
(487)
—
—
58
(1)
1,231
(38)
1,193
$
$
Increase/(Decrease)
52
41
$
$
1,038
372
302
1,712
114
345
2,171
126
12
13
1,038
351
297
1,686
112
327
2,125
117
1,649
(573)
(76)
—
65
2
1,067
113
1,180
1,025
342
288
1,655
109
324
2,088
115
_______
Certain items affecting Segment EBDA
(a) 2018 amount includes (i) an increase in expense of $31 million associated with a certain Pacific operations litigation matter; (ii) an
increase in earnings of $5 million as a result of a property tax refund; and (iii) a decrease in expense of $1 million related to other certain
items. 2017 amount includes a decrease in expense of $34 million related to a right-of-way settlement and an increase in expense of $1
million related to hurricane repairs. 2016 amount includes increases in expense of $31 million of rate case liability estimate adjustments
associated with prior periods and $20 million related to a legal settlement.
(b) 2018 amount includes a decrease in earnings of $36 million associated with a project write-off on the Utica Marcellus Texas pipeline.
2016 amount includes increases in expense of $65 million related to the Palmetto project write-off and $9 million of non-cash
impairment charges related to the sale of a Transmix facility.
(c) 2017 amount includes an increase in equity earnings of $5 million related to the impact of the 2017 Tax Reform at an equity investee.
2016 amount includes a $12 million gain related to the sale of an equity investment.
Other
(d) Volumes include ethanol pipeline volumes.
(e) Joint Venture throughput is reported at our ownership share.
(f) Represents total ethanol volumes, including ethanol pipeline volumes included in gasoline volumes above.
48
Below are the changes in both Segment EBDA before certain items and revenues before certain items in 2018 and 2017,
when compared with the respective prior year:
Year Ended December 31, 2018 versus Year Ended December 31, 2017
NGLs
Southeast Refined Products
Crude & Condensate
West Coast Refined Products
Total Products Pipelines
Segment EBDA before
certain items
increase/(decrease)
Revenues before
certain items
increase/(decrease)
(In millions, except percentages)
$
$
33
26
(15)
(3)
41
27%
11%
(4)%
(1)%
3%
$
$
4
19
15
14
52
2%
5%
4%
2%
3%
The changes in Segment EBDA for our Products Pipelines business segment are further explained by the following
discussion of the significant factors driving Segment EBDA before certain items in the comparable years of 2018 and 2017:
•
• NGLs’ increase of $33 million (27%) was primarily due to increases in earnings from Cochin pipeline and to a lesser
extent an increase in earnings from equity earnings from Utopia, which went into service in 2018. Cochin’s earnings
were higher primarily due to foreign exchange transaction losses in 2017 primarily related to an intercompany note
receivable, integrity work during 2017 and an expansion project placed in service during 2018;
Southeast Refined Products’ increase of $26 million (11%) was primarily due to increased equity earnings from
Plantation pipeline and earnings from South East Terminals. Plantation pipeline earnings were higher primarily due to
lower income tax expense due to the 2017 Tax Reform, lower operating expense attributable to a 2017 project write-
off and product net gains as a result of higher product prices. South East Terminals earnings were favorably impacted
primarily due to higher revenues as a result of expansion projects that were placed into service in the later part of 2017
and higher volumes with existing customers;
• Crude & Condensate’s decrease of $15 million (4%) was primarily due to a decrease of earnings from Kinder Morgan
Crude & Condensate Pipeline partially offset by an increase of Double H Pipeline earnings. The Kinder Morgan
Crude & Condensate Pipeline lower earnings were primarily due to lower services revenues as a result of unfavorable
rates on contract renewals partially offset by recognition of deficiency revenue. Double H Pipeline increase in
earnings was primarily due to an increase in volumes and the recognition of deficiency revenue; and
• West Coast Refined Products’ decrease of $3 million (1%) was primarily due to lower earnings from Pacific
operations partially offset by an increase in Calnev earnings. Pacific operations earnings were lower primarily due to
higher operating expenses driven by an unfavorable change in product gain/loss, an increase in 2018 environmental
reserves and higher fuel and power costs. Calnev earnings were higher due to an increase in services revenues driven
by an increase in volumes, the result of an interruption of service by a provider for a competing pipeline that also
serves the Las Vegas market.
Year Ended December 31, 2017 versus Year Ended December 31, 2016
Segment EBDA before
certain items
increase/(decrease)
Revenues before
certain items
increase/(decrease)
West Coast Refined Products
NGLs
Southeast Refined Products
Crude & Condensate
Total Products Pipelines
$
$
49
(In millions, except percentages)
7
1%
11
$
4
3
(1)
13
3%
1%
—%
1%
$
9
(9)
1
12
2%
5%
(2)%
—%
1%
The changes in Segment EBDA for our Products Pipelines business segment are further explained by the following
discussion of the significant factors driving Segment EBDA before certain items in the comparable years of 2017 and 2016:
• West Coast Refined Products’ increase of $7 million (1%) was primarily due to improved earnings at both Pacific
operations and Calnev. Pacific operations increase in earnings was primarily due to higher service revenues driven by
an increase in volumes partially offset by a volume driven increase in power costs and an increase in right-of-way
expense. Calnev earnings were higher primarily due to higher service revenues driven by higher volumes and a
decrease in expense related to the reduction of a rate reserve;
• NGLs’ increase of $4 million (3%) was primarily due to increased development fee revenues in 2017 for Utopia
•
Pipeline ;
Southeast Refined Products’ increase of $3 million (1%) was primarily due to increased earnings at South East
Terminals and to a lesser extent at Transmix processing operations, partially offset by our sale of a 50% interest in
Parkway Pipeline on July 1, 2016. South East Terminals increased earnings were primarily due to higher revenues
driven by higher volumes as a result of capital expansion projects being placed in service during 2017. The decrease
in revenues was driven by lower sales volumes primarily due to the sale of our Indianola plant in August 2016 and
lower brokered sales at the Dorsey plant due to an expired contract in May 2017; and
• Crude & Condensate’s decrease of $1 million (—%) was primarily due a decrease in earnings on Kinder Morgan
Crude & Condensate Pipeline resulting from higher cost of goods sold offset by an increase in earnings from Double
Eagle primarily due to higher revenues driven by higher volumes and price.
Terminals
Revenues(a)
Operating expenses(b)
(Loss) gain on impairments and divestitures, net(c)
Earnings from equity investments(d)
Other, net
Segment EBDA(a)(b)(c)(d)
Certain items, net(a)(b)(c)(d)
Segment EBDA before certain items
Change from prior period
Revenues before certain items
Segment EBDA before certain items
Liquids tankage capacity available for service (MMBbl)
Liquids utilization %(e)
Bulk transload tonnage (MMtons)
Ethanol (MMBbl)
Year Ended December 31,
2018
2017
2016
(In millions, except operating statistics)
$
1,922
(768)
(99)
19
4
1,078
91
$
1,169
$
$
$
$
$
2,019
(818)
(54)
22
2
1,171
34
1,205
$
1,966
(788)
14
24
8
1,224
(10)
1,214
Increase/(Decrease)
55
(9)
$
$
68
45
90.1
93.5%
64.2
61.7
87.6
93.6%
59.5
68.1
84.4
94.7%
54.8
66.7
_______
Certain items affecting Segment EBDA
(a) 2018, 2017 and 2016 amounts include increases in revenues of $2 million, $9 million and $28 million, respectively, from the
amortization of a fair value adjustment (associated with the below market contracts assumed upon acquisition) from our Jones Act
tankers. 2017 amount also includes a decrease in revenues of $5 million related to other certain items.
(b) 2018 amount includes a decrease in expense of $18 million related to hurricane damage insurance recoveries, net of repair costs and an
increase in expense of $1 million related to other certain item. 2017 amount includes (i) an increase in expense of $21 million related to
hurricane repairs; (ii) a decrease in expense of $10 million related to accrued dredging costs; and (iii) a decrease in expense of $2 million
related to other certain items. 2016 amount includes an increase in expense of $3 million related to other certain items.
(c) 2018 amount includes a net loss of $53 million on impairments and divestitures, net, primarily related to our Staten Island terminal.
2017 amount includes a gain of $23 million primarily related to the sale of a 40% membership interest in the Deeprock Development
joint venture in July 2017 and losses of $8 million related to other divestitures and impairments, net. 2016 amount includes an expense
of $109 million related to various losses on impairments and divestitures, net.
(d) 2016 amount includes an increase in earnings of $9 million related to our share of the settlement of a certain litigation matter at an equity
investee and a decrease in earnings of $16 million related to various losses on impairments and divestitures of equity investments, net.
50
Other
(e) The ratio of our tankage capacity in service to tankage capacity available for service.
Below are the changes in both Segment EBDA before certain items and revenues before certain items in 2018 and 2017,
when compared with the respective prior year:
Year Ended December 31, 2018 versus Year Ended December 31, 2017
Northeast
Gulf Central
Southeast
Alberta Canada
Gulf Liquids
Midwest
Marine Operations
All others (including intrasegment eliminations)
Total Terminals
Segment EBDA before
certain items
increase/(decrease)
Revenues before
certain items
increase/(decrease)
(In millions, except percentages)
$
$
(19)
(19)
(8)
(1)
31
6
3
(2)
(9)
(15)%
(22)%
(13)%
(1)%
11%
8%
2%
(1)%
(1)%
$
$
(20)
(19)
(4)
21
37
7
40
(7)
55
(9)%
(15)%
(3)%
13%
9%
5%
13%
(2)%
3%
The changes in Segment EBDA for our Terminals business segment are further explained by the following discussion of
the significant factors driving Segment EBDA before certain items in the comparable years of 2018 and 2017:
•
•
•
•
•
•
•
decrease of $19 million (15%) from our Northeast terminals primarily due to low utilization at our Staten Island
terminal;
decrease of $19 million (22%) from our Gulf Central terminals primarily related to the sale of a 40% membership
interest in the Deeprock Development joint venture in July 2017 and the expiration of a crude by rail terminaling
contract in August 2018 at our Deer Park Rail Terminal;
decrease of $8 million (13%) from our Southeast terminals primarily due to the sale of certain terminal assets in
December 2017 and higher operating expenses at our steel handling operations;
decrease of $1 million (1%) from our Alberta Canada terminals primarily due to an increase in operating expenses
associated with tank lease fees at our Edmonton South Terminal following the TMPL Sale and the impact of the
expiration of a third party crude-by-rail terminaling contract at our Edmonton Rail Terminal joint venture partially
offset by an increase in earnings due to the commencement of operations at our Base Line Terminal joint venture;
increase of $31 million (11%) from our Gulf Liquids terminals primarily driven by contributions from expansion
projects at our Pasadena Terminal and the Kinder Morgan Export Terminal as well as organic volume growth at
several of our Houston Ship Channel locations;
increase of $6 million (8%) from our Midwest terminals primarily driven by increased ethanol storage revenues and
new liquids customer contracts entered into in 2018; and
increase of $3 million (2%) from our Marine Operations primarily due to the incremental earnings from the March
2017, June 2017, July 2017 and December 2017 deliveries of the Jones Act tankers, the American Freedom, Palmetto
State, American Liberty and American Pride, respectively, partially offset by decreased contributions from existing
Jones Act tankers driven by lower charter rates and a reduced operating cost credit attributable to capitalized overhead.
51
Year Ended December 31, 2017 versus Year Ended December 31, 2016
Marine Operations
Gulf Liquids
Alberta, Canada
Midwest
Held for sale operations
Gulf Central
All others (including intrasegment eliminations)
Total Terminals
Segment EBDA before
certain items
increase/(decrease)
Revenues before
certain items
increase/(decrease)
(In millions, except percentages)
$
$
42
20
8
7
(19)
(17)
4
45
27%
8%
6%
11%
(100)%
(16)%
1%
4%
$
$
72
38
7
15
(55)
(11)
2
68
31%
11%
5%
11%
(90)%
(8)%
—%
4%
The changes in Segment EBDA for our Terminals business segment are further explained by the following discussion of
the significant factors driving Segment EBDA before certain items in the comparable years of 2017 and 2016:
•
•
•
•
•
•
increase of $42 million (27%) from our Marine Operations related to the incremental earnings from the May 2016,
July 2016, September 2016, December 2016, March 2017, June 2017, July 2017 and December 2017 deliveries of the
Jones Act tankers, the Magnolia State, Garden State, Bay State, American Endurance, American Freedom, Palmetto
State, American Liberty and American Pride, respectively, partially offset by decreased charter rates on the Golden
State, Pelican State, Sunshine State, Empire State and Pennsylvania Jones Act tankers;
increase of $20 million (8%) from our Gulf Liquids terminals primarily related to higher volumes as a result of various
expansion projects, including the recently commissioned Kinder Morgan Export Terminal and North Docks terminal,
partially offset by lost revenue associated with Hurricane Harvey-related operational disruptions;
increase of $8 million (6%) from our Alberta, Canada terminals primarily due to escalations in predominantly fixed,
take-or-pay terminaling contracts and a true-up in terminal fees in connection with a favorable arbitration ruling;
increase of $7 million (11%) from our Midwest terminals primarily driven by increased ethanol throughput revenues
in 2017 and a new bulk storage and handling contract entered into fourth quarter 2016;
decrease of $19 million (100%) from our sale of certain bulk terminal facilities to an affiliate of Watco Companies,
LLC in December 2016 and early 2017; and
decrease of $17 million (16%) from our Gulf Central terminals primarily related to the sale of a 40% membership
interest in the Deeprock Development joint venture in July 2017 and the subsequent change in accounting treatment of
our retained 11% membership interest as well as lost revenue associated with Hurricane Harvey-related operational
disruptions.
52
CO2
Revenues(a)
Operating expenses(b)
(Loss) gain on impairments and divestitures, net(c)
Earnings from equity investments(d)
Segment EBDA(a)(b)(c)(d)
Certain items(a)(b)(c)(d)
Segment EBDA before certain items
Change from prior period
Revenues before certain items
Segment EBDA before certain items
Southwest Colorado CO2 production (gross) (Bcf/d)(e)
Southwest Colorado CO2 production (net) (Bcf/d)(e)
SACROC oil production (gross)(MBbl/d)(f)
SACROC oil production (net)(MBbl/d)(g)
Yates oil production (gross)(MBbl/d)(f)
Yates oil production (net)(MBbl/d)(g)
Katz, Goldsmith, and Tall Cotton Oil Production - Gross (MBbl/d)(f)
Katz, Goldsmith, and Tall Cotton Oil Production - Net (MBbl/d)(g)
NGL sales volumes (net)(MBbl/d)(g)
Realized weighted-average oil price per Bbl(h)
Realized weighted-average NGL price per Bbl(i)
Year Ended December 31,
2018
2017
2016
(In millions, except operating statistics)
$
$
$
$
$
$
1,255
(453)
(79)
36
759
148
907
$
$
1,196
(394)
1
44
847
40
$
887
$
Increase/(Decrease)
104
20
$
$
(43)
(32)
1.2
0.6
29.3
24.4
16.7
7.4
8.2
7.0
10.0
57.83
32.21
$
$
1.3
0.6
27.9
23.2
17.3
7.7
8.1
6.9
9.9
58.40
25.15
$
$
1,221
(399)
(19)
24
827
92
919
1.2
0.6
29.3
24.4
18.4
8.2
7.0
5.9
10.3
61.52
17.91
_______
Certain items affecting Segment EBDA
(a) 2018, 2017 and 2016 amounts include unrealized losses of $90 million and $54 million, and $63 million, respectively, related to
derivative contracts used to hedge forecasted commodity sales. 2017 amount also includes an increase in revenues of $9 million related
to the settlement of a CO2 customer sales contract.
(b) 2018 amount includes an increase in earnings of $21 million as a result of a severance tax refund.
(c) 2018 amount includes oil and gas property impairments of $79 million. 2017 and 2016 amounts include a decrease in expense of $1
million and an increase in expense of $20 million, respectively, related to source and transportation project write-offs.
(d) 2017 and 2016 amounts include an increase in equity earnings of $4 million and a decrease in equity earnings of $9 million, respectively,
for our share of a project write-off recorded by an equity investee.
Other
(e) Includes McElmo Dome and Doe Canyon sales volumes.
(f) Represents 100% of the production from the field. We own an approximately 97% working interest in the SACROC unit, an
approximately 50% working interest in the Yates unit, an approximately 99% working interest in the Katz unit and a 99% working
interest in the Goldsmith Landreth unit and a 100% working interest in the Tall Cotton field.
(g) Net after royalties and outside working interests.
(h) Includes all crude oil production properties.
(i)
Includes all NGL sales.
53
Below are the changes in both Segment EBDA before certain items and revenues before certain items in 2018 and 2017,
when compared with the respective prior year:
Year Ended December 31, 2018 versus Year Ended December 31, 2017
Oil and Gas Producing activities
Source and Transportation activities
Intrasegment eliminations
Total CO2
Segment EBDA before
certain items
increase/(decrease)
Revenues before
certain items
increase/(decrease)
(In millions, except percentages)
$
$
27
(7)
—
20
5%
(2)%
—%
2%
$
$
45
52
7
104
5%
16%
18%
8%
The changes in Segment EBDA for our CO2 business segment are further explained by the following discussion of the
significant factors driving Segment EBDA before certain items in the comparable years of 2018 and 2017:
•
•
increase of $27 million (5%) from our Oil and Gas Producing activities primarily due to increased revenues of $45
million primarily driven by higher NGL prices of $23 million and higher volumes of $22 million partially offset by an
increase of $16 million in operating expenses and higher severance tax expense of $2 million; and
decrease of $7 million (2%) from our Source and Transportation activities primarily due to lower other revenues of $5
million, higher ad valorem tax expense of $4 million and decreased earnings from an equity investee of $3 million
partially offset by higher CO2 sales of $3 million driven by higher contract sales prices of $25 million offset by lower
volumes of $22 million and lower operating expenses of $2 million. The increase in revenues of $52 million is
primarily due to the effect of the January 1, 2018 adoption of Topic 606, which increased both revenues and operating
expenses (costs of sales) by $54 million, as discussed in Note 16 “Revenue Recognition” to our consolidated financial
statements.
Year Ended December 31, 2017 versus Year Ended December 31, 2016
Segment EBDA before
certain items
increase/(decrease)
Revenues before
certain items
increase/(decrease)
Source and Transportation activities
Oil and Gas Producing activities
Intrasegment eliminations
Total CO2
$
$
$
1%
(In millions, except percentages)
2
(34)
—
(32)
(9)
(33)
(1)
(43)
(6)%
(3)%
—%
$
(3)%
(3)%
(3)%
(3)%
The changes in Segment EBDA for our CO2 business segment are further explained by the following discussion of the
significant factors driving Segment EBDA before certain items in the comparable years of 2017 and 2016:
•
•
increase of $2 million (1%) from our Source and Transportation activities primarily due to increased earnings from an
equity investee of $6 million and lower operating expenses of $5 million partially offset by lower revenues of $9
million driven by lower contract sales prices of $7 million and decreased volumes of $2 million; and
decrease of $34 million (6%) from our Oil and Gas Producing activities primarily due to decreased revenues of $33
million driven by lower volumes of $22 million and lower commodity prices of $11 million, and higher operating
expenses of $1 million.
54
Kinder Morgan Canada
Revenues
Operating expenses
Gain on divestiture(a)
Other, net
Segment EBDA(a)
Certain items(a)
Segment EBDA before certain items
Change from prior period
Revenues
Segment EBDA before certain items
Year Ended December 31,
2018
2017
2016
(In millions, except operating statistics)
$
$
$
$
170
(72)
596
26
720
(596)
124
$
$
256
(95)
—
25
186
—
$
186
$
253
(87)
—
15
181
—
181
Increase/(Decrease)
(86) $
(62) $
3
5
Transport volumes (MBbl/d)(b)
291
308
316
______
Certain items affecting Segment EBDA
(a) 2018 amount includes a gain of $596 million on the TMPL Sale.
Other
(b) Represents TMPL average daily volumes reported until date of sale, August 31, 2018.
For the comparable years of 2018 and 2017, the Kinder Morgan Canada business segment had a decrease in Segment
EBDA of $62 million (33%) primarily due to the TMPL Sale on August 31, 2018 sale. As a result of the TMPL Sale on August
31, 2018, this business segment does not have results of operations on a prospective basis.
For the comparable years of 2017 and 2016, the Kinder Morgan Canada business segment had an increase in Segment EBDA
of $5 million (3%) and an increase in revenues of $3 million (1%) primarily due to (i) higher capitalized equity financing costs
due to spending on the TMEP; (ii) currency translation gains due to the strengthening of the Canadian dollar; and (iii) higher
incentive revenues partly offset by lower state of Washington volumes and operating expense timing changes.
General and Administrative and Corporate Charges, Interest, net and Noncontrolling Interests
General and administrative and corporate charges(a)
Certain items(a)
General and administrative and corporate charges before certain items(a)
Interest, net(b)
Certain items(b)
Interest, net, before certain items(b)
Net income attributable to noncontrolling interests(c)
Noncontrolling interests associated with certain items(c)
Net income attributable to noncontrolling interests before certain items(c)
_______
55
Year Ended December 31,
2018
2017
2016
(In millions)
$
$
$
$
$
$
588
(24)
564
1,917
(26)
1,891
310
(240)
70
$
$
$
$
$
$
660
(15)
645
1,832
39
1,871
40
—
40
$
$
$
$
$
$
652
13
665
1,806
193
1,999
13
8
21
Certain items
(a) 2018 amount includes: (i) an increase in expense of $10 million associated with an estimated environmental reserve adjustment; (ii) a
decrease in expense of $12 million related to the release of certain sales and use tax reserves; (iii) an increase in expense of $10 million
of asset sale related costs; (iv) an increase in expense of $9 million related to certain corporate litigation matters; and (v) an increase in
expense of $7 million related to other certain items. 2017 amount includes: (i) an increase in expense of $10 million for acquisition and
divestiture related costs; (ii) an increase in expense of $4 million related to certain corporate litigation matters; (iii) an increase in
expense of $5 million related to a pension settlement; and (iv) a decrease in expense of $4 million related to other certain items. 2016
amount includes increases in expense of (i) $14 million related to severance costs; and (ii) $12 million related to acquisition and
divestiture costs; offset by decreases in expense of (i) $34 million related to certain corporate litigation matters; and (ii) $5 million
related to other certain items.
(b) 2018, 2017 and 2016 amounts include: (i) decreases in interest expense of $32 million, $44 million and $115 million, respectively,
related to amortization of non-cash debt fair value adjustments associated with acquisitions and (ii) an increase of $9 million and
decreases of $3 million and $44 million, respectively, in interest expense related to non-cash true-ups of our estimates of swap
ineffectiveness. 2018 amount also includes increases in interest expense of $47 million related to the write-off of capitalized KML credit
facility fees and $2 million related to other certain items. 2017 amount also includes an $8 million increase in interest expense related to
other certain items. 2016 amount also includes a $34 million decrease in interest expense related to certain litigation matters.
(c) 2018 amount is primarily associated with the $596 million gain on the TMPL Sale and is disclosed above in “—Kinder Morgan
Canada.” The 2016 amount is associated with Natural Gas Pipelines segment certain items and disclosed above in “—Natural Gas
Pipelines.”
General and administrative expenses and corporate charges before certain items decreased $81 million in 2018 and $20
million in 2017 when compared with the respective prior year. The decrease in 2018 as compared to 2017 was primarily due to
higher capitalized costs of $54 million driven by the 2018 construction of Elba Liquefaction, Gulf Coast and Hiland facilities
offset by lower spending on TGP, lower vacation and labor accruals of $18 million and $7 million from the sale of TMPL. The
decrease in 2017 as compared to 2016 was primarily driven by the sale of a 50% interest in our SNG natural gas pipeline
system (effective September 1, 2016), higher capitalized costs, lower state franchise taxes, legal and insurance costs, partially
offset by higher labor accruals and pension costs.
In the table above, we report our interest expense as “net,” meaning that we have subtracted interest income and capitalized
interest from our total interest expense to arrive at one interest amount. Our consolidated interest expense net of interest
income before certain items, increased $20 million in 2018 and decreased $128 million in 2017 when compared with the
respective prior year. The increase in interest expense in 2018 as compared to 2017 was primarily due to higher short-term
interest rates and higher short-term debt balance partially offset by lower average long-term debt balance. The decrease in
interest expense in 2017 as compared to 2016 was primarily due to lower weighted average debt balances as proceeds from the
May 2017 KML IPO and our September 2016 sale of a 50% interest in SNG were used to pay down debt, partially offset by a
slightly higher overall weighted average interest rate on our outstanding debt.
We use interest rate swap agreements to convert a portion of the underlying cash flows related to our long-term fixed rate
debt securities (senior notes) into variable rate debt in order to achieve our desired mix of fixed and variable rate debt. As of
December 31, 2018 and 2017, approximately 31% and 28%, respectively, of the principal amount of our debt balances were
subject to variable interest rates—either as short-term or long-term variable rate debt obligations or as fixed-rate debt converted
to variable rates through the use of interest rate swaps. For more information on our interest rate swaps, see Note 14 “Risk
Management—Interest Rate Risk Management” to our consolidated financial statements.
Net income attributable to noncontrolling interests, represents the allocation of our consolidated net income attributable to
all outstanding ownership interests in our consolidated subsidiaries that are not owned by us. Net income attributable to
noncontrolling interests before certain items increased $30 million in 2018 and $19 million in 2017 when compared with the
respective prior year. The increases were primarily due to the May 30, 2017 sale of approximately 30% of our Canadian
business operations to the public in the KML IPO.
Income Taxes
Year Ended December 31, 2018 versus Year Ended December 31, 2017
Our tax expense for the year ended December 31, 2018 is approximately $587 million, as compared with 2017 tax expense
of $1,938 million. The $1,351 million decrease in tax expense is primarily due to (i) the decrease in the federal income tax rate
as a result of the 2017 Tax Reform; and (ii) the decrease in uncertain tax positions as a result of audit settlements; partially
offset by (i) the tax impact on the TMPL Sale; and (ii) the decrease of enhanced oil recovery credits.
56
Year Ended December 31, 2017 versus Year Ended December 31, 2016
Our tax expense for the year ended December 31, 2017 is approximately $1,938 million, as compared with 2016 tax
expense of $917 million. The $1,021 million increase in tax expense is primarily due to (i) an increase in year-over-year
earnings as a result of fewer asset impairments and project write-offs in 2017; and (ii) higher tax expense as a result of the 2017
Tax Reform. These increases are partially offset by (i) the 2016 impact of our Regulated Natural Gas Pipelines business
segment’s $817 million non-tax-deductible goodwill as a result of the sale of a 50% interest in SNG; and (ii) the recognition of
enhanced oil recovery credits.
Liquidity and Capital Resources
General
As of December 31, 2018, we had $3,280 million of “Cash and cash equivalents,” an increase of $3,016 million (1,142%)
from December 31, 2017. We believe our cash position, remaining borrowing capacity on our credit facility (discussed below
in “—Short-term Liquidity”), and our cash flows from operating activities are adequate to allow us to manage our day-to-day
cash requirements and anticipated obligations as discussed further below.
We have consistently generated substantial cash flow from operations, providing a source of funds of $5,043 million and
$4,601 million in 2018 and 2017, respectively. The year-to-year increase is discussed below in “—Cash Flows—Operating
Activities.” Generally, we primarily rely on cash provided from operations to fund our operations as well as our debt service,
sustaining capital expenditures, dividend payments, and our growth capital expenditures. We also generally expect that our
short-term liquidity needs will be met primarily through retained cash from operations, short-term borrowings or by issuing
new long-term debt to refinance certain of our maturing long-term debt obligations. Moreover, as a result of our current
common stock dividend policy and our continued focus on disciplined capital allocation, we do not expect the need to access
the equity capital markets to fund our growth projects for the foreseeable future.
Additionally, during 2018 the TMPL Sale mentioned above in “—General—KML—Sale of Trans Mountain Pipeline
System and Its Expansion Project” was a source of liquidity and the primary driver of cash on hand as of December 31, 2018.
On January 3, 2019, pursuant to KML’s shareholders’ approval on November 29, 2018, KML distributed to its shareholders
as a return of capital, the net proceeds from the TMPL Sale, after capital gains taxes, customary purchase price adjustments and
the repayment of debt outstanding under a temporary KML credit facility (see “—KML 2018 Credit Facility” following).
KML’s public owners of its restricted voting shares, reflected as noncontrolling interests by us, received approximately $0.9
billion (C$1.2 billion), and part of our approximately 70% portion of the net proceeds of $1.9 billion (C$2.5 billion) (after
Canadian tax) were used to immediately repay our outstanding commercial paper borrowings of $0.4 million and in February
2019 to pay down approximately $1.3 billion of maturing long-term debt. To facilitate the return of capital and provide
flexibility for KML’s dividends going forward, KML’s shareholders also approved a reduction in the stated capital of its
restricted voting shares by C$1.45 billion, along with a “reverse stock split” of KML’s restricted voting shares, and KML’s
special voting shares that we own, on a one-for-three basis (three shares consolidating to one share) which occurred on January
4, 2019.
KML 2018 Credit Facility
Upon the closing of the TMPL Sale on August 31, 2018, KML established a 4-year, C$500 million unsecured revolving credit
facility (the “KML 2018 Credit Facility”) for working capital purposes, replacing a temporary credit facility that was put in place
following the announcement of the TMPL Sale on May 30, 2018 (the “KML Temporary Credit Facility”). The C$133 million
(U.S.$102 million) of outstanding borrowings under the KML Temporary Credit Facility were paid off prior to its termination
with a portion of the proceeds from the TMPL Sale. As of December 31, 2018, there were no outstanding borrowings under the
KML 2018 Credit Facility.
Credit Ratings and Capital Market Liquidity
We believe that our capital structure will continue to allow us to achieve our business objectives. We expect that our short-
term liquidity needs will be met primarily through retained cash from operations or short-term borrowings. Generally, we
anticipate re-financing maturing long term debt obligations in the debt capital markets and are therefore subject to certain
market conditions which could result in higher costs or negatively affect our and/or our subsidiaries’ credit ratings.
57
As of December 31, 2018, our short-term corporate debt ratings were A-3 (upgraded to A-2 on January 7, 2019), Prime-2
and F3 at Standard and Poor’s, Moody’s Investor Services and Fitch Ratings, Inc., respectively. We are on a positive outlook
for an upgrade by Fitch Ratings, Inc.
The following table represents KMI’s and KMP’s senior unsecured debt ratings as of December 31, 2018.
Rating agency
Standard and Poor’s(a)
Moody’s Investor Services
Fitch Ratings, Inc.
______
(a) Subsequently was upgraded to BBB on January 7, 2019 with a Stable outlook.
Short-term Liquidity
Senior debt
rating
BBB-
Baa2
BBB-
Outlook
Positive
Stable
Positive
As of December 31, 2018, our principal sources of short-term liquidity are (i) our $4.5 billion revolving credit facilities
and associated $4.0 billion commercial paper program; (ii) the KML 2018 Credit Facility (for the purposes described above);
and (iii) cash from operations. The loan commitments under our revolving credit facility can be used for working capital and
other general corporate purposes and as a backup to our commercial paper program. Borrowings under our commercial paper
program and letters of credit reduce borrowings allowed under ours and KML’s respective credit facilities. We provide for
liquidity by maintaining a sizable amount of excess borrowing capacity under our credit facility (see Note 9 “Debt—Credit
Facilities and Restrictive Covenants—KMI” to our consolidated financial statements) and, as previously discussed, we have
consistently generated strong cash flows from operations.
As of December 31, 2018, our $3,388 million of short-term debt consisted primarily of (i) $433 million outstanding under
our $4.0 billion commercial paper program; and (ii) $2,800 million of senior notes that mature in the next year. As previously
discussed, we repaid $1.7 billion of this short-term debt in 2019 from a portion of the TMPL Sale proceeds. We intend to
refinance our remaining short-term debt through credit facility borrowings, commercial paper borrowings, or by issuing new
long-term debt or paying down short-term debt using cash retained from operations. Our short-term debt balance as of
December 31, 2017 was $2,828 million.
We had working capital (defined as current assets less current liabilities) deficits of $1,835 million and $3,466 million as of
December 31, 2018 and 2017, respectively. Our current liabilities may include short-term borrowings used to finance our
expansion capital expenditures, which we may periodically replace with long-term financing and/or pay down using retained
cash from operations. The overall $1,631 million (47%) favorable change from year-end 2017 was primarily due to: (i) the
$2,998 million of proceeds from the TMPL Sale, net of cash disposed, partially offset by (i) the $890 million (C$1,195 million)
distribution paid to our noncontrolling interests associated with KML on January 3, 2019 ($876 million was the accrued U.S.$
value as of December 31, 2018) and a $516 million increase in current maturities of our senior notes. Generally, our working
capital balance varies due to factors such as the timing of scheduled debt payments, timing differences in the collection and
payment of receivables and payables, the change in fair value of our derivative contracts, and changes in our cash and cash
equivalent balances as a result of excess cash from operations after payments for investing and financing activities (discussed
below in “—Long-term Financing” and “—Capital Expenditures”).
We employ a centralized cash management program for our U.S.-based bank accounts that concentrates the cash assets of
our wholly owned subsidiaries in joint accounts for the purpose of providing financial flexibility and lowering the cost of
borrowing. These programs provide that funds in excess of the daily needs of our wholly owned subsidiaries are concentrated,
consolidated or otherwise made available for use by other entities within the consolidated group. We place no material
restrictions on the ability to move cash between entities, payment of intercompany balances or the ability to upstream dividends
to KMI other than restrictions that may be contained in agreements governing the indebtedness of those entities.
Certain of our wholly owned subsidiaries are subject to FERC-enacted reporting requirements for oil and natural gas
pipeline companies that participate in cash management programs. FERC-regulated entities subject to these rules must, among
other things, place their cash management agreements in writing, maintain current copies of the documents authorizing and
supporting their cash management agreements, and file documentation establishing the cash management program with the
FERC.
58
Long-term Financing
Our equity consists of Class P common stock with a par value of $0.01 per share. We do not expect to need to access the
equity capital markets to fund our growth projects for the foreseeable future. Furthermore, through January 2019, we have
repurchased approximately 29 million shares of our Class P common stock under a $2 billion share buy-back program
authorized by our board of directors in December 2017 that we funded through retained cash. For more information on our
equity buy-back program and our equity distribution agreement, see Note 11 “Stockholders’ Equity” to our consolidated
financial statements.
From time to time, we issue long-term debt securities, often referred to as senior notes. All of our senior notes issued to
date, other than those issued by certain of our subsidiaries, generally have very similar terms, except for interest rates, maturity
dates and prepayment premiums. All of our fixed rate senior notes provide that the notes may be redeemed at any time at a
price equal to 100% of the principal amount of the notes plus accrued interest to the redemption date, and, in most cases, plus a
make-whole premium. In addition, from time to time our subsidiaries, have issued long-term debt securities. Furthermore, we
and almost all of our direct and indirect wholly owned domestic subsidiaries are parties to a cross guaranty wherein we each
guarantee the debt of each other. See Note 20 “Guarantee of Securities of Subsidiaries” to our consolidated financial
statements. As of December 31, 2018 and 2017, the aggregate principal amount outstanding of our various long-term debt
obligations (excluding current maturities) was $33,205 million and $34,088 million, respectively. For more information
regarding our debt-related transactions in 2018, see Note 9 “Debt” to our consolidated financial statements.
We achieve our variable rate exposure primarily by issuing long-term fixed rate debt and then swapping the fixed rate
interest payments for variable rate interest payments and through the issuance of commercial paper or credit facility
borrowings.
For additional information about our outstanding senior notes and debt-related transactions in 2018 and early 2019, see
Note 9 “Debt” to our consolidated financial statements. For information about our interest rate risk, see Item 7A “Quantitative
and Qualitative Disclosures About Market Risk—Interest Rate Risk.”
Capital Expenditures
We account for our capital expenditures in accordance with GAAP. We also distinguish between capital expenditures that
are maintenance/sustaining capital expenditures and those that are expansion capital expenditures (which we also refer to as
discretionary capital expenditures). Expansion capital expenditures are those expenditures which increase throughput or
capacity from that which existed immediately prior to the addition or improvement, and are not deducted in calculating DCF
(see “—Results of Operations—DCF”). With respect to our oil and gas producing activities, we classify a capital expenditure as
an expansion capital expenditure if it is expected to increase capacity or throughput (i.e., production capacity) from the capacity
or throughput immediately prior to the making or acquisition of such additions or improvements. Maintenance capital
expenditures are those which maintain throughput or capacity. The distinction between maintenance and expansion capital
expenditures is a physical determination rather than an economic one, irrespective of the amount by which the throughput or
capacity is increased.
Budgeting of maintenance capital expenditures is done annually on a bottom-up basis. For each of our assets, we budget
for and make those maintenance capital expenditures that are necessary to maintain safe and efficient operations, meet
customer needs and comply with our operating policies and applicable law. We may budget for and make additional
maintenance capital expenditures that we expect to produce economic benefits such as increasing efficiency and/or lowering
future expenses. Budgeting and approval of expansion capital expenditures are generally made periodically throughout the year
on a project-by-project basis in response to specific investment opportunities identified by our business segments from which
we generally expect to receive sufficient returns to justify the expenditures. Generally, the determination of whether a capital
expenditure is classified as maintenance/sustaining or as expansion capital expenditures is made on a project level. The
classification of our capital expenditures as expansion capital expenditures or as maintenance capital expenditures is made
consistent with our accounting policies and is generally a straightforward process, but in certain circumstances can be a matter
of management judgment and discretion. The classification has an impact on DCF because capital expenditures that are
classified as expansion capital expenditures are not deducted from DCF, while those classified as maintenance capital
expenditures are. See “—Common Dividends” and “—Preferred Dividends.”
59
Our capital expenditures for the year ended December 31, 2018, and the amount we expect to spend for 2019 to sustain and
grow our business are as follows (in millions):
Sustaining capital expenditures(a)(b)
KMI Discretionary capital investments(b)(c)(d)
KML Discretionary capital investments(b)(e)
2018
Expected
2019
$
$
$
652
2,363
401
$
$
$
715
3,085
24
_______
(a) 2018 and Expected 2019 amounts include $105 million and $127 million, respectively, for our proportionate share of (i) certain equity
investee’s; (ii) KML’s; and (iii) certain consolidating joint venture subsidiaries’ sustaining capital expenditures.
(b) 2018 includes $128 million of net changes from accrued capital expenditures, contractor retainage, and other.
(c) 2018 amount includes $279 million of our contributions to certain unconsolidated joint ventures for capital investments and small
acquisitions.
(d) Amounts include our actual or estimated contributions to certain unconsolidated joint ventures, net of actual or estimated contributions
from certain partners in non-wholly owned consolidated subsidiaries for capital investments.
(e) 2018 amount includes TMEP capital investments for the period ending on August 31, 2018, the closing of the TMPL Sale.
Off Balance Sheet Arrangements
We have invested in entities that are not consolidated in our financial statements. For information on our obligations with
respect to these investments, as well as our obligations with respect to related letters of credit, see Note 13 “Commitments and
Contingent Liabilities” to our consolidated financial statements. Additional information regarding the nature and business
purpose of our investments is included in Note 7 “Investments” to our consolidated financial statements.
Contractual Obligations and Commercial Commitments
Payments due by period
Total
Less than 1
year
1-3 years
3-5 years
(In millions)
More than
5 years
Contractual obligations:
Debt borrowings-principal payments(a)
Interest payments(b)
Leases and rights-of-way obligations(c)
Pension and postretirement welfare plans(d)
Transportation, volume and storage
agreements(e)
Other obligations(f)
Total
Other commercial commitments:
Standby letters of credit(g)
Capital expenditures(h)
$
36,593
$
3,388
$
4,627
$
5,768
$
24,493
1,890
3,418
2,992
862
925
928
276
$
$
$
64,077
156
304
$
$
$
122
67
168
65
5,700
83
304
209
40
307
84
178
41
205
35
22,810
16,193
353
777
248
92
$
$
$
8,685
73
$
$
— $
9,219
$
40,473
— $
— $
—
—
_______
(a) Less than 1 year amount primarily includes $3,277 million of current maturities on senior notes and $111 million associated with our
Trust I Preferred Securities that are classified as current obligations because these securities have rights to convert into cash and/or KMI
common stock. See Note 9 “Debt” to our consolidated financial statements.
(b) Interest payment obligations exclude adjustments for interest rate swap agreements and assume no change in variable interest rates from
those in effect at December 31, 2018.
(c) Represents commitments pursuant to the terms of operating lease agreements and liabilities for rights-of-way.
(d) Represents the amount by which the benefit obligations exceeded the fair value of plan assets at year-end for pension and other
postretirement benefit plans whose accumulated postretirement benefit obligations exceeded the fair value of plan assets. The payments
by period include expected contributions to funded plans in 2019 and estimated benefit payments for unfunded plans in all years.
(e) Primarily represents transportation agreements of $374 million, volume agreements of $338 million and storage agreements for capacity
of $183 million.
60
(f) Primarily includes environmental liabilities related to sites that we own or have a contractual or legal obligation with a regulatory agency
or property owner upon which we will perform remediation activities. These liabilities are included within “Accrued contingencies” and
“Other long-term liabilities and deferred credits” in our consolidated balance sheets.
(g) The $156 million in letters of credit outstanding as of December 31, 2018 consisted of the following (i) letters of credit totaling $46
million supporting our International Marine Terminals Partnership Plaquemines, Louisiana Port, Harbor, and Terminal Revenue Bonds;
(ii) $33 million under nine letters of credit for insurance purposes; (iii) a $24 million letter of credit supporting our Kinder Morgan
Operating L.P. “B” tax-exempt bonds; (iv) thirteen letters of credit totaling $8 million supporting our pipeline and terminal operations in
Canada; and (v) a combined $45 million in twenty-five letters of credit supporting environmental and other obligations of us and our
subsidiaries.
(h) Represents commitments for the purchase of plant, property and equipment as of December 31, 2018.
Cash Flows
Operating Activities
The net increase of $442 million (10%) in cash provided by operating activities in 2018 compared to 2017 was primarily
attributable to:
•
•
a $346 million increase in cash associated with net changes in working capital items and other non-current assets and
liabilities, primarily driven, among other things, by a $137 income tax refund received in the 2018 period, and an
increase in current income tax liabilities associated with the tax gain on the TMPL Sale in the 2018 period. These
increases were partially offset by higher payments for litigation matters in the 2018 period compared with the 2017
period; and
a $96 million increase in operating cash flow resulting from the combined effects of adjusting the $1,696 million
increase in net income for the period-to-period net changes in non-cash items including the following: (i) loss on
impairments and divestitures, net (see discussion above in “—Results of Operations”); (ii) loss on impairments and
divestitures of equity investments, net (see discussion above in “—Results of Operations”); (iii) the change in fair
market value of derivative contracts; (iv) DD&A expenses (including amortization of excess cost of equity
investments); (v) deferred income taxes; (vi) earnings from equity investments; and (vii) loss on early extinguishment
of debt.
Investing Activities
The $3,335 million net decrease in cash used in investing activities in 2018 compared to 2017 was primarily attributable
to:
to:
•
•
•
•
•
•
a $2,998 million increase in cash reflecting proceeds received from the TMPL Sale, net of cash disposed in the 2018
period. See Note 3 “Divestitures and Acquisition” for further information regarding this transaction;
a $284 million decrease in capital expenditures in the 2018 period over the comparative 2017 period primarily due to
lower expenditures in our Terminals business segment, partially offset by higher expenditures related to construction
projects in our Natural Gas Pipelines business segment;
a $251 million decrease in cash used for contributions to equity investments primarily due to lower contributions we
made to NGPL Holdings LLC, FEP and Utopia Holding LLC in the 2018 period compared to the 2017 period,
partially offset by the contributions made to Gulf Coast Express Pipeline LLC in the 2018 period; and
a $124 million increase in cash proceeds received from the sale of equity investments, primarily driven by a sale of
our partial interest in Gulf Coast Express LLC in the 2018 period; partially offset by,
a $138 million decrease in cash proceeds from sale of property, plant and equipment and other net assets in the 2018
period compared to the 2017 period; and
a $137 million decrease in cash resulting from lower distributions received from equity investments in excess of
cumulative earnings, primarily from MEP, SNG and Citrus Corporation in the 2018 period over the comparative 2017
period.
Financing Activities
The net increase of $143 million in cash used by financing activities in 2018 compared to 2017 was primarily attributable
•
•
a combined $1,665 million decrease in cash reflecting $1,245 million net proceeds we received from the KML IPO in
May 2017 and $420 million net proceeds received from the KML preferred share issuances in the 2017 period;
a $498 million increase in dividend payments to our common shareholders;
61
•
•
•
•
a $304 million decrease in cash due to lower contributions received from EIG in the 2018 period compared to the 2017
period as the 2017 period included $386 million we received from EIG Global Energy Partners for our sale of a 49%
partnership interest in ELC;
a $36 million increase in distributions to noncontrolling interests, primarily to KML restricted share holders and
preferred shareholders; and
a $23 million increase in cash used for common shares repurchased under our common share buy-back program in the
2018 period compared to the 2017 period; partially offset by,
a $2,384 million net increase in cash related to debt activity as a result of $118 million of net debt issuances in the
2018 period compared to $2,266 million of net debt payments in the 2017 period. See Note 9 “Debt” for further
information regarding our debt activity.
Mandatory Convertible Preferred Stock
As of October 26, 2018, all of our issued and outstanding 1,600,000 shares of 9.750% Series A mandatory convertible
preferred stock, with a liquidating preference of $1,000 per share were converted into common stock either at the option of the
holders before or automatically on October 26, 2018. Based on the current market price of our common stock at the time of
conversion, our Series A Preferred Shares converted into 58 million common shares.
Dividends and Stock Buy-back Program
KMI Preferred Stock Dividends
Dividends on our mandatory convertible preferred stock were payable on a cumulative basis when, as and if declared by
our board of directors (or an authorized committee thereof) at an annual rate of 9.750% of the liquidation preference of $1,000
per share on January 26, April 26, July 26 and October 26 of each year, commencing on January 26, 2016 to, and including,
October 26, 2018. Prior to the October 26, 2018 conversion of our Series A Preferred Shares into common shares, we paid all
dividends on our mandatory convertible preferred stock in cash.
Period
January 26, 2018 through April 25, 2018
April 26, 2018 through July 25, 2018
July 26, 2018 through October 25, 2018
KMI Common Stock Dividends
Total
dividend per
share for the
period
$24.375
24.375
24.375
Date of declaration
January 17, 2018
April 18, 2018
July 18, 2018
Date of record
April 11, 2018
July 11, 2018
October 11, 2018
Date of dividend
April 26, 2018
July 26, 2018
October 26, 2018
The table below reflects the declaration of common stock dividends of $0.80 per common share for 2018.
Three months ended
March 31, 2018
June 30, 2018
September 30, 2018
December 31, 2018
Total quarterly
dividend per share
for the period
$0.20
0.20
0.20
0.20
Date of declaration
Date of record
Date of dividend
April 18, 2018
April 30, 2018
May 15, 2018
July 18, 2018
July 31, 2018
August 15, 2018
October 17, 2018
October 31, 2018
November 15, 2018
January 16, 2019
January 31, 2019
February 15, 2019
We will continue to return additional value to our shareholders in 2019 through our previously announced dividend
increase. We plan to increase our dividend to $1.00 per common share in 2019 and $1.25 per common share in 2020, a growth
rate of 25% annually.
The actual amount of common stock dividends to be paid on our capital stock will depend on many factors, including our
financial condition and results of operations, liquidity requirements, business prospects, capital requirements, legal, regulatory
and contractual constraints, tax laws, Delaware laws and other factors. See Item 1A “Risk Factors—The guidance we provide
for our anticipated dividends is based on estimates. Circumstances may arise that lead to conflicts between using funds to pay
anticipated dividends or to invest in our business.” All of these matters will be taken into consideration by our board of
directors in declaring dividends.
62
Our common stock dividends are not cumulative. Consequently, if dividends on our common stock are not paid at the
intended levels, our common stockholders are not entitled to receive those payments in the future. Our common stock
dividends generally will be paid on or about the 15th day of each February, May, August and November.
Stock Buy-back Program
On July 19, 2017, our board of directors approved a $2 billion common share buy-back program that began in December
2017. During the years ended December 31, 2018 and 2017, we repurchased approximately 15 million and 14 million,
respectively, of our Class P shares for approximately $273 million and $250 million, respectively. 2018 amounts exclude
repurchases made in December 2018 of approximately 0.1 million of our Class P shares for approximately $2 million, which
settled on January 2, 2019.
Noncontrolling Interests
The caption “Noncontrolling interests” in our accompanying consolidated balance sheets consists of interests that we do
not own in the following subsidiaries (in millions):
KML(a)
Others
December 31,
2018
2017
$
$
514
339
853
$
$
1,163
325
1,488
_______
(a) The reduction in the noncontrolling interests associated with KML is primarily attributable to the accrual of the return of capital
distribution for the net proceeds from the TMPL Sale paid to KML’s Restricted Voting Shareholders on January 3, 2019 of
approximately $0.9 billion. For more information see “—General—KML—Sale of Trans Mountain Pipeline System and Its Expansion
Project” above.
KML Distributions
KML has a dividend policy pursuant to which it may pay a quarterly dividend on its restricted voting shares in an amount
based on a portion of its distributable cash flow. The payment of dividends is not guaranteed, and the amount and timing of any
dividends payable will be at the discretion of KML’s board of directors. KML intends to pay quarterly dividends, if any, on or
about the 45th day (or next business day) following the end of each calendar quarter to holders of its restricted voting shares of
record as of the close of business on or about the last business day of the month following the end of each calendar quarter.
KML also established a Dividend Reinvestment Plan (DRIP) that allows holders (excluding holders not resident in Canada) of
restricted voting shares to elect to have any or all cash dividends payable to such shareholder automatically reinvested in
additional restricted voting shares at a price per share calculated by reference to the volume-weighted average of the closing
price of the restricted voting shares on the stock exchange on which the restricted voting shares are then listed for the five
trading days immediately preceding the relevant dividend payment date, less a discount of between 0% and 5% (as determined
from time to time by KML’s board of directors, in its sole discretion).
On January 16, 2019, KML’s board of directors announced that it would suspend KML’s DRIP, effective with the
payment of the fourth quarter 2018 dividend on February 15, 2019, in light of KML’s reduced need for capital.
For 2019, KML announced that it expects to pay an annual dividend of C$0.65 per split-adjusted restricted voting share.
KML also pays dividends on its 12,000,000 Series 1 Preferred Shares and 10,000,000 Series 3 Preferred Shares, which are
fixed, cumulative, preferential, and payable quarterly in the annual amount of C$1.3125 per share and C$1.3000 per share,
respectively, on the 15th day of February, May, August and November, as and when declared by KML’s board of directors, for
the initial fixed rate period to but excluding November 15, 2022 and February 15, 2023, respectively.
During the year ended December 31, 2018, KML paid dividends on its Restricted Voting Shares to the public valued at $52
million, of which $38 million was paid in cash. The remaining value of $14 million for the year ended December 31, 2018 was
paid in 1,092,791 KML Restricted Voting Shares. KML also paid dividends to the public on its Series 1 and Series 3 Preferred
Shares of $21 million for the year ended December 31, 2018.
63
Recent Accounting Pronouncements
Please refer to Note 19 “Recent Accounting Pronouncements” to our consolidated financial statements for information
concerning recent accounting pronouncements.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Generally, our market risk sensitive instruments and positions have been determined to be “other than trading.” Our
exposure to market risk as discussed below includes forward-looking statements and represents an estimate of possible changes
in fair value or future earnings that would occur assuming hypothetical future movements in energy commodity prices or
interest rates. Our views on market risk are not necessarily indicative of actual results that may occur and do not represent the
maximum possible gains and losses that may occur, since actual gains and losses will differ from those estimated based on
actual fluctuations in energy commodity prices or interest rates and the timing of transactions.
Energy Commodity Market Risk
We are exposed to energy commodity market risk and other external risks in the ordinary course of business. However, we
manage these risks by executing a hedging strategy that seeks to protect us financially against adverse price movements and
serves to minimize potential losses. Our strategy involves the use of certain energy commodity derivative contracts to reduce
and minimize the risks associated with unfavorable changes in the market price of natural gas, NGL and crude oil. The
derivative contracts that we use include exchange-traded and OTC commodity financial instruments, including, but not limited
to, futures and options contracts, fixed price swaps and basis swaps.
Our hedging strategy involves entering into a financial position intended to offset our physical position, or anticipated
position, in order to minimize the risk of financial loss from an adverse price change. For example, as sellers of crude oil and
natural gas, we often enter into fixed price swaps and/or futures contracts to guarantee or lock-in the sale price of our crude oil
or the margin from the sale and purchase of our natural gas at the time of market delivery, thereby in whole or in part offsetting
any change in prices, either positive or negative.
Our policies require that derivative contracts are only entered into with carefully selected major financial institutions or
similar counterparties based upon their credit ratings and other factors, and we maintain strict dollar and term limits that
correspond to our counterparties’ credit ratings. While it is our policy to enter into derivative transactions principally with
investment grade counterparties and actively monitor their credit ratings, it is nevertheless possible that losses will result from
counterparty credit risk in the future.
The credit ratings of the primary parties from whom we transact in energy commodity derivative contracts (based on
contract market values) are as follows (credit ratings per Standard & Poor’s Rating Service):
ING
Wells Fargo
Bank of Nova Scotia
Canadian Imperial Bank
JP Morgan
Credit Rating
A+
A+
A+
A+
A+
As discussed above, the principal use of energy commodity derivative contracts is to mitigate the market price risk
associated with anticipated transactions for the purchase and sale of natural gas, NGL and crude oil. Using derivative contracts
for this purpose helps provide increased certainty with regard to operating cash flows which helps us to undertake further
capital improvement projects, attain budget results and meet dividend targets. We may categorize such use of energy
commodity derivative contracts as cash flow hedges because the derivative contract is used to hedge the anticipated future cash
flow of a transaction that is expected to occur but which value is uncertain.
We measure the risk of price changes in the crude oil, natural gas and NGL derivative instruments portfolios utilizing a
sensitivity analysis model. The sensitivity analysis applied to each portfolio measures the potential income or loss (i.e., the
change in fair value of the derivative instrument portfolio) based upon a hypothetical 10% movement in the underlying quoted
market prices. In addition to these variables, the fair value of each portfolio is influenced by fluctuations in the notional
amounts of the instruments and the discount rates used to determine the present values. A hypothetical 10% movement in the
64
underlying commodity prices would have the following effect on the associated derivative contracts’ estimated fair value (in
millions):
Commodity derivative
Crude oil
Natural gas
NGL
Total
As of December 31,
2018
2017
$
$
$
97
12
6
115
$
125
15
10
150
As discussed above, we enter into derivative contracts largely for the purpose of mitigating the risks that accompany
certain of our business activities and, therefore both in the sensitivity analysis model and in reality, the change in the market
value of the derivative contracts’ portfolio is offset largely by changes in the value of the underlying physical transactions.
Our sensitivity analysis represents an estimate of the reasonably possible gains and losses that would be recognized on the
crude oil, natural gas and NGL portfolios of derivative contracts assuming hypothetical movements in future market rates and is
not necessarily indicative of actual results that may occur. It does not represent the maximum possible loss or any expected
loss that may occur, since actual future gains and losses will differ from those estimated. Actual gains and losses may differ
from estimates due to actual fluctuations in market rates, operating exposures and the timing thereof, as well as changes in our
portfolio of derivatives during the year.
Interest Rate Risk
In order to maintain a cost effective capital structure, it is our policy to borrow funds using a mix of fixed rate debt and
variable rate debt. The market risk inherent in our debt instruments and positions is the potential change arising from increases
or decreases in interest rates as discussed below.
For fixed rate debt, changes in interest rates generally affect the fair value of the debt instrument, but not our earnings or
cash flows. Conversely, for variable rate debt, changes in interest rates generally do not impact the fair value of the debt
instrument, but may affect our future earnings and cash flows. Generally, there is not an obligation to prepay fixed rate debt
prior to maturity and, as a result, changes in fair value should not have a significant impact on the fixed rate debt. We are
generally subject to interest rate risk upon refinancing maturing debt. Below are our debt balances, including debt fair value
adjustments and the preferred interest in KMGP, and sensitivity to interest rates (in millions):
Fixed rate debt(a)
Variable rate debt
Notional principal amount of fixed-to-variable interest rate swap
agreements
Debt balances subject to variable interest rates(b)
December 31, 2018
December 31, 2017
Carrying
value
36,480
844
10,575
11,419
$
$
$
Estimated
fair
value(c)
$
$
36,647
822
Carrying
value
37,041
802
9,575
10,377
$
$
$
Estimated
fair
value(c)
$
$
39,255
795
_______
(a) A hypothetical 10% change in the average interest rates applicable to such debt as of December 31, 2018 and 2017, would result in
changes of approximately $1,638 million and $1,525 million, respectively, in the fair values of these instruments.
(b) A hypothetical 10% change in the weighted average interest rate on all of our borrowings (approximately 52 and 50 basis points,
respectively, in 2018 and 2017) when applied to our outstanding balance of variable rate debt as of December 31, 2018 and 2017,
including adjustments for the notional swap amounts described above, would result in changes of approximately $59 million and $52
million, respectively, in our 2018 and 2017 annual pre-tax earnings.
(c) Fair values were determined using quoted market prices, where applicable, or future cash flows discounted at market rates for similar
types of borrowing arrangements.
Fixed-to-variable interest rate swap agreements are entered into for the purpose of converting a portion of the underlying
cash flows related to long-term fixed rate debt securities into variable rate debt in order to achieve our desired mix of fixed and
variable rate debt. Since the fair value of fixed rate debt varies with changes in the market rate of interest, swap agreements are
65
entered into to receive a fixed and pay a variable rate of interest. Such swap agreements result in future cash flows that vary
with the market rate of interest, and therefore hedge against changes in the fair value of the fixed rate debt due to market rate
changes.
We monitor the mix of fixed rate and variable rate debt obligations in light of changing market conditions and from time to
time, may alter that mix by, for example, refinancing outstanding balances of variable rate debt with fixed rate debt (or vice versa)
or by entering into interest rate swap agreements or other interest rate hedging agreements. As of December 31, 2018, including
debt converted to variable rates through the use of interest rate swaps but excluding our debt fair value adjustments, approximately
31% of our debt balances were subject to variable interest rates.
For more information on our interest rate risk management and on our interest rate swap agreements, see Note 14 “Risk
Management” to our consolidated financial statements.
Foreign Currency Risk
As of December 31, 2018, we had a notional principal amount of $1,358 million of cross-currency swap agreements that
effectively convert all of our fixed-rate Euro denominated debt, including annual interest payments and the payment of
principal at maturity, to U.S. dollar denominated debt at fixed rates. These swaps eliminate the foreign currency risk associated
with our foreign currency denominated debt.
As of December 31, 2018, we had a notional principal amount of C$2,450 million (U.S.$1,888 million) of cross-currency
swap agreements that result in our selling fixed C$ and receiving fixed U.S.$. These swaps effectively hedged the foreign
currency risk associated with a substantial portion of our share of the TMPL Sale proceeds that KML distributed to us on
January 3, 2019, at which time the cross-currency currency swaps also expired.
Item 8. Financial Statements and Supplementary Data.
The information required in this Item 8 is in this report as set forth in the “Index to Financial Statements” on page 72.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures.
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
As of December 31, 2018, our management, including our Chief Executive Officer and Chief Financial Officer, has
evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule
13a-15(b) under the Securities Exchange Act of 1934. There are inherent limitations to the effectiveness of any system of
disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls
and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of
achieving their control objectives. Based upon and as of the date of the evaluation, our Chief Executive Officer and our Chief
Financial Officer concluded that the design and operation of our disclosure controls and procedures were effective to provide
reasonable assurance that information required to be disclosed in the reports we file and submit under the Securities Exchange
Act of 1934 is recorded, processed, summarized and reported as and when required, and is accumulated and communicated to
our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions
regarding required disclosure.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such
term is defined in Exchange Act Rule 13a-15(f). Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate. Under the supervision and with the participation of our management, including our Chief
Executive Officer and Chief Financial Officer, we conducted an assessment of the effectiveness of our internal control over
financial reporting based on the framework in Internal Control – Integrated Framework (2013) issued by the Committee of
66
Sponsoring Organizations of the Treadway Commission. Based on this assessment, our management concluded that our
internal control over financial reporting was effective as of December 31, 2018.
The effectiveness of our internal control over financial reporting as of December 31, 2018, has been audited by
PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their audit report, which appears
herein.
Changes in Internal Control Over Financial Reporting
There has been no change in our internal control over financial reporting during the fourth quarter of 2018 that has
materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information.
None.
PART III
Item 10. Directors, Executive Officers and Corporate Governance.
The information required by this item is incorporated by reference from KMI’s definitive proxy statement for the 2019
Annual Meeting of Stockholders, which shall be filed no later than April 30, 2019.
Item 11. Executive Compensation.
The information required by this item is incorporated by reference from KMI’s definitive proxy statement for the 2019
Annual Meeting of Stockholders, which shall be filed no later than April 30, 2019.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The information required by this item is incorporated by reference from KMI’s definitive proxy statement for the 2019
Annual Meeting of Stockholders, which shall be filed no later than April 30, 2019.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
The information required by this item is incorporated by reference from KMI’s definitive proxy statement for the 2019
Annual Meeting of Stockholders, which shall be filed no later than April 30, 2019.
Item 14. Principal Accounting Fees and Services.
The information required by this item is incorporated by reference from KMI’s definitive proxy statement for the 2019
Annual Meeting of Stockholders, which shall be filed no later than April 30, 2019.
PART IV
Item 15. Exhibits, Financial Statement Schedules.
(a) (1) Financial Statements and (2) Financial Statement Schedules
See “Index to Financial Statements” set forth on Page 72.
(3) Exhibits
Exhibit
Number
Description
3.1 * Amended and Restated Certificate of Incorporation of KMI (filed as Exhibit 3.1 to KMI’s Quarterly Report on
Form 10-Q for the three months ended June 30, 2015 (File No. 001-35081))
3.2 * Amended and Restated Bylaws of KMI (filed as Exhibit 3.1 to KMI’s Current Report on Form 8-K, filed
October 20, 2017 (File No. 001-35081))
67
Exhibit
Number
Description
3.3 * Certificate of Elimination of 9.75% Series A Mandatory Convertible Preferred Stock of KMI (filed as Exhibit
3.1 to KMI’s Current Report on Form 8-K filed January 22, 2019 (File No. 001-35081))
4.1 * Form of certificate representing Class P common shares of KMI (filed as Exhibit 4.1 to KMI’s Registration
Statement on Form S-1 filed on January 18, 2011 (File No. 333-170773))
4.2 * Shareholders Agreement among KMI and certain holders of common stock (filed as Exhibit 4.2 to KMI’s
Quarterly Report on Form 10-Q for the three Months ended March 31, 2011 (File No. 001-35081))
4.3 * Amendment No. 1 to the Shareholders Agreement among KMI and certain holders of common stock (filed as
Exhibit 4.3 to KMI’s Current Report on Form 8-K filed on May 30, 2012 (File No. 001-35081))
4.4 * Amendment No. 2 to the Shareholders Agreement among KMI and certain holders of common stock (filed as
Exhibit 4.1 to KMI’s Current Report on Form 8-K filed on December 3, 2014 (File No. 001-35081))
4.5 * Form of Senior Indenture between Kinder Morgan Kansas, Inc. and Wachovia Bank, National Association, as
Trustee (filed as Exhibit 4.2 to Kinder Morgan Kansas, Inc.’s Registration Statement on Form S-3 filed on
February 4, 2003 (File No. 333-102963))
4.6 * Form of Senior Note of Kinder Morgan Kansas, Inc. (included in the Form of Senior Indenture filed as Exhibit
4.2 to Kinder Morgan Kansas, Inc.’s Registration Statement on Form S-3 filed on February 4, 2003 (File No.
333-102963))
4.7 *
Indenture dated as of December 9, 2005, among Kinder Morgan Finance Company LLC (formerly Kinder
Morgan Finance Company, ULC), Kinder Morgan Kansas, Inc. and Wachovia Bank, National Association, as
Trustee (filed as Exhibit 4.1 to Kinder Morgan Kansas, Inc.’s Current Report on Form 8-K filed on December
15, 2005 (File No. 1-06446))
4.8 * Forms of Kinder Morgan Finance Company LLC Notes (included in the Indenture filed as Exhibit 4.1 to Kinder
Morgan Kansas, Inc.’s Current Report on Form 8-K filed on December 15, 2005 (File No. 1-06446))
4.9 *
Indenture dated January 2, 2001 between Kinder Morgan Energy Partners, L.P. and First Union National Bank,
as trustee, relating to Senior Debt Securities (including form of Senior Debt Securities) (filed as Exhibit 4.11 to
Kinder Morgan Energy Partners, L.P.’s Annual Report on Form 10-K for the year ended December 31, 2000
(File No. 1-11234))
4.10 * Certificate of the Vice President and Chief Financial Officer of Kinder Morgan Energy Partners, L.P.
establishing the terms of the 7.40% Notes due March 15, 2031 (filed as Exhibit 4.1 to Kinder Morgan Energy
Partners, L.P.’s Current Report on Form 8-K filed on March 14, 2001 (File No. 1-11234))
4.11 * Specimen of 7.40% Notes due March 15, 2031 in book-entry form (filed as Exhibit 4.3 to Kinder Morgan
Energy Partners, L.P.’s Current Report on Form 8-K filed on March 14, 2001(File No. 1-11234))
4.12 * Certificate of the Vice President and Chief Financial Officer of Kinder Morgan Energy Partners, L.P.
establishing the terms of the 7.750% Notes due March 15, 2032 (filed as Exhibit 4.1 to Kinder Morgan Energy
Partners, L.P.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2002 (File No. 1-11234))
4.13 * Specimen of 7.750% Notes due March 15, 2032 in book-entry form (filed as Exhibit 4.3 to Kinder Morgan
Energy Partners, L.P.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2002 (File No.
1-11234))
4.14 *
Indenture dated August 19, 2002 between Kinder Morgan Energy Partners, L.P. and Wachovia Bank, National
Association, as Trustee (filed as Exhibit 4.1 to Kinder Morgan Energy Partners, L.P.’s Registration Statement on
Form S-4 filed on October 4, 2002 (File No. 333-100346))
4.15 * First Supplemental Indenture to Indenture dated August 19, 2002, dated August 23, 2002 between Kinder
Morgan Energy Partners, L.P. and Wachovia Bank, National Association, as Trustee (filed as Exhibit 4.2 to
Kinder Morgan Energy Partners, L.P.’s Registration Statement on Form S-4 filed on October 4, 2002 (File No.
333-100346))
4.16 * Form of 7.30% Notes due 2033 (contained in the Indenture filed as Exhibit 4.1 to Kinder Morgan Energy
Partners, L.P.’s Registration Statement on Form S-4 filed on October 4, 2002 (File No. 333-100346))
4.17 * Senior Indenture dated January 31, 2003 between Kinder Morgan Energy Partners, L.P. and Wachovia Bank,
National Association (filed as Exhibit 4.2 to Kinder Morgan Energy Partners, L.P.’s Registration Statement on
Form S-3 filed on February 4, 2003 (File No. 333-102961))
68
Exhibit
Number
Description
4.18 * Form of Senior Note of Kinder Morgan Energy Partners, L.P. (included in the Form of Senior Indenture filed as
Exhibit 4.2 to Kinder Morgan Energy Partners, L.P.’s Registration Statement on Form S-3 filed on February 4,
2003 (File No. 333-102961))
4.19 * Certificate of the Vice President, Treasurer and Chief Financial Officer and the Vice President, General Counsel
and Secretary of Kinder Morgan Management, LLC and Kinder Morgan G.P., Inc., on behalf of Kinder Morgan
Energy Partners, L.P. establishing the terms of the 5.80% Notes due March 15, 2035 (filed as Exhibit 4.1 to
Kinder Morgan Energy Partners, L.P.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2005
(File No. 1-11234))
4.20 * Certificate of the Vice President and Chief Financial Officer of Kinder Morgan Management, LLC and Kinder
Morgan G.P., Inc., on behalf of Kinder Morgan Energy Partners, L.P. establishing the terms of the 6.00% Senior
Notes due 2017 and 6.50% Senior Notes due 2037 (filed as Exhibit 4.28 to Kinder Morgan Energy Partners,
L.P.’s Annual Report on Form 10-K for the year ended December 31, 2006 (File No. 1-11234))
4.21 * Certificate of the Vice President and Treasurer and the Vice President and Chief Financial Officer of Kinder
Morgan Management, LLC and Kinder Morgan G.P., Inc., on behalf of Kinder Morgan Energy Partners, L.P.,
establishing the terms of the 6.95% Senior Notes due 2038 (filed as Exhibit 4.2 to Kinder Morgan Energy
Partners, L.P.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2007 (File No. 1-11234))
4.22 * Certificate of the Vice President and Treasurer and the Vice President and Chief Financial Officer of Kinder
Morgan Management, LLC and Kinder Morgan G.P., Inc., on behalf of Kinder Morgan Energy Partners, L.P.,
establishing the terms of the 9.00% Senior Notes due 2019 (filed as Exhibit 4.29 to Kinder Morgan Energy
Partners, L.P.’s Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 1-11234))
4.23 * Certificate of the Vice President and Chief Financial Officer and the Vice President and Treasurer of Kinder
Morgan Management, LLC and Kinder Morgan G.P., Inc., on behalf of Kinder Morgan Energy Partners, L.P.,
establishing the terms of the 6.85% Senior Notes due 2020 (filed as Exhibit 4.2 to Kinder Morgan Energy
Partners, L.P.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2009 (File No. 1-11234))
4.24 * Certificate of the Vice President and Chief Financial Officer and the Vice President and Treasurer of Kinder
Morgan Management, LLC and Kinder Morgan G.P., Inc., on behalf of Kinder Morgan Energy Partners, L.P.,
establishing the terms of the 5.80% Senior Notes due 2021, and the 6.50% Senior Notes due 2039 (filed as
Exhibit 4.2 to Kinder Morgan Energy Partners, L.P.’s Quarterly Report on Form 10-Q for the quarter ended
September 30, 2009 (File No. 1-11234))
4.25 * Certificate of the Vice President and Chief Financial Officer and the Vice President and Treasurer of Kinder
Morgan Management, LLC and Kinder Morgan G.P., Inc., on behalf of Kinder Morgan Energy Partners, L.P.,
establishing the terms of the 5.30% Senior Notes due 2020, and the 6.55% Senior Notes due 2040 (filed as
Exhibit 4.2 to Kinder Morgan Energy Partners, L.P.’s Quarterly Report on Form 10-Q for the quarter ended
June 30, 2010 (File No. 1-11234))
4.26 * Certificate of the Vice President and Chief Financial Officer and the Vice President and Treasurer of Kinder
Morgan Management, LLC and Kinder Morgan G.P., Inc., on behalf of Kinder Morgan Energy Partners, L.P.,
establishing the terms of the 6.375% Senior Notes due 2041 (filed as Exhibit 4.1 to Kinder Morgan Energy
Partners, L.P.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2011 (File No. 1-11234))
4.27 * Certificate of the Vice President and Chief Financial Officer and the Vice President and Treasurer of Kinder
Morgan Management, LLC and Kinder Morgan G.P., Inc., on behalf of Kinder Morgan Energy Partners, L.P.,
establishing the terms of the 4.150% Senior Notes due 2022, and the 5.625% Senior Notes due 2041 (filed as
Exhibit 4.1 to Kinder Morgan Energy Partners, L.P.’s Quarterly Report on Form 10-Q for the quarter ended
September 30, 2011 (File No. 1-11234))
4.28 * Certificate of the Vice President, Finance and Investor Relations and the Vice President and Secretary of Kinder
Morgan Management, LLC and Kinder Morgan G.P., Inc., on behalf of Kinder Morgan Energy Partners, L.P.,
establishing the terms of the 3.500% Senior Notes due 2021 and the 5.500% Senior Notes due 2044 (filed as
Exhibit 4.1 to Kinder Morgan Energy Partners, L.P.’s Quarterly Report on Form 10-Q for the quarter ended
March 31, 2014 (File No. 1-11234))
4.29 * Certificate of the Vice President and Treasurer and the Vice President and Secretary of Kinder Morgan
Management, LLC and Kinder Morgan G.P., Inc., on behalf of Kinder Morgan Energy Partners, L.P.,
establishing the terms of the 4.250% Senior Notes due 2024 and the 5.400% Senior Notes due 2044 (filed as
Exhibit 4.1 to Kinder Morgan Energy Partners, L.P.’s Quarterly Report on Form 10-Q for the quarter ended
September 30, 2014 (File No. 1-11234))
4.30 *
Indenture, dated March 1, 2012, between KMI and U.S. Bank National Association, as Trustee (filed as Exhibit
4.1 to KMI’s Registration Statement on Form S-3 filed on March 1, 2012 (File No. 001-35081))
69
Exhibit
Number
Description
4.31 * Certificate of the Vice President and Treasurer and the Vice President and Secretary of KMI establishing the
terms of the 2.000% Senior Notes due 2017, the 3.050% Senior Notes due 2019, the 4.300% Senior Notes due
2025, the 5.300% Senior Notes due 2034 and the 5.550% Senior Notes due 2045 (filed as Exhibit 10.53 to
KMI’s Annual Report on Form 10-K for the year ended December 31, 2014 (File No. 001-35081))
4.32 * Certificate of the Vice President and Treasurer and Vice President and Secretary of KMI establishing the terms
of the 5.050% Senior Notes due 2046 (filed as Exhibit 4.1 to KMI’s Quarterly Report on Form 10-Q for the
three months ended March 31, 2015 (File No. 001-35081))
4.33 * Certificate of the Vice President and Treasurer and Vice President and Secretary of KMI establishing the terms
of the 1.500% Senior Notes due 2022 and 2.250% Senior Notes due 2027 (filed as Exhibit 4.2 to KMI’s Form 8-
A, filed March 16, 2015 (File No. 001-35081))
4.34 * Certificate of the Vice President and Treasurer and the Vice President and Chief Financial Officer of KMI
establishing the terms of the 3.150% Senior Notes due January 15, 2023 (filed as Exhibit 4.1 to KMI’s Quarterly
Report on Form 10-Q for the quarter ended September 30, 2017 (File No. 001-35081))
4.35 * Certificate of the Vice President and Treasurer and the Vice President and Chief Financial Officer of KMI
establishing the terms of the Floating Rate Senior Notes due January 15, 2023 (filed as Exhibit 4.2 to KMI’s
Quarterly Report on Form 10-Q for the quarter ended September 30, 2017 (File No. 001-35081))
4.36 * Certificate of the Vice President and Treasurer and the Vice President and Chief Financial Officer of KMI
establishing the terms of the 4.300% Senior Notes due 2028 and the 5.200% Senior Notes due 2048 (filed as
Exhibit 4.1 to KMI’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018 (File No.
001-35081))
4.37
Certain instruments with respect to long-term debt of KMI and its consolidated subsidiaries which relate to debt
that does not exceed 10% of the total assets of KMI and its consolidated subsidiaries are omitted pursuant to
Item 601(b) (4) (iii) (A) of Regulation S-K, 17 C.F.R. sec. #229.601. KMI hereby agrees to furnish
supplementally to the Securities and Exchange Commission a copy of each such instrument upon request.
10.1 * KMI 2015 Amended and Restated Stock Incentive Plan (filed as Exhibit 4.5 to KMI’s Registration Statement on
Form S-8, filed on July 1, 2015 (File No. 333-205430))
10.2 * Amendment No. 1 to KMI 2015 Amended and Restated Stock Incentive Plan (filed as Exhibit 10.2 to KMI’s
Current Report on Form 8-K filed on January 24, 2017 (File No. 001-35081))
10.3 * Amendment No. 2 to KMI 2015 Amended and Restated Stock Incentive Plan (filed as Exhibit 10.2 to KMI’s
Quarterly Report on Form 10-Q for the three months ended June 30, 2018 (File No. 001-35081))
10.4 * Amendment No. 3 to KMI 2015 Amended and Restated Stock Incentive Plan (filed as Exhibit 10.1 to KMI’s
Current Report on Form 8-K filed on January 22, 2019 (File No. 001-35081))
10.5 *
10.6 *
10.7 *
2015 Form of Employee Restricted Stock Unit Agreement (filed as Exhibit 4.6 to KMI’s Registration Statement
on Form S-8, filed on July 1, 2015 (File No. 333-205430))
2016 Form of Employee Restricted Stock Unit Agreement (filed as Exhibit 10.2 to KMI’s Quarterly Report on
Form 10-Q for the three months ended June 30, 2016 (File No. 001-35081))
2018 Form of Employee Restricted Stock Unit Agreement (filed as Exhibit 10.3 to KMI’s Quarterly Report on
Form 10-Q for the three months ended June 30, 2018 (File No. 001-35081))
10.8 * Amended and Restated Stock Compensation Plan for Non-Employee Directors (filed as Exhibit 10.5 to KMI’s
Quarterly Report on Form 10-Q for the three months ended June 30, 2015 (File No. 001-35081))
10.9 *
10.10 *
2015 Form of Non-Employee Director Stock Compensation Agreement (filed as Exhibit 10.6 to KMI’s
Quarterly Report on Form 10-Q for the three months ended June 30, 2015 (File No. 001-35081))
2011 Form of Non-Employee Director Stock Compensation Agreement (filed as Exhibit 10.3 to KMI’s
Quarterly Report on Form 10-Q for the three months ended March 31, 2011 (File No. 001-35081))
10.11 * KMI Employees Stock Purchase Plan (filed as Exhibit 10.5 to KMI’s Quarterly Report on Form 10-Q for the
three months ended March 31, 2011 (File No. 001-35081))
10.12 * Amended and Restated Annual Incentive Plan of KMI (filed as Exhibit 10.4 to KMI’s Quarterly Report on Form
10-Q for the three months ended June 30, 2015 (File No. 001-35081))
10.13 * Amendment No. 1 to Amended and Restated Incentive Plan of KMI (filed as Exhibit 10.1 to KMI’s Current
Report on Form 8-K filed January 24, 2017 (File No. 001-35081))
70
Exhibit
Number
Description
10.14
10.15
10.16
21.1
23.1
31.1
31.2
32.1
32.2
101
Revolving Credit Agreement, dated November 16, 2018 among KMI, as borrower, Barclays Bank PLC, as
administrative agent, and the lenders and issuing banks party thereto
364-Day Revolving Credit Agreement, dated November 16, 2018 among KMI, as borrower, Barclays Bank
PLC, as administrative agent, and the lenders party thereto
Cross Guarantee Agreement, dated as of November 26, 2014 among KMI and certain of its subsidiaries with
schedules updated as of December 31, 2018
Subsidiaries of KMI
Consent of PricewaterhouseCoopers LLP
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act
of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act
of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002
Interactive data files pursuant to Rule 405 of Regulation S-T: (i) our Consolidated Statements of Income for the
years ended December 31, 2018, 2017, and 2016; (ii) our Consolidated Statements of Comprehensive Income
for the years ended December 31, 2018, 2017, and 2016; (iii) our Consolidated Balance Sheets as of December
31, 2018 and 2017; (iv) our Consolidated Statements of Cash Flows for the years ended December 31, 2018,
2017, and 2016; (v) our Consolidated Statement of Stockholders’ Equity as of and for the years ended December
31, 2018, 2017, and 2016; and (vi) the notes to our Consolidated Financial Statements
_______
*Asterisk indicates exhibits incorporated by reference as indicated; all other exhibits are filed herewith, except as noted
otherwise.
71
KINDER MORGAN, INC. AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm
Consolidated Statements of Income for the years ended December 31, 2018, 2017 and 2016
Consolidated Statements of Comprehensive Income for the years ended December 31, 2018, 2017 and 2016
Consolidated Balance Sheets as of December 31, 2018 and 2017
Consolidated Statements of Cash Flows for the years ended December 31, 2018, 2017 and 2016
Consolidated Statement of Stockholders’ Equity as of and for the years ended December 31, 2018, 2017 and 2016
Notes to Consolidated Financial Statements
Supplemental Selected Quarterly Financial Data (Unaudited)
Page
Number
73
75
76
77
78
80
81
153
72
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Kinder Morgan, Inc.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Kinder Morgan, Inc. and its subsidiaries (the “Company”) as
of December 31, 2018 and 2017 and the related consolidated statements of income, comprehensive income, cash flows, and
stockholders’ equity for each of the three years in the period ended December 31, 2018, including the related notes (collectively
referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial
reporting as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by
the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial
position of the Company as of December 31, 2018 and 2017, and the results of their operations and their cash flows for each of
the three years in the period ended December 31, 2018 in conformity with accounting principles generally accepted in the
United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over
financial reporting as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013)
issued by the COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal
control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included
in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to
express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial
reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight
Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement,
whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material
respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement
of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal
control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the
risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based
on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the
circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
73
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/PricewaterhouseCoopers LLP
Houston, Texas
February 8, 2019
We have served as the Company’s auditor since 1997.
74
KINDER MORGAN, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In Millions, Except Per Share Amounts)
Year Ended December 31,
2017
2016
2018
Revenues
Natural gas sales
Services
Product sales and other
Total Revenues
Operating Costs, Expenses and Other
Costs of sales
Operations and maintenance
Depreciation, depletion and amortization
General and administrative
Taxes, other than income taxes
Loss on impairments and divestitures, net
Other income, net
Total Operating Costs, Expenses and Other
Operating Income
Other Income (Expense)
Earnings from equity investments
Loss on impairments and divestitures of equity investments, net
Amortization of excess cost of equity investments
Interest, net
Other, net
Total Other Expense
Income Before Income Taxes
Income Tax Expense
Net Income
Net Income Attributable to Noncontrolling Interests
Net Income Attributable to Kinder Morgan, Inc.
Preferred Stock Dividends
Net Income Available to Common Stockholders
Class P Shares
Basic and Diluted Earnings Per Common Share
Basic and Diluted Weighted Average Common Shares Outstanding
Dividends Per Common Share Declared for the Period
$
$
3,281
7,931
2,932
14,144
$
3,053
7,901
2,751
13,705
2,454
8,146
2,458
13,058
4,421
2,522
2,297
601
345
167
(3)
10,350
4,345
2,472
2,261
688
398
13
(1)
10,176
3,794
3,529
887
(270)
(95)
(1,917)
107
(1,288)
578
(150)
(61)
(1,832)
97
(1,368)
3,429
2,372
2,209
703
421
387
(1)
9,520
3,538
497
(610)
(59)
(1,806)
78
(1,900)
2,506
2,161
1,638
(587)
(1,938)
(917)
1,919
(310)
1,609
(128)
223
(40)
183
721
(13)
708
(156)
(156)
1,481
$
27
$
552
0.66
$
0.01
$
0.25
2,216
2,230
2,230
0.80
$
0.50
$
0.50
$
$
$
The accompanying notes are an integral part of these consolidated financial statements.
75
KINDER MORGAN, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In Millions)
Year Ended December 31,
2017
2016
2018
Net income
Other comprehensive income (loss), net of tax
$
1,919
$
223
$
721
Change in fair value of hedge derivatives (net of tax (expense) benefit of
$(34), $(82) and $60, respectively)
Reclassification of change in fair value of derivatives to net income (net of
tax (expense) benefit of $(25), $97 and $67, respectively)
Foreign currency translation adjustments (net of tax expense of $16, $56 and
$20, respectively)
Benefit plan adjustments (net of tax (expense) benefit of $(11), $(27) and
$19, respectively)
Total other comprehensive income (loss)
111
84
141
2
338
145
(171)
101
40
115
Comprehensive income
Comprehensive income attributable to noncontrolling interests
Comprehensive income attributable to KMI
2,257
(328)
1,929
$
$
338
(86)
252
$
(104)
(116)
34
(14)
(200)
521
(13)
508
The accompanying notes are an integral part of these consolidated financial statements.
76
KINDER MORGAN, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Millions, Except Share and Per Share Amounts)
ASSETS
December 31,
2018
2017
Current assets
Cash and cash equivalents
Restricted deposits
Accounts receivable, net
Fair value of derivative contracts
Inventories
Income tax receivable
Other current assets
Total current assets
Property, plant and equipment, net
Investments
Goodwill
Other intangibles, net
Deferred income taxes
Deferred charges and other assets
Total Assets
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND
STOCKHOLDERS’ EQUITY
Current liabilities
Current portion of debt
Accounts payable
Distributions payable to KML noncontrolling interests
Accrued interest
Accrued taxes
Accrued contingencies
Other current liabilities
Total current liabilities
Long-term liabilities and deferred credits
Long-term debt
Outstanding
Preferred interest in general partner of KMP
Debt fair value adjustments
Total long-term debt
Other long-term liabilities and deferred credits
Total long-term liabilities and deferred credits
Total Liabilities
Commitments and contingencies (Notes 9, 13 and 18)
Redeemable Noncontrolling Interest
Stockholders’ Equity
Preferred stock, $0.01 par value, 10,000,000 shares authorized, 9.75% Series A Mandatory Convertible,
$1,000 per share liquidation preference, - and 1,600,000 shares, respectively, issued and outstanding
Class P shares, $0.01 par value, 4,000,000,000 shares authorized, 2,262,165,783 and 2,217,110,072
shares, respectively, issued and outstanding
Additional paid-in capital
Retained deficit
Accumulated other comprehensive loss
Total Kinder Morgan, Inc.’s stockholders’ equity
Noncontrolling interests
Total Stockholders’ Equity
Total Liabilities, Redeemable Noncontrolling Interest and Stockholders’ Equity
$
$
$
$
3,280
51
1,498
260
385
23
225
5,722
37,897
7,481
21,965
2,880
1,566
1,355
78,866
3,388
1,337
876
579
483
88
806
7,557
33,105
100
731
33,936
2,176
36,112
43,669
666
—
23
41,701
(7,716)
(330)
33,678
853
34,531
78,866
$
$
$
$
264
62
1,448
114
424
165
238
2,715
40,155
7,298
22,162
3,099
2,044
1,582
79,055
2,828
1,340
—
621
256
291
845
6,181
33,988
100
927
35,015
2,735
37,750
43,931
—
—
22
41,909
(7,754)
(541)
33,636
1,488
35,124
79,055
The accompanying notes are an integral part of these consolidated financial statements.
77
KINDER MORGAN, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Millions)
Year Ended December 31,
2018
2017
2016
$
1,919
$
223
$
721
Cash Flows From Operating Activities
Net income
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation, depletion and amortization
Deferred income taxes
Amortization of excess cost of equity investments
Change in fair market value of derivative contracts
Loss (gain) on early extinguishment of debt
Loss on impairments and divestitures, net (Note 4)
Loss on impairments and divestitures of equity investments, net (Note 4)
Earnings from equity investments
Distributions of equity investment earnings
Changes in components of working capital, net of the effects of acquisitions and dispositions
Accounts receivable, net
Income tax receivable
Inventories
Other current assets
Accounts payable
Accrued interest, net of interest rate swaps
Accrued taxes
Accrued contingencies and other current liabilities
Rate reparations, refunds and other litigation reserve adjustments
Other, net
Net Cash Provided by Operating Activities
Cash Flows From Investing Activities
Proceeds from the TMPL Sale, net of cash disposed (Note 3)
Acquisitions of assets and investments
Capital expenditures
Proceeds from sale of equity interests in subsidiaries, net
Proceeds from sales of equity investments
Sales of property, plant and equipment, investments, and other net assets, net of removal costs
Contributions to investments
Distributions from equity investments in excess of cumulative earnings
Loans (to) from related parties
Other, net
Net Cash Used in Investing Activities
Cash Flows From Financing Activities
Issuances of debt
Payments of debt
Debt issue costs
Cash dividends - common shares (Note 11)
Cash dividends - preferred shares (Note 11)
Repurchases of common shares (Note 11)
Contributions from investment partner
Contributions from noncontrolling interests - net proceeds from KML IPO (Note 3)
Contributions from noncontrolling interests - net proceeds from KML preferred share issuances
(Note 11)
Contributions from noncontrolling interests - other
Distributions to noncontrolling interests
Other, net
Net Cash Used in Financing Activities
Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Deposits
Net increase (decrease) in Cash, Cash Equivalents and Restricted Deposits
Cash, Cash Equivalents, and Restricted Deposits, beginning of period
2,297
405
95
77
—
167
270
(887)
499
(50)
137
15
(16)
21
(22)
241
73
(202)
4
5,043
2,998
(39)
(2,904)
—
124
(20)
(433)
237
(31)
—
(68)
14,751
(14,591)
(42)
(1,618)
(156)
(273)
181
—
—
19
(78)
(17)
(1,824)
(146)
3,005
326
2,261
2,073
61
40
4
13
150
(578)
426
(78)
7
(90)
(25)
73
10
(37)
138
(100)
30
4,601
—
(4)
(3,188)
—
—
118
(684)
374
(23)
4
(3,403)
8,868
(11,064)
(70)
(1,120)
(156)
(250)
485
1,245
420
12
(42)
(9)
(1,681)
22
(461)
787
326
$
2,209
1,087
59
64
(45)
387
610
(497)
431
(107)
(148)
49
(81)
144
(18)
31
11
(32)
(117)
4,758
—
(333)
(2,882)
1,401
—
330
(408)
231
35
1
(1,625)
8,629
(10,060)
(19)
(1,118)
(154)
—
—
—
—
117
(24)
(8)
(2,637)
2
498
289
787
Cash, Cash Equivalents, and Restricted Deposits, end of period
$
3,331
$
78
KINDER MORGAN, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(In Millions)
Cash and Cash Equivalents, beginning of period
Restricted Deposits, beginning of period
Cash, Cash Equivalents, and Restricted Deposits, beginning of period
Cash and Cash Equivalents, end of period
Restricted Deposits, end of period
Cash, Cash Equivalents, and Restricted Deposits, end of period
Net increase (decrease) in Cash, Cash Equivalents and Restricted Deposits
Noncash Investing and Financing Activities
Assets acquired by the assumption or incurrence of liabilities
Net assets contributed to equity investments
Increase in property, plant and equipment from both accruals and contractor retainage
Decrease in noncontrolling interests for distribution accrual
Supplemental Disclosures of Cash Flow Information
Cash paid during the period for interest (net of capitalized interest)
Cash (refunded) paid during the period for income taxes, net
Year Ended December 31,
2018
2017
2016
$
264
$
62
326
3,280
51
3,331
$
684
103
787
264
62
326
$
$
3,005
$
(461) $
— $
— $
—
30
905
—
14
—
229
60
289
684
103
787
498
43
37
—
1,879
(109)
1,854
(140)
2,050
4
The accompanying notes are an integral part of these consolidated financial statements.
79
KINDER MORGAN, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In Millions)
Common stock
Preferred stock
Issued
shares
Par
value
Issued
shares
Par
value
Additional
paid-in
capital
Retained
deficit
Accumulated
other
comprehensive
loss
Stockholders’
equity
attributable
to KMI
Non-
controlling
interests
Total
Balance at December 31, 2015
2,229
$
22
2
$ — $
41,661
$ (6,103) $
(461) $
35,119
$
284
$35,403
1
Restricted shares
Net income
Distributions
Contributions
Preferred stock dividends
Common stock dividends
Other
Other comprehensive loss
66
12
708
(156)
(1,118)
Balance at December 31, 2016
2,230
22
2
—
41,739
(6,669)
(200)
(661)
51
(250)
65
314
38
183
(156)
(1,120)
66
708
—
—
(156)
(1,118)
12
(200)
34,431
(250)
65
183
365
—
38
—
—
(156)
(1,120)
—
11
69
13
(24)
117
(19)
371
40
684
419
(48)
18
66
721
(24)
117
(156)
(1,118)
(7)
(200)
34,802
(250)
65
223
1,049
419
38
(48)
18
(156)
(1,120)
(30)
(12)
46
(30)
(1)
115
3
8
69
22
22
2
2
1
(2)
— $
41,909
$ (7,754) $
(541) $
33,636
$
1,488
35,124
—
41,909
(7,579)
175
(109)
(650)
(273)
(1)
65
1
1,609
(128)
(1,618)
320
66
33,702
(273)
—
65
1,609
—
—
(128)
(1,618)
1
320
66
35,190
(273)
—
65
1,919
(997)
33
(128)
(1,618)
2
338
1,488
310
(997)
33
1
18
(14)
1
Repurchases of shares
Restricted shares
Net income
KML IPO
KML preferred share issuance
Reorganization of foreign
subsidiaries
Distributions
Contributions
Preferred stock dividends
Common stock dividends
Sale and deconsolidation of
interest in Deeprock
Development, LLC
Other
Other comprehensive income
Balance at December 31, 2017
2,217
2,217
(15)
58
2
Impact of adoption of ASUs
(Note 2)
Balance at January 1, 2018
Repurchases of shares
Mandatory conversion of
preferred shares
Restricted shares
Net income
Distributions
Contributions
Preferred stock dividends
Common stock dividends
Other
Other comprehensive income
Balance at December 31, 2018
2,262
$
23
— $ — $
41,701
$ (7,716) $
(330) $
33,678
$
853
$34,531
The accompanying notes are an integral part of these consolidated financial statements.
80
KINDER MORGAN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. General
We are one of the largest energy infrastructure companies in North America and unless the context requires otherwise,
references to “we,” “us,” “our,” “the Company,” or “KMI” are intended to mean Kinder Morgan, Inc. and its consolidated
subsidiaries. Our pipelines transport natural gas, refined petroleum products, crude oil, condensate, CO2 and other products, and
our terminals transload and store liquid commodities including petroleum products, ethanol and chemicals, and bulk products,
including petroleum coke, metals and ores.
Our common stock trades on the NYSE under the symbol “KMI.”
2. Summary of Significant Accounting Policies
Basis of Presentation
Our reporting currency is U.S. dollars, and all references to dollars are U.S. dollars, unless stated otherwise. Our
accompanying consolidated financial statements have been prepared under the rules and regulations of the SEC. These rules
and regulations conform to the accounting principles contained in the FASB’s Accounting Standards Codification (ASC), the
single source of GAAP. Under such rules and regulations, all significant intercompany items have been eliminated in
consolidation. Additionally, certain amounts from prior years have been reclassified to conform to the current presentation.
Adoption of New Accounting Pronouncements
On January 1, 2018, we adopted Accounting Standards Updates (ASU) No. 2014-09, “Revenue from Contracts with
Customers” and a series of related accounting standard updates designed to create improved revenue recognition and disclosure
comparability in financial statements. For more information, see “—Revenue Recognition” below and Note 16.
On January 1, 2018, we retroactively adopted ASU No. 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash
(a consensus of the FASB Emerging Issues Task Force).” This ASU requires the statements of cash flows to present the change
during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash
equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents are now included with
cash and cash equivalents when reconciling the beginning of period and end of period amounts presented on the statements of
cash flows. The retrospective application of this new accounting guidance resulted in an increase of $41 million and a decrease
of $43 million in “Net increase (decrease) in Cash, Cash Equivalents and Restricted Deposits”, no change and a decrease of
$37 million in “Accrued contingencies and other current liabilities” in Cash Flows from Operating Activities, and a decrease of
$41 million and an increase of $80 million in “Other, net” in Cash Flows from Investing Activities in our accompanying
consolidated statement of cash flows for the years ended December 31, 2017 and 2016, respectively, from what was previously
presented in our Annual Report on Form 10-K for the year ended December 31, 2017.
Amounts included in the restricted deposits in the accompanying consolidated financial statements represent a combination
of restricted cash amounts required to be set aside by regulatory agencies to cover obligations for our captive and other
insurance subsidiaries, and cash margin deposits posted by us with our counterparties associated with certain energy
commodity contract positions.
On January 1, 2018, we adopted ASU No. 2017-05, “Clarifying the Scope of Asset Derecognition Guidance and
Accounting for Partial Sales of Nonfinancial Assets.” This ASU clarifies the scope and application of ASC 610-20 on contracts
for the sale or transfer of nonfinancial assets and in substance nonfinancial assets to noncustomers, including partial sales. This
ASU also clarifies that the derecognition of all businesses is in the scope of ASC 810 and defines an “in substance nonfinancial
asset.” We utilized the modified retrospective method to adopt the provisions of this ASU, which required us to apply the new
standard to (i) all new contracts entered into after January 1, 2018, and (ii) to contracts that were not completed contracts as of
January 1, 2018 through a cumulative adjustment to our “Retained deficit” balance. The cumulative effect of the adoption of
this ASU was a $66 million, net of income taxes, adjustment to our “Retained deficit” balance as presented in our consolidated
statement of stockholders’ equity for the year ended December 31, 2018. This ASU also requires us to classify EIG Global
Energy Partners’ (EIG) cumulative contribution to ELC as mezzanine equity, which we have included as “Redeemable
noncontrolling interest” on our consolidated balance sheet as of December 31, 2018, as EIG has the right under certain
81
conditions to redeem their interests for cash. The December 31, 2017 balance of $485 million is included in “Other long-term
liabilities and deferred credits” on our consolidated balance sheet as of December 31, 2017.
On January 1, 2018, we adopted ASU No. 2017-07, “Compensation - Retirement Benefits (Topic 715).” This ASU requires
an employer to disaggregate the service cost component from the other components of net benefit cost, allows only the service
cost component of net benefit cost to be eligible for capitalization and establishes how to present the service cost component
and the other components of net benefit cost in the income statement. Topic 715 required us to retrospectively reclassify $15
million and $34 million of other components of net benefit credits (excluding the service cost component) from “General and
administrative” to “Other, net” in our accompanying consolidated statements of income for the years ended December 31, 2017
and 2016, respectively. We prospectively applied Topic 715 related to net benefit costs eligible for capitalization.
On January 1, 2018, we adopted ASU No. 2018-02, “Reclassification of Certain Tax Effects from Accumulated Other
Comprehensive Income.” Our accounting policy for the release of stranded tax effects in accumulated other comprehensive
income is on an aggregate portfolio basis. This ASU permits companies to reclassify the income tax effects of the 2017 Tax
Reform on items within accumulated other comprehensive income to retained earnings. The FASB refers to these amounts as
“stranded tax effects.” Only the stranded tax effects resulting from the 2017 Tax Reform are eligible for reclassification. The
adoption of this ASU resulted in a $109 million reclassification adjustment of stranded income tax effects from “Accumulated
other comprehensive loss” to “Retained deficit” on our consolidated statement of stockholders’ equity for the year ended
December 31, 2018.
Use of Estimates
Certain amounts included in or affecting our financial statements and related disclosures must be estimated, requiring us
to make certain assumptions with respect to values or conditions which cannot be known with certainty at the time our
financial statements are prepared. These estimates and assumptions affect the amounts we report for assets and liabilities,
our revenues and expenses during the reporting period, and our disclosures, including as it relates to contingent assets and
liabilities at the date of our financial statements. We evaluate these estimates on an ongoing basis, utilizing historical
experience, consultation with experts and other methods we consider reasonable in the particular circumstances.
Nevertheless, actual results may differ significantly from our estimates. Any effects on our business, financial position or
results of operations resulting from revisions to these estimates are recorded in the period in which the facts that give rise to
the revision become known.
Certain accounting policies are of more significance in our financial statement preparation process than others, and set
out below are the principal accounting policies we apply in the preparation of our consolidated financial statements.
Cash Equivalents and Restricted Deposits
We define cash equivalents as all highly liquid short-term investments with original maturities of three months or less.
Restricted deposits were $51 million and $62 million as of December 31, 2018 and 2017, respectively.
Accounts Receivable, net
The amounts reported as “Accounts receivable, net” on our accompanying consolidated balance sheets as of
December 31, 2018 and 2017 primarily consist of amounts due from customers net of the allowance for doubtful accounts.
Our policy for determining an appropriate allowance for doubtful accounts varies according to the type of business
being conducted and the customers being served. Generally, we make periodic reviews and evaluations of the
appropriateness of the allowance for doubtful accounts based on a historical analysis of uncollected amounts, and we record
adjustments as necessary for changed circumstances and customer-specific information. When specific receivables are
determined to be uncollectible, the reserve and receivable are relieved.
The allowance for doubtful accounts was $3 million and $35 million as of December 31, 2018 and 2017, respectively.
Inventories
Our inventories consist of materials and supplies and products such as, NGL, crude oil, condensate, refined petroleum
products, transmix and natural gas. We report products inventory at the lower of weighted-average cost or net realizable
82
value. We report materials and supplies inventories at cost, and periodically review for physical deterioration and
obsolescence.
Property, Plant and Equipment, net
Capitalization, Depreciation and Depletion and Disposals
We report property, plant and equipment at its acquisition cost. We expense costs for routine maintenance and repairs in
the period incurred.
We generally compute depreciation using either the straight-line method based on estimated economic lives or the
composite depreciation method, which applies a single depreciation rate for a group of assets. Generally, we apply composite
depreciation rates to functional groups of property having similar economic characteristics. The rates range from 1.01% to
23.0% excluding certain short-lived assets such as vehicles. For FERC-regulated entities, the FERC-accepted composite
depreciation rate is applied to the total cost of the composite group until the net book value equals the salvage value. For
other entities, depreciation estimates are based on various factors, including age (in the case of acquired assets),
manufacturing specifications, technological advances, estimated production life of the oil or gas field served by the asset,
contract term for assets on leased or customer property and historical data concerning useful lives of similar assets.
Uncertainties that impact these estimates include changes in laws and regulations relating to restoration and abandonment
requirements, economic conditions, and supply and demand in the area. When these assets are put into service, we make
estimates with respect to useful lives (and salvage values where appropriate) that we believe are reasonable. Subsequent
events could cause us to change our estimates, thus impacting the future calculation of depreciation and amortization
expense. Historically, adjustments to useful lives have not had a material impact on our aggregate depreciation levels from
year to year.
Our oil and gas producing activities are accounted for under the successful efforts method of accounting. Under this
method costs that are incurred to acquire leasehold and subsequent development costs are capitalized. Costs that are
associated with the drilling of successful exploration wells are capitalized if proved reserves are found. Costs associated with
the drilling of exploratory wells that do not find proved reserves, geological and geophysical costs, and costs of certain non-
producing leasehold costs are expensed as incurred. The capitalized costs of our producing oil and gas properties are
depreciated and depleted by the units-of-production method. Other miscellaneous property, plant and equipment are
depreciated over the estimated useful lives of the asset.
We engage in enhanced recovery techniques in which CO2 is injected into certain producing oil reservoirs. In some
cases, the cost of the CO2 associated with enhanced recovery is capitalized as part of our development costs when it is
injected. The cost of CO2 associated with pressure maintenance operations for reservoir management is expensed when it is
injected. When CO2 is recovered in conjunction with oil production, it is extracted and re-injected, and all of the associated
costs are expensed as incurred. Proved developed reserves are used in computing units of production rates for drilling and
development costs, and total proved reserves are used for depletion of leasehold costs.
A gain on the sale of property, plant and equipment used in our oil and gas producing activities or in our bulk and
liquids terminal activities is calculated as the difference between the cost of the asset disposed of, net of depreciation, and
the sales proceeds received. A gain on an asset disposal is recognized in income in the period that the sale is closed. A loss on
the sale of property, plant and equipment is calculated as the difference between the cost of the asset disposed of, net of
depreciation, and the sales proceeds received or the market value if the asset is being held for sale. A loss is recognized when
the asset is sold or when the net cost of an asset held for sale is greater than the market value of the asset. For our pipeline
system assets under the composite method of depreciation, we generally charge the original cost of property sold or retired to
accumulated depreciation and amortization, net of salvage and cost of removal. Gains and losses are booked for FERC-
approved operating unit sales and land sales and are recorded to income or expense accounts in accordance with regulatory
accounting guidelines. In those instances where we receive recovery in tariff rates related to losses on dispositions of
operating units, we record a regulatory asset for the estimated recoverable amount.
Asset Retirement Obligations
We record liabilities for obligations related to the retirement and removal of long-lived assets used in our
businesses. We record, as liabilities, the fair value of asset retirement obligations on a discounted basis when they are
incurred and can be reasonably estimated, which is typically at the time the assets are installed or acquired. Amounts
recorded for the related assets are increased by the amount of these obligations. Over time, the liabilities increase due to the
83
change in their present value, and the initial capitalized costs are depreciated over the useful lives of the related assets. The
liabilities are eventually extinguished when the asset is taken out of service.
We have various other obligations throughout our businesses to remove facilities and equipment on rights-of-way and
other leased facilities. We currently cannot reasonably estimate the fair value of these obligations because the associated
assets have indeterminate lives. These assets include pipelines, certain processing plants and distribution facilities, and
certain bulk and liquids terminal facilities. An asset retirement obligation, if any, will be recognized once sufficient
information is available to reasonably estimate the fair value of the obligation.
Long-lived Asset and Other Intangibles Impairments
We evaluate long-lived assets and investments for impairment whenever events or changes in circumstances indicate
that our carrying amount of an asset or investment may not be recoverable. We recognize impairment losses when estimated
future cash flows expected to result from our use of the asset and its eventual disposition is less than its carrying amount.
In addition to our annual goodwill impairment test, to the extent triggering events exist, we complete a review of the
carrying value of our long-lived assets, including property, plant and equipment as well as other intangibles, and record, as
applicable, the appropriate impairments. Because the impairment test for long-lived assets held in use is based on
undiscounted cash flows, there may be instances where an asset or asset group is not considered impaired, even when its fair
value may be less than its carrying value, because the asset or asset group is recoverable based on the cash flows to be
generated over the estimated life of the asset or asset group. If the carrying value of a long-lived asset or asset group is in
excess of undiscounted cash flows, we typically use discounted cash flow analyses to determine if an impairment is required.
We evaluate our oil and gas producing properties for impairment of value on a field-by-field basis or, in certain
instances, by logical grouping of assets if there is significant shared infrastructure, using undiscounted future cash flows
based on total proved and risk-adjusted probable reserves.
Oil and gas producing properties deemed to be impaired are written down to their fair value, as determined by
discounted future cash flows based on total proved and risk-adjusted probable and possible reserves or, if available,
comparable market values. Unproved oil and gas properties that are individually significant are periodically assessed for
impairment of value, and a loss is recognized at the time of impairment.
Equity Method of Accounting and Excess Investment Cost
We account for investments which we do not control, but do have the ability to exercise significant influence using the
equity method of accounting. Under this method, our equity investments are carried originally at our acquisition cost,
increased by our proportionate share of the investee’s net income and by contributions made, and decreased by our
proportionate share of the investee’s net losses and by distributions received.
With regard to our equity investments in unconsolidated affiliates, in almost all cases, either (i) the price we paid to
acquire our share of the net assets of such equity investees or (ii) the revaluation of our share of the net assets of any retained
noncontrolling equity investment (from the sale of a portion of our ownership interest in a consolidated subsidiary, thereby
losing our controlling financial interest in the subsidiary) differed from the underlying carrying value of such net
assets. This differential consists of two pieces. First, an amount related to the difference between the investee’s recognized
net assets at book value and at current fair values (representing the appreciated value in plant and other net assets), and
secondly, to any premium in excess of fair value (referred to as equity method goodwill) we paid to acquire the
investment. We include both amounts within “Investments” on our accompanying consolidated balance sheets.
The first differential, representing the excess of the fair market value of our investees’ plant and other net assets over its
underlying book value at either the date of acquisition or the date of the loss of control totaled $470 million and $732 million
as of December 31, 2018 and 2017, respectively. Generally, this basis difference relates to our share of the underlying
depreciable assets, and, as such, we amortize this portion of our investment cost against our share of investee earnings. As
of December 31, 2018, this excess investment cost is being amortized over a weighted average life of approximately twelve
years.
The second differential, representing equity method goodwill, totaled $1,967 million for both periods as of
December 31, 2018 and 2017. This differential is not subject to amortization but rather to impairment testing as part of our
periodic evaluation of the recoverability of our investment as compared to the fair value of net assets accounted for under the
84
equity method. Our impairment test considers whether the fair value of the equity investment as a whole has declined and
whether that decline is other than temporary.
Goodwill
Goodwill is the cost of an acquisition in excess of the fair value of acquired assets and liabilities and is recorded as an
asset on our balance sheet. Goodwill is not subject to amortization but must be tested for impairment at least annually. This
test requires us to assign goodwill to an appropriate reporting unit and to determine if the implied fair value of the reporting
unit’s goodwill is less than its carrying amount.
We evaluate goodwill for impairment on May 31 of each year. For this purpose, prior to the TMPL Sale we had seven
reporting units as follows: (i) Products Pipelines (excluding associated terminals); (ii) Products Pipelines Terminals
(evaluated separately from Products Pipelines for goodwill purposes); (iii) Natural Gas Pipelines Regulated; (iv) Natural Gas
Pipelines Non-Regulated; (v) CO2; (vi) Terminals; and (vii) Kinder Morgan Canada. Subsequent to the TMPL Sale, Kinder
Morgan Canada is no longer a reporting unit. We also evaluate goodwill for impairment to the extent events or conditions
indicate a risk of possible impairment during the interim periods subsequent to our annual impairment test. Generally, the
evaluation of goodwill for impairment involves a two-step test, although under certain circumstance an initial qualitative
evaluation may be sufficient to conclude that goodwill is not impaired without conducting the quantitative test.
Step 1 involves comparing the estimated fair value of each respective reporting unit to its carrying value, including
goodwill. If the estimated fair value exceeds the carrying value, the reporting unit’s goodwill is not considered impaired. If
the carrying value exceeds the estimated fair value, step 2 must be performed to determine whether goodwill is impaired
and, if so, the amount of the impairment. Step 2 involves calculating an implied fair value of goodwill by performing a
hypothetical allocation of the estimated fair value of the reporting unit determined in step 1 to the respective tangible and
intangible net assets of the reporting unit. The remaining implied goodwill is then compared to the actual carrying amount
of the goodwill for the reporting unit. To the extent the carrying amount of goodwill exceeds the implied goodwill, the
difference is the amount of the goodwill impairment.
A large portion of our goodwill is non-deductible for tax purposes, and as such, to the extent there are impairments, all
or a portion of the impairment may not result in a corresponding tax benefit.
Refer to Note 8 for further information.
Other Intangibles
Excluding goodwill, our other intangible assets include customer contracts, relationships and agreements, and
technology-based assets. As of both December 31, 2018 and 2017, the gross carrying amounts of these intangible assets was
$4,305 million and the accumulated amortization was $1,425 million and $1,206 million, respectively, resulting in net
carrying amounts of $2,880 million and $3,099 million, respectively. These intangible assets primarily consisted of customer
contracts, relationships and agreements associated with our Natural Gas Pipelines and Terminals business segments.
Primarily, these contracts, relationships and agreements relate to the gathering of natural gas, and the handling and
storage of petroleum, chemical, and dry-bulk materials, including oil, gasoline and other refined petroleum products,
petroleum coke, metals and ores. We determined the values of these intangible assets by first, estimating the revenues
derived from a customer contract or relationship (offset by the cost and expenses of supporting assets to fulfill the contract),
and second, discounting the revenues at a risk adjusted discount rate.
We amortize the costs of our intangible assets to expense in a systematic and rational manner over their estimated useful
lives. The life of each intangible asset is based either on the life of the corresponding customer contract or agreement or, in
the case of a customer relationship intangible (the life of which was determined by an analysis of all available data on that
business relationship), the length of time used in the discounted cash flow analysis to determine the value of the customer
relationship. Among the factors we weigh, depending on the nature of the asset, are the effect of obsolescence, new
technology, and competition.
For the years ended December 31, 2018, 2017 and 2016, the amortization expense on our intangibles totaled $219
million, $220 million and $223 million, respectively. Our estimated amortization expense for our intangible assets for each
of the next five fiscal years (2019 – 2023) is approximately $213 million, $209 million, $209 million, $207 million, and
$203 million, respectively. As of December 31, 2018, the weighted average amortization period for our intangible assets
was approximately fifteen years.
85
Revenue Recognition
Revenue from Contracts with Customers
Beginning in 2018, we account for revenue from contracts with customers in accordance with Accounting Standards
Updates ASU No. 2014-09, “Revenue from Contracts with Customers” and a series of related accounting standard updates
(Topic 606). The unit of account in Topic 606 is a performance obligation, which is a promise in a contract to transfer to a
customer either a distinct good or service (or bundle of goods or services) or a series of distinct goods or services provided over
a period of time. Topic 606 requires that a contract’s transaction price, which is the amount of consideration to which an entity
expects to be entitled in exchange for transferring promised goods or services to a customer, is to be allocated to each
performance obligation in the contract based on relative standalone selling prices and recognized as revenue when (point in
time) or as (over time) control of the goods or services transfers to the customer and the performance obligation is satisfied.
Our customer sales contracts primarily include natural gas sales, NGL sales, crude oil sales, CO2 sales, and transmix sales
contracts, as described below. Generally, for the majority of these contracts: (i) each unit (Mcf, gallon, barrel, etc.) of
commodity is a separate performance obligation, as our promise is to sell multiple distinct units of commodity at a point in
time; (ii) the transaction price principally consists of variable consideration, which amount is determinable each month end
based on our right to invoice at month end for the value of commodity sold to the customer that month; and (iii) the transaction
price is allocated to each performance obligation based on the commodity’s standalone selling price and recognized as revenue
upon delivery of the commodity, which is the point in time when the customer obtains control of the commodity and our
performance obligation is satisfied.
Our customer services contracts primarily include transportation service, storage service, gathering and processing service,
and terminaling service contracts, as described below. Generally, for the majority of these contracts: (i) our promise is to
transfer (or stand ready to transfer) a series of distinct integrated services over a period of time, which is a single performance
obligation; (ii) the transaction price includes fixed and/or variable consideration, which amount is determinable at contract
inception and/or at each month end based on our right to invoice at month end for the value of services provided to the
customer that month; and (iii) the transaction price is recognized as revenue over the service period specified in the contract
(which can be a day, including each day in a series of promised daily services, a month, a year, or other time increment,
including a deficiency makeup period) as the services are rendered using a time-based (passage of time) or units-based (units of
service transferred) output method for measuring the transfer of control of the services and satisfaction of our performance
obligation over the service period, based on the nature of the promised service (e.g., firm or non-firm) and the terms and
conditions of the contract (e.g., contracts with or without makeup rights).
Firm Services
Firm services (also called uninterruptible services) are services that are promised to be available to the customer at all
times during the period(s) covered by the contract, with limited exceptions. Our firm service contracts are typically structured
with take-or-pay or minimum volume provisions, which specify minimum service quantities a customer will pay for even if it
chooses not to receive or use them in the specified service period (referred to as “deficiency quantities”). We typically
recognize the portion of the transaction price associated with such provisions, including any deficiency quantities, as revenue
depending on whether the contract prohibits the customer from making up deficiency quantities in subsequent periods, or the
contract permits this practice, as follows:
• Contracts without Makeup Rights. If contractually the customer cannot make up deficiency quantities in future
periods, our performance obligation is satisfied, and revenue associated with any deficiency quantities is generally
recognized as each service period expires. Because a service period may exceed a reporting period, we determine at
inception of the contract and at the beginning of each subsequent reporting period if we expect the customer to take
the minimum volume associated with the service period. If we expect the customer to make up all deficiencies in the
specified service period (i.e., we expect the customer to take the minimum service quantities), the minimum volume
provision is deemed not substantive and we will recognize the transaction price as revenue in the specified service
period as the promised units of service are transferred to the customer. Alternatively, if we expect that there will be
any deficiency quantities that the customer cannot or will not make up in the specified service period (referred to as
“breakage”), we will recognize the estimated breakage amount (subject to the constraint on variable consideration) as
revenue ratably over such service period in proportion to the revenue that we will recognize for actual units of service
transferred to the customer in the service period. For certain take-or-pay contracts where we make the service, or a
part of the service (e.g., reservation), continuously available over the service period, we typically recognize the take-
or-pay amount as revenue ratably over such period based on the passage of time.
86
• Contracts with Makeup Rights. If contractually the customer can acquire the promised service in a future period and
make up the deficiency quantities in such future period (the “deficiency makeup period”), we have a performance
obligation to deliver those services at the customer’s request (subject to contractual and/or capacity constraints) in the
deficiency makeup period. At inception of the contract, and at the beginning of each subsequent reporting period, we
estimate if we expect that there will be deficiency quantities that the customer will or will not make up. If we expect
the customer will make up all deficiencies it is contractually entitled to, any non-refundable consideration received
relating to temporary deficiencies that will be made up in the deficiency makeup period will be deferred as a contract
liability, and we will recognize that amount as revenue in the deficiency makeup period when either of the following
occurs: (i) the customer makes up the volumes or (ii) the likelihood that the customer will exercise its right for
deficiency volumes then becomes remote (e.g., there is insufficient capacity to make up the volumes, the deficiency
makeup period expires). Alternatively, if we expect at inception of the contract, or at the beginning of any subsequent
reporting period, that there will be any deficiency quantities that the customer cannot or will not make up (i.e.,
breakage), we will recognize the estimated breakage amount (subject to the constraint on variable consideration) as
revenue ratably over the specified service periods in proportion to the revenue that we will recognize for actual units
of service transferred to the customer in those service periods.
Non-Firm Services
Non-firm services (also called interruptible services) are the opposite of firm services in that such services are provided to
a customer on an “as available” basis. Generally, we do not have an obligation to perform these services until we accept a
customer’s periodic request for service. For the majority of our non-firm service contracts, the customer will pay only for the
actual quantities of services it chooses to receive or use, and we typically recognize the transaction price as revenue as those
units of service are transferred to the customer in the specified service period (typically a daily or monthly period).
Refer to Note 16 for further information.
Revenue Recognition Policy prior to January 1, 2018
Prior to the implementation of Topic 606, we recognized revenue as services were rendered or goods were delivered
and, if applicable, risk of loss had passed. We recognized natural gas, crude and NGL sales revenue when the commodity
was sold to a purchaser at a fixed or determinable price, delivery had occurred and risk of loss had transferred, and
collectability of the revenue was reasonably assured. Our sales and purchases of natural gas, crude and NGL were primarily
accounted for on a gross basis as natural gas sales or product sales, as applicable, and cost of sales, except in circumstances
where we solely acted as an agent and did not have price and related risk of ownership, in which case we recognized revenue
on a net basis.
For revenues associated with our firm services as previously described, the fixed-fee component of the overall rate was
recognized as revenue in the period the service was provided. The per-unit charge was recognized as revenue when the
volumes were delivered to the customers’ agreed upon delivery point, or when the volumes were injected into/withdrawn
from our storage facilities.
Revenues associated with our non-firm services as previously described, were recognized in the same manner utilized
for the per-unit rate for volumes actually transported under firm service agreements.
Revenues associated with our crude oil and refined petroleum products transportation and storage services were
recorded when products were delivered and services had been provided, and adjusted according to terms prescribed by the
toll settlements with shippers and approved by regulatory authorities.
We recognized bulk terminal transfer service revenues based on volumes loaded and unloaded. We recognized liquids
terminal tank rental revenue ratably over the contract period. We recognized liquids terminal throughput revenue based on
volumes received and volumes delivered. We recognized transmix processing revenues based on volumes processed or sold,
and if applicable, when risk of loss had passed. We recognized energy-related product sales revenues based on delivered
quantities of product.
Revenues from the sale of crude oil, NGL, CO2 and natural gas production within the CO2 business segment were
recorded using the entitlement method, under which revenue was recorded when title passed based on our net interest. We
recorded our entitled share of revenues based on entitled volumes and contracted sales prices. Since there was a ready
87
market for oil and gas production, we sold the majority of our products soon after production at various locations, at which
time title and risk of loss had passed to the buyer.
Cost of Sales
Cost of sales primarily includes the cost of energy commodities sold, including natural gas, NGL and other refined
petroleum products, adjusted for the effects of our energy commodity activities, as applicable, other than production from
our CO2 business segment.
Operations and Maintenance
Operations and maintenance include costs of services and is primarily comprised of (i) operational labor costs and (ii)
operations, maintenance and asset integrity, regulatory and environmental costs. Costs associated with our oil, gas and CO2
producing activities included within operations and maintenance totaled $363 million, $342 million and $349 million for the
years ended December 31, 2018, 2017 and 2016, respectively.
Environmental Matters
We capitalize or expense, as appropriate, environmental expenditures. We capitalize certain environmental expenditures
required in obtaining rights-of-way, regulatory approvals or permitting as part of the construction. We accrue and expense
environmental costs that relate to an existing condition caused by past operations, which do not contribute to current or
future revenue generation. We generally do not discount environmental liabilities to a net present value, and we record
environmental liabilities when environmental assessments and/or remedial efforts are probable and we can reasonably
estimate the costs. Generally, our recording of these accruals coincides with our completion of a feasibility study or our
commitment to a formal plan of action. We recognize receivables for anticipated associated insurance recoveries when such
recoveries are deemed to be probable. We record at estimated fair value, where appropriate, environmental liabilities
assumed in a business combination.
We routinely conduct reviews of potential environmental issues and claims that could impact our assets or
operations. These reviews assist us in identifying environmental issues and estimating the costs and timing of remediation
efforts. We also routinely adjust our environmental liabilities to reflect changes in previous estimates. In making
environmental liability estimations, we consider the material effect of environmental compliance, pending legal actions
against us, and potential third-party liability claims. Often, as the remediation evaluation and effort progresses, additional
information is obtained, requiring revisions to estimated costs. These revisions are reflected in our income in the period in
which they are reasonably determinable.
Pensions and Other Postretirement Benefits
We recognize the differences between the fair value of each of our and our consolidated subsidiaries’ pension and other
postretirement benefit plans’ assets and the benefit obligations as either assets or liabilities on our consolidated balance
sheet. We record deferred plan costs and income—unrecognized losses and gains, unrecognized prior service costs and
credits, and any remaining unamortized transition obligations—in “Accumulated other comprehensive loss,” with the
proportionate share associated with less than wholly owned consolidated subsidiaries allocated and included within
“Noncontrolling interests,” or as a regulatory asset or liability for certain of our regulated operations, until they are
amortized as a component of benefit expense.
Noncontrolling Interests
Noncontrolling interests represents the interests in our consolidated subsidiaries that are not owned by us. In our
accompanying consolidated income statements, the noncontrolling interest in the net income of our consolidated subsidiaries
is shown as an allocation of our consolidated net income and is presented separately as “Net Income Attributable to
Noncontrolling Interests.” In our accompanying consolidated balance sheets, noncontrolling interests is presented separately
as “Noncontrolling interests” within “Stockholders’ Equity.”
Income Taxes
Income tax expense is recorded based on an estimate of the effective tax rate in effect or to be in effect during the
relevant periods. Changes in tax legislation are included in the relevant computations in the period in which such changes are
enacted. We do business in a number of states with differing laws concerning how income subject to each state’s tax
88
structure is measured and at what effective rate such income is taxed. Therefore, we must make estimates of how our income
will be apportioned among the various states in order to arrive at an overall effective tax rate. Changes in our effective rate,
including any effect on previously recorded deferred taxes, are recorded in the period in which the need for such change is
identified.
Deferred income tax assets and liabilities are recognized for temporary differences between the basis of assets and
liabilities for financial reporting and tax purposes. Deferred tax assets are reduced by a valuation allowance for the amount
that is, more likely than not, to not be realized. While we have considered estimated future taxable income and prudent and
feasible tax planning strategies in determining the amount of our valuation allowance, any change in the amount that we
expect to ultimately realize will be included in income in the period in which such a determination is reached.
In determining the deferred income tax asset and liability balances attributable to our investments, we apply an
accounting policy that looks through our investments. The application of this policy resulted in no deferred income taxes
being provided on the difference between the book and tax basis on the non-tax-deductible goodwill portion of our
investments, including KMI’s investment in its wholly-owned subsidiary, KMP.
Foreign Currency Transactions and Translation
Foreign currency transaction gains or losses result from a change in exchange rates between (i) the functional currency,
for example the Canadian dollar for a Canadian subsidiary and (ii) the currency in which a foreign currency transaction is
denominated, for example the U.S. dollar for a Canadian subsidiary. In our accompanying consolidated statements of
income, gains and losses from our foreign currency transactions are included within “Other Income (Expense)—Other, net.”
Foreign currency translation is the process of expressing, in U.S. dollars, amounts recorded in a local functional
currency other than U.S. dollars, for example the Canadian dollar for a Canadian subsidiary. We translate the assets and
liabilities of each of our consolidated foreign subsidiaries that have a local functional currency to U.S. dollars at year-end
exchange rates. Income and expense items are translated at weighted-average rates of exchange prevailing during the year
and stockholders’ equity accounts are translated by using historical exchange rates. The cumulative translation adjustments
balance is reported as a component of “Accumulated other comprehensive loss.”
Risk Management Activities
We utilize energy commodity derivative contracts for the purpose of mitigating our risk resulting from fluctuations in
the market price of commodities including natural gas, NGL and crude oil. In addition, we enter into interest rate swap
agreements for the purpose of hedging the interest rate risk associated with our debt obligations. We also enter into cross-
currency swap agreements to manage our foreign currency risk with certain debt obligations and net investments in foreign
operations. We measure our derivative contracts at fair value and we report them on our balance sheet as either an asset or
liability. For certain physical forward commodity derivatives contracts, we apply the normal purchase/normal sale
exception, whereby the revenues and expenses associated with such transactions are recognized during the period when the
commodities are physically delivered or received.
For qualifying accounting hedges, we formally document the relationship between the hedging instrument and the
hedged item, the risk management objectives and the methods used for assessing and testing effectiveness, and how any
ineffectiveness will be measured and recorded. If we designate a derivative contract as a cash flow accounting hedge, the
effective portion of the change in fair value of the derivative is deferred in “Accumulated other comprehensive loss” and
reclassified into earnings in the period in which the hedged item affects earnings. Any ineffective portion of the derivative’s
change in fair value or amount excluded from the assessment of hedge effectiveness is recognized currently in earnings. If
we designate a derivative contract as a fair value accounting hedge, the effective portion of the change in fair value of the
derivative is recorded as an adjustment to the item being hedged. Any ineffective portion of the derivative’s change in fair
value is recognized currently in earnings. If we designate a derivative contract as a net investment accounting hedge, the
effective portion of the change in fair value of the derivative is reflected in the Cumulative Translation Adjustment (CTA)
section of Other Comprehensive Income (OCI) on our consolidated statements of comprehensive income.
For derivative instruments that are not designated as accounting hedges, or for which we have not elected the normal
purchase/normal sales exception, changes in fair value are recognized currently in earnings.
89
Regulatory Assets and Liabilities
Regulatory assets and liabilities represent probable future revenues or expenses associated with certain charges and credits
that will be recovered from or refunded to customers through the ratemaking process. We included the amounts of our
regulatory assets and liabilities within “Other current assets,” “Deferred charges and other assets,” “Other current liabilities”
and “Other long-term liabilities and deferred credits,” respectively, in our accompanying consolidated balance sheets.
The following table summarizes our regulatory asset and liability balances as of December 31, 2018 and 2017 (in
millions):
Current regulatory assets
Non-current regulatory assets
Total regulatory assets(a)
Current regulatory liabilities
Non-current regulatory liabilities
Total regulatory liabilities(b)
December 31,
2018
2017
$
$
$
$
66
245
311
29
206
235
$
$
$
$
60
288
348
107
236
343
_______
(a) Regulatory assets as of December 31, 2018 include (i) $176 million of unamortized losses on disposal of assets; (ii) $53
million income tax gross up on equity AFUDC; and (iii) $82 million of other assets including amounts related to fuel tracker
arrangements. Approximately $98 million of the regulatory assets, with a weighted average remaining recovery period of 23
years, are recoverable without earning a return, including the income tax gross up on equity AFUDC for which there is an
offsetting deferred income tax balance for FERC rate base purposes; therefore, it does not earn a return.
(b) Regulatory liabilities as of December 31, 2018 are comprised of customer prepayments to be credited to shippers or other
over-collections that are expected to be returned to shippers or netted against under-collections over time. Approximately
$136 million of the $206 million classified as non-current is expected to be credited to shippers over a remaining weighted
average period of 18 years, while the remaining $70 million is not subject to a defined period.
Earnings per Share
We calculate earnings per share using the two-class method. Earnings were allocated to Class P shares and participating
securities based on the amount of dividends paid in the current period plus an allocation of the undistributed earnings or
excess distributions over earnings to the extent that each security participates in earnings or excess distributions over
earnings. Our unvested restricted stock awards, which may be restricted stock or restricted stock units issued to employees
and non-employee directors and include dividend equivalent payments, do not participate in excess distributions over
earnings.
The following table sets forth the allocation of net income available to shareholders of Class P shares and participating
securities (in millions):
Net Income Available to Common Stockholders
Participating securities:
Less: Net Income Allocated to Restricted stock awards(a)
Net Income Allocated to Class P Stockholders
Basic Weighted Average Common Shares Outstanding
Basic Earnings Per Common Share
Year Ended December 31,
2018
2017
2016
1,481
$
27
$
552
(8)
1,473
$
(5)
22
$
(4)
548
2,216
2,230
0.66
$
0.01
$
2,230
0.25
$
$
$
_______
(a) As of December 31, 2018, there were approximately 13 million such restricted stock awards.
90
The following maximum number of potential common stock equivalents are antidilutive and, accordingly, are excluded
from the determination of diluted earnings per share (in millions on a weighted average basis):
Unvested restricted stock awards
Warrants to purchase our Class P shares(a)
Convertible trust preferred securities
Mandatory convertible preferred stock(b)
Year Ended December 31,
2018
2017
2016
12
3
48
10
116
3
58
8
293
8
58
_______
(a) On May 25, 2017, approximately 293 million of unexercised warrants expired without the issuance of Class P common stock. Prior to
expiration, each warrant entitled the holder to purchase one share of our common stock for an exercise price of $40 per share. The
potential dilutive effect of the warrants did not consider the assumed proceeds to KMI upon exercise.
(b) The holder of each convertible preferred share participated in our earnings by receiving preferred stock dividends through the mandatory
conversion date of October 26, 2018 at which time our convertible preferred shares were converted to common shares.
3. Divestitures and Acquisition
Sale of Trans Mountain Pipeline System and Its Expansion Project
On August 31, 2018, KML completed the sale of the TMPL, the TMEP, the Puget Sound pipeline system and Kinder
Morgan Canada Inc., the Canadian employer of our staff that operate the business, which were indirectly acquired by the
Government of Canada through Trans Mountain Corporation (a subsidiary of the Canada Development Investment
Corporation) for cash consideration of C$4.43 billion (U.S.$3.4 billion), which is the contractual purchase price of C$4.5
billion net of a preliminary working capital adjustment (the “TMPL Sale”). These assets comprised our Kinder Morgan Canada
business segment. We recognized a pre-tax gain from the TMPL Sale of $596 million within “Loss on impairments and
divestitures, net” in our accompanying consolidated statement of income during the year ended December 31, 2018, including
an incremental working capital adjustment of $26 million accrued as of December 31, 2018.
On January 3, 2019, pursuant to KML’s shareholders’ approval on November 29, 2018, KML distributed to its shareholders
as a return of capital, the net proceeds from the TMPL Sale, after capital gains taxes, customary purchase price adjustments and
the repayment of debt outstanding under a temporary KML credit facility (see Note 9, “Debt—Credit Facilities and Restrictive
Covenants—KML”). KML’s public owners of its restricted voting shares, reflected as noncontrolling interests by us, received
approximately $0.9 billion (C$1.2 billion), and part of our approximate 70% portion of the net proceeds of $1.9 billion (C$2.5
billion) (after Canadian tax) were used to immediately repay our outstanding commercial paper borrowings of $0.4 billion and
in February 2019, to pay down approximately $1.3 billion of maturing long-term debt. To facilitate the return of capital and
provide flexibility for KML’s dividends going forward, KML’s shareholders also approved a reduction in the stated capital of
its restricted voting shares by C$1.45 billion, which was recorded in the fourth quarter of 2018, along with a “reverse stock
split” of KML’s restricted voting shares, and KML’s special voting shares that we own, on a one-for-three basis (three shares
consolidating to one share) which occurred on January 4, 2019.
May 2017 Sale of Approximate 30% Interest in Canadian Business
On May 30, 2017, KML completed an IPO of 102,942,000 restricted voting shares listed on the Toronto Stock Exchange at
a price to the public of C$17.00 per restricted voting share for total gross proceeds of approximately C$1,750 million (US
$1,299 million). The net proceeds from the IPO were used by KML to indirectly acquire from us an approximate 30% interest
in a limited partnership that holds our Canadian business while we retained the remaining 70% interest. We used the proceeds
from KML’s IPO to pay down debt.
Subsequent to the IPO, we retained control of KML and the limited partnership, and as a result, they remain consolidated
in our consolidated financial statements. The public ownership of the KML restricted voting shares is reflected within
“Noncontrolling interests” in our consolidated statements of stockholders’ equity and consolidated balance sheets. Earnings
attributable to the public ownership of KML are presented in “Net income attributable to noncontrolling interests” in our
consolidated statements of income for the periods presented after May 30, 2017.
The net proceeds received of $1,245 million are presented as “Contributions from noncontrolling interests - net proceeds
from KML IPO” on our consolidated statement of cash flows for the year ended December 31, 2017. Because we retained
control of KML subsequent to the IPO, the $314 million adjustment made to “Additional paid-in capital” on our consolidated
statement of stockholders equity for the year ended December 31, 2017 represents the difference between our book value prior
91
to the sale and our share of book value in KML’s net assets after the sale. The impact of the IPO resulted in a $166 million
deferred income tax adjustment. At the date of the IPO, $765 million was attributed to the KML public shareholders to reflect
their proportionate ownership percentage in the net assets of KML acquired from us and is included in “Noncontrolling
interests” on our consolidated statement of stockholders equity. The above amounts recorded to “Additional paid-in capital”
and “Noncontrolling interests” are net of IPO fees.
In addition, the amount recorded to “Noncontrolling interests” at the date of the IPO was reduced by $81 million primarily
associated with the allocation of currency translation adjustments from “Accumulated other comprehensive loss” to
“Noncontrolling interests.”
The portion of the Canadian business operations that we sold to the public on May 30, 2017 represented Canadian assets
that were included in our Kinder Morgan Canada, Terminals and Product Pipelines business segments and include (i) the Trans
Mountain pipeline system; (ii) the Canadian Cochin pipeline system; (iii) the Puget Sound pipeline system; (iv) the Jet Fuel
pipeline system; and (v) terminal facilities located in Western Canada. In January 2018, KML completed the registration of its
restricted voting shares pursuant to Section 12(g) of the United States Securities Exchange Act of 1934 (the “Exchange Act”)
and subsequently is subject to the reporting requirements of Section 13(a) of the Exchange Act.
In conjunction with the IPO, Kinder Morgan Canada Limited Partnership (KMC LP) and Kinder Morgan Canada GP Inc.
(KMC GP) were formed to hold our Canadian business. We have determined that KMC LP is a variable interest entity because
a simple majority or lower threshold of the limited partnership interests do not possess substantive “kick-out rights” (i.e., the
right to remove the general partner or to dissolve (liquidate) the entity without cause) or substantive participation rights. We
have also determined KMC GP is the primary beneficiary because it has the power to direct the activities that most significantly
impact KMC LP’s performance, the right to receive benefits and the obligation to absorb losses, that could be significant to
KMC LP. As a result, KMC GP consolidates KMC LP. KMC GP is a wholly owned subsidiary of KML, which is indirectly
controlled by us through our 100% interest in KML’s special voting shares that represent approximately 70% of KML’s total
voting shares (comprised of restricted voting shares and special voting shares). Consequently, we consolidate KML and the
variable interest entity, KMC LP, in our consolidated financial statements.
The following table shows the carrying amount and classification of KMC LP’s assets and liabilities in our consolidated
balance sheet (in millions):
Assets
Total current assets
Property, plant and equipment, net
Total goodwill, deferred charges and other assets
Total assets
Liabilities
Current portion of debt
Total other current liabilities
Long-term debt, excluding current maturities
Total other long-term liabilities and deferred credits
Total liabilities
December 31,
2018
2017
$
$
$
$
3,204
719
8
3,931
$
$
— $
2,353
—
52
2,405
$
270
2,956
322
3,548
—
236
—
414
650
We receive distributions from KMC LP through our indirectly owned limited partnership interests in KMC LP, but
otherwise the assets of KMC LP cannot be used to settle our obligations other than those of KML. We do not guarantee the
debt, commercial paper or other similar commitments of KMC LP or any of its subsidiaries, and the obligations of KMC LP
may only be settled using the assets of KMC LP. KMC LP does not guarantee the debt or other similar commitments of KMI.
Sale of Noncontrolling Interest in ELC
Effective February 28, 2017, we sold a 49% partnership interest in ELC to investment funds managed by EIG. We
continue to own a 51% controlling interest in and operate ELC. Under the terms of ELC’s limited liability company
agreement, we are responsible for placing in service and operating certain supply pipelines and terminal facilities that support
the operations of ELC and that are wholly owned by us. In certain limited circumstances that are not expected to occur, EIG
has the right to relinquish its interest in ELC and redeem its capital account. The sale proceeds of $386 million, and subsequent
92
EIG contributions, have been reflected as of December 31, 2018 within “Redeemable Noncontrolling Interest” and as of
December 31, 2017, as a deferred credit within “Other long-term liabilities and deferred credits” on our consolidated balance
sheets. Once these contingencies expire, EIG’s capital account will be reflected in Noncontrolling interests on our consolidated
balance sheet.
Terminals Asset Sale
In October 2016, we entered into a definitive agreement to sell several bulk terminals to an affiliate of Watco Companies,
LLC for approximately $100 million. The terminals are predominantly located along the inland river system and handle mostly
coal and steel products, and are included within our Terminals business segment. The sale of eight of the locations closed in
the fourth quarter of 2016, for which we received $37 million of the total consideration, and the balance of this transaction,
which included an additional eleven locations, closed in the second quarter of 2017 as certain conditions were satisfied. As a
result of this transaction, we recognized a pre-tax loss of $81 million, including a $7 million reduction of goodwill, which is
included within “Loss on impairments and divestitures, net” on our accompanying consolidated statement of income for the
year ended December 31, 2016.
Sale of Equity Interest in SNG
On September 1, 2016, we completed the sale of a 50% interest in our SNG natural gas pipeline system to The Southern
Company (Southern Company), receiving proceeds of $1.4 billion, and the formation of a joint venture, which includes our
remaining 50% interest in SNG. We used the proceeds from the sale to reduce outstanding debt. We recognized a pre-tax loss
of $84 million on the sale of our interest in SNG which is included within “Loss on impairments and divestitures, net” on the
accompanying consolidated statement of income for the year ended December 31, 2016. As a result of this transaction, we no
longer hold a controlling interest in SNG or Bear Creek Storage Company, LLC (Bear Creek) (50% of which is owned by
SNG) and, as such, we now account for our remaining equity interests in SNG and Bear Creek as equity investments.
Acquisition of BP Products North America Inc. (BP) Terminal Assets
On February 1, 2016, we completed the acquisition of 15 products terminals and associated infrastructure from BP for
$349 million, including a transaction deposit paid in 2015 and working capital adjustments paid in 2016. The purchase price
consisted of $396 million of property, plant and equipment, $2 million of current assets, and assumed liabilities of $49 million.
In conjunction with this transaction, we and BP formed a joint venture with an equity ownership interest of 75% and 25%,
respectively. Subsequent to the acquisition, we contributed 14 of the acquired terminals to the joint venture, which we operate,
and the remaining terminal is solely owned by us. BP acquired its 25% interest in the joint venture for $84 million, which we
reported as “Contributions from noncontrolling interests - other” within our accompanying consolidated statement of cash
flows for the year ended December 31, 2016. These terminals are included in our Terminals and Products Pipelines business
segments.
4. Impairments and Losses (Gains) on Divestitures
During the years ended December 31, 2018, 2017, and 2016, we recorded impairments of certain equity investments, long-
lived assets, and intangible assets, and net gains and losses on divestitures totaling $437 million, $172 million, and $1,013
million, respectively. During 2016, and to a lesser degree in 2017 and 2018, a sustained lower commodity price environment,
and negative outlook for certain long-term transportation contracts, led us to cancel certain construction projects, divest of
certain assets, write-down certain assets and investments to fair value.
These impairments were driven by market conditions that existed at the time and required management to estimate the fair
value of these assets. The estimates of fair value are based on Level 3 valuation estimates using industry standard income
approach valuation methodologies which include assumptions primarily involving management’s significant judgments and
estimates with respect to general economic conditions and the related demand for products handled or transported by our assets
as well as assumptions regarding commodity prices, future cash flows based on rate and volume assumptions, terminal values
and discount rates. We typically use discounted cash flow analyses to determine the fair value of our assets. We may
probability weight various forecasted cash flow scenarios utilized in the analysis as we consider the possible outcomes. We use
discount rates representing our estimate of the risk-adjusted discount rates that would be used by market participants specific to
the particular asset.
In January 2019, Pacific Gas and Electric (PG&E) filed for Chapter 11 bankruptcy protection. Our exposure to PG&E is
limited to our $750 million equity investment in Ruby and an approximate $55 million note receivable from Ruby, where
PG&E is Ruby’s largest customer. PG&E represents approximately $93 million of annual revenues on Ruby, and our partner’s
93
preferred equity interest in Ruby is senior to our interest. Despite the bankruptcy filing, Ruby continues to perform under its
existing service contracts with PG&E and PG&E has provided credit support on its trade payables to Ruby through a
prepayment arrangement. While the ultimate outcome of the bankruptcy proceedings remains uncertain, there is the potential
for Ruby’s existing contracts with PG&E to be canceled in the bankruptcy process. Any cancellation of these contracts could
negatively impact Ruby’s future revenues and require us to evaluate our investment in Ruby for an other than temporary
impairment. This could result in a material impairment of our investment in Ruby at the time such events become known.
We may identify additional triggering events requiring future evaluations of the recoverability of the carrying value of our
long-lived assets, investments and goodwill. Because certain assets and investments have been written down to fair value in
the last few years, any deterioration in fair value relative to our carrying value increases the likelihood of further impairments.
Such non-cash impairments could have a significant effect on our results of operations, which would be recognized in the
period in which the carrying value is determined to be not fully recoverable.
We recognized the following non-cash pre-tax impairment charges and losses (gains) on divestitures of assets (in millions):
Year Ended December 31,
2018
2017
2016
Natural Gas Pipelines
Impairments of long-lived assets(a)
(Gains) losses on divestitures of long-lived assets(b)
$
Impairment of equity investments(c)
Impairment at equity investee(d)
Products Pipelines
Impairments of long-lived assets(e)
Losses on divestitures of long-lived assets
Gain on divestiture of equity investment
Terminals
Impairments of long-lived assets(f)
(Gains) losses on divestitures of long-lived assets(g)
Losses on impairments and divestitures of equity investments, net
CO2
Impairments of long-lived assets(h)
Gain on divestitures of long-lived assets
Impairment at equity investee
Kinder Morgan Canada
Gain on divestiture of long-lived assets(i)
Other losses (gains) on divestitures of long-lived assets
600
(6)
270
—
36
—
—
59
(6)
—
79
—
—
(595)
—
$
30
$
—
150
10
—
—
—
3
(18)
—
(1)
—
(4)
—
2
Pre-tax losses on impairments and divestitures, net
$
437
$
172
$
106
94
606
7
66
10
(12)
19
80
16
20
(1)
9
—
(7)
1,013
_______
(a) 2018 amount represents the non-cash impairment associated with certain gathering and processing assets in Oklahoma. 2017 amount
represents the impairment of our Colden storage facility, of which $3 million is included in “Costs of sales” on our accompanying
consolidated statement of income. 2016 amount represents the project write-off of our portion of the Northeast Energy Direct Market
project.
(b) 2016 amount primarily relates to our sale of a 50% interest in SNG.
(c) 2018 amount represents the non-cash impairment of our investment in Gulf LNG Holdings Group, LLC (Gulf LNG) which was driven by
a ruling by an arbitration panel affecting a customer contract. Our share of earnings recognized by Gulf LNG on the respective
customer contract is included in “Earnings from equity investments” on our accompanying consolidated statement of income for the
year ended December 31, 2018. 2017 amount represents the non-cash impairment of our investment in FEP. 2016 amount includes a
$350 million non-cash impairment of our investment in MEP and a $250 million non-cash impairment of our investment in Ruby.
(d) 2017 and 2016 amounts represent losses on impairments recorded by equity investees and are included in “Earnings from equity
investments” on our accompanying consolidated statements of income.
(e) 2018 amount represents a project write-off associated with the Utica Marcellus Texas pipeline. 2016 amount represents project write-offs
associated with the canceled Palmetto project.
94
(f) 2018 amount primarily relates to non-cash impairments of certain Northeast terminal assets.
(g) 2017 amount includes a $23 million gain related to the sale of a 40% membership interest in the Deeprock Development joint venture.
2016 amount primarily relates to the sale of 20 bulk terminals that handle mostly coal and steel products, predominately located along
the inland river system.
(h) 2018 amount represents impairments of oil and gas properties.
(i) 2018 amount represents the gain on the TMPL Sale.
Our largest impairment for the year ended December 31, 2018 was a $600 million non-cash impairment in our Natural Gas
Pipelines business segment driven by reduced cash flow estimates for some of our gathering and processing assets in Oklahoma
identified during the period as a result of our decision to redirect our focus to other areas of our portfolio. These reduced
estimates triggered an impairment analysis as we determined that our carrying value may no longer be recoverable. The
impairment analysis for long-lived assets was based upon a two-step process as prescribed in the accounting standards. Step 1
involved comparing the undiscounted future cash flows to be derived from the asset group to the carrying value of the asset
group. Based on the results of our step 1 test, we determined that the undiscounted future cash flows were less than the carrying
value of the asset group. Step 2 involved using the income approach to calculate the fair value of the asset group and comparing
it to the carrying value. The impairment that we recorded represented the difference between the fair and carrying values.
5. Income Taxes
The components of “Income Before Income Taxes” are as follows (in millions):
U.S.
Foreign
Total Income Before Income Taxes
Year Ended December 31,
2018
2017
2016
$
$
1,739
767
2,506
$
$
1,976
185
2,161
$
$
1,466
172
1,638
Components of the income tax provision applicable for federal, foreign and state taxes are as follows (in millions):
Year Ended December 31,
2018
2017
2016
Current tax expense (benefit)
Federal
State
Foreign
Total
Deferred tax expense (benefit)
Federal
State
Foreign
Total
$
(22) $
(45)
249
182
425
55
(75)
405
(137) $
(16)
18
(135)
2,022
4
47
2,073
Total tax provision
$
587
$
1,938
$
(148)
(28)
6
(170)
998
51
38
1,087
917
We are subject to taxation in Canada and Mexico. In Canada we recognized income tax expense of $168 million, $58
million and $38 million at December 31, 2018, 2017, and 2016, respectively. In Mexico we recognized income tax expense
of $6 million, $7 million and $6 million at December 31, 2018, 2017, and 2016, respectively.
95
The difference between the statutory federal income tax rate and our effective income tax rate is summarized as follows (in
millions, except percentages):
Federal income tax
$
526
21.0 % $
756
35.0 % $
573
35.0 %
Year Ended December 31,
2018
2017
2016
Increase (decrease) as a result of:
State deferred tax rate change
Taxes on foreign earnings, net of
federal benefit
Net effects of noncontrolling
interests
State income tax, net of federal
benefit
Dividend received deduction
Adjustments to uncertain tax
positions
Valuation allowance on
investment and tax credits
Impact of the 2017 Tax Reform
Nondeductible goodwill
General business credit
Other
Total
$
(7)
(0.3)%
131
5.2 %
(65)
46
(31)
(47)
14
—
58
(64)
26
587
(2.6)%
1.8 %
(1.2)%
(1.9)%
0.5 %
— %
2.3 %
(2.6)%
1.2 %
10
42
(14)
38
(56)
(12)
13
1,240
—
(95)
16
0.5 %
1.9 %
(0.7)%
1.8 %
(2.6)%
(0.6)%
0.6 %
57.4 %
— %
(4.4)%
0.8 %
11
28
(4)
26
(48)
(23)
34
—
301
—
19
917
0.7 %
1.7 %
(0.3)%
1.6 %
(2.9)%
(1.4)%
2.1 %
— %
18.5 %
— %
1.1 %
56.1 %
23.4 % $
1,938
89.7 % $
Deferred tax assets and liabilities result from the following (in millions):
Deferred tax assets
Employee benefits
Accrued expenses
Net operating loss, capital loss and tax credit carryforwards
Derivative instruments and interest rate and currency swaps
Debt fair value adjustment
Investments
Other
Valuation allowances
Total deferred tax assets
Deferred tax liabilities
Property, plant and equipment
Other
Total deferred tax liabilities
Net deferred tax assets
December 31,
2018
2017
$
238
$
76
1,526
9
33
177
—
(178)
1,881
270
45
315
251
73
1,113
12
37
968
6
(171)
2,289
225
20
245
$
1,566
$
2,044
Deferred Tax Assets and Valuation Allowances: The step-up in tax basis from the merger transactions that occurred in
November 2014 resulted in a deferred tax asset, primarily related to our investment in KMP. As book earnings from our
investment in KMP are projected to exceed taxable income (primarily as a result of the partnership’s tax depreciation in
excess of book depreciation), the deferred tax asset related to our investment in KMP is expected to be fully realized.
96
We increased our valuation allowances in 2018 by $7 million, primarily due to a $17 million increase for capital loss
carryover as a result of the TMPL Sale, a $6 million decrease for foreign operating losses and a $4 million utilization of
foreign tax credits.
We have deferred tax assets of $1,249 million related to net operating loss carryovers, $260 million related to general
business, alternative minimum, and foreign tax credits, $17 million related to capital losses, and $140 million of valuation
allowances related to these deferred tax assets at December 31, 2018. As of December 31, 2017, we had deferred tax assets
of $935 million related to net operating loss carryovers, $178 million related to general business, alternative minimum and
foreign tax credits and $133 million of valuation allowances related to these deferred tax assets. We expect to generate
taxable income and begin to utilize federal net operating loss carryforwards and tax credits in 2022.
Our alternative minimum tax credit carryforwards decreased by $8 million in 2018 as a result of a federal audit
settlement. In 2017, our decision to elect to forgo bonus depreciation on property placed in service in that year allowed us to
utilize $137 million of minimum tax credits. Section 168(k)(4) of the Internal Revenue Code allows for corporate taxpayers
with minimum tax credit carryforwards to forgo bonus depreciation and accelerate their use of the credits to reduce tax
liability in that same tax year if the amount of the allowable credit exceeds the taxpayer’s tax liability. We received an
income tax refund of $145 million in 2018 related to the 2017 credit utilization and 2018 audit settlement.
Expiration Periods for Deferred Tax Assets: As of December 31, 2018, we have U.S. federal net operating loss
carryforwards of $1.4 billion that will be carried forward indefinitely and $3.4 billion that will expire from 2019 - 2037; state
losses of $3.7 billion which will expire from 2019 - 2038; and foreign losses of $112 million which will expire from 2029 -
2038. We also have $241 million of general business credits which will expire from 2019 - 2028; a capital loss carryover of
$17 million which will expire in 2023; and approximately $17 million of foreign tax credits, which will expire from 2020 -
2023. Use of a portion of our U.S. federal carryforwards is subject to the limitations provided under Sections 382 and 383 of
the Internal Revenue Code as well as the separate return limitation rules of Internal Revenue Service regulations. If certain
substantial changes in our ownership occur, there would be an annual limitation on the amount of carryforwards that could
be utilized.
Unrecognized Tax Benefits: We recognize the tax benefit from an uncertain tax position only if it is more likely than not
that the tax position will be sustained on examination by the taxing authorities, based not only on the technical merits of the
tax position based on tax law, but also the past administrative practices and precedents of the taxing authority. The tax
benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a
greater than 50% likelihood of being realized upon ultimate resolution.
A reconciliation of our gross unrecognized tax benefit excluding interest and penalties is as follows (in millions):
Balance at beginning of period
Additions based on current year tax positions
Additions based on prior year tax positions
Reductions based on prior year tax positions
Reductions based on settlements with taxing authority
Reductions due to lapse in statute of limitations
Impact of the 2017 Tax Reform
Balance at end of period
Year Ended December 31,
2018
2017
2016
$
97
$
122
$
3
7
—
(73)
—
—
34
$
3
—
—
(22)
(2)
(4)
97
$
$
148
3
7
(1)
(26)
(9)
—
122
We recognize interest and/or penalties related to income tax matters in income tax expense. We recognized tax benefits
of $15 million, $9 million and an expense of $2 million at December 31, 2018, 2017 and 2016, respectively. As of
December 31, 2018, 2017 and 2016, we had $2 million, $19 million and $28 million, respectively, of accrued interest. We
had less than $1 million of accrued penalties as of December 31, 2018 and no accrued penalties as of December 31,
2017. All of the $34 million of unrecognized tax benefits, if recognized, would affect our effective tax rate in future
periods. In addition, we believe it is reasonably possible that our liability for unrecognized tax benefits will decrease by
approximately $21 million during the next year to approximately $13 million, primarily due to settlements with taxing
authorities, partially offset by additions for state filing positions taken in prior years.
97
We are subject to taxation, and have tax years open to examination for the periods 2015-2017 in the U.S., 2005-2017 in
various states and 2007-2017 in various foreign jurisdictions.
Impact of 2017 Tax Reform
On December 22, 2017, the U.S. enacted the 2017 Tax Reform. Among the many provisions included in the 2017 Tax
Reform is a provision to reduce the U.S. federal corporate income tax rate from 35% to 21% effective January 1, 2018.
As of December 31, 2017, we had deferred tax assets related to our net operating loss carryforwards and tax credits, in
addition to tax basis in excess of accounting basis primarily related to our investment in KMP. Prior to the 2017 Tax Reform,
the value of these deferred tax assets was recorded at the previous income tax rate of 35%, which represented their expected
future benefit to us. As a result of the 2017 Tax Reform, the future benefit of these deferred tax assets was re-measured at the
new income tax rate of 21% and we recorded an approximate $1,240 million provisional non-cash adjustment for the year
ended December 31, 2017. We determined the effects of the rate change using our best estimate of temporary book-to-tax
differences. Upon final analysis and remeasurement of our deferred tax balances, the December 31, 2017 adjustment
recorded accurately reflected the change in corporate income tax rates and has not been materially adjusted in subsequent
periods.
In addition, the 2017 Tax Reform required a mandatory deemed repatriation of post-1986 undistributed foreign earnings
and profits. As of December 31, 2017, we recorded a provisional amount for this 2017 Tax Reform provision and as of
December 31, 2018, completed our analysis on this provision. The 2017 Tax Reform transition tax was $2 million.
The income tax rate change in the 2017 Tax Reform had an impact not only on our corporate income taxes but also
resulted in us recording an approximate $144 million after-tax ($219 million pre-tax) provisional non-cash adjustment,
including our share of equity investee provisional adjustments, related to our FERC regulated business for the year ended
December 31, 2017. As a result of the completion of our assessment of the 2017 Tax Reform’s effect on our FERC regulated
business, we decreased this non-cash provisional adjustment by approximately $27 million after-tax ($36 million pre-tax)
during the year ended December 31, 2018.
The 2017 Tax Reform requires a U.S. corporation to record taxes on global intangible low-tax income (GILTI) and elect
an accounting policy to either recognize GILTI as a current period expense when incurred or to record deferred taxes for the
temporary basis differences expected to reverse in the future as GILTI. Though we did not generate any GILTI during 2018,
we have elected to recognize the GILTI tax as a period cost in the future, as applicable.
6. Property, Plant and Equipment, net
Classes and Depreciation
As of December 31, 2018 and 2017, our property, plant and equipment, net consisted of the following (in millions):
Pipelines (Natural gas, liquids, crude oil and CO2)
Equipment (Natural gas, liquids, crude oil, CO2, and terminals)
Other(a)
Accumulated depreciation, depletion and amortization
Land and land rights-of-way
Construction work in process
Property, plant and equipment, net
December 31,
2018
2017
$
19,727
$
24,392
5,447
(15,359)
34,207
1,378
2,312
20,157
24,152
5,570
(14,175)
35,704
1,456
2,995
$
37,897
$
40,155
_______
(a) Includes general plant, general structures and buildings, computer and communication equipment, intangibles, vessels, transmix products,
linefill and miscellaneous property, plant and equipment.
As of December 31, 2018 and 2017, property, plant and equipment, net included $12,349 million and $14,055 million,
respectively, of assets which were regulated by either the FERC or the NEB. Depreciation, depletion, and amortization expense
98
charged against property, plant and equipment was $2,057 million, $2,022 million, and $1,970 million for the years ended
December 31, 2018, 2017, and 2016, respectively.
Asset Retirement Obligations
As of December 31, 2018 and 2017, we recognized asset retirement obligations in the aggregate amount of $213 million
and $208 million, respectively, of which $4 million were classified as current for both periods. The majority of our asset
retirement obligations are associated with our CO2 business segment, where we are required to plug and abandon oil and gas
wells that have been removed from service and to remove the surface wellhead equipment and compressors.
7. Investments
Our investments primarily consist of equity investments where we hold significant influence over investee actions and for
which we apply the equity method of accounting. As of December 31, 2018 and 2017, our investments consisted of the
following (in millions):
Citrus Corporation
SNG
Ruby
NGPL Holdings LLC
Gulf LNG Holdings Group, LLC
Plantation Pipe Line Company
Utopia Holding LLC
EagleHawk
Gulf Coast Express Pipeline LLC
MEP
Red Cedar Gathering Company
Watco Companies, LLC
Double Eagle Pipeline LLC
Liberty Pipeline Group LLC
Bear Creek Storage
Sierrita Gas Pipeline LLC
Permian Highway Pipeline
FEP
All others
December 31,
2018
2017
$
1,708
$
1,536
750
1,698
1,495
774
733
361
344
333
299
240
235
191
185
140
66
65
55
45
44
151
687
461
331
276
314
—
253
187
182
149
71
63
55
—
112
190
Total investments
$
7,481
$
7,298
As shown in the investment balance table above and the earnings from equity investments table below, our significant
equity investments, as of December 31, 2018 consisted of the following:
• Citrus Corporation—We own a 50% interest in Citrus Corporation, the sole owner of Florida Gas Transmission
Company, L.L.C. (Florida Gas). Florida Gas transports natural gas to cogeneration facilities, electric utilities,
independent power producers, municipal generators, and local distribution companies through a 5,300-mile natural gas
pipeline. Energy Transfer Partners L.P. operates Florida Gas and owns the remaining 50% interest in Citrus;
•
SNG—We operate SNG and own a 50% interest in SNG; and Evergreen Enterprise Holdings, LLC, a subsidiary of
Southern Company, owns the remaining 50% interest;
• Ruby—We operate Ruby and own the common interest in Ruby, the sole owner of the Ruby Pipeline natural gas
transmission system. Pembina Pipeline Corporation (Pembina) owns the remaining interest in Ruby in the form of a
convertible preferred interest. If Pembina converted its preferred interest into common interest, we and Pembina
would each own a 50% common interest in Ruby;
99
• NGPL Holdings LLC— We operate NGPL Holdings LLC and own a 50% interest in NGPL Holdings LLC, the
indirect owner of NGPL and certain affiliates, collectively referred to in this report as NGPL, a major interstate natural
gas pipeline and storage system. The remaining 50% interest is owned by Brookfield;
• Gulf LNG Holdings Group, LLC—We operate Gulf LNG Holdings Group, LLC and own a 50% interest in Gulf LNG
Holdings Group, LLC, the owner of a LNG receiving, storage and regasification terminal near Pascagoula,
Mississippi, as well as pipeline facilities to deliver vaporized natural gas into third party pipelines for delivery into
various markets around the country. The remaining 50% interest is owned by a variety of investment entities,
including subsidiaries of The Blackstone Group, LP; Warburg Pincus, LLC; Kelso and Company; and Chatham Asset
Management, LLC, which is directed by Chatham Asset GP, LLC;
•
Plantation—We operate Plantation and own a 51.17% interest in Plantation, the sole owner of the Plantation refined
petroleum products pipeline system. A subsidiary of Exxon Mobil Corporation owns the remaining interest. Each
investor has an equal number of directors on Plantation’s board of directors, and board approval is required for certain
corporate actions that are considered substantive participating rights; therefore, we do not control Plantation, and
account for the investment under the equity method;
• Utopia Holding L.L.C. — We operate Utopia Holding L.L.C. and own a 50% interest in Utopia Holding L.L.C.
Riverstone Investment Group LLC owns the remaining 50% interest;
• BHP Billiton Petroleum (Eagle Ford Gathering) LLC, (EagleHawk)—We own a 25% interest in EagleHawk, the sole
owner of natural gas and condensate gathering systems serving the producers of the Eagle Ford shale formation. A
subsidiary of BHP Billiton Petroleum (Tx Gathering), LLC operates EagleHawk and owns the remaining 75%
ownership interest;
• Gulf Coast Express Pipeline LLC — We operate Gulf Coast Express Pipeline LLC and own 35% interest of Gulf
Coast Express Pipeline LLC indirectly through Kinder Morgan Texas Pipeline LLC, our 100% subsidiary. DCP GCX
Pipeline LLC, an indirect subsidiary of DCP Midstream, owns 25% interest; Targa GCX Pipeline LLC, an indirect
subsidiary of Targa Resources Corp., owns 25% interest and Altus Midstream Company, an indirect subsidiary of
Apache Corporation, owns 15% interest;
• MEP—We operate MEP and own a 50% interest in MEP, the sole owner of the MEP natural gas pipeline system. The
remaining 50% ownership interest is owned by subsidiaries of Energy Transfer Partners L.P.;
• Red Cedar Gathering Company—We own a 49% interest in Red Cedar Gathering Company, the sole owner of the Red
Cedar natural gas gathering, compression and treating system. The Southern Ute Indian Tribe owns the remaining
51% interest and serves as operator of Red Cedar;
• Watco Companies, LLC—We hold a preferred and common equity investment in Watco Companies, LLC, the largest
privately held short line railroad company in the U.S. We own 100,000 Class A and 50,000 Class B preferred shares
and pursuant to the terms of the investment, receive priority, cumulative cash and stock distributions from the
preferred shares at a rate of 3.25% and 3.00% per quarter, respectively, and participate partially in additional profit
distributions at a rate equal to 0.4%. Neither class holds any voting powers, but do provide us certain approval rights,
including the right to appoint one of the members to Watco’s board of managers. In addition to the senior interests, we
also hold approximately 13,000 common equity units, which represents a 3.2% common ownership;
• Double Eagle Pipeline LLC - We own a 50% equity interest in Double Eagle Pipeline LLC. The remaining 50%
interest is owned by Magellan Midstream Partners;
• Liberty Pipeline Group, LLC (Liberty) —We own a 50% interest in Liberty. ETC NGL Transport, LLC, a subsidiary
of Energy Transfer Partners, L.P. owns the remaining 50% interest and serves as operator of Liberty;
• Bear Creek Storage—We own a combined 75% interest in Bear Creek through: our wholly owned subsidiary’s (TGP)
50% interest and an additional 25% indirect interest through our 50% equity interest in SNG, which owns the
remaining 50% interest;
•
•
Sierrita Gas Pipeline LLC — We operate Sierrita Gas Pipeline LLC and own a 35% interest in Sierrita Gas Pipeline
LLC. MGI Enterprises U.S. LLC, a subsidiary of PEMEX, owns 35%; and MIT Pipeline Investment Americas, Inc., a
subsidiary of Mitsui & Co., Ltd, owns 30%;
Permian Highway Pipeline — We operate Permian Highway Pipeline and own a 50% interest of Permian Highway
Pipeline indirectly through KMTP, our wholly owned subsidiary. BCP PHP, LLC (BCP), a portfolio company of
Blackstone Energy Partners, owns the remaining 50% interest. An affiliate of an anchor shipper exercised its option in
January 2019 to acquire a 20% equity interest in the project, bringing KMTP’s and BCP’s ownership interest to 40%
each. Altus Midstream Company (Altus Midstream) (a gas gathering, processing and transportation company formed
100
by shipper Apache Corporation) has an option to acquire an equity interest in the project from the initial partners by
September 2019. If Altus Midstream exercises its option, KMTP, BCP and Altus Midstream will each hold a 26.67%
ownership interest in the project. KMTP will build and operate the pipeline;
•
FEP —We own a 50% interest in FEP, the sole owner of the Fayetteville Express natural gas pipeline system. Energy
Transfer Partners, L.P. owns the remaining 50% interest and serves as operator of FEP;
• Cortez Pipeline Company—We operate the Cortez CO2 pipeline system, and own a 52.98% interest in the Cortez
Pipeline Company, the sole owner of the Cortez CO2 pipeline system. Mobil Cortez Pipeline Inc. owns 33.25%; and
Cortez Vickers Pipeline Company owns the remaining 13.77%.
Our earnings from equity investments were as follows (in millions):
Gulf LNG Holdings Group, LLC(a)
Citrus Corporation
SNG
NGPL Holdings LLC
FEP
Plantation Pipe Line Company
Cortez Pipeline Company(b)
MEP
Ruby
Watco Companies, LLC
Red Cedar Gathering Company(c)
Utopia Holding LLC
Double Eagle Pipeline LLC
Bear Creek Storage
EagleHawk
Liberty Pipeline Group LLC
Sierrita Gas Pipeline LLC
Gulf Coast Express LLC
All others
Year Ended December 31,
2018
2017
2016
$
$
209
169
141
66
55
55
36
31
26
21
18
14
10
9
7
7
7
2
4
47
$
108
48
102
77
10
53
46
44
38
44
19
14
—
7
8
24
9
7
—
23
58
12
51
37
24
40
15
25
24
—
5
2
10
11
7
—
26
Total earnings from equity investments
Amortization of excess costs
$
$
887
(95)
$
578
(61)
497
(59)
_______
(a) 2018 amount includes our share of earnings recognized due to a ruling by an arbitration panel affecting a customer contract.
(b) 2017 and 2016 amounts include $(4) million and $9 million, respectively, representing our share of a non-cash impairment charge (pre-
tax) recorded by Cortez Pipeline Company.
(c) 2017 amount includes non-cash impairment charges of $10 million (pre-tax) related to our investment.
Summarized combined financial information for our significant equity investments (listed or described above) is reported
below (in millions; amounts represent 100% of investee financial information):
Income Statement
Revenues
Costs and expenses
Net income
Year Ended December 31,
2017
2016
2018
$
$
5,129
3,371
1,758
$
$
4,703
3,398
1,305
$
$
4,084
3,056
1,028
101
Balance Sheet
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Partners’/owners’ equity
8. Goodwill
December 31,
2018
2017
$
1,496
$
23,396
2,715
9,555
12,622
956
22,344
1,241
10,605
11,454
Changes in the amounts of our goodwill for each of the years ended December 31, 2018 and 2017 are summarized by
reporting unit as follows (in millions):
Natural
Gas
Pipelines
Regulated
Natural
Gas
Pipelines
Non-
Regulated
CO2
Products
Pipelines
Products
Pipelines
Terminals Terminals
Kinder
Morgan
Canada
Total
Historical Goodwill $
15,892
$
5,812
$
1,528
$
2,125
$
221
$
1,575
$
562
$ 27,715
Accumulated
impairment losses
December 31, 2016
Currency translation
Divestitures(a)
(1,643)
14,249
(1,597)
4,215
—
—
—
—
—
1,528
—
—
December 31, 2017
14,249
4,215
1,528
Currency translation
Divestitures(b)
Other
—
—
—
—
—
—
—
—
—
(1,197)
928
—
—
928
—
—
—
(70)
151
—
—
151
—
—
—
(679)
896
—
(3)
893
—
—
1
(377)
185
13
—
198
(8)
(190)
—
(5,563)
22,152
13
(3)
22,162
(8)
(190)
1
December 31, 2018
$
14,249
$
4,215
$
1,528
$
928
$
151
$
894
$
— $ 21,965
_______
(a) 2017 includes $3 million related to certain terminal divestitures.
(b) 2018 includes $190 million related to the TMPL Sale.
Refer to Note 2 “Summary of Significant Accounting Policies—Goodwill” for a description of our accounting for goodwill.
We determine the fair value of each reporting unit as of May 31 of each year based primarily on a market approach
utilizing enterprise value to estimated earning before interest, taxes, depreciation and amortization (EBITDA) multiples of
comparable companies. The value of each reporting unit is determined on a stand-alone basis from the perspective of a market
participant representing the price estimated to be received in a sale of the reporting unit in an orderly transaction between
market participants at the measurement date. For our Natural Gas Pipelines Non-Regulated reporting unit, our May 31, 2018
annual test included a discounted cash flow analysis (income approach) to evaluate the fair value of this reporting unit to
provide additional indication of fair value based on the present value of cash flows this reporting unit is expected to generate in
the future. We weighted the market and income approaches for this reporting unit to arrive at an estimated fair value of this
reporting unit giving more weighting on the income approach and less on the market approach as we believed the value
indicated using the income approach is more representative of the value that could be received from a market participant. As of
May 31, 2018, each of our reporting units indicated a fair value in excess of their respective carrying values (by at least 10%)
and step 2 was not required. The results of our Step 1 analysis did not indicate an impairment of goodwill and we did not
identify any triggers for further impairment analysis during the remainder of the year.
A continued period of volatile commodity prices could result in deterioration of market multiples, comparable sales
transactions prices, weighted average costs of capital, and our cash flow estimates. A significant unfavorable change to any one
or combination of these factors would result in a change to the reporting unit fair values discussed above potentially resulting in
future impairments of long-lived assets, equity method investments, and/or goodwill. Such non-cash impairments could have a
significant effect on our results of operations.
102
9. Debt
We classify our debt based on the contractual maturity dates of the underlying debt instruments. We defer costs associated
with debt issuance over the applicable term. These costs are then amortized as interest expense in our accompanying
consolidated statements of income.
The following table provides detail on the principal amount of our outstanding debt balances. The table amounts exclude
all debt fair value adjustments, including debt discounts, premiums and issuance costs (in millions):
Credit facility and commercial paper borrowings(a)
Corporate senior notes(b)
December 31,
2018
2017
$
433
$
365
6.00%, due January 2018
7.00%, due February 2018
5.95%, due February 2018
7.25%, due June 2018
9.00%, due February 2019
2.65%, due February 2019
3.05%, due December 2019
6.85%, due February 2020
6.50%, due April 2020
5.30%, due September 2020
6.50%, due September 2020
5.00%, due February 2021
3.50%, due March 2021
5.80%, due March 2021
5.00%, due October 2021
4.15%, due March 2022
1.50%, due March 2022(c)
3.95%, due September 2022
3.15%, due January 2023
Floating rate, due January 2023
3.45%, due February 2023
3.50%, due September 2023
5.625%, due November 2023
4.15%, due February 2024
4.30%, due May 2024
4.25%, due September 2024
4.30%, due June 2025
6.70%, due February 2027
2.25%, due March 2027(c)
6.67%, due November 2027
4.30%, due March 2028
7.25%, due March 2028
6.95%, due June 2028
8.05%, due October 2030
7.40%, due March 2031
7.80%, due August 2031
7.75%, due January 2032
7.75%, due March 2032
7.30%, due August 2033
5.30%, due December 2034
5.80%, due March 2035
7.75%, due October 2035
6.40%, due January 2036
6.50%, due February 2037
7.42%, due February 2037
6.95%, due January 2038
6.50%, due September 2039
6.55%, due September 2040
7.50%, due November 2040
6.375%, due March 2041
103
—
—
—
—
500
800
1,500
700
535
600
349
750
750
400
500
375
860
1,000
1,000
250
625
600
750
650
600
650
1,500
7
573
7
1,250
32
31
234
300
537
1,005
300
500
750
500
1
36
400
47
1,175
600
400
375
600
750
82
975
477
500
800
1,500
700
535
600
349
750
750
400
500
375
900
1,000
1,000
250
625
600
750
650
600
650
1,500
7
600
7
—
32
31
234
300
537
1,005
300
500
750
500
1
36
400
47
1,175
600
400
375
600
5.625%, due September 2041
5.00%, due August 2042
4.70%, due November 2042
5.00%, due March 2043
5.50%, due March 2044
5.40%, due September 2044
5.55%, due June 2045
5.05%, due February 2046
5.20%, due March 2048
7.45%, due March 2098
TGP senior notes(b)
7.00%, due March 2027
7.00%, due October 2028
8.375%, due June 2032
7.625%, due April 2037
EPNG senior notes(b)
8.625%, due January 2022
7.50%, due November 2026
8.375%, due June 2032
CIG senior notes(b)
4.15%, due August 2026
6.85%, due June 2037
EPC Building, LLC, promissory note, 3.967%, due December 2035
Trust I Preferred Securities, 4.75%, due March 2028(d)
KMGP, $1,000 Liquidation Value Series A Fixed-to-Floating Rate Term Cumulative Preferred Stock, due
August 2057(e)
Other miscellaneous debt(f)
December 31,
2018
2017
375
625
475
700
750
550
1,750
800
750
26
300
400
240
300
260
200
300
375
100
409
221
100
375
625
475
700
750
550
1,750
800
—
26
300
400
240
300
260
200
300
375
100
421
221
100
250
36,593
3,388
33,205
278
36,916
2,828
34,088
Total debt – KMI and Subsidiaries
Less: Current portion of debt(g)
Total long-term debt – KMI and Subsidiaries(h)
_______
(a) See “—Current portion of debt” below for further details regarding the outstanding credit facility and commercial paper borrowings.
(b) Notes provide for the redemption at any time at a price equal to 100% of the principal amount of the notes plus accrued interest to the
redemption date plus a make whole premium and are subject to a number of restrictions and covenants. The most restrictive of these
include limitations on the incurrence of liens and limitations on sale-leaseback transactions.
$
$
(c) Consists of senior notes denominated in Euros that have been converted to U.S. dollars and are respectively reported above at the
December 31, 2018 exchange rate of 1.1467 U.S. dollars per Euro and at the December 31, 2017 exchange rate of 1.2005 U.S. dollars
per Euro. As of December 31, 2018 and 2017, the cumulative changes in the exchange rate of U.S. dollars per Euro since issuance had
resulted in increases to our debt balance of $46 million and $86 million, respectively, related to the 1.50% series and increases of $30
million and $57 million, respectively, related to the 2.25% series. The cumulative increase in debt due to the changes in exchange rates
is offset by a corresponding change in the value of cross-currency swaps reflected in “Deferred charges and other assets” and “ Other
long-term liabilities and deferred credits” on our consolidated balance sheets. At the time of issuance, we entered into cross-currency
swap agreements associated with these senior notes, effectively converting these Euro-denominated senior notes to U.S. dollars (see
Note 14 “Risk Management—Foreign Currency Risk Management”).
(d) Capital Trust I (Trust I), is a 100%-owned business trust that as of December 31, 2018, had 4.4 million of 4.75% trust convertible
preferred securities outstanding (referred to as the Trust I Preferred Securities). Trust I exists for the sole purpose of issuing preferred
securities and investing the proceeds in 4.75% convertible subordinated debentures, which are due 2028. Trust I’s sole source of income
is interest earned on these debentures. This interest income is used to pay distributions on the preferred securities. We provide a full and
unconditional guarantee of the Trust I Preferred Securities. There are no significant restrictions from these securities on our ability to
obtain funds from our subsidiaries by distribution, dividend or loan. The Trust I Preferred Securities are non-voting (except in limited
circumstances), pay quarterly distributions at an annual rate of 4.75%, carry a liquidation value of $50 per security plus accrued and
unpaid distributions. The Trust I Preferred Securities outstanding as of December 31, 2018 are convertible at any time prior to the close
of business on March 31, 2028, at the option of the holder, into the following mixed consideration: (i) 0.7197 of a share of our Class P
common stock; and (ii) $25.18 in cash without interest. We have the right to redeem these Trust I Preferred Securities at any time.
(e) As of December 31, 2018 and 2017, KMGP had outstanding, 100,000 shares of its $1,000 Liquidation Value Series A Fixed-to-Floating
Rate Term Cumulative Preferred Stock due 2057. Since August 18, 2012, dividends on the preferred stock accumulate at a floating rate
of the 3-month LIBOR plus 3.8975% and are payable quarterly in arrears, when and if declared by KMGP’s board of directors, on
February 18, May 18, August 18 and November 18 of each year, beginning November 18, 2012. The preferred stock has approval rights
over a commencement of or filing of voluntary bankruptcy by KMP or its SFPP or Calnev subsidiaries.
Includes capital lease obligations with monthly installments. The lease terms expire between 2024 and 2061.
(f)
(g) Amounts include KMI and KML outstanding credit facility borrowings, commercial paper borrowings and other debt maturing within
12 months. See “—Current Portion of Debt” below.
104
(h) Excludes our “Debt fair value adjustments” which, as of December 31, 2018 and 2017, increased our combined debt balances by $731
million and $927 million, respectively. In addition to all unamortized debt discount/premium amounts, debt issuance costs and purchase
accounting on our debt balances, our debt fair value adjustments also include amounts associated with the offsetting entry for hedged
debt and any unamortized portion of proceeds received from the early termination of interest rate swap agreements. For further
information about our debt fair value adjustments, see “—Debt Fair Value Adjustments” below.
Current Portion of Debt
The following table details the components of our “Current portion of debt” reported on our consolidated balance sheets.
$500 million, 364-day credit facility due November 15, 2019(a)
$4 billion credit facility due November 16, 2023(a)
$5 billion, five-year credit facility due November 26, 2019, -% and 2.99%, respectively(a)(b)
Commercial paper notes, 3.10% and 2.02%, respectively(b)
KML 2018 Credit Facility(c)
Current portion of senior notes
6.00%, due January 2018
7.00%, due February 2018
5.95%, due February 2018
7.25%, due June 2018
9.00%, due February 2019
2.65%, due February 2019
3.05%, due December 2019
Trust I Preferred Securities, 4.75%, due March 2028
Current portion - Other debt
Total current portion of debt
$
$
December 31,
2018
2017
— $
—
—
433
—
—
—
125
240
—
750
82
975
477
—
—
—
—
—
—
—
500
800
1,500
111
44
3,388
111
68
2,828
$
_______
(a) On November 16, 2018, we replaced our $5 billion, five-year credit facility with two new credit facilities discussed further in “—Credit
Facilities and Restrictive Covenants” following.
(b) Interest rates are weighted average rates at December 31, 2018 and 2017, respectively.
(c) Borrowings under the KML 2018 Credit Facility are denominated in C$ and are converted to U.S. dollars. The exchange rate was
0.7330 U.S. dollars per C$ at December 31, 2018 and 0.7971 U.S. dollars per C$ at December 31, 2017. See “—Credit Facilities”
below.
We and substantially all of our wholly owned domestic subsidiaries are a party to a cross guarantee agreement whereby
each party to the agreement unconditionally guarantees, jointly and severally, the payment of specified indebtedness of each
other party to the agreement. Also, see Note 20.
Subsequent Event—Debt Repayments
Using part of our portion of proceeds from the TMPL Sale that KML distributed to us in January 2019, we immediately
repaid our outstanding balance of commercial paper borrowings, and then in February 2019, repaid $500 million of maturing
9.00% senior notes and $800 million of maturing 2.65% senior notes which were included in “Current portion of debt” on the
accompanying consolidated balance sheet as of December 31, 2018.
Credit Facilities and Restrictive Covenants
KMI
On November 16, 2018, we replaced our five-year, $5 billion revolving credit facility with (i) a new five-year, $4 billion
revolving credit facility (Five-year Credit Facility); and (ii) a new 364-day, $500 million revolving credit facility (364-day
Credit Facility) with a syndicate of lenders, together, “KMI’s New Credit Facilities.”
We also continue to maintain a $4 billion commercial paper program through the private placement of short-term notes.
The notes mature up to 270 days from the date of issue and are not redeemable or subject to voluntary prepayment by us prior
to maturity. The notes are sold at par value less a discount representing an interest factor or if interest bearing, at par.
105
Borrowings under our revolving credit facility can be used for working capital and other general corporate purposes and as a
backup to our commercial paper program. Borrowings under our commercial paper program reduce the borrowings allowed
under our Five-year Credit Facility.
Depending on the type of loan request, our credit facility borrowings under either of our credit facilities bear interest at
either (i) LIBOR adjusted for a eurocurrency funding reserve plus an applicable margin ranging from 1.000% to 2.000% per
annum based on our credit ratings or (ii) the greatest of (1) the Federal Funds Rate plus 0.5%; (2) the Prime Rate; or (3) LIBOR
for a one-month eurodollar loan adjusted for a eurocurrency funding reserve, plus 1%, plus, in each case, an applicable margin
ranging from 0.100% to 1.000% per annum based on our credit rating. Standby fees for the unused portion of the credit facility
will be calculated at a rate ranging from 0.100% to 0.300%for the Five-year Credit Facility and 0.090% to 0.275% for the 364-
day Credit Facility based upon our debt credit rating.
KMI’s New Credit Facilities contain financial and various other covenants that apply to the Company and its subsidiaries
and are common in such agreements, including a maximum ratio of Consolidated Net Indebtedness to Consolidated EBITDA
(each as defined in the Five-Year Credit Facility and 364-day Credit Facility, as applicable) of 5.50 to 1.00, for any four-fiscal-
quarter period. Other negative covenants include restrictions on the Company’s and certain of its subsidiaries’ ability to incur
debt, grant liens, make fundamental changes or engage in certain transactions with affiliates, or in the case of certain material
subsidiaries, permit restrictions on dividends, distributions or making or prepayments of loans to the Company or any
guarantor. KMI’s New Credit Facilities also restrict the Company’s ability to make certain restricted payments if an event of
default (as defined in the Five-Year Credit Facility and the 364-Day Credit Facility) has occurred and is continuing or would
occur and be continuing.
As of December 31, 2018, we had no borrowings outstanding under our Five-year Credit Facility or our 364-day Credit
Facility, $433 million outstanding under our commercial paper program and $99 million in letters of credit. Our availability
under these facilities as of December 31, 2018 was $3,968 million. As of December 31, 2018, we were in compliance with all
required covenants.
KML
Upon the closing of the TMPL Sale on August 31, 2018, KML’s prior credit facility was replaced with a new 4-year, C
$500 million unsecured revolving credit facility for working capital purposes (“KML 2018 Credit Facility”) under a credit
agreement with the Royal Bank of Canada (the “KML Credit Agreement”) as agent. In addition, the C$133 million (U.S.$102
million) of outstanding borrowings under KML’s prior credit facility were paid off prior to its termination with a portion of the
proceeds from the TMPL Sale.
Depending on the type of loan requested, interest on borrowings outstanding are calculated based on: (i) a Canadian prime
rate of interest; (ii) a U.S. base rate; (iii) LIBOR; or (iv) bankers’ acceptance fees, plus (i) in the case of Canadian prime rate or
U.S. base rate loans, an applicable margin of up to 1.25%; or (ii) in the case of LIBOR or bankers’ acceptance loans, an
applicable margin ranging from 1.00% to 2.25%, with such margin in any case determined by KML’s debt credit rating.
Standby fees for the unused portion of the KML 2018 Credit Facility will be calculated at a rate ranging from 0.20% to 0.45%
based upon KML’s debt credit rating.
The KML Credit Agreement contains various financial and other covenants that apply to KML and its subsidiaries and that
are common in such agreements, including a maximum ratio of KML’s consolidated total funded debt to its consolidated
earnings before interest, income taxes, DD&A, and non-cash adjustments as defined in the KML Credit Agreement, of
5.00:1.00 and restrictions on KML’s ability to incur debt, grant liens, make dispositions, engage in transactions with affiliates,
make restricted payments, make investments, enter into sale leaseback transactions, amend organizational documents and
engage in corporate reorganization transactions.
In addition, the KML Credit Agreement contains customary events of default, including non-payment; non-compliance
with covenants (in some cases, subject to grace periods); payment default under, or acceleration events affecting, certain other
indebtedness; bankruptcy or insolvency events involving KML or guarantors; and changes of control. If an event of default
under the KML Credit Agreement exists and is continuing, the lenders could terminate their commitments and accelerate the
maturity of the outstanding obligations under the KML Credit Agreement.
On May 30, 2018, in conjunction with the announcement of the TMPL Sale approximately C$100 million of borrowings
outstanding under KML’s June 16, 2017 revolving credit facilities (the “KML 2017 Credit Facility”) were repaid, the
underlying credit facilities were terminated, and approximately $46 million of deferred costs associated with the KML 2017
Credit Facility that were being amortized as interest expense over its term were written off.
106
As of December 31, 2018, KML had no borrowings outstanding under the KML 2018 Credit Facility, and had C$489
million (U.S. $359 million) available under the KML 2018 Credit Facility, after reducing the C$500 million (U.S.$367 million)
capacity for the C$11 million (U.S.$8 million) in letters of credit. Of the total C$11 million of letters of credit issued,
approximately C$8 million are related to Trans Mountain for which it has issued a backstop letter of credit to KML. As of
December 31, 2018, KML was in compliance with all required covenants. As of December 31, 2017, KML had no borrowings
outstanding under the KML 2017 Credit Facility.
Maturities of Debt
The scheduled maturities of the outstanding debt balances, excluding debt fair value adjustments as of December 31, 2018,
are summarized as follows (in millions):
Year
2019
2020
2021
2022
2023
Thereafter
Total
Debt Fair Value Adjustments
Total
3,388
2,205
2,422
2,518
3,250
22,810
36,593
$
$
The carrying value adjustment to debt securities whose fair value is being hedged is included within “Debt fair value
adjustments” on our accompanying consolidated balance sheets. “Debt fair value adjustments” also include unamortized debt
discount/premiums, purchase accounting debt fair value adjustments, unamortized portion of proceeds received from the early
termination of interest rate swap agreements, and debt issuance costs. As of December 31, 2018, the weighted-average
amortization period of the unamortized premium from the termination of interest rate swaps was approximately 16 years. The
following table summarizes the “Debt fair value adjustments” included on our accompanying consolidated balance sheets (in
millions):
Debt Fair Value Adjustments
Purchase accounting debt fair value adjustments
Carrying value adjustment to hedged debt
Unamortized portion of proceeds received from the early termination of interest rate swap
agreements
Unamortized debt discounts, net
Unamortized debt issuance costs
Total debt fair value adjustments
December 31,
2018
2017
$
658
$
2
275
(74)
(130)
731
$
$
719
115
297
(74)
(130)
927
Interest Rates, Interest Rate Swaps and Contingent Debt
The weighted average interest rate on all of our borrowings was 5.15% during 2018 and 5.02% during 2017. Information
on our interest rate swaps is contained in Note 14. For information about our contingent debt agreements, see Note 13
“Commitments and Contingent Liabilities—Contingent Debt”).
107
10. Share-based Compensation and Employee Benefits
Share-based Compensation
Class P Shares
Kinder Morgan, Inc. Amended and Restated Stock Compensation Plan for Non-Employee Directors
We have a Kinder Morgan, Inc. Amended and Restated Stock Compensation Plan for Non-Employee Directors, in which
our eligible non-employee directors participate. The plan recognizes that the compensation paid to each eligible non-employee
director is fixed by our board, generally annually, and that the compensation is payable in cash. Pursuant to the plan, in lieu of
receiving some or all of the cash compensation, each eligible non-employee director may elect to receive shares of Class P
common stock. Each election will be generally at or around the first board meeting in January of each calendar year and will
be effective for the entire calendar year. An eligible director may make a new election each calendar year. The total number of
shares of Class P common stock authorized under the plan is 250,000. During 2018, 2017 and 2016, we made restricted Class
P common stock grants to our non-employee directors of 25,800, 17,740 and 31,880, respectively. These grants were valued at
time of issuance at $500,000, $400,000 and $400,000, respectively. All of the restricted stock awards made to non-employee
directors vest during a six-month period.
Kinder Morgan, Inc. 2015 Amended and Restated Stock Incentive Plan
The Kinder Morgan, Inc. 2015 Amended and Restated Stock Incentive Plan is an equity awards plan available to eligible
employees. The total number of shares of Class P common stock authorized under the plan is 33,000,000. The following table
sets forth a summary of activity and related balances of our restricted stock awards excluding that issued to non-employee
directors (in millions, except share and per share amounts):
Year Ended
December 31, 2018
Year Ended
December 31, 2017
Year Ended
December 31, 2016
Weighted
Average
Grant Date
Fair Value
per Share
Shares
Outstanding at beginning of period
10,518,344
$
Granted
5,389,476
Vested
(2,371,193)
Forfeited
(382,022)
Outstanding at end of period
13,154,605
28.21
17.73
36.34
23.26
22.59
Weighted
Average
Grant Date
Fair Value
per Share
32.72
19.52
36.67
28.34
28.21
Shares
9,038,137
$
3,221,691
(1,501,939)
(239,545)
10,518,344
Weighted
Average
Grant Date
Fair Value
per Share
37.91
21.36
38.53
35.74
32.72
Shares
7,645,105
$
2,816,599
(1,226,652)
(196,915)
9,038,137
The intrinsic value of restricted stock awards vested during the years ended December 31, 2018, 2017 and 2016 was $42
million, $30 million and $25 million, respectively. Restricted stock awards made to employees have vesting periods ranging
from 1 year with variable vesting dates to 10 years. Following is a summary of the future vesting of our outstanding restricted
stock awards:
Year
2019
2020
2021
2022
2023
Thereafter
Total Outstanding
Vesting of
Restricted
Shares
4,048,963
3,537,544
4,814,403
152,104
121,093
480,498
13,154,605
The related compensation costs less estimated forfeitures is generally recognized ratably over the vesting period of the
restricted stock awards. Upon vesting, the grants will be paid in our Class P common shares.
108
During 2018, 2017 and 2016, we recorded $63 million, $65 million and $66 million, respectively, in expense related to
restricted stock awards and capitalized approximately $13 million, $9 million and $9 million, respectively. At December 31,
2018 and 2017, unrecognized restricted stock awards compensation costs, less estimated forfeitures, was approximately $127
million with a weighted average remaining amortization period of 2.32 years.
KML Restricted Shares
KML adopted the 2017 Restricted Share Unit Plan for Employees, an equity awards plan, for its eligible employees, and
the 2017 Restricted Share Unit Plan for Non-Employee Directors, in which its eligible non-employee directors participate.
During the year ended December 31, 2018 and 2017, we recognized $6 million and $1 million, respectively, of expense and
capitalized $2 million and $1 million, respectively, related to these compensation programs. At December 31, 2018,
unrecognized compensation costs, less estimated forfeitures associated with KML’s restricted share unit awards, was
approximately $3 million, with a weighted average remaining amortization period of 2.1 years.
Pension and Other Postretirement Benefit Plans
Savings Plan
We maintain a defined contribution plan covering eligible U.S. employees. We contribute 5% of eligible compensation for
most of the plan participants. Certain collectively bargained participants receive Company contributions in accordance with
collective bargaining agreements. The total cost for our savings plan was approximately $48 million, $47 million, and $47
million for the years ended December 31, 2018, 2017 and 2016, respectively.
Pension Plans
Our pension plans are defined benefit plans that cover substantially all of our U.S. employees and provide benefits under a
cash balance formula. A participant in the cash balance formula accrues benefits through contribution credits based on a
combination of age and years of service, multiplied by eligible compensation. Interest is also credited to the participant’s plan
account. A participant becomes fully vested in the plan after three years and may take a lump sum distribution upon
termination of employment or retirement. Certain collectively bargained and grandfathered employees accrue benefits through
career pay or final pay formulas.
Other Postretirement Benefit Plans
We and certain of our subsidiaries provide other postretirement benefits (OPEB), including medical benefits for closed
groups of retired employees and certain grandfathered employees and their dependents, and limited postretirement life
insurance benefits for retired employees. These plans provide a fixed subsidy to post-age 65 Medicare eligible participants to
purchase coverage through a retiree Medicare exchange. Medical benefits under these OPEB plans may be subject to
deductibles, co-payment provisions, dollar caps and other limitations on the amount of employer costs, and we reserve the right
to change these benefits.
Additionally, our subsidiary SFPP has incurred certain liabilities for postretirement benefits to certain current and former
employees, their covered dependents, and their beneficiaries. However, the net periodic benefit costs, contributions and liability
amounts associated with the SFPP postretirement benefit plan are not material to our consolidated income statements or balance
sheets.
Plans Associated with Foreign Operations
Two of our former subsidiaries, Kinder Morgan Canada Inc. and Trans Mountain Pipeline ULC (as general partner of
Trans Mountain Pipeline L.P.), were sponsors of pension and OPEB plans for eligible Canadian and Trans Mountain pipeline
employees. These subsidiaries, along with the plan assets of the Canadian pension and OPEB plans, were sold on August 31,
2018 (see Note 3). Prior to 2018, we included the net periodic benefit costs, contributions and liability amounts associated with
our Canadian pension plans within our consolidated financial statements. In conjunction with the sale, Kinder Morgan Canada
Services was formed and became the Canadian employer of the staff that operates our remaining Canadian assets. Kinder
Morgan Canada Services subsequently established a defined contribution pension plan and an OPEB plan for eligible Canadian
employees which are not material to our consolidated income statements and balance sheets, and therefore are excluded from
the following disclosures.
109
Benefit Obligation, Plan Assets and Funded Status. The following table provides information about our pension and
OPEB plans as of and for each of the years ended December 31, 2018 and 2017 (in millions):
Change in benefit obligation:
Benefit obligation at beginning of period
$
2,982
$
2,884
$
425
$
Pension Benefits
OPEB
2018
2017
2018
2017
473
1
13
(16)
(38)
2
1
1
—
(12)
425
332
29
9
2
1
(38)
—
—
—
335
(90)
Service cost
Interest cost
Actuarial (gain) loss
Benefits paid
Participant contributions
Medicare Part D subsidy receipts
Exchange rate changes
Settlements
Other(a)
Benefit obligation at end of period
Change in plan assets:
52
84
(172)
(175)
—
—
—
—
(205)
2,566
40
88
155
(180)
3
—
13
(21)
—
2,982
Fair value of plan assets at beginning of period
2,296
2,160
Actual return on plan assets
Employer contributions
Participant contributions
Medicare Part D subsidy receipts
Benefits paid
Exchange rate changes
Settlements
Other(a)
Fair value of plan assets at end of period
Funded status - net liability at December 31,
$
(128)
30
—
—
(175)
—
—
(159)
1,864
(702) $
292
32
3
—
(180)
10
(21)
—
1
12
(53)
(33)
1
1
—
—
(15)
339
335
(5)
7
1
1
(33)
—
—
—
2,296
(686) $
306
(33) $
_______
(a) 2018 amounts represent December 31, 2017 balances associated with Canadian pension and OPEB plans that were included in the
TMPL Sale. 2017 amounts represent December 31, 2016 balances associated with our Plantation Pipeline OPEB plan that are no longer
included in these disclosures.
Components of Funded Status. The following table details the amounts recognized in our balance sheets at December 31,
2018 and 2017 related to our pension and OPEB plans (in millions):
Non-current benefit asset(a)
Current benefit liability
Non-current benefit liability
Funded status - net liability at December 31,
Pension Benefits
OPEB
2018
2017
2018
2017
$
$
— $
—
(702)
(702) $
— $
—
(686)
(686) $
$
190
(13)
(210)
(33) $
198
(15)
(273)
(90)
_______
(a) 2018 and 2017 OPEB amounts include $32 million and $33 million, respectively, of non-current benefit assets related to a plan we
sponsor which is associated with employee services provided to an unconsolidated joint venture, and for which we have recorded an
offsetting related party deferred credit.
110
Components of Accumulated Other Comprehensive (Loss) Income. The following table details the amounts of pre-tax
accumulated other comprehensive (loss) income at December 31, 2018 and 2017 related to our pension and OPEB plans which
are included on our accompanying consolidated balance sheets, including the portion attributable to our noncontrolling
interests, (in millions):
Unrecognized net actuarial (loss) gain
Unrecognized prior service (cost) credit
Accumulated other comprehensive (loss) income
Pension Benefits
OPEB
2018
2017
2018
2017
$
$
(653) $
(3)
(656) $
(635) $
(4)
(639) $
117
14
131
$
$
88
17
105
We anticipate that approximately $40 million of pre-tax accumulated other comprehensive loss, inclusive of amounts
reported as noncontrolling interests, will be recognized as part of our net periodic benefit cost in 2019, including approximately
$42 million of unrecognized net actuarial loss and approximately $2 million of unrecognized prior service credit.
Our accumulated benefit obligation for our pension plans was $2,535 million and $2,840 million at December 31, 2018
and 2017, respectively.
Our accumulated postretirement benefit obligation for our OPEB plans, whose accumulated postretirement benefit
obligations exceeded the fair value of plan assets, was $293 million and $373 million at December 31, 2018 and 2017,
respectively. The fair value of these plans’ assets was approximately $70 million and $84 million at December 31, 2018 and
2017, respectively.
Plan Assets. The investment policies and strategies are established by the Fiduciary Committee for the assets of each of
the pension and OPEB plans, which are responsible for investment decisions and management oversight of the plans. The
stated philosophy of the Fiduciary Committee is to manage these assets in a manner consistent with the purpose for which the
plans were established and the time frame over which the plans’ obligations need to be met. The objectives of the investment
management program are to (1) meet or exceed plan actuarial earnings assumptions over the long term and (2) provide a
reasonable return on assets within established risk tolerance guidelines and to maintain the liquidity needs of the plans with the
goal of paying benefit and expense obligations when due. In seeking to meet these objectives, the Fiduciary Committee
recognizes that prudent investing requires taking reasonable risks in order to raise the likelihood of achieving the targeted
investment returns. In order to reduce portfolio risk and volatility, the Fiduciary Committee has adopted a strategy of using
multiple asset classes.
As of December 31, 2018, the allowable range for asset allocations in effect for our pension plan were 34% to 59% equity,
37% to 57% fixed income, 0% to 5% cash, 0% to 2% alternative investments and 0% to 10% company securities (KMI Class P
common stock and/or debt securities). As of December 31, 2018, the allowable range for asset allocations in effect for our
OPEB plans were 42% to 67% equity, 25% to 51% fixed income and 0% to 20% cash.
Below are the details of our pension and OPEB plan assets by class and a description of the valuation methodologies used
for assets measured at fair value.
• Level 1 assets’ fair values are based on quoted market prices for the instruments in actively traded markets. Included
in this level are cash, equities, exchange traded mutual funds and MLPs. These investments are valued at the closing
price reported on the active market on which the individual securities are traded.
• Level 2 assets’ fair values are primarily based on pricing data representative of quoted prices for similar assets in
active markets (or identical assets in less active markets). Included in this level are short-term investment funds, fixed
income securities and derivatives. Short-term investment funds are valued at amortized cost, which approximates fair
value. The fixed income securities’ fair values are primarily based on an evaluated price which is based on a
compilation of primarily observable market information or a broker quote in a non-active market. Derivatives are
exchange-traded through clearinghouses and are valued based on these prices.
• Level 3 assets’ fair values are calculated using valuation techniques that require inputs that are both significant to the
fair value measurement and are unobservable, or are similar to Level 2 assets. Included in this level are guaranteed
insurance contracts and immediate participation guarantee contracts. These contracts are valued at contract value,
which approximates fair value.
111
•
Plan assets with fair values that are based on the net asset value per share, or its equivalent (NAV), as reported by the
issuers are determined based on the fair value of the underlying securities as of the valuation date and include
common/collective trust funds, private investment funds, limited partnerships, and fixed income trusts. The plan
assets measured at NAV are not categorized within the fair value hierarchy described above, but are separately
identified in the following tables.
Listed below are the fair values of our pension and OPEB plans’ assets that are recorded at fair value by class and
categorized by fair value measurement used at December 31, 2018 and 2017 (in millions):
Pension Assets
2018
2017
Level 1 Level 2 Level 3
Total
Level 1 Level 2 Level 3
Total
Measured within fair value hierarchy
Cash
$ — $ — $ — $ — $
6
$ — $ — $
Short-term investment funds
Mutual funds(a)
Equities(b)
Fixed income securities
Derivatives
Subtotal
Measured at NAV(c)
Common/collective trusts(d)
Private investment funds(e)
Private limited partnerships(f)
Subtotal
Total plan assets fair value
6
65
245
278
416
5
—
81
227
—
—
7
—
—
422
6
—
—
—
—
—
7
81
227
422
6
—
245
278
—
—
65
—
—
416
5
—
—
—
—
—
$
308
$
435
$ — $
743
$
529
$
486
$ — $ 1,015
857
215
49
1,121
$ 1,864
895
337
49
1,281
$ 2,296
_______
(a) Includes mutual funds which are invested in equity.
(b) Plan assets include $94 million and $110 million of KMI Class P common stock for 2018 and 2017, respectively.
(c) Plan assets for which fair value was measured using NAV as a practical expedient.
(d) Common/collective trust funds were invested in approximately 37% fixed income and 63% equity in 2018 and 36% fixed income and
64% equity in 2017.
(e) Private investment funds were invested in approximately 71% fixed income and 29% equity in 2018 and 52% fixed income and 48%
equity in 2017.
Includes assets invested in real estate, venture and buyout funds.
(f)
112
OPEB Assets
2018
2017
Level 1 Level 2 Level 3
Total
Level 1 Level 2 Level 3
Total
Measured within fair value hierarchy
Short-term investment funds
$ — $
4
$ — $
Equities(a)
MLPs
Guaranteed insurance contracts
Mutual funds
Subtotal
Measured at NAV(b)
Common/collective trusts(c)
Fixed income trusts
Limited partnerships(d)
Subtotal
Total plan assets fair value
—
—
—
1
1
$
—
—
—
—
$
4
$
—
—
51
—
51
$
$
4
—
—
51
1
56
250
—
—
250
306
$ — $
7
$ — $
16
50
—
1
—
—
—
—
$
67
$
7
$
—
—
49
—
49
7
16
50
49
1
$
123
68
66
78
212
335
$
_______
(a) Plan assets include $2 million of KMI Class P common stock for 2017.
(b) Plan assets for which fair value was measured using NAV as a practical expedient.
(c) Common/collective trust funds were invested in approximately 60% equity and 40% fixed income securities for 2018 and 71% equity
and 29% fixed income securities for 2017.
(d) Limited partnerships were invested in global equity securities.
The following tables present the changes in our pension and OPEB plans’ assets included in Level 3 for the years ended
December 31, 2018 and 2017 (in millions):
Pension Assets
Realized
and
Unrealized
Gains
(Losses),
net
Purchases
(Sales), net
Balance at
End of
Period
Balance at
Beginning
of Period
Transfers
In (Out)
2017
Insurance contracts
$
16
$
— $
— $
(16) $
—
OPEB Assets
Realized
and
Unrealized
Gains
(Losses),
net
Purchases
(Sales), net
Balance at
End of
Period
Balance at
Beginning
of Period
Transfers
In (Out)
$
$
49
$
— $
4
$
(2) $
47
$
— $
5
$
(3) $
51
49
2018
Insurance contracts
2017
Insurance contracts
Changes in the underlying value of Level 3 assets due to the effect of changes of fair value were immaterial for the years
ended December 31, 2018 and 2017.
113
Expected Payment of Future Benefits and Employer Contributions. As of December 31, 2018, we expect to make the
following benefit payments under our plans (in millions):
Fiscal year
2019
2020
2021
2022
2023
2024 - 2028
$
Pension
Benefits
OPEB(a)
$
234
233
225
223
214
969
33
32
32
31
29
127
_______
(a) Includes a reduction of approximately $2 million in each of the years 2019 - 2023 and approximately $13 million in aggregate for 2024 -
2028 for an expected subsidy related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003.
In 2019, we expect to contribute approximately $60 million to our pension plans and $7 million, net of anticipated
subsidies, to our OPEB plans.
Actuarial Assumptions and Sensitivity Analysis. Benefit obligations and net benefit cost are based on actuarial estimates
and assumptions. The following table details the weighted-average actuarial assumptions used in determining our benefit
obligation and net benefit costs of our pension and OPEB plans for 2018, 2017 and 2016:
Pension Benefits
2018
2017
2016
2018
OPEB
2017
2016
Assumptions related to benefit
obligations:
Discount rate
Rate of compensation increase
Assumptions related to benefit
costs:
Discount rate for benefit
obligations
Discount rate for interest on
benefit obligations
Discount rate for service cost
Discount rate for interest on
service cost
Expected return on plan
assets(a)
Rate of compensation increase
4.26%
3.50%
3.56%
3.53%
3.83%
3.52%
4.16%
n/a
3.48%
n/a
3.69%
n/a
3.56%
3.83%
4.05%
3.48%
3.69%
3.91%
3.13%
3.56%
3.09%
3.88%
3.24%
4.15%
3.08%
3.82%
3.05%
4.15%
3.18%
4.36%
3.14%
3.24%
3.50%
3.76%
3.95%
4.17%
7.25%
3.50%
7.07%
3.52%
7.31%
3.51%
7.08%
n/a
6.84%
n/a
7.07%
n/a
_______
(a) The expected return on plan assets listed in the table above is a pre-tax rate of return based on our targeted portfolio of investments. For
the OPEB assets subject to unrelated business income taxes (UBIT), we utilize an after-tax expected return on plan assets to determine
our benefit costs, which is based on a UBIT rate of 21% for 2018, 2017 and 2016.
We utilize a full yield curve approach in the estimation of the service and interest cost components of net periodic benefit
cost (credit) for our retirement benefit plans by applying the specific spot rates along the yield curve used in the determination
of the benefit obligation to their underlying projected cash flows. The expected long-term rates of return on plan assets were
determined by combining a review of the historical returns realized within the portfolio, the investment strategy included in the
plans’ investment policy, and capital market projections for the asset classes in which the portfolio is invested and the target
weightings of each asset class.
114
Actuarial estimates for our OPEB plans assumed a weighted-average annual rate of increase in the per capita cost of
covered health care benefits of 7.26%, gradually decreasing to 4.54% by the year 2038. Assumed health care cost trends have a
significant effect on the amounts reported for OPEB plans. A one-percentage point change in assumed health care cost trends
would have the following effects as of December 31, 2018 and 2017 (in millions):
One-percentage point increase:
Aggregate of service cost and interest cost
Accumulated postretirement benefit obligation
One-percentage point decrease:
Aggregate of service cost and interest cost
Accumulated postretirement benefit obligation
2018
2017
$
$
$
1
16
(1) $
(14)
1
22
(1)
(19)
Components of Net Benefit Cost and Other Amounts Recognized in Other Comprehensive Income. For each of the years
ended December 31, the components of net benefit cost and other amounts recognized in pre-tax other comprehensive income
related to our pension and OPEB plans are as follows (in millions):
Pension Benefits
2018
2017
2016
2018
OPEB
2017
2016
40
$
36
$
1
$
1
$
Components of net benefit cost:
Service cost
Interest cost
Expected return on assets
Amortization of prior service cost
(credit)
Amortization of net actuarial loss
(gain)
Curtailment and settlement loss
Net benefit (credit) cost(a)
Other changes in plan assets and
benefit obligations recognized
in other comprehensive
(income) loss:
Net loss (gain) arising during
period
Prior service cost (credit) arising
during period
Amortization or settlement
recognition of net actuarial
(loss) gain
Amortization of prior service
(cost) credit
Exchange rate changes
Total recognized in total other
comprehensive (income) loss
Total recognized in net benefit
cost (credit) and other
comprehensive (income) loss
$
$
52
84
(149)
—
40
—
27
105
—
(87)
(1)
—
17
88
(147)
89
(151)
1
52
5
39
17
—
(64)
(1)
—
(48)
1
35
—
10
116
—
(34)
—
1
83
12
(20)
(4)
(6)
—
(17)
13
(19)
(3)
(6)
—
(14)
1
16
(19)
(3)
—
—
(5)
(32)
(25)
(48)
—
3
3
—
—
6
1
—
—
—
1
—
(26)
(18)
(47)
$
44
$
(9) $
93
$
(43) $
(32) $
(52)
_______
(a) 2018 and 2017 OPEB amounts each include $4 million of net benefit credits related to a plan that we sponsor that is associated with
employee services provided to an unconsolidated joint venture. We charge or refund these costs or credits associated with this plan to the
joint venture as an offset to our net benefit cost or credit and receive our proportionate share of these costs or credits through our share of
the equity investee’s earnings.
115
Multiemployer Plans
We participate in several multi-employer pension plans for the benefit of employees who are union members. We do not
administer these plans and contribute to them in accordance with the provisions of negotiated labor contracts. Other benefits
include a self-insured health and welfare insurance plan and an employee health plan where employees may contribute for their
dependents’ health care costs. Amounts charged to expense for these plans were approximately $8 million for each of the years
ended December 31, 2018, 2017 and 2016. We consider the overall multi-employer pension plan liability exposure to be
minimal in relation to the value of its total consolidated assets and net income.
11. Stockholders’ Equity
Mandatory Convertible Preferred Stock
As of October 26, 2018, all of our issued and outstanding 1,600,000 shares of 9.75% Series A mandatory convertible
preferred stock, with a liquidating preference of $1,000 per share were converted into common stock either at the option of the
holders before or automatically on October 26, 2018. Based on the current market price of our common stock at the time of
conversion, our Series A Preferred Shares converted into approximately 58 million common shares.
Preferred Stock Dividends
Dividends on our mandatory convertible preferred stock were payable on a cumulative basis when, as and if declared by
our board of directors (or an authorized committee thereof) at an annual rate of 9.75% of the liquidation preference of $1,000
per share on January 26, April 26, July 26 and October 26 of each year, commencing on January 26, 2016 to, and including,
October 26, 2018. Prior to the October 26, 2018 conversion of our Series A Preferred Shares into common shares, we paid all
dividends on our mandatory convertible preferred stock in cash. The following table provides information regarding our
preferred stock dividends:
Period
January 26, 2018 through April 25, 2018
April 26, 2018 through July 25, 2018
July 26, 2018 through October 25, 2018
Common Equity
Total
dividend per
share for the
period
$24.375
24.375
24.375
Date of declaration
January 17, 2018
April 18, 2018
July 18, 2018
Date of record
April 11, 2018
July 11, 2018
October 11, 2018
Date of dividend
April 26, 2018
July 26, 2018
October 26, 2018
As of December 31, 2018, our common equity consisted of our Class P common stock.
On July 19, 2017, our board of directors approved a $2 billion common share buy-back program that began in December
2017. During the years ended December 31, 2018 and 2017, we repurchased approximately 15 million and 14 million,
respectively, of our Class P shares for approximately $273 million and $250 million, respectively. 2018 amounts exclude
repurchases made in December 2018 of approximately 0.1 million of our Class P shares for approximately $2 million which
settled on January 2, 2019.
On December 19, 2014, we entered into an equity distribution agreement authorizing us to issue and sell through or to the
managers party thereto, as sales agents and/or principals, shares of our Class P common stock having an aggregate offering of
up to $5.0 billion from time to time during the term of this agreement. During the years ended December 31, 2018, 2017 and
2016 we did not issue any Class P common stock under this agreement.
116
KMI Common Stock Dividends
Holders of our common stock participate in any dividend declared by our board of directors, subject to the rights of the
holders of any outstanding preferred stock. The following table provides information about our per share dividends:
Per common share cash dividend declared for the period
Per common share cash dividend paid in the period
Year Ended December 31,
2018
2017
2016
$
0.80
$
0.725
$
0.50
0.50
0.50
0.50
On January 16, 2019, our board of directors declared a cash dividend of $0.20 per common share for the quarterly period
ended December 31, 2018, which is payable on February 15, 2019 to shareholders of record as of January 31, 2019.
Warrants
The warrant repurchase program dated June 12, 2015, which authorized us to repurchase up to $100 million of warrants,
expired along with the warrants on May 25, 2017, at which time 293 million of unexercised warrants to buy KMI common
stock expired without the issuance of Class P common stock. Prior to expiration, each of the warrants entitled the holder to
purchase one share of our common stock for an exercise price of $40 per share, payable in cash or by cashless exercise.
Noncontrolling Interests
The caption “Noncontrolling interests” in our accompanying consolidated balance sheets consists of interests that we do
not own in the following subsidiaries (in millions):
KML(a)
Others
December 31,
2018
2017
$
$
514
339
853
$
$
1,163
325
1,488
_______
(a) The reduction in the noncontrolling interests associated with KML is primarily attributable to the accrual of the return of capital
distribution for the net proceeds from the TMPL Sale paid to KML’s Restricted Voting Shareholders on January 3, 2019 of
approximately $0.9 billion.
KML Contributions
KML Restricted Voting Shares
As discussed in Note 3, on May 30, 2017 our indirect subsidiary, KML, issued 102,942,000 restricted voting shares in a
public offering listed on the Toronto Stock Exchange. The public ownership of the KML restricted voting shares represents an
approximate 30% interest in our Canadian operations and is reflected within “Noncontrolling interests” in our consolidated
financial statements as of and for the period presented after May 30, 2017.
KML Preferred Share Offerings
On August 15, 2017, KML completed an offering of 12,000,000 cumulative redeemable minimum rate reset preferred
shares, Series 1 (Series 1 Preferred Shares) on the Toronto Stock Exchange at a price to the public of C$25.00 per Series 1
Preferred Share for total gross proceeds of C$300 million (U.S.$235 million). On December 15, 2017, KML completed an
offering of 10,000,000 cumulative redeemable minimum rate reset preferred shares, Series 3 (Series 3 Preferred Shares) on the
Toronto Stock Exchange at a price to the public of C$25.00 per Series 3 Preferred Share for total gross proceeds of C$250
million (U.S.$195 million). The net proceeds from the Series 1 and Series 3 Preferred Share offerings of C$293 million (U.S.
$230 million) and C$243 million (U.S.$189 million), respectively, were used by KML to indirectly subscribe for preferred units
in KMC LP, which in turn were used by KMC LP to repay the KML Credit Facility indebtedness recently incurred to, directly
or indirectly, finance the development, construction and completion of the TMEP and Base Line Terminal project, and for its
general corporate purposes.
117
KML Distributions
KML has a dividend policy pursuant to which it may pay a quarterly dividend on its restricted voting shares in an amount
based on a portion of its DCF. The payment of dividends is not guaranteed and the amount and timing of any dividends payable
will be at the discretion of KML’s board of directors. If declared by KML’s board of directors, KML will pay quarterly
dividends, on or about the 45th day (or next business day) following the end of each calendar quarter to holders of its restricted
voting shares of record as of the close of business on or about the last business day of the month following the end of each
calendar quarter. KML also established a Dividend Reinvestment Plan (DRIP) which allows holders (excluding holders not
resident in Canada) of restricted voting shares to elect to have any or all cash dividends payable to such shareholder
automatically reinvested in additional restricted voting shares at a price per share calculated by reference to the volume-
weighted average of the closing price of the restricted voting shares on the stock exchange on which the restricted voting shares
are then listed for the five trading days immediately preceding the relevant dividend payment date, less a discount of between
0% and 5% (as determined from time to time by KML’s board of directors, in its sole discretion).
Subsequent Event
On January 16, 2019, KML’s board of directors announced that it would suspend KML’s DRIP, effective with the payment
of the fourth quarter 2018 dividend noted above, in light of KML’s reduced need for capital.
KML also pays dividends on its Series 1 Preferred Shares and Series 3 Preferred Shares, which are fixed, cumulative,
preferential, and payable quarterly in the annual amount of C$1.3125 per share and C$1.3000 per share, respectively, on the
15th day of February, May, August and November, as and when declared by KML’s board of directors, for the initial fixed rate
period to but excluding November 15, 2022 and February 15, 2023, respectively.
During the years ended December 31, 2018 and 2017, KML paid dividends on its Restricted Voting Shares to the public
valued at $52 million and $18 million, respectively, of which $38 million and $13 million, respectively, was paid in cash. The
remaining value of $14 million and $5 million for the years ended December 31, 2018 and 2017, respectively, was paid in
1,092,791 and 418,989, respectively, KML Restricted Voting Shares. KML also paid dividends to the public on its Series 1 and
Series 3 Preferred Shares of $21 million for the year ended December 31, 2018 and on its Series 1 Preferred Shares of $3
million for the year ended December 31, 2017.
12. Related Party Transactions
Affiliate Balances
We have transactions with affiliates which consist of (i) unconsolidated affiliates in which we hold an investment
accounted for under the equity method of accounting (see Note 7 for additional information related to these investments); and
(ii) external joint venture partners of our joint ventures we consolidate, and our proportional method joint ventures, for which
we include our proportionate share of balances and activity in our financial statements. The following tables summarize our
affiliate balance sheet balances and income statement activity (in millions):
118
Balance sheet location
Accounts receivable, net
Other current assets
Deferred charges and other assets
Current portion of debt
Accounts payable
Other current liabilities
Long-term debt
Other long-term liabilities and deferred credits
Income statement location
Revenues
Services
Product sales and other
Operating Costs, Expenses and Other
Costs of sales
Other operating expenses
13. Commitments and Contingent Liabilities
Leases and Rights-of-Way Obligations
December 31,
2018
2017
$
$
$
$
$
$
48
2
55
105
6
26
7
148
34
$
221
$
Year Ended December 31,
2017
2016
2018
$
$
$
$
$
$
171
94
265
63
91
73
89
162
$
$
20
$
100
34
8
23
65
6
18
4
155
35
218
71
71
142
38
75
The table below depicts future gross minimum rental commitments under our operating leases and rights-of-way
obligations as of December 31, 2018 (in millions):
Year
2019
2020
2021
2022
2023
Thereafter
Total minimum payments
Commitment
$
$
122
107
102
97
81
353
862
The remaining terms on our operating leases, including probable elections to exercise renewal options, range from one to
thirty-five years. Total lease and rental expenses were $155 million, $140 million and $138 million for the years ended
December 31, 2018, 2017 and 2016, respectively. The amount of capital leases included within “Property, plant and equipment,
net” in our accompanying consolidated balance sheets as of December 31, 2018 and 2017 is not material to our consolidated
balance sheets.
119
Contingent Debt
Our contingent debt disclosures pertain to certain types of guarantees or indemnifications we have made and cover certain
types of guarantees included within debt agreements, even if the likelihood of requiring our performance under such guarantee
is remote.
As of December 31, 2018 and 2017, our contingent debt obligations, as well as our obligations with respect to related
letters of credit, totaled $714 million and $1,070 million, respectively. December 31, 2018 and 2017 amounts are represented
by our proportional share of the debt obligations of four and three equity investees, respectively. Under such guarantees we are
severally liable for our percentage ownership share of these equity investees’ debt issued in the event of their non-performance.
Also included in our contingent debt obligations is a guarantee of a throughput and deficiency agreement supporting certain
debt obligations of a subsidiary of our investee, Cortez Pipeline Company. Through this guarantee, we are severally liable for
approximately 50% of a Cortez Pipeline Company subsidiary’s debt obligations with respect to a $50 million credit facility and
$100 million in bonds. In addition, we have guaranteed approximately 100% of the debt issued by another Cortez Pipeline
Company subsidiary to fund an expansion project, of which debt consists of a $27 million credit facility and a $120 million
private placement note.
Guarantees and Indemnifications
We are involved in joint ventures and other ownership arrangements that sometimes require financial and performance
guarantees. In a financial guarantee, we are obligated to make payments if the guaranteed party fails to make payments under,
or violates the terms of, the financial arrangement. In a performance guarantee, we provide assurance that the guaranteed party
will execute on the terms of the contract. If they do not, we are required to perform on their behalf. We also periodically
provide indemnification arrangements related to assets or businesses we have sold. These arrangements include, but are not
limited to, indemnifications for income taxes, the resolution of existing disputes and environmental matters.
While many of these agreements may specify a maximum potential exposure, or a specified duration to the indemnification
obligation, there are also circumstances where the amount and duration are unlimited. Currently, we are not subject to any
material requirements to perform under quantifiable arrangements. We are unable to estimate a maximum exposure for our
guarantee and indemnification agreements that do not provide for limits on the amount of future payments due to the
uncertainty of these exposures.
See Note 18 for a description of matters that we have identified as contingencies requiring accrual of liabilities and/or
disclosure, including any such matters arising under guarantee or indemnification agreements.
14. Risk Management
Certain of our business activities expose us to risks associated with unfavorable changes in the market price of natural gas,
NGL and crude oil. We also have exposure to interest rate and foreign currency risk as a result of the issuance of our debt
obligations and net investments in foreign operations. Pursuant to our management’s approved risk management policy, we use
derivative contracts to hedge or reduce our exposure to some of these risks.
During the year ended December 31, 2018, due to volatility in certain basis differentials, we discontinued hedge
accounting on certain of our crude oil derivative contracts as we did not expect them to be highly effective, for accounting
purposes, in offsetting the variability in cash flows. As of December 31, 2018, these hedging relationships had been re-
designated as the effectiveness improved to required levels. As the forecasted transactions were still probable, accumulated
gains and losses prior to the discontinuance remained in “Accumulated other comprehensive loss” unless earnings were
impacted by the forecasted transactions; however, changes in the derivative contracts’ fair value subsequent to the
discontinuance of hedge accounting and prior to the re-designation were reported in earnings. Upon re-designation, we
resumed reporting changes in the derivative contracts’ fair value in “Accumulated other comprehensive income.”
120
Energy Commodity Price Risk Management
As of December 31, 2018, we had the following outstanding commodity forward contracts to hedge our forecasted energy
commodity purchases and sales:
Net open position long/(short)
Derivatives designated as hedging contracts
Crude oil fixed price
Crude oil basis
Natural gas fixed price
Natural gas basis
Derivatives not designated as hedging contracts
Crude oil fixed price
Crude oil basis
Natural gas fixed price
Natural gas basis
NGL fixed price
(21.6) MMBbl
(13.7) MMBbl
(33.3) Bcf
(26.1) Bcf
(0.5) MMBbl
(4.5) MMBbl
(4.5) Bcf
(26.9) Bcf
(3.2) MMBbl
As of December 31, 2018, the maximum length of time over which we have hedged, for accounting purposes, our
exposure to the variability in future cash flows associated with energy commodity price risk is through December 2022.
Interest Rate Risk Management
As of December 31, 2018 and 2017, we had a combined notional principal amount of $10,575 million and $9,575 million,
respectively, of fixed-to-variable interest rate swap agreements, all of which were designated as fair value hedges. All of our
swap agreements effectively convert the interest expense associated with certain series of senior notes from fixed rates to
variable rates based on an interest rate of LIBOR plus a spread and have termination dates that correspond to the maturity dates
of the related series of senior notes. As of December 31, 2018, the maximum length of time over which we have hedged a
portion of our exposure to the variability in the value of debt due to interest rate risk is through March 15, 2035.
Foreign Currency Risk Management
As of both December 31, 2018 and 2017, we had a notional principal amount of $1,358 million of cross-currency swap
agreements to manage the foreign currency risk related to our Euro denominated senior notes by effectively converting all of
the fixed-rate Euro denominated debt, including annual interest payments and the payment of principal at maturity, to U.S.
dollar denominated debt at fixed rates equivalent to approximately 3.79% and 4.67% for the 7-year and 12-year senior notes,
respectively. These cross-currency swaps are accounted for as cash flow hedges. The terms of the cross-currency swap
agreements correspond to the related hedged senior notes, and such agreements have the same maturities as the hedged senior
notes.
During the year ended December 31, 2018, we entered into foreign currency swap agreements with a combined notional
principal amount of C$2,450 million (U.S.$1,888 million). These swaps result in our selling fixed C$ and receiving fixed
U.S.$, effectively hedging the foreign currency risk associated with a substantial portion of our share of the TMPL Sale
proceeds which KML distributed on January 3, 2019, at which time the foreign currency swaps expired. These foreign
currency swaps were accounted for as net investment hedges as the foreign currency risk was related to our investment in
Canadian dollar denominated foreign operations, and the critical risks of the forward contracts coincided with those of the net
investment. As a result, the change in fair value of the foreign currency swaps while outstanding were reflected in the CTA
section of OCI.
121
Fair Value of Derivative Contracts
The following table summarizes the fair values of our derivative contracts included in our accompanying consolidated
balance sheets (in millions):
Fair Value of Derivative Contracts
Asset derivatives
December 31,
2017
2018
Fair value
Liability derivatives
December 31,
2017
2018
Fair value
Location
Derivatives designated as
hedging contracts
Energy commodity derivative contracts
(Other current liabilities)
Fair value of derivative contracts/
$
135
$
65
$
(45) $
(53)
Subtotal
Interest rate contracts
Subtotal
Foreign currency contracts
Deferred charges and other assets/
(Other long-term liabilities and
deferred credits)
Fair value of derivative contracts/
(Other current liabilities)
Deferred charges and other assets/
(Other long-term liabilities and
deferred credits)
Fair value of derivative contracts/
(Other current liabilities)
Deferred charges and other assets/
(Other long-term liabilities and
deferred credits)
Subtotal
Total
Derivatives not designated as
hedging contracts
Energy commodity derivative contracts
(Other current liabilities)
Fair value of derivative contracts/
Deferred charges and other assets/
(Other long-term liabilities and
deferred credits)
Total
Total derivatives
Effect of Derivative Contracts on the Income Statement
64
199
12
121
133
91
106
197
529
22
—
22
14
79
41
164
205
—
166
166
450
8
—
8
$
551
$
458
$
—
(45)
(37)
(78)
(115)
(6)
—
(6)
(166)
(24)
(77)
(3)
(62)
(65)
(6)
—
(6)
(148)
(5)
(22)
—
(5)
(171) $
(2)
(24)
(172)
The following tables summarize the pre-tax impact of our derivative contracts in our accompanying consolidated
statements of income (in millions):
Derivatives in fair value hedging
relationships
Location
Interest rate contracts
Hedged fixed rate debt
Interest, net
Interest, net
Gain/(loss) recognized in income on
derivatives and related hedged item
Year Ended December 31,
2018
2017
2016
(122) $
(103) $
(180)
113
$
105
$
160
$
$
122
Derivatives in
cash flow
hedging
relationships
Gain/(loss)
recognized in OCI
on derivative
(effective portion)(a)
Location
Year Ended
December 31,
Gain/(loss)
reclassified from
Accumulated OCI
into income
(effective portion)(b)
Year Ended
December 31,
Location
Gain/(loss)
recognized in
income on derivative
(ineffective portion
and amount
excluded from
effectiveness testing)
Year Ended
December 31,
Energy
commodity
derivative
contracts
Interest rate
contracts(c)
Foreign
currency
contracts
Total
2018
2017
2016
2018
2017
2016
2018
2017
2016
$ 201
$ 37
$(182)
Revenues—
Natural gas
sales
Revenues—
Product sales
and other
Costs of sales
$ (29) $ 18
$ 23
Revenues—
Natural gas
sales
(30)
21
55
14
Revenues—
Product sales
and other
233
(26) Costs of sales
$ — $ — $ —
(65)
—
11
—
(12)
—
3
—
(3)
Interest, net
(4)
(5)
(4)
Interest, net
—
—
—
(59)
190
21 Other, net
$ 145
$ 227
$(164) Total
(67)
186
$(109) $ 268
(43) Other, net
$ 183 Total
—
—
$ (65) $ 11
—
$ (12)
_______
(a) We expect to reclassify an approximate $165 million gain associated with cash flow hedge price risk management activities included in
our accumulated other comprehensive loss balance as of December 31, 2018 into earnings during the next twelve months (when the
associated forecasted transactions are also expected to occur); however, actual amounts reclassified into earnings could vary materially
as a result of changes in market prices.
(b) During the year ended December 31, 2018, we recognized a $3 million loss as a result of our equity investment’s forecasted transactions
being probable of not occurring and a $21 million gain associated with a write-down of hedged inventory. All other amounts reclassified
were the result of the hedged forecasted transactions actually affecting earnings (i.e., when the forecasted sales and purchases actually
occurred).
(c) Amounts represent our share of an equity investee’s accumulated other comprehensive income (loss).
Derivatives in
net investment
hedging
relationships
Gain/(loss)
recognized in OCI
on derivative
(effective portion)
Location
Year Ended
December 31,
Gain/(loss)
reclassified from
Accumulated OCI
into income
(effective portion)(a)
Year Ended
December 31,
Location
Gain/(loss)
recognized in
income on derivative
(ineffective portion
and amount
excluded from
effectiveness testing)
Year Ended
December 31,
2018
2017
2016
2018
2017
2016
2018
2017
2016
Foreign
currency
contracts
Total
Loss on
impairments
and
divestitures,
net
$ 91
$ — $ —
$ 26
$ — $ — Other, net
$ — $ — $ —
$ 91
$ — $ — Total
$ 26
$ — $ — Total
$ — $ — $ —
_______
(a) During the year ended December 31, 2018, we recognized a $26 million gain from our accumulated other comprehensive loss balance
related to the TMPL Sale. See Note 3.
123
Derivatives not designated as
accounting hedges
Location
Energy commodity derivative contracts Revenues—Natural gas sales
Interest rate contracts
Total(a)
Revenues—Product sales and other
Costs of sales
Interest, net
Gain/(loss) recognized in income on
derivatives
Year Ended December 31,
2018
2017
2016
$
$
$
3
(12)
2
—
(7) $
20
(16)
—
—
4
$
$
(10)
(26)
3
63
30
________
(a) For the years ended December 31, 2018, 2017 and 2016 includes approximate losses of $4 million and gains of $57 million and $73
million, respectively, associated with natural gas, crude and NGL derivative contract settlements.
Credit Risks
In conjunction with certain derivative contracts, we are required to provide collateral to our counterparties, which may
include posting letters of credit or placing cash in margin accounts. As of December 31, 2018 and 2017, we had no outstanding
letters of credit supporting our commodity price risk management program. As of December 31, 2018, we had cash margins of
$16 million posted by our counterparties with us as collateral and reported within “Other Current Liabilities” on our
accompanying consolidated balance sheet. As of December 31, 2017, we had cash margins of $1 million posted by us with our
counterparties as collateral and reported within “Restricted deposits” on our accompanying consolidated balance sheet. The
balance at December 31, 2018 consisted of initial margin requirements of $9 million offset by variation margin requirements of
$25 million. We also use industry standard commercial agreements that allow for the netting of exposures associated with
transactions executed under a single commercial agreement. Additionally, we generally utilize master netting agreements to
offset credit exposure across multiple commercial agreements with a single counterparty.
We also have agreements with certain counterparties to our derivative contracts that contain provisions requiring the
posting of additional collateral upon a decrease in our credit rating. As of December 31, 2018, based on our current mark to
market positions and posted collateral, we estimate that if our credit rating were downgraded one or two notches we would not
be required to post additional collateral.
124
Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Loss
Cumulative revenues, expenses, gains and losses that under GAAP are included within our comprehensive income but
excluded from our earnings are reported as “Accumulated other comprehensive loss” within “Stockholders’ Equity” in our
consolidated balance sheets. Changes in the components of our “Accumulated other comprehensive loss” not including non-
controlling interests are summarized as follows (in millions):
Net unrealized
gains/(losses)
on cash flow
hedge
derivatives
Foreign
currency
translation
adjustments
Pension and
other
postretirement
liability
adjustments
Total
Accumulated
other
comprehensive
loss
Balance at December 31, 2015
$
219
$
(322) $
(358) $
Other comprehensive (loss) gain before
reclassifications
Gains reclassified from accumulated other
comprehensive loss
Net current-period other comprehensive (loss)
income
Balance at December 31, 2016
Other comprehensive gain before reclassifications
Gains reclassified from accumulated other
comprehensive loss
KML IPO
Net current-period other comprehensive (loss)
income
Balance at December 31, 2017
Other comprehensive gain (loss) before
reclassifications
Losses reclassified from accumulated other
comprehensive loss(a)
Impact of adoption of ASU 2018-02 (Note 1)
(104)
(116)
(220)
(1)
145
(171)
—
(26)
(27)
111
84
(4)
34
—
34
(288)
55
—
44
99
(189)
(89)
223
(36)
(14)
—
(14)
(372)
40
—
7
47
(325)
(31)
22
(69)
Net current-period other comprehensive income
(loss)
Balance at December 31, 2018
$
191
164
$
98
(91) $
(78)
(403) $
(461)
(84)
(116)
(200)
(661)
240
(171)
51
120
(541)
(9)
329
(109)
211
(330)
_______
(a) Amounts for foreign currency translation adjustments and pension and other postretirement liability adjustments reflect the deferred
losses recognized in income during the year ended December 31, 2018 related to the TMPL Sale.
15. Fair Value
The fair values of our financial instruments are separated into three broad levels (Levels 1, 2 and 3) based on our
assessment of the availability of observable market data and the significance of non-observable data used to determine fair
value. Each fair value measurement must be assigned to a level corresponding to the lowest level input that is significant to the
fair value measurement in its entirety.
The three broad levels of inputs defined by the fair value hierarchy are as follows:
• Level 1 Inputs—quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity
has the ability to access at the measurement date;
• Level 2 Inputs—inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly or indirectly. If the asset or liability has a specified (contractual) term, a Level 2 input must be
observable for substantially the full term of the asset or liability; and
• Level 3 Inputs—unobservable inputs for the asset or liability. These unobservable inputs reflect the entity’s own
assumptions about the assumptions that market participants would use in pricing the asset or liability, and are
developed based on the best information available in the circumstances (which might include the reporting entity’s
own data).
125
Fair Value of Derivative Contracts
The following two tables summarize the fair value measurements of our (i) energy commodity derivative contracts; (ii)
interest rate swap agreements; and (iii) cross-currency swap agreements, based on the three levels established by the
Codification (in millions). The tables also identify the impact of derivative contracts which we have elected to present on our
accompanying consolidated balance sheets on a gross basis that are eligible for netting under master netting agreements.
Balance sheet asset fair value
measurements by level
Level 1 Level 2 Level 3
Gross
amount
Contracts
available
for netting
Cash
collateral
held(b)
Net
amount
As of December 31, 2018
Energy commodity derivative contracts(a) $
28
$
Interest rate contracts
Foreign currency contracts
As of December 31, 2017
$ — $
$ — $
193
133
197
$ — $
$ — $
$ — $
Energy commodity derivative contracts(a) $
17
$
70
$ — $
Interest rate contracts
Foreign currency contracts
$ — $
$ — $
205
166
$ — $
$ — $
221
133
197
87
205
166
$
$
$
$
$
$
(39) $
(7) $
(6) $
(42) $
(15) $
(6) $
(25) $
— $
— $
(12) $
— $
— $
157
126
191
33
190
160
Balance sheet liability
fair value measurements by level
Level 1 Level 2 Level 3
Gross
amount
Contracts
available
for netting
Collateral
posted(b)
Net
amount
As of December 31, 2018
Energy commodity derivative contracts(a) $
Interest rate contracts
Foreign currency contracts
As of December 31, 2017
(11) $
(39) $ — $
$ — $ (115) $ — $
(6) $ — $
$ — $
(50) $
(115) $
(6) $
Energy commodity derivative contracts(a) $
(3) $
Interest rate contracts
Foreign currency contracts
$ — $
$ — $
(98) $ — $
(65) $ — $
(6) $ — $
(101) $
(65) $
(6) $
39
7
6
42
15
6
$
$
$
$
$
$
— $
(11)
(108)
— $ —
— $
— $
(59)
(50)
— $ —
— $
_______
(a) Level 1 consists primarily of NYMEX natural gas futures. Level 2 consists primarily of OTC WTI swaps and NGL swaps.
(b) Any cash collateral paid or received is reflected in this table, but only to the extent that it represents variation margins. Any amount
associated with derivative prepayments or initial margins that are not influenced by the derivative asset or liability amounts or those that
are determined solely on their volumetric notional amounts are excluded from this table.
Fair Value of Financial Instruments
The carrying value and estimated fair value of our outstanding debt balances is disclosed below (in millions):
Total debt
December 31, 2018
December 31, 2017
Carrying
value
Estimated
fair value
Carrying
value
Estimated
fair value
$
37,324
$
37,469
$
37,843
$
40,050
We used Level 2 input values to measure the estimated fair value of our outstanding debt balance as of both December 31,
2018 and 2017.
126
16. Revenue Recognition
Adoption of Topic 606
Effective January 1, 2018, we adopted ASU No. 2014-09, “Revenue from Contracts with Customers” and the series of
related accounting standard updates that followed (collectively referred to as “Topic 606”). We utilized the modified
retrospective method to adopt Topic 606, which required us to apply the new revenue standard to (i) all new revenue contracts
entered into after January 1, 2018 and (ii) revenue contracts that were not completed as of January 1, 2018. In accordance with
this approach, our consolidated revenues for periods prior to January 1, 2018 were not revised. The cumulative effect of this
adoption of Topic 606 as of January 1, 2018 was not material.
The impact to our consolidated financial statement line items from the adoption of Topic 606 for these changes was as
follows (in millions):
Line Item
Consolidated Statement of Income
Natural gas sales
Services
Product sales and other
Total Revenues
Cost of sales
Operating Income
Year ended December 31, 2018
Amounts
Without
Adoption of
Topic 606
Effect of
Change
Increase/
(Decrease)
As
Reported
$
3,281
$
3,339
$
7,931
2,932
14,144
4,421
3,794
8,134
3,270
14,743
5,020
3,794
(58)
(203)
(338)
(599)
(599)
—
The effect-of-change amounts in the table above are attributable to the non-FERC-regulated portion of our Natural Gas
Pipelines business segment, which provides gathering, processing and processed commodity sales services for various
producers.
In those instances where we purchase and obtain control of the entire natural gas stream in our producer arrangements, we
have determined these are contracts with suppliers rather than contracts with customers, and therefore, these arrangements are
not included in the scope of Topic 606. These supplier arrangements are subject to updated guidance in ASC 705, Cost of Sales
and Services, whereby any embedded fees within such contracts, which historically have been reported as Services revenue, are
now reported as a reduction to Cost of sales upon adoption of Topic 606.
In our natural gas processing arrangements where we extract and sell the commodities derived from the processed natural
gas stream (i.e., residue gas or NGLs), we may take control of: (i) none of the commodities we sell, (ii) a portion of the
commodities we sell, or (iii) all of the commodities we sell.
In those instances where we remit all of the cash proceeds received from third parties for selling the extracted
commodities, less the fees attributable to these arrangements, we have determined that the producer has control over these
commodities. Upon adoption of Topic 606, we eliminated recording both sales revenue (Natural gas and Product) and Cost of
sales amounts and now only record fees attributable to these arrangements to Service revenues.
In other instances where we do not obtain control of the extracted commodities we sell, we are acting as an agent for the
producer and, upon adoption of Topic 606, we have continued to recognize Services revenue for the net amount of
consideration we retain in exchange for our service.
When we purchase and obtain control of a portion of the residue gas or NGLs we sell, we have determined these
arrangements contain both a supply and a service revenue element and therefore are partially in the scope of Topic 606. In
these arrangements, the producer is a supplier for the cash settled portion of the commodity we purchase and a customer with
regards to the service provided to gather and redeliver the other component. Upon adoption of Topic 606, fees attributable to
the supply element are recorded as a reduction to Cost of sales and fees attributable to the service element are recorded as
Services revenue. Previously, we recognized Services revenue for both elements.
127
Nature of Revenue by Segment
Natural Gas Pipelines Segment
We provide various types of natural gas transportation and storage services, natural gas and NGL sales contracts, and
various types of gathering and processing services for producers, including receiving, compressing, transporting and re-
delivering quantities of natural gas and/or NGLs made available to us by producers to a specified delivery location.
Natural Gas Transportation and Storage Contracts
The natural gas we receive under our transportation and storage contracts remains under the control of our customers.
Under firm service contracts, the customer generally pays a two-part transaction price that includes (i) a fixed fee reserving the
right to transport or store natural gas in our facilities up to contractually specified capacity levels (referred to as “reservation”)
and (ii) a per-unit rate for quantities of natural gas actually transported or injected into/withdrawn from storage. In our firm
service contracts we generally promise to provide a single integrated service each day over the life of the contract, which is
fundamentally a stand-ready obligation to provide services up to the customer’s reservation capacity prescribed in the contract.
Our customers have a take-or-pay payment obligation with respect to the fixed reservation fee component, regardless of the
quantities they actually transport or store. In other cases, generally described as interruptible service, there is no fixed fee
associated with these transportation and storage services because the customer accepts the possibility that service may be
interrupted at our discretion in order to serve customers who have firm service contracts. We do not have an obligation to
perform under interruptible customer arrangements until we accept and schedule the customer’s request for periodic service.
The customer pays a transaction price based on a per-unit rate for the quantities actually transported or injected into/withdrawn
from storage.
Natural Gas and NGL Sales Contracts
Our sales and purchases of natural gas and NGL are primarily accounted for on a gross basis as natural gas sales or product
sales, as applicable, and cost of sales. These customer contracts generally provide for the customer to nominate a specified
quantity of commodity products to be delivered and sold to the customers at specified delivery points. The customer pays a
transaction price typically based on a market indexed per-unit rate for the quantities sold.
Gathering and Processing Contracts
We provide various types of gathering and processing services for producers, including receiving, processing,
compressing, transporting and re-delivering quantities of natural gas made available to us by producers to a specified delivery
location. This integrated service can be firm if subject to a minimum volume commitment or acreage dedication or non-firm
when offered on an as requested, non-guaranteed basis. In our gathering contracts we generally promise to provide the
contracted integrated services each day over the life of the contract. The customer pays a transaction price typically based on a
per-unit rate for the quantities actually gathered and/or processed, including amounts attributable to deficiency quantities
associated with minimum volume contracts.
Products Pipelines Segment
We provide crude oil and refined petroleum transportation and storage services on a firm or non-firm basis. For our firm
transportation service, we typically promise to transport on a stand-ready basis the customer’s minimum volume commitment
amount. The customer is obligated to pay for its volume commitment amount, regardless of whether or not it flows volumes
into our pipeline. The customer pays a transaction price typically based on a per-unit rate for quantities transported, including
amounts attributable to deficiency quantities. Our firm storage service generally includes a fixed monthly fee for the portion of
storage capacity reserved by the customer and a per-unit rate for actual quantities injected into/withdrawn from storage. The
customer is obligated to pay the fixed monthly reservation fee, regardless of whether or not it uses our storage facility (i.e.,
take-or-pay payment obligation). Non-firm transportation and storage service is provided to our customers when and to the
extent we determine the requested capacity is available in our pipeline system and/or terminal storage facility. The customer
typically pays a per-unit rate for actual quantities of product injected into/withdrawn from storage and/or transported.
We sell transmix, crude oil or other commodity products. The customer’s contracts generally include a specified quantity
of commodity products to be delivered and sold to the customers at specified delivery points. The customer pays a transaction
price typically based on a market indexed per-unit rate for the quantities sold.
128
Terminals Segment
We provide various types of liquid tank and bulk terminal services. These services are generally comprised of inbound,
storage and outbound handling of customer products.
Liquids Tank Services
Firm Storage and Handling Contracts: We have liquids tank storage and handling service contracts that include a promised
tank storage capacity provision and prepaid volume throughput of the stored product. In these contracts, we have a stand-ready
obligation to perform this contracted service each day over the life of the contract. The customer pays a transaction price
typically in the form of a fixed monthly charge and is obligated to pay whether or not it uses the storage capacity and
throughput service (i.e., a take-or-pay payment obligation). These contracts generally include a per-unit rate for any quantities
we handle at the request of the customer in excess of the prepaid volume throughput amount and also typically include per-unit
rates for additional, ancillary services that may be periodically requested by the customer.
Firm Handling Contracts: For our firm handling service contracts, we typically promise to handle on a stand-ready basis
throughput volumes up to the customer’s minimum volume commitment amount. The customer is obligated to pay for its
minimum volume commitment amount, regardless of whether or not it used the handling service. The customer pays a
transaction price typically based on a per-unit rate for volumes handled, including amounts attributable to deficiency quantities.
Bulk Services
Our bulk storage and handling contracts generally include inbound handling of our customers’ dry bulk material product
(e.g. petcoke, metals, ores) into our storage facility and outbound handling of these products from our storage facility. These
services are provided on both a firm and non-firm basis. In our firm bulk storage and handling contracts, we are committed to
handle and store on a stand-ready basis the minimum throughput quantity of bulk materials contracted by the customer. In
some cases, the customer is obligated to pay for its minimum volume commitment amount, regardless of whether or not it uses
the storage and handling service. The customer pays a transaction price typically based on a per-unit rate for quantities
handled, including amounts attributable to deficiency quantities. For non-firm storage and handling services, the customer pays
a transaction price typically based on a per-unit rate for quantities handled on an as requested, non-guaranteed basis.
CO2 Segment
Our crude oil, NGL, CO2 and natural gas production customer sales contracts typically include a specified quantity and
quality of commodity product to be delivered and sold to the customer at a specified delivery point. The customer pays a
transaction price typically based on a market indexed per-unit rate for the quantities sold.
Kinder Morgan Canada Segment
On August 31, 2018, the assets comprising the Kinder Morgan Canada business segment were sold; therefore, this segment
will not have revenues on a prospective basis (see Note 3). Prior to the sale of these assets, we provided crude oil and refined
petroleum transportation services generally as described above for non-firm, interruptible transportation services in our
Products Pipelines business segment. The TMPL regulated tariff was designed to provide revenues sufficient to recover the
costs of providing transportation services to shippers, including a return on invested capital. TMPL’s revenue was adjusted
according to terms prescribed in our toll settlement with shippers as approved by the National Energy Board (NEB).
Differences between transportation revenue recognized pursuant to our toll settlement and actual toll receipts were recognized
as regulatory assets or liabilities and settled through future tolls.
129
Disaggregation of Revenues
The following tables present our revenues disaggregated by revenue source and type of revenue for each revenue source
(in millions):
Year ended December 31, 2018
Natural
Gas
Pipelines
Products
Pipelines
Terminals
CO2
Kinder
Morgan
Canada
Corporate
and
Eliminations
Total
Revenues from contracts with
customers(a)
Services
Firm services(b)
Fee-based services
Total services revenues
Sales
Natural gas sales
Product sales
Other sales
Total sales revenues
Total revenues from
contracts with
customers
Other revenues(c)
$
3,215
$
860
4,075
3,319
1,333
8
4,660
8,735
280
$
566
791
1,357
$
976
581
1,557
—
216
—
216
1,573
140
—
18
—
18
1,575
444
2
67
69
2
1,222
—
1,224
1,293
(38)
$
— $
(13) $
167
167
—
—
—
—
167
3
—
(13)
(11)
(1)
—
(12)
(25)
(3)
4,746
2,466
7,212
3,310
2,788
8
6,106
13,318
826
Total revenues
$
9,015
$
1,713
$
2,019
$
1,255
$
170
$
(28) $
14,144
_______
(a) Differences between the revenue classifications presented on the consolidated statements of income and the categories for the
disaggregated revenues by type of revenue above are primarily attributable to revenues reflected in the “Other revenues” category above
(see note (c) below).
(b) Includes non-cancellable firm service customer contracts with take-or-pay or minimum volume commitment elements, including those
contracts where both the price and quantity amount are fixed. Excludes service contracts with indexed-based pricing, which along with
revenues from other customer service contracts are reported as Fee-based services.
(c) Amounts recognized as revenue under guidance prescribed in Topics of the Accounting Standards Codification other than in Topic 606
and primarily include leases and derivatives. The majority of our lease revenues are from certain firm service contracts that are
accounted for as operating leases. See Note 14 for additional information related to our derivative contracts.
Contract Balances
Contract assets and contract liabilities are the result of timing differences between revenue recognition, billings and cash
collections. We recognize contract assets in those instances where billing occurs subsequent to revenue recognition, and our
right to invoice the customer is conditioned on something other than the passage of time. Our contract assets are substantially
related to breakage revenue associated with our firm service contracts with minimum volume commitment payment obligations
and contracts where we apply revenue levelization (i.e., contracts with fixed rates per volume that increase over the life of the
contract for which we record revenue ratably per unit over the life of the contract based on our performance obligations that are
generally unchanged over the life of the contract). Our contract liabilities are substantially related to (i) capital improvements
paid for in advance by certain customers generally in our non-regulated businesses, which we subsequently recognize as
revenue on a straight-line basis over the initial term of the related customer contracts; (ii) consideration received from
customers for temporary deficiency quantities under minimum volume contracts that we expect will be made up in a future
period, which we subsequently recognize as revenue when the customer makes up the volumes or the likelihood that the
customer will exercise its right for deficiency volumes becomes remote (e.g., there is insufficient capacity to make up the
volumes, the deficiency makeup period expires); and (iii) contracts with fixed rates per volume that decrease over the life of the
contract where we apply revenue levelization for amounts received for our future performance obligations.
130
The following table presents the activity in our contract assets and liabilities (in millions):
Contract Assets
Balance at January 1, 2018
Additions
Transfer to Accounts receivable
Balance at December 31, 2018(a)
Contract Liabilities
Balance at January 1, 2018
Additions
Transfer to Revenues
Other(b)
Balance at December 31, 2018(c)
Year ended
December 31, 2018
$
$
$
$
32
59
(67)
24
206
453
(360)
(7)
292
_______
(a) Includes current and non-current balances of $14 million and $10 million reported within “Other current assets” and “Deferred charges
and other assets,” respectively, in our accompanying consolidated balance sheet at December 31, 2018.
(b) Includes 2018 foreign currency translation adjustments associated with the balances at December 31, 2017.
(c) Includes current and non-current balances of $80 million and $212 million reported within “Other current liabilities” and “Other long-
term liabilities and deferred credits,” respectively, in our accompanying consolidated balance sheet at December 31, 2018.
Revenue Allocated to Remaining Performance Obligations
The following table presents our estimated revenue allocated to remaining performance obligations for contracted revenue
that has not yet been recognized, representing our “contractually committed” revenue as of December 31, 2018 that we will
invoice or transfer from contract liabilities and recognize in future periods (in millions):
Year
2019
2020
2021
2022
2023
Thereafter
Total
Estimated
Revenue
4,881
4,182
3,528
3,011
2,497
14,138
32,237
$
$
Our contractually committed revenue, for purposes of the tabular presentation above, is generally limited to service or
commodity sale customer contracts which have fixed pricing and fixed volume terms and conditions, generally including
contracts with take-or-pay or minimum volume commitment payment obligations. Our contractually committed revenue
amounts generally exclude, based on the following practical expedients that we elected to apply, remaining performance
obligations for: (i) contracts with index-based pricing or variable volume attributes in which such variable consideration is
allocated entirely to a wholly unsatisfied performance obligation or to a wholly unsatisfied promise to transfer a distinct service
that forms part of a series of distinct services; (ii) contracts with an original expected duration of one year or less; and (iii)
contracts for which we recognize revenue at the amount for which we have the right to invoice for services performed.
17. Reportable Segments
Our reportable business segments are:
• Natural Gas Pipelines—the ownership and operation of (i) major interstate and intrastate natural gas pipeline and
storage systems; (ii) natural gas and crude oil gathering systems and natural gas processing and treating facilities; (iii)
NGL fractionation facilities and transportation systems; and (iv) LNG facilities;
•
Products Pipelines—the ownership and operation of refined petroleum products, NGL and crude oil and condensate
pipelines that primarily deliver, among other products, gasoline, diesel and jet fuel, propane, ethane, crude oil and
131
condensate to various markets, plus the ownership and/or operation of associated product terminals and petroleum
pipeline transmix facilities;
• Terminals—the ownership and/or operation of (i) liquids and bulk terminal facilities located throughout the U.S. and
portions of Canada that transload and store refined petroleum products, crude oil, ethanol and chemicals, and bulk
products, including petroleum coke, metals and ores; and (ii) Jones Act tankers;
• CO2—(i) the production, transportation and marketing of CO2 to oil fields that use CO2 as a flooding medium to
increase recovery and production of crude oil from mature oil fields; (ii) ownership interests in and/or operation of oil
fields and gas processing plants in West Texas; and (iii) the ownership and operation of a crude oil pipeline system in
West Texas; and
• Kinder Morgan Canada (prior to August 31, 2018)—the ownership and operation of the Trans Mountain pipeline
system that transports crude oil and refined petroleum products from Edmonton, Alberta, Canada to marketing
terminals and refineries in British Columbia, Canada and the state of Washington. As a result of the TMPL Sale, this
segment does not have results of operations on a prospective basis.
We evaluate performance principally based on each segment’s EBDA, which excludes general and administrative
expenses, interest expense, net, and income tax expense. Our reportable segments are strategic business units that offer
different products and services, and they are structured based on how our chief operating decision makers organize their
operations for optimal performance and resource allocation. Each segment is managed separately because each segment
involves different products and marketing strategies.
We consider each period’s earnings before all non-cash DD&A expenses to be an important measure of business segment
performance for our reporting segments. We account for intersegment sales at market prices, while we account for asset
transfers at either market value or, in some instances, book value.
During 2018, 2017 and 2016, we did not have revenues from any single external customer that exceeded 10% of our
consolidated revenues.
132
Financial information by segment follows (in millions):
Revenues
Natural Gas Pipelines
Revenues from external customers
$
9,004
$
8,608
$
7,998
Year Ended December 31,
2018
2017
2016
Intersegment revenues
Products Pipelines
Revenues from external customers
Intersegment revenues
Terminals
Revenues from external customers
Intersegment revenues
CO2
Kinder Morgan Canada
Corporate and intersegment eliminations(a)
Total consolidated revenues
Operating expenses(b)
Natural Gas Pipelines
Products Pipelines
Terminals
CO2
Kinder Morgan Canada
Corporate and intersegment eliminations
Total consolidated operating expenses
Other expense (income)(c)
Natural Gas Pipelines
Products Pipelines
Terminals
CO2
Kinder Morgan Canada
Corporate
11
1699
14
2,017
2
1,255
170
(28)
14,144
$
10
1645
16
1,965
1
1,196
256
8
7
1631
18
1,921
1
1,221
253
8
$
13,705
$
13,058
Year Ended December 31,
2018
2017
2016
$
5,353
$
5,457
$
4,393
594
818
453
72
(2)
7,288
$
$
487
788
394
95
(6)
7,215
573
768
399
87
2
$
6,222
Year Ended December 31,
2018
2017
2016
$
593
$
26
$
34
54
79
(596)
—
—
(14)
(1)
—
1
12
$
199
76
99
19
—
(7)
386
Total consolidated other expense (income)
$
164
$
133
DD&A
Natural Gas Pipelines
Products Pipelines
Terminals
CO2
Kinder Morgan Canada
Corporate
Year Ended December 31,
2018
2017
2016
$
1,058
$
1,011
$
1,041
228
484
473
29
25
216
472
493
46
23
221
435
446
44
22
Total consolidated DD&A
$
2,297
$
2,261
$
2,209
Earnings from equity investments and amortization of excess cost of equity
investments, including loss on impairments
Natural Gas Pipelines
Products Pipelines
Terminals
CO2
Total consolidated equity earnings
Year Ended December 31,
2018
2017
2016
$
$
391
$
253
$
75
22
34
48
24
42
522
$
367
$
(269)
56
19
22
(172)
Year Ended December 31,
2018
2017
2016
Other, net-income (expense)
Natural Gas Pipelines
Products Pipelines
Terminals
Kinder Morgan Canada
Corporate
$
37
$
3
2
26
39
Total consolidated other, net-income (expense)
$
107
$
49
(1)
8
25
16
97
$
$
19
2
4
15
38
78
134
Segment EBDA(d)
Natural Gas Pipelines
Products Pipelines
Terminals
CO2
Kinder Morgan Canada
Total segment EBDA
DD&A
Amortization of excess cost of equity investments
General and administrative and corporate charges
Interest, net
Income tax expense
Total consolidated net income
Capital expenditures
Natural Gas Pipelines
Products Pipelines
Terminals
CO2
Kinder Morgan Canada
Corporate
Year Ended December 31,
2018
2017
2016
$
3,580
$
3,487
$
1,173
1,171
759
720
7,403
(2,297)
(95)
(588)
(1,917)
(587)
1,919
$
1,231
1,224
847
186
6,975
(2,261)
(61)
(660)
(1,832)
(1,938)
223
$
$
3,211
1,067
1,078
827
181
6,364
(2,209)
(59)
(652)
(1,806)
(917)
721
Year Ended December 31,
2018
2017
2016
$
1,620
$
1,376
$
1,227
150
380
397
332
25
127
888
436
338
23
244
983
276
124
28
Total consolidated capital expenditures
$
2,904
$
3,188
$
2,882
Investments at December 31
Natural Gas Pipelines
Products Pipelines
Terminals
CO2
Kinder Morgan Canada
2018
2017
$
6,358
$
6,218
839
268
16
—
777
263
6
34
Total consolidated investments $
7,481
$
7,298
135
Assets at December 31
Natural Gas Pipelines
Products Pipelines
Terminals
CO2
Kinder Morgan Canada
Corporate assets(e)
2018
2017
$
51,562
$
51,173
8,429
9,283
3,928
—
5,664
8,539
9,935
3,946
2,080
3,382
Total consolidated assets
$
78,866
$
79,055
_______
(a) 2017 and 2016 amounts include a management fee of $35 million and $34 million, respectively, for services we perform as operator of
an equity investee.
(b) Includes costs of sales, operations and maintenance expenses, and taxes, other than income taxes.
(c) Includes loss on impairments and divestitures, net and other income, net.
(d) Includes revenues, earnings from equity investments, other, net, less operating expenses, loss on impairments and divestitures, net, loss
on impairments and divestitures of equity investments, net and other income, net.
(e) Includes cash and cash equivalents, margin and restricted deposits, certain prepaid assets and deferred charges, including income tax
related assets, risk management assets related to debt fair value adjustments, corporate headquarters in Houston, Texas and
miscellaneous corporate assets (such as information technology, telecommunications equipment and legacy activity) not allocated to our
reportable segments.
We do not attribute interest and debt expense to any of our reportable business segments.
Following is geographic information regarding the revenues and long-lived assets of our business (in millions):
Revenues from external customers
U.S.
Canada
Mexico and other foreign
Total consolidated revenues from external customers
Long-term assets, excluding goodwill and other intangibles
U.S.
Canada
Mexico and other foreign
Total consolidated long-lived assets
18. Litigation, Environmental and Other Contingencies
Year Ended December 31,
2018
2017
2016
13,596
$
13,073
$
12,459
447
101
503
129
483
116
14,144
$
13,705
$
13,058
December 31,
2018
2017
2016
47,468
$
47,928
$
49,125
748
83
3,071
80
2,399
82
48,299
$
51,079
$
51,606
$
$
$
$
We and our subsidiaries are parties to various legal, regulatory and other matters arising from the day-to-day operations of
our businesses or certain predecessor operations that may result in claims against the Company. Although no assurance can be
given, we believe, based on our experiences to date and taking into account established reserves and insurance, that the ultimate
resolution of such items will not have a material adverse impact on our business, financial position, results of operations or
dividends to our shareholders. We believe we have meritorious defenses to the matters to which we are a party and intend to
vigorously defend the Company. When we determine a loss is probable of occurring and is reasonably estimable, we accrue an
undiscounted liability for such contingencies based on our best estimate using information available at that time. If the
estimated loss is a range of potential outcomes and there is no better estimate within the range, we accrue the amount at the low
end of the range. We disclose contingencies where an adverse outcome may be material or, in the judgment of management,
we conclude the matter should otherwise be disclosed.
136
FERC Proceedings
FERC Rulemaking on Tax Cuts and Jobs Act for Jurisdictional Natural Gas Pipelines
On March 15, 2018, FERC issued a notice of proposed rule-making (NOPR) which proposed a process to implement for
ratemaking purposes the 2017 Tax Reform. The NOPR proposed that each regulated interstate natural gas pipeline make a
mandatory filing (Form 501-G) to reflect, based upon certain required assumptions, the rate impact of the reduced statutory
corporate tax rate, and in the case of master limited partnerships and other pass-through entities, the elimination of an income
tax allowance and unspecified resulting treatment of accumulated deferred income tax (ADIT) in the cost of service. The
NOPR also provided four options for regulated entities to consider: (1) make a limited filing under section 4 of the NGA to
reduce rates for the impact of the 2017 Tax Reform; (2) commit to file a general section 4 rate case in the near future; (3) file an
explanation why no rate change is needed, or (4) take no further action other than filing the required Form 501-G report. On
July 18, 2018, FERC issued Order No. 849 (Final Rule) promulgating a final rule to implement the 2017 Tax Reform for
jurisdictional natural gas pipelines. The Final Rule continues to require the regulated interstate pipelines to file the Form 501-G
reflecting certain mandatory assumptions. The Final Rule also maintains substantially the same four options for regulated
entities to implement the reduced corporate tax rate. The Final Rule clarifies that pass-through entities whose income
consolidates up to a federal income tax paying entity are eligible for a tax allowance. It also clarifies that the required filing is
a one-time informational filing and that FERC is not mandating any adjustment in rates as a function of complying with the
Final Rule. Companies are also allowed to file an addendum which may reflect an income tax allowance, alternative capital
structure and alternative equity returns. The Final Rule establishes a presumption that negotiated rate contracts should not be
disturbed. Kinder Morgan filed for rehearing of the Final Rule, but also filed the required Form 501-G filings. We continue to
believe any initial, downward rate pressure will be mitigated and spread out over multiple years given the procedural options
presented in the Final Rule, the prospective nature of rate changes under section 5 of the NGA and the fact that the FERC
affirmed its intention to respect negotiated rate contracts. Many of our transportation and storage services are rendered
pursuant to negotiated rate agreements that, consistent with the Final Rule, will not be subject to adjustment due to changes in
tax law. Also, many of our current transactions are provided at discounted rates that are below maximum tariff rates, many of
which would not be impacted by a change in the maximum tariff rate. Further, on many of our pipelines we are operating
under settlements that preclude customers from requesting rate changes at the FERC during the life of the settlement.
SFPP
The tariffs and rates charged by SFPP are subject to a number of ongoing proceedings at the FERC, including the
complaints and protests of various shippers, the most recent of which was filed in 2015 (docketed at OR16-6) challenging
SFPP’s filed East Line rates. In general, these complaints and protests allege the rates and tariffs charged by SFPP are not just
and reasonable under the Interstate Commerce Act (ICA). In some of these proceedings shippers have challenged the overall
rate being charged by SFPP, and in others the shippers have challenged SFPP’s index-based rate increases. If the shippers
prevail on their arguments or claims, they are entitled to seek reparations (which may reach back up to two years prior to the
filing date of their complaints) or refunds of any excess rates paid, and SFPP may be required to reduce its rates going forward.
These proceedings tend to be protracted, with decisions of the FERC often appealed to the federal courts. The issues involved
in these proceedings include, among others, whether indexed rate increases are justified, and the appropriate level of return and
income tax allowance SFPP may include in its rates. On March 22, 2016, the D.C. Circuit issued a decision in United Airlines,
Inc. v. FERC remanding to FERC for further consideration of two issues: (1) the appropriate data to be used to determine the
return on equity for SFPP in the underlying docket, and (2) the just and reasonable return to be provided to a tax pass-through
entity that includes an income tax allowance in its underlying cost of service. On July 21, 2017, an initial decision by the
Administrative Law Judge (ALJ) in OR16-6 concluded that the Complainants are due reparations, with appropriate interest,
equal to the difference between what SFPP collected from the Complainants for service on the East Line and the amounts SFPP
would have collected had it charged just and reasonable rates for that line. The ALJ ruled that an income tax allowance should
be included in the cost of service both to determine reparations and to set going forward rates, and found that the new just and
reasonable rates are not knowable until the FERC reviews the initial decision and orders a compliance filing. The FERC will
determine which portions of the initial decision to affirm, reject or amend. On March 15, 2018, the FERC announced certain
policy changes including a Revised Policy Statement on Treatment of Income Taxes (Revised Policy Statement) and, that same
day, the FERC issued orders in a series of pending SFPP proceedings which combined to deny income tax allowance to SFPP,
direct SFPP to make compliance filings in its 2008 and 2009 rate filing dockets, and restart the 2011 SFPP complaint
proceeding which had been abated. Requests for rehearing were filed in the Revised Policy Statement docket as well as the
SFPP dockets in which the Revised Policy Statement was applied. The requests for rehearing in the SFPP dockets remain
pending at the FERC. On July 18, 2018, the FERC issued an Order on Rehearing in the Revised Policy Statement docket in
which it denied the rehearing petitions and clarified that the issue of entitlement to an income tax allowance will continue to be
resolved in individual proceedings, including proceedings involving income tax pass-through entities. The FERC also clarified
137
that when an income tax allowance is eliminated from cost of service, previously ADIT balances associated with such income
tax allowance may also be eliminated. SFPP along with another pipeline entity appealed the Revised Policy Statement along
with the Order on Rehearing to the D.C. Circuit. With respect to the various SFPP related complaints and protest proceedings
at the FERC, we estimate that the shippers are seeking approximately $30 million in annual rate reductions and approximately
$330 million in refunds. Management believes SFPP has meritorious arguments supporting SFPP’s rates and intends to
vigorously defend SFPP against these complaints and protests. However, to the extent the shippers are successful in one or
more of the complaints or protest proceedings, SFPP estimates that applying the principles of FERC precedent, as applicable, to
pending SFPP cases would result in rate reductions and refunds substantially lower than those sought by the shippers.
EPNG
The tariffs and rates charged by EPNG are subject to two ongoing FERC proceedings (the “2008 rate case” and the “2010
rate case”). With respect to the 2008 rate case, the FERC issued its decision (Opinion 517-A) in July 2015. The FERC
generally upheld its prior determinations, ordered refunds to be paid within 60 days, and stated that it will apply its findings in
Opinion 517-A to the same issues in the 2010 rate case. All refund obligations related to the 2008 rate case were satisfied
during calendar year 2015. EPNG sought federal appellate review of Opinion 517-A and oral arguments were held on February
15, 2017. On February 21, 2017, the reviewing court delayed the case until the FERC rules on the rehearing requests pending in
the 2010 Rate Case. With respect to the 2010 rate case, the FERC issued its decision (Opinion 528-A) on February 18, 2016.
The FERC generally upheld its prior determinations, affirmed prior findings of an Administrative Law Judge that certain
shippers qualify for lower rates and required EPNG to file revised pro forma recalculated rates consistent with the terms of
Opinions 517-A and 528-A. On May 3, 2018, the FERC issued Opinion 528-B upholding its decisions in Opinion 528-A and
requiring EPNG to implement the rates required by its rulings and provide refunds within 60 days. On July 2, 2018, EPNG
reported to the FERC the refund calculations, and that the refunds had been provided as ordered. Also on July 2, 2018, EPNG
initiated appellate review of Opinions 528, 528-A and 528-B. On August 23, 2018, the reviewing court established a briefing
schedule and consolidated EPNG’s delayed appeal from the 2008 rate case, EPNG’s appeal from the 2010 rate case, and the
intervenors’ delayed appeal in the 2010 case. In accordance with that schedule, EPNG and the intervenors filed their initial
briefs on January 8, 2019.
Other Commercial Matters
Union Pacific Railroad Company Easements Landowner Litigation
A purported class action lawsuit was filed in 2015 in a U.S. District Court in California against Union Pacific Railroad
Company (UPRR), SFPP, KMGP and Kinder Morgan Operating L.P. “D” by private landowners who claimed to be the lawful
owners of subsurface real property allegedly used or occupied by UPRR or SFPP for pipeline easements on rights-of-way held
by UPRR. Substantially similar follow-on lawsuits were filed in federal courts by landowners in Nevada, Arizona and New
Mexico. These suits, which were brought purportedly as class actions on behalf of all landowners who own land in fee adjacent
to and underlying the railroad easement under which the SFPP pipeline is located in those respective states, asserted claims
alleging that the defendants’ occupation and use of the subsurface real property was improper. Plaintiffs’ motions for class
certification were denied by the federal courts in Arizona and California. The Ninth Circuit Court of Appeals denied
interlocutory review of the class certification decisions, and the New Mexico and Nevada lawsuits were stayed. All pending
lawsuits have now been settled or dismissed on terms that are not material to KMI’s results of operations, cash flows or
dividends to shareholders.
Gulf LNG Facility Arbitration
On March 1, 2016, Gulf LNG Energy, LLC and Gulf LNG Pipeline, LLC (GLNG) received a Notice of Disagreement and
Disputed Statements and a Notice of Arbitration from Eni USA Gas Marketing LLC (Eni USA), one of two companies that
entered into a terminal use agreement for capacity of the Gulf LNG Facility in Mississippi for an initial term that was not
scheduled to expire until the year 2031. Eni USA is an indirect subsidiary of Eni S.p.A., a multi-national integrated energy
company headquartered in Milan, Italy. Pursuant to its Notice of Arbitration, Eni USA sought declaratory and monetary relief
based upon its assertion that (i) the terminal use agreement should be terminated because changes in the U.S. natural gas
market since the execution of the agreement in December 2007 have “frustrated the essential purpose” of the agreement and (ii)
activities allegedly undertaken by affiliates of Gulf LNG Holdings Group LLC “in connection with a plan to convert the LNG
Facility into a liquefaction/export facility have given rise to a contractual right on the part of Eni USA to terminate” the
agreement. A three-member arbitration panel conducted an arbitration hearing in January 2017. On June 29, 2018, the
arbitration panel delivered its Award, and the panel's ruling calls for the termination of the agreement and Eni USA's payment
of compensation to GLNG. The Award resulted in our recording a net loss in the second quarter of 2018 of our equity
investment in GLNG due to a non-cash impairment of our investment in GLNG partially offset by our share of earnings
138
recognized by GLNG. On September 25, 2018, GLNG filed a lawsuit against Eni USA in the Delaware Court of Chancery to
enforce the Award. On February 1, 2019, the Delaware Court of Chancery issued a Final Order and Judgment confirming the
Award. On September 28, 2018, GLNG filed a lawsuit against Eni S.p.A. in the Supreme Court of the State of New York in
New York County to enforce a Guarantee Agreement entered by Eni S.p.A. in connection with the terminal use agreement. On
December 12, 2018, Eni S.p.A. filed a counterclaim seeking unspecified damages from GLNG. GLNG intends to vigorously
prosecute and defend both lawsuits.
Brinckerhoff Merger Litigation
In April 2017, a purported class action suit was filed in the Delaware Court of Chancery by Peter Brinckerhoff, a former
EPB unitholder on behalf of a class of former unaffiliated unitholders of EPB, seeking to challenge the $9.2 billion merger of
EPB into a subsidiary of KMI as part of a series of transactions in November 2014 whereby KMI acquired all of the
outstanding equity interests in KMP, Kinder Morgan Management, LLC and EPB that KMI and its subsidiaries did not already
own. The suit alleged that the merger consideration did not sufficiently compensate EPB unitholders for the value of three
derivative suits concerning drop down transactions which the derivative plaintiff lost standing to pursue after the merger. The
suit claimed that the alleged failure to obtain sufficient merger consideration for the drop down lawsuits constituted a breach of
the EPB limited partnership agreement and the implied covenant of good faith and fair dealing. The suit also asserted claims
against KMI and certain individual defendants for allegedly tortiously interfering with and/or aiding and abetting the alleged
breach of the limited partnership agreement. In November 2017, the Court dismissed the suit in its entirety. On June 8, 2018,
the Delaware Supreme Court affirmed the dismissal. Also in November 2017, counsel for Brinckerhoff filed a separate lawsuit
against KMEP and KMI seeking to recover up to $44 million in attorneys’ fees allegedly incurred in connection with the
assertion of derivative claims that Brinckerhoff lost standing to pursue. On April 9, 2018, the Court dismissed the suit in its
entirety, and that dismissal is final.
Price Reporting Litigation
Beginning in 2003, several lawsuits were filed by purchasers of natural gas against El Paso Corporation, El Paso
Marketing L.P. and numerous other energy companies based on a claim under state antitrust law that such defendants conspired
to manipulate the price of natural gas by providing false price information to industry trade publications that published gas
indices. Several of the cases were previously settled or dismissed, except for two cases pending in a U.S. District Court in
Nevada, including a lawsuit brought by an industrial consumer in Kansas in which approximately $500 million in damages plus
interest was alleged against all defendants, and a Wisconsin class action in which approximately $300 million in damages plus
interest has been alleged against all defendants. The Kansas case has now been settled, and a settlement in principal has been
reached in the Wisconsin class action that will require class notice and court approval in 2019. The amount to be paid in
settlement of these matters is not material to our results of operations, cash flows or dividends to shareholders.
Pipeline Integrity and Releases
From time to time, despite our best efforts, our pipelines experience leaks and ruptures. These leaks and ruptures may
cause explosions, fire, and damage to the environment, damage to property and/or personal injury or death. In connection with
these incidents, we may be sued for damages caused by an alleged failure to properly mark the locations of our pipelines and/or
to properly maintain our pipelines. Depending upon the facts and circumstances of a particular incident, state and federal
regulatory authorities may seek civil and/or criminal fines and penalties.
General
As of December 31, 2018 and 2017, our total reserve for legal matters was $207 million and $350 million, respectively.
The reduction in the reserve primarily resulted from the payment of refunds in the EPNG rate case matter discussed above in
“—FERC Proceedings—EPNG.” The remaining reserve primarily relates to various claims from regulatory proceedings
arising in our Products Pipelines business segment.
Environmental Matters
We and our subsidiaries are subject to environmental cleanup and enforcement actions from time to time. In particular,
CERCLA generally imposes joint and several liability for cleanup and enforcement costs on current and predecessor owners
and operators of a site, among others, without regard to fault or the legality of the original conduct, subject to the right of a
liable party to establish a “reasonable basis” for apportionment of costs. Our operations are also subject to federal, state and
local laws and regulations relating to protection of the environment. Although we believe our operations are in substantial
compliance with applicable environmental laws and regulations, risks of additional costs and liabilities are inherent in pipeline,
139
terminal and CO2 field and oil field operations, and there can be no assurance that we will not incur significant costs and
liabilities. Moreover, it is possible that other developments, such as increasingly stringent environmental laws, regulations and
enforcement policies under the terms of authority of those laws, and claims for damages to property or persons resulting from
our operations, could result in substantial costs and liabilities to us.
We are currently involved in several governmental proceedings involving alleged violations of environmental and safety
regulations, including alleged violations of the Risk Management Program and leak detection and repair requirements of the
Clean Air Act. As we receive notices of non-compliance, we attempt to negotiate and settle such matters where appropriate.
These alleged violations may result in fines and penalties, but we do not believe any such fines and penalties, individually or in
the aggregate, will be material. We are also currently involved in several governmental proceedings involving groundwater and
soil remediation efforts under administrative orders or related state remediation programs. We have established a reserve to
address the costs associated with the remediation.
In addition, we are involved with and have been identified as a potentially responsible party in several federal and state
superfund sites. Environmental reserves have been established for those sites where our contribution is probable and
reasonably estimable. In addition, we are from time to time involved in civil proceedings relating to damages alleged to have
occurred as a result of accidental leaks or spills of refined petroleum products, NGL, natural gas and CO2.
Portland Harbor Superfund Site, Willamette River, Portland, Oregon
In December 2000, the EPA issued General Notice letters to potentially responsible parties including GATX Terminals
Corporation (n/k/a KMLT). At that time, GATX owned two liquids terminals along the lower reach of the Willamette River, an
industrialized area known as Portland Harbor. Portland Harbor is listed on the National Priorities List and is designated as a
Superfund Site under CERCLA. A group of potentially responsible parties formed what is known as the Lower Willamette
Group (LWG), of which KMLT is a non-voting member. The LWG agreed to conduct the remedial investigation and feasibility
study (RI/FS) leading to the proposed remedy for cleanup of the Portland Harbor site. The EPA issued the FS and the Proposed
Plan on June 8, 2016 which included a proposed combination of dredging, capping, and enhanced natural recovery. On January
6, 2017, the EPA issued its Record of Decision (ROD) for the final cleanup plan. The final remedy is more stringent than the
remedy proposed in the EPA’s Proposed Plan. The estimated cost increased from approximately $750 million to approximately
$1.1 billion, and active cleanup is now expected to take as long as 13 years to complete. KMLT and 90 other parties are
involved in a non-judicial allocation process to determine each party’s respective share of the cleanup costs. We are
participating in the allocation process on behalf of KMLT and KMBT in connection with their current or former ownership or
operation of four facilities located in Portland Harbor. Our share of responsibility for Portland Harbor Superfund Site costs will
not be determined until the ongoing non-judicial allocation process is concluded in several years or a lawsuit is filed that results
in a judicial decision allocating responsibility. Until the allocation process is completed, we are unable to reasonably estimate
the extent of our liability for the costs related to the design of the proposed remedy and cleanup of the site. In addition to
CERCLA cleanup costs, we are reviewing and will attempt to settle, if possible, natural resource damage (NRD) claims
asserted by state and federal trustees following their natural resource assessment of the site. At this time, we are unable to
reasonably estimate the extent of our potential NRD liability.
Roosevelt Irrigation District v. Kinder Morgan G.P., Inc., Kinder Morgan Energy Partners, L.P., U.S. District Court,
Arizona
The Roosevelt Irrigation District filed a lawsuit in 2010 against KMGP, KMEP and others under CERCLA for alleged
contamination of the water purveyor’s wells. The First Amended Complaint sought $175 million in damages from
approximately 70 defendants. KMGP was dismissed from the suit. On August 6, 2013, plaintiffs filed their Second Amended
Complaint seeking monetary damages in unspecified amounts and reducing the number of defendants to 26 including KMEP
and SFPP. The claims against KMEP and SFPP were related to alleged releases from a specific parcel within the SFPP Phoenix
Terminal and the alleged impact of such releases on water wells owned by the plaintiffs and located in the vicinity of the
Terminal. During the first quarter of 2018, KMEP and SFPP settled all claims made by the Roosevelt Irrigation District on
terms that are not material to KMI’s results of operations, cash flows or dividends to shareholders.
Uranium Mines in Vicinity of Cameron, Arizona
In the 1950s and 1960s, Rare Metals Inc., a historical subsidiary of EPNG, mined approximately twenty uranium mines in
the vicinity of Cameron, Arizona, many of which are located on the Navajo Indian Reservation. The mining activities were in
response to numerous incentives provided to industry by the U.S. to locate and produce domestic sources of uranium to support
the Cold War-era nuclear weapons program. In May 2012, EPNG received a general notice letter from the EPA notifying
EPNG of the EPA’s investigation of certain sites and its determination that the EPA considers EPNG to be a potentially
140
responsible party within the meaning of CERCLA. In August 2013, EPNG and the EPA entered into an Administrative Order
on Consent and Scope of Work pursuant to which EPNG is conducting a radiological assessment of the surface of the mines
and the immediate vicinity. On September 3, 2014, EPNG filed a complaint in the U.S. District Court for the District of
Arizona seeking cost recovery and contribution from the applicable federal government agencies toward the cost of
environmental activities associated with the mines, given the U.S. is the owner of the Navajo Reservation, the U.S.’s
exploration and reclamation activities at the mines, and the pervasive control of such federal agencies over all aspects of the
nuclear weapons program. Defendants filed an answer and counterclaims seeking contribution and recovery of response costs
allegedly incurred by the federal agencies in investigating uranium impacts on the Navajo Reservation. The counterclaim of
defendant EPA has been settled, and no viable claims for reimbursement by the other defendants are known to exist. In August
2017, the District Court found the U.S. liable under CERCLA as owner of the Navajo Reservation. The matter seeking cost
recovery and contribution from federal government agencies is set for trial in February 2019. We intend to continue to
prosecute and defend this case vigorously.
Lower Passaic River Study Area of the Diamond Alkali Superfund Site, Essex, Hudson, Bergen and Passaic Counties, New
Jersey
EPEC Polymers, Inc. (EPEC Polymers) and EPEC Oil Company Liquidating Trust (EPEC Oil Trust), former El Paso
Corporation entities now owned by KMI, are involved in an administrative action under CERCLA known as the Lower Passaic
River Study Area Superfund Site (Site) concerning the lower 17-mile stretch of the Passaic River. It has been alleged that EPEC
Polymers and EPEC Oil Trust may be potentially responsible parties (PRPs) under CERCLA based on prior ownership and/or
operation of properties located along the relevant section of the Passaic River. EPEC Polymers and EPEC Oil Trust entered into
two Administrative Orders on Consent (AOCs) which obligate them to investigate and characterize contamination at the Site.
They are also part of a joint defense group of approximately 44 cooperating parties, referred to as the Cooperating Parties
Group (CPG), which has entered into AOCs and is directing and funding the work required by the EPA. Under the first AOC,
draft remedial investigation and feasibility studies (RI/FS) of the Site were submitted to the EPA in 2015, and EPA approval
remains pending. Under the second AOC, the CPG members conducted a CERCLA removal action at the Passaic River Mile
10.9, and the group is currently conducting EPA-directed post-remedy monitoring in the removal area. We have established a
reserve for the anticipated cost of compliance with the AOCs.
On April 11, 2014, the EPA announced the issuance of its Focused Feasibility Study (FFS) for the lower eight miles of the
Passaic River Study Area, and its proposed plan for remedial alternatives to address the dioxin sediment contamination from
the mouth of Newark Bay to River Mile 8.3. The EPA estimates the cost for the alternatives will range from $365 million to
$3.2 billion. The EPA’s preferred alternative would involve dredging the river bank-to-bank and installing an engineered cap at
an estimated cost of $1.7 billion. On March 4, 2016, the EPA issued its Record of Decision (ROD) for the lower eight miles of
the Passaic River Study area. The final cleanup plan in the ROD is substantially similar to the EPA’s preferred alternative
announced on April 11, 2014. On October 5, 2016, the EPA entered into an AOC with Occidental Chemical Company (OCC),
a member of the PRP group requiring OCC to spend an estimated $165 million to perform engineering and design work
necessary to begin the cleanup of the lower eight miles of the Passaic River. The design work is expected to take four years to
complete and the cleanup is expected to take six years to complete. On June 30, 2018 and July 13, 2018, respectively, OCC
filed two separate lawsuits in the U.S. District Court for the District of New Jersey seeking cost recovery and contribution
under CERCLA from more than 120 defendants, including EPEC Polymers. OCC alleges that each defendant is responsible to
reimburse OCC for a proportionate share of the $165 million OCC is required to spend pursuant to its AOC. EPEC Polymers
was dismissed without prejudice from the lawsuit on August 8, 2018.
In addition, the EPA and numerous PRPs, including EPEC Polymers, are engaged in an allocation process for the
implementation of the remedy for the lower eight miles of the Passaic River Study area. There remains significant uncertainty
as to the implementation and associated costs of the remedy set forth in the FFS and ROD. There is also uncertainty as to the
impact of the recent EPA FS directive for the upper nine mile segment not subject to the lower eight mile FFS and ROD. In a
letter dated October 10, 2018, the EPA directed the CPG to prepare a streamlined FS for the Site that evaluates interim remedy
alternatives for sediments in the upper nine miles of the Site. Until this FS is completed and the RI/FS is finalized and
allocations are determined, the scope of potential EPA claims for the Site and liability therefor are not reasonably estimable.
Plaquemines Parish Louisiana Coastal Zone Litigation
On November 8, 2013, the Parish of Plaquemines, Louisiana filed a petition for damages in the state district court for
Plaquemines Parish, Louisiana against TGP and 17 other energy companies, alleging that defendants’ oil and gas exploration,
production and transportation operations in the Bastian Bay, Buras, Empire and Fort Jackson oil and gas fields of Plaquemines
Parish caused substantial damage to the coastal waters and nearby lands (Coastal Zone) within the Parish, including the erosion
of marshes and the discharge of oil waste and other pollutants which detrimentally affected the quality of state waters and plant
141
and animal life, in violation of the State and Local Coastal Resources Management Act of 1978 (Coastal Zone Management
Act). The case is one of numerous similar cases pending in Louisiana. As a result of such alleged violations of the Coastal
Zone Management Act, Plaquemines Parish seeks, among other relief, unspecified monetary relief, attorney fees, interest, and
payment of costs necessary to restore the allegedly affected Coastal Zone to its original condition, including costs to clear,
vegetate and detoxify the Coastal Zone. In connection with this suit, TGP made two tenders for defense and indemnity: (1) to
Anadarko, as successor to the entity that purchased TGP’s oil and gas assets in Bastian Bay, and (2) to Kinetica, which
purchased TGP’s pipeline assets in Bastian Bay in 2013. Anadarko accepted TGP’s tender (limited to oil and gas assets), and
Kinetica rejected TGP’s tender. The Louisiana Department of Natural Resources (LDNR) and the Louisiana Attorney General
(LAG) intervened in the lawsuit. The Court separated the defendants into several trial groups and set trials to begin in 2019.
The case involving TGP was set for trial in 2020. During May 2018, the defendants removed numerous cases which allege
violations under the Coastal Zone Management Act to federal court in Louisiana; the case involving TGP was removed to the
U.S. District Court for the Eastern District of Louisiana. Thereafter, the defendants moved the U.S. Judicial Panel on
Multidistrict Litigation to transfer all such cases, including the case involving TGP, to the U.S. District Court for the Eastern
District of Louisiana for coordinated proceedings. On July 31, 2018, the Panel denied the motion. The plaintiffs and
intervenors moved to remand all of the cases, including the case involving TGP, to the state district courts. Those motions are
pending. All of the cases, including the case involving TGP, remain effectively stayed pending resolution of the removal and
remand issues. We will continue to vigorously defend the lawsuit.
Vintage Assets, Inc. Coastal Erosion Litigation
On December 18, 2015, Vintage Assets, Inc. and several individual landowners filed a lawsuit in the State District Court
for Plaquemines Parish, Louisiana alleging that its 5,000 acre property is composed of coastal wetlands, and that SNG and TGP
failed to maintain pipeline canals and banks, causing widening of the canals, land loss, and damage to the ecology and
hydrology of the marsh, in breach of right of way agreements, prudent operating practices, and Louisiana law. The suit also
claims that defendants’ alleged failure to maintain pipeline canals and banks constitutes negligence and has resulted in
encroachment of the canals, constituting trespass. The suit seeks in excess of $80 million in money damages, including
recovery of litigation costs, damages for trespass, and money damages associated with an alleged loss of natural resources and
projected reconstruction cost of replacing or restoring wetlands. The suit was removed to the U.S. District Court for the
Eastern District of Louisiana. The SNG assets at issue were sold to Highpoint Gas Transmission, LLC in 2011, which was
subsequently purchased by American Midstream Partners, LP. In response to SNG’s demand for defense and indemnity,
American Midstream Partners agreed to pay 50% of joint defense costs and expenses, with a percentage of indemnity to be
determined upon final resolution of the suit. On October 20, 2016, plaintiffs filed an amended complaint naming Highpoint
Gas Transmission, LLC as an additional defendant. A non-jury trial was held during September 2017. On May 4, 2018, the
District Court entered a judgment dismissing the tort and negligence claims against all of the defendants, and dismissing certain
of the contract claims against TGP. In ruling in favor of plaintiffs on the remaining contract claims, the District Court ordered
the Defendants to pay $1,104 in money damages, and issued a permanent injunction ordering the Defendants to restore a total
of 9.6 acres of land and maintain certain canals at widths designated by the right of way agreements in effect. The Court stayed
the judgment and the injunction pending appeal. The parties each filed a separate appeal to the U.S. Court of Appeals for the
Fifth Circuit. On September 13, 2018, Highpoint Gas Transmission, LLC filed a motion to vacate the judgment and dismiss all
of the appeals for lack of subject matter jurisdiction. On October 2, 2018, the Court of Appeals dismissed the appeals and
remanded the suit to the U.S. District Court for the Eastern District of Louisiana. In doing so, the Court of Appeals ordered the
District Court to remand the suit to the State District Court of Plaquemines Parish, Louisiana for further proceedings. The
District Court has not yet done so. We will continue to vigorously defend the suit.
General
Although it is not possible to predict the ultimate outcomes, we believe that the resolution of the environmental matters set
forth in this note, and other matters to which we and our subsidiaries are a party, will not have a material adverse effect on our
business, financial position, results of operations or cash flows. As of December 31, 2018 and 2017, we have accrued a total
reserve for environmental liabilities in the amount of $271 million and $279 million, respectively. In addition, as of both
December 31, 2018 and 2017, we have recorded a receivable of $13 million for expected cost recoveries that have been
deemed probable.
Other Contingencies
In 2017, in order to demonstrate to the NEB that Trans Mountain has sufficient financial resources to meet its
responsibilities under Canada’s Pipeline Safety Act (the “Act”), we entered into a loan facility with Trans Mountain pursuant to
which it may borrow up to C$500 million from us in the event that a TMPL environmental incident occurs giving rise to a
liability on the part of Trans Mountain under the Act. Upon the closing of the TMPL Sale on August 31, 2018, the government
142
of Canada delivered to us a C$500 million cash-collateralized letter of credit to fully backstop our obligation under the loan
facility, which will continue until the NEB approves a replacement arrangement with which Trans Mountain may satisfy its
financial resources requirement.
19. Recent Accounting Pronouncements
Accounting Standards Updates
Topic 842
On February 25, 2016, the FASB issued ASU No. 2016-02, “Leases” followed by a series of related accounting standard
updates (collectively referred to as “Topic 842”). Topic 842 establishes a new lease accounting model for leases. The most
significant changes include the clarification of the definition of a lease, the requirement for lessees to recognize for all leases a
right-of-use asset and a lease liability in the consolidated balance sheet, and additional quantitative and qualitative disclosures
which are designed to give financial statement users information on the amount, timing, and uncertainty of cash flows arising
from leases. Expenses are recognized in the consolidated statement of income in a manner similar to current accounting
guidance. Lessor accounting under the new standard is substantially unchanged. The new standard will become effective for
us beginning with the first quarter 2019. We will adopt the accounting standard using a prospective transition approach, which
applies the provisions of the new guidance at the effective date without adjusting the comparative periods presented. We have
elected the package of practical expedients permitted under the transition guidance within the new standard, which among other
things, allows us to carry forward the historical accounting relating to lease identification and classification for existing leases
upon adoption. We have also elected the optional practical expedient permitted under the transition guidance within the new
standard related to land easements that allows us to carry forward our historical accounting treatment for land easements on
existing agreements upon adoption. We have made an accounting policy election to keep leases with an initial term of 12
months or less off of the consolidated balance sheet. We are finalizing our evaluation of the impacts that the adoption of this
accounting guidance will have on the consolidated financial statements, and estimate approximately $500 million of additional
right-of-use assets and liabilities will be recognized in our consolidated balance sheet upon adoption.
ASU No. 2016-13
On June 16, 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement
of Credit Losses on Financial Instruments.” This ASU modifies the impairment model to utilize an expected loss methodology
in place of the currently used incurred loss methodology, which will result in the more timely recognition of losses. ASU No.
2016-13 will be effective for us as of January 1, 2020, and earlier adoption is permitted. We are currently reviewing the effect
of this ASU to our financial statements.
ASU No. 2017-04
On January 26, 2017, the FASB issued ASU No. 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the
Test for Goodwill Impairment.” This ASU simplifies the accounting for goodwill impairment by removing Step 2 of the
goodwill impairment test, which requires a hypothetical purchase price allocation. Goodwill impairment will now be the
amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. ASU
No. 2017-04 will be effective for us as of January 1, 2020, and earlier adoption is permitted. We are currently reviewing the
effect of this ASU to our financial statements.
ASU No. 2017-12
On August 28, 2017, the FASB issued ASU No. 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements
to Accounting for Hedging Activities.” This ASU better aligns an entity’s risk management activities and financial reporting for
hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships
and the presentation of hedge results. The guidance expands the ability to hedge nonfinancial and financial risk components,
reduces complexity in fair value hedges of interest rate risk, eliminates the requirement to separately measure and report hedge
ineffectiveness, and eases certain hedge effectiveness assessment requirements. ASU No. 2017-12 was effective January 1,
2019. We adopted ASU No. 2017-12 with no material impact to our financial statements.
ASU No. 2018-13
On August 28, 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework-
Changes to the Disclosure Requirements for Fair Value Measurement.” This ASU amends existing fair value measurement
143
disclosure requirements by adding, changing, or removing certain disclosures. ASU No. 2018-13 will be effective for us as of
January 1, 2020, and earlier adoption is permitted. We are currently reviewing the effect of this ASU to our financial
statements.
ASU No. 2018-14
On August 28, 2018, the FASB issued ASU No. 2018-14, “Compensation - Retirement Benefits - Defined Benefit Plans -
General (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans.” This
ASU amends existing annual disclosure requirements applicable to all employers that sponsor defined benefit pension and
other postretirement plans by adding, removing, and clarifying certain disclosures. ASU No. 2018-14 will be effective for us
for the fiscal year ending December 31, 2020, and earlier adoption is permitted. We are currently reviewing the effect of this
ASU to our financial statements.
20. Guarantee of Securities of Subsidiaries
KMI, along with its direct subsidiary KMP, are issuers of certain public debt securities. KMI, KMP and substantially all of
KMI’s wholly owned domestic subsidiaries, are parties to a cross guarantee agreement whereby each party to the agreement
unconditionally guarantees, jointly and severally, the payment of specified indebtedness of each other party to the agreement.
Accordingly, with the exception of certain subsidiaries identified as Subsidiary Non-Guarantors, the parent issuer, subsidiary
issuer and other subsidiaries are all guarantors of each series of public debt. As a result of the cross guarantee agreement, a
holder of any of the guaranteed public debt securities issued by KMI or KMP are in the same position with respect to the net
assets, income and cash flows of KMI and the Subsidiary Issuer and Guarantors. The only amounts that are not available to the
holders of each of the guaranteed public debt securities to satisfy the repayment of such securities are the net assets, income
and cash flows of the Subsidiary Non-Guarantors.
In lieu of providing separate financial statements for subsidiary issuer and guarantor, we have included the accompanying
condensed consolidating financial statements based on Rule 3-10 of the SEC’s Regulation S-X. We have presented each of the
parent and subsidiary issuer in separate columns in this single set of condensed consolidating financial statements.
Excluding fair value adjustments, as of December 31, 2018, Parent Issuer and Guarantor, Subsidiary Issuer and Guarantor-
KMP, and Subsidiary Guarantors had $15,192 million, $17,910 million, and $2,535 million of Guaranteed Notes outstanding,
respectively. Included in the Subsidiary Guarantors debt balance as presented in the accompanying December 31,
2018 condensed consolidating balance sheet are approximately $159 million of capitalized lease debt that is not subject to the
cross guarantee agreement.
The accounts within the Parent Issuer and Guarantor, Subsidiary Issuer and Guarantor-KMP, Subsidiary Guarantors and
Subsidiary Non-Guarantors are presented using the equity method of accounting for investments in subsidiaries, including
subsidiaries that are guarantors and non-guarantors, for purposes of these condensed consolidating financial statements only.
These intercompany investments and related activity eliminate in consolidation and are presented separately in the
accompanying condensed consolidating balance sheets and statements of income and cash flows.
A significant amount of each Issuers’ income and cash flow is generated by its respective subsidiaries. As a result, the
funds necessary to meet its debt service and/or guarantee obligations are provided in large part by distributions or advances it
receives from its respective subsidiaries. We utilize a centralized cash pooling program among our majority-owned and
consolidated subsidiaries, including the Subsidiary Issuers and Guarantors and Subsidiary Non-Guarantors. The following
Condensed Consolidating Statements of Cash Flows present the intercompany loan and distribution activity, as well as cash
collection and payments made on behalf of our subsidiaries, as cash activities.
144
Condensed Consolidating Statements of Income and Comprehensive Income
for the Year Ended December 31, 2018
(In Millions)
Parent
Issuer and
Guarantor
$
Subsidiary
Issuer and
Guarantor -
KMP
— $
— $
Subsidiary
Guarantors
12,767
Subsidiary
Non-
Guarantors
1,526
$
Consolidating
Adjustments
$
(149) $
Consolidated
KMI
Total Revenues
Operating Costs, Expenses and Other
Costs of sales
Depreciation, depletion and amortization
Other operating expenses
Total Operating Costs, Expenses and Other
Operating Income (Loss)
Other Income (Expense)
Earnings from consolidated subsidiaries
Earnings from equity investments
Interest, net
Amortization of excess cost of equity investments and other,
net
Income Before Income Taxes
Income Tax (Expense) Benefit
Net Income
Net Income Attributable to Noncontrolling Interests
Net Income Attributable to Controlling Interests
Preferred Stock Dividends
Net Income Available to Common Stockholders
Net Income
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to noncontrolling
interests
Comprehensive income attributable to controlling interests
14,144
4,421
2,297
3,632
10,350
3,794
—
617
(1,917)
12
2,506
(587)
1,919
(310)
1,609
(128)
1,481
1,919
338
2,257
—
19
(39)
(20)
20
2,760
—
(780)
27
2,027
(418)
1,609
—
1,609
(128)
1,481
1,609
320
1,929
—
$
$
—
—
1
1
(1)
2,533
—
(8)
—
2,524
68
2,592
—
2,592
—
2,592
2,592
290
2,882
—
$
$
4,247
1,971
3,693
9,911
2,856
599
617
(1,090)
(18)
2,964
(61)
2,903
—
2,903
—
2,903
2,903
280
3,183
—
$
$
277
307
23
607
919
62
—
(39)
3
945
(176)
769
—
769
—
769
769
136
905
—
$
$
(103)
—
(46)
(149)
—
(5,954)
—
—
—
(5,954)
—
(5,954)
(310)
(6,264)
—
$
$
(6,264) $
(5,954) $
(688)
(6,642)
$
1,929
$
2,882
$
3,183
$
905
$
(6,970) $
1,929
145
(328)
(328)
Condensed Consolidating Statements of Income and Comprehensive Income
for the Year Ended December 31, 2017
(In Millions)
Parent
Issuer and
Guarantor
35
$
Subsidiary
Issuer and
Guarantor -
KMP
Subsidiary
Guarantors
12,202
— $
Subsidiary
Non-
Guarantors
1,614
$
Consolidating
Adjustments
$
(146) $
Consolidated
KMI
Total Revenues
Operating Costs, Expenses and Other
Costs of sales
Depreciation, depletion and amortization
Other operating expenses
Total Operating Costs, Expenses and Other
Operating (Loss) Income
Other Income (Expense)
Earnings from consolidated subsidiaries
Earnings from equity investments
Interest, net
Amortization of excess cost of equity investments and other,
net
Income Before Income Taxes
Income Tax (Expense) Benefit
Net Income
Net Income Attributable to Noncontrolling Interests
Net Income Attributable to Controlling Interests
Preferred Stock Dividends
Net Income Available to Common Stockholders
Net Income
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to noncontrolling
interests
Comprehensive income attributable to controlling interests
$
$
$
$
$
$
—
16
78
94
(59)
3,575
—
(701)
2
2,817
(2,634)
183
—
183
(156)
27
183
69
252
—
—
—
1
1
(1)
2,681
—
7
—
2,687
(5)
2,682
—
2,682
—
2,682
2,682
194
2,876
—
$
$
4,124
1,933
3,014
9,071
3,131
419
428
(1,104)
13
2,887
237
3,124
—
3,124
—
3,124
3,124
217
3,341
—
$
$
322
312
522
1,156
458
59
—
(34)
21
504
464
968
—
968
—
968
968
160
1,128
—
$
$
(101)
—
(45)
(146)
—
(6,734)
—
—
—
(6,734)
(6,734)
(40)
(6,774)
—
(6,774) $
(6,734) $
(525)
(7,259)
(86)
—
(1,938)
13,705
4,345
2,261
3,570
10,176
3,529
—
428
(1,832)
36
2,161
223
(40)
183
(156)
27
223
115
338
(86)
252
252
$
2,876
$
3,341
$
1,128
$
(7,345) $
146
Condensed Consolidating Statements of Income and Comprehensive Income
for the Year Ended December 31, 2016
(In Millions)
Parent
Issuer and
Guarantor
34
$
Subsidiary
Issuer and
Guarantor -
KMP
Subsidiary
Guarantors
11,572
— $
Subsidiary
Non-
Guarantors
1,511
$
Consolidating
Adjustments
$
(59) $
Consolidated
KMI
Total Revenues
Operating Costs, Expenses and Other
Costs of sales
Depreciation, depletion and amortization
Other operating expenses
Total Operating Costs, Expenses and Other
Operating (Loss) Income
Other Income (Expense)
Earnings from consolidated subsidiaries
Losses from equity investments
Interest, net
Amortization of excess cost of equity investments and other,
net
Income Before Income Taxes
Income Tax Expense
Net Income
Net Income Attributable to Noncontrolling Interests
Net Income Attributable to Controlling Interests
Preferred Stock Dividends
Net Income Available to Common Stockholders
Net Income
Total other comprehensive (loss) income
Comprehensive income
Comprehensive income attributable to noncontrolling
interests
Comprehensive income attributable to controlling interests
$
$
$
$
$
$
—
18
758
776
(742)
2,948
—
(696)
33
1,543
(835)
708
—
708
(156)
552
708
(200)
508
—
—
—
(36)
(36)
36
2,802
—
90
—
2,928
(5)
2,923
—
2,923
—
2,923
2,923
(341)
2,582
—
$
$
3,176
1,872
2,461
7,509
4,063
245
(113)
(1,149)
(18)
3,028
(33)
2,995
—
2,995
—
2,995
2,995
(352)
2,643
—
$
$
266
319
745
1,330
181
58
—
(51)
4
192
(44)
148
—
148
—
148
148
55
203
—
(13)
—
(46)
(59)
—
(6,053)
—
—
—
(6,053)
—
(6,053)
(13)
(6,066)
—
$
$
(6,066) $
(6,053) $
638
(5,415)
(13)
508
$
2,582
$
2,643
$
203
$
(5,428) $
147
13,058
3,429
2,209
3,882
9,520
3,538
—
(113)
(1,806)
19
1,638
(917)
721
(13)
708
(156)
552
721
(200)
521
(13)
508
Condensed Consolidating Balance Sheet as of December 31, 2018
(In Millions)
ASSETS
Cash and cash equivalents
Other current assets - affiliates
All other current assets
Property, plant and equipment, net
Investments
Investments in subsidiaries
Goodwill
Notes receivable from affiliates
Deferred income taxes
Other non-current assets
Total assets
LIABILITIES, REDEEMABLE
NONCONTROLLING INTEREST AND
STOCKHOLDERS’ EQUITY
Liabilities
Current portion of debt
Other current liabilities - affiliates
All other current liabilities
Long-term debt
Notes payable to affiliates
Deferred income taxes
Other long-term liabilities and deferred credits
Total liabilities
Redeemable noncontrolling interest
Stockholders’ equity
Total KMI equity
Noncontrolling interests
Total stockholders’ equity
Total Liabilities, Redeemable Noncontrolling Interest
and Stockholders’ Equity
Parent
Issuer and
Guarantor
Subsidiary
Issuer and
Guarantor -
KMP
Subsidiary
Guarantors
Subsidiary
Non-
Guarantors
Consolidating
Adjustments
Consolidated
KMI
$
$
$
8
4,465
171
231
664
42,096
13,789
945
3,137
233
65,739
1,933
14,189
486
13,474
1,234
—
745
32,061
—
33,678
—
33,678
$
— $
— $
$
$
$
$
4,788
17
—
—
40,049
22
20,345
—
105
65,326
1,300
14,087
354
16,799
448
—
59
33,047
—
32,279
—
32,279
$
$
23,851
2,056
30,750
6,718
6,077
5,166
247
—
3,823
78,688
30
4,898
1,838
3,020
20,543
503
944
31,776
666
46,246
—
46,246
3,277
1,031
212
6,916
99
4,324
2,988
1,043
—
74
19,964
125
961
1,510
643
355
1,068
428
5,090
—
14,874
—
14,874
$
(5) $
(34,135)
(14)
—
—
(92,546)
—
(22,580)
(1,571)
—
$
(150,851) $
$
— $
(34,135)
(19)
—
(22,580)
(1,571)
—
(58,305)
—
(93,399)
853
(92,546)
3,280
—
2,442
37,897
7,481
—
21,965
—
1,566
4,235
78,866
3,388
—
4,169
33,936
—
—
2,176
43,669
666
33,678
853
34,531
$
65,739
$
65,326
$
78,688
$
19,964
$
(150,851) $
78,866
148
Condensed Consolidating Balance Sheet as of December 31, 2017
(In Millions)
Parent
Issuer and
Guarantor
Subsidiary
Issuer and
Guarantor -
KMP
Subsidiary
Guarantors
Subsidiary
Non-
Guarantors
Consolidating
Adjustments
Consolidated
KMI
ASSETS
Cash and cash equivalents
Other current assets - affiliates
All other current assets
Property, plant and equipment, net
Investments
Investments in subsidiaries
Goodwill
Notes receivable from affiliates
Deferred income taxes
Other non-current assets
Total assets
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities
Current portion of debt
Other current liabilities - affiliates
All other current liabilities
Long-term debt
Notes payable to affiliates
Deferred income taxes
Other long-term liabilities and deferred credits
Total liabilities
Stockholders’ equity
Total KMI equity
Noncontrolling interests
Total stockholders’ equity
Total liabilities and stockholders’ equity
262
858
235
8,826
135
4,232
3,185
776
—
183
18,692
124
750
508
653
355
1,142
467
3,999
$
(1) $
(34,675)
(24)
—
—
(84,360)
—
(23,405)
(1,591)
—
$
(144,056) $
$
— $
(34,675)
(25)
—
(23,405)
(1,591)
—
(59,696)
14,693
—
14,693
18,692
$
(85,848)
1,488
(84,360)
(144,056) $
264
—
2,451
40,155
7,298
—
22,162
—
2,044
4,681
79,055
2,828
—
3,353
35,015
—
—
2,735
43,931
33,636
1,488
35,124
79,055
$
$
$
$
3
6,214
243
236
665
37,983
13,789
1,033
3,635
254
64,055
924
13,225
468
13,104
2,009
—
689
30,419
33,636
—
33,636
64,055
$
— $
— $
5,201
59
—
—
36,728
22
20,363
—
164
62,537
975
14,188
347
18,206
448
—
117
34,281
28,256
—
28,256
62,537
$
$
$
22,402
1,938
31,093
6,498
5,417
5,166
1,233
—
4,080
77,827
805
6,512
2,055
3,052
20,593
449
1,462
34,928
42,899
—
42,899
77,827
$
$
$
$
$
$
149
Condensed Consolidating Statements of Cash Flows
for the Year Ended December 31, 2018
(In Millions)
Subsidiary
Issuer and
Guarantor -
KMP
Parent
Issuer and
Guarantor
$
(2,758) $
Consolidating
Adjustments
$
(8,324) $
Consolidated
KMI
Net cash (used in) provided by operating activities
Cash flows from investing activities
Proceeds from the TMPL Sale, net of cash disposed
Acquisitions of investments
Capital expenditures
Proceeds from sales of equity investments
Sales of property, plant and equipment, investments and other net assets, net of
removal costs
Contributions to investments
Distributions from equity investments in excess of cumulative earnings
Funding to affiliates
Loans to related parties
Net cash (used in) provided by investing activities
Cash flows from financing activities
Issuances of debt
Payments of debt
Debt issue costs
Cash dividends - common shares
Cash dividends - preferred shares
Repurchases of common shares
Funding from affiliates
Contributions from investment partner
Contributions from parents
Contributions from noncontrolling interests
Distributions to parents
Distributions to noncontrolling interests
Other, net
Net cash provided by (used in) financing activities
—
—
(24)
—
9
(12)
2,342
(6,521)
—
(4,206)
14,143
(12,640)
(35)
(1,618)
(156)
(273)
7,560
—
—
—
—
—
(12)
6,969
Subsidiary
Guarantors
11,129
$
Subsidiary
Non-
Guarantors
1,117
$
—
(39)
(1,995)
124
(34)
(413)
234
(7,419)
(31)
(9,573)
—
(784)
—
—
—
—
4,542
181
19
—
(5,514)
—
—
(1,556)
2,998
—
(885)
—
5
(8)
1
(1,003)
—
1,108
608
(192)
(7)
—
—
—
839
—
—
—
(317)
—
(5)
926
3,879
—
—
—
—
—
—
—
(26)
—
(26)
—
(975)
—
—
—
—
2,028
—
—
—
(4,907)
—
—
(3,854)
—
—
—
—
—
—
(2,340)
14,969
—
12,629
—
—
—
—
—
—
(14,969)
—
(19)
19
10,738
(78)
—
(4,309)
Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted
Deposits
Net increase (decrease) in Cash, Cash Equivalents and Restricted Deposits
Cash, Cash Equivalents, and Restricted Deposits, beginning of period
Cash, Cash Equivalents, and Restricted Deposits, end of period
$
—
5
3
8
$
—
(1)
1
— $
—
—
—
— $
(146)
3,005
323
3,328
$
—
(4)
(1)
(5) $
150
5,043
2,998
(39)
(2,904)
124
(20)
(433)
237
—
(31)
(68)
14,751
(14,591)
(42)
(1,618)
(156)
(273)
—
181
—
19
—
(78)
(17)
(1,824)
(146)
3,005
326
3,331
Condensed Consolidating Statements of Cash Flows
for the Year Ended December 31, 2017
(In Millions)
Subsidiary
Issuer and
Guarantor -
KMP
Parent
Issuer and
Guarantor
$
(3,184) $
Subsidiary
Guarantors
11,523
$
Subsidiary
Non-
Guarantors
1,121
$
Consolidating
Adjustments
$
(8,770) $
Consolidated
KMI
Net cash (used in) provided by operating activities
Cash flows from investing activities
Acquisitions of investments
Capital expenditures
Sales of property, plant and equipment, investments and other net assets, net of
removal costs
Contributions to investments
Distributions from equity investments in excess of cumulative earnings
Funding (to) from affiliates
Loans to related party
Other, net
Net cash (used in) provided by investing activities
Cash flows from financing activities
Issuances of debt
Payments of debt
Debt issue costs
Cash dividends - common shares
Cash dividends - preferred shares
Repurchases of common shares
Funding from (to) affiliates
Contributions from investment partner
Contributions from parents, including net proceeds from KML IPO and
preferred share issuance
Contributions from noncontrolling interests - net proceeds from KML IPO
Contributions from noncontrolling interests - net proceeds from KML
preferred share issuances
Contributions from noncontrolling interests - other
Distributions to parents
Distributions to noncontrolling interests
Other, net
Net cash provided by (used in) financing activities
Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted
Deposits
Net (decrease) increase in Cash, Cash Equivalents and Restricted Deposits
Cash, Cash Equivalents, and Restricted Deposits, beginning of period
Cash, Cash Equivalents, and Restricted Deposits, end of period
$
—
(23)
16
(237)
2,297
(4,419)
(23)
—
(2,389)
8,609
(9,288)
(12)
(1,120)
(156)
(250)
7,327
—
—
4
—
—
—
—
(9)
5,105
—
(468)
471
3
151
3,911
—
—
—
—
—
779
—
1
780
—
(600)
—
—
—
—
776
—
—
—
—
—
(4,902)
—
—
(4,726)
(4)
(2,390)
94
(435)
326
(7,040)
—
4
(9,445)
—
(897)
—
—
—
—
3,797
485
—
—
—
—
(5,472)
—
—
(2,087)
—
(35)
36
1
$
—
(9)
9
— $
$
—
(775)
8
(12)
—
(1,028)
—
(1)
(1,808)
259
(279)
(58)
—
—
—
(192)
—
1,673
—
—
—
(687)
—
—
716
22
51
272
323
—
—
—
—
(2,249)
11,708
—
—
9,459
—
—
—
—
—
—
(11,708)
—
(1,673)
1,241
420
12
11,061
(42)
—
(689)
—
—
(1)
(1) $
$
4,601
(4)
(3,188)
118
(684)
374
—
(23)
4
(3,403)
8,868
(11,064)
(70)
(1,120)
(156)
(250)
—
485
—
1,245
420
12
—
(42)
(9)
(1,681)
22
(461)
787
326
Condensed Consolidating Statements of Cash Flows
for the Year Ended December 31, 2016
(In Millions)
Subsidiary
Issuer and
Guarantor -
KMP
Parent
Issuer and
Guarantor
$
(3,981) $
Subsidiary
Guarantors
11,641
$
Subsidiary
Non-
Guarantors
885
$
Consolidating
Adjustments
$
(8,730) $
Consolidated
KMI
Net cash (used in) provided by operating activities
Cash flows from investing activities
Acquisitions of assets and investments
Capital expenditures
Proceeds from sale of equity interests in subsidiaries, net
Sales of property, plant and equipment, investments, and other net assets, net
of removal costs
Contributions to investments
Distributions from equity investments in excess of cumulative earnings
Funding to affiliates
Loan repayments from related party
Other, net
Net cash used in investing activities
Cash flows from financing activities
Issuances of debt
Payments of debt
Debt issue costs
Cash dividends - common shares
Cash dividends - preferred shares
Funding from affiliates
Contributions from parents
Contributions from noncontrolling interests
Distributions to parents
Distributions to noncontrolling interests
Other, net
Net cash provided by (used in) financing activities
4,943
—
—
—
—
—
298
(535)
—
—
(237)
—
(500)
—
—
—
1,116
—
—
(5,286)
—
—
(4,670)
(331)
(2,258)
1,401
326
(54)
190
(5,062)
35
3
(5,750)
374
(2,227)
(2)
—
—
1,959
117
—
(6,116)
—
—
(5,895)
(2)
(27)
—
6
(343)
2,417
(2,820)
—
—
(769)
8,255
(7,322)
(16)
(1,118)
(154)
5,461
—
—
—
—
(8)
5,098
Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted
Deposits
Net increase (decrease) in Cash, Cash Equivalents and Restricted Deposits
Cash, Cash Equivalents, and Restricted Deposits, beginning of period
Cash, Cash Equivalents, and Restricted Deposits, end of period
$
—
348
123
471
$
—
36
—
36
$
—
(4)
13
9
$
152
—
(597)
—
(2)
(11)
—
(727)
—
(2)
(1,339)
—
(11)
(1)
—
—
608
—
—
(73)
—
—
523
2
71
201
272
—
—
—
—
—
(2,674)
9,144
—
—
6,470
—
—
—
—
—
(9,144)
(117)
117
11,475
(24)
—
2,307
—
47
(48)
(1) $
$
4,758
(333)
(2,882)
1,401
330
(408)
231
—
35
1
(1,625)
8,629
(10,060)
(19)
(1,118)
(154)
—
—
117
—
(24)
(8)
(2,637)
2
498
289
787
Supplemental Selected Quarterly Financial Data (Unaudited)
Quarters Ended
March 31
June 30
September 30 December 31
(In millions, except per share amounts)
$
3,418
$
3,428
$
3,517
$
949
542
524
485
0.22
272
(130)
(141)
(180)
(0.08)
1,515
1,005
732
693
0.31
$
3,424
$
3,368
$
3,281
$
977
445
440
401
0.18
918
383
376
337
0.15
826
387
373
334
0.15
3,781
1,058
502
494
483
0.21
3,632
808
(992)
(1,006)
(1,045)
(0.47)
2018
Revenues
Operating Income
Net Income (Loss)
Net Income (Loss) Attributable to Kinder Morgan, Inc.
Net Income (Loss) Available to Common Stockholders
Basic and Diluted Earnings (Loss) Per Common Share
2017
Revenues
Operating Income
Net Income (Loss)
Net Income (Loss) Attributable to Kinder Morgan, Inc.
Net Income (Loss) Available to Common Stockholders
Basic and Diluted Earnings (Loss) Per Common Share
Item 16. Form 10-K Summary.
Not Applicable.
153
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly authorized.
SIGNATURES
KINDER MORGAN, INC.
Registrant
/s/ David P. Michels
David P. Michels
Vice President and Chief Financial Officer
(principal financial and accounting officer)
Date: February 8, 2019
154
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons in the capacities and on the dates indicated.
Signature
Title
Date
/s/ DAVID P. MICHELS
David P. Michels
/s/ STEVEN J. KEAN
Steven J. Kean
/s/ RICHARD D. KINDER
Richard D. Kinder
/s/ KIMBERLY A. DANG
Kimberly A. Dang
/s/ TED A. GARDNER
Ted A. Gardner
/s/ ANTHONY W. HALL, JR.
Anthony W. Hall, Jr.
/s/ GARY L. HULTQUIST
Gary L. Hultquist
/s/ RONALD L. KUEHN, JR.
Ronald L. Kuehn, Jr.
/s/ DEBORAH A. MACDONALD
Deborah A. Macdonald
/s/ MICHAEL C. MORGAN
Michael C. Morgan
/s/ ARTHUR C. REICHSTETTER
Arthur C. Reichstetter
/s/ FAYEZ SAROFIM
Fayez Sarofim
/s/ C. PARK SHAPER
C. Park Shaper
/s/ WILLIAM A. SMITH
William A. Smith
/s/ JOEL V. STAFF
Joel V. Staff
/s/ ROBERT F. VAGT
Robert F. Vagt
/s/ PERRY M. WAUGHTAL
Perry M. Waughtal
Vice President and Chief Financial
Officer (principal financial officer and
principal accounting officer)
Chief Executive Officer (principal
executive officer); Director
Executive Chairman
President; Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
155
February 8, 2019
February 8, 2019
February 8, 2019
February 8, 2019
February 8, 2019
February 8, 2019
February 8, 2019
February 8, 2019
February 8, 2019
February 8, 2019
February 8, 2019
February 8, 2019
February 8, 2019
February 8, 2019
February 8, 2019
February 8, 2019
February 8, 2019
EXHIBIT 10.14
$4,000,000,000
REVOLVING CREDIT AGREEMENT
dated as of
November 16, 2018
among
KINDER MORGAN, INC.,
as the Borrower,
THE LENDERS PARTY HERETO
and
BARCLAYS BANK PLC,
as the Administrative Agent
___________________________________
JPMORGAN CHASE BANK, N.A.,
as the Syndication Agent,
and
BARCLAYS BANK PLC,
JPMORGAN CHASE BANK, N.A.,
BANK OF AMERICA, N.A.,
BMO HARRIS BANK N.A.,
CITIGROUP GLOBAL MARKETS INC.,
CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH,
MIZUHO BANK, LTD.,
MUFG BANK, LTD.,
ROYAL BANK OF CANADA,
THE BANK OF NOVA SCOTIA, HOUSTON BRANCH and
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as the Documentation Agents,
_______________________________________________
BARCLAYS BANK PLC,
JPMORGAN SECURITIES LLC,
BMO CAPITAL MARKETS CORP.,
CITIGROUP GLOBAL MARKETS INC.,
CREDIT SUISSE SECURITIES (USA) LLC,
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,
MIZUHO BANK, LTD.,
MUFG BANK, LTD.,
RBC CAPITAL MARKETS,
THE BANK OF NOVA SCOTIA, HOUSTON BRANCH and
WELLS FARGO SECURITIES, LLC,
as the Joint Lead Arrangers and the Joint Book Runners
EXHIBIT 10.14
TABLE OF CONTENTS
ARTICLE I DEFINITIONS
SECTION 1.01 Defined Terms
SECTION 1.02 Classification of Loans and Borrowings
SECTION 1.03 Accounting Terms; Changes in GAAP
SECTION 1.04 Interpretation
ARTICLE II THE CREDITS
SECTION 2.01 Commitments
SECTION 2.02 Loans and Borrowings
SECTION 2.03 Requests for Borrowings
SECTION 2.04 Swingline Loans
SECTION 2.05 Letters of Credit
SECTION 2.06 Funding of Borrowings
SECTION 2.07 Interest Elections
SECTION 2.08 Termination and Reduction of Commitments; Mandatory Prepayments
SECTION 2.09 Repayment of Loans; Evidence of Debt
SECTION 2.10 Voluntary Prepayment of Loans
SECTION 2.11 Fees
SECTION 2.12 Interest
SECTION 2.13 Alternate Rate of Interest
SECTION 2.14 Increased Costs
SECTION 2.15 Break Funding Payments
SECTION 2.16 Taxes
SECTION 2.17 Payments Generally; Pro Rata Treatment; Sharing of Set-offs
SECTION 2.18 Mitigation of Obligations; Replacement of Lenders
SECTION 2.19 Defaulting Lenders
SECTION 2.20 Cash Collateral
SECTION 2.21 Accordion Facilities
SECTION 2.22 Extension of Maturity Date
ARTICLE III CONDITIONS PRECEDENT
SECTION 3.01 Conditions Precedent to the Closing Date
SECTION 3.02 Conditions Precedent to Each Credit Event
ARTICLE IV REPRESENTATIONS AND WARRANTIES
SECTION 4.01 Organization and Qualification
SECTION 4.02 Authorization, Validity, Etc
i
Page
1
1
25
25
25
26
26
26
27
28
28
35
36
37
38
39
39
40
41
42
43
44
47
49
50
52
53
53
55
55
57
57
57
58
SECTION 4.03 Governmental Consents, Etc
SECTION 4.04 No Breach or Violation of Agreements or Restrictions, Etc
SECTION 4.05 Properties
SECTION 4.06 Litigation and Environmental Matters
SECTION 4.07 Financial Statements
SECTION 4.08 Disclosure
SECTION 4.09 Investment Company Act
SECTION 4.10 ERISA
SECTION 4.11 Tax Returns and Payments
SECTION 4.12 Compliance with Laws and Agreements
SECTION 4.13 Purpose of Loans
SECTION 4.14 Foreign Assets Control Regulations, etc.
SECTION 4.15 Solvency.
ARTICLE V AFFIRMATIVE COVENANTS
SECTION 5.01 Financial Statements and Other Information
SECTION 5.02 Existence, Conduct of Business
SECTION 5.03 Payment of Obligations
SECTION 5.04 Maintenance of Properties; Insurance
SECTION 5.05 Books and Records; Inspection Rights
SECTION 5.06 Compliance with Laws
SECTION 5.07 Use of Proceeds
SECTION 5.08 Additional Guarantors
ARTICLE VI NEGATIVE COVENANTS
SECTION 6.01 Indebtedness of Non-Guarantor Subsidiaries
SECTION 6.02 Liens
SECTION 6.03 Fundamental Changes
SECTION 6.04 Restricted Payments
SECTION 6.05 Transactions with Affiliates
SECTION 6.06 Restrictive Agreements
SECTION 6.07 Ratio of Consolidated Net Indebtedness to Consolidated EBITDA
SECTION 6.08 Use of Proceeds
ARTICLE VII EVENTS OF DEFAULT
SECTION 7.01 Events of Default and Remedies
ARTICLE VIII THE ADMINISTRATIVE AGENT
SECTION 8.01 Appointment and Authority
SECTION 8.02 Rights as a Lender
ii
EXHIBIT 10.14
58
58
58
58
59
59
60
60
60
61
61
61
61
61
61
64
64
64
64
65
65
65
65
65
66
66
67
67
68
68
68
69
69
71
71
71
EXHIBIT 10.14
SECTION 8.03 Exculpatory Provisions
SECTION 8.04 Reliance by Administrative Agent
SECTION 8.05 Delegation of Duties
SECTION 8.06 Resignation of Administrative Agent
SECTION 8.07 Non-Reliance on Administrative Agent and Other Lenders
SECTION 8.08 INDEMNIFICATION
SECTION 8.09 No Reliance on Agents or other Lenders
SECTION 8.10 Duties of the Syndication Agent, Documentation Agents, Arrangers
SECTION 8.11 Certain ERISA Matters
ARTICLE IX MISCELLANEOUS
SECTION 9.01 Notices, Etc.
SECTION 9.02 Waivers; Amendments; Releases
SECTION 9.03 Payment of Expenses, Indemnities, etc.
SECTION 9.04 Successors and Assigns Generally
SECTION 9.05 Assignments by Lenders
SECTION 9.06 Survival; Reinstatement
SECTION 9.07 Counterparts; Integration; Effectiveness; Electronic Execution
SECTION 9.08 Severability
SECTION 9.09 Right of Setoff
SECTION 9.10 Governing Law; Jurisdiction; Consent to Service of Process
SECTION 9.11 WAIVER OF JURY TRIAL
SECTION 9.12 Confidentiality
SECTION 9.13 Interest Rate Limitation
SECTION 9.14 EXCULPATION PROVISIONS
SECTION 9.15 U.S. Patriot Act
SECTION 9.16 No Advisory or Fiduciary Responsibility
SECTION 9.17 Headings
SECTION 9.18 Acknowledgement and Consent to Bail-In of EEA Financial Institutions
71
72
72
73
74
74
74
75
75
76
76
78
80
83
83
86
86
87
87
88
89
89
90
90
90
90
91
91
iii
EXHIBIT 10.14
SCHEDULES:
Schedule 1.01
Schedule 1.01A
Schedule 1.01B
Schedule 6.01
Schedule 6.05
Schedule 6.06
EXHIBITS:
Exhibit 1.01-A
Exhibit 1.01-B
Exhibit 1.01-C
Exhibit 1.01-D
Exhibit 2.03
Exhibit 2.05
Exhibit 2.07
Exhibit 2.10
Exhibit 2.16-A
Exhibit 2.16-B
Exhibit 2.16-C
Exhibit 2.16-D
Exhibit 2.21
Exhibit 5.01
Commitments
Excluded Subsidiaries
Existing Letters of Credit
Existing Non-Guarantor Indebtedness
Existing Transactions with Affiliates
Existing Restrictive Agreements
Form of Assignment and Acceptance
Form of Guaranty Agreement
Form of Committed Note
Form of Swingline Note
Form of Borrowing Request
Form of Letter of Credit Request
Form of Interest Election Request
Form of Notice of Prepayment
Form of U.S. Tax Compliance Certificate
Form of U.S. Tax Compliance Certificate
Form of U.S. Tax Compliance Certificate
Form of U.S. Tax Compliance Certificate
Form of New Loan Increase Joinder
Form of Compliance Certificate
iv
EXHIBIT 10.14
REVOLVING CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT, dated as of November 16, 2018 (this
“Agreement”) is among:
(a)
Kinder Morgan, Inc., a Delaware corporation (the “Borrower”);
(b)
the banks, financial institutions and other lenders listed on the signature pages
hereof under the caption “Lenders” (the “Lenders” and together with each other Person that becomes a
Lender pursuant to Section 2.21(b), Section 2.22(c) or Section 9.05, collectively, the “Lenders”); and
(c)
Barclays Bank PLC, individually as a Lender and as the administrative agent for
the Lenders (in such latter capacity together with any other Person that becomes Administrative Agent
pursuant to Section 8.08, the “Administrative Agent”).
PRELIMINARY STATEMENTS
The Borrower has requested that the Lenders extend credit to the Borrower in the form of
Loans (as defined below) in an aggregate principal amount of $4,000,000,000 (the “Transactions”) to be
used by Borrower and its subsidiaries for working capital and general corporate purposes, and the Lenders
have indicated their willingness to lend on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01
Defined Terms. As used in this Agreement, the following terms have
the meanings specified below:
“ABR”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or
the Loans comprising such Borrowing, bear interest at a rate determined by reference to the Alternate Base
Rate.
“Adjusted LIBO Rate” means, with respect to any Eurodollar Loan for any Interest Period
for such Loan, a rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) determined by
the Administrative Agent to be equal to the product of (i) the Eurodollar Rate for such Loan for such Interest
Period multiplied by (ii) the Reserve Requirement for such Loan for such Interest Period. In no case shall
the Adjusted LIBO Rate be less than zero.
“Administrative Agent” has the meaning specified in the introduction to this Agreement.
“Administrative Agent Fee Letter” has the meaning specified in Section 2.11(c).
“Administrative Questionnaire” means an Administrative Questionnaire in the form
supplied by the Administrative Agent.
“Affiliate” of any Person means (i) any Person directly or indirectly controlled by, controlling
or under common control with such first Person, (ii) any director or officer of such first Person or of any
Person referred to in clause (i) above and (iii) if any Person in clause (i) above is an individual, any member
of the immediate family (including parents, siblings, spouse and children) of such individual and any trust
1
EXHIBIT 10.14
whose principal beneficiary is such individual or one or more members of such immediate family and any
Person who is controlled by any such member or trust. For purposes of this definition, any Person that owns
directly or indirectly 25% or more of the securities having ordinary voting power for the election of directors
or other governing body of a corporation or 25% or more of the partnership or other ownership interests of
any other Person (other than as a limited partner of such other Person) will be deemed to “control” (including,
with its correlative meanings, “controlled by” and “under common control with”) such corporation or other
Person. In no event shall the Administrative Agent or any Lender be deemed to an Affiliate of the Borrower
of any of its Subsidiaries.
“Affiliated Entities” means unconsolidated Subsidiaries of the Borrower and Persons not
otherwise constituting Subsidiaries of the Borrower in which the Borrower has an equity investment.
“Agreement” has the meaning specified in the introduction to this Agreement (subject,
however, to Section 1.04(e) hereof).
“Alternate Base Rate” means, for any day, a fluctuating rate per annum equal to the greatest
of (a) the Federal Funds Effective Rate in effect on such day plus ½ of 1%, (b) the Prime Rate in effect for
such day, and (c) the Adjusted LIBO Rate for a Eurodollar Loan with a one month Interest Period that begins
on such day (and if such day is not a Business Day, the immediately preceding Business Day) plus 1%. Any
change in the Alternate Base Rate due to a change in the Prime Rate, the Federal Funds Effective Rate or
the Adjusted LIBO Rate shall be effective from the effective date of such change in the Prime Rate, the
Federal Funds Effective Rate or the Adjusted LIBO Rate, respectively.
“Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction applicable
to the Borrower or any of its Subsidiaries from time to time concerning or relating to bribery or corruption.
“Applicable Commitment Fee Rate” means, at any time and from time to time, the percentage
per annum equal to the applicable percentage set forth below for the corresponding Performance Level at
such time:
Performance Level
I
II
III
IV
V
VI
Applicable Commitment
Fee Rate
0.100%
0.125%
0.150%
0.200%
0.250%
0.300%
The Applicable Commitment Fee Rate shall be determined by reference to the Performance
Level in effect from time to time and any change in the Applicable Commitment Fee Rate shall be effective
from the effective date of the change in the applicable Performance Level giving rise thereto.
2
EXHIBIT 10.14
“Applicable Margin” means, as to any ABR Borrowing or any Eurodollar Borrowing, as
the case may be, at any time and from time to time, a percentage per annum equal to the applicable percentage
set forth below for the corresponding Performance Level at such time:
Performance Level
I
II
III
IV
V
VI
Eurodollar Borrowings
Applicable
Margin Percentage
1.000%
ABR Borrowings
Applicable
Margin Percentage
0.100%
1.125%
1.250%
1.500%
1.750%
2.000%
0.125%
0.250%
0.500%
0.750%
1.000%
The Applicable Margin shall be determined by reference to the Performance Level in effect
from time to time, and any change in the Applicable Margin shall be effective from the effective date of any
change in the applicable Performance Level giving rise thereto.
“Applicable Anniversary” has the meaning specified in Section 2.22(a).
“Applicable Percentage” means at any time, for each Lender, the percentage obtained by
dividing (a) such Lender’s Commitment by (b) the amount of the Total Commitment, provided that at any
time when the Total Commitment shall have been terminated, each Lender’s Applicable Percentage shall be
the percentage obtained by dividing (a) such Lender’s Credit Exposure by (b) the aggregate Credit Exposure
of all Lenders.
“Application” has the meaning specified in Section 2.05(e).
“Approved Fund” means any Fund that is administered or managed by (a) a Lender, (b) an
Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.
“Arrangers” means Barclays Bank PLC, J.P. Morgan Securities LLC, Merrill Lynch, Pierce,
Fenner & Smith Incorporated (or any other registered broker-dealer wholly-owned by Bank of America
Corporation to which all or substantially all of Bank of America Corporation’s or any of its subsidiaries’
investment banking, commercial lending services or related businesses may be transferred following the
date of this Agreement), BMO Capital Markets Corp., Citigroup Global Markets Inc., Credit Suisse Securities
(USA) LLC, Mizuho Bank, Ltd., MUFG Bank, Ltd., RBC Capital Markets, The Bank of Nova Scotia,
Houston Branch and Wells Fargo Securities LLC, as joint lead arrangers and joint book runners.
“Assignment and Acceptance” means an assignment and acceptance entered into by a Lender
and an assignee (with the consent of any party whose consent is required by Section 9.05), and accepted by
the Administrative Agent, in the form of Exhibit 1.01-A or any other form approved by the Administrative
Agent.
3
EXHIBIT 10.14
“Auto-Extension Letter of Credit” has the meaning specified in Section 2.05(f).
“Availability Period” means the period from the Closing Date to the earlier of (i) the Maturity
Date or (ii) the date of termination of the Total Commitment.
“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the
applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.
“Bail-In Legislation” means, with respect to any EEA Member Country implementing
Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union,
the implementing law for such EEA Member Country from time to time which is described in the EU Bail-
In Legislation Schedule.
“Beneficial Ownership Certification” means a certification regarding beneficial ownership
or control as required by the Beneficial Ownership Regulation, which certification shall be substantially
similar in form and substance to the form of Certification Regarding Beneficial Owners of Legal Entity
Customers published jointly, in May 2018, by the Loan Syndications and Trading Association and Securities
Industry and Financial Markets Association.
“Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.
“Benefit Arrangement” means at any time an employee benefit plan within the meaning of
Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan and which is maintained or otherwise
contributed to by any member of the ERISA Group.
“Benefit Plan” means any of (a) an “employee benefit plan” (as defined in Section 3(3) of
ERISA) that is subject to Title I of ERISA, (b) a “plan” as defined in Section 4975 of the Code to which
Section 4975 of the Code applies, and (c) any Person whose assets include (for purposes of the Plan Asset
Regulations or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any
such “employee benefit plan” or “plan”.
“Board” means the Board of Governors of the Federal Reserve System of the United States
of America.
“Board of Directors” means, with respect to any Person, the Board of Directors of such
Person or any committee of the Board of Directors of such Person duly authorized to act on behalf of the
Board of Directors of such Person.
“Bond Letter of Credit” means irrevocable letter of credit No. S113181 issued by First Union
National Bank (now Wells Fargo) in the original face amount of $24,128,548 for the account of the OLP
“B” and for the benefit of Trustee.
“Bonds” means the Port Facility Refunding Revenue Bonds (Enron Transportation Services,
L.P. Project) Series 1994 in the original aggregate principal amount of $23,700,000, as issued by the Jackson-
Union Regional Port District.
“Borrower” has the meaning specified in the introduction to this Agreement.
“Borrower Debt Rating” means, with respect to the Borrower as of any date of determination,
the rating that has been most recently announced by each of S&P or Moody’s for any non-credit
4
EXHIBIT 10.14
enhanced, unsecured long-term senior debt issued or to be issued by the Borrower. For purposes of the
foregoing:
(a)
if, at any time, neither S&P nor Moody’s shall have in effect a Borrower Debt Rating,
the Applicable Margin or the Applicable Commitment Fee Rate, as the case may be, shall be set in accordance
with Performance Level VI under the definition of “Applicable Margin” or “Applicable Commitment Fee
Rate”, as the case may be;
(b)
if the ratings established by S&P and Moody’s shall fall within different Performance
Levels, the Applicable Margin or the Applicable Commitment Fee Rate, as the case may be, shall be based
upon the higher rating; provided, however, that, if the lower of such ratings is two or more Performance
Levels below the higher of such ratings, the Applicable Margin or the Applicable Commitment Fee Rate, as
the case may be, shall be based upon the rating that is one Performance Level higher than the lower rating;
(c)
if any rating established by S&P or Moody’s shall be changed, such change shall
be effective as of the date on which such change is announced publicly by the rating agency making such
change;
(d)
if S&P or Moody’s shall change the basis on which ratings are established by it,
each reference to the Borrower Debt Rating announced by S&P or Moody’s shall refer to the then equivalent
rating by S&P or Moody’s, as the case may be.
“Borrowing” means (a) a borrowing comprised of Committed Loans of the same Type,
made, converted or continued on the same date and, in the case of Eurodollar Loans, as to which a single
Interest Period is in effect or (b) a Swingline Loan.
“Borrowing Date” means the Business Day upon which any Letter of Credit is to be issued
or any Loans are to be made available to the Borrower.
“Borrowing Request” has the meaning specified in Section 2.03(a).
“Business Day” means any day that is not a Saturday, Sunday or other day on which
commercial banks in Houston, Texas or New York, New York are authorized or required by law to remain
closed; provided that, when used in connection with a rate of interest determined by reference to the Eurodollar
Rate, the term “Business Day” shall also exclude any day on which banks are not open for dealings in dollar
deposits in the London interbank market.
“Capital Lease Obligations” of any Person means the obligations of such Person to pay rent
or other amounts under any lease of (or other arrangement conveying the right to use) real or personal
property, or a combination thereof, which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the
capitalized amount thereof determined in accordance with GAAP.
“Capital Stock” means, with respect to any Person, any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents (however designated) of such Person’s equity,
including (a) all common stock and preferred stock, any limited or general partnership interest and any
limited liability company member interest, (b) beneficial interests in trusts, and (c) any other interest or
participation that confers upon a Person the right to receive a share of the profits and losses of, or distribution
of assets of, the issuing Person.
5
EXHIBIT 10.14
“Cash Collateralize” means, solely for purposes of Sections 2.05(f), 2.19 and 2.20, to pledge
and deposit with or deliver to the Administrative Agent, for the benefit of one or more of the Issuing Banks
or Lenders, as collateral for their respective LC Exposure, cash or deposit account balances or, if the
Administrative Agent and each applicable Issuing Bank shall agree in their sole discretion, other credit
support, in each case pursuant to documentation in form and substance satisfactory to the Administrative
Agent and each applicable Issuing Bank. “Cash Collateral” shall have a meaning correlative to the foregoing
and shall include the proceeds of such cash collateral and other credit support.
“Cash Equivalents” means (a) securities issued or unconditionally guaranteed by the United
States government or any agency or instrumentality thereof, in each case having maturities of not more than
24 months from the date of acquisition thereof; (b) securities issued by any state of the United States of
America or any political subdivision of any such state or any public instrumentality thereof or any political
subdivision of any such state or any public instrumentality thereof having maturities of not more than 24
months from the date of acquisition thereof and, at the time of acquisition, having an investment grade rating
generally obtainable from either S&P or Moody’s (or, if at any time neither S&P nor Moody’s shall be rating
such obligations, then from another nationally recognized rating service); (c) commercial paper issued by
any Lender or any bank holding company owning any Lender; (d) commercial paper maturing no more than
12 months after the date of creation thereof and, at the time of acquisition, having a rating of at least A-2 or
P-2 from either S&P or Moody’s (or, if at any time neither S&P nor Moody’s shall be rating such obligations,
an equivalent rating from another nationally recognized rating service); (e) domestic and Eurodollar Rate
certificates of deposit or bankers’ acceptances maturing no more than two years after the date of acquisition
thereof issued by any Lender or any other bank having combined capital and surplus of not less than
$250,000,000 in the case of domestic banks and $100,000,000 (or the equivalent in dollars thereof) in the
case of foreign banks; (f) repurchase agreements with a term of not more than 30 days for underlying securities
of the type described in clauses (a), (b) and (e) above entered into with any bank meeting the qualifications
specified in clause (e) above or securities dealers of recognized national standing; (g) marketable short-term
money market and similar funds (i) either having assets in excess of $250,000,000 or (ii) having a rating of
at least A-2 or P-2 from either S&P or Moody’s (or, if at any time neither S&P nor Moody’s shall be rating
such obligations, an equivalent rating from another nationally recognized rating service); (h) shares of
investment companies that are registered under the Investment Company Act of 1940 and substantially all
the investments of which are one or more of the types of securities described in clauses (a) through (g) above;
and (i) in the case of investments by any Foreign Subsidiary, other customarily utilized high-quality
investments in the country where such Foreign Subsidiary is located.
“Certain Items” means such items that are required to be included in the calculation of Net
Income in accordance with GAAP that either (i) are non-cash or (ii) by their nature are separately identifiable
from the Borrower and the Subsidiaries’ normal business operations and are likely to occur only sporadically,
and are reflected as such in the Annual Report on Form 10-K of the Borrower or in the Quarterly Report on
Form 10-Q of the Borrower, in each case filed with the SEC. For the avoidance of doubt, Certain Items will
be unadjusted for noncontrolling interests related thereto.
“CFC” means a Person that is a “controlled foreign corporation” within the meaning of
Section 957 of the Code.
“Change in Control” means and will be deemed to have occurred if (a) any person, entity
or “group” (within the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended)
shall at any time have acquired direct or indirect beneficial ownership of a percentage of the voting power
of the outstanding Voting Stock of the Borrower that exceeds 50% of the voting power of all the outstanding
Voting Stock of the Borrower; or (b) Continuing Directors shall not constitute at least a majority of the board
of directors of the Borrower.
6
EXHIBIT 10.14
“Change in Law” means the occurrence, after the date of this Agreement, of any of the
following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law,
rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by
any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether
or not having the force of law) by any Governmental Authority; provided that notwithstanding anything
herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests,
rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules,
guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on
Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory
authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless
of the date enacted, adopted or issued.
“Charges” has the meaning specified in Section 9.13.
“Citi” means Citibank Global Markets Inc., Citibank, N.A., Citicorp North America Inc.,
and any of their affiliates.
“Class”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or
the Loans comprising such Borrowing, are Committed Loans or Swingline Loans.
“Closing Date” means the date on which the conditions specified in Section 3.01 are satisfied
(or waived in accordance with Section 9.02).
“Code” means the Internal Revenue Code of 1986, as amended from time to time.
“Commitment” means, with respect to each Lender, the commitment of such Lender to make
Committed Loans pursuant to Section 2.01 and to acquire participations in Letters of Credit and Swingline
Loans hereunder, expressed as an amount representing the maximum aggregate amount of such Lender’s
Credit Exposure hereunder, as such commitment may be reduced or increased from time to time pursuant
to the terms hereof. The initial amount of each Lender’s Commitment as of the Closing Date is set forth on
Schedule 1.01, or in the Register maintained by the Administrative Agent pursuant to Section 9.05.
“Commitment Fee” has the meaning specified in Section 2.11(a).
“Committed Letter of Credit” has the meaning specified in Section 2.05(b).
“Committed Loan” means a Loan made pursuant to Section 2.03(a).
“Committed Note” means a promissory note of the Borrower payable to the order of each
Lender, in substantially the form of Exhibit 1.01-C, together with all modifications, extensions, renewals
and rearrangements thereof.
“Communications” has the meaning specified in Section 9.01(a).
“Connection Income Taxes” means Other Connection Taxes that are imposed on or measured
by net income (however denominated) or that are franchise Taxes or branch profits Taxes.
“Consolidated Assets” means, at the date of any determination thereof, the total assets of
the Borrower and the Subsidiaries as set forth on a consolidated balance sheet of the Borrower and the
Subsidiaries for their most recently completed fiscal quarter, prepared in accordance with GAAP.
7
EXHIBIT 10.14
“Consolidated EBITDA” means, for any period (without duplication), the Net Income of
the Borrower and the Subsidiaries for such period determined on a consolidated basis in accordance with
GAAP, increased (a) (to the extent deducted in determining Net Income for such period) by the sum of (i)
all book taxes of the Borrower and the Subsidiaries paid or accrued and reflected in the Annual Report on
Form 10-K of the Borrower or in the Quarterly Report on Form 10-Q of the Borrower, in each case filed
with the SEC, and the pro rata portion of book taxes attributable to Affiliated Entities (net of (x) the
noncontrolling interest’s portion of such book taxes of KML and (y) the consolidating joint venture partners’
share of such book taxes of such consolidating joint venture), for such period; (ii) Consolidated Interest
Expense for such period, (iii) all DD&A of the Borrower and the Subsidiaries and the pro rata portion of
DD&A attributable to Affiliated Entities (net of (x) the noncontrolling interest’s portion of such DD&A of
KML and (y) the consolidating joint venture partners’ share of such DD&A of such consolidating joint
venture), for such period; (iv) Certain Items charges or losses, and (v) amortization, write-off or write-down
of debt discount, capitalized interest and debt issuance costs and commissions, discounts and other fees,
charges and expenses associated with any letters of credit or Indebtedness, including in connection with the
repurchase or repayment thereof, including any premium and acceleration of fees or discounts and other
expenses, minus (b) Certain Items of income or gain which were included in determining such consolidated
Net Income for such period; provided, that Consolidated EBITDA shall be calculated after giving pro forma
effect to acquisitions of any Person, property, business or asset (to the extent not subsequently sold,
transferred, abandoned or otherwise disposed) and any sale, transfer, abandonment or other disposition of
any Person, property, business or asset made by the Borrower or any Subsidiary during such period, as if
the acquisition, sale, transfer, abandonment or other disposition had been effected on the first date of such
period.
“Consolidated Interest Expense” means, for any period, the Interest Expense of the Borrower
and the Subsidiaries for such period determined on a consolidated basis in accordance with GAAP.
“Consolidated Net Indebtedness” means, at the date of any determination thereof, (a)
Indebtedness of the Borrower and the Subsidiaries determined on a consolidated basis in accordance with
GAAP minus (b) (i) the aggregate cash included in the cash accounts listed on the consolidated balance sheet
of the Borrower and the Subsidiaries as at such date and (ii) Cash Equivalents of the Borrower and the
Subsidiaries as at such date, in the case of each of clauses (i) and (ii), to the extent the use thereof for
application to payment of Indebtedness is not prohibited by any Requirement of Law or any contract to
which the Borrower or any of the Subsidiaries is a party.
“Consolidated Net Tangible Assets” means, at the date of any determination thereof,
Consolidated Tangible Assets after deducting therefrom all current liabilities, excluding (i) any current
liabilities that by their terms are extendable or renewable at the option of the obligor thereon to a time more
than 12 months after the time as of which the amount thereof is being computed; and (ii) current maturities
of long-term debt, all as set forth, or on a pro forma basis would be set forth, on a consolidated balance sheet
of the Borrower and the Subsidiaries for their most recently completed fiscal quarter, prepared in accordance
with GAAP.
“Consolidated Tangible Assets” means, at the date of any determination thereof,
Consolidated Assets after deducting therefrom the value, net of any applicable reserves and accumulated
amortization, of all goodwill, trade names, trademarks, patents and other like intangible assets, all as set
forth, or on a pro forma basis would be set forth, on a consolidated balance sheet of the Borrower and the
Subsidiaries for their most recently completed fiscal quarter, prepared in accordance with GAAP.
“Continuing Director” means, at any date, an individual (a) who is a member of the board
of directors of the Borrower on the Closing Date, (b) who, as at such date, has been a member of such board
8
EXHIBIT 10.14
of directors for at least the twelve preceding months, or (c) who has been nominated to be a member of such
board of directors by, or elected to such board of directors with the approval of, a majority of the other
Continuing Directors then in office.
“Credit Event” means the making of any Loan or the issuance or extension of any Letter of
Credit or any extension of the Maturity Date pursuant to Section 2.22.
“Credit Exposure” means, with respect to any Lender at any time, the sum of the outstanding
principal amount of such Lender’s Committed Loans and its LC Exposure and its Swingline Exposure at
such time.
“DD&A” means depreciation, depletion and amortization (including amortization of
goodwill) and the amortization of excess costs of equity investments, determined in accordance with GAAP.
“Debtor Relief Laws” means the Bankruptcy Code of the United States of America, and all
other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium,
rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States
or other applicable jurisdictions from time to time in effect.
“Default” means any event or condition which upon notice, lapse of time or both would,
unless cured or waived, become an Event of Default.
“Defaulting Lender” means, subject to Section 2.19(b), any Lender that (a) has failed to (i)
fund all or any portion of its Loans within three Business Days of the date such Loans were required to be
funded hereunder unless such Lender notifies the Administrative Agent and the Borrower in writing that
such failure is the result of such Lender’s determination that one or more conditions precedent to funding
(each of which conditions precedent, together with any applicable default, shall be specifically identified in
such writing) has not been satisfied, or (ii) pay to the Administrative Agent, any Issuing Bank, any Swingline
Lender or any other Lender any other amount required to be paid by it hereunder (including in respect of its
participation in Letters of Credit or Swingline Loans) within two Business Days of the date when due, (b)
has notified the Borrower, the Administrative Agent, any Issuing Bank or any Swingline Lender in writing
that it does not intend to comply with its funding obligations hereunder, or has made a public statement to
that effect (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder
and states that such position is based on such Lender’s determination that a condition precedent to funding
(which condition precedent, together with any applicable default, shall be specifically identified in such
writing or public statement) cannot be satisfied), (c) has failed, within three Business Days after written
request by the Administrative Agent or the Borrower, to confirm in writing to the Administrative Agent and
the Borrower that it will comply with its prospective funding obligations hereunder (provided that such
Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written
confirmation by the Administrative Agent and the Borrower), or (d) has, or has a direct or indirect parent
company that has, (i) become the subject of a proceeding under any Debtor Relief Law, (ii) become subject
of a Bail-In Action, or (iii) had appointed for it a receiver, custodian, conservator, trustee, administrator,
assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business
or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory
authority acting in such a capacity; provided that, for the avoidance of doubt, a Lender shall not be a
Defaulting Lender solely by virtue of (i) the ownership or acquisition of any equity interest in that Lender
or any direct or indirect parent company thereof by a Governmental Authority, or (ii), in the case of a solvent
Person, the precautionary appointment of an administrator, guardian, custodian or other similar official by
a Governmental Authority under or based on the law of the country where such Person is subject to home
9
EXHIBIT 10.14
jurisdiction supervision if applicable law requires that such appointment not be publicly disclosed, in each
of such cases, so long as such ownership interest or such appointment does not result in or provide such
Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of
judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to
reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any
determination by the Administrative Agent that a Lender is a Defaulting Lender under any one or more of
clauses (a) through (d) above shall be conclusive and binding absent manifest error, and such Lender shall
be deemed to be a Defaulting Lender (subject to Section 2.19(b)) upon delivery of written notice of such
determination to the Borrower and each Lender.
“Dividing Person” has the meaning assigned to such term in the definition of “Division”.
“Division” means the division of the assets, liabilities and/or obligations of a Person (the
“Dividing Person”) among two or more Persons (whether pursuant to a “plan of division” or similar
arrangement), which may or may not include the Dividing Person and pursuant to which the Dividing Person
may or may not survive.
“Division Successor” means any Person that, upon the consummation of a Division of a
Dividing Person, holds all or any portion of the assets, liabilities and/or obligations previously held by such
Dividing Person immediately prior to the consummation of such Division. A Dividing Person which retains
any of its assets, liabilities and/or obligations after a Division shall be deemed a Division Successor upon
the occurrence of such Division.
“Documentation Agents” means Barclays Bank PLC, JPMorgan Chase Bank, N.A., Bank of
America, N.A., BMO Harris Bank N.A., Citigroup Global Markets Inc., Credit Suisse AG, Cayman Islands
Branch, Mizuho Bank, Ltd., MUFG Bank, Ltd., Royal Bank of Canada, The Bank of Nova Scotia, Houston Branch
and Wells Fargo Bank, National Association, as documentation agents.
“dollars” or “$” refers to lawful money of the United States of America.
“Domestic Subsidiary” means any Subsidiary of the Borrower organized under the laws of
any jurisdiction within the United States.
“EEA Financial Institution” means (a) any credit institution or investment firm established
in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any
entity established in an EEA Member Country which is a parent of an institution described in clause (a) of
this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary
of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision
with its parent.
“EEA Member Country” means any of the member states of the European Union, Iceland,
Liechtenstein, and Norway.
“EEA Resolution Authority” means any public administrative authority or any person
entrusted with public administrative authority of any EEA Member Country (including any delegee) having
responsibility for the resolution of any EEA Financial Institution.
“Eligible Assignee” means any Person that meets the requirements to be an assignee under
Section 9.05(a)(iii), (v) and (vi) (subject to such consents, if any, as may be required under Section 9.05(a)
(iii)).
10
EXHIBIT 10.14
“Environmental Laws” means all laws, rules, regulations, codes, ordinances, orders, decrees,
judgments, injunctions, notices or binding agreements issued, promulgated or entered into by any
Governmental Authority, relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous Material or to health and safety
matters.
“Environmental Liability” means any liability, contingent or otherwise (including any
liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the Borrower
or any Subsidiary directly or indirectly resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials,
(c) exposure to any Hazardous Materials, (d) the release of any Hazardous Materials into the environment,
or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or
imposed with respect to any of the foregoing.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from
time to time.
“ERISA Group” means the Borrower and all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control which, together with the
Borrower, are treated as a single employer under Section 414 of the Code or Section 4001(a)(14) of ERISA.
“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published
by the Loan Market Association (or any successor person), as in effect from time to time.
“Eurodollar”, when used in reference to any Loan or Borrowing, refers to whether such
Loan, or the Loans comprising such Borrowing, bear interest at a rate determined by reference to the Adjusted
LIBO Rate.
“Eurodollar Rate” means for any Interest Period as to any Eurodollar Loan, (i) the rate per
annum determined by the Administrative Agent to be the offered rate which appears on the page of the
Reuters Screen which displays the London interbank offered rate administered by ICE Benchmark
Administration Limited (such page currently being the LIBOR01 page) (the “LIBO Rate”) for deposits (for
delivery on the first day of such Interest Period) with a term equivalent to such Interest Period in Dollars,
determined as of approximately 11:00 a.m. (London, England time), two Business Days prior to the
commencement of such Interest Period, or (ii) in the event the rate referenced in the preceding clause (i)
does not appear on such page or service or if such page or service shall cease to be available, the rate
determined by the Administrative Agent to be the offered rate on such other page or other service which
displays the LIBO Rate for deposits (for delivery on the first day of such Interest Period) with a term equivalent
to such Interest Period in Dollars, determined as of approximately 11:00 a.m. (London, England time) two
Business Days prior to the commencement of such Interest Period; provided that if LIBO Rates are quoted
under either of the preceding clauses (i) or (ii), but there is no such quotation for the Interest Period elected,
the LIBO Rate shall be equal to the Interpolated Rate; and provided, further, that if any such rate determined
pursuant to the preceding clauses (i) or (ii) is less than zero, the Eurodollar Rate will be deemed to be zero.
“Event of Default” has the meaning specified in Section 7.01.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
11
EXHIBIT 10.14
“Excluded Subsidiary” means (i) any Subsidiary that is not a Wholly-owned Domestic
Operating Subsidiary, (ii) any Domestic Subsidiary that is a Subsidiary of a CFC or any Domestic Subsidiary
(including a disregarded entity for U.S. federal income Tax purposes) substantially all of whose assets (held
directly or through Subsidiaries) consist of Capital Stock of one or more CFCs or Indebtedness of such CFCs,
(iii) any Immaterial Subsidiary, (iv) any Subsidiary listed on Schedule 1.01A, (v) any other Subsidiary with
respect to which, in the reasonable judgment of the Administrative Agent (confirmed in writing by notice to
the Borrower), the cost or other consequences (including any adverse Tax consequences) of providing a
Guaranty shall be excessive in view of the benefits to be obtained by the Lenders therefrom, (vi) any not-
for-profit Subsidiary, (vii) any Subsidiary that is prohibited by a Requirement of Law from providing a
Guaranty of the Obligations, and (ix) any Subsidiary acquired by the Borrower and its Subsidiaries after the
Closing Date to the extent, and so long as, the financing documentation governing any existing Indebtedness
of such Subsidiary (other than Indebtedness created or incurred in anticipation of, or with the intent to
circumvent the terms of, this Agreement) that is permitted to survive pursuant to Section 6.01 (and does
survive) prohibits such Subsidiary from guaranteeing the Obligations; provided, that notwithstanding the
foregoing, any Subsidiary that Guarantees any senior notes or senior debt securities issued by the Borrower
shall not constitute an Excluded Subsidiary for so long as such Guarantee is in effect.
“Excluded Taxes” means any of the following Taxes imposed on or with respect to a Recipient
or required to be withheld or deducted from a payment to a Recipient, (a) Taxes imposed on or measured by
net income (however denominated), franchise Taxes and branch profits Taxes, in each case, (i) imposed as
a result of such Recipient being organized under the laws of, or having its principal office or, in the case of
any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political
subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal
withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an
applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (i) such Lender
acquires such interest in the Loan or Commitment or becomes a party to this Agreement (other than pursuant
to an assignment request by the Borrower under Section 2.18(b) or (ii) such Lender changes its lending
office, except in each case to the extent that, pursuant to Section 2.16, amounts with respect to such Taxes
were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to
such Lender immediately before it changed its lending office, (c) Taxes attributable to such Recipient’s
failure to comply with Section 2.16(g) and (d) any U.S. federal withholding Taxes imposed under FATCA.
“Executive Summary” means the Confidential Information Memorandum relating to this
Agreement and the Transactions dated October 2018.
“Existing Credit Agreement” means the Revolving Credit Agreement, dated as of September
19, 2014 (as amended, restated or otherwise modified), among the Borrower, the banks and other financial
institutions party thereto as lenders and Barclays Bank, PLC as administrative agent.
“Existing LC Subsidiary” means OLP “B” and each other Subsidiary of the Borrower set
forth on Exhibit 1.01E for the account of which an Existing Letter of Credit has been issued.
“Existing Letters of Credit” means the letters of credit issued or, in the case of the Bond
Letter of Credit, deemed issued, under the Existing Credit Agreement and certain letters of credit issued
under a bilateral facility, in each case, listed on Schedule 1.01B.
“Existing Subsidiary Letters of Credit” means, collectively, (i) the Bond Letter of Credit
and (ii) each other Existing Letter of Credit that has been issued for the account of an Existing LC Subsidiary.
12
EXHIBIT 10.14
“Existing Subsidiary Letters of Credit Guaranteed Obligations” has the meaning specified
in Section 2.05(n).
“Existing Subsidiary Letters of Credit Guaranty” has the meaning specified in Section
2.05(n).
“Extension Consenting Lender” has the meaning specified in Section 2.22(b).
“Extension Date” has the meaning specified in Section 2.22(b).
“Extension Non-Consenting Lender” has the meaning specified in Section 2.22(b).
“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement
(or any amended or successor version that is substantively comparable and not materially more onerous to
comply with), any current or future regulations or official interpretations thereof, any agreements entered
into pursuant to Section 1471(b)(1) of the Code, and any law, regulation, rule, promulgation, guidance notes,
practices or official agreement implementing an intergovernmental agreement, treaty or convention with
respect to the foregoing.
“Federal Funds Effective Rate” means, for any day, the rate calculated by the Federal Reserve
Bank of New York based on such day’s federal funds transactions by depository institutions (as determined
in such manner as the Federal Reserve Bank of New York shall set forth on its public website from time to
time) and published on the next succeeding Business Day by the Federal Reserve Bank of New York as the
federal funds effective rate; provided, that if the Federal Funds Effective Rate for any day is less than zero,
the Federal Funds Effective Rate for such day will be deemed to be zero.
“Fee Letter” has the meaning specified in Section 2.11(c).
“Fee Letters” means, collectively, the Administrative Agent Fee Letter and the Fee Letter.
“Foreign Lender” means any Lender that is not a U.S. Person.
“Foreign Subsidiary” means any Subsidiary of the Borrower that is not a Domestic
Subsidiary.
“Fronting Exposure” means, at any time there is a Defaulting Lender, (a) with respect to
any Issuing Bank, such Defaulting Lender’s Applicable Percentage of the outstanding LC Exposure with
respect to Letters of Credit issued by such Issuing Bank other than LC Exposure as to which such Defaulting
Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance
with the terms hereof and (b) with respect to any Swingline Lender, such Defaulting Lender’s Applicable
Percentage of outstanding Swingline Loans made by such Swingline Lender other than Swingline Loans as
to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders.
“Fund” means any Person (other than a natural person) that is (or will be) engaged in making,
purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary
course of its business.
“GAAP” means generally accepted accounting principles in the United States of America
from time to time, including as set forth in the opinions, statements and pronouncements of the
13
EXHIBIT 10.14
Accounting Principles Board of the American Institute of Certified Public Accountants and the Financing
Accounting Standards Board.
“Governmental Authority” means the government of the United States of America or any
other nation, or of any political subdivision thereof, whether state or local, and any agency, authority,
instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra
national bodies such as the European Union or the European Central Bank).
“Guarantee” of or by any Person (the “guarantor”) means any obligation, contingent or
otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or
other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly,
and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply
funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance
or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property,
securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the
payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition
or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other
obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support
such Indebtedness or obligation; provided that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business.
“Guarantors” means each Person that guarantees the Obligations pursuant to the Guaranty.
“Guaranty” means the Guaranty Agreement substantially in the form of Exhibit 1.01-B
hereto.
“Hazardous Materials” means all explosive or radioactive substances or wastes and all
hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates,
asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any Environmental Law.
“Hedging Agreement” means a financial instrument or security which is used as a cash flow
or fair value hedge to manage the risk associated with a change in interest rates, foreign currency exchange
rates or commodity prices.
“Hybrid Securities” means any trust preferred securities, or deferrable interest subordinated
debt with a maturity of at least 20 years, which provides for the optional or mandatory deferral of interest
or distributions, issued by the Borrower, or any business trusts, limited liability companies, limited
partnerships or similar entities (i) substantially all of the common equity, general partner or similar interests
of which are owned (either directly or indirectly through one or more Wholly-owned Subsidiaries) at all
times by the Borrower or any of the Subsidiaries, (ii) that have been formed for the purpose of issuing trust
preferred securities or deferrable interest subordinated debt, and (iii) substantially all the assets of which
consist of (A) subordinated debt of the Borrower or a Subsidiary, and (B) payments made from time to time
on the subordinated debt.
“Immaterial Subsidiary” means any Subsidiary that is not a Material Subsidiary.
“Increased Amount Date” has the meaning specified in Section 2.21(a).
14
EXHIBIT 10.14
“Indebtedness” of any Person means, without duplication, (a) all obligations of such Person
for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar
instruments (other than surety, performance and guaranty bonds), (c) all obligations of such Person under
conditional sale or other title retention agreements relating to property acquired by such Person, (d) all
obligations of such Person in respect of the deferred purchase price of property or services (excluding trade
accounts payable incurred in the ordinary course of business), (e) all Indebtedness of others secured by (or
for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby
has been assumed (determined as the lesser of the amount of the Indebtedness so secured and such property’s
fair market value), (f) all Guarantees by such Person of Indebtedness of others (provided that in the event
that any Indebtedness of the Borrower or any Subsidiary shall be the subject of a Guarantee by one or more
Subsidiaries or by the Borrower, as the case may be, the aggregate amount of the outstanding Indebtedness
of the Borrower and the Subsidiaries in respect thereof shall be determined by reference to the primary
Indebtedness so guaranteed, and without duplication by reason of the existence of any such guarantee), (g)
all Capital Lease Obligations of such Person, (h) all obligations of such Person as an account party in respect
of (i) the full face amount of all letters of credit (drawn or undrawn) supporting the exposure of such Person
under Hedging Agreements and (ii) the drawn portion of all other letters of credit and letters of guaranty, (i)
all obligations, contingent or otherwise, of such Person in respect of funded bankers’ acceptances and (j)
Hybrid Securities. The Indebtedness of any Person shall include the Indebtedness of any other Person
(including any partnership in which such Person is a general partner) to the extent such Person is liable
therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to
the extent the terms of such Indebtedness provide that such Person is not liable therefor: provided that
Indebtedness shall not include (1) non-recourse debt, (2) performance guaranties, (3) monetary obligations
or guaranties of monetary obligations of Person as lessees under leases that are in accordance with GAAP,
recorded as operating leases (and giving effect to the proviso in Section 1.03), and (4) guarantees by such
Person of obligations of others which are not obligations described in clauses (a) through (j) of this definition,
and provided further, that where any such indebtedness or obligation of such Person is made jointly, or jointly
and severally, with any third party or parties other than any Subsidiary of such Person, the amount thereof
for the purpose of this definition only shall be the pro rata portion thereof payable by such Person, so long
as such third party or parties have not defaulted on its or their joint and several portions thereof and can
reasonably be expected to perform its or their obligations thereunder. For the avoidance of doubt, except as
expressly provided in clause (h)(i) above, “Indebtedness” of a Person in respect of such letters of credit shall
include, without duplication, only the principal amount of the unreimbursed obligations of such Person in
respect of such letters of credit that have been drawn upon by the beneficiaries to the extent of the amount
drawn, and shall include no other obligations in respect of such letters of credit.
“Indemnified Parties” has the meaning specified in Section 9.03(b).
“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect
to any payment made by or on account of any Obligation and (b) to the extent not otherwise described in
(a), Other Taxes.
“Indemnity Matters” means, with respect to any Indemnified Party, all losses, liabilities,
claims and damages (including reasonable legal fees and expenses).
“Interest Election Request” has the meaning specified in Section 2.07(b).
“Interest Expense” means (without duplication), with respect to any period for any Person
(a) the aggregate amount of interest, whether expensed or capitalized, paid, accrued or scheduled to be paid
during such period in respect of the Indebtedness of such Person including (i) the interest portion of any
15
EXHIBIT 10.14
deferred payment obligation; (ii) the portion of any rental obligation in respect of Capital Lease Obligations
allocable to interest expenses; and (iii) any non-cash interest payments or accruals, all determined in
accordance with GAAP, less (b) Interest Income of such Person for such period.
“Interest Income” means, with respect to any period for any Person, interest actually received
by such Person during such period.
“Interest Payment Date” means (a) with respect to any ABR Loan (including a Swingline
Loan), the last Business Day of each March, June, September and December, and (b) with respect to any
Eurodollar Loan, the last Business Day of the Interest Period applicable to the Borrowing of which such
Loan is a part and, in the case of a Eurodollar Borrowing with an Interest Period of more than three months’
duration, each day prior to the last day of such Interest Period that occurs at intervals of three months’ duration
after the first day of such Interest Period.
“Interest Period” means with respect to any Eurodollar Borrowing, the period commencing
on the date of such Borrowing and ending (a) on the date that is one week thereafter or (b) on the numerically
corresponding day in the calendar month that is one, two, three or six months thereafter, in each case as the
Borrower may elect; provided (i) if any Interest Period would end on a day other than a Business Day, such
Interest Period shall be extended to the next succeeding Business Day unless, in the case of any Eurodollar
Borrowing, such next succeeding Business Day would fall in the next calendar month, in which case such
Interest Period shall end on the next preceding Business Day, (ii) any Interest Period that commences on the
last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in
the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month
of such Interest Period and (iii) no Interest Period shall end after the Stated Maturity Date. For purposes
hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and, in the case
of a Eurodollar Borrowing, thereafter shall be the effective date of the most recent conversion or continuation
of such Borrowing.
“Interpolated Rate” means, in relation to the LIBO Rate, the rate which results from
interpolating on a linear basis between:
(a)
the applicable LIBO Rate for the longest period (for which that LIBO Rate is
available) which is less than the Interest Period of that Loan; and
(b)
the applicable LIBO Rate for the shortest period (for which that LIBO Rate is
available) which exceeds the Interest Period of that Loan,
each as of approximately 11:00 a.m. (London, England time) two Business Days prior to the commencement
of such Interest Period of that Loan.
“IRS” means the United States Internal Revenue Service.
“Issuing Banks” means Barclays Bank PLC, JPMorgan Chase Bank, N.A., Bank of America,
N.A., Citi and Wells Fargo in their capacities as issuers of Letters of Credit hereunder, and each other Lender
as the Borrower may from time to time select as an Issuing Bank hereunder pursuant to Section 2.05; provided
that such Lender has agreed to be an Issuing Bank and the Administrative Agent has consented to such
selection.
“KML” means Kinder Morgan Canada Limited and its consolidated subsidiaries.
16
EXHIBIT 10.14
“Laws” means, collectively, all international, foreign, federal, state and local statutes,
treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or
authorities, including the interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all applicable administrative orders,
directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental
Authority.
“LC Disbursement” means a payment made by an Issuing Bank pursuant to a Letter of
Credit.
“LC Exposure” means, at any time, the sum of (a) the aggregate undrawn amount of all
outstanding Committed Letters of Credit and Uncommitted Letters of Credit at such time plus (b) the
aggregate amount of all LC Disbursements that have not yet been reimbursed by or on behalf of the Borrower
at such time. The LC Exposure of any Lender at any time shall be its Applicable Percentage of the total LC
Exposure at such time.
“LC Sublimit” means $500,000,000.
“Lenders” has the meaning specified in the introduction to this Agreement. Unless context
otherwise requires, the term “Lenders” includes the Swingline Lender.
“Letter of Credit” means any Existing Letter of Credit or any letter of credit issued pursuant
to this Agreement.
“Letter of Credit Commitment” means, with respect to any Issuing Bank, the commitment
of such Issuing Bank to issue Letters of Credit hereunder, expressed as an amount representing the maximum
aggregate amount of the LC Exposure with respect to Letters of Credit issued by such Issuing Bank as such
commitment may be reduced or terminated from time to time pursuant to Section 2.08. The initial amount
of each Issuing Bank’s Letter of Credit Commitment is set forth on Schedule 1.01.
“Letter of Credit Request” has the meaning specified in Section 2.05(e).
“LIBO Rate” shall have the meaning ascribed thereto in the definition of “Eurodollar Rate”.
“Lien” means, with respect to any asset (a) any mortgage, deed of trust, lien, pledge,
hypothecation, encumbrance, charge or security interest in, on or of such asset, and (b) the interest of a
vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the foregoing) relating to such asset.
“Loan Documents” mean, collectively, this Agreement, the Guaranty, the Notes, if any, the
Applications, the Fee Letters and all other instruments and documents from time to time executed and
delivered by the Borrower or the Guarantors in connection herewith and therewith.
“Loan Party” means the Borrower and each Guarantor.
“Loans” means advances made by the Lenders to the Borrower pursuant to this Agreement.
17
EXHIBIT 10.14
“Material Adverse Effect” means, relative to any occurrence of whatever nature, a material
adverse effect on (a) the business assets, liabilities or financial condition of the Borrower and the Subsidiaries
taken as a whole, (b) the ability of the Borrower and the Guarantors, taken as a whole, to perform the
Obligations or (c) the rights and remedies of the Administrative Agent, any Issuing Bank or any Lender
against the Borrower or, taken as a whole, the Guarantors, under any material provision of this Agreement
or any other Loan Document.
“Material Subsidiary” means, as at any date of determination, any Subsidiary of the Borrower
whose total tangible assets (for purposes of the below, when combined with the tangible assets of such
Subsidiary’s Subsidiaries, after eliminating intercompany obligations) as at such date of determination are
greater than or equal to 5% of Consolidated Tangible Assets as of the last day of the fiscal quarter most
recently ended for which financial statements have been delivered pursuant to Section 5.01(a) or (b) (the
“Most Recent Financial Statement Date”), as the case may be; provided that if the aggregate total tangible
assets of all Material Subsidiaries is less than 85% of Consolidated Tangible Assets as of the Most Recent
Financial Statement Date, the Borrower shall designate Subsidiaries as “Material Subsidiaries” in writing
to the Administrative Agent along with the delivery of the applicable financial statements pursuant to Section
5.01(a) or (b) such that the deficit described in this proviso ceases to exist; provided further that KML shall
not be eligible to be considered as a Material Subsidiary (if applicable) until June 30, 2019.
“Maturity Date” means the earlier of (a) the Stated Maturity Date and (b) the acceleration
of the Obligations pursuant to Section 7.01.
“Maximum Rate” has the meaning specified in Section 9.13.
“Minimum Collateral Amount” means, solely for purposes of Sections 2.19 and 2.20, at
any time, (i) with respect to Cash Collateral consisting of cash or deposit account balances, an amount equal
to 100% of the Fronting Exposure of all Issuing Banks with respect to Letters of Credit issued and outstanding
at such time and (ii) otherwise, an amount determined by the Administrative Agent and the Issuing Banks
in their sole discretion.
“Moody’s” means Moody’s Investors Service, Inc.
“Most Recent Financial Statement Date” has the meaning specified in the definition of
Material Subsidiary.
“Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3) of
ERISA.
“Net Income” means with respect to any Person for any period that net income of such
Person for such period determined in accordance with GAAP; provided that there shall be excluded, without
duplication, from such net income (to the extent otherwise included therein).
(a)
net extraordinary gains and losses (other than, in the case of losses, losses resulting
from charges against net income to establish or increase reserves for potential environmental liabilities and
reserves for exposure of such Person under rate cases);
(b)
course of business;
net gains or losses in respect of dispositions of assets other than in the ordinary
(c)
any gains or losses attributable to write-ups or write-downs of assets; and
18
EXHIBIT 10.14
(d)
proceeds of any key man insurance, or any insurance on property, plant or equipment.
“Net Worth” means, as to the Borrower at any date, the sum of the amount of shareholders’
equity of the Borrower determined as of such date in accordance with GAAP, provided there shall be excluded,
without duplication, from such determination (to the extent otherwise included therein) the amount of
accumulated other comprehensive gain or loss as of such date.
“New Commitment” has the meaning specified in Section 2.21(a).
“New Lender” has the meaning specified in Section 2.21(b).
“New Loan” has the meaning specified in Section 2.21(b).
“New Loan Increase Joinder” has the meaning specified in Section 2.21(c).
“Non-Consenting Lender” means any Lender that does not approve any consent, waiver or
amendment that (i) requires the approval of all Lenders or all affected Lenders in accordance with the terms
of Section 9.02 and (ii) has been approved by the Required Lenders.
“Non-Defaulting Lender” means, at any time, each Lender that is not a Defaulting Lender
at such time.
Subsidiary.
“Non-Extension Notice Date” has the meaning specified in Section 2.05(f).
“Non-Guarantor Subsidiary” has the meaning specified in Section 6.01.
“Non-Wholly-owned Subsidiary” means any Subsidiary that is not a Wholly-owned
“Note” means a Committed Note or a Swingline Note.
“Notice of Default” has the meaning specified in Section 7.01.
“Notice of Prepayment” has the meaning specified in Section 2.10(b).
“Obligations” means collectively:
(a)
the payment of all indebtedness and liabilities by, and performance of all other
obligations of, the Borrower in respect of the Loans;
(b)
all obligations of the Borrower under, with respect to and relating to the Letters of
Credit, whether contingent or matured;
(c)
the payment of all other indebtedness and liabilities by and performance of all other
obligations of the Borrower to the Administrative Agent, the Issuing Banks and the Lenders under, with
respect to, and arising in connection with, the Loan Documents, and the payment of all indebtedness and
liabilities of the Borrower to the Administrative Agent, the Issuing Banks and the Lenders for fees, costs,
indemnification and expenses (including reasonable attorneys’ fees and expenses) under the Loan
Documents;
19
EXHIBIT 10.14
(d)
the reimbursement of all sums advanced and costs and expenses incurred by the
Administrative Agent under any Loan Document (whether directly or indirectly) in connection with the
Obligations or any part thereof or any renewal, extension or change of or substitution for the Obligations or,
any part thereof, whether such advances, costs and expenses were made or incurred at the request of the
Borrower or the Administrative Agent; and
(e)
all renewals, extensions, amendments and changes of, or substitutions or
replacements for, all or any part of the items described under clauses (a) through (d) above.
“OLP “B”” means Kinder Morgan Operating L.P. “B”, a Delaware limited partnership.
“Operating Subsidiary” means any operating company that is a Subsidiary of the Borrower.
“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result
of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than
connections arising from such Recipient having executed, delivered, become a party to, performed its
obligations under, received payments under, received or perfected a security interest under, engaged in any
other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan
or any Loan Document).
“Other Taxes” means all present or future stamp, court or documentary, intangible, recording,
filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance,
enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with
respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect
to an assignment (other than an assignment made pursuant to Section 2.18(b)).
“Participant” has the meaning assigned to such term in Section 9.05(c).
“Participant Register” has the meaning specified in Section 9.05(c).
“Patriot Act” has the meaning specified in Section 9.15.
“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA
and any successor entity performing similar functions.
“Performance Level” means a reference to one of Performance Level I, Performance Level
II, Performance Level III, Performance Level IV, Performance Level V or Performance Level VI.
“Performance Level I” means, at any date of determination, that the Borrower shall have a
Borrower Debt Rating in effect on such date of at least A- by S&P or at least A3 by Moody’s.
“Performance Level II” means, at any date of determination, (a) that the Performance Level
does not meet the requirements of Performance Level I and (b) that the Borrower shall have a Borrower
Debt Rating in effect on such date of at least BBB+ by S&P or at least Baa1 by Moody’s.
“Performance Level III” means, at any date of determination, (a) that the Performance Level
does not meet the requirements of Performance Level I or Performance Level II and (b) that the Borrower
shall have a Borrower Debt Rating in effect on such date of at least BBB by S&P, or at least Baa2 by Moody’s.
20
EXHIBIT 10.14
“Performance Level IV” means, at any date of determination, (a) that the Performance Level
does not meet the requirements of Performance Level I, Performance Level II or Performance Level III and
(b) that the Borrower shall have a Borrower Debt Rating in effect on such date of at least BBB- by S&P, or
at least Baa3 by Moody’s.
“Performance Level V” means, at any date of determination, (a) that the Performance Level
does not meet the requirements of Performance Level I, Performance Level II, Performance Level III or
Performance Level IV and (b) that the Borrower shall have a Borrower Debt Rating in effect on such date
of at least BB+ by S&P, or at least Ba1 by Moody’s.
“Performance Level VI” means, at any date of determination, that the Performance Level
does not meet the requirements of Performance Level I, Performance Level II, Performance Level III,
Performance Level IV or Performance Level V.
“Person” means any natural person, corporation, limited liability company, trust, joint
venture, association, company, partnership, Governmental Authority or other entity.
“Plan” means any employee pension benefit plan (other than a Multiemployer Plan) subject
to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect
of which the Borrower or any member of its ERISA Group is (or, if such plan were terminated, would under
Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.
“Plan Asset Regulations” means 29 CFR § 2510.3-101 et seq., as modified by Section 3(42)
of ERISA, as amended from time to time.
“Prime Rate” means the rate of interest last quoted by The Wall Street Journal as the “Prime
Rate” in the U.S. or, if The Wall Street Journal ceases to quote such rate, the highest per annum interest rate
published by the Federal Reserve Board in Federal Reserve Statistical Release H.15 (519) (Selected Interest
Rates) as the “bank prime loan” rate or, if such rate is no longer quoted therein, any similar rate quoted
therein (as determined by the Administrative Agent) or any similar release by the Federal Reserve Board (as
determined by the Administrative Agent).
“Principal Office” means the principal office of the Administrative Agent, presently located
in New York, New York, or such other location as designated by the Administrative Agent from time to time.
“Recipient” means (a) the Administrative Agent, (b) any Lender and (c) any Issuing Bank,
as applicable.
“Register” has the meaning specified in Section 9.05(b).
“Regulation D” means Regulation D of the Board, as the same is from time to time in effect,
and all official rulings and interpretations thereunder or thereof.
“Regulation T” means Regulation T of the Board, as the same is from time to time in effect,
and all official rulings and interpretations thereunder or thereof.
“Regulation U” means Regulation U of the Board, as the same is from time to time in effect,
and all official rulings and interpretations thereunder or thereof.
21
EXHIBIT 10.14
“Regulation X” means Regulation X of the Board, as the same is from time to time in effect,
and all official rulings and interpretations thereunder or thereof.
“Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners,
directors, officers, employees, agents, trustees, administrators, managers, advisors and representatives of
such Person and of such Person’s Affiliates.
“Required Lenders” means, at any time, subject to the provisions of Section 9.02(b), Lenders
having Credit Exposure and unused Commitments representing more than 50% of the sum of the total Credit
Exposures and unused Commitments at such time.
“Requirement of Law” means any law, statute, code, ordinance, order, determination, rule,
regulation, judgment, decree, injunction, franchise, permit, certificate, license, authorization or other
directive or requirement (whether or not having the force of law), including Environmental Laws, energy
regulations and occupational, safety and health standards or controls, of any Governmental Authority.
“Reserve Requirement” means, for any day a fraction (expressed as a decimal), the numerator
of which is the number one and the denominator of which is the number one minus the aggregate of the
maximum reserve percentage (including any marginal, special, emergency or supplemental reserves)
expressed as a decimal established by the Board or other Governmental Authority to which the Administrative
Agent is subject with respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred to as
“Eurocurrency Liabilities” in Regulation D of the Board). Such reserve percentage shall include those
imposed pursuant to such Regulation D. Eurodollar Loans shall be deemed to constitute eurocurrency funding
and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets
that may be available from time to time to any Lender under such Regulation D or any comparable regulations.
The Reserve Requirement shall be adjusted automatically on and as of the effective date of any change in
any such reserve percentage.
“Responsible Officer” means, as used with respect to the Borrower, the Chairman, Vice
Chairman, President, any Vice President, Chief Executive Officer, Chief Financial Officer, Controller or
Treasurer of the Borrower.
“Restricted Payment” means any distribution (whether in cash, securities or other property)
with respect to any Capital Stock in the Borrower, or any payment (whether in cash, securities or other
property), including any deposit, on account of the purchase, redemption, retirement, acquisition, cancellation
or termination of any such Capital Stock or any option or other right to acquire any such Capital Stock.
“S&P” means Standard & Poor’s Ratings Group, a division of The McGraw-Hill Companies,
Inc.
“Sanctioned Country” means, at any time, a country, region or territory which is itself the
subject or target of any Sanctions (at the time of this Agreement, Crimea, Cuba, Iran, North Korea, and
Syria).
“Sanctioned Person” means, at any time, (a) any Person listed in any Sanctions-related list
of designated Persons maintained by the Office of Foreign Assets Control of the U.S. Department of the
Treasury, the U.S. Department of State, (b) any Person operating, organized or resident in a Sanctioned
Country or (c) any Person owned or controlled by any such Person or Persons described in the foregoing
clauses (a) or (b).
22
EXHIBIT 10.14
“Sanctions” has the meaning specified in Section 4.14(a).
“SEC” means the Securities and Exchange Commission or any Governmental Authority
succeeding to its function.
“Solvent” means, with respect to any Person as of any date, that as of such date, (a)(i) the
sum of such Person’s indebtedness (including contingent liabilities) does not exceed the present fair saleable
value of such Person’s present assets; (ii) such Person’s capital is not unreasonably small in relation to its
business as contemplated on such date; and (iii) such Person has not incurred, and does not intend to incur,
or believe that it will incur indebtedness (including current obligations) beyond its ability to pay principal
and interest on such indebtedness as it becomes due (whether at maturity or otherwise); and (b) such Person
is “solvent” within the meaning given that term and similar terms under applicable laws relating to fraudulent
transfers and conveyances. For the purposes of this definition, the amount of any contingent liability at any
time shall be computed as the amount that, in light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or matured liability (irrespective
of whether such contingent liabilities meet the criteria for accrual under Statement of Financial Accounting
Standard No. 5).
“Stated Maturity Date” means, for any Lender, the date that is five years following the
Closing Date subject to the extension thereof for such Lender pursuant to Section 2.22 or, if such date is not
a Business Day, the immediately preceding Business Day; provided, however, that the Stated Maturity Date
of any Lender that is a Non-Consenting Lender to any requested extension pursuant to Section 2.22 shall be
the Stated Maturity Date of such Lender in effect immediately prior to the applicable Extension Date for all
purposes of this Agreement.
“Subsidiary” means, with respect to any Person (the “parent”) at any date, any corporation,
limited liability company, partnership, association or other entity the accounts of which would be consolidated
with those of the parent in the parent’s consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company,
partnership, association or other entity that is, as of such date, otherwise controlled, by the parent or one or
more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent. Unless the context
otherwise clearly requires, references in this Agreement to a “Subsidiary” or the “Subsidiaries” refer to a
Subsidiary or the Subsidiaries of the Borrower.
“Swingline Exposure” means, at any time, the aggregate principal amount of all Swingline
Loans outstanding at such time. The Swingline Exposure of any Lender at any time shall be its Applicable
Percentage of the total Swingline Exposure at such time.
“Swingline Lender” means Barclays Bank PLC, in its capacity as lender of Swingline Loans
hereunder, or any other Lender acceptable to the Borrower and the Administrative Agent, acting in such
capacity.
“Swingline Loan” means a Loan made pursuant to Section 2.04(a).
“Swingline Note” means a promissory note of the Company payable to the Swingline Lender
in substantially the form of Exhibit 1.01-D, together with all modifications, extensions, renewals and
replacements thereof.
“Syndication Agent” means JPMorgan Chase Bank, N.A.
23
EXHIBIT 10.14
“Taxes” means all present or future taxes, levies, imposts, duties, deductions, or withholdings
(including backup withholding) assets, fees or other charges imposed by any Governmental Authority
including any interest, additions to tax or penalties applicable thereto.
“Total Capitalization” means, as to the Borrower at any date, the sum of Consolidated Net
Indebtedness (determined at such date) and the Net Worth (determined as at the end of the most recent fiscal
quarter of the Borrower for which financial statements pursuant to Section 5.01(a) or Section 5.01(b), as
applicable, have been delivered).
“Total Commitment” means the sum of the Commitments of the Lenders.
“Transactions” has the meaning specified in the Preliminary Statements.
“Trustee” means The Bank of New York Mellon Trust Company, N.A., as the beneficiary
of the Bond Letter of Credit and any successor beneficiary.
“Type”, when used in reference to any Loan or Borrowing, refers to whether the rate of
interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the Adjusted
LIBO Rate or the Alternate Base Rate.
“Uncommitted Letter of Credit” has the meaning specified in Section 2.05(b).
“United States” and “U.S.” each means United States of America.
“U.S. Person” means any Person that is a “United States Person” as defined in Section
7701(a)(30) of the Code.
“U.S. Tax Compliance Certificate” has the meaning specified in Section 2.16(g)(ii)(B)(3).
“Voting Stock” means, with respect to any Person, securities of any class or classes of Capital
Stock in such Person entitling holders thereof (whether at all times or only so long as no senior class of stock
has voting power by reason of any contingency) to vote in the election of members of the Board of Directors
or other governing body of such Person or its managing member or its general partner (or its managing
general partner if there is more than one general partner).
“Wells Fargo” means Wells Fargo Bank National Association.
“Wholly-owned Domestic Operating Subsidiary” means any Wholly-owned Subsidiary
that constitutes (i) a Domestic Subsidiary and (ii) an Operating Subsidiary.
“Wholly-owned Subsidiary” means a Subsidiary of which all issued and outstanding Capital
Stock (excluding in the case of a corporation, directors’ qualifying shares) is directly or indirectly owned by
the Borrower.
“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a complete or
partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title
IV of ERISA.
“Withholding Agent” means the Administrative Agent and the Borrower.
24
EXHIBIT 10.14
“Write-Down and Conversion Powers” means, with respect to any EEA Resolution
Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under
the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers
are described in the EU Bail-In Legislation Schedule.
SECTION 1.02
Classification of Loans and Borrowings. For purposes of this
Agreement, Loans and Borrowings may be classified and referred to by Type (e.g., a “Eurodollar Loan” or
“Eurodollar Borrowing” or an “ABR Loan” or “ABR Borrowing”).
SECTION 1.03
Accounting Terms; Changes in GAAP. All accounting and financial
terms used herein and not otherwise defined herein and the compliance with each covenant contained herein
which relates to financial matters shall be determined in accordance with GAAP applied by the Borrower
on a consistent basis, except to the extent that a deviation therefrom is expressly stated. Should there be a
change in GAAP from that in effect on the Closing Date, such that any of the defined terms set forth in
Section 1.01 and/or compliance with the covenants set forth in Article VI would then be calculated in a
different manner or with different components or any of such covenants and/or defined terms used therein
would no longer constitute meaningful criteria for evaluating the matters addressed thereby prior to such
change in GAAP (a) the Borrower and the Required Lenders agree, within the 60 day period following any
such change, to negotiate in good faith and enter into an amendment to this Agreement in order to modify
the defined terms set forth in Section 1.01 or the covenants set forth in Article VI, or both, in such respects
as shall reasonably be deemed necessary by the Required Lenders that the criteria for evaluating the matters
addressed by such covenants are substantially the same criteria as were effective prior to any such change
in GAAP, and (b) the Borrower shall be deemed to be in compliance with such covenants during the 60-day
period following any such change, or until the earlier date of execution of such amendment, if and to the
extent that the Borrower would have been in compliance therewith under GAAP as in effect immediately
prior to such change; provided, however, that for the avoidance of doubt, any lease that was accounted for
by the Borrower or the Subsidiaries as an operating lease as of the Closing Date and any other lease entered
into after the Closing Date by the Borrower or any Subsidiary shall be accounted for as an operating lease
and not a capital lease to the extent that such lease would have been characterized as an operating lease as
of the Closing Date.
SECTION 1.04
Interpretation. In this Agreement, unless a clear contrary intention
appears:
(a)
(b)
(c)
the singular number includes the plural number and vice versa;
reference to any gender includes each other gender;
the words “herein”, “hereof” and “hereunder” and other words of similar import
refer to this Agreement as a whole and not to any particular Article, Section or other subdivision;
(d)
reference to any Person includes such Person’s successors and assigns but, if
applicable, only if such successors and assigns are permitted by this Agreement, and reference to a Person
in a particular capacity excludes such Person in any other capacity or individually; provided that nothing in
this clause (d) is intended to authorize any assignment not otherwise permitted by this Agreement;
(e)
except as expressly provided to the contrary herein, reference to any agreement,
document or instrument (including this Agreement) means such agreement, document or instrument as
amended, supplemented or modified, or extended, renewed, refunded, substituted or replaced, and in effect
from time to time in accordance with the terms thereof and, if applicable, the terms hereof, and reference to
25
EXHIBIT 10.14
any Note or other note or Indebtedness or other indebtedness includes any note or indebtedness issued
pursuant hereto in extension or renewal or refunding thereof or in substitution or replacement therefor;
(f)
unless the context indicates otherwise, reference to any Article, Section, Schedule
or Exhibit means such Article or Section hereof or such Schedule or Exhibit hereto;
(g)
the word “including” (and with correlative meaning “include”) means including,
without limiting the generality of any description preceding such term;
with respect to the determination of any period of time, except as expressly provided
to the contrary, the word “from” means “from and including” and the word “to” means “to but excluding”;
(h)
(i)
reference to any law, rule or regulation means such as amended, modified, codified
or reenacted, in whole or in part, and in effect from time to time; and
(j)
the words “asset” and “property” shall be construed to have the same meaning and
effect and refer to any and all tangible and intangible assets and properties.
ARTICLE II
THE CREDITS
SECTION 2.01
Commitments.
Subject to the terms and conditions set forth herein, each Lender agrees to make Committed
Loans in U.S. dollars to the Borrower from time to time during the Availability Period in an aggregate
principal amount that will not result in (i) such Lender’s Credit Exposure exceeding such Lender’s
Commitment or (ii) the sum of the total Credit Exposures exceeding the Total Commitment. Within the
foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, prepay
and reborrow Committed Loans.
SECTION 2.02
Loans and Borrowings.
(a)
Each Committed Loan shall be made as part of a Borrowing consisting of Committed
Loans denominated in U.S. dollars made by the Lenders, ratably in accordance with their Applicable
Percentage of the Total Commitment on the date such Loan is made hereunder. The failure of any Lender
to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder;
provided that the Commitments of the Lenders are several and no Lender shall be responsible for any other
Lender’s failure to make Loans as required.
(b)
Subject to Section 2.13, each Borrowing (other than a Borrowing of Swingline
Loans, which must be ABR Loans) shall be comprised entirely of ABR Loans or Eurodollar Loans as the
Borrower may request in accordance herewith. Each Lender at its option may make any Eurodollar Loan
by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any
exercise of such option shall not affect the obligation of the Borrower to repay such Loan in accordance with
the terms of this Agreement.
(c)
At the commencement of each Interest Period for any Eurodollar Borrowing, such
Borrowing shall be in an aggregate amount that is an integral multiple of $1,000,000 and not less than
$3,000,000. At the time that each ABR Borrowing is made, such Borrowing shall be in an aggregate amount
that is an integral multiple of $1,000,000 and not less than $1,000,000; provided that an ABR
26
EXHIBIT 10.14
Borrowing may be in an aggregate amount that is equal to the entire unused balance of the Total Commitment
or that is required to finance the reimbursement of an LC Disbursement as contemplated by Section 2.05(h).
Each Swingline Loan shall be in an amount that is an integral multiple of $100,000 and not less than
$1,000,000.
(d)
There shall not at any time be more than a total of twelve Eurodollar Borrowings
outstanding.
(e)
Notwithstanding any other provision of this Agreement, the Borrower shall not be
entitled to request, or to elect to convert or continue, any Borrowing if the Interest Period requested with
respect thereto would end after the Stated Maturity Date.
SECTION 2.03
Requests for Borrowings.
(a)
To request a Borrowing (other than a Borrowing of a Swingline Loan), the Borrower
shall notify the Administrative Agent of such request (which request shall be in writing unless otherwise
agreed to by the Administrative Agent) (a) in the case of a Eurodollar Borrowing, not later than 11:00 a.m.,
New York, New York time, three Business Days before the date of the proposed Borrowing and (b) in the
case of an ABR Borrowing, not later than 10:00 a.m., New York, New York, time, on the date of the proposed
Borrowing. Each such Borrowing Request shall be irrevocable and shall be made by hand delivery, telecopy
or electronic communication (e-mail) to the Administrative Agent of a written Borrowing Request in a form
of Exhibit 2.03 (a “Borrowing Request”) and signed by the Borrower. Each such Borrowing Request shall
specify the following information in compliance with Section 2.02:
(i)
the aggregate amount of the requested Borrowing;
(ii)
the date of such Borrowing, which shall be a Business Day;
(iii)
whether such Borrowing is to be an ABR Borrowing or a Eurodollar
Borrowing;
(iv)
in the case of a Eurodollar Borrowing, the initial Interest Period to be
applicable thereto, which shall be a period contemplated by the definition of the term “Interest
Period”; and
(v)
the location and number of the Borrower’s account to which funds are to
be disbursed, which shall comply with the requirements of Section 2.06;
If no election as to the Type of Borrowing is specified, then the requested Borrowing shall
be an ABR Borrowing. If no Interest Period is specified with respect to any requested Eurodollar Borrowing,
then the Borrower shall be deemed to have selected an Interest Period of one month’s duration. Promptly
following receipt of a Borrowing Request in accordance with this Section 2.03, the Administrative Agent
shall advise each Lender in writing of the details thereof and of the amount of such Lender’s Loan to be
made as part of the requested Borrowing.
(b)
To request a Borrowing of a Swingline Loan, the Borrower shall notify the
Administrative Agent of such request (which request shall be in writing unless otherwise agreed by the
Administrative Agent), not later than 12:00 noon, New York, New York, time, on the day of a proposed
Swingline Loan. Each such notice shall be irrevocable and shall specify (i) the requested date (which shall
be a Business Day) of the Swingline Loan, (ii) the amount of the requested Swingline Loan and (iii) the
number of the Borrower’s deposit account with the Swingline Lender to which funds are to be disbursed.
27
EXHIBIT 10.14
The Administrative Agent (if not the Swingline Lender) will promptly advise the Swingline Lender of any
such notice received from the Borrower. The Swingline Lender shall make each Swingline Loan available
to the Borrower by means of a credit to the deposit account of the Borrower identified in the notice or
otherwise agreed upon by the Borrower and the Swingline Lender from time to time by 3:00 p.m., New
York, New York, time, on the requested date of such Swingline Loan.
SECTION 2.04
Swingline Loans.
(a)
Subject to the terms and conditions set forth herein, the Swingline Lender in its
individual capacity agrees, at any time and from time to time on and after the Closing Date, to make a loan
or loans (each a “Swingline Loan” and, collectively, the “Swingline Loans”) to the Borrower from time to
time during the Availability Period, in an aggregate principal amount at any time outstanding that will not
result in (i) the aggregate principal amount of outstanding Swingline Loans exceeding $50,000,000 or (ii)
the sum of the total Credit Exposures exceeding the Total Commitment; provided that (A) each Swingline
Loan shall be in a minimum amount of $1,000,000 and shall be repayable in full as provided in Section 2.09,
and (B) the Swingline Lender shall not be required to make a Swingline Loan to refinance an outstanding
Swingline Loan. Within the foregoing limits and subject to the terms and conditions set forth herein, the
Borrower may borrow, prepay and reborrow Swingline Loans.
(b)
The Swingline Lender may by written notice given to the Administrative Agent not
later than 12:00 noon, New York, New York, time, on any Business Day require the Lenders to acquire
participations on such Business Day in all or a portion of the Swingline Loans outstanding. Such notice
shall specify the aggregate amount of Swingline Loans in which Lenders will participate. Promptly upon
receipt of such notice, the Administrative Agent will give notice thereof to each Lender, specifying in such
notice such Lender’s Applicable Percentage of such Swingline Loan or Loans. Each Lender hereby absolutely
and unconditionally agrees, upon receipt of notice as provided above, to pay to the Administrative Agent,
for the account of the Swingline Lender, such Lender’s Applicable Percentage of such Swingline Loan or
Loans. Each Lender acknowledges and agrees that its obligation to acquire participations in Swingline Loans
pursuant to this paragraph is irrevocable and unconditional and shall not be affected by any circumstance
whatsoever, including the occurrence and continuance of a Default or Event of Default or reduction or
termination of the Total Commitment, and that each such payment shall be made without any offset,
abatement, withholding or reduction whatsoever. Each Lender shall comply with its obligation under this
paragraph by wire transfer of immediately available funds, in the same manner as provided in Section 2.06
with respect to Loans made by such Lender (and Section 2.06 shall apply, mutatis mutandis, to the payment
obligations of the Lenders), and the Administrative Agent shall promptly pay to the Swingline Lender the
amounts so received by it from the Lenders. The Administrative Agent shall notify the Borrower of any
participations in any Swingline Loan acquired pursuant to this paragraph, and thereafter payments in respect
of such Swingline Loan shall be made to the Administrative Agent for the account of the Lenders and not
to the Swingline Lender. Any amounts received by the Swingline Lender from the Borrower (or other party
on behalf of the Borrower) in respect of a Swingline Loan after receipt by the Swingline Lender of the
proceeds of a sale of participations therein shall be promptly remitted to the Administrative Agent for the
account of the Lenders; any such amounts received by the Administrative Agent shall be promptly remitted
by the Administrative Agent to the Lenders that shall have made their payments pursuant to this paragraph
and to the Swingline Lender, as their interests may appear. The purchase of participations in a Swingline
Loan pursuant to this paragraph shall not relieve the Borrower of any default in the payment thereof.
SECTION 2.05
Letters of Credit.
Existing Letters of Credit. The parties hereto acknowledge that on and after the
Closing Date, each Existing Letter of Credit shall be a Letter of Credit issued by the Issuing Bank shown as
(a)
28
EXHIBIT 10.14
the issuer thereof on Schedule 1.01B for the account of the relevant Existing LC Subsidiary in the case of
the Existing Subsidiary Letters of Credit, and for the account of the Borrower in the case of all other Existing
Letters of Credit. Any Letter of Credit issued by Wachovia Bank, National Association, or First Union
National Bank shall be deemed to be a Letter of Credit issued by Wells Fargo. OLP “B” hereby pledges,
assigns, transfers and delivers to Wells Fargo, as the Issuing Bank that has issued the Bond Letter of Credit,
all its right, title and interest to all Bonds purchased with funds drawn under the Bond Letter of Credit (the
“Pledged Bonds”), and hereby grants to such Issuing Bank a first lien on, and security interest in, its rights,
title and interest in and to the Pledged Bonds, the interest thereon and all proceeds thereof or substitutions
therefor, as collateral security for the prompt and complete payment when due of the amounts payable in
respect of the Bond Letter of Credit. During such time as any Bonds are Pledged Bonds, the Issuing Bank
that has issued the Bond Letter of Credit shall be entitled to exercise all of the rights of a holder of Bonds
with respect to voting, consenting and directing the Trustee as if such Issuing Bank were the owner of such
Bonds, and OLP “B” hereby grants and assigns to such Issuing Bank all such rights.
(b)
General. Subject to the terms and conditions set forth herein, the Borrower may
request the issuance, amendment, renewal or extension of Letters of Credit from an Issuing Bank for its own
account individually, for its own account and that of any Subsidiary as co-applicants, or, in the case of the
Existing Subsidiary Letters of Credit, for the account of the relevant Existing LC Subsidiary, in a form
reasonably acceptable to the Administrative Agent and such Issuing Bank, at any time and from time to time
during the Availability Period. Subject to the terms and conditions set forth herein, such Issuing Bank shall
have an obligation to issue a Letter of Credit (each such Letter of Credit, a “Committed Letter of Credit”),
and to amend, renew or extend any Letter of Credit previously issued by it, under this Section 2.05 if, after
giving effect to any such issuance, amendment, renewal or extension, (i) the LC Exposure for all Letters of
Credit issued by such Issuing Bank would not exceed such Issuing Bank’s Letter of Credit Commitment at
such time, (ii) the total LC Exposure would not exceed the LC Sublimit and (iii) the total Credit Exposure
does not exceed the Total Commitment. In addition, at the request of the Borrower, an Issuing Bank may
in its sole discretion agree to issue, amend, renew, or extend Letters of Credit for the account of the Borrower
individually or for its own account and that of any Subsidiary (each such Letter of Credit, an “Uncommitted
Letter of Credit”); provided, however, after giving effect to any such issuance, amendment, renewal or
extension, (i) the total LC Exposure shall not exceed the LC Sublimit, and (ii) the total Credit Exposure shall
not exceed the Total Commitment. In the event of any inconsistency between the terms and conditions of
this Agreement and the terms and conditions of any Application or other agreement submitted by the Borrower
to, or entered into by the Borrower with, the Issuing Bank thereof relating to any Letter of Credit, the terms
and conditions of this Agreement shall control. All Letters of Credit issued and deemed issued under this
Section 2.05 shall constitute utilization of the Total Commitment including the total Letter of Credit
Commitments in an amount equal to the LC Exposure relating to such Letters of Credit. All Letters of Credit
issued under this Agreement shall be denominated in U.S. dollars. In no event shall any Issuing Bank be
required to issue any Letter of Credit other than a stand by Letter of Credit.
(c)
No Issuing Bank shall be under any obligation to issue any Letter of Credit if:
(i)
any order, judgment or decree of any Governmental Authority or arbitrator
shall by its terms purport to enjoin or restrain such Issuing Bank from issuing such Letter of Credit,
or any Law applicable to such Issuing Bank or any request or directive (whether or not having the
force of law) from any Governmental Authority with jurisdiction over such Issuing Bank shall
prohibit, or request that such Issuing Bank refrain from, the issuance of letters of credit generally
or such Letter of Credit in particular or shall impose upon such Issuing Bank with respect to such
Letter of Credit any restriction, reserve or capital requirement (for which such Issuing Bank is not
otherwise compensated hereunder) not in effect on the Closing Date, or shall impose upon such
29
EXHIBIT 10.14
Issuing Bank any unreimbursed loss, cost or expense which was not applicable on the Closing Date
and which such Issuing Bank in good faith deems material to it;
(ii)
the issuance of such Letter of Credit would violate one or more policies of
such Issuing Bank applicable to letters of credit generally;
(iii)
except as otherwise agreed by the Administrative Agent and such Issuing
Bank, such Letter of Credit is in an initial stated amount less than $10,000;
(iv)
such Letter of Credit is to be denominated in a currency other than U.S.
dollars;
(v)
such Letter of Credit contains any provisions for automatic reinstatement
of the stated amount after any drawing thereunder; or
(vi)
any Lender is at such time a Defaulting Lender, unless such Issuing Bank
has entered into arrangements, including reallocation of such Lender’s Applicable Percentage of the
outstanding LC Exposure pursuant to Section 2.19(a)(iv) or the delivery of Cash Collateral,
satisfactory to such Issuing Bank (in its sole discretion) with the Borrower or such Lender to eliminate
such Issuing Bank’s actual or potential Fronting Exposure (after giving effect to Section 2.19(a)(iv))
with respect to such Lender arising from either the Letter of Credit then proposed to be issued or
such Letter of Credit and all other LC Exposure as to which such Issuing Bank has actual or potential
Fronting Exposure, as it may elect in its sole discretion.
(d)
No Issuing Bank shall be under any obligation to amend or extend any Letter of
Credit if (A) such Issuing Bank would have no obligation at such time to issue the Letter of Credit in its
amended form under the terms hereof or (B) the beneficiary of such Letter of Credit does not accept the
proposed amendment thereto.
(e)
Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions. To
request the issuance of a Letter of Credit (or the amendment, renewal or extension of an outstanding Letter
of Credit), the Borrower shall hand deliver or telecopy (or transmit by electronic communication (e-mail),
if arrangements for doing so have been approved by the designated Issuing Bank) to the designated Issuing
Bank and the Administrative Agent not less than five Business Days (or such lesser number as may be
otherwise acceptable to such Issuing Bank) in advance of the requested date of issuance, amendment, renewal
or extension) a notice (a “Letter of Credit Request”) requesting the issuance of a Letter of Credit, or identifying
the Letter of Credit to be amended, renewed or extended, the date of issuance, amendment, renewal or
extension, the date on which such Letter of Credit is to expire (which shall comply with Section 2.05(f)),
the amount of such Letter of Credit, the name and address of the beneficiary thereof and such other information
as shall be necessary to prepare, amend, renew or extend such Letter of Credit. If requested by the Issuing
Bank that has been requested to issue such Letter of Credit, the Borrower also shall submit a letter of credit
application on such Issuing Bank’s standard form (an “Application”), appropriately completed and signed
by a Responsible Officer of the Borrower and including agreed-upon draft language for such Letter of Credit
reasonably acceptable to the applicable Issuing Bank, in connection with any request for a Letter of Credit.
A Letter of Credit shall be issued, amended, renewed or extended only if, after giving effect to such issuance,
amendment, renewal or extension, (i) at any time prior to the Stated Maturity Date (A) the sum of the total
Credit Exposures at any time shall not exceed the Total Commitment, (B) the LC Exposure in respect of
Committed Letters of Credit issued by any Issuing Bank shall not exceed the Letter of Credit Commitment
of such Issuing Bank and (C) the total LC Exposure shall not exceed the LC Sublimit, and (ii) at any time
on and after the Stated Maturity Date, no Lender shall have any Credit Exposure or LC Exposure. Upon the
30
EXHIBIT 10.14
issuance, amendment, renewal or extension of each Letter of Credit, the Issuing Bank that has issued such
Letter of Credit will notify the Administrative Agent, who, in turn, will notify the Lenders, of the amount
and type of such Letter of Credit that is issued, amended, renewed or extended pursuant to this Agreement.
(f)
Expiration Date. Each Letter of Credit (other than the Bond Letter of Credit) shall
expire at or prior to the close of business on the earlier of (i) the date one year after the date of the issuance
of such Letter of Credit (unless the Issuing Bank issuing such Letter of Credit otherwise agrees in its sole
discretion) and (ii) five Business Days prior to the Stated Maturity Date (except to the extent Cash
Collateralized or backstopped pursuant to arrangements satisfactory to the relevant Issuing Bank when
required in accordance with Section 2.05(l)). If the Borrower so requests in any applicable Letter of Credit
Request, the Issuing Bank may, in its sole and absolute discretion, agree to issue a Letter of Credit that has
automatic extension provisions (each, an “Auto-Extension Letter of Credit”); provided that any such Auto-
Extension Letter of Credit must permit the Issuing Bank to prevent any such extension at least once in each
twelve-month period (commencing with the date of issuance of such Letter of Credit) by giving prior notice
to the beneficiary thereof not later than a day (the “Non-Extension Notice Date”) in each such twelve-month
period to be agreed upon at the time such Letter of Credit is issued. Unless otherwise directed by the Issuing
Bank, the Borrower shall not be required to make a specific request to the Issuing Bank for any such extension.
Once an Auto-Extension Letter of Credit has been issued, the Lenders shall be deemed to have authorized
(but may not require) the Issuing Bank to permit the extension of such Letter of Credit at any time to an
expiry date not later than the five Business Days prior to the Stated Maturity Date; provided, however, that
(i) the Issuing Bank shall not permit any such extension if the Issuing Bank has determined that it would not
be permitted, or would have no obligation, at such time to issue such Letter of Credit in its revised form (as
extended) under the terms hereof (by reason of the provisions of clause (e) of this Section 2.05 or otherwise
pursuant to the terms hereof) and (ii) an Issuing Bank may permit the extension of such Letter of Credit to
an expiry date that is later than the five Business Days prior to the Stated Maturity Date (but in any case to
a date that is no later than twelve months since the expiry date as of the last auto-extension), provided that
such Letter of Credit is Cash Collateralized or otherwise backstopped pursuant to arrangements satisfactory
to the relevant Issuing Bank when required in accordance with Section 2.05(l).
(g)
Participations. On the Closing Date, with respect to the Existing Letters of Credit
and by the issuance of each other Letter of Credit (or an amendment to a Letter of Credit increasing the
amount thereof) and without any further action on the part of the Issuing Banks or the Lenders, the Issuing
Bank that has issued such Letter of Credit hereby grants to each Lender, and each Lender hereby acquires
from such Issuing Bank, a participation in such Letter of Credit equal to such Lender’s Applicable Percentage
of the aggregate amount available to be drawn under such Letter of Credit. In consideration and in furtherance
of the foregoing, each Lender hereby absolutely and unconditionally agrees to pay to the Administrative
Agent, for the account of such Issuing Bank, such Lender’s Applicable Percentage of each LC Disbursement
made by such Issuing Bank and not reimbursed by the Borrower on the date due as provided in Section
2.05(h), or of any reimbursement payment required to be refunded to the Borrower for any reason. Each
Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in
respect of Letters of Credit is irrevocable and unconditional and shall not be affected by any circumstance
whatsoever, including any amendment, renewal or extension of any Letter of Credit or the occurrence and
continuance of a Default or an Event of Default or reduction or termination of the Total Commitment, and
that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.
(h)
Reimbursement. If any Issuing Bank shall make any LC Disbursement in respect
of a Letter of Credit, the Borrower shall reimburse such LC Disbursement by paying to the Administrative
Agent (whether from its own funds or with the proceeds of Committed Loans) an amount equal to such LC
Disbursement not later than 12:00 noon, New York, New York, time, on the Business
31
EXHIBIT 10.14
Day immediately following the day that the Borrower receives notice of such LC Disbursement; provided
that if the Borrower fails to make such payment when due, then, upon demand by such Issuing Bank sent
to the Administrative Agent and each Lender before 10:00 a.m., New York, New York, time, each Lender
shall pursuant to Section 2.06 on the same day make available to the Administrative Agent for delivery to
such Issuing Bank, immediately available funds in an amount equal to such Lender’s Applicable Percentage
of the amount of such payment by such Issuing Bank, and the funding of such amount shall be treated as the
funding of an ABR Loan by such Lender to the Borrower. Notwithstanding anything herein or in any other
Loan Document to the contrary, the funding obligations of the Lenders set forth in this Section 2.05(h) shall
be binding regardless of whether or not a Default or an Event of Default shall exist or the other conditions
precedent in Article III are satisfied at such time. If and to the extent any Lender fails to effect any payment
due from it under this Section 2.05(h) to the Administrative Agent, then interest shall accrue on the obligation
of such Lender to make such payment from the date such payment became due to the date such obligation
is paid in full at a rate per annum equal to the Federal Funds Effective Rate. The failure of any Lender to
pay its Applicable Percentage of any payment under any Letter of Credit shall not relieve any other Lender
of its obligation hereunder to pay to the Administrative Agent its Applicable Percentage of any payment
under any Letter of Credit on the date required, as specified above, but no Lender shall be responsible for
the failure of any other Lender to pay to the Administrative Agent such other Lender’s Applicable Percentage
of any such payment.
(i)
Obligations Absolute. The Borrower’s obligation to reimburse LC Disbursements
as provided in Section 2.05(h) shall, to the extent permitted by law, be absolute, unconditional and irrevocable,
and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances
whatsoever and irrespective of:
(i)
any lack of validity or enforceability of any Letter of Credit, this Agreement
or any other Loan Document, or any term or provision herein or therein;
(ii)
any amendment or waiver of or any consent to departure from all or any of
the provisions of any Letter of Credit, this Agreement or any other Loan Document;
(iii)
the existence of any claim, setoff, defense or other right that any Loan Party,
any Affiliate of any Loan Party or any other Person may at any time have against the beneficiary
under any Letter of Credit, any Issuing Bank, the Administrative Agent or any Lender or any other
Person, whether in connection with this Agreement or any other related or unrelated agreement or
transaction;
(iv)
any draft or other document presented under a Letter of Credit proving to
be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate
in any respect;
(v)
payment by any Issuing Bank under a Letter of Credit against presentation
of a draft or other document that does not comply with the terms of such Letter of Credit; and
(vi)
any other act or omission to act or delay of any kind of the Issuing Banks,
the Lenders, the Administrative Agent or any other Person or any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this
Section 2.05, constitute a legal or equitable discharge of either Borrower’s obligations hereunder.
32
EXHIBIT 10.14
Neither the Administrative Agent, the Lenders nor the Issuing Banks, nor any of their Related Parties, shall
have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter
of Credit or any payment or failure to make any payment thereunder, including any of the circumstances
specified in clauses (i) through (vi) above, as well as any error, omission, interruption, loss or delay in
transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit
(including any document required to make a drawing thereunder), any error in interpretation of technical
terms or any consequence arising from causes beyond the control of any Issuing Bank; provided that the
foregoing shall not be construed to excuse any Issuing Bank from liability to the Borrower (or, in the case
of the Existing Subsidiary Letters of Credit, the relevant Existing LC Subsidiary) to the extent of any direct
damages (as opposed to consequential damages, claims in respect of which are hereby waived by each
Borrower to the extent permitted by applicable law) suffered by the Borrower that are caused by such Issuing
Bank’s failure to exercise the agreed standard of care (as set forth below) in determining whether drafts and
other documents presented under a Letter of Credit comply with the terms thereof. The parties hereto
expressly agree that each Issuing Bank shall have exercised the agreed standard of care in the absence of
gross negligence, willful misconduct or unlawful conduct on the part of such Issuing Bank. Without limiting
the generality of the foregoing, it is understood that each Issuing Bank may accept documents that appear
on their face to be in substantial compliance with the terms of a Letter of Credit, without responsibility for
further investigation, regardless of any notice or information to the contrary, and may make payment upon
presentation of documents that appear on their face to be in substantial compliance with the terms of such
Letter of Credit; provided that each Issuing Bank shall have the right, in its sole discretion, to decline to
accept such documents and to make such payment if such documents are not in strict compliance with the
terms of such Letter of Credit.
(j)
Disbursement Procedures. Each Issuing Bank shall, promptly following its receipt
thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit issued
by it. Each Issuing Bank shall promptly notify the Administrative Agent and the Borrower and, in the case
of the Existing Subsidiary Letters of Credit, the relevant Existing LC Subsidiary, by telephone (confirmed
by telecopy) or by electronic communication (e-mail) of such demand for payment and whether such Issuing
Bank has made or will make an LC Disbursement thereunder; provided that any failure to give or delay in
giving such notice shall not relieve the Borrower of its obligation to reimburse such Issuing Bank and the
Lenders with respect to any such LC Disbursement.
(k)
Interim Interest. If any Issuing Bank shall make any LC Disbursement, then, unless
the Borrower shall reimburse such LC Disbursement in full on the date specified in Section 2.05(h), the
unpaid amount thereof shall bear interest, for each day from the date such LC Disbursement is made to the
date that the Borrower reimburses such LC Disbursement (or all Lenders make the payments to the
Administrative Agent contemplated by Section 2.05(h) and treated pursuant to said Section as constituting
the funding of ABR Loans), at the rate per annum then applicable to ABR Committed Loans.
(l)
Cash Collateralization. If (i) any Event of Default shall occur and be continuing,
on the Business Day that the Borrower receives notice from the Administrative Agent or the Required Lenders
(or, if the maturity of the Loans has been accelerated, Lenders with LC Exposure representing greater than
51% of the total LC Exposure) demanding the deposit of cash collateral pursuant to this paragraph or (ii) any
Letter of Credit remains outstanding on the fifth Business Day prior to the Stated Maturity Date, the Borrower
shall deposit in an account with the Administrative Agent, in the name of the Administrative Agent and for
the benefit of the Lenders, an amount in cash equal to the LC Exposure as of such date plus any accrued and
unpaid interest thereon; provided that the obligation to deposit such cash collateral shall become effective
immediately, and such deposit shall become immediately due and payable, without demand or notice of any
kind, upon (A) the occurrence of any event described in the foregoing clauses (i) or (ii) or (B) the occurrence
of any Event of Default with respect to the Borrower
33
EXHIBIT 10.14
described in clause (g) or (h) of Section 7.01. Such deposit shall be held by the Administrative Agent as
collateral for the payment and performance of the obligations of the Borrower under this Agreement and the
other Loan Documents. The Administrative Agent shall have exclusive dominion and control, including the
exclusive right of withdrawal, over such account. Other than any interest earned on the investment of such
deposits (which investments shall be made at the option and sole discretion of the Administrative Agent, but
only in investments rated at least AA (or equivalent) by at least one nationally recognized rating agency)
such deposits shall not bear interest. Interest or profits, if any, on such investments shall accumulate in such
account and may, subject to the immediately preceding sentence be reinvested from time to time. Moneys
in such account shall be applied by the Administrative Agent to reimburse each Issuing Bank for LC
Disbursements for which it has not been reimbursed and, to the extent not so applied, shall be held for the
satisfaction of the reimbursement obligations of the Borrower for the LC Exposure at such time or, if the
maturity of the Loans has been accelerated (but subject to the consent of Lenders with LC Exposure
representing greater than 51% of the total LC Exposure), be applied to satisfy other obligations of the
Borrower under this Agreement and the other Loan Documents. If the Borrower is required to provide an
amount of cash collateral hereunder as a result of the occurrence of an Event of Default, such amount (to
the extent not applied as aforesaid) shall be returned to the Borrower within three Business Days after all
Events of Default have been cured or waived. If the Borrower is required to provide an amount of cash
collateral hereunder as a result of any Letter of Credit remaining outstanding on the fifth Business Day prior
to the Stated Maturity Date, then such cash collateral or portion thereof shall be released promptly following:
(i) the elimination of the applicable LC Exposure, (ii) the Administrative Agent’s good faith determination
that there exists excess cash collateral, or (iii) the extension of the Stated Maturity Date to a date that is more
than five Business Days later than the expiry date of the applicable Letter of Credit.
(m)
Designation. In addition the Borrower and any Issuing Bank, with the written
consent of the applicable Issuing Bank and notice to the Administrative Agent and the Lenders, may designate
letters of credit issued by such Issuing Bank that were not originally issued under this Agreement as Letters
of Credit issued hereunder, so long as, at the time of such designation, (i) the Borrower would have been
able to deliver a Letter of Credit Request with respect to a Letter of Credit hereunder containing the same
terms as such letter of credit that was so designated, (ii) such Issuing Bank would have been required to
issue a Letter of Credit hereunder containing the same terms as such letter of credit that was so designated
and (iii) all the conditions to a credit extension set forth in Section 3.02 have been met immediately prior to
such designation. Upon such designation in accordance with the foregoing, such designated letter of credit
of such Issuing Bank shall be deemed to be a Letter of Credit issued by such Issuing Bank hereunder.
(n)
Existing Subsidiary Letters of Credit Guaranty. Notwithstanding that each Existing
Subsidiary Letter of Credit is in support of obligations of, and is for the account of, a Subsidiary, the Borrower
shall be obligated to reimburse the Issuing Bank hereunder for any and all drawings under such Existing
Subsidiary Letter of Credit in accordance with Section 2.05(h). Notwithstanding the foregoing, to the extent
that the Borrower is not treated as the primary obligor for the reimbursement of such Existing Subsidiary
Letter of Credit pursuant to the relevant documentation for such Existing Subsidiary Letter of Credit, the
Debtor Relief Laws, any other applicable Laws or otherwise, the Borrower hereby absolutely, unconditionally
and irrevocably guarantees (this “Existing Subsidiary Letters of Credit Guaranty”) the punctual payment
and performance when due, whether at stated maturity, by acceleration or otherwise, of the obligations of
the Existing LC Subsidiaries under the Existing Subsidiary Letters of Credit, whether for principal, interest
(including interest accruing or becoming owing both prior to and subsequent to the commencement of any
proceeding against or with respect to the Existing LC Subsidiaries under any Debtor Relief Laws, fees,
commissions, expenses (including reasonable attorneys’ fees and expenses) or otherwise (all such obligations
being the “Existing Subsidiary Letters of Credit Guaranteed Obligations”). The Borrower agrees to pay any
and all expenses incurred by
34
EXHIBIT 10.14
each Lender, the Issuing Bank and the Administrative Agent in enforcing this Existing Subsidiary Letters
of Credit Guaranty against the Borrower. This Existing Subsidiary Letters of Credit Guaranty is an absolute,
unconditional, present and continuing guaranty of payment and not of collectability and is in no way
conditioned upon any attempt to collect from the Existing LC Subsidiaries or any other action, occurrence
or circumstance whatsoever. The Borrower agrees that, to the maximum extent permitted by applicable law,
the Existing Subsidiary Letters of Credit Guaranteed Obligations may be extended or renewed, and
indebtedness thereunder repaid and reborrowed in whole or in part, without notice to or assent by the
Borrower, and that it will remain bound upon this Existing Subsidiary Letters of Credit Guaranty
notwithstanding any extension, renewal or other alteration of any Existing Subsidiary Letters of Credit
Guaranteed Obligations, or any repayment and reborrowing of Loans. To the maximum extent permitted
by applicable law, except as otherwise expressly provided in this Agreement or any other Loan Document
to which the Borrower is a party, the obligations of the Borrower under this Existing Subsidiary Letters of
Credit Guaranty shall be absolute, unconditional and irrevocable, and shall be performed strictly in
accordance with the terms hereof under any circumstances whatsoever. The Borrower hereby waives
promptness, diligence, notice of acceptance and any other notice with respect to any of the Existing Subsidiary
Letters of Credit Guaranteed Obligations and this Existing Subsidiary Letters of Credit Guaranty and waives
presentment, demand for payment, notice of intent to accelerate, notice of dishonor or nonpayment and any
requirement that the Administrative Agent or any Lender institute suit, collection proceedings or take any
other action to collect the Existing Subsidiary Letters of Credit Guaranteed Obligations, including any
requirement that the Administrative Agent or any Lender exhaust any right or take any action against the
Existing LC Subsidiaries or any other Person or any collateral (it being the intention of the Administrative
Agent, the Lenders and the Borrower that this Existing Subsidiary Letters of Credit Guaranty is to be a
guaranty of payment and not of collection). It shall not be necessary for the Administrative Agent or any
Lender, in order to enforce any payment by the Borrower hereunder, to institute suit or exhaust its rights and
remedies against the Existing LC Subsidiaries or any other Person, including others liable to pay any Existing
Subsidiary Letters of Credit Guaranteed Obligations, or to enforce its rights against any security ever given
to secure payment thereof. The Borrower hereby expressly waives to the maximum extent permitted by
applicable law each and every right to which it may be entitled by virtue of the suretyship laws of the State
of New York or any other state in which it may be located, including any and all rights it may have pursuant
to Rule 31, Texas Rules of Civil Procedure, Section 17.001 of the Texas Civil Practice and Remedies Code
and Chapter 34 of the Texas Business and Commerce Code.
SECTION 2.06
Funding of Borrowings.
(a)
Each Lender shall make each Loan to be made by it hereunder on the proposed date
thereof by wire transfer of immediately available funds by 2:00 p.m., New York, New York time, to the
account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders;
provided that Swingline Loans shall be made as provided in Section 2.04. The Borrower hereby irrevocably
authorizes the Administrative Agent to disburse the proceeds of each Borrowing requested pursuant to Section
2.03 in immediately available funds by crediting or wiring such proceeds to the deposit account of the
Borrower identified in the Borrowing Request or otherwise agreed upon by the Borrower and the
Administrative Agent from time to time; provided that ABR Committed Loans made to finance the
reimbursement of an LC Disbursement as provided in Section 2.05(g) and (h) shall be remitted by the
Administrative Agent to the Issuing Bank that made such LC Disbursement.
(b)
Unless the Administrative Agent shall have received notice from a Lender prior to
the proposed date of any Borrowing (or prior to 11:00 a.m., New York, New York, time, on such date in the
case of an ABR Borrowing) that such Lender will not make available to the Administrative Agent such
Lender’s Applicable Percentage of such Borrowing, the Administrative Agent may assume that such Lender
has made such Applicable Percentage of such Borrowing available on such date in accordance with
35
EXHIBIT 10.14
Section 2.06(a) and may, in reliance upon such assumption, make available to the Borrower a corresponding
amount. In such event, if a Lender has not in fact made its Applicable Percentage of the applicable Borrowing
available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay
to the Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each
day from the date such amount is made available to the Borrower to the date of payment to the Administrative
Agent, at (i) in the case of such Lender, the greater of the Federal Funds Effective Rate and a rate determined
by the Administrative Agent in accordance with banking industry rules on interbank compensation, or (ii)
in the case of the Borrower, the interest rate applicable to ABR Loans. If the Borrower and such Lender
shall pay such interest to the Administrative Agent for the same or an overlapping period, the Administrative
Agent shall promptly remit to the Borrower the amount of such interest paid by the Borrower for such period.
If such Lender pays its share of the applicable Borrowing to the Administrative Agent, then the amount so
paid shall constitute such Lender’s Loan included in such Borrowing. Any payment by the Borrower shall
be without prejudice to any claim the Borrower may have against a Lender that shall have failed to make
such payment to the Administrative Agent.
SECTION 2.07
Interest Elections.
(a)
Subject to Section 2.13, each Borrowing initially shall be of the Type specified in
the applicable Borrowing Request and, in the case of a Eurodollar Borrowing, shall have an initial Interest
Period as specified in such Borrowing Request. Thereafter, subject to Section 2.13, the Borrower may elect
to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Eurodollar
Borrowing, may elect Interest Periods therefor, all as provided in this Section 2.07. The Borrower may elect
different options with respect to different portions of the affected Borrowing, in which case each such portion
shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans
comprising each such portion shall be considered a separate Borrowing. This Section 2.07 shall not apply
to Swingline Borrowings, which may not be converted or continued.
(b)
To make an election pursuant to this Section 2.07, the Borrower shall notify the
Administrative Agent of such election (which notification shall be in writing unless otherwise agreed to by
the Administrative Agent) by the time that a Borrowing Request would be required under Section 2.03 if the
Borrower were requesting a Borrowing of the Type resulting from such election to be made on the effective
date of such election. Each such Interest Election Request shall be irrevocable and shall be made by hand
delivery or telecopy or by electronic communication (e-mail) to the Administrative Agent of an Interest
Election Request in the form of Exhibit 2.07 (an “Interest Election Request”).
(c)
Each Interest Election Request shall specify the following information in
compliance with Section 2.02:
(i)
the Borrowing to which such Interest Election Request applies and, if
different options are being elected with respect to different portions thereof, the portions thereof to
be allocated to each resulting Borrowing (in which case the information to be specified pursuant to
clauses (iii) and (iv) below shall be specified for each resulting Borrowing);
(ii)
the effective date of the election made pursuant to such Interest Election
Request, which shall be a Business Day;
(iii)
whether the resulting Borrowing is to be an ABR Borrowing or a Eurodollar
Borrowing; and
36
EXHIBIT 10.14
(iv)
if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period
to be applicable thereto after giving effect to such election, which shall be a period contemplated
by the definition of the term “Interest Period”.
If any such Interest Election Request requests a Eurodollar Borrowing but does not specify
an Interest Period, then the Borrower shall be deemed to have selected an Interest Period of one month’s
duration.
(d)
Promptly following receipt of an Interest Election Request, the Administrative
Agent shall advise each Lender in writing of the details thereof and of such Lender’s portion of each resulting
Borrowing.
(e)
If the Borrower fails to deliver a timely Interest Election Request with respect to a
Eurodollar Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing
is repaid as provided herein, at the end of such Interest Period such Borrowing shall be converted to an ABR
Borrowing. Notwithstanding any contrary provision hereof, if and so long as an Event of Default is continuing
and the Administrative Agent, at the request of the Required Lenders, so notifies the Borrower, then so long
as an Event of Default has occurred and is continuing (i) no outstanding Borrowing may be converted to or
continued as a Eurodollar Borrowing, and (ii) unless repaid, each Eurodollar Borrowing shall be converted
to an ABR Borrowing at the end of the Interest Period applicable thereto.
SECTION 2.08
Termination and Reduction of Commitments; Mandatory Prepayments.
(a)
Unless previously terminated, the Total Commitment shall terminate on the Maturity
Date.
(b)
The Borrower may at any time terminate, or from time to time reduce, the Total
Commitment or the Letter of Credit Commitments, in whole or in part; provided that (i) each partial reduction
of the Total Commitment or Letter of Credit Commitments shall be in an amount that is an integral multiple
of $1,000,000 and not less than $5,000,000, (ii) the Borrower shall not terminate or reduce the Commitments
if, after giving effect to any concurrent prepayment of the Loans in accordance with Section 2.10, the total
Credit Exposures would exceed the Total Commitment and (iii) the Borrower shall not terminate or reduce
the Letter of Credit Commitments if, after giving effect to such termination or reduction, (A) the total LC
Exposure would exceed the total Letter of Credit Commitments as so reduced or (B) the LC Exposure of
any Issuing Bank would exceed its Letter of Credit Commitment.
(c)
The Borrower shall notify the Administrative Agent of any election to terminate or
reduce the Total Commitment or the Letter of Credit Commitments under Section 2.08(a) at least three
Business Days prior to the effective date of such termination or reduction, specifying such election and the
effective date thereof. Promptly following receipt of any notice, the Administrative Agent shall advise the
Lenders of the contents thereof. Each notice delivered by the Borrower pursuant to this Section 2.08 shall
be irrevocable; provided that a notice of termination of the Total Commitment or the Letter of Credit
Commitments delivered by the Borrower may state that such notice is conditioned upon the effectiveness
of other credit facilities or other event, in which case such notice may be revoked by the Borrower (by notice
to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied. Any
termination or reduction of the Total Commitment or the Letter of Credit Commitments shall be permanent.
Except as expressly provided in Section 2.19, each reduction of the Total Commitment shall be made ratably
among the Lenders in accordance with their Applicable Percentages.
37
EXHIBIT 10.14
SECTION 2.09
Repayment of Loans; Evidence of Debt.
(a)
The Borrower hereby unconditionally promises to pay (i) to the Administrative
Agent for the account of each Lender the then unpaid principal amount of each Committed Loan on the
Maturity Date and (ii) to the Swingline Lender the then unpaid principal amount of each Swingline Loan
not later than seven days after the date such Swingline Loan is made. In addition, if the total Credit Exposures
exceeds the Total Commitment, the Borrower shall pay to the Administrative Agent for the account of each
Lender an aggregate principal amount of Committed Loans or Swingline Loans sufficient to cause the total
Credit Exposures not to exceed the Total Commitment; provided, however, if the repayment of the outstanding
Committed Loans and/or Swingline Loans does not cause the total Credit Exposures, to be equal to or less
than the Total Commitment, the Borrower shall deposit in an account with the Administrative Agent in the
name of the Administrative Agent and for the benefit of the Lenders, an amount in cash equal to the amount
by which the total Credit Exposures exceeds the Total Commitment, which cash deposit shall be held by the
Administrative Agent for the payment of the Obligations of the Borrower under this Agreement and the other
Loan Documents. The Administrative Agent shall have exclusive dominion and control, including the
exclusive right of withdrawal, over such account other than any interest earned on the investment of such
deposit (which investments shall be made at the option and sole discretion of the Administrative Agent, but
only in investments rated at least AA (or equivalent) by at least one nationally recognized rating agency,
unless an Event of Default shall have occurred and be continuing, and in any event at the Borrower’s risk
and expense). Interest or profits, if any, on such investments shall accumulate in such account. Moneys in
such account shall be applied by the Administrative Agent to reimburse each Issuing Bank for LC
Disbursements for which it has not been reimbursed and, to the extent not so applied, shall be held for the
satisfaction of the reimbursement obligations of the Borrower for the LC Exposure at such time, or if the
maturity of the Loans has been accelerated (but subject to the consent of the Lenders with LC Exposure
representing greater than 51% of the total LC Exposure), be applied to satisfy other obligations of the
Borrower under this Agreement and the other Loan Documents. At any time when the sum of the total Credit
Exposures does not exceed the Total Commitment and so long as no Default under Section 7.01(b) or Event
of Default shall then exist, upon the request of the Borrower the amount of such deposit (to the extent not
applied as aforesaid) shall be returned to the Borrower within three Business Days after receipt of such
request.
(b)
Each Lender shall maintain in accordance with its usual practice an account or
accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by
such Lender, including the amounts of principal and interest payable and paid to such Lender from time to
time hereunder.
(c)
The Administrative Agent shall maintain accounts in which it shall record (i) the
amount of each Loan made hereunder, the Class and Type thereof and the Interest Period applicable thereto,
(ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower
to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder
for the account of the Lenders and each Lender’s share thereof.
(d)
The entries made in the accounts maintained pursuant to Section 2.09(b) or (c) shall
be prima facie evidence of the existence and amounts of the obligations recorded therein; provided that the
failure of any Lender or the Administrative Agent to maintain such accounts or any error or conflict therein
shall not in any manner affect the obligation of the Borrower to repay the Loans in accordance with the terms
of this Agreement.
Any Lender may request that Loans made by it be evidenced by a Committed Note
or a Swingline Note, as applicable. In such event, the Borrower shall prepare, execute and deliver to such
(e)
38
EXHIBIT 10.14
Lender a Committed Note or a Swingline Note, as applicable. Thereafter, the Loans evidenced by such
Committed Note and interest thereon shall at all times (including after assignment pursuant to Section 9.05)
be represented by one or more Committed Notes in such forms payable to the payee named therein.
SECTION 2.10
Voluntary Prepayment of Loans.
(a)
The Borrower shall have the right at any time and from time to time to prepay any
Borrowing in whole or in part, subject to prior notice in accordance with Section 2.10(b).
(b)
The Borrower shall notify the Administrative Agent (or, in the case of prepayment
of a Swingline Loan, the Swingline Lender) (which notice shall be made in writing by telecopy or electronic
communication (e-mail) in the form of Exhibit 2.10 (a “Notice of Prepayment”)) of any prepayment hereunder
(i) in the case of prepayment of a Eurodollar Borrowing, not later than 11:00 a.m., New York, New York
time, three Business Days before the date of prepayment, (ii) in the case of prepayment of an ABR Borrowing
(other than Swingline Loans), not later than 11:00 a.m., New York, New York time, one Business Day prior
to the date of prepayment or (iii) in the case of prepayment of a Swingline Loan, not later than 11:00 a.m.,
New York, New York time on the date of the prepayment. Each such notice shall be irrevocable and shall
specify the prepayment date, Type and the principal amount of each Borrowing or portion thereof to be
prepaid; provided that, if a notice of prepayment is given in connection with a conditional notice of termination
of the Total Commitment as contemplated by Section 2.08, then such notice of prepayment may be revoked
if such notice of termination of the Total Commitment is revoked in accordance with Section 2.08. Each
partial prepayment shall be in an aggregate amount not less than, and shall be an integral multiple of, the
amounts shown below with respect to the applicable Type of Loan or Borrowing:
Type of
Loan/Borrowing
Eurodollar Borrowing
ABR Borrowing
Swingline Loan
Integral
Multiple of
Minimum
Aggregate Amount
$1,000,000
$1,000,000
$100,000
$3,000,000
$1,000,000
$1,000,000
Promptly following receipt of any such notice relating to a Borrowing, the Administrative Agent shall advise
the Lenders in writing of the contents thereof. If the Borrower fails to designate the Type of Borrowings to
be prepaid, partial prepayments shall be applied first to the outstanding Swingline Loans until the outstanding
principal amount of all Swingline Loans is repaid in full, then to the outstanding ABR Borrowings until the
outstanding principal amount of all ABR Borrowings is repaid in full, and then to the outstanding principal
amount of Eurodollar Borrowings. Each partial prepayment of any Borrowing shall be in an amount that
would be permitted in the case of an advance of a Borrowing of the same Type as provided in Section 2.02.
Each prepayment of a Borrowing shall be applied to the Loans included in the prepaid Borrowing in
accordance with the Lenders’ Applicable Percentage of such Borrowing. Prepayments shall be accompanied
by accrued interest to the extent required by Section 2.12.
SECTION 2.11
Fees.
(a)
The Borrower agrees to pay to the Administrative Agent for the account of each
Lender (other than a Defaulting Lender) a commitment fee (the “Commitment Fee”), which shall be equal
to (a) the Applicable Commitment Fee Rate times (b) the daily average undrawn portion of the such
39
EXHIBIT 10.14
Lender’s Commitment (it being understood that (i) such Lender’s Applicable Percentage of the face amount
of Letters of Credit issued and outstanding shall be considered a drawn portion of such Lender’s Commitment
for such purpose and (ii) such Lender’s Swingline Exposure shall be excluded from the drawn portion of
such Lender’s Commitment for such purpose), during the period from the Closing Date to the later of (i) the
date on which such Commitment terminates and (ii) the date on which the Loans are paid in full; provided
that, if such Lender continues to have any Credit Exposure after its Commitment terminates, then such
Commitment Fee shall continue to accrue on the daily amount of such Lender’s Credit Exposure from the
date on which its Commitment terminates to the date on which such Lender ceases to have any Credit
Exposure. Accrued Commitment Fees shall be payable in arrears on the last Business Day of March, June,
September and December of each year and on the date on which the Commitments terminate and the date
the Loans are paid in full, commencing on the first such date to occur after the Closing Date. All Commitment
Fees shall be computed on the basis of a year of 365 or 366 days, as the case may be, and shall be payable
for the actual number of days elapsed (including the first day but excluding the last day).
(b)
The Borrower agrees to pay (i) to the Administrative Agent for the account of each
Lender (other than a Defaulting Lender) a participation fee with respect to its participations in Letters of
Credit which shall accrue at a rate per annum equal to the Applicable Margin for Eurodollar Loans on the
average daily amount of such Lender’s LC Exposure (excluding any portion thereof attributable to
unreimbursed LC Disbursements) during the period from and including the Closing Date to but excluding
the later of the date on which such Lender’s Commitment terminates and the date on which such Lender
ceases to have any LC Exposure and (ii) to each Issuing Bank that has issued a Letter of Credit, a fronting
fee which shall accrue a rate agreed to by the Borrower and such Issuing Bank (and notified to the
Administrative Agent) on the average daily amount of the LC Exposure in respect of each such Letter of
Credit from the date such Letter of Credit is issued to the date on which there ceases to be any LC Exposure
with respect to such Letter of Credit. The Borrower also agrees to pay each Issuing Bank’s standard fees
with respect to the issuance, amendment, renewal or extension of any Letter of Credit issued by it or the
processing of drawings thereunder. Accrued participation fees and fronting fees shall be payable in arrears
on the last Business Day of March, June, September and December of each year, commencing on the first
such date to occur after the Closing Date; provided that all such fees shall be payable on the date on which
the Total Commitment terminates and any such fees accruing after the date on which the Total Commitment
terminates shall be payable on demand. Any other fees payable to any Issuing Bank pursuant to this paragraph
shall be payable within 10 days after demand. All participation fees shall be computed on the basis of a year
of 360 days, as applicable, and shall be payable for the actual number of days elapsed (including the first
day but excluding the last day).
(c)
The Borrower agrees to pay, without duplication, to (i) the Administrative Agent
and the Lenders, for their own accounts (or that of their applicable Affiliate), fees payable in the amounts
and at the times specified in that letter agreement dated October 23, 2018 among the Borrower, Barclays
Bank PLC and JPMorgan Chase Bank, N.A. (as from time to time amended, the “Fee Letter”) and (ii) the
Administrative Agent, for its own account (or that of its applicable Affiliate), fees payable in amounts and
at the times specified in that letter agreement dated October 23, 2018 among the Borrower and Barclays
Bank PLC (the “Administrative Agent Fee Letter”).
(d)
All fees payable hereunder shall be paid on the dates due, in immediately available
funds, to the Administrative Agent (or to each Issuing Bank, in the case of fees payable to it) (for distribution,
in the case of Commitment Fees and participation fees, to the Lenders). Except as required by law, fees paid
shall not be refundable under any circumstance.
SECTION 2.12
Interest.
40
EXHIBIT 10.14
(a)
The Loans comprising each ABR Borrowing shall bear interest at a rate per annum
equal to the sum of Alternate Base Rate plus the Applicable Margin. Each Swingline Loan shall be an ABR
Loan and shall bear interest at the Alternate Base Rate plus the Applicable Margin.
(b)
The Loans comprising each Eurodollar Borrowing shall bear interest at the Adjusted
LIBO Rate for the Interest Period in effect for such Borrowing plus the Applicable Margin.
(c)
Notwithstanding the foregoing, if any principal of or interest on any Loan or any
fee or other amount payable by the Borrower hereunder is not paid when due, whether at stated maturity,
upon acceleration or otherwise, such overdue amount shall bear interest, after as well as before judgment,
at a rate per annum equal to (i) in the case of overdue principal of any Loan, 2% plus the rate otherwise
applicable to such Loan as provided above or (ii) in the case of any other amount, 2% plus the Alternate
Base Rate.
(d)
Accrued interest on each Loan shall be payable in arrears on each Interest Payment
Date for such Loan; provided that (i) interest accrued pursuant to Section 2.12(c) shall be payable on demand,
(ii) in the event of any repayment or prepayment of any Loan (other than a prepayment of an ABR Committed
Loan prior to the end of the Availability Period), accrued interest on the principal amount repaid or prepaid
shall be payable on the date of such repayment or prepayment, (iii) in the event of any conversion of any
Eurodollar Committed Loan prior to the end of the current Interest Period therefor, accrued interest on such
Loan shall be payable on the effective date of such conversion and (iv) all accrued interest shall be payable
upon termination of the Total Commitment.
(e)
All interest hereunder shall be computed on the basis of a year of 360-day year,
except that interest computed by reference to the Alternate Base Rate at times when the Alternate Base Rate
is based on the Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year),
and in each case shall be payable for the actual number of days elapsed (including the first day but excluding
the last day). The applicable Alternate Base Rate, Adjusted LIBO Rate or LIBO Rate shall be determined
by the Administrative Agent, and such determination shall be conclusive absent manifest error.
SECTION 2.13
Alternate Rate of Interest.
(a)
If prior to the commencement of any Interest Period for a Eurodollar Borrowing:
(i)
the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining
the Adjusted LIBO Rate or the LIBO Rate for such Interest Period; or
(ii)
the Administrative Agent is advised by the Required Lenders that the
Adjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest Period will not adequately
and fairly reflect the cost to such Lenders of making or maintaining their Loans included in such
Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and the Lenders in writing as promptly
as practicable thereafter and, until the Administrative Agent notifies the Borrower and the Lenders in writing
that the circumstances giving rise to such notice no longer exist, (i) any Interest Election Request that requests
the conversion of any Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing shall be
ineffective, and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such Borrowing shall be
made as an ABR Borrowing.
41
EXHIBIT 10.14
(b)
If at any time the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that (i) the circumstances set forth in clause (a)(i) have arisen and such
circumstances are unlikely to be temporary or (ii) the circumstances set forth in clause (a)(i) have not arisen
but the supervisor for the administrator of the LIBO Rate or a Governmental Authority having jurisdiction
over the Administrative Agent has made a public statement identifying a specific date after which the LIBO
Rate shall no longer be used for determining interest rates for loans, then the Administrative Agent and the
Borrower shall endeavor to establish an alternate rate of interest to the LIBO Rate that gives due consideration
to the then prevailing market convention for determining a rate of interest for syndicated loans in the United
States at such time, and shall enter into an amendment to this Agreement to reflect such alternate rate of
interest and such other related changes to this Agreement as may be applicable (but for the avoidance of
doubt, such related changes shall not include a reduction of the Applicable Margin). Notwithstanding
anything to the contrary in Section 9.02, such amendment shall become effective without any further action
or consent of any other party to this Agreement so long as the Administrative Agent shall not have received,
within five Business Days of the date notice of such alternate rate of interest is provided to the Lenders, a
written notice from the Required Lenders stating that such Required Lenders object to such amendment.
Until an alternate rate of interest shall be determined in accordance with this clause (b) (but, in the case of
the circumstances described in clause (ii) of the first sentence of this Section 2.13(b), only to the extent the
LIBO Rate for such Interest Period is not available or published at such time on a current basis), (x) any
Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing
as, a Eurodollar Borrowing shall be ineffective and (y) if any Borrowing Request requests a Eurodollar
Borrowing, such Borrowing shall be made as an ABR Borrowing; provided that, if such alternate rate of
interest shall be less than zero, such rate shall be deemed to be zero for the purposes of this Agreement.
SECTION 2.14
Increased Costs.
(a)
If any Change in Law shall:
(i)
impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of, or credit extended by, any Lender
(except any such reserve requirement reflected in the Adjusted LIBO Rate) or any Issuing Bank;
(ii)
subject any Recipient to any Taxes (other than (A) Indemnified Taxes, (B)
Taxes described in clauses (b) through (d) of the definition of Excluded Taxes and (C) Connection
Income Taxes) on its Loans, loan principal, Letters of Credit, Commitments, or other Obligations,
or its deposits, reserves, other liabilities or capital attributable thereto; or
(iii)
impose on any Lender, any Issuing Bank or the London interbank market
any other condition, cost or expense (other than Taxes) affecting this Agreement or Eurodollar Loans
made by such Lender or any Letter of Credit or participation therein;
and the result of any of the foregoing shall be to increase the cost to such Lender or such other Recipient of
making, converting to, continuing or maintaining any Loan or of maintaining its obligation to make any such
Loan, or to increase the cost to such Lender, such Issuing Bank or such other Recipient of participating in,
issuing or maintaining any Letter of Credit (or of maintaining any obligation to participate in or to issue any
Letter of Credit), or to reduce the amount of any sum received or receivable by such Lender, Issuing Bank
or other Recipient hereunder (whether of principal, interest or any other amount) then, upon request of such
Lender, Issuing Bank or other Recipient, the Borrower will pay to such Lender or other Recipient, as the
case may be, such additional amount or amounts as will
42
EXHIBIT 10.14
compensate such Lender, Issuing Bank or other Recipient, as the case may be, for such additional costs
incurred or reduction suffered.
(b)
If any Lender or Issuing Bank determines that any Change in Law affecting such
Lender or Issuing Bank or any lending office of such Lender or such Lender’s or Issuing Bank’s holding
company, if any, regarding capital or liquidity requirements, has or would have the effect of reducing the
rate of return on such Lender’s or Issuing Bank’s capital or on the capital of such Lender’s or Issuing Bank’s
holding company, if any, as a consequence of this Agreement, the Commitment of such Lender or the Loans
made by, or participations in Letters of Credit or Swingline Loans held by, such Lender, or the Letters of
Credit issued by any Issuing Bank, to a level below that which such Lender or Issuing Bank or such Lender’s
or Issuing Bank’s holding company could have achieved but for such Change in Law (taking into consideration
such Lender’s or Issuing Bank’s policies and the policies of such Lender’s or Issuing Bank’s holding company
with respect to capital adequacy and/or liquidity requirements), then from time to time the Borrower will
pay to such Lender or Issuing Bank, as the case may be, such additional amount or amounts as will compensate
such Lender or Issuing Bank or such Lender’s or Issuing Bank’s holding company for any such reduction
suffered.
(c)
A certificate of a Lender or any Issuing Bank setting forth the amount or amounts
necessary to compensate such Lender or Issuing Bank or its holding company, as the case may be, as specified
in paragraph (a) or (b) of this Section 2.14 and delivered to the Borrower, shall be conclusive absent manifest
error. The Borrower shall pay such Lender or Issuing Bank, as the case may be, the amount shown as due
on any such certificate within 10 Business Days after receipt thereof.
(d)
Failure or delay on the part of any Lender or any Issuing Bank to demand
compensation pursuant to this Section 2.14 shall not constitute a waiver of such Lender’s or Issuing Bank’s
right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender
or any Issuing Bank pursuant to this Section 2.14 for any increased costs or reductions incurred more than
six months prior to the date that such Lender or such Issuing Bank, as the case may be, notifies the Borrower
of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or such Issuing
Bank’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such
increased costs or reductions is retroactive, then the six-month period referred to above shall be extended to
include the period of retroactive effect thereof).
SECTION 2.15
Break Funding Payments. In the event of (a) the payment of any
principal of any Eurodollar Loan other than on the last day of an Interest Period applicable thereto (including
as a result of an Event of Default), (b) the conversion of any Eurodollar Loan other than on the last day of
the Interest Period applicable thereto, (c) the failure to borrow (unless such failure was caused by the failure
of a Lender to make such Loan), convert, continue or prepay any Eurodollar Loan, or the failure to convert
an ABR Loan to a Eurodollar Loan, on the date specified in any notice delivered pursuant hereto (regardless
of whether such notice is permitted to be revocable under Section 2.08 and is revoked in accordance herewith),
or (d) the assignment of any Eurodollar Loan other than on the last day of the Interest Period applicable
thereto as a result of a request by the Borrower pursuant to Section 2.18, then, in any such event, the Borrower
shall compensate each Lender for the loss, cost and expense attributable to such event. In the case of a
Eurodollar Loan, the loss to any Lender attributable to any such event shall be deemed to include an amount
determined by such Lender to be equal to the excess, if any, of (i) the amount of interest that such Lender
would pay for a deposit equal to the principal amount of such Loan for the period from the date of such
payment, conversion, failure or assignment to the last day of the then current Interest Period for such Loan
(or, in the case of a failure to borrow, convert or continue, the duration of the Interest Period that would have
resulted from such borrowing, conversion or continuation) if the interest rate payable on such deposit were
equal to the Adjusted LIBO Rate for such Interest Period, over (ii) the amount of interest that such Lender
43
EXHIBIT 10.14
would earn on such principal amount for such period if such Lender were to invest such principal amount
for such period at the interest rate that would be bid by such Lender (or an affiliate of such Lender) for dollar
deposits from other banks in the Eurodollar market at the commencement of such period. A certificate of
any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section
2.15 shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall
pay such Lender the amount shown as due on any such certificate within 10 Business Days after receipt
thereof.
SECTION 2.16
Taxes.
(a)
Defined Terms. For purposes of this Section 2.16, the term “Requirement of Law”
includes FATCA.
(b)
Payments Free of Taxes. Any and all payments by or on account of any obligation
of the Borrower under any Loan Document shall be made without deduction or withholding for any Taxes,
except as required by a Requirement of Law. If any Requirement of Law (as determined in the good faith
discretion of the Withholding Agent) requires the deduction or withholding of any Tax from any such payment
by the Withholding Agent, then the Withholding Agent shall be entitled to make such deduction or withholding
and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in
accordance with applicable Requirement of Law and, if such Tax is an Indemnified Tax, then the sum payable
by the Borrower shall be increased as necessary so that after such deduction or withholding has been made
(including such deductions and withholdings applicable to additional sums payable under this Section 2.16)
the applicable Recipient receives an amount equal to the sum it would have received had no such deduction
or withholding been made.
(c)
Payment of Other Taxes by the Borrower. Without duplication of any obligation
under this Section 2.16, the Borrower shall timely pay to the relevant Governmental Authority in accordance
with applicable Requirement of Law, or at the option of the Administrative Agent timely reimburse it for
the payment of, any Other Taxes.
(d)
Indemnification by the Borrower. Without duplication of any obligation under this
Section 2.16, the Borrower shall indemnify each Recipient, within 10 days after demand therefor, for the
full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable
to amounts payable under this Section) payable or paid by such Recipient or required to be withheld or
deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect
thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority; provided, however, the Borrower shall not be required to indemnify a Recipient
pursuant to this Section 2.16(d) for any Indemnified Taxes unless such Recipient makes written demand on
the Borrower for indemnification for such Indemnified Taxes no later than six months after the earlier of (i)
the date on which such Recipient receives written demand from the relevant Governmental Authority for
payment of such Indemnified Taxes or (ii) the date on which such Recipient has made payment of such
Indemnified Taxes. A certificate as to the amount of such payment or liability delivered to the Borrower by
a Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on
behalf of a Lender, shall be conclusive absent manifest error.
(e)
Indemnification by the Lenders. Each Lender shall severally indemnify the
Administrative Agent, within 10 days after demand therefor, for (i) any Taxes attributable to such Lender
(but only to the extent that the Borrower has not already indemnified the Administrative Agent for such
Taxes and without limiting the obligation of the Borrower to do so), (ii) any Taxes attributable to such
Lender’s failure to comply with the provisions of Section 9.05(c) relating to the maintenance of a Participant
44
EXHIBIT 10.14
Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by
the Administrative Agent in connection with any Loan Document, and any reasonable expenses arising
therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted
by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered
to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby
authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such
Lender under any Loan Document or otherwise payable by the Administrative Agent to the Lender from any
other source against any amount due to the Administrative Agent under this paragraph (e).
(f)
Evidence of Payments. As soon as practicable after any payment of Taxes by the
Borrower to a Governmental Authority pursuant to this Section 2.16, the Borrower shall deliver to the
Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority
evidencing such payment, a copy of the return reporting such payment or other evidence of such payment
reasonably satisfactory to the Administrative Agent.
(g)
Status of Lenders. (i) Any Lender that is entitled to an exemption from or reduction
of withholding Tax with respect to payments made under any Loan Document shall deliver to the Borrower
and the Administrative Agent, at the time or times reasonably requested by the Borrower or the Administrative
Agent, such properly completed and executed documentation reasonably requested by the Borrower or the
Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of
withholding. In addition, any Lender, if reasonably requested by the Borrower or the Administrative Agent,
shall deliver such other documentation prescribed by applicable Requirement of Law or reasonably requested
by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to
determine whether or not such Lender is subject to backup withholding or information reporting requirements.
Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and
submission of such documentation (other than such documentation set forth in subsections (ii)(A), (ii)(B)
and (ii)(D) below) shall not be required if in the Lender’s reasonable judgment such completion, execution
or submission would subject such Lender to any material unreimbursed cost or expense or would materially
prejudice the legal or commercial position of such Lender.
(ii) Without limiting the generality of the foregoing, in the event that the
Borrower is a U.S. Borrower,
(A)
any Lender that is a U.S. Person shall deliver to the Borrower and
the Administrative Agent on or prior to the date on which such Lender becomes a Lender
under this Agreement (and from time to time thereafter upon the reasonable request of the
Borrower or the Administrative Agent), executed originals of IRS Form W-9 certifying that
such Lender is exempt from U.S. federal backup withholding Tax;
(B)
any Foreign Lender shall, to the extent it is legally entitled to do
so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall
be requested by the recipient) on or prior to the date on which such Foreign Lender becomes
a Lender under this Agreement (and from time to time thereafter upon the reasonable request
of the Borrower or the Administrative Agent), whichever of the following is applicable:
(1)
in the case of a Foreign Lender claiming the benefits of an
income Tax treaty to which the United States is a party (x) executed originals of
IRS Form W-8BEN or IRS Form W-8BEN-E establishing an exemption from, or
reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such
Tax treaty and (y) IRS Form W-8BEN or IRS Form W-8BEN-E establishing an
45
EXHIBIT 10.14
exemption from, or reduction of, U.S. federal withholding Tax pursuant to the
“business profits” or “other income” article of such Tax treaty;
(2)
executed originals of IRS Form W-8ECI;
(3)
in the case of a Foreign Lender claiming the benefits of the
exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate
substantially in the form of Exhibit 2.16-A to the effect that such Foreign Lender
is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10
percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B)
of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)
(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y) executed originals
of IRS Form W-8BEN or IRS Form W-8BEN-E; or
(4)
to the extent a Foreign Lender is not the beneficial owner,
executed originals of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS
Form W-8BEN or IRS Form W-8BEN-E, a U.S. Tax Compliance Certificate
substantially in the form of Exhibit 2.16-B or Exhibit 2.16-C, IRS Form W-9, and/
or other certification documents from each beneficial owner, as applicable; provided
that if the Foreign Lender is a partnership and one or more direct or indirect partners
of such Foreign Lender are claiming the portfolio interest exemption, such Foreign
Lender may provide a U.S. Tax Compliance Certificate substantially in the form of
Exhibit 2.16-D on behalf of each such direct and indirect partner;
(C)
any Foreign Lender shall, to the extent it is legally entitled to do
so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall
be requested by the recipient) on or prior to the date on which such Foreign Lender becomes
a Lender under this Agreement (and from time to time thereafter upon the reasonable request
of the Borrower or the Administrative Agent), executed originals of any other form
prescribed by applicable Requirement of Law as a basis for claiming exemption from or a
reduction in U.S. federal withholding Tax, duly completed and executed, together with such
supplementary documentation as may be prescribed by applicable Requirement of Law to
permit the Borrower or the Administrative Agent to determine the withholding or deduction
required to be made; and
(D)
if a payment made to a Lender under any Loan Document would
be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail
to comply with the applicable reporting requirements of FATCA (including those contained
in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the
Borrower and the Administrative Agent at the time or times prescribed by Requirement of
Law and at such time or times reasonably requested by the Borrower or the Administrative
Agent such documentation prescribed by applicable Requirement of Law (including as
prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation
reasonably requested by the Borrower or the Administrative Agent as may be necessary for
the Borrower and the Administrative Agent to comply with their obligations under FATCA
and to determine that such Lender has complied with such Lender’s obligations under FATCA
or to determine the amount to deduct and withhold from such payment. Solely for purposes
of this clause (D), “FATCA” shall include any amendments made to FATCA after the date
of this Agreement.
46
EXHIBIT 10.14
Each Lender agrees that if any form or certification it previously delivered expires or
becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify
the Borrower and the Administrative Agent in writing of its legal inability to do so.
(h)
Treatment of Certain Refunds. If any party determines, in its sole discretion
exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant
to this Section 2.16 (including by the payment of additional amounts pursuant to this Section 2.16), it shall
pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments
made under this Section with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses
(including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant
Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such
indemnified party, shall repay to such indemnified party the amount paid over pursuant to this paragraph (h)
(plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event
that such indemnified party is required to repay such refund to such Governmental Authority.
Notwithstanding anything to the contrary in this paragraph (h), in no event will the indemnified party be
required to pay any amount to an indemnifying party pursuant to this paragraph (h) the payment of which
would place the indemnified party in a less favorable net after-Tax position than the indemnified party would
have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted,
withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such
Tax had never been paid. This paragraph shall not be construed to require any indemnified party to make
available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the
indemnifying party or any other Person.
(i)
On or before the date that Barclays Bank PLC (or any successor or replacement
Administrative Agent) becomes the Administrative Agent hereunder, it shall deliver to the Borrower two
duly executed originals of either (i) IRS Form W-9 (or any applicable successor form) certifying that the
Administrative Agent is not subject to backup withholding, or (ii) IRS Form W-8IMY (or any applicable
successor form) establishing that the Administrative Agent will act as a withholding agent for any U.S. federal
withholding tax imposed with respect to any payments made to Lenders under any Loan Document.
(j)
Survival. Each party’s obligations under this Section 2.16 shall survive the
resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement
of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all
obligations under any Loan Document.
SECTION 2.17
Payments Generally; Pro Rata Treatment; Sharing of Set-offs.
(a)
The Borrower shall make each payment required to be made by the Borrower
hereunder (whether of principal, interest or fees, or under Section 2.14, 2.15 or 2.16, or otherwise) prior to
12:00 noon, New York, New York time, on the date when due, in immediately available funds, without set-
off or counterclaim. Any amounts received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes
of calculating interest thereon. All such payments shall be made to the Administrative Agent at its Principal
Office, except payments made directly to an Issuing Bank or the Swingline Lender as expressly provided
herein and except that payments pursuant to Sections 2.14, 2.15, 2.16 and 9.03 shall be made directly to the
Persons entitled thereto. The Administrative Agent shall distribute any such payments received by it for the
account of any other Person to the appropriate recipient promptly following receipt thereof. If any payment
hereunder shall be due on a day that is not a Business Day, the date for payment shall be extended to the
next succeeding Business Day, and, in the case of any payment
47
EXHIBIT 10.14
accruing interest, interest thereon shall be payable for the period of such extension. All payments hereunder
shall be made in dollars.
(b)
If at any time insufficient funds are received by and available to the Administrative
Agent to pay fully all amounts of principal, unreimbursed LC Disbursements, interest and fees then due
hereunder, such funds shall be applied (i) first, to pay interest and fees then due hereunder, ratably among
the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and
(ii) second, to pay principal and unreimbursed LC Disbursements then due hereunder, ratably among the
parties entitled thereto in accordance with the amount of principal and unreimbursed LC Disbursements then
due to such parties.
(c)
If any Lender shall, by exercising any right of setoff or counterclaim or otherwise,
obtain payment in respect of any principal of or interest on any of its Loans or other obligations hereunder
resulting in such Lender receiving payment of a proportion of the aggregate amount of its Loans and accrued
interest thereon or other such obligations greater than its pro rata share thereof as provided herein, then the
Lender receiving such greater proportion shall (a) notify the Administrative Agent of such fact, and (b)
purchase (for cash at face value) participations in the Loans and such other obligations of the other Lenders,
or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared
by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their
respective Loans and other amounts owing them; provided that:
(i)
if any such participations are purchased and all or any portion of the payment
giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored
to the extent of such recovery, without interest; and
(ii)
the provisions of this paragraph shall not be construed to apply to (x) any
payment made by the Borrower pursuant to and in accordance with the express terms of this
Agreement (including the application of funds arising from the existence of a Defaulting Lender),
or (y) any payment obtained by a Lender as consideration for the assignment of or sale of a
participation in any of its Loans or participations in LC Disbursements to any assignee or participant,
other than to the Borrower or any Subsidiary thereof (as to which the provisions of this paragraph
shall apply).
The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable
law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against
the Borrower rights of setoff and counterclaim with respect to such participation as fully as if such Lender
were a direct creditor of the Borrower in the amount of such participation.
(d)
Unless the Administrative Agent shall have received notice from the Borrower prior
to the date on which any payment is due to the Administrative Agent for the account of the Lenders or the
Issuing Banks hereunder that the Borrower will not make such payment, the Administrative Agent may
assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance
upon such assumption, distribute to the Lenders or such Issuing Bank, as the case may be, the amount due.
In such event, if the Borrower has not in fact made such payment, then each of the Lenders or the Issuing
Banks, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the
amount so distributed to such Lender or such Issuing Bank with interest thereon, for each day from the date
such amount is distributed to it to the date of payment to the Administrative Agent, at the greater of the
Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking
industry rules or interbank compensation.
48
EXHIBIT 10.14
(e)
If any Lender shall fail to make any payment required to be made by it pursuant to
Section 2.04(b), 2.05(h), 2.06(b), 2.17(d) or 8.08, then the Administrative Agent may, in its discretion
(notwithstanding any contrary provision hereof), (i) apply any amounts thereafter received by the
Administrative Agent for the account of such Lender to satisfy such Lender’s obligations under such Sections
until all such unsatisfied obligations are fully paid and/or (ii) hold any such amounts in a segregated account
as cash collateral for, and application to, any future funding obligations of such Lender under such Sections;
in the case of each of (i) and (ii) above, in any order as determined by the Administrative Agent in its
discretion.
SECTION 2.18 Mitigation of Obligations; Replacement of Lenders.
(a)
Designation of a Different Lending Office. If any Lender requests compensation
under Section 2.14, or requires the Borrower to pay any Indemnified Taxes or additional amounts to any
Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.16, then such
Lender shall (at the request of the Borrower) use reasonable efforts to designate a different lending office
for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its
offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would
eliminate or reduce amounts payable pursuant to Section 2.14 or 2.16, as the case may be, in the future, and
(ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be
disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses
incurred by any Lender in connection with any such designation or assignment.
(b)
Replacement of Lenders. If any Lender requests compensation under Section 2.14,
or if the Borrower is required to pay any Indemnified Taxes or additional amounts to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.16 and, in each case, such
Lender has declined or is unable to designate a different lending office in accordance with Section 2.18(a),
or if any Lender is a Defaulting Lender or a Non-Consenting Lender, then the Borrower may, at its sole
expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign
and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents
required by, Section 9.05), all of its interests, rights (other than its existing rights to payments pursuant to
Section 2.14 or Section 2.16) and obligations under this Agreement and the related Loan Documents to an
Eligible Assignee that shall assume such obligations (which assignee may be another Lender, if a Lender
accepts such assignment); provided that:
(i)
fee (if any) specified in Section 9.05;
the Borrower shall have paid to the Administrative Agent the assignment
(ii)
such Lender shall have received payment of an amount equal to the
outstanding principal of its Loans and participations in LC Disbursements, accrued interest thereon,
accrued fees and all other amounts payable to it hereunder and under the other Loan Documents
(including any amounts under Section 2.15) from the assignee (to the extent of such outstanding
principal and accrued interest and fees) or the Borrower (in the case of all other amounts);
(iii)
in the case of any such assignment resulting from a claim for compensation
under Section 2.14 or payments required to be made pursuant to Section 2.16, such assignment will
result in a reduction in such compensation or payments thereafter;
(iv)
such assignment does not conflict with applicable law; and
49
EXHIBIT 10.14
(v)
in the case of any assignment resulting from a Lender becoming a Non-
Consenting Lender, the applicable assignee shall have consented to the applicable amendment,
waiver or consent.
A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result
of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment
and delegation cease to apply.
SECTION 2.19
Defaulting Lenders. (a) Notwithstanding anything to the contrary
contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as such Lender
is no longer a Defaulting Lender, to the extent permitted by applicable law:
(i)
Such Defaulting Lender’s right to approve or disapprove any amendment,
waiver or consent with respect to this Agreement shall be restricted as set forth in Section 9.02.
(ii)
Any payment of principal, interest, fees or other amounts received by the
Administrative Agent for the account of such Defaulting Lender (whether voluntary or mandatory,
at maturity, pursuant to Article VII or otherwise) or received by the Administrative Agent from a
Defaulting Lender pursuant to Section 9.09 shall be applied at such time or times as may be
determined by the Administrative Agent as follows: first, to the payment of any amounts owing by
such Defaulting Lender to the Administrative Agent hereunder; second, to the payment on a pro rata
basis of any amounts owing by such Defaulting Lender to any Issuing Bank or Swingline Lender
hereunder; third, to Cash Collateralize the Issuing Banks’ Fronting Exposure with respect to such
Defaulting Lender in accordance with Section 2.20; fourth, as the Company may request (so long
as no Default or Event of Default exists), to the funding of any Loan in respect of which such
Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined
by the Administrative Agent; fifth, if so determined by the Administrative Agent and the Borrower,
to be held in a deposit account and released pro rata in order to (x) satisfy such Defaulting Lender’s
potential future funding obligations with respect to Loans under this Agreement and (y) Cash
Collateralize the Issuing Banks’ future Fronting Exposure with respect to such Defaulting Lender
with respect to future Letters of Credit issued under this Agreement, in accordance with Section
2.20; sixth, to the payment of any amounts owing to the Lenders, the Issuing Banks or the Swingline
Lender as a result of any judgment of a court of competent jurisdiction obtained by any Lender, any
Issuing Bank or the Swingline Lender against such Defaulting Lender as a result of such Defaulting
Lender’s breach of its obligations under this Agreement; seventh, so long as no Default or Event of
Default exists, to the payment of any amounts owing to the Borrower as a result of any judgment
of a court of competent jurisdiction obtained by the Borrower against such Defaulting Lender as a
result of such Defaulting Lender’s breach of its obligations under this Agreement; and eighth, to
such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that
if (x) such payment is a payment of the principal amount of any Loans or LC Disbursements in
respect of which such Defaulting Lender has not fully funded its appropriate share, and (y) such
Loans were made or the related Letters of Credit were issued at a time when the conditions set forth
in Section 3.02 were satisfied or waived, such payment shall be applied solely to pay the Loans of,
and LC Disbursements owed to, all Non-Defaulting Lenders on a pro rata basis prior to being applied
to the payment of any Loans of, or LC Disbursements owed to, such Defaulting Lender until such
time as all Loans and funded and unfunded participations in Letter of Credit Commitments and
Swingline Loans are held by the Lenders pro rata in accordance with the Commitments without
giving effect to Section 2.19(a)(iv). Any payments, prepayments or other amounts paid or payable
to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to
50
EXHIBIT 10.14
post Cash Collateral pursuant to this Section 2.19(a)(ii) shall be deemed paid to and redirected by
such Defaulting Lender, and each Lender irrevocably consents hereto.
(iii)
(A) Each Defaulting Lender shall be entitled to receive a Commitment Fee
for any period during which that Lender is a Defaulting Lender only to extent allocable to the sum
of (1) the outstanding principal amount of the Loans funded by it, and (2) its Applicable Percentage
of the stated amount of Letters of Credit for which it has provided Cash Collateral pursuant to Section
2.20.
(B)
Each Defaulting Lender shall be entitled to receive letter of credit
fees under Section 2.11(b) for any period during which that Lender is a Defaulting Lender
only to the extent allocable to its Applicable Percentage of the stated amount of Letters of
Credit for which it has provided Cash Collateral pursuant to Section 2.20.
(C) With respect to any Commitment Fee or letter of credit fee under
Section 2.11(b) not required to be paid to any Defaulting Lender pursuant to clause (A) or
(B) above, the Borrower shall (x) pay to each Non-Defaulting Lender that portion of any
such fee otherwise payable to such Defaulting Lender with respect to such Defaulting
Lender’s LC Exposure or Swingline Loans that has been reallocated to such Non-Defaulting
Lender pursuant to clause (iv) below, (y) pay to each Issuing Bank and Swingline Lender,
as applicable, the amount of any such fee otherwise payable to such Defaulting Lender to
the extent allocable to such Issuing Bank’s or Swingline Lender’s Fronting Exposure to such
Defaulting Lender, and (z) not be required to pay the remaining amount of any such fee.
(iv)
All or any part of such Defaulting Lender’s LC Exposure and Swingline
Loans shall be reallocated among the Non-Defaulting Lenders in accordance with their respective
Applicable Percentages (calculated without regard to such Defaulting Lender’s Commitment) but
only to the extent that (x) the conditions set forth in Section 3.02 are satisfied at the time of such
reallocation (and, unless the Borrower shall have otherwise notified the Administrative Agent at
such time, the Borrower shall be deemed to have represented and warranted that such conditions
are satisfied at such time), and (y) such reallocation does not cause the aggregate Credit Exposure
of any Non-Defaulting Lender to exceed such Non-Defaulting Lender’s Commitment. Subject to
Section 9.18, no reallocation hereunder shall constitute a waiver or release of any claim of any party
hereunder against a Defaulting Lender arising from that Lender having become a Defaulting Lender,
including any claim of a Non-Defaulting Lender as a result of such Non-Defaulting Lender’s
increased exposure following such reallocation.
(v)
If the reallocation described in clause (iv) above cannot, or can only
partially, be effected, the Borrower shall, without prejudice to any right or remedy available to it
hereunder or under law, (x) first, prepay Swingline Loans in an amount equal to the Swingline
Lenders’ Fronting Exposure and (y) second, Cash Collateralize the Issuing Banks’ Fronting Exposure
in accordance with the procedures set forth in Section 2.20.
(b)
If the Borrower, the Administrative Agent, the Swingline Lender and each Issuing
Bank agree in writing that a Lender is no longer a Defaulting Lender, the Administrative Agent will so notify
the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions
set forth therein (which may include arrangements with respect to any Cash Collateral), that Lender will, to
the extent applicable, purchase at par that portion of outstanding Loans of the other Lenders or take such
other actions as the Administrative Agent may determine to be necessary to cause
51
EXHIBIT 10.14
the Loans and funded and unfunded participations in Letters of Credit and Swingline Loans to be held pro
rata by the Lenders in accordance with their respective Commitments (without giving effect to Section
2.19(a)(iv), whereupon, that Lender will cease to be a Defaulting Lender; provided that no adjustments will
be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while
that Lender was a Defaulting Lender; and provided, further, that except to the extent otherwise expressly
agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a
waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting
Lender.
(c)
So long as any Lender is a Defaulting Lender, (i) the Swingline Lender shall not be
required to fund any Swingline Loans unless it is satisfied that it will have no Fronting Exposure after giving
effect to such Swingline Loan and (ii) no Issuing Bank shall be required to issue, extend, renew or increase
any Letter of Credit unless it is satisfied that it will have no Fronting Exposure after giving effect thereto.
SECTION 2.20
Cash Collateral.
At any time that there shall exist a Defaulting Lender, within one Business Day following
the written request of the Administrative Agent or any Issuing Bank (with a copy to the Administrative Agent)
the Borrower shall Cash Collateralize the Issuing Banks’ Fronting Exposure with respect to such Defaulting
Lender (determined after giving effect to Section 2.19(a)(iv) and any Cash Collateral provided by such
Defaulting Lender) in an amount not less than the Minimum Collateral Amount.
(a)
The Borrower, and to the extent provided by any Defaulting Lender, such Defaulting
Lender, hereby grants to the Administrative Agent, for the benefit of the Issuing Banks, and agrees to maintain,
a first priority security interest in all such Cash Collateral as security for the Defaulting Lenders’ LC Exposure,
to be applied pursuant to clause (b) below. If at any time the Administrative Agent determines that Cash
Collateral is subject to any right or claim of any Person other than the Administrative Agent and the Issuing
Banks as herein provided, or that the total amount of such Cash Collateral is less than the Minimum Collateral
Amount, the Borrower will, promptly upon demand by the Administrative Agent, pay or provide to the
Administrative Agent additional Cash Collateral in an amount sufficient to eliminate such deficiency (after
giving effect to any Cash Collateral provided by the Defaulting Lender).
(b)
Application. Notwithstanding anything to the contrary contained in this Agreement,
Cash Collateral provided under this Section 2.20 or Section 2.19 in respect of Letters of Credit shall be
applied to the satisfaction of the Defaulting Lender’s LC Exposure (including, as to Cash Collateral provided
by a Defaulting Lender, any interest accrued on such obligation) for which the Cash Collateral was so
provided, prior to any other application of such property as may otherwise be provided for herein.
(c)
Termination of Requirement. Cash Collateral (or the appropriate portion thereof)
provided to reduce any Issuing Bank’s Fronting Exposure shall no longer be required to be held as Cash
Collateral pursuant to this Section 2.20 following (i) the elimination of the applicable Fronting Exposure
(including by the termination of Defaulting Lender status of the applicable Lender), or (ii) the determination
by the Administrative Agent and each Issuing Bank that there exists excess Cash Collateral; provided that,
subject to Section 2.19 the Person providing Cash Collateral and each Issuing Bank may agree that Cash
Collateral shall be held to support future anticipated Fronting Exposure or other obligations and provided
further that to the extent that such Cash Collateral was provided by the Borrower, such Cash Collateral shall
remain subject to the security interest granted pursuant to the Loan Documents.
52
EXHIBIT 10.14
SECTION 2.21
Accordion Facilities.
(a)
Before the Maturity Date, the Borrower may by written notice to Administrative
Agent elect to request the establishment of one or more increases in the Total Commitment (each increase
to the Total Commitment, a “New Commitment” and, collectively, the “New Commitments”), in an aggregate
amount not to exceed $1,000,000,000. Each such notice shall specify the date (each, an “Increased Amount
Date”) on which the Borrower proposes that the New Commitments shall be effective, which shall be a date
not less than ten Business Days after the date on which such notice is delivered to the Administrative Agent;
provided that any Lender offered or approached to provide all or a portion of the New Commitments may
elect or decline, in its sole discretion, to provide a New Commitment. Such New Commitments shall become
effective as of such Increased Amount Date; provided further that, (i) no Event of Default shall exist on such
Increased Amount Date before or after giving effect to such New Commitments; (ii) the Borrower shall make
any payments required pursuant to this Agreement (including Section 2.15) to the Administrative Agent and
the Lenders (other than any Defaulting Lender), in connection with the New Commitments, as applicable;
(iii) the Administrative Agent, the Swingline Lender and the Issuing Banks shall have consented to such
prospective lender (such consent not to be unreasonably withheld or delayed) and (iv) such New Commitment
will be documented solely as an increase to the Total Commitment, without any change to the terms of
revolving facility provided for herein. The proceeds of each New Commitment shall be used for working
capital and general corporate purposes. For the avoidance of doubt, no Lender shall be obligated to provide
any portion of the New Commitments.
(b)
On any Increased Amount Date on which New Commitments are effected, subject
to the satisfaction of the foregoing terms and conditions, (a) each of the Lenders with Commitments shall
assign to each Lender with a New Commitment (each such Lender and each Eligible Assignee that agrees
to an extension of the Maturity Date in accordance with Section 2.22(c), a “New Lender”) and each of the
New Lenders shall purchase from each of the Lenders with Commitments, at the principal amount thereof
(together with accrued interest), such interests in the Committed Loans outstanding on such Increased Amount
Date as shall be necessary in order that, after giving effect to all such assignments and purchases, such
Committed Loans will be held by existing Lenders with Committed Loans and New Lenders ratably in
accordance with their Commitments after giving effect to the addition of such New Commitments to the
Total Commitment, (b) each New Commitment shall be deemed for all purposes a Commitment and each
Loan made thereunder (a “New Loan”) shall be deemed, for all purposes, a Committed Loan and (c) each
New Lender shall become a Lender with respect to the New Commitment and all matters relating thereto.
(c)
The New Commitments shall be effected by a joinder agreement (the “New Loan
Increase Joinder”) substantially in the form of Exhibit 2.21 executed by the Borrower, the Administrative
Agent and each Lender making such New Commitment, in form and substance reasonably satisfactory to
each of them, and consented to by the Administrative Agent, the Issuing Banks and the Swingline Lender.
Each New Loan Increase Joinder may, without the consent of any other Lenders, effect such amendments
to this Agreement and the other Loan Documents as may be necessary or appropriate, in the opinion of the
Administrative Agent, to effect the provisions of this Section 2.21.
SECTION 2.22
Extension of Maturity Date.
(a)
At least 60 days but not more than 90 days prior to any anniversary of the Effective
Date (the “Applicable Anniversary”), the Borrower, by written notice to the Administrative Agent, may
request an extension of the Maturity Date in effect at such time by one year from its then scheduled expiration
(which request may be conditioned on a minimum level of Commitments from Extension Consenting Lenders
and New Lenders); provided that the Maturity Date shall not be extended
53
EXHIBIT 10.14
more than twice. The Administrative Agent shall promptly notify each Lender of such request, and each
Lender shall in turn, in its sole discretion, not later than 30 days prior to the Applicable Anniversary, notify
the Borrower and the Administrative Agent in writing as to whether such Lender will consent to such
extension. If any Lender shall fail to notify the Administrative Agent and the Borrower in writing of its
consent to any such request for extension of the Maturity Date at least 30 days prior to the Applicable
Anniversary, such Lender shall be deemed to be an Extension Non-Consenting Lender with respect to such
request. The Administrative Agent shall notify the Borrower not later than 25 days prior to the Applicable
Anniversary of the decision of the Lenders regarding the Borrower’s request for an extension of the Maturity
Date.
(b)
If all the Lenders consent in writing to any such request in accordance with Section
2.22(a), the Maturity Date in effect at such time shall, effective as at the Applicable Anniversary (the
“Extension Date”), be extended for one year; provided that on each Extension Date the applicable conditions
set forth in Section 3.02 shall be satisfied. If less than all of the Lenders consent in writing to any such
request in accordance with Section 2.22(a), the Maturity Date in effect at such time shall, effective as at the
applicable Extension Date and subject to Section 2.22(d), be extended as to those Lenders that so consented
(each a “Extension Consenting Lender”) but shall not be extended as to any other Lender (each a “Extension
Non-Consenting Lender”). To the extent that the Maturity Date is not extended as to any Lender pursuant
to this Section 2.22 and the Commitment of such Lender is not assumed in accordance with Section 2.22(c)
on or prior to the applicable Extension Date, the Commitment of such Extension Non-Consenting Lender
shall automatically terminate in whole on such unextended Maturity Date without any further notice or other
action by the Borrower, such Lender or any other Person; provided that such Extension Non-Consenting
Lender’s rights under Sections 2.14, 2.16 and 9.03, and its obligations under Section 8.08, shall survive the
Maturity Date for such Lender as to matters occurring prior to such date. It is understood and agreed that
no Lender shall have any obligation whatsoever to agree to any request made by the Borrower for any
requested extension of the Maturity Date.
(c)
If less than all of the Lenders consent to any such request pursuant to Section 2.22(a),
the Administrative Agent shall promptly so notify the Extension Consenting Lenders, and each Extension
Consenting Lender may, in its sole discretion, give written notice to the Administrative Agent not later than
ten days prior to the Extension Date of the amount of the Extension Non-Consenting Lenders’ Commitments
for which it is willing to accept an assignment. If the Extension Consenting Lenders notify the Administrative
Agent that they are willing to accept assignments of Commitments in an aggregate amount that exceeds the
amount of the Commitments of the Extension Non-Consenting Lenders, such Commitments shall be allocated
among the Extension Consenting Lenders willing to accept such assignments in such amounts as are agreed
between the Borrower and the Administrative Agent. If after giving effect to the assignments of Commitments
described above there remains any Commitments of Extension Non-Consenting Lenders, the Borrower may
arrange for one or more Extension Consenting Lenders or other Eligible Assignees as New Lenders to assume,
effective as of the Extension Date, any Extension Non-Consenting Lender’s Commitment and all of the
obligations of such Extension Non-Consenting Lender under this Agreement thereafter arising, without
recourse to or warranty by, or expense to, such Extension Non-Consenting Lender; provided, however, that
the amount of the Commitment of any such New Lender as a result of such substitution shall in no event be
less than $20,000,000 unless the amount of the Commitment of such Extension Non-Consenting Lender is
less than $20,000,000, in which case such New Lender shall assume all of such lesser amount; and provided
further that:
(i)
any such Extension Consenting Lender or New Lender shall have paid to
such Extension Non-Consenting Lender (A) the aggregate principal amount of, and any interest
accrued and unpaid to the effective date of the assignment on, the outstanding Borrowings, if any,
54
EXHIBIT 10.14
of such Extension Non-Consenting Lender plus (B) any accrued but unpaid facility fees owing to
such Extension Non-Consenting Lender as of the effective date of such assignment;
(ii)
all additional costs reimbursements, expense reimbursements and
indemnities payable to such Extension Non-Consenting Lender, and all other accrued and unpaid
amounts owing to such Extension Non-Consenting Lender hereunder, as of the effective date of such
assignment shall have been paid to such Extension Non-Consenting Lender;
(iii)
with respect to any such New Lender, the applicable processing and
recordation fee required under Section 9.05 for such assignment shall have been paid; and
(iv)
each Issuing Bank shall have consented to any such assignment to a New
Lender.
provided further that such Extension Non-Consenting Lender’s rights under Sections 2.14, 2.16 and 9.03,
and its obligations under Section 8.08, shall survive such substitution as to matters occurring prior to the
date of substitution. At least five Business Days prior to any Extension Date, (A) each such New Lender,
if any, shall have delivered to the Borrower and the Administrative Agent an Assumption Agreement, duly
executed by such New Lender, such Extension Non-Consenting Lender, the Borrower and the Administrative
Agent and (B) any such Extension Consenting Lender shall have delivered confirmation in writing
satisfactory to the Borrower and the Administrative Agent as to the increase in the amount of its Commitment.
Upon the payment or prepayment of all amounts referred to in clauses (i), (ii) and (iii) of the immediately
preceding sentence, each such Extension Consenting Lender or New Lender, as of the Extension Date, will
be substituted for such Extension Non-Consenting Lender under this Agreement and shall be a Lender for
all purposes of this Agreement, without any further acknowledgment by or the consent of the other Lenders,
and the obligations of each such Extension Non-Consenting Lender hereunder shall, by the provisions hereof,
be released and discharged.
(d)
If (after giving effect to any assignments or assumptions pursuant to Section 2.22(c))
Lenders having Commitments equal to more than 50% of the Commitments in effect immediately prior to
the Extension Date consent in writing to a requested extension (whether by execution or delivery of an
Assumption Agreement or otherwise) not later than one Business Day prior to such Extension Date, the
Administrative Agent shall so notify the Borrower, and, subject to the satisfaction of the applicable conditions
in Section 3.02, the Maturity Date for each Extension Consenting Lender and each New Lender then in effect
shall be extended for the additional one year period as described in Section 2.22(b); provided that the Maturity
Date for each Extension Non-Consenting Lender shall not be so extended. Promptly following each Extension
Date, the Administrative Agent shall notify the Lenders (including, without limitation, each New Lender)
of the extension of the scheduled Maturity Date in effect immediately prior thereto and shall thereupon record
in the Register the relevant information with respect to each such Extension Consenting Lender and each
such New Lender. On and after each Extension Date, the Applicable Percentage of each Lender’s participation
in Letter of Credit Commitments shall be calculated after giving effect to the Commitments of the Lenders
after the occurrence of such Extension Date.
ARTICLE III
CONDITIONS PRECEDENT
SECTION 3.01
Conditions Precedent to the Closing Date. The obligations of the
Lenders to make Loans hereunder and the obligations of the Issuing Banks to issue Letters of Credit hereunder
shall not become effective until the date on which each of the following conditions is satisfied or waived in
accordance with Section 9.02:
55
EXHIBIT 10.14
(a)
The Administrative Agent shall have received the following, each dated as of the
Closing Date:
(i)
this Agreement executed by each party hereto;
(ii)
the Guaranty executed by each party thereto;
(iii)
a certificate of an officer and of the secretary or an assistant secretary of
the Borrower and each Guarantor, certifying, inter alia (A) true and complete copies of each of the
certificate of incorporation or other appropriate organizational document, as amended and in effect,
of such Person, the bylaws or similar organizational document, as amended and in effect, of such
Person and the resolutions adopted by the Board of Directors or similar governing body of such
Person (1) authorizing the execution, delivery and performance by such Person of each Loan
Document to which such Person is or will be a party, (2) approving the Loan Documents to which
such Person is or will be a party and (3) authorizing officers of such Person to execute and deliver
the Loan Documents to which such Person is or will be a party and any related documents and (B)
the incumbency and specimen signatures of the officers of such Person executing any documents
on its behalf; provided, that there shall be no requirement to deliver such certificates for any Guarantor
that is not a Material Subsidiary;
(iv)
a certificate of a Responsible Officer of the Borrower certifying as to the
satisfaction of the conditions in Sections 3.01(c) and (e); and
(v)
signed opinions addressed to the Administrative Agent and the Lenders
from legal counsel to the Borrower and the Guarantors covering the matters reasonably requested
by the Administrative Agent; provided, that there shall be no requirement to deliver opinions of legal
counsel for any Guarantor that is not a Material Subsidiary.
(b)
The Administrative Agent shall have received a certificate of appropriate officials
as to the existence and good standing of the Borrower and each Guarantor.
(c)
There shall not have occurred any change, effect, event or occurrence since
December 31, 2017 that, individually or in the aggregate, has had, or would reasonably be expected to have,
a Material Adverse Effect.
(d)
The Administrative Agent shall have received evidence that the Existing Credit
Agreement has been, or substantially concurrently with the Closing Date will be, terminated and the
obligations outstanding thereunder repaid in full pursuant to customary payoff documentation, including
evidence of the release of Liens, if any, granted in connection therewith.
(e)
The conditions precedent set forth in Sections 3.02(b) and (d) shall have theretofore
been satisfied or waived in accordance with Section 9.02.
(f)
(i) The Administrative Agent shall have received (for distribution to the Lenders so
requesting) at least three business days prior to the Closing Date all documentation and other information
about the Borrower and Guarantors as required by regulatory authorities under applicable “know your
customer” and anti-money laundering rules and regulations, including without limitation the Patriot Act, to
the extent reasonably requested by any Lender to the Administrative Agent and conveyed by the
Administrative Agent to the Borrower in writing at least 10 days prior to the Closing Date and (ii) to the
extent the Borrower qualifies as a “legal entity customer” under the Beneficial Ownership Regulation, at
56
EXHIBIT 10.14
least five days prior to the Closing Date, any Lender that has requested, in a written notice to the Borrower
at least 10 days prior to the Closing Date, a Beneficial Ownership Certification in relation to the Borrower
shall have received such Beneficial Ownership Certification (provided that, upon the execution and delivery
by such Lender of its signature page to this Agreement, the condition set forth in this clause (ii) shall be
deemed to be satisfied).
(g)
All fees required to be paid on the Closing Date pursuant to the Fee Letters referenced
in Section 2.11(c) and all reasonable out-of-pocket expenses required to be paid on the Closing Date, to the
extent invoiced at least two Business Days prior to the Closing Date shall have been paid.
The Administrative Agent shall notify the Borrower and the Lenders of the Closing Date in writing
promptly upon such conditions precedent being satisfied (or waived in accordance with Section 9.02), and
such notice shall be conclusive and binding.
SECTION 3.02
Conditions Precedent to Each Credit Event. Except with respect to
Committed Loans made by the Lenders pursuant to Section 2.05(h), the obligations of (i) the Lenders to
make Loans hereunder (ii) the obligations of the Issuing Banks to issue or extend any Letter of Credit under
this Agreement and (iii) each extension of the Maturity Date pursuant to Section 2.22 is subject to the
satisfaction or waiver in accordance with Section 9.02 of the following conditions precedent:
(a)
The conditions precedent set forth in Section 3.01 shall have theretofore been
satisfied or waived in accordance with Section 9.02;
(b)
The representations and warranties set forth in Article IV and in the other Loan
Documents shall be true and correct in all material respects as of, and as if such representations and warranties
were made on, the Borrowing Date of the proposed Loan or Letter of Credit, as the case may be (unless such
representation and warranty expressly relates to an earlier date), and by the Borrower’s delivery of a
Borrowing Request, the Borrower shall be deemed to have certified to the Administrative Agent and the
Lenders that such representations and warranties are true and correct in all material respects;
(c)
or Section 2.05, as the case may be;
The Company shall have complied with the provisions of Section 2.03, Section 2.04
(d)
result from such Credit Event; and
No Default or Event of Default shall have occurred and be continuing or would
(e)
A Borrowing Request shall have been delivered in accordance with the terms of
Section 2.03.
The acceptance by the Borrower of the benefits of each Credit Event shall constitute a representation
and warranty by the Borrower to each of the Lenders that all of the conditions specified in this Section 3.02
above exist as of that time.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
On the Closing Date and on each Borrowing Date, the Borrower makes the following
representations and warranties to the Administrative Agent and the Lenders:
SECTION 4.01
Organization and Qualification. The Borrower and each of the Material
Subsidiaries (a) is a corporation, partnership or limited liability company duly organized or formed, validly
57
EXHIBIT 10.14
existing and in good standing under the laws of the state of its incorporation, organization or formation, (b)
has all requisite corporate, partnership, limited liability company or other power and all material governmental
licenses, authorizations, consents and approvals required to carry on its business as now conducted and (c)
is duly qualified to do business and is in good standing in every jurisdiction in which the failure to be so
qualified would, individually or together with all such other failures of the Borrower and the Subsidiaries,
have a Material Adverse Effect.
SECTION 4.02
Authorization, Validity, Etc. The Borrower and each Guarantor has all
requisite corporate (or other organizational) power and authority to execute and deliver, and to incur and
perform its obligations under this Agreement and under the other Loan Documents to which it is a party and,
in the case of the Borrower, to make the Borrowings hereunder, and all such actions have been duly authorized
by all necessary proceedings on its behalf. This Agreement and the other Loan Documents have been duly
and validly executed and delivered by or on behalf of the Borrower (and, on the Closing Date, with respect
to the Guaranty, each Guarantor) party thereto and constitute valid and legally binding agreements of the
Borrower and each Guarantor, as applicable, enforceable against the Borrower or the Guarantor in accordance
with the respective terms thereof, except (a) as may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer, fraudulent conveyance or other similar laws relating to or affecting the
enforcement of creditors’ rights generally, and by general principles of equity (including principles of good
faith, reasonableness, materiality and fair dealing) which may, among other things, limit the right to obtain
equitable remedies (regardless of whether considered in a proceeding in equity or at law) and (b) as to the
enforceability of provisions for indemnification for violation of applicable securities laws, limitations thereon
arising as a matter of law or public policy.
SECTION 4.03
Governmental Consents, Etc. No authorization, consent, approval,
license or exemption of or registration, declaration or filing with any Governmental Authority, is necessary
for the valid execution and delivery of, or the incurrence and performance by the Borrower or each Guarantor
of its obligations under, any Loan Document to which it is a party, except those that have been obtained and
such matters relating to performance as would ordinarily be done in the ordinary course of business after
the Closing Date.
SECTION 4.04
No Breach or Violation of Agreements or Restrictions, Etc. Neither
the execution and delivery of, nor the incurrence and performance by any Loan Party of its obligations under,
the Loan Documents to which it is a party, nor the extensions of credit contemplated by the Loan Documents,
will (a) breach or violate any applicable Requirement of Law, (b) result in any breach or violation of any of
the terms, covenants, conditions or provisions of, or constitute a default under, or result in the creation or
imposition of (or the obligation to create or impose) any Lien upon any of its property or assets (other than
Liens created or contemplated by this Agreement) pursuant to the terms of, any indenture, mortgage, deed
of trust, agreement or other instrument to which it or any of the Subsidiaries is party or by which any of its
properties or assets, or those of any of the Subsidiaries is bound or to which it is subject, except for breaches,
violations and defaults under clauses (a) and (b) that neither individually nor in the aggregate could reasonably
be expected to result in a Material Adverse Effect, or (c) violate any provision of the organizational documents
of such Loan Party.
SECTION 4.05
Properties. Each of the Borrower and the Material Subsidiaries has
good title to, or valid leasehold or other interests in, all its real and personal property material to its business
free of all Liens securing Indebtedness except for such Liens permitted under Section 6.02.
SECTION 4.06
Litigation and Environmental Matters. (a) Except as disclosed in the
most recent Annual Report on Form 10-K delivered by the Borrower to the Lenders, there is no action, suit
or proceeding by or before any arbitrator or Governmental Authority pending against or, to the knowledge
58
EXHIBIT 10.14
of the Borrower, threatened against or affecting the Borrower or any of the Material Subsidiaries as to which
there is a reasonable possibility of an adverse determination and that, if adversely determined, could
reasonably be expected to result in a Material Adverse Effect.
(b)
Except as disclosed in the most recent Annual Report on Form 10-K delivered by
the Borrower to the Lenders, the associated liabilities and costs of the Borrower’s compliance with
Environmental Laws (including any capital or operating expenditures required for clean-up or closure of
properties currently or previously owned, any capital or operating expenditures required to achieve or
maintain compliance with environmental protection standards imposed by Environmental Laws or as a
condition of any license, permit or contract, any related constraints on operating activities, including any
periodic or permanent shutdown of any facility or reduction in the level of or change in the nature of operations
conducted thereat, any costs or liabilities in connection with off-site disposal of wastes or Hazardous
Materials, and any actual or potential liabilities to third parties, including employees, and any related costs
and expenses) are unlikely to result in a Material Adverse Effect.
SECTION 4.07
Financial Statements.
(a)
The consolidated balance sheet of the Borrower and the Subsidiaries as at December
31, 2017 and the related consolidated statements of income, comprehensive income, shareholders’ equity
and cash flows of the Borrower and the Subsidiaries for the fiscal year ended on said date, with the opinion
thereon of PricewaterhouseCoopers LLP and set forth in the Borrower’s 2017 Annual Report on Form 10-
K, as filed with the SEC, fairly present, in all material respects, the consolidated financial position of the
Borrower and the Subsidiaries as of such date and their consolidated results of operations and cash flows
for such fiscal year in accordance with GAAP.
(b)
The unaudited consolidated balance sheets of the Borrower and the Subsidiaries as
at March 31, 2018, June 30, 2018 and September 30, 2018 and the related consolidated statements of income
and cash flows of the Borrower and the Subsidiaries for the three month period ended on such date and set
forth in the Borrower’s Quarterly Report on Form 10-Q for its fiscal quarter then ended, as filed with the
SEC, fairly present, in all material respects, the consolidated financial position of the Borrower and the
Subsidiaries as of such date and their consolidated results of their operations cash flows for the applicable
time period ended on said date (subject to the absence of footnotes and to normal year-end and audit
adjustments), in accordance with GAAP applied on a basis consistent with the financial statements referred
to in Section 4.07(a).
(c)
On the Closing Date and since the date of the Annual Report on Form 10-K delivered
by the Borrower to the Lenders with respect to the fiscal year ended December 31, 2017, there has been no
material adverse change in the business, assets, liabilities or financial condition of the Borrower and the
Subsidiaries, taken as a whole.
SECTION 4.08
Disclosure.
(a)
As of the Closing Date only, information heretofore furnished by the Borrower to
the Administrative Agent or any Lender for purposes of or in connection with this Agreement or any
transaction contemplated hereby, together with the Executive Summary is, when taken as a whole, true and
accurate in all material respects on the date as of which such information is stated or certified. The Executive
Summary and the reports, financial statements, certificates or other written information furnished by or on
behalf of the Borrower to the Administrative Agent or any Lender in connection with the syndication or
negotiation of this Agreement or delivered hereunder (as modified or supplemented by other information so
furnished) on or prior to the Closing Date, when taken as a whole, do not contain any material misstatement
59
EXHIBIT 10.14
of fact or omits to state any material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that, with respect to any projected
financial information, the Borrower represents only that such information was prepared in good faith based
upon assumptions believed by the Borrower to be reasonable at the time (it being recognized, however, that
projections as to future events are not to be viewed as facts and that the actual results during the period or
periods covered by any projects may materially different from the projected results).
(b)
As of the Closing Date, to the knowledge of the Borrower, the information included
in the Beneficial Ownership Certification provided on or prior to the Closing Date to any Lender in connection
with this Agreement is true and correct in all respects.
SECTION 4.09
Investment Company Act. The Borrower is not, and no Loan Party is
required to register as, an “investment company,” as such term is defined in the Investment Company Act
of 1940, as amended.
SECTION 4.10
ERISA. Each member of the ERISA Group has fulfilled its obligations
under the minimum funding standards of ERISA and the Code with respect to each Plan and is in compliance
in all material respects with the presently applicable provisions of ERISA and the Code with respect to each
Plan, except where the failure to so fulfill such obligations and such noncompliance individually, or together
with all such failures to fulfill such obligations and all such noncompliance, could not reasonably be expected
to result in a Material Adverse Effect. No member of the ERISA Group has (i) sought a waiver of the
minimum funding standard under Section 412 of the Code in respect of any Plan, (ii) failed to make any
contribution or payment to any Plan or Multiemployer Plan or in respect of any Benefit Arrangement, or
made any amendment to any Plan or Benefit Arrangement, which has resulted or could result in the imposition
of a Lien or the posting of a bond or other security under ERISA or the Code or (iii) incurred any liability
under Title IV of ERISA other than a liability to the PBGC for premiums under Section 4007 of ERISA,
which waiver, failure, amendment or liability individually, or collectively with all such waivers, failures,
amendments or liabilities, could reasonably be expected to result in a Material Adverse Effect. Except where
the failure to so fulfill such obligations and such noncompliance could individually, or together with all such
failures to fulfill such obligations and all such noncompliance could reasonably be expected to result in a
Material Adverse Effect, (i) no “reportable event”, as defined in Section 4043 of ERISA or the regulations
issued thereunder, has occurred with respect to a Plan (other than an event for which the 30 day notice period
is waived),. (ii) neither the Borrower nor any member of its ERISA Group has received any notice from the
PBGC or a plan administrator relating to an intention to terminate any Plan or Plans or to appoint a trustee
to administer any Plan and (iii) neither the Borrower or any members of its ERISA Group has any liability
with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan, nor has the
Borrower, any members of its ERISA Group, or any Multiemployer Plan from the Borrower or member of
its ERISA Group received any notice concerning the imposition of Withdrawal Liability or a determination
that a Multiemployer Plan is, or is expected to be, insolvent within the meaning of Title IV of ERISA.
SECTION 4.11
Tax Returns and Payments. The Borrower and the Material Subsidiaries
have caused to be filed all federal income Tax returns and other material Tax returns, statements and reports
(or obtained extensions with respect thereto) which are required to be filed and have paid or deposited or
made adequate provision in accordance with GAAP for the payment of all Taxes (including estimated Taxes
shown on such returns, statements and reports) which are shown to be due pursuant to such returns, except
for Taxes being contested in good faith by appropriate proceedings for which adequate reserves in accordance
with GAAP have been created on the books of the Borrower and the Subsidiaries and where the failure to
pay such Taxes (individually or in the aggregate for the Borrower and the Subsidiaries) would not have a
Material Adverse Effect.
60
EXHIBIT 10.14
SECTION 4.12
Compliance with Laws and Agreements. Each of the Borrower and the
Material Subsidiaries is in compliance with all laws, regulations and orders of any Governmental Authority
applicable to it or its property and all indentures, agreements and other instruments binding upon it or its
property, except where the failure to do so, individually or in the aggregate for the Borrower and the Material
Subsidiaries, could not reasonably be expected to result in a Material Adverse Effect.
SECTION 4.13
Purpose of Loans.
(a)
All proceeds of the Loans will be used for the purposes set forth in Section 5.07.
(b)
Neither the Borrower nor any agent acting on its behalf has taken or will take any
action which might cause this Agreement or any other Loan Document to violate Regulation T, Regulation
U, Regulation X, or any other regulation of the Board or to violate the Exchange Act. Margin stock does
not constitute more than 25% of the assets of the Borrower, or of the Borrower and the Subsidiaries on a
consolidated basis, and the Borrower does not intend or foresee that it will ever do so.
SECTION 4.14
Foreign Assets Control Regulations, etc. (a) To the extent applicable,
neither any Letter of Credit nor any part of the proceeds of the Loans will (i) be used to violate in any material
respect the Trading with the Enemy Act, as amended, or (ii) be used, directly or indirectly or made available
to any subsidiary, joint venture partner or any other Person to fund or support any activities or business of
or with any Person, or in any country or territory, that, at the time of such funding or extension, is, or whose
government is, at the time of making such Loans or extension of such Letters of Credit, the subject of any
economic or financial sanctions or trade embargoes administered or enforced by the U.S. Government,
including any enforced by the U.S. Department of Treasury’s Office of Foreign Assets Control or the U.S.
Department of State (collectively, “Sanctions”).
(b)
Neither the Borrower nor any Subsidiary, nor, to the knowledge of the Borrower,
any director, officer, employee, agent, affiliate or representative of the Borrower or any Subsidiary is a Person
that is, or is owned or controlled by, a Sanctioned Person. The Borrower and the Subsidiaries are in
compliance, in all material respects, with the Patriot Act.
(c)
Neither any Letter of Credit nor any part of the proceeds of the Loans will be used,
directly or indirectly, for any payments to any person in violation of any Anti-Corruption Laws, to the extent
the Anti-Corruption Laws apply to the Borrower or one of the Subsidiaries.
SECTION 4.15
Solvency. On the Closing Date, after giving effect to the Transactions,
the Borrower and its Subsidiaries, on a consolidated basis, are Solvent.
ARTICLE V
AFFIRMATIVE COVENANTS
From the Closing Date until the Commitments have expired or been terminated and principal
of and interest on each Loan and all fees payable hereunder shall have been paid in full and all Letters of
Credit shall have expired or terminated (or other arrangements satisfactory to the applicable Issuing Bank
made with respect thereto) and all LC Disbursements shall have been reimbursed, the Borrower covenants
and agrees with the Lenders that:
SECTION 5.01
Financial Statements and Other Information. The Borrower will furnish
to the Administrative Agent:
61
EXHIBIT 10.14
(a)
within ten days after the date in each fiscal year on which the Borrower is required
to file its Annual Report on Form 10-K with the SEC or, if earlier, 100 days after the end of each fiscal year
(i) such Annual Report, and (ii) its audited consolidated balance sheet and the related consolidated statements
of income, comprehensive income, operations, shareholders’ equity and cash flows as of the end of and for
such year, setting forth in each case in comparative form the figures as of the end of and for the previous
fiscal year, all reported on by, and accompanied by an opinion (without a “going concern” or like qualification
or exception and without any qualification or exception as to the scope of their audit) of,
PricewaterhouseCoopers LLP, or other independent public accountants of recognized national standing to
the effect that such consolidated financial statements present fairly in all material respects the financial
position, results of operations and cash flows of the Borrower and the Subsidiaries on a consolidated basis
in accordance with GAAP; provided, however, that (x) the Borrower shall be deemed to have furnished said
Annual Report on Form 10-K for purposes of clause (i) if it shall have timely made the same available on
“EDGAR” and/or on its home page on the worldwide web (at the date of this Agreement located at http://
www.kindermorgan.com) and complied with the last grammatical paragraph of this Section 5.01 in respect
thereof, and (y) if said Annual Report contains such consolidated balance sheet and such consolidated
statements of results of income, comprehensive income, shareholders’ equity and cash flows, and the report
thereon of such independent public accountants (without qualification or exception, and to the effect, as
specified above), the Borrower shall not be required to comply with clause (ii);
(b)
within five days after each date in each fiscal year on which the Borrower is required
to file a Quarterly Report on Form 10-Q with the SEC or, if earlier, 50 days after the end of each fiscal quarter
(i) such Quarterly Report, and (ii) its consolidated balance sheet and the related consolidated statements of
income and cash flows as of the end of and for the fiscal quarter to which said Quarterly Report relates and
the then elapsed portion of the fiscal year, setting forth in each case in comparative form the figures as of
the end and for the corresponding period or periods of the previous fiscal year, all certified by a Responsible
Officer as presenting fairly in all material respects the financial condition and results of operations of the
Borrower and the Subsidiaries on a consolidated basis in accordance with GAAP, subject to normal year-
end audit adjustments and the absence of footnotes; provided, however, that (x) the Borrower shall be deemed
to have furnished said Quarterly Report for purposes of clause (i) if it shall have timely made the same
available on “EDGAR” and/or on its home page on the worldwide web (at the date of this Agreement located
at http://www.kindermorgan.com) and complied with the last grammatical paragraph of this Section 5.01 in
respect thereof, and (y) if said Quarterly Report contains such consolidated balance sheet and consolidated
statements of income and cash flows, and such certifications, the Borrower shall not be required to comply
with clause (ii);
(c)
simultaneously with the delivery of each set of financial statements referred to in
clauses (a) and (b) above, a certificate in substantially the form of Exhibit 5.01 signed by an authorized
financial or accounting officer of the Borrower (i) setting forth in reasonable detail the calculations required
to establish whether the Borrower was in compliance with the requirements of Section 6.07, (ii) (A) in the
case of the first set of financial statements delivered following the Closing Date, setting forth a list of the
Material Subsidiaries, and (B) in the case of each set of financial statements delivered thereafter, an update
of any change in the list of the Material Subsidiaries or stating that there has been no such change, and
(iii) stating whether any Default or Event of Default exists on the date of such certificate and, if any Default
or Event of Default then exists, setting forth the details thereof and the action which the Borrower is taking
or proposes to take with respect thereto;
(d)
prompt written notice of the following:
(i)
the occurrence of any Default or Event of Default;
62
EXHIBIT 10.14
(ii)
any other development that results in, or could reasonably be expected to
result in, a Material Adverse Effect; and
(iii)
any change in the information provided in the Beneficial Ownership
Certification delivered to such Lender that would result in a change to the list of beneficial owners
identified in such certification;
(each notice delivered under this Section 5.01(d) to be accompanied by a statement of a Responsible Officer
setting forth the details of the event or development requiring such notice and any action taken or proposed
to be taken with respect thereto);
(e)
without duplication of any other requirement of this Section 5.01, promptly upon
the mailing thereof to the public shareholders of the Borrower generally, copies of all financial statements,
reports and proxy statements so mailed;
(f)
promptly upon the filing thereof with the SEC, copies of all registration statements
(other than the exhibits thereto and any registration statements on Form S-8 or its equivalent) and reports
on Form 8-K which the Borrower shall have filed with the SEC;
(g)
if and when any member of the ERISA Group (i) gives or is required to give notice
to the PBGC of any “reportable event” (as defined in Section 4043 of ERISA) (other than such event as to
which the 30-day notice requirement is waived) with respect to any Plan which would reasonably be expected
to constitute grounds for a termination of such Plan under Title IV of ERISA, or knows that the plan
administrator of any Plan has given or is required to give notice of any such reportable event, a copy of the
notice of such reportable event given or required to be given to the PBGC; (ii) receives notice of complete
or partial material Withdrawal Liability under Title IV of ERISA or notice that any Multiemployer Plan is
insolvent, is in “endangered” or “critical” status (within the meaning of Section 432 of the Code or Section
305 of ERISA) or has been terminated, a copy of such notice; (iii) receives notice from the PBGC under
Title IV of ERISA of an intent to terminate, impose liability (other than for premiums under Section 4007
of ERISA) in respect of, or appoint a trustee to administer any Plan, a copy of such notice; (iv) fails to satisfy,
or applies for a waiver of, the minimum funding standard under Section 412 of the Code, a copy of such
application; (v) gives notice of intent to terminate any Plan under Section 4041(c) of ERISA, a copy of such
notice and other information filed with the PBGC; (vi) gives notice of withdrawal from any Plan pursuant
to Section 4063 of ERISA, a copy of such notice; or (vii) fails to make any payment or contribution to any
Plan or Multiemployer Plan or in respect of any Benefit Arrangement or makes any amendment to any Plan
or Benefit Arrangement which has resulted or could result in the imposition of a Lien or the posting of a
bond or other security, a certificate of the chief financial officer or the chief accounting officer of the Borrower
setting forth details as to such occurrence and action, if any, which the Borrower or applicable member of
the ERISA Group is required or proposes to take; and
(h)
(x) from time to time such other information (other than projections) regarding the
business, affairs or financial condition of the Borrower or any Subsidiary as the Required Lenders or the
Administrative Agent may reasonably request and (y) promptly following any request therefor, information
and documentation reasonably requested by the Administrative Agent for distribution to the Lenders so
requesting for purposes of compliance with applicable “know your customer” and anti-money laundering
rules and regulations, including the Patriot Act and the Beneficial Ownership Regulation.
Information required to be delivered pursuant to Section 5.01(a), 5.01(b) or 5.01(f) above
shall be deemed to have been delivered on the date on which the Borrower provides notice to the
Administrative Agent and the Lenders that such information has been posted on “EDGAR” or the Borrower’s
63
EXHIBIT 10.14
website or another website identified in such notice and accessible by the Administrative Agent and the
Lenders without charge (and the Borrower hereby agrees to provide such notice); provided that such notice
may be included in a certificate delivered pursuant to Section 5.01(c).
SECTION 5.02
Existence, Conduct of Business. The Borrower will, and will cause
each of the Material Subsidiaries to, do or cause to be done all things necessary to preserve, renew and keep
in full force and effect its legal existence and the rights, licenses, permits, privileges and franchises material
to the conduct of its business, except where the failure to do so (individually or collectively with all such
failures) could not reasonably expected to have a Material Adverse Effect; provided that the foregoing shall
not prohibit any merger, consolidation, liquidation or dissolution permitted under Section 6.03.
SECTION 5.03
Payment of Obligations. The Borrower will, and will cause each of the
Material Subsidiaries to, pay, before the same shall become delinquent or in default, its Indebtedness and
Tax liabilities but excluding Indebtedness (other than the Obligations) that is not in excess of $150,000,000,
except where (a) the validity or amount thereof is being contested in good faith by appropriate proceedings,
(b) the Borrower or such Material Subsidiary has set aside on its books adequate reserves with respect thereto
in accordance with GAAP or (c) the failure to make payment pending such contest could not reasonably be
expected to result in a Material Adverse Effect.
SECTION 5.04 Maintenance of Properties; Insurance.
(a)
The Borrower will keep, and will cause each Material Subsidiary to keep, all property
material to the conduct its business (taken as a whole) in good working order and condition, ordinary wear
and tear excepted, in the reasonable judgment of the Borrower.
(b)
The Borrower will maintain or cause to be maintained with, in the good faith
judgment of the Borrower, financially sound and reputable insurers, or through self-insurance, insurance
with respect to its properties and business and the properties and businesses of the Subsidiaries against loss
or damage of the kinds customarily insured against by business enterprises of established reputation engaged
in the same or similar business and similarly situated, of such types and in such amounts as are customarily
carried under similar circumstances by such other corporations. Such insurance may include self-insurance
or be subject to co-insurance, deductibility or similar clauses which, in effect, result in self-insurance of
certain losses, provided that such self-insurance is in accord with the approved practices of business
enterprises of established reputation similarly situated and adequate insurance reserves are maintained in
connection with such self-insurance, and, notwithstanding the foregoing provisions of this Section 5.04 the
Borrower or any Subsidiary may effect workers’ compensation or similar insurance in respect of operations
in any state or other jurisdiction any through an insurance fund operated by such state or other jurisdiction
or by causing to be maintained a system or systems of self-insurance in accord with applicable laws.
SECTION 5.05
Books and Records; Inspection Rights. The Borrower will, and will
cause each of the Material Subsidiaries to, keep, in accordance with GAAP, books of record and account.
The Borrower will, and will cause each of the Material Subsidiaries to, permit any representatives designated
by the Administrative Agent or any Lender, upon reasonable prior notice during normal business hours, and,
if the Borrower shall so request, in the presence of a Responsible Officer or an appointee of a Responsible
Officer, at the expense of the Administrative Agent or such Lender (unless an Event of Default exists, in
which event the expense shall be that of the Borrower) to visit and inspect its properties, to examine and
make extracts from its books and records (subject to compliance with confidentiality agreements and
applicable copyright law), and to discuss its affairs, finances and condition
64
EXHIBIT 10.14
with its officers, all at such times, and as often, as reasonably requested, but unless an Event of Default exists,
no more frequently than once during each calendar year.
SECTION 5.06
Compliance with Laws. The Borrower will, and will cause each of the
Material Subsidiaries to, comply with all Requirements of Law applicable to it or its property, except where
the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect. The Borrower will maintain in effect and enforce policies and procedures designed to ensure
compliance by the Borrower, its Subsidiaries and their respective directors, officers, employees and agents
with Anti-Corruption Laws and applicable Sanctions.
SECTION 5.07
Use of Proceeds. The proceeds of the Loans will be used for working
capital and other general corporate purposes.
SECTION 5.08
Additional Guarantors. The Borrower shall cause each Subsidiary
(including, without limitation, any Division Successor) (other than any Excluded Subsidiary) formed or
otherwise purchased or acquired after the Closing Date (including each Subsidiary that ceases to constitute
an Excluded Subsidiary after the Closing Date) to execute a supplement to the Guaranty and become a
Guarantor within 45 days of the occurrence of the applicable event specified in this Section 5.08 (or such
longer period of time as the Administrative Agent shall reasonably agree).
ARTICLE VI
NEGATIVE COVENANTS
From the Closing Date until the Commitments have expired or terminated and principal of
and interest on each Loan and all fees payable hereunder have been paid in full and all Letters of Credit have
expired or terminated (or other arrangements satisfactory to the applicable Issuing Bank made with respect
thereto) and all LC Disbursements shall have been reimbursed, the Borrower covenants and agrees with the
Lenders that:
SECTION 6.01
Indebtedness of Non-Guarantor Subsidiaries. The Borrower will not
permit any Subsidiary that is not a Guarantor (each a “Non-Guarantor Subsidiary”) to create, incur or assume
Indebtedness other than the following:
(a)
Indebtedness existing as of the Closing Date and set forth on Schedule 6.01 and
any Indebtedness incurred to refund, extend, refinance or otherwise replace such Indebtedness; provided
that the principal amount of such Indebtedness does not exceed the principal amount of Indebtedness
refinanced (plus the amount of penalties, premiums, fees, accrued interest and reasonable expenses and other
obligations incurred therewith) at the time of the refinancing;
(b)
Indebtedness owing to the Borrower or its Subsidiaries;
(c)
Indebtedness that is (or was) secured by Liens permitted pursuant to Section 6.02(b)
or (c) and any Indebtedness incurred to refund, extend, refinance or otherwise replace such Indebtedness;
provided, that the principal amount of such Indebtedness does not exceed the principal amount of
Indebtedness refinanced (plus the amount of penalties, premiums, fees, accrued interest and reasonable
expenses and other obligations incurred therewith) at the time of refinancing;
(d)
(i) Indebtedness attaching to any property or asset prior to the acquisition thereof
by any Non-Guarantor Subsidiary or of, or attaching to any property or asset of, any Person that becomes a
Non-Guarantor Subsidiary after the date hereof prior to the time such Person becomes a Non-Guarantor
65
EXHIBIT 10.14
Subsidiary, in each case, outstanding prior to the acquisition of such property or asset or such Person becoming
a Non-Guarantor Subsidiary; provided that such Indebtedness was not incurred in contemplation of or in
connection with such acquisition or such Person becoming a Non-Guarantor Subsidiary, as the case may be
and (ii) and any Indebtedness incurred to refund, extend, refinance or otherwise replace such Indebtedness
(plus the amount of penalties, premiums, fees, accrued interest and reasonable expenses and other obligations
incurred therewith);
(e)
(f)
Indebtedness of Foreign Subsidiaries; and
Indebtedness of Non-Wholly-owned Subsidiaries.
SECTION 6.02
Liens. The Borrower will not, and will not permit any Subsidiary to,
create, incur, assume or permit to exist any Lien securing Indebtedness on any property or asset now owned
or hereafter acquired by it except:
(a)
Liens existing as of the Closing Date (including any replacement, extension or
renewal of any such Lien permitted upon or in the same assets (other than after acquired property that is
affixed or incorporated into the property covered by such Lien) theretofore subject to such Lien or the
replacement, extension or renewal (without increase in the amount or change in any direct or contingent
obligor except to the extent otherwise permitted hereunder) of the Indebtedness secured thereby);
(b)
Liens securing (A) Capital Lease Obligations, or (B) Indebtedness incurred to
finance the acquisition, construction, expansion or improvement of any fixed or capital assets of the Borrower
or its Subsidiaries; provided that (x) such Liens attach at all times only to the assets so financed except for
accessions to such property, improvements thereof and general intangibles relating thereto, and the proceeds
and the products thereof and (y) individual financings of equipment provided by one lender may be cross
collateralized to other financings of equipment provided by such lender;
(c)
Liens existing on any property or asset prior to the acquisition thereof by the
Borrower or any Subsidiary or existing on any property or asset of any Person that becomes a Subsidiary
after the date hereof prior to the time such Person becomes a Subsidiary, in each case, pursuant to security
documents in effect prior to the acquisition of such property or asset or such Person becoming a Subsidiary
(“Existing Security Documents”), and securing Indebtedness whose incurrence, for purposes of this
Agreement, by virtue of acquisition of such property or asset, or by virtue of such Person so becoming a
Subsidiary, would not result in a violation of Section 6.07; provided that (i) such Lien is not created in
contemplation of or in connection with such acquisition or such Person becoming a Subsidiary, as the case
may be, (ii) such Lien shall not apply to any other property or assets of the Borrower or any Subsidiary
except to the extent such Lien attaches to such property or assets pursuant to Existing Security Documents,
(iii) such Lien shall secure only those obligations which it secures on the date of such acquisition or the date
such Person becomes a Subsidiary, as the case may be, and extensions, renewals and replacements thereof
that do not increase the outstanding principal amount thereof. For purposes of this Section 6.02(c), the
Indebtedness so secured shall be deemed to have been incurred on the last day of the fiscal quarter then most
recently ended; and
(d)
Liens, not otherwise permitted by the foregoing clauses (a) and (b), securing
Indebtedness in an aggregate amount not exceeding 15% of Consolidated Net Tangible Assets.
SECTION 6.03
Fundamental Changes. The Borrower will not, and will not permit any
Material Subsidiary to, merge into or consolidate with any other Person, or permit any other Person to merge
into or consolidate with it, or sell, transfer, lease or otherwise dispose of (including pursuant to a Division
66
EXHIBIT 10.14
and whether in one transaction or in a series of transactions) all (or substantially all) of its assets, or all or
substantially all of the stock of or other equity interest in any of the Material Subsidiaries (in each case,
whether now owned or hereafter acquired), or liquidate or dissolve, unless: (a) at the time thereof and
immediately after giving effect thereto no Event of Default or Default shall have occurred and be continuing;
and (b) (i) the Borrower or a Material Subsidiary is the surviving entity or the recipient of the assets so sold,
transferred, leased or otherwise disposed of in any such sale, transfer, lease or other disposition of assets,
provided, that no such merger, consolidation, sale, transfer, lease or other disposition shall have the effect
of releasing the Borrower from any of the Obligations or (ii) such merger, consolidation, sale, transfer, lease
or other disposition, when taken together with all other consolidations, mergers or sales of assets by the
Borrower or any Material Subsidiary since the Closing Date, shall not result in the disposition by the Borrower
and the Material Subsidiaries of assets in an amount that would constitute all or substantially all of the
consolidated assets of the Borrower and the Material Subsidiaries.
SECTION 6.04
Restricted Payments. The Borrower will not declare or make, or agree
to pay or make, directly or indirectly, any Restricted Payment except (a) distributions with respect to the
Capital Stock of the Borrower, so long as both before and after the making of such distribution, no Event of
Default shall have occurred and be continuing, (b) any Capital Stock split, Capital Stock reverse split, dividend
of Borrower Capital Stock or similar transaction will not constitute a Restricted Payment, and (c) acquisitions
by officers, directors and employees of the Borrower of equity interests in the Borrower through cashless
exercise of options pursuant to, and in accordance with the terms of, management and/or employee stock
plans, stock subscription agreements or shareholder agreements.
SECTION 6.05
Transactions with Affiliates. The Borrower will conduct, and cause
each of the Subsidiaries to conduct, all transactions with any of its Affiliates (other than the Borrower or the
Subsidiaries) on terms that are substantially as favorable to the Borrower or such Subsidiary as it would
obtain in a comparable arm’s-length transaction with a Person that is not an Affiliate, provided that the
foregoing shall be deemed to be satisfied with respect to any transaction that is approved by a majority of
the independent members of the Borrower’s board of directors, or of a committee thereof consisting solely
of independent directors, and provided, further that the foregoing restrictions shall not apply to:
(a)
the payment of customary fees for management, consulting and financial services
rendered to the Borrower and the Subsidiaries and (ii) customary investment banking fees paid for services
rendered to the Borrower and the Subsidiaries in connection with divestitures, acquisitions, financings and
other transactions;
(b)
transactions permitted by Section 6.04;
(c)
the payment of any fees or expenses incurred or paid by the Borrower or any of its
Subsidiaries in connection with the Transactions, this Agreement and the other Loan Documents and the
transactions contemplated hereby and thereby;
(d)
the issuance of Capital Stock of the Borrower to the management of the Borrower
or any of its Subsidiaries in connection with the Transactions or pursuant to arrangements described in clause
(f) of this Section 6.05;
(e)
loans, advances, provision of credit support and other investments by (or to) the
Borrower and the Subsidiaries;
(f)
employment and severance arrangements among the Borrower and the Subsidiaries
and their respective officers and employees in the ordinary course of business;
67
EXHIBIT 10.14
(g)
payments by the Borrower and the Subsidiaries pursuant to tax sharing agreements
among the Borrower and the Subsidiaries on customary terms to the extent attributable to the ownership or
operation of the Borrower and the Subsidiaries;
(h)
the payment of customary fees and reasonable out of pocket costs to, and indemnities
provided on behalf of, directors, managers, consultants, officers and employees of the Borrower and the
Subsidiaries in the ordinary course of business to the extent attributable to the ownership or operation of the
Borrower and the Subsidiaries; and
(i)
transactions pursuant to agreements set forth on Schedule 6.05 or any amendment
thereto to the extent such an amendment is not adverse, taken as a whole, to the Lenders in any material
respect.
SECTION 6.06
Restrictive Agreements. The Borrower will not, and will not permit
any of the Material Subsidiaries that are not Guarantors to, directly or indirectly, enter into, incur or permit
to exist any agreement or other arrangement that prohibits, restricts or imposes any condition upon the ability
of any non-Guarantor Material Subsidiary to pay dividends or other distributions with respect to any shares
of its Capital Stock or to make or repay loans (including subordinate loans) or advances to the Borrower or
any Guarantor, provided that the foregoing shall not apply to (a) restrictions and conditions imposed by law
or by this Agreement, (b) customary restrictions and conditions contained in agreements relating to the sale
of all or substantially all of the Capital Stock or assets of a Subsidiary pending such sale, provided such
restrictions and conditions apply only to the Subsidiary that is to be sold and such sale is permitted hereunder,
(c) restrictions and conditions existing on the date hereof identified on Schedule 6.06 (but shall apply to
any extension or renewal of, or any amendment or modification expanding the scope of, any such restriction
or condition) and (d) restrictions or conditions contained in, or existing by reason of, any agreement or
instrument relating to any Subsidiary at the time such Subsidiary was merged or consolidated with or into,
or acquired by, the Borrower or a Subsidiary or became a Subsidiary and not created in contemplation thereof.
SECTION 6.07
Ratio of Consolidated Net Indebtedness to Consolidated EBITDA.
Commencing with the last day of the first full fiscal quarter following the Closing Date and on the last day
of each fiscal quarter ended thereafter, the Borrower will not permit the ratio of Consolidated Net Indebtedness
to Consolidated EBITDA for the most recent four full fiscal quarters ended as of the last day of such applicable
fiscal quarter, to exceed 5.50:1.00.
In addition, for purposes of this Section 6.07, Hybrid Securities up to an aggregate amount
of 5% of Total Capitalization (after giving effect to the following exclusion) shall be excluded from
Consolidated Net Indebtedness.
SECTION 6.08
Use of Proceeds. The Borrower will not request any Borrowing or
Letter of Credit, and the Borrower shall not use, and shall procure that its Subsidiaries and its or their
respective directors, officers, employees and agents shall not use, the proceeds of any Borrowing or Letter
of Credit (A) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving
of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws, (B) for the
purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned
Person, or in any Sanctioned Country, or (C) in any manner that would result in the violation of any Sanctions
applicable to any party hereto.
68
EXHIBIT 10.14
ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.01
Events of Default and Remedies. If any of the following events (“Events
of Default”) shall occur and be continuing:
(a)
the principal of any Loan or any reimbursement obligation in respect of any LC
Disbursement shall not be paid when and as the same shall become due and payable, whether at the due date
thereof or at a date fixed for prepayment thereof or otherwise;
(b)
any interest on any Loan or any fee or any other amount (other than an amount
referred to in clause (a) of this Article) payable by a Loan Party under this Agreement or any other Loan
Document shall not be paid, when and as the same shall become due and payable, and such failure shall
continue unremedied for a period of five Business Days;
(c)
any representation or warranty made or, for purposes of Article III, deemed made
by or on behalf of the Borrower herein, at the direction of the Borrower or by any Loan Party in any other
Loan Document or in any document, certificate or financial statement delivered in connection with this
Agreement or any other Loan Document shall prove to have been incorrect in any material respect when
made or deemed made or reaffirmed, as the case may be;
(d)
the Borrower shall fail to observe or perform any covenant, condition or agreement
contained in Section 5.01(d)(i), 5.02 (with respect to the Borrower’s existence) or 5.07 or in Article VI;
(e)
any Loan Party shall fail to perform or observe any other term, covenant or agreement
contained in this Agreement (other than those specified in Section 7.01(a), Section 7.01(b) or Section 7.01(d))
or any other Loan Document to which it is a party and, in any event, such failure shall remain unremedied
for 30 calendar days after the earlier of (i) written notice of such failure shall have been given to the Borrower
by the Administrative Agent or any Lender or, (ii) a Responsible Officer of the Borrower becomes aware of
such failure;
(f)
other than as specified in Section 7.01(a) or (b), (i) the Borrower or any Subsidiary
fails to make (whether as primary obligor or as guarantor or other surety) any payment of principal of, or
interest or premium, if any, on any item or items of Indebtedness (other than as specified in Section 7.01(a)
or Section 7.01(b)) or any payment in respect of any Hedging Agreement, in each case when the same
becomes due and payable (whether by scheduled maturity, required payment or prepayment, acceleration,
demand or otherwise), beyond any period of grace provided with respect thereto (not to exceed 30 days);
provided that the aggregate outstanding principal amount of all Indebtedness or payment obligations in
respect of all Hedging Agreements as to which such a payment default shall occur and be continuing is equal
to or exceeds $150,000,000, or (ii) the Borrower or any Subsidiary fails to duly observe, perform or comply
with any agreement with any Person or any term or condition of any instrument, if such failure, either
individually or in the aggregate, shall have resulted in the acceleration of the payment of Indebtedness with
an aggregate face amount which is equal to or exceeds $150,000,000; provided that this Section 7.01(f) shall
not apply to secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property
or assets securing such Indebtedness, so long as such Indebtedness is paid in full when due;
(g)
an involuntary case shall be commenced or an involuntary petition shall be filed
seeking (i) liquidation, reorganization or other relief in respect of the Borrower or any Material Subsidiary
or its debts, or of a substantial part of its assets, under any Debtor Relief Laws or (ii) the appointment of a
69
EXHIBIT 10.14
receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any Material
Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall
continue undismissed for 60 days or an order or decree approving or ordering any of the foregoing shall be
entered;
(h)
the Borrower or any Material Subsidiary shall (i) voluntarily commence any
proceeding or file any petition seeking liquidation, winding-up, reorganization or other relief under any
Debtor Relief Laws, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner,
any proceeding or petition described in Section 7.01(g), (iii) apply for or consent to the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any Material
Subsidiary or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a
petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or
(vi) take any action for the purpose of effecting any of the foregoing;
(i)
the Borrower or any Material Subsidiary shall become unable, admit in writing or
fail generally to pay its debts as they become due;
(j)
one or more judgments for the payment of money in an aggregate amount in excess
of $150,000,000 shall be rendered against the Borrower, any Subsidiary or any combination thereof and the
same shall (x) not be covered by insurance and (y) remain undischarged for a period of 60 consecutive days
during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment
creditor to attach or levy upon any assets of the Borrower or any Subsidiary to enforce any such judgment;
(k)
a Change in Control shall occur;
(l)
any member of the ERISA Group shall fail to pay when due an amount which it
shall have become liable to pay under Title IV of ERISA; or notice of intent to terminate a Plan shall be filed
under Title IV of ERISA by any member of the ERISA Group, any plan administrator or any combination
of the foregoing; or the PBGC shall institute proceedings under Title IV of ERISA to terminate, to impose
liability (other than for premiums under Section 4007 of ERISA) in respect of, or to cause a trustee to be
appointed to administer any Plan; or a condition shall exist by reason of which the PBGC would be entitled
to obtain a decree adjudicating that any Plan must be terminated; or there shall occur a complete or partial
withdrawal from, or a default, within the meaning of Section 4219(c)(5) of ERISA, with respect to, one or
more Multiemployer Plans which could cause one or more members of the ERISA Group to incur a current
payment obligation; and in each of the foregoing instances such condition could reasonably be expected to
result in a Material Adverse Effect;
then, and in any such event, and at any time thereafter (but for the avoidance of doubt, in each case, not prior
to the Closing Date) if any Event of Default shall then be continuing, the Administrative Agent, may, and
upon the written request of the Required Lenders shall, by written notice (including notice sent by telecopy
or electronic mail) to the Borrower (a “Notice of Default”) take any or all of the following actions, without
prejudice to the rights of the Administrative Agent, any Lender or other holder of any of the Obligations to
enforce its claims against the Borrower (provided that, if an Event of Default specified in Section 7.01(g)
or Section 7.01(h) shall occur with respect to the Borrower or any Material Subsidiary, the actions described
in clauses (i), (ii) and (v) below shall occur automatically without the giving of any Notice of Default): (i)
declare the Total Commitment terminated, whereupon the Commitments of the Lenders shall forthwith
terminate immediately and any accrued Commitment Fees shall forthwith become due and payable without
any other notice of any kind; (ii) declare the principal of and any accrued interest in respect of all Loans,
and all the other Obligations owing hereunder and under the other Loan Documents, to be, whereupon the
same shall become, forthwith due and payable without presentment, demand, notice of demand or of dishonor
70
EXHIBIT 10.14
and nonpayment, protest, notice of protest, notice of intent to accelerate, declaration or notice of acceleration
or any other notice of any kind, all of which are hereby waived by the Borrower; (iii) exercise any rights or
remedies under the Loan Documents; (iv) terminate any Letter of Credit which may be terminated in
accordance with its terms (whether by the giving of written notice to the beneficiary or otherwise); and (v)
direct the Borrower to comply, and the Borrower agrees that upon receipt of such notice (or upon the
occurrence of an Event of Default specified in Section 7.01(g) or Section 7.01(h)) it will comply, with the
provisions of Section 2.05(l).
ARTICLE III
THE ADMINISTRATIVE AGENT
SECTION 8.01
Appointment and Authority. Each of the Lenders and the Issuing Banks
hereby irrevocably appoints Barclays Bank PLC to act on its behalf as the Administrative Agent hereunder
and under the other Loan Documents and authorizes the Administrative Agent to take such actions on its
behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or
thereof, together with such actions and powers as are reasonably incidental thereto. The provisions of this
Article are solely for the benefit of the Administrative Agent, the Lenders and the Issuing Banks and, except
as specifically provided in Section 8.06(a) and (b), the Borrower shall not have rights as a third-party
beneficiary of any of such provisions. It is understood and agreed that the use of the term “agent” herein or
in any other Loan Documents (or any other similar term) with reference to the Administrative Agent is not
intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of
any applicable law. Instead such term is used as a matter of market custom, and is intended to create or reflect
only an administrative relationship between contracting parties.
SECTION 8.02
Rights as a Lender. The Person serving as the Administrative Agent
hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not the Administrative Agent, and the term “Lender” or “Lenders” shall,
unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as
the Administrative Agent hereunder in its individual capacity. Such Person and its Affiliates may accept
deposits from, lend money to, own securities of, act as the financial advisor or in any other advisory capacity
for, and generally engage in any kind of business with, the Borrower or any Subsidiary or other Affiliate
thereof as if such Person were not the Administrative Agent hereunder and without any duty to account
therefor to the Lenders.
SECTION 8.03
Exculpatory Provisions.
(a)
The Administrative Agent shall not have any duties or obligations except those
expressly set forth herein and in the other Loan Documents, and its duties hereunder shall be administrative
in nature. Without limiting the generality of the foregoing, the Administrative Agent:
(i)
shall not be subject to any fiduciary or other implied duties, regardless of
whether a Default or an Event of Default has occurred and is continuing;
(ii)
shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly contemplated hereby or by
the other Loan Documents that the Administrative Agent is required to exercise as directed in writing
by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly
provided for herein or in the other Loan Documents); provided that the Administrative Agent shall
not be required to take any action that, in its opinion or the opinion of its counsel, may expose the
Administrative Agent to liability or that is contrary to any Loan Document or applicable law,
71
EXHIBIT 10.14
including for the avoidance of doubt any action that may be in violation of the automatic stay under
any Debtor Relief Law or that may effect a forfeiture, modification or termination of property of a
Defaulting Lender in violation of any Debtor Relief Law; and
(iii)
shall not, except as expressly set forth herein and in the other Loan
Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any
information relating to the Borrower or any of its Affiliates that is communicated to or obtained by
the Person serving as the Administrative Agent or any of its Affiliates in any capacity.
(b)
The Administrative Agent shall not be liable for any action taken or not taken by it
(i) with the consent or at the request of the Required Lenders (or such other number or percentage of the
Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary,
under the circumstances as provided in Sections 9.02 and 9.03) or (ii) in the absence of its own gross
negligence or willful misconduct as determined by a court of competent jurisdiction by final and
nonappealable judgment. The Administrative Agent shall be deemed not to have knowledge of any Default
or Event of Default unless and until notice describing such Default is given to the Administrative Agent in
writing by the Borrower, a Lender or an Issuing Bank.
(c)
The Administrative Agent shall not be responsible for or have any duty to ascertain
or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement
or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder
or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the
covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default
or Event of Default or the enforceability, effectiveness or genuineness of this Agreement, any other Loan
Document or any other agreement, instrument or document, or (v) the satisfaction of any condition set forth
in Article III or elsewhere herein, other than to confirm receipt of items expressly required to be delivered
to the Administrative Agent.
SECTION 8.04
Reliance by Administrative Agent. The Administrative Agent shall be
entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing (including any electronic message, Internet or intranet
website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise
authenticated by the proper Person. The Administrative Agent also may rely upon any statement made to it
orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any
liability for relying thereon. In determining compliance with any condition hereunder to the making or
extension of a Loan or the issuance, extension, renewal or increase of a Letter of Credit, that by its terms
must be fulfilled to the satisfaction of a Lender or an Issuing Bank, the Administrative Agent may presume
that such condition is satisfactory to such Lender or Issuing Bank unless the Administrative Agent shall have
received notice to the contrary from such Lender or Issuing Bank prior to the making or extension of such
Loan or the issuance of such Letter of Credit. The Administrative Agent may consult with legal counsel
(who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall
not be liable for any action taken or not taken by it in accordance with the advice of any such counsel,
accountants or experts.
SECTION 8.05
Delegation of Duties. The Administrative Agent may perform any and
all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through
any one or more sub agents appointed by the Administrative Agent. The Administrative Agent and any such
sub agent may perform any and all of its duties and exercise its rights and powers by or through their respective
Related Parties. The exculpatory provisions of this Article shall apply to any such sub agent and to the
Related Parties of the Administrative Agent and any such sub agent, and shall apply to their respective
72
EXHIBIT 10.14
activities in connection with the syndication of the revolving credit facility provided for herein as well as
activities as Administrative Agent. The Administrative Agent shall not be responsible for the negligence or
misconduct of any sub-agents except to the extent that a court of competent jurisdiction determines in a final
and nonappealable judgment that the Administrative Agent acted with gross negligence or willful misconduct
in the selection of such sub agents.
SECTION 8.06
Resignation of Administrative Agent.
(a)
The Administrative Agent may at any time give notice of its resignation to the
Lenders, the Issuing Banks and the Borrower. Upon receipt of any such notice of resignation, the Required
Lenders shall have the right to appoint a successor, subject to (so long as no Default or Event of Default
exists) the prior written consent of the Borrower (which consent will not be unreasonably withheld or delayed),
which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in
the United States. If no such successor shall have been so appointed by the Required Lenders and shall have
accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its
resignation (or such earlier day as shall be agreed by the Required Lenders) (the “Resignation Effective
Date”), then the retiring Administrative Agent may (but shall not be obligated to), subject to (so long as no
Default or Event of Default exists) the prior written consent of the Borrower (which consent will not be
unreasonably withheld), on behalf of the Lenders and the Issuing Banks, appoint a successor Administrative
Agent meeting the qualifications set forth above. Whether or not a successor has been appointed, such
resignation shall become effective in accordance with such notice on the Resignation Effective Date.
(b)
If the Person serving as Administrative Agent is a Defaulting Lender pursuant to
clause (d) of the definition thereof, the Required Lenders may, to the extent permitted by applicable law, by
notice in writing to the Borrower and such Person remove such Person as Administrative Agent and, subject
to (so long as no Default or Event of Default exists) the prior written consent of the Borrower (which consent
will not be unreasonably withheld or delayed), appoint a successor. If no such successor shall have been so
appointed by the Required Lenders and shall have accepted such appointment within 30 days (or such earlier
day as shall be agreed by the Required Lenders) (the “Removal Effective Date”), then such removal shall
nonetheless become effective in accordance with such notice on the Removal Effective Date.
(c)
With effect from the Resignation Effective Date or the Removal Effective Date (as
applicable) (1) the retiring or removed Administrative Agent shall be discharged from its duties and
obligations hereunder and under the other Loan Documents (except that in the case of any collateral security
held by the Administrative Agent on behalf of the Lenders or the Issuing Banks under any of the Loan
Documents, the retiring or removed Administrative Agent shall continue to hold such collateral security until
such time as a successor Administrative Agent is appointed) and (2) except for any indemnity payments
owed to the retiring or removed Administrative Agent, all payments, communications and determinations
provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender
and Issuing Bank directly, until such time, if any, as the Required Lenders appoint a successor Administrative
Agent as provided for above. Upon the acceptance of a successor’s appointment as Administrative Agent
hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and
duties of the retiring or removed Administrative Agent (other than any rights to indemnity payments owed
to the retiring or removed Administrative Agent), and the retiring or removed Administrative Agent shall be
discharged from all of its duties and obligations hereunder or under the other Loan Documents. The fees
payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its
predecessor unless otherwise agreed between the Borrower and such successor. After the retiring or removed
Administrative Agent’s resignation or removal hereunder and under the other Loan Documents, the provisions
of this Article and Section 9.03 shall continue in effect for the benefit of such retiring or removed
Administrative Agent, its sub agents and their respective Related Parties in respect of any actions taken or
73
EXHIBIT 10.14
omitted to be taken by any of them while the retiring or removed Administrative Agent was acting as
Administrative Agent.
SECTION 8.07
Non-Reliance on Administrative Agent and Other Lenders.
(a)
Each Lender acknowledges that it has, independently and without reliance upon the
Administrative Agent or any other Lender or any of their Related Parties and based on such documents and
information as it has deemed appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender and Issuing Bank also acknowledges that it will, independently and without reliance
upon the Administrative Agent or any other Lender or any of their Related Parties and based on such
documents and information as it shall from time to time deem appropriate, continue to make its own decisions
in taking or not taking action under or based upon this Agreement, any other Loan Document or any related
agreement or any document furnished hereunder or thereunder.
(b)
Each Lender acknowledges that Simpson Thacher & Bartlett LLP is acting in this
transaction as special legal counsel to the Administrative Agent only. Each Lender and Issuing Bank will
consult with its own legal counsel to the extent it deems necessary with this Agreement and the other Loan
Documents and the matters contemplated herein and therein.
SECTION 8.08
INDEMNIFICATION. THE LENDERS AGREE TO INDEMNIFY
THE ADMINISTRATIVE AGENT, THE ARRANGERS, THE SYNDICATION AGENT AND THE
DOCUMENTATION AGENTS RATABLY IN ACCORDANCE WITH THEIR APPLICABLE
PERCENTAGES FOR THE INDEMNITY MATTERS AS DESCRIBED IN SECTION 9.03 TO THE
EXTENT NOT INDEMNIFIED OR REIMBURSED BY THE BORROWER UNDER SECTION 9.03,
BUT WITHOUT LIMITING THE OBLIGATIONS OF THE BORROWER UNDER SAID SECTION
9.03 AND FOR ANY AND ALL OTHER LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES,
PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES OR DISBURSEMENTS OF
ANY KIND AND NATURE WHATSOEVER WHICH MAY BE IMPOSED ON, INCURRED BY OR
ASSERTED AGAINST THE ADMINISTRATIVE AGENT, ANY ARRANGER, THE
SYNDICATION AGENT OR ANY DOCUMENTATION AGENT IN ANY WAY RELATING TO OR
ARISING OUT OF:
(A) THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
CONTEMPLATED BY OR REFERRED TO HEREIN OR THE TRANSACTIONS
CONTEMPLATED HEREBY, BUT EXCLUDING, UNLESS A DEFAULT OR AN EVENT OF
DEFAULT HAS OCCURRED AND IS CONTINUING, NORMAL ADMINISTRATIVE COSTS AND
EXPENSES INCIDENT TO THE PERFORMANCE OF ITS AGENCY DUTIES, IF ANY,
HEREUNDER OR UNDER ANY SUCH OTHER LOAN DOCUMENT OR (B) THE
ENFORCEMENT OF ANY OF THE TERMS OF THIS AGREEMENT OR OF ANY OTHER LOAN
DOCUMENT; WHETHER OR NOT ANY OF THE FOREGOING SPECIFIED IN THIS SECTION
8.08 ARISES FROM THE SOLE OR CONCURRENT NEGLIGENCE OF THE ADMINISTRATIVE
AGENT, ANY ARRANGER, THE SYNDICATION AGENT OR ANY DOCUMENTATION AGENT,
AS THE CASE MAY BE; PROVIDED THAT NO LENDER SHALL BE LIABLE FOR ANY OF THE
FOREGOING TO THE EXTENT THEY ARISE FROM THE GROSS NEGLIGENCE, WILLFUL
MISCONDUCT OR UNLAWFUL CONDUCT OF THE ADMINISTRATIVE AGENT, ANY
ARRANGER, THE SYNDICATION AGENT OR ANY DOCUMENTATION AGENT AS
DETERMINED BY A COURT OF COMPETENT JURISDICTION IN A FINAL AND
NONAPPEALABLE JUDGMENT.
SECTION 8.09
No Reliance on Agents or other Lenders. Each Lender acknowledges
and agrees that it has, independently and without reliance on the Administrative Agent, any Arranger, the
Syndication Agent, any Documentation Agent or any other Lender, and based on such documents and
74
EXHIBIT 10.14
information as it has deemed appropriate, made its own credit analysis of the Borrower and its Subsidiaries
and its decision to enter into this Agreement, and that it will, independently and without reliance upon the
Administrative Agent, any Arranger, the Syndication Agent, any Documentation Agent or any other Lender,
and based on such documents and information as it shall deem appropriate at the time, continue to make its
own analysis and decisions in taking or not taking action under this Agreement. None of the Administrative
Agent, the Arrangers, the Syndication Agent or the Documentation Agents shall be required to keep itself
informed as to the performance or observance by the Borrower of this Agreement, the other Loan Documents
or any other document referred to or provided for herein or to inspect the properties or books of the Borrower.
Except for notices, reports and other documents and information expressly required to be furnished to the
Lenders by the Administrative Agent hereunder, none of the Administrative Agent, the Arrangers, the
Syndication Agent or the Documentation Agents shall have any duty or responsibility to provide any Lender
with any credit or other information concerning the affairs, financial condition or business of the Borrower
(or any of its Affiliates) which may come into the possession of the Administrative Agent, any Arranger, the
Syndication Agent, any Documentation Agent or any of their respective Affiliates. In this regard, each Lender
acknowledges that Simpson Thacher & Bartlett LLP is acting in this transaction as special counsel to the
Administrative Agent only. Each Lender will consult with its own legal counsel to the extent that it deems
necessary in connection with this Agreement and other Loan Documents and the matters contemplated herein
and therein.
SECTION 8.10
Duties of the Syndication Agent, Documentation Agents, Arrangers.
Notwithstanding the indemnity of the Syndication Agent, the Documentation Agents and the Arrangers
contained in Section 8.08 and in Section 9.03, nothing contained in this Agreement shall be construed to
impose any obligation or duty whatsoever on any Person named on the cover of this Agreement or elsewhere
in this Agreement as a Syndication Agent, a Documentation Agent, an Arranger, a “lead arranger” or a
“bookrunner”, other than those applicable to all Lenders as such.
SECTION 8.11
Certain ERISA Matters.
(a)
Each Lender (x) represents and warrants, as of the date such Person became a Lender
party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such
Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent and the Joint Lead
Arrangers and their respective Affiliates, and not, for the avoidance of doubt, to or for the benefit of the
Borrower or any other Loan Party, that at least one of the following is and will be true:
(i)
such Lender is not using “plan assets” (within the meaning of the Plan Asset
Regulations) of one or more Benefit Plans in connection with the Loans, the Letters of Credit or the
Commitments,
(ii)
the transaction exemption set forth in one or more PTEs, such as PTE 84-14
(a class exemption for certain transactions determined by independent qualified professional asset
managers), PTE 95-60 (a class exemption for certain transactions involving insurance company
general accounts), PTE 90-1 (a class exemption for certain transactions involving insurance company
pooled separate accounts), PTE 91-38 (a class exemption for certain transactions involving bank
collective investment funds) or PTE 96-23 (a class exemption for certain transactions determined
by in-house asset managers), is applicable with respect to such Lender’s entrance into, participation
in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this
Agreement, and the conditions for exemptive relief thereunder are and will continue to be satisfied
in connection therewith,
75
EXHIBIT 10.14
(iii)
(A) such Lender is an investment fund managed by a “Qualified
Professional Asset Manager” (within the meaning of Part VI of PTE 84-14), (B) such Qualified
Professional Asset Manager made the investment decision on behalf of such Lender to enter into,
participate in, administer and perform the Loans, the Letters of Credit, the Commitments and this
Agreement, (C) the entrance into, participation in, administration of and performance of the Loans,
the Letters of Credit, the Commitments and this Agreement satisfies the requirements of sub-sections
(b) through (g) of Part I of PTE 84-14 and (D) to the best knowledge of such Lender, the requirements
of subsection (a) of Part I of PTE 84-14 are satisfied with respect to such Lender’s entrance into,
participation in, administration of and performance of the Loans, the Letters of Credit, the
Commitments and this Agreement, or
(iv)
such other representation, warranty and covenant as may be agreed in
writing between the Administrative Agent, in its sole discretion, and such Lender.
(b)
In addition, unless sub-clause (i) in the immediately preceding clause (a) is true
with respect to a Lender or such Lender has not provided another representation, warranty and covenant as
provided in sub-clause (iv) in the immediately preceding clause (a), such Lender further (x) represents and
warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such
Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the
benefit of, the Administrative Agent and the Joint Lead Arrangers and their respective Affiliates, and not,
for the avoidance of doubt, to or for the benefit of the Borrower or any other Loan Party, that none of the
Administrative Agent or the Joint Leader Arrangers or any of their respective Affiliates is a fiduciary with
respect to the assets of such Lender (including in connection with the reservation or exercise of any rights
by the Administrative Agent under this Agreement, any Loan Document or any documents related to hereto
or thereto),
(c)
The Administrative Agent and the Joint Leader Arrangers hereby inform the Lenders
that each such Person is not undertaking to provide impartial investment advice, or to give advice in a
fiduciary capacity, in connection with the transactions contemplated hereby, and that such Person has a
financial interest in the transactions contemplated hereby in that such Person or an Affiliate thereof (i) may
receive interest or other payments with respect to the Loans, the Letters of Credit, the Commitments and
this Agreement, (ii) may recognize a gain if it extended the Loans, the Letters of Credit or the Commitments
for an amount less than the amount being paid for an interest in the Loans, the Letters of Credit or the
Commitments by such Lender or (iii) may receive fees or other payments in connection with the transactions
contemplated hereby, the Loan Documents or otherwise, including structuring fees, commitment fees,
arrangement fees, facility fees, upfront fees, underwriting fees, ticking fees, agency fees, administrative
agent or collateral agent fees, utilization fees, minimum usage fees, letter of credit fees, fronting fees, deal-
away or alternate transaction fees, amendment fees, processing fees, term out premiums, banker’s acceptance
fees, breakage or other early termination fees or fees similar to the foregoing.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01
Notices, Etc.
(a)
All notices, consents, requests, approvals, demands and other communications
(collectively “Communications”) provided for herein shall be in writing (including facsimile
Communications) and mailed, telecopied or delivered:
(i)
if to the Borrower, to it at:
76
EXHIBIT 10.14
1001 Louisiana Street, Suite 1000
Houston, Texas 77002
Attention:
Anthony Ashley
Telecopy No.: (713) 445-8302;
With a copy to:
1001 Louisiana Street, Suite 1000
Houston, Texas 77002
Attention:
General Counsel
Telecopy No.: (713) 495-2877;
(ii)
if to the Administrative Agent, to it at
c/o Barclays Bank PLC
745 Seventh Avenue
27th Floor
New York, NY 10019
Attention: Patrick Shields
Email: patrick.shields@barclays.com
Phone: 212-526-9531
(iii)
if to the Swingline Lender, to it at
c/o Barclays Bank PLC
745 Seventh Avenue
27th Floor
New York, NY 10019
Attention: Patrick Shields
Email: patrick.shields@barclays.com
Phone: 212-526-9531
c/o Barclays Bank PLC
400 Jefferson Park
Whippany, NJ 07981
Attention: Bobby Fitzpatrick
Email: bobby.fitzpatrick@barclays.com
Phone: 201-499-5043
(i)
if to any other Lender or to any Issuing Bank, to it at its address (or telecopy
number) set forth in the Administrative Questionnaire delivered by such Person to the Administrative
Agent or in the Assignment and Acceptance executed by such Person;
or, in the case of any party hereto, such other address or telecopy number as such party may hereafter specify
for such purpose by notice to the other parties.
(b)
Communications to the Lenders hereunder may be delivered or furnished by
electronic communications (including electronic mail and internet or intranet websites) pursuant to
procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices
77
EXHIBIT 10.14
pursuant to Article II unless otherwise agreed by the Administrative Agent and the applicable Lender. The
Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications
to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval
of such procedures may be limited to particular notices or communications.
(c)
Unless the Administrative Agent otherwise prescribes, (i) notices and other
communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an
acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available,
return e-mail or other written acknowledgement), and (ii) notices or communications posted to an Internet
or intranet website shall be deemed received upon the deemed receipt by the intended recipient, at its e-mail
address as described in the foregoing clause (i), of notification that such notice or communication is available
and identifying the website address therefor; provided that, for both clauses (i) and (ii) above, if such notice,
email or other communication is not sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on the next business day for
the recipient.
(d)
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto.
(e)
Platform.
(i)
The Borrower agrees that the Administrative Agent may, but shall not be
obligated to, make the Communications available to the Lenders and the Issuing Banks by posting
the Communications on Debt Domain, Intralinks, Syndtrak or a substantially similar electronic
transmission system (the “Platform”).
The Platform is provided “as is” and “as available.” The Agent Parties (as defined below) do not warrant
the adequacy of the Platform and expressly disclaim liability for errors or omissions in the Electronic
Communications (as defined below). No warranty of any kind, express, implied or statutory, including,
without limitation, any warranty of merchantability, fitness for a particular purpose, non-infringement of
third-party rights or freedom from viruses or other code defects, is made by any Agent Party in connection
with the Communications or the Platform. In no event shall the Administrative Agent or any of its Related
Parties (collectively, the “Agent Parties”) have any liability to the Borrower, any Lender, any Issuing Bank
or any other Person or entity for damages of any kind, including, without limitation, direct or indirect, special,
incidental or consequential damages, losses or expenses (whether in tort, contract or otherwise) arising out
of the Borrower or the Administrative Agent’s transmission of communications through the Platform.
“Electronic Communications” means, collectively, any notice, demand, communication, information,
document or other material provided by or on behalf of the Borrower pursuant to any Loan Document or
the transactions contemplated therein which is distributed to the Administrative Agent, any Lender or any
Issuing Bank by means of electronic communications pursuant to this Section, including through the Platform.
SECTION 9.02 Waivers; Amendments; Releases.
(a)
No failure or delay by the Administrative Agent, any Issuing Bank or any Lender
in exercising, and no course of dealing with respect to, any right or power hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or
the exercise of any other right or power. No notice to or demand on the Borrower in any case shall entitle
the Borrower to any other or further notice or demand in similar or other circumstances. No waiver of any
provision of this Agreement or consent to any departure therefrom shall in any event be effective unless the
78
EXHIBIT 10.14
same shall be permitted by Section 9.02(b), and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the
making of a Loan or issuance of a Letter of Credit shall not be construed as a waiver of any Default or Event
of Default, regardless of whether the Administrative Agent, any Lender or any Issuing Bank may have had
notice or knowledge of such Default at the time.
(b)
No provision of this Agreement or any other Loan Document (other than each Fee
Letter, which may be amended by the parties thereto) provision may be waived, amended or modified except
pursuant to an agreement or agreements in writing entered into by the Borrower (or to the extent another
Loan Party and not the Borrower is party thereto, such Loan Party) and the Required Lenders or by the
Borrower and the Administrative Agent with the consent of the Required Lenders; provided that no such
agreement shall (i) increase the Commitment of any Lender without the written consent of such Lender,
other than increases of Commitments as provided in Section 2.21 and extensions of Commitments as provided
in Section 2.22, (ii) reduce the principal amount of any Loan or LC Disbursement or reduce the rate of interest
thereon, or reduce any fees payable hereunder, without the written consent of each Lender affected thereby
(for the avoidance of doubt, any amendment imposing an alternative interest rate basis in accordance with
Section 2.13(b) shall become effective as provided in Section 2.13(b)), (iii) postpone the scheduled date of
payment of the principal amount of any Loan or LC Disbursement, or any interest thereon, or any fees or
other amounts payable hereunder, or reduce the amount of, waive or excuse any such payment, or postpone
the scheduled date of expiration of any Commitment, without the written consent of each Lender affected
thereby, other than extensions of the Maturity Date as provided in Section 2.22, (iv) change Section 2.17(b)
or (c) in a manner that would alter the pro rata sharing of payments required thereby, without the written
consent of each Lender, (v) amend Section 2.19 or 2.20 without the consent of the Administrative Agent,
the Swingline Lender and the Issuing Banks in addition to the consent of the Required Lenders, (vi) release
all or substantially all of the value of the Guarantees under the Guaranty or change any of the provisions of
this Section 9.02(b), or the definition of “Required Lenders” or any other provision hereof specifying the
number or percentage of Lenders required to waive, amend or modify any rights hereunder or make any
determination or grant any consent hereunder, without the written consent of each Lender; provided, further,
that no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative
Agent, the Swingline Lender or any Issuing Bank hereunder without the prior written consent of the
Administrative Agent, the Swingline Lender or such Issuing Bank, as the case may be. Except as provided
herein, during such period as a Lender is a Defaulting Lender, to the fullest extent permitted by applicable
law, such Lender will not be entitled to vote in respect of amendments and waivers hereunder and the
Commitment and the outstanding Loans or other extensions of credit of such Lender hereunder will not be
taken into account in determining whether the Required Lenders or all of the Lenders, as required, have
approved any such amendment or waiver (and the definition of “Required Lenders” will automatically be
deemed modified accordingly for the duration of such period); provided that any such amendment or waiver
referred to in clauses (i) through (vi) or the first of this Section 9.02(b) above or that would alter the terms
set forth in such proviso shall require the consent of such Defaulting Lender.
Notwithstanding the foregoing, the Administrative Agent and the Borrower may amend any Loan Document
to correct any obvious errors, mistakes, omissions, defects or inconsistencies and such amendment shall
become effective without any further consent of any other party to such Loan Document other than the
Administrative Agent and the Borrower.
(c)
Notwithstanding the provisions of Section 9.02(b), amendments to this Agreement
pursuant to Section 2.21(c) and Section 2.22 may be effected without the consent of any Lenders other than
the Administrative Agent, the Issuing Banks, the Swingline Lender and each Lender making a New
Commitment or extending a Commitment.
79
EXHIBIT 10.14
(d)
The Lenders hereby irrevocably agree that any Guarantor shall be automatically
released from the Guarantee upon consummation of any transaction not prohibited hereunder resulting in
such Subsidiary ceasing to constitute a Subsidiary or upon any Subsidiary becoming an Excluded Subsidiary,
provided that with respect to any Excluded Subsidiary that is a Guarantor on the Closing Date or that has
become a Guarantor after the Closing Date at the request of the Borrower, such Excluded Subsidiary shall
be automatically released from the Guaranty upon written notice thereof from a Responsible Officer of the
Borrower to the Administrative Agent certifying that (i) such Excluded Subsidiary is an Excluded Subsidiary
and (ii) on such date, or concurrently with such release, such Excluded Subsidiary shall be automatically
released as a guarantor under the Cross Guarantee Agreement, dated as of November 26, 2014 (as amended,
restated, supplemented or otherwise modified from time to time) entered by the Borrower and the other
signatories party thereto, and is not a guarantor of the Bonds or any other material Indebtedness of the
Borrower or any Subsidiary. The Lenders hereby authorize the Administrative Agent to execute and deliver
any instruments, documents, and agreements necessary or desirable to evidence and confirm the release of
any Guarantor pursuant to the foregoing provisions of this paragraph, all without the further consent or
joinder of any Lender.
SECTION 9.03
Payment of Expenses, Indemnities, etc. The Borrower agrees:
(a)
to pay (i) all reasonable out-of-pocket expenses incurred by the Administrative
Agent and its Affiliates, including the reasonable fees, charges and disbursements of counsel for the
Administrative Agent, in connection with the syndication of the credit facility provided for herein, the
preparation and administration of this Agreement or any amendments, modifications or waivers of the
provisions hereof, (ii) all reasonable out-of-pocket expenses incurred by any Issuing Bank in connection
with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment
thereunder and (iii) all out-of-pocket expenses incurred by the Administrative Agent, any Issuing Bank or
any Lender, including the fees, charges and disbursements of any counsel for the Administrative Agent, any
Issuing Bank or any Lender, in connection with the enforcement or protection of its rights in connection
with this Agreement, including its rights under this Section, or in connection with the Loans made or Letters
of Credit issued hereunder, including all such out-of-pocket expenses incurred during any workout,
restructuring or negotiations in respect of such Loans or Letters of Credit.
(b)
TO INDEMNIFY THE ADMINISTRATIVE AGENT, EACH ISSUING BANK,
EACH ARRANGER, THE SYNDICATION AGENT, EACH DOCUMENTATION AGENT AND EACH
LENDER AND EACH OF THEIR AFFILIATES AND EACH OF THEIR OFFICERS, DIRECTORS,
EMPLOYEES, REPRESENTATIVES, AGENTS, ATTORNEYS, ACCOUNTANTS AND EXPERTS
(“INDEMNIFIED PARTIES”) FROM, HOLD EACH OF THEM HARMLESS AGAINST AND
PROMPTLY UPON DEMAND PAY OR REIMBURSE EACH OF THEM FOR, THE INDEMNITY
MATTERS WHICH MAY BE REASONABLY INCURRED BY OR ASSERTED AGAINST OR INVOLVE
ANY OF THEM (WHETHER OR NOT ANY OF THEM IS DESIGNATED A PARTY THERETO AND
WHETHER OR NOT THE CLAIM IS BROUGHT BY THE BORROWER OR A THIRD PARTY) AS A
RESULT OF, ARISING OUT OF OR IN ANY WAY RELATED TO (I) ANY ACTUAL OR PROPOSED
USE BY THE BORROWER OF THE PROCEEDS OF ANY OF THE LOANS OR ANY LETTER OF
CREDIT, (II) THE EXECUTION, DELIVERY AND PERFORMANCE OF THE LOAN DOCUMENTS,
(III) THE OPERATIONS OF THE BUSINESS OF THE BORROWER AND THE SUBSIDIARIES, (IV)
THE FAILURE OF THE BORROWER OR ANY SUBSIDIARY TO COMPLY WITH THE TERMS OF
THIS AGREEMENT, OR WITH ANY REQUIREMENT OF LAW, (V) ANY INACCURACY OF ANY
REPRESENTATION OR ANY BREACH OF ANY WARRANTY OF THE BORROWER SET FORTH IN
ANY OF THE LOAN DOCUMENTS, (VI) THE ISSUANCE, EXECUTION AND DELIVERY OR
TRANSFER OF OR PAYMENT OR FAILURE TO PAY UNDER ANY LETTER OF CREDIT, (VII) THE
PAYMENT OF A DRAWING UNDER ANY LETTER OF CREDIT NOTWITHSTANDING THE NON-
80
EXHIBIT 10.14
COMPLIANCE, NON-DELIVERY OR OTHER IMPROPER PRESENTATION OF THE MANUALLY
EXECUTED DRAFT(S) AND CERTIFICATION(S), OR (VIII) ANY OTHER ASPECT OF THE LOAN
DOCUMENTS, INCLUDING THE REASONABLE FEES AND DISBURSEMENTS OF COUNSEL AND
ALL OTHER EXPENSES INCURRED IN CONNECTION WITH INVESTIGATING, DEFENDING OR
PREPARING TO DEFEND ANY SUCH ACTION, SUIT, PROCEEDING (INCLUDING ANY
INVESTIGATIONS, LITIGATION OR INQUIRIES) OR CLAIM AND INCLUDING ALL INDEMNITY
MATTERS ARISING BY REASON OF THE ORDINARY NEGLIGENCE OF ANY INDEMNIFIED
PARTY, BUT EXCLUDING ALL INDEMNITY MATTERS ARISING SOLELY (I) BY REASON OF
CLAIMS BETWEEN THE LENDERS OR ANY LENDER AND THE ADMINISTRATIVE AGENT, ANY
ARRANGER, THE SYNDICATION AGENT, ANY DOCUMENTATION AGENT, OR A LENDER’S
SHAREHOLDERS AGAINST THE ADMINISTRATIVE AGENT OR LENDER (OTHER THAN
CLAIMS IN ITS ROLE AS AGENT OR ARRANGER) OR (II) BY REASON OF THE GROSS
NEGLIGENCE, WILLFUL MISCONDUCT OR UNLAWFUL CONDUCT ON THE PART OF THE
INDEMNIFIED PARTY SEEKING INDEMNIFICATION AS DETERMINED BY A COURT OF
COMPETENT JURISDICTION IN A FINAL AND NONAPPEALABLE JUDGMENT. FOR THE
AVOIDANCE OF DOUBT, THIS SECTION 9.03(B) SHALL NOT APPLY WITH RESPECT TO TAXES
OTHER THAN ANY TAXES THAT REPRESENT LOSSES, CLAIMS, DAMAGES, ETC. ARISING
FROM ANY NON-TAX CLAIM.
(c)
TO INDEMNIFY AND HOLD HARMLESS FROM TIME TO TIME THE
INDEMNIFIED PARTIES FROM AND AGAINST ANY AND ALL LOSSES, CLAIMS, COST
RECOVERY ACTIONS, ADMINISTRATIVE ORDERS OR PROCEEDINGS, DAMAGES AND
LIABILITIES TO WHICH ANY SUCH PERSON MAY BECOME SUBJECT (I) UNDER ANY
ENVIRONMENTAL LAW APPLICABLE TO THE BORROWER OR ANY SUBSIDIARY OR ANY OF
THEIR PROPERTIES OR ASSETS, INCLUDING THE TREATMENT OR DISPOSAL OF HAZARDOUS
MATERIALS ON ANY OF THEIR PROPERTIES OR ASSETS, (II) AS A RESULT OF THE BREACH
OR NON-COMPLIANCE BY THE BORROWER OR ANY SUBSIDIARY WITH ANY
ENVIRONMENTAL LAW APPLICABLE TO THE BORROWER OR ANY SUBSIDIARY, (III) DUE TO
PAST OWNERSHIP BY THE BORROWER OR ANY SUBSIDIARY OF ANY OF THEIR PROPERTIES
OR ASSETS OR PAST ACTIVITY ON ANY OF THEIR PROPERTIES OR ASSETS WHICH, THOUGH
LAWFUL AND FULLY PERMISSIBLE AT THE TIME, COULD RESULT IN PRESENT LIABILITY,
(IV) THE PRESENCE, USE, RELEASE, STORAGE, TREATMENT OR DISPOSAL OF HAZARDOUS
MATERIALS ON OR AT ANY OF THE PROPERTIES OWNED OR OPERATED BY THE BORROWER
OR ANY SUBSIDIARY, OR (V) ANY OTHER ENVIRONMENTAL, HEALTH OR SAFETY
CONDITION IN CONNECTION WITH THE LOAN DOCUMENTS (EXPRESSLY INCLUDING ANY
SUCH CLAIM, DAMAGE LOSS, LIABILITY, COST, PENALTY, FEE OR EXPENSE ATTRIBUTABLE
TO THE ORDINARY, SOLE OR CONTRIBUTORY NEGLIGENCE OF SUCH INDEMNIFIED PARTY,
BUT EXCLUDING ANY SUCH CLAIM, DAMAGE, LOSS, LIABILITY, COST, PENALTY, FEE OR
EXPENSE RESULTING FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH
INDEMNIFIED PARTY AS DETERMINED BY A COURT OF COMPETENT JURISDICTION IN A
FINAL AND NONAPPEALABLE JUDGMENT). FOR THE AVOIDANCE OF DOUBT, THIS SECTION
9.03(C) SHALL NOT APPLY WITH RESPECT TO TAXES OTHER THAN ANY TAXES THAT
REPRESENT LOSSES, CLAIMS, DAMAGES, ETC. ARISING FROM ANY NON-TAX CLAIM.
(d)
No Indemnified Party may settle any claim to be indemnified without the consent
of the indemnitor, such consent not to be unreasonably withheld; provided that the indemnitor may not
reasonably withhold consent to any settlement that an Indemnified Party proposes, if the indemnitor does
not have the financial ability to pay all its obligations outstanding and asserted against the indemnitor at
81
EXHIBIT 10.14
that time, including the maximum potential claims against the Indemnified Party to be indemnified pursuant
to this Section 9.03.
(e)
In the case of any indemnification hereunder, the Indemnified Party, as appropriate,
shall give notice to the Borrower of any such claim or demand being made against the Indemnified Party
and the Borrower shall have the non-exclusive right to join in the defense against any such claim or demand;
provided that if the Borrower provides a defense, the Indemnified Party shall bear its own cost of defense
unless there is a conflict between the Borrower and such Indemnified Party.
(f)
THE FOREGOING INDEMNITIES SHALL EXTEND TO THE INDEMNIFIED
PARTIES NOTWITHSTANDING THE SOLE OR CONCURRENT NEGLIGENCE OF EVERY KIND
OR CHARACTER WHATSOEVER, WHETHER ACTIVE OR PASSIVE, WHETHER AN
AFFIRMATIVE ACT OR AN OMISSION, INCLUDING, ALL TYPES OF NEGLIGENT CONDUCT
IDENTIFIED IN THE RESTATEMENT (SECOND) OF TORTS OF ONE OR MORE OF THE
INDEMNIFIED PARTIES OR BY REASON OF STRICT LIABILITY IMPOSED WITHOUT FAULT ON
ANY ONE OR MORE OF THE INDEMNIFIED PARTIES. TO THE EXTENT THAT AN INDEMNIFIED
PARTY IS FOUND TO HAVE COMMITTED AN ACT OF GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OR ENGAGED IN UNLAWFUL CONDUCT (AS DETERMINED BY A COURT OF
COMPETENT JURISDICTION IN A FINAL AND NONAPPEALABLE JUDGMENT), THIS
CONTRACTUAL OBLIGATION OF INDEMNIFICATION SHALL CONTINUE BUT SHALL ONLY
EXTEND TO THE PORTION OF THE CLAIM THAT IS DEEMED TO HAVE OCCURRED BY REASON
OF EVENTS OTHER THAN THE GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR UNLAWFUL
CONDUCT OF THE INDEMNIFIED PARTY (AS DETERMINED BY A COURT OF COMPETENT
JURISDICTION IN A FINAL AND NONAPPEALABLE JUDGMENT).
(g)
The Borrower’s obligations under this Section 9.03 shall survive any termination
of this Agreement, the payment of the Loans and the expiration of the Letters of Credit and shall continue
thereafter in full force and effect.
(h)
To the extent that the Borrower fails to pay any amount required to be paid by it to
the Administrative Agent, the Swingline Lender or any Issuing Bank under this Section 9.03, each Lender
severally agrees to pay to the Administrative Agent, the Swingline Lender or such Issuing Bank, as the case
may be, such Lender’s Applicable Percentage (determined as of the time that the applicable unreimbursed
expense or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed expense
or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or
asserted against the Administrative Agent, the Swingline Lender or such Issuing Bank in its capacity as such.
(i)
The Borrower shall pay any amounts due under this Section 9.03 within 30 days of
the receipt by the Borrower of notice of the amount due.
(j)
To the fullest extent permitted by applicable law, no party shall assert, and each
party hereby waives, any claim against any other party, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection
with, or as a result of this Agreement, any other Loan Document or any agreement or instrument contemplated
hereby, the transactions contemplated hereby or thereby, any Loan or Letter of Credit or the use of the
proceeds thereof; provided, however, that the foregoing limitation shall not be deemed to impair or affect
the indemnification obligations of the Borrower under the Loan Documents. No Indemnified Party referred
to in paragraph (b) above shall be liable for any damages arising from the use by unintended recipients of
any information or other materials distributed by it through telecommunications, electronic or other
82
EXHIBIT 10.14
information transmission systems in connection with this Agreement or the other Loan Documents or the
transactions contemplated hereby or thereby.
SECTION 9.04
Successors and Assigns Generally. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns
permitted hereby, except that the Borrower may not assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of the Administrative Agent and each Lender, and no Lender
may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in
accordance with the provisions of Section 9.05(a), (ii) by way of participation in accordance with the
provisions of Section 9.05(c), or (iii) by way of pledge or assignment of a security interest subject to the
restrictions of Section 9.05(d) (and any other attempted assignment or transfer by any party hereto shall be
null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any
Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants
to the extent provided in Section 9.05(c) and, to the extent expressly contemplated hereby, the Related Parties
of each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or
by reason of this Agreement.
SECTION 9.05
Assignments by Lenders.
(a)
Any Lender may at any time assign to one or more assignees all or a portion of its
rights and obligations under this Agreement (including all or a portion of its Commitment, Letter of Credit
Commitment and the Loans at the time owing to it); provided that any such assignment shall be subject to
the following conditions:
(i)
(A)
in the case of an assignment of the entire remaining amount of the
assigning Lender’s Commitment and/or the Loans at the time owing to it or contemporaneous
assignments to related Approved Funds that equal at least the amount specified in paragraph
(a)(i)(B) of this Section; and
(B)
in any case not described in the proviso to paragraph (a)(i)(A) of
this Section, the aggregate amount of the Commitment (which for this purpose includes
Loans outstanding thereunder) or, if the applicable Commitment is not then in effect, the
principal outstanding balance of the Loans of the assigning Lender subject to each such
assignment (determined as of the date the Assignment and Acceptance with respect to such
assignment is delivered to the Administrative Agent or, if “Trade Date” is specified in the
Assignment and Acceptance, as of the Trade Date) shall not be less than $5,000,000, unless
each of the Administrative Agent and, so long as no Event of Default has occurred and is
continuing, the Borrower otherwise consents (each such consent not to be unreasonably
withheld or delayed); provided, however, in the case of an assignment to a Lender, an Affiliate
of a Lender or an Approved Fund, no minimum amount need be assigned.
(ii)
Each partial assignment shall be made as an assignment of a proportionate
part of all the assigning Lender’s rights and obligations under this Agreement with respect to the
Loans or the Commitment assigned.
(iii)
No consent shall be required for any assignment except to the extent required
by paragraph (a)(i)(B) of this Section and, in addition:
the consent of the Borrower (such consent not to be unreasonably
withheld or delayed) shall be required unless (x) an Event of Default has occurred and is
(A)
83
EXHIBIT 10.14
continuing at the time of such assignment or (y) such assignment is to a Lender, an Affiliate
of a Lender or an Approved Fund, provided that the Borrower’s consent shall not be required
during the primary syndication of the credit facility evidenced by this Agreement;
(B)
the consent of the Administrative Agent (such consent not to be
unreasonably withheld or delayed) shall be required for assignments if such assignment is
to a Person that is not a Lender, an Affiliate of such Lender or an Approved Fund with respect
to such Lender; and
the consent of each Issuing Bank and the Swingline Lender (such
consents not to be unreasonably withheld or delayed) shall be required for any assignment.
(C)
(iv)
The parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Acceptance, together with a processing and recordation
fee of $3,500; provided that the Administrative Agent may, in its sole discretion, elect to waive such
processing and recordation fee in the case of any assignment. The assignee, if it is not a Lender,
shall deliver to the Administrative Agent an Administrative Questionnaire.
(v)
No such assignment shall be made to (A) the Borrower or any of the
Borrower’s Affiliates or Subsidiaries or (B) to any Defaulting Lender or any of its Subsidiaries, or
any Person who, upon becoming a Lender hereunder, would constitute any of the foregoing Persons
described in this clause (B).
(vi)
No such assignment shall be made to a natural Person.
(vii)
In connection with any assignment of rights and obligations of any
Defaulting Lender hereunder, no such assignment shall be effective unless and until, in addition to
the other conditions thereto set forth herein, the parties to the assignment shall make such additional
payments to the Administrative Agent in an aggregate amount sufficient, upon distribution thereof
as appropriate (which may be outright payment, purchases by the assignee of participations or
subparticipations, or other compensating actions, including funding, with the consent of the Borrower
and the Administrative Agent, the applicable pro rata share of Loans previously requested but not
funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby
irrevocably consent), to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting
Lender to the Administrative Agent, each Issuing Bank, the Swingline Lender and each other Lender
hereunder (and interest and fees accrued thereon), and (y) acquire (and fund as appropriate) its full
pro rata share of all Loans and participations in Letters of Credit and Swingline Loans in accordance
with its Applicable Percentage. Notwithstanding the foregoing, in the event that any assignment of
rights and obligations of any Defaulting Lender hereunder shall become effective under applicable
law without compliance with the provisions of this paragraph, then the assignee of such interest
shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance
occurs.
Subject to acceptance and recording thereof by the Administrative Agent pursuant to paragraph (b) of this
Section, from and after the effective date specified in each Assignment and Acceptance, the assignee
thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment
and Acceptance, have the rights and obligations of a Lender under this Agreement, and the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and Acceptance, be released from
its obligations under this Agreement (and, in the case of an Assignment and
84
EXHIBIT 10.14
Acceptance covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender
shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 2.14, 2.15 and
9.03 and with respect to facts and circumstances occurring prior to the effective date of such assignment;
provided, that except to the extent otherwise expressly agreed by the affected parties, no assignment by a
Defaulting Lender will constitute a waiver or release of any claim of any party hereunder arising from that
Lender’s having been a Defaulting Lender. Any assignment or transfer by a Lender of rights or obligations
under this Agreement that does not comply with this paragraph shall be treated for purposes of this Agreement
as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (c)
of this Section.
(b)
Upon its receipt of a duly completed Assignment and Acceptance executed by an
assigning Lender and an assignee, the assignee’s completed Administrative Questionnaire (unless the
assignee shall already be a Lender hereunder), the processing and recordation fee, if any, referred to in Section
9.05(a) and any written consent to such assignment required by Section 9.05(a), the Administrative Agent
shall accept such Assignment and Acceptance and record the information contained therein in the Register
(as defined below). No assignment shall be effective for purposes of this Agreement unless it has been
recorded in the Register as provided in this paragraph. The Administrative Agent, acting solely for this
purpose as a non-fiduciary agent of the Borrower, shall maintain at one of its offices in New York, New York
a copy of each Assignment and Acceptance delivered to it and a register for the recordation of the names
and addresses of the Lenders, and the Commitments of, and principal amounts (and stated interest) of the
Loans owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries
in the Register shall be conclusive absent manifest error, and the Borrower, the Administrative Agent and
the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as
a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the
Borrower and any Lender (with respect to its own interest only), at any reasonable time and from time to
time upon reasonable prior notice.
(c)
Any Lender may at any time, without the consent of, or notice to, the Borrower, the
Administrative Agent, the Swingline Lender or the Issuing Banks, sell participations to any Person (other
than a natural Person or the Borrower or any of the Borrower’s Affiliates or Subsidiaries) (each, a
“Participant”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including
all or a portion of its Commitment and/or the Loans owing to it); provided that (i) such Lender’s obligations
under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, and (iii) the Borrower, the Administrative Agent, the
Issuing Banks and the Lenders shall continue to deal solely and directly with such Lender in connection with
such Lender’s rights and obligations under this Agreement. For the avoidance of doubt, each Lender shall
be responsible for the indemnity under Section 8.08 with respect to any payments made by such Lender to
its Participant(s).
Any agreement or instrument pursuant to which a Lender sells such a participation shall
provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant, agree to any amendment,
modification or waiver described in the first proviso Section 9.02(b) that affects such Participant. The
Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.14, 2.15 and 2.16 (subject
to the requirements and limitations therein, including the requirements under Section 2.16 (it being understood
that the documentation required under Section 2.16 shall be delivered to the participating Lender)) to the
same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (a) of
this Section; provided that such Participant (A) agrees to be subject to the provisions of Sections 2.18 as if
it were an assignee under paragraph (a) of this Section; and (B) shall not be entitled to receive any greater
85
EXHIBIT 10.14
payment under Sections 2.14 and 2.16, with respect to any participation, than its participating Lender would
have been entitled to receive, except to the extent such entitlement to receive a greater payment results from
a Change in Law that occurs after the Participant acquired the applicable participation. Each Lender that
sells a participation agrees, at the Borrower’s request and expense, to use reasonable efforts to cooperate
with the Borrower to effectuate the provisions of Section 2.18 with respect to any Participant. To the extent
permitted by law, each Participant also shall be entitled to the benefits of Section 9.09 as though it were a
Lender; provided that such Participant agrees to be subject to Section 2.17 as though it were a Lender. Each
Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower,
maintain a register on which it enters the name and address of each Participant and the principal amounts
(and stated interest) of each Participant’s interest in the Loans or other obligations under the Loan Documents
(the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion
of the Participant Register (including the identity of any Participant or any information relating to a
Participant’s interest in any commitments, loans, letters of credit or its other obligations under any Loan
Document) to any Person except to the extent that such disclosure is necessary to establish that such
commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the
United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest
error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the
owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary.
For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have
no responsibility for maintaining a Participant Register.
(d)
Any Lender may at any time pledge or assign a security interest in all or any portion
of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment
to secure obligations to a Federal Reserve Bank or any central bank having jurisdiction over such Lender;
provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder
or substitute any such pledgee or assignee for such Lender as a party hereto.
SECTION 9.06
Survival; Reinstatement.
(a)
All covenants, agreements, representations and warranties made by the Borrower
herein and in the certificates or other instruments delivered in connection with or pursuant to this Agreement
shall be considered to have been relied upon by the other parties hereto and shall survive the execution and
delivery of this Agreement and the making of any Loans and issuance of any Letters of Credit, regardless
of any investigation made by any such other party or on its behalf and notwithstanding that the Administrative
Agent, any Issuing Bank or any Lender may have had notice or knowledge of any Default or Event of Default
or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in
full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other
amount payable under this Agreement is outstanding and unpaid or any Letter of Credit is outstanding or so
long as the Commitments have not expired or terminated. The provisions of Sections 2.14, 2.15, 2.16 and
9.03 and Article VIII shall survive and remain in full force and effect regardless of the consummation of the
transactions contemplated hereby, the repayment of the Loans, the expiration or termination of the Letters
of Credit and the Commitments or the termination of this Agreement or any provision hereof.
(b)
To the extent that any payments on the Obligations are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, debtor in possession,
receiver or other Person under any bankruptcy law, common law or equitable cause, then to such extent, the
Obligations so satisfied shall be revived and continue as if such payment or proceeds had not been received.
SECTION 9.07
Counterparts; Integration; Effectiveness; Electronic Execution.
86
EXHIBIT 10.14
(a)
This Agreement may be executed in counterparts (and by different parties hereto
on different counterparts), each of which shall constitute an original, but all of which when taken together
shall constitute a single contract. This Agreement, the other Loan Documents and the Fee Letters constitute
the entire contract among the parties hereto relating to the subject matter hereof and supersede any and all
previous agreements and understandings, oral or written, relating to the subject matter hereof (including the
Executive Summary). Except as provided in Section 3.01, this Agreement shall become effective when it
shall have been executed by the Administrative Agent and when the Administrative Agent shall have received
counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors
and assigns. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or
electronic (i.e., “pdf” or “tif”) format shall be effective as delivery of a manually executed counterpart of
this Agreement.
(b)
The words “execution,” “signed,” “signature,” and words of like import in any
Assignment and Acceptance shall be deemed to include electronic signatures or the keeping of records in
electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually
executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and
as provided for in any applicable law, including the Federal Electronic Signatures in Global and National
Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws
based on the Uniform Electronic Transactions Act.
SECTION 9.08
Severability. Any provision of this Agreement held to be invalid, illegal
or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity,
illegality or unenforceability without affecting the validity, legality and enforceability of the remaining
provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate
such provision in any other jurisdiction.
SECTION 9.09
Right of Setoff. If an Event of Default shall have occurred and be
continuing, each Lender, each Issuing Bank and each of their respective Affiliates is hereby authorized at
any time and from time to time, to the fullest extent permitted by applicable law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time
held, and other obligations (in whatever currency) at any time owing, by such Lender, such Issuing Bank or
any such Affiliate, to or for the credit or the account of a Loan Party against any and all of the obligations
of a Loan Party now or hereafter existing under this Agreement or any other Loan Document to such Lender,
such Issuing Bank or their respective Affiliates, irrespective of whether or not such Lender, Issuing Bank or
Affiliate shall have made any demand under this Agreement or any other Loan Document and although such
obligations of the Loan Parties may be contingent or unmatured or are owed to a branch, office or Affiliate
of such Lender or Issuing Bank different from the branch, office or Affiliate holding such deposit or obligated
on such indebtedness; provided that in the event that any Defaulting Lender shall exercise any such right of
setoff, (x) all amounts so set off shall be paid over immediately to the Administrative Agent for further
application in accordance with the provisions of Section 2.19 pending such payment, shall be segregated by
such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Administrative
Agent, the Issuing Banks and the Lenders, and (y) the Defaulting Lender shall provide promptly to the
Administrative Agent a statement describing in reasonable detail the Obligations owing to such Defaulting
Lender as to which it exercised such right of setoff. The rights of each Lender, each Issuing Bank and their
respective Affiliates under this Section are in addition to other rights and remedies (including other rights
of setoff) that such Lender, such Issuing Bank or their respective Affiliates may have. Each Lender and
Issuing Bank agrees to notify the Borrower and the Administrative Agent promptly after any such setoff and
application; provided that the failure to give such notice shall not affect the validity of such setoff and
87
EXHIBIT 10.14
application. The rights of each Lender under this Section 9.09 are in addition to other rights and remedies
(including other rights of setoff) which such Lender may have.
SECTION 9.10
Governing Law; Jurisdiction; Consent to Service of Process. (a) This
Agreement and the other Loan Documents shall be construed in accordance with and governed by the laws
of the State of New York.
(b)
ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE BROUGHT IN THE COURTS
OF THE STATE OF NEW YORK SITTING IN THE BOROUGH OF MANHATTAN OR OF THE
UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK AND, BY EXECUTION
AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY AND ASSETS,
UNCONDITIONALLY, THE EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS
WITH RESPECT TO ANY SUCH ACTION OR PROCEEDING. THE BORROWER HEREBY
IRREVOCABLY DESIGNATES, APPOINTS AND EMPOWERS C T CORPORATION SYSTEM,
WITH OFFICES ON THE DATE HEREOF AT 111 8TH AVENUE, NEW YORK, NEW YORK 10011,
AS ITS DESIGNEE, APPOINTEE AND AGENT TO RECEIVE AND ACCEPT FOR AND ON ITS
BEHALF, AND IN RESPECT OF ITS PROPERTY, SERVICE OF ANY AND ALL LEGAL
PROCESS, SUMMONS, NOTICES AND DOCUMENTS WHICH MAY BE SERVED IN ANY SUCH
ACTION OR PROCEEDING. IF FOR ANY REASON SUCH DESIGNEE, APPOINTEE AND
AGENT SHALL CEASE TO BE AVAILABLE TO ACT AS SUCH, THE BORROWER AGREES TO
DESIGNATE A NEW DESIGNEE, APPOINTEE AND AGENT IN NEW YORK, NEW YORK ON
THE TERMS AND FOR THE PURPOSES OF THIS PROVISION SATISFACTORY TO THE
ADMINISTRATIVE AGENT. THE BORROWER FURTHER IRREVOCABLY CONSENTS TO
THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY
SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED
OR CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT ITS ADDRESS PROVIDED IN SECTION
9.01, SUCH SERVICE TO BECOME EFFECTIVE THIRTY DAYS AFTER SUCH MAILING.
NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT OR ANY
LENDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
(c)
THE BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE
AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH
THIS AGREEMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (b) ABOVE AND
HEREBY FURTHER IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT PERMITTED BY
APPLICABLE LAW, THE RIGHT TO PLEAD OR CLAIM, AND AGREES NOT TO PLEAD OR
CLAIM, THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM.
(d)
EACH PARTY HERETO HEREBY (i) IRREVOCABLY WAIVES, TO THE
MAXIMUM EXTENT PERMITTED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR
RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES; (ii) CERTIFIES THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR
AGENT OR COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING
88
EXHIBIT 10.14
WAIVERS, AND (iii) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN
THIS SECTION 9.10.
SECTION 9.11 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT
MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.11.
SECTION 9.12
Confidentiality. Each of the Administrative Agent, the Issuing Banks
and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that
Information may be disclosed (a) to their Affiliates, to their and their Affiliates’ directors, officers and
employees and agents, including accountants, legal counsel and other advisors who have been informed of
the confidential nature of the information provided, (b) disclosures in connection with any pledge or
assignment permitted under Section 9.05(d) and, to the extent requested by any regulatory authority, including
any self-regulatory authority such as the National Association of Insurance Commissioners or any similar
organization, or any nationally recognized rating agency that requires access to information about a Lender’s
investment portfolio, (c) to the extent a Lender reasonably believes it is required by applicable laws or
regulations or by any subpoena or similar legal process (and, to the extent not prohibited under applicable
law), such Lender will provide prompt notice thereof to the Borrower), (d) to any other party to this Agreement,
(e) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to
this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject
to an understanding with such Person that such Person will comply with this Section 9.12, to (i) any assignee
of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under
this Agreement or (ii) any actual or prospective party (or its Related Parties) to any swap, derivative, or other
transaction under which payments are to be made by reference to the Borrower, and its obligations under
this Agreement or the payments hereunder, (g) with the consent of the Borrower or (h) to the extent such
Information (i) becomes publicly available other than as a result of a breach of this Section 9.12 or (ii)
becomes available to the Administrative Agent, any Issuing Bank or any Lender from a source other than
the Borrower (unless such source is actually known by the individual providing the information to be bound
by a confidentiality agreement or other legal or contractual obligation of confidentiality with respect to such
information). In addition, the Administrative Agent and the Lenders may disclose the existence of this
Agreement and information about this Agreement to market data collectors, similar service providers to the
lending industry and service providers to the Administrative Agent and the Lenders in connection with the
administration of this Agreement, the other Loan Documents, and the Commitments. For the purposes of
this Section 9.12, “Information” means all information received from the Borrower relating to the Borrower
or its business, other than any such information that is known to a Lender, publicly known or otherwise
available to the Administrative Agent or any Lender other than through disclosure (a) by the Borrower, or
(b) from a source actually known to a Lender to be bound by a confidentiality agreement or other legal or
contractual obligation of confidentiality with respect to such information. Any Person required to maintain
the confidentiality of Information as provided in this Section 9.12 shall be considered
89
EXHIBIT 10.14
to have complied with its obligation to do so if such Person maintains the confidentiality of such Information
in accordance with procedures adopted in good faith to protect confidential Information of third parties
delivered to a lender.
SECTION 9.13
Interest Rate Limitation. Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges and other
amounts which are treated as interest on such Loan under applicable law (collectively the “Charges”), shall
exceed the maximum lawful rate (the “Maximum Rate”) which may be contracted for, charged, taken,
received or reserved by the Lender holding such Loan in accordance with applicable law, the rate of interest
payable in respect of such Loan hereunder, together with all Charges payable in respect thereof, shall be
limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable
in respect of such Loan but were not payable as a result of the operation of this Section 9.13 shall be cumulated
and the interest and Charges payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at
the Federal Funds Effective Rate to the date of repayment, shall have been received by such Lender.
SECTION 9.14
EXCULPATION PROVISIONS. EACH OF THE PARTIES
HERETO SPECIFICALLY AGREES THAT IT HAS A DUTY TO READ THIS AGREEMENT, THE
NOTES AND (IN THE CASE OF THE BORROWER AND THE ADMINISTRATIVE AGENT) THE FEE
LETTERS AND AGREES THAT IT IS CHARGED WITH NOTICE AND KNOWLEDGE OF THE TERMS
OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; THAT IT HAS IN FACT READ THIS
AGREEMENT AND IS FULLY INFORMED AND HAS FULL NOTICE AND KNOWLEDGE OF THE
TERMS, CONDITIONS AND EFFECTS OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS; THAT IT HAS BEEN REPRESENTED BY INDEPENDENT LEGAL COUNSEL OF ITS
CHOICE THROUGHOUT THE NEGOTIATIONS PRECEDING ITS EXECUTION OF THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND HAS RECEIVED THE ADVICE OF ITS
ATTORNEY IN ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND
THAT IT RECOGNIZES THAT CERTAIN OF THE TERMS OF THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS RESULT IN ONE PARTY ASSUMING THE LIABILITY INHERENT IN SOME
ASPECTS OF THE TRANSACTION AND RELIEVING THE OTHER PARTY OF ITS RESPONSIBILITY
FOR SUCH LIABILITY. EACH PARTY HERETO AGREES AND COVENANTS THAT IT WILL NOT
CONTEST THE VALIDITY OR ENFORCEABILITY OF ANY EXCULPATORY PROVISION OF THIS
AGREEMENT ON THE BASIS THAT THE PARTY HAD NO NOTICE OR KNOWLEDGE OF SUCH
PROVISION OR THAT THE PROVISION IS NOT “CONSPICUOUS.”
SECTION 9.15
U.S. Patriot Act. Each Lender that is subject to the requirements of the
USA PATRIOT ACT (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Patriot Act”) and
the Beneficial Ownership Regulation hereby notifies the Loan Parties that pursuant to the requirements of
the Patriot Act and the Beneficial Ownership Regulation, it is required to obtain, verify, and record information
that identifies the Loan Parties, which information includes the name and address of the Loan Parties and
other information that will allow such Lender to identify the Loan Parties in accordance with the Patriot Act
and the Beneficial Ownership Regulation.
SECTION 9.16
No Advisory or Fiduciary Responsibility. In connection with all aspects
of each transaction contemplated hereby, the Borrower acknowledges and agrees, and acknowledges its
Affiliates’ understanding, that: (i) the credit facility provided for hereunder and any related arranging or
other services in connection therewith (including in connection with any amendment, waiver or other
modification hereof or of any other Loan Document) are an arm’s-length commercial transaction between
the Borrower, on the one hand, and the Administrative Agent, the Arrangers,
90
EXHIBIT 10.14
the Syndication Agent, the Documentation Agents, the Issuing Banks and the Lenders, on the other hand,
and the Borrower is capable of evaluating and understanding and understands and accepts the terms, risks
and conditions of the transactions contemplated hereby and by the other Loan Documents (including any
amendments, waiver or other modification hereof or thereof); (ii) in connection with the process leading to
such transaction, the Administrative Agent, the Arrangers, the Syndication Agent, the Documentation Agents,
the Issuing Banks and the Lenders are and have been acting solely as principals and are not the financial
advisors, agents or fiduciaries, for the Borrower or any of its Affiliates, stockholders, creditors or employees
or any other Person; (iii) the Administrative Agent, the Arrangers, Syndication Agent, the Documentation
Agents, the Issuing Banks and the Lenders have not assumed and will not assume an advisory, agency or
fiduciary responsibility in favor of the Borrower with respect to any of the transactions contemplated hereby
or the process leading thereto, including with respect to any amendment, waiver or other modification hereof
or of any other Loan Document (irrespective of whether the Administrative Agent, any Arranger, the
Syndication Agent, any Documentation Agent, any Issuing Bank or any Lender advised or is currently
advising the Borrower or any of its Affiliates on other matters) and the Administrative Agent, the Arrangers,
the Syndication Agent, the Documentation Agents, the Issuing Banks and the Lenders have no obligation to
the Borrower or any of its Affiliates with respect to the transactions contemplated hereby except those
obligations expressly set forth herein and in the other Loan Documents; (iv) the Administrative Agent, the
Arrangers, the Syndication Agent, the Documentation Agents, the Issuing Banks, the Lenders and their
respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from
those of the Borrower and its Affiliates, and the Administrative Agent, the Arrangers, the Syndication Agent,
the Documentation Agents, the Issuing Banks and the Lenders have no obligation to disclose any of such
interests by virtue of any advisory, agency or fiduciary relationship; and (v) the Administrative Agent, the
Arrangers, the Syndication Agent, the Documentation Agents, the Issuing Banks and the Lenders have not
provided and will not provide any legal, accounting, regulatory or Tax advice with respect to any of the
transactions contemplated hereby (including any amendment, waiver or other modification hereof or of any
other Loan Document) and the Loan Parties have consulted its own legal, accounting, regulatory and Tax
advisors to the extent it has deemed appropriate. Each Loan Parties hereby waive and release, to the fullest
extent permitted by law, any claims that it may have against the Administrative Agent, the Arrangers, the
Syndication Agent, the Documentation Agents, the Issuing Banks or the Lenders with respect to any breach
or alleged breach of agency or fiduciary duty.
SECTION 9.17
Headings. Section headings herein are included herein for convenience
of reference only and shall not constitute a part hereof for any other purpose or be given any substantive
effect.
SECTION 9.18 Acknowledgement and Consent to Bail-In of EEA
Financial Institutions. (a) Notwithstanding anything to the contrary in any Loan Document or in any other
agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any
liability of any EEA Financial Institution arising under any Loan Document, to the extent such liability is
unsecured, may be subject to the write-down and conversion powers of an EEA Resolution Authority and
agrees and consents to, and acknowledges and agrees to be bound by: (a) the application of any Write-Down
and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may
be payable to it by any party hereto that is an EEA Financial Institution; and
(b)
the effects of any Bail-in Action on any such liability, including, if applicable:
(i)
a reduction in full or in part or cancellation of any such liability;
a conversion of all, or a portion of, such liability into shares or other
instruments of ownership in such EEA Financial Institution, its parent undertaking, or a bridge
(ii)
91
EXHIBIT 10.14
institution that may be issued to it or otherwise conferred on it, and that such shares or other
instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability
under this Agreement or any other Loan Document; or
(iii)
the variation of the terms of such liability in connection with the exercise
of the write-down and conversion powers of any EEA Resolution Authority.
[The rest of this page intentionally left blank]
92
EXHIBIT 10.14
The parties hereto have caused this Agreement to be duly executed as of the date and year
first above written.
KINDER MORGAN, INC.,
as the Borrower
/s/ Anthony B. Ashley /s/
By:
Name: Anthony B. Ashley
Title: Treasurer
[5-Year Revolving Credit Agreement]
EXHIBIT 10.14
BARCLAYS BANK PLC,
as the Administrative Agent and as a Lender
/s/ Sydney G. Dennis
By:
Name: Sydney G. Dennis
Title: Director
[5-Year Revolving Credit Agreement]
EXHIBIT 10.14
JPMORGAN CHASE BANK, N.A.,
as a Lender
/s/ Stephanie Balette /s/
By:
Name: Stephanie Balette
Title: Authorized Officer
[5-Year Revolving Credit Agreement]
EXHIBIT 10.14
Bank of America, N.A.,
as a Lender
/s/ Tyler Ellis /s/
By:
Name: Tyler Ellis
Title: Director
[5-Year Revolving Credit Agreement]
EXHIBIT 10.14
BMO Harris Bank, N.A.,
as a Lender
/s/ Melissa Guzman /s/
By:
Name: Melissa Guzman
Title: Director
[5-Year Revolving Credit Agreement]
EXHIBIT 10.14
CITIBANK, N.A.,
as a Lender
/s/ Maureen Maroney /s/
By:
Name: Maureen Maroney
Title: Vice President
[5-Year Revolving Credit Agreement]
EXHIBIT 10.14
CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH,
as a Lender
/s/ Nupur Kumar /s/
By:
Name: Nupur Kumar
Title: Authorized Signatory
/s/ Christopher Zybrick /s/
By:
Name: Christopher Zybrick
Title: Authorized Signatory
[5-Year Revolving Credit Agreement]
EXHIBIT 10.14
Mizuho Bank, Ltd.,
as a Lender
/s/ Donna DeMagistris /s/
By:
Name: Donna DeMagistris
Title: Authorized Signatory
[5-Year Revolving Credit Agreement]
EXHIBIT 10.14
MUFG BANK, LTD.
as a Lender
/s/ Christopher Facenda /s/
By:
Name: Christopher Facenda
Title: Director
[5-Year Revolving Credit Agreement]
EXHIBIT 10.14
ROYAL BANK OF CANADA,
as a Lender
/s/ Jason S. York /s/
By:
Name: Jason S. York
Title: Authorized Signatory
[5-Year Revolving Credit Agreement]
EXHIBIT 10.14
The Bank of Nova Scotia, Houston Branch,
as a Lender
/s/ Alfredo Brahim /s/
By:
Name: Alfredo Brahim
Title: Director
[5-Year Revolving Credit Agreement]
EXHIBIT 10.14
Wells Fargo Bank, N.A.,
as a Lender
/s/ Doug McDowell /s/
By:
Name: Doug McDowell
Title: Managing Director
[5-Year Revolving Credit Agreement]
EXHIBIT 10.14
Commerzbank AG, New York Branch,
as a Lender
/s/ Barbara Stacks /s/
By:
Name: Barbara Stacks
Title: Director
/s/ James Boyle /s/
By:
Name: James Boyle
Title: Director
[5-Year Revolving Credit Agreement]
EXHIBIT 10.14
Sumitomo Mitsui Banking Corporation,
as a Lender
/s/ Katsuyuki Kubo /s/
By:
Name: Katsuyuki Kubo
Title: Managing Director
[5-Year Revolving Credit Agreement]
EXHIBIT 10.14
CANADIAN IMPERIAL BANK OF COMMERCE,
New York Branch,
as a Lender
/s/ Donovan C. Broussard /s/
By:
Name: Donovan C. Broussard
Title: Authorized Signatory
/s/ Trudy Nelson /s/
By:
Name: Trudy Nelson
Title: Authorized Signatory
[5-Year Revolving Credit Agreement]
EXHIBIT 10.14
CREDIT AGRICOLE CORPORATE AND
INVESTMENT BANK,
as a Lender
/s/ Dixon Schultz /s/
By:
Name: Dixon Schultz
Title: Managing Director
/s/ Michael Willis /s/
By:
Name: Michael Willis
Title: Managing Director
[5-Year Revolving Credit Agreement]
EXHIBIT 10.14
SUNTRUST BANK,
as a Lender
/s/ Carmen Malizia /s/
By:
Name: Carmen Malizia
Title: Director
[5-Year Revolving Credit Agreement]
EXHIBIT 10.14
PNC Bank, National Association,
as a Lender
/s/ Stephen Monto /s/
By:
Name: Stephen Monto
Title: SVP
[5-Year Revolving Credit Agreement]
EXHIBIT 10.14
SOCIETE GENERALE,
as a Lender
/s/ Diego Medina /s/
By:
Name: Diego Medina
Title: Director
[5-Year Revolving Credit Agreement]
EXHIBIT 10.14
THE TORONTO-DOMINION BANK, NEW YORK
BRANCH
as a Lender
/s/ Annie Dorval /s/
By:
Name: Annie Dorval
Title: Authorized Signatory
[5-Year Revolving Credit Agreement]
EXHIBIT 10.14
MORGAN STANLEY SENIOR FUNDING, INC.,
as a Lender
/s/ Michael King /s/
By:
Name: Michael King
Title: Vice President
[5-Year Revolving Credit Agreement]
EXHIBIT 10.14
MORGAN STANLEY BANK, N.A.,
as a Lender
/s/ Michael King /s/
By:
Name: Michael King
Title: Authorized Signatory
[5-Year Revolving Credit Agreement]
EXHIBIT 10.14
Compass Bank,
as a Lender
/s/ Mark H. Wolf /s/
By:
Name: Mark H. Wolf
Title: Senior Vice President
[5-Year Revolving Credit Agreement]
EXHIBIT 10.14
ING Capital LLC,
as a Lender
/s/ Subha Pasumarti /s/
By:
Name: Subha Pasumarti
Title: Managing Director
/s/ Tanja van der Woude /s/
By:
Name: Tanja van der Woude
Title: Director
[5-Year Revolving Credit Agreement]
EXHIBIT 10.14
REGIONS BANK,
as a Lender
/s/ David Valentine /s/
By:
Name: David Valentine
Title: Managing Director
[5-Year Revolving Credit Agreement]
EXHIBIT 10.14
Intesa Sanpaolo S.p.A. – New York Branch,
as a Lender
/s/ Christophe Hamonet /s/
By:
Name: Christophe Hamonet
Title: Reginal Business Manager
/s/ Francesco Di Mario /s/
By:
Name: Francesco Di Mario
Title: FVP – Head of Credit
[5-Year Revolving Credit Agreement]
EXHIBIT 10.14
NATIONAL BANK OF CANADA,
as a Lender
/s/ Rahul Rahul /s/
By:
Name: Rahul Rahul
Title: Authorized Signatory
/s/ Mark Williamson /s/
By:
Name: Mark Williamson
Title: Authorized Signatory
[5-Year Revolving Credit Agreement]
EXHIBIT 10.14
Acknowledged and agreed, solely for the purpose of
Section 2.05(a):
KINDER MORGAN OPERATING L.P. “B”
By: Kinder Morgan G.P., Inc.,
its General Partner
/s/ Anthony B. Ashley /s/
By:
Name: Anthony B. Ashley
Title: Treasurer
[5-Year Revolving Credit Agreement]
SCHEDULE 1.01
Commitments
Lender
Commitment
Barclays Bank PLC
JPMorgan Chase Bank,
N.A.
Bank of America, N.A.
BMO Harris Bank, N.A.
Citibank, N.A.
Credit Suisse AG, Cayman
Islands Branch
Mizuho Bank, Ltd.
MUFG Bank, Ltd.
Royal Bank of Canada
The Bank of Nova Scotia,
Houston Branch
Wells Fargo Bank, N.A.
Commerzbank AG, New
York Branch
Sumitomo Mitsui Banking
Corporation
Canadian Imperial Bank of
Commerce, New York
Branch
Credit Agricole Corporate
and Investment Bank
SunTrust Bank
PNC Bank, National
Association
Societe Generale
The Toronto-Dominion
Bank, New York Branch
Morgan Stanley Senior
Funding, Inc.
Morgan Stanley Bank, N.A.
Compass Bank
ING Capital LLC
Regions Bank
Intesa Sanpaolo S.p.A.-New
York Branch
National Bank of Canada
Total
$195,000,000
$195,000,000
$195,000,000
$195,000,000
$195,000,000
$195,000,000
$195,000,000
$195,000,000
$195,000,000
$195,000,000
$195,000,000
$144,500,000
$144,500,000
$144,500,000
$144,500,000
$144,500,000
$144,500,000
$144,500,000
$144,500,000
$46,500,000
$70,000,000
$116,500,000
$116,500,000
$116,500,000
$116,500,000
EXHIBIT 10.14
Letter of Credit
Commitment
$100,000,000
$100,000,000
$100,000,000
N/A
$100,000,000
N/A
N/A
N/A
N/A
N/A
$100,000,000
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
$116,500,000
$4,000,000,000
N/A
$500,000,000
EXHIBIT 10.14
SCHEDULE 1.01A
Excluded Subsidiaries
ANR Real Estate Corporation
Calnev Pipeline LLC
Coastal Eagle Point Oil Company
Coastal Oil New England, Inc.
Colton Processing Facility
Coscol Petroleum Corporation
El Paso CGP Company, L.L.C.
El Paso Energy Argentina Service Company
El Paso Energy Capital Trust I
El Paso Energy E.S.T. Company
El Paso Energy International Company
El Paso Marketing Company, L.L.C.
El Paso Merchant Energy North America Company, L.L.C.
El Paso Merchant Energy-Petroleum Company
El Paso Reata Energy Company, L.L.C.
El Paso Remediation Company
El Paso Services Holding Company
EPC Building, LLC
EPC Property Holdings, Inc.
EPEC Corporation
EPEC Oil Company Liquidating Trust
EPEC Polymers, Inc.
EPEC Realty, Inc.
EPED Holding Company
I.M.T Land Corp.
International Marine Terminals Partnership
Kinder Morgan Foundation
Kinder Morgan G.P., Inc.
Kinder Morgan Mexico LLC
Kinder Morgan Services International LLC
Kinder Morgan Tejas Pipeline GP LLC
Kinder Morgan Urban Renewal, L.L.C.
Kinder Morgan Urban Renewal II, LLC
KM Express LLC
KM Insurance Texas Inc.
KN Capital Trust I
KN Capital Trust III
Mesquite Investors, L.L.C.
SFPP, L.P.
Note the Excluded Subsidiaries listed on this Schedule 1.01A may also be Excluded Subsidiaries
pursuant to other exceptions set forth in the definition of “Excluded Subsidiary”.
EXHIBIT 10.14
SCHEDULE 1.01B
Existing Letters of Credit
Letters of Credit issued under the Existing Credit Agreement (as of September 15, 2014):
Letter of
Credit #
Beneficiary
Amount
JP Morgan
Insurance Company of North America
P-367925
TPTS-211032 TCEQ
P-381222
TPTS-390077 U.S. Environmental Protection Agency
TPTS-330400 RBC/BC Maritime
SCA Services, Inc.
Wells Fargo
Bank of New York
SM215665W TCEQ
SM230084W Bank of New York Mellon
SM230086W Bank of New York Mellon
S113181
SM238154W Port of Houston Authority
SM231529W Port Authority of NY & NJ
SM235293W Port of Portland
IS0012983
IS0011480
IS0021875U
IS0024221U Medina Electric Cooperative
Karnes Electric Cooperative
IS0178750U
New Jersey Department of Environmental
IS0194687U
Protection (NJDEP)
Guadalupe Valley Electric Coop
California Department of Fish and Wildlife
Guadalupe Valley Electric Coop
U.S. Environmental Protection Agency
Twin County Electric Power Assoc
IS0213588U
IS0255620U
61663921
63656702
63660191
63668640
69605543
69606341
Citigroup, N.A.
Terasen Inc.
KANSAS H&E
SELF INS CA
New Jersey Dept of Environmental Protection
Site Remediation Program
Philadelphia Gas Works
BP Products, NA
Total LCs under KMI Revolver
30,650.00
8,000,000.00
282,000.00
3,700,000.00
399,018.00
4,381,018.00
7,000,000.00
22,750,000.00
22,750,000.00
24,128,548.00
25,000.00
375,000.00
300,000.00
320,000.00
489,652.00
1,000,000.00
536,433.63
875,329.00
423,972.00
265,000.00
685,795.72
81,924,730.35
522,365.00
2,000,000.00
836,631.00
172,920.00
97,384.00
807,872.00
4,437,172.00
90,742,920.35
EXHIBIT 10.14
SCHEDULE 6.01
Existing Non-Guarantor Indebtedness
• Certificate of Designations of Series A Fixed-to-Floating Rate Term Cumulative
Preferred Stock due 2057 of Kinder Morgan G.P., Inc.
• EPC Building, LLC, promissory note, 3.967%, due 2013 through 2035
• K N Capital Trust I 8.56% capital trust securities due 2027
• K N Capital Trust III 7.63% capital trust securities due 2028
• El Paso Energy Capital Trust I 4.75% preferred securities due 2028
•
International Marine Terminals Partnership 2002 floating rate notes due 2025
EXHIBIT 10.14
SCHEDULE 6.05
Existing Transactions with Affiliates
None.
EXHIBIT 10.14
SCHEDULE 6.06
Existing Restrictive Agreements
• Certificate of Designations of Series A Fixed-to-Floating Rate Term Cumulative
Preferred Stock due 2057 of Kinder Morgan G.P., Inc.
• Constituent documents of Kinder Morgan Canada Limited and its subsidiaries, each as
amended to date, setting forth terms related to Kinder Morgan Canada Limited’s (i)
Cumulative Redeemable Minimum Rate Reset Preferred Shares, Series 1; and (ii)
Cumulative Redeemable Minimum Rate Reset Preferred Shares, Series 3:
o Certificate and Articles of Incorporation of Kinder Morgan Canada Limited
o Certificate and Articles of Incorporation of Kinder Morgan Canada GP Inc.
o Certificate of Limited Partnership of Kinder Morgan Canada Limited Partnership
o Second Amended and Restated Limited Partnership Agreement of Kinder Morgan
Canada Limited Partnership
o Articles of Association of Kinder Morgan Cochin ULC
• Credit Agreement, dated August 31, 2018, by and among Kinder Morgan Cochin ULC,
Royal Bank of Canada and the lenders party thereto
EXHIBIT 10.14
EXHIBIT 1.01-A
FORM OF ASSIGNMENT AND ASSUMPTION
This Assignment and Assumption (the “Assignment and Assumption”) is dated as of the
Effective Date set forth below and is entered into by and between [the][each]1 Assignor identified in item
1 below ([the][each, an] “Assignor”) and [the][each]2 Assignee identified in item 2 below ([the][each, an]
“Assignee”). [It is understood and agreed that the rights and obligations of [the Assignors][the Assignees]3
hereunder are several and not joint.]4 Capitalized terms used but not defined herein shall have the meanings
given to them in the 5-Year Credit Agreement identified below (as further restated, amended, modified,
supplemented and in effect, the “5-Year Credit Agreement”), receipt of a copy of which is hereby
acknowledged by [the][each] Assignee. The Standard Terms and Conditions set forth in Annex 1 attached
hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and
Assumption as if set forth herein in full.
For an agreed consideration, [the][each] Assignor hereby irrevocably sells and assigns to
[the Assignee][the respective Assignees], and [the][each] Assignee hereby irrevocably purchases and
assumes from [the Assignor][the respective Assignors], subject to and in accordance with the Standard Terms
and Conditions and the 5-Year Credit Agreement, as of the Effective Date inserted by the Administrative
Agent as contemplated below (i) all of [the Assignor’s][the respective Assignors’] rights and obligations in
[its capacity as a Lender][their respective capacities as Lenders] under the 5-Year Credit Agreement and any
other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage
interest identified below of all of such outstanding rights and obligations of [the Assignor][the respective
Assignors] under the revolving credit facility identified below (including, without limitation, the Letters of
Credit and the Swingline Loans included in such facility), and (ii) to the extent permitted to be assigned
under applicable law, all claims, suits, causes of action and any other right of [the Assignor (in its capacity
as a Lender)][the respective Assignors (in their respective capacities as Lenders)] against any Person, whether
known or unknown, arising under or in connection with the 5-Year Credit Agreement, any other documents
or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on
or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice
claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and
assigned pursuant to clause (i) above (the rights and obligations sold and assigned by [the][any] Assignor
to [the][any] Assignee pursuant to clauses (i) and (ii) above being referred to herein collectively as [the][an]
“Assigned Interest”). Each such sale and assignment is without recourse to [the][any] Assignor and, except
as expressly provided in this Assignment and Assumption, without representation or warranty by [the][any]
Assignor.
_____________________________
1
For bracketed language here and elsewhere in this form relating to the Assignor(s), if the assignment is
from a single Assignor, choose the first bracketed language. If the assignment is from multiple Assignors,
choose the second bracketed language.
2
3
4
For bracketed language here and elsewhere in this form relating to the Assignee(s), if the assignment is to a
single Assignee, choose the first bracketed language. If the assignment is to multiple Assignees, choose the
second bracketed language.
Select as appropriate.
Include bracketed language if there are either multiple Assignors or multiple Assignees.
EXHIBIT 10.14
1.
Assignor[s]:
______________________________
______________________________
[Assignor [is] [is not] a Defaulting Lender]
2.
Assignee[s]:
______________________________
______________________________
3.
4.
5.
[for each Assignee, indicate [Affiliate][Approved Fund] of [identify Lender]
Borrower:
Kinder Morgan, Inc.
Administrative Agent: ______________________, as the administrative agent
under the 5-Year Credit Agreement
5-Year Credit Agreement:
The Revolving Credit Agreement dated as of
November 16, 2018 among Kinder Morgan, Inc., the Lenders parties thereto,
Barclays Bank PLC, as Administrative Agent, and the other agents parties thereto
6.
Assigned Interest[s]:
Assignor[s]5 Assignee[s]6
Aggregate Amount
of
Commitment/Loans
for all Lenders7
Amount of
Commitment/Loans
Assigned8
Percentage
Assigned of
Commitment/
Loans8
CUSIP
Number
$
$
$
$
$
$
%
%
%
[7.
Trade Date:
______________]9
Effective Date: _____________ ___, 20___ [TO BE INSERTED BY ADMINISTRATIVE AGENT AND
WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER
THEREFOR.]
The terms set forth in this Assignment and Assumption are hereby agreed to:
__________________________
5
List each Assignor, as appropriate.
6
7
8
List each Assignee, as appropriate.
Amount to be adjusted by the counterparties to take into account any payments or prepayments made
between the Trade Date and the Effective Date.
Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder.
9
To be completed if the Assignor(s) and the Assignee(s) intend that the minimum assignment amount is to be
determined as of the Trade Date.
EXHIBIT 10.14
ASSIGNOR[S]10
[NAME OF ASSIGNOR]
By:______________________________
Title:
[NAME OF ASSIGNOR]
By:______________________________
Title:
ASSIGNEE[S]11
[NAME OF ASSIGNEE]
By:______________________________
Title:
[NAME OF ASSIGNEE]
By:______________________________
Title:
__________________________
10
Add additional signature blocks as needed. Include both Fund/Pension Plan and manager making the trade
(if applicable).
11
Add additional signature blocks as needed. Include both Fund/Pension Plan and manager making the trade
(if applicable).
EXHIBIT 10.14
[Consented to and]12 Accepted:
[NAME OF ADMINISTRATIVE AGENT], as
Administrative Agent
By: _________________________________
Title:
[Consented to:]13
[NAME OF THE RELEVANT PARTY]
By: ________________________________
Title:
__________________________
12
To be added only if the consent of the Administrative Agent is required by the terms of the 5-Year Credit
Agreement.
EXHIBIT 10.14
13
To be added only if the consent of the Borrower and/or other parties (e.g. Swingline Lender or Issuing
Bank) is required by the terms of the 5-Year Credit Agreement.
ANNEX 1 TO ASSIGNMENT AND ASSUMPTION
STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION
1.
Representations and Warranties.
1.1.
Assignor. [The][Each] Assignor (a) represents and warrants that (i) it is the legal and
beneficial owner of [the][[the relevant] Assigned Interest, (ii) [the][such] Assigned Interest is free and clear
of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all
action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or
representations made in or in connection with the 5-Year Credit Agreement or any other Loan Document,
(ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents
or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates
or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by
the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations
under any Loan Document.
1.2.
Assignee. [The][Each] Assignee (a) represents and warrants that (i) it has full power and
authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and
to consummate the transactions contemplated hereby and to become a Lender under the 5-Year Credit
Agreement, (ii) it meets all the requirements to be an assignee under the paragraph following Section 9.05(a)
(vii) and Section 9.05(b) of the 5-Year Credit Agreement (subject to such consents, if any, as may be required
under Section 9.05(a)(iii) of the 5-Year Credit Agreement), (iii) from and after the Effective Date, it shall
be bound by the provisions of the 5-Year Credit Agreement as a Lender thereunder and, to the extent of [the]
[the relevant] Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it is sophisticated
with respect to decisions to acquire assets of the type represented by [the][such] Assigned Interest and either
it, or the Person exercising discretion in making its decision to acquire [the][such] Assigned Interest, is
experienced in acquiring assets of such type, (v) it has received a copy of the 5-Year Credit Agreement, and
has received or has been accorded the opportunity to receive copies of the most recent financial statements
delivered pursuant to Section 5.01 of the 5-Year Credit Agreement, as applicable, and such other documents
and information as it deems appropriate to make its own credit analysis and decision to enter into this
Assignment and Assumption and to purchase [the][such] Assigned Interest, (vi) it has, independently and
without reliance upon the Administrative Agent or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and decision to enter into this
Assignment and Assumption and to purchase [the][such] Assigned Interest and (vii) attached to this
Assignment and Assumption is any documentation required to be delivered by it pursuant to Section 2.16
of the 5-Year Credit Agreement; and (b) agrees that (i) it will, independently and without reliance upon the
Administrative Agent, [the][any] Assignor or any other Lender, and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking
action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations
which by the terms of the Loan Documents are required to be performed by it as a Lender.
2.
Payments. From and after the Effective Date, the Administrative Agent shall make all
payments in respect of [the][each] Assigned Interest (including payments of principal, interest, fees and other
EXHIBIT 10.14
amounts) to [the][the relevant] Assignor for amounts which have accrued to but excluding the Effective Date
and to [the][the relevant] Assignee for amounts which have accrued from and after the Effective Date.
3.
General Provisions.
3.1. In accordance with Sections 9.04 and 9.05 of the 5-Year Credit Agreement, upon execution,
delivery, acceptance and recording of this Assignment and Assumption, from and after the Effective Date,
(a) the Assignee shall be a party to the 5-Year Credit Agreement and, to the extent provided in this Assignment
and Assumption, have the rights and obligations of a Lender under the 5-Year Credit Agreement with a
Commitment as set forth herein and (b) the Assignor shall, to the extent of the Assigned Interest assigned
pursuant to this Assignment and Assumption, be released from its obligations under the 5-Year Credit
Agreement (and, in the case of this Assignment and Assumption covers all of the Assignor’s rights and
obligations under the 5-Year Credit Agreement, the Assignor shall cease to be a party to the 5-Year Credit
Agreement but shall continue to be entitled to the benefits of Sections 2.14, 2.15, 2.16 and 9.03 thereof).
3.2.
This Assignment and Assumption shall be binding upon, and inure to the benefit of, the
parties hereto and their respective successors and assigns. This Assignment and Assumption may be executed
in any number of counterparts, which together shall constitute one instrument. Delivery of an executed
counterpart of a signature page of this Assignment and Assumption by telecopy shall be effective as delivery
of a manually executed counterpart of this Assignment and Assumption. This Assignment and Assumption
shall be governed by, and construed in accordance with, the laws of the State of New York.
EXHIBIT 10.14
EXHIBIT 1.01-B
FORM OF GUARANTY AGREEMENT
[See attached.]
FORM OF COMMITTED NOTE
EXHIBIT 10.14
EXHIBIT 1.01-C
_____________, _____
(the
“Borrower”), HEREBY
FOR VALUE RECEIVED, the undersigned, KINDER MORGAN, INC., a Delaware
corporation
of
PROMISES TO
_______________________________________________________ (the “Lender”), the lesser of (i) such
Lender’s Commitment and (ii) the aggregate amount of Committed Loans made by the Lender and
outstanding on the Maturity Date. The principal amount of the Committed Loans made by the Lender to
the Borrower shall be due and payable on the dates and in the amounts as are specified in that certain
Revolving Credit Agreement, dated as of November 16, 2018 (as further restated, amended, modified,
supplemented and in effect from time to time, the “5-Year Credit Agreement”), among the Borrower, the
Lender, certain other lenders that are party thereto, Barclays Bank PLC, as Administrative Agent for the
Lender and such other lenders, and the other agents named therein. All capitalized terms used herein and
not otherwise defined shall have the meanings as defined in the 5-Year Credit Agreement.
order
PAY
the
to
The Borrower promises to pay interest on the unpaid principal amount of each Committed
Loan outstanding from time to time from the date thereof until such principal amount is paid in full, at such
interest rates and payable on such dates as are specified in the 5-Year Credit Agreement. Principal and
interest are payable in same day funds in lawful money of the United States of America to the Administrative
Agent at its Principal Office, or at such other place as the Administrative Agent shall designate in writing to
the Borrower.
This Note is one of the Committed Notes referred to in, and this Note and all provisions
herein are entitled to the benefits of, the 5-Year Credit Agreement. The 5-Year Credit Agreement, among
other things (a) provides for the making of Committed Loans by the Lender and the other lenders to the
Borrower from time to time, and (b) contains provisions for acceleration of the maturity hereof upon the
happening of certain stated events, for prepayments on account of principal hereof prior to the maturity
hereof upon the terms and conditions therein specified, and for limitations on the amount of interest paid
such that no provision of the 5-Year Credit Agreement or this Note shall require the payment or permit the
collection of interest in excess of the Maximum Rate.
This Note may be held by the Lender for the account of its applicable lending office and
may be transferred from one lending office to another lending office from time to time as the Lender may
determine.
The Borrower and any and all endorsers, guarantors and sureties severally waive grace,
demand, presentment for payment, notice of dishonor, default or intent to accelerate, protest and notice of
protest and diligence in collecting and bringing of suit against any party hereto, and agree to all renewals,
extensions or partial payments hereon and to any release or substitution of security herefor, in whole or in
part, with or without notice, before or after maturity.
EXHIBIT 10.14
This Note shall be governed by and construed under the laws of the State of New York and
the applicable laws of the United States of America.
KINDER MORGAN, INC.,
as the Borrower
By:__________________________________________
Name:________________________________________
Title:_________________________________________
EXHIBIT 10.14
EXHIBIT 1.01-D
FORM OF SWINGLINE NOTE
$_____________________
______________, _____
to
(the
“Borrower”), HEREBY PROMISES TO PAY
FOR VALUE RECEIVED, the undersigned, KINDER MORGAN, INC., a Delaware
corporation
of
__________________________________________________ (the “Swingline Lender”), the lesser of
(i) $_______________ and (ii) the aggregate amount of Swingline Loans made by the Swingline Lender
and outstanding on the Maturity Date. The principal amount of the Swingline Loans made by the
Swingline Lender to the Borrower shall be due and payable on the dates and in the amounts as are
specified in that certain Revolving Credit Agreement dated as of November 16, 2018 (as further restated,
amended, modified, supplemented and in effect from time to time, the “5-Year Credit Agreement”)
among the Borrower, the Swingline Lender, certain other lenders that are party thereto, Barclays Bank
PLC, as Administrative Agent for the Swingline Lender and such other lenders, and the other agents
named therein. All capitalized terms used herein and not otherwise defined shall have the meanings as
defined in the 5-Year Credit Agreement.
order
the
The Borrower promises to pay interest on the unpaid principal amount of each Swingline
Loan outstanding from time to time from the date thereof until such principal amount is paid in full, at
such interest rates and payable on such dates as are specified in the 5-Year Credit Agreement. Both
principal and interest are payable in same day funds in lawful money of the United States of America
to the Swingline Lender at its Principal Office or such other place as the Swingline Lender shall designate
in writing to the Borrower.
This Note is the Swingline Note referred to in, and this Note and all provisions herein
are entitled to the benefits of, the 5-Year Credit Agreement. The 5-Year Credit Agreement, among other
things (a) provides for the making of Swingline Loans by the Swingline Lender to the Borrower from
time to time, and (b) contains provisions for acceleration of the maturity hereof upon the happening of
certain stated events, for prepayments on account of principal hereof prior to the maturity hereof upon
the terms and conditions therein specified, and for limitations on the amount of interest paid such that
no provision of the 5-Year Credit Agreement or this Note shall require the payment or permit the collection
of interest in excess of the Maximum Rate.
The Borrower and any and all endorsers, guarantors and sureties severally waive grace,
demand, presentment for payment, notice of dishonor, default or intent to accelerate, protest and notice
of protest and diligence in collecting and bringing of suit against any party hereto, and agree to all
renewals, extensions or partial payments hereon and to any release or substitution of security herefor,
in whole or in part, with or without notice, before or after maturity.
EXHIBIT 10.14
This Note shall be governed by and construed under the laws of the State of New York
and the applicable laws of the United States of America.
KINDER MORGAN, INC.,
as the Borrower
By:__________________________________________
Name:________________________________________
Title:_________________________________________
EXHIBIT 10.14
EXHIBIT 2.03
FORM OF BORROWING REQUEST
Dated __________
Barclays Bank PLC,
1301 Sixth Avenue
New York, NY 10019
Attn: Bobby Fitzpatrick
Phone: 201-499-5043
E-mail: bobby.fitzpatrick@barclays.com and 12145455230@tls.ldsprod.com
Ladies and Gentlemen:
This Borrowing Request is delivered to you by Kinder Morgan, Inc. (the “Borrower”), a
Delaware corporation, under Section 2.03 of the Revolving Credit Agreement, dated as of November 16,
2018 (as further restated, amended, modified, supplemented and in effect, the “5-Year Credit Agreement”),
by and among the Borrower, the Lenders party thereto, Barclays Bank PLC, as Administrative Agent, and
the other agents named therein.
1.
The Borrower hereby requests that the Lenders make a [Committed] [Swingline]/1
Loan or Loans in the aggregate principal amount of $______________./2
2.
The Borrower hereby requests that the [Committed] [Swingline] Loan or Loans be
made on the following Business Day: ________________./3
3.
The Borrower hereby requests that the Borrowing be [an ABR Borrowing] [a
Eurodollar Borrowing]. /4
4.
In the case of a Eurodollar Borrowing, the initial Interest Period shall be [one week]
[one month] [two months] [three months] [six months].
5.
The Borrower hereby requests that the funds from the requested Loan or Loans be
disbursed to the following bank account: ______________________________.
6.
After giving effect to the requested Loan or Loans, the aggregate Credit Exposures
outstanding as of the date hereof (including the requested Loans) does not exceed the maximum amount
permitted to be outstanding pursuant to the terms of the 5-Year Credit Agreement.
__________________________
1
Items 3 and 4 are not completed for Swingline Loans.
2
3
4
Complete with an amount in accordance with Section 2.03 of the 5-Year Credit Agreement.
Complete with a Business Day in accordance with Section 2.03 of the 5-Year Credit Agreement.
If no election as to Type of Borrowing is made for a Committed Loan, the Requested Borrowing shall be an
ABR Borrowing.
EXHIBIT 10.14
7.
The representations and warranties set forth in the 5-Year Credit Agreement and
the other Loan Documents are true and correct in all material respects on and as of the date hereof (unless
such representation and warranty expressly relates to an earlier date).
8.
No Default or Event of Default has occurred and is continuing on the date hereof
or would result after giving effect to the Loans requested hereby.
9.
All capitalized undefined terms used herein have the meanings assigned thereto in
the 5-Year Credit Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Borrowing Request this
_____ day of _______________, ______.
KINDER MORGAN, INC.,
as the Borrower
By:__________________________________________
Name:________________________________________
Title:_________________________________________
EXHIBIT 10.14
EXHIBIT 2.05
FORM OF LETTER OF CREDIT REQUEST
Dated __________
Barclays Bank PLC,
1301 Sixth Avenue
New York, NY 10019
Attn: Patrick Shields
Phone: 212-526-9531
E-mail: xraletterofcredit@barclays.com and Patrick.shields@barclays.com
and
[Name and address of Issuing Bank,
if the Issuing Bank is not Barclays Bank PLC]
Ladies and Gentlemen:
This Letter of Credit Request is delivered to you by Kinder Morgan, Inc., (the “Borrower”),
a Delaware corporation, under Section 2.05 of the Revolving Credit Agreement, dated as of November 16,
2018 (as further restated, amended, modified, supplemented, and in effect from time to time, the “5-Year
Credit Agreement”), by and among the Borrower, the Lenders party thereto, Barclays Bank PLC, as
Administrative Agent, and the other parties named therein.
The Borrower hereby requests the issuance of a Letter of Credit under the 5-Year Credit
Agreement, and in that connection sets forth below the information relating to such Letter of Credit (the
“Proposed Letter of Credit”) as required by Section 2.05(e) of the 5-Year Credit Agreement. The Proposed
Letter of Credit must be issued:
on or before ____________________, _____ 1
for the benefit of _____________ whose address is __________________
In the amount of $_________________
having an expiry date of ________________, ____2
attached hereto is any special language to be incorporated into the Proposed Letter of Credit.
or
The Borrower hereby refers to Letter of Credit Number _____________ (the “Existing
Letter of Credit”) which has an existing expiry date of _______________. The Borrower hereby requests
__________________________
1
Must be a date not earlier than five Business Days after notice is given to the Issuing Bank.
2
May include requirement for automatic extension provision but, in any event must comply with Section
2.05(f) of the 5-Year Credit Agreement.
EXHIBIT 10.14
that [the expiry date of the Expiring Letter of Credit be extended to _____________. 2] [the Existing Letter
of Credit be amended.] [the Existing Letter of Credit be renewed. 3]
1.
After giving effect to the Proposed Letter of Credit, (i) the LC Exposure for all
Committed Letters of Credit issued by such Issuing Bank does not exceed such Issuing Bank’s Letter of
Credit Commitment at such time, (ii) the total LC Exposure does not exceed the LC Sublimit and (iii) the
total Credit Exposure does not exceed the Total Commitment.
2.
All capitalized undefined terms used herein have the meanings assigned thereto in
the 5-Year Credit Agreement.
The undersigned hereby certifies that:
1. The representations and warranties set forth in the 5-Year Credit Agreement and the other
Loan Documents are true and correct in all material respects on and as of the date hereof (unless such
representation and warranty expressly relates to an earlier date); and
2. No Default or Event of Default has occurred and is continuing on the date hereof or would
result from the issuance of the Letter of Credit requested hereby.
[Remainder of page intentionally left blank]
__________________________
3
If an amendment, describe the proposed amendment.
EXHIBIT 10.14
IN WITNESS WHEREOF, the undersigned have executed this Letter of Credit Request this
_____ day of _______________, _____.
KINDER MORGAN, INC.,
as the Borrower
By:__________________________________________
Name:________________________________________
Title:_________________________________________
EXHIBIT 10.14
EXHIBIT 2.07
FORM OF INTEREST ELECTION REQUEST
Date: [__________], 20[__]
Barclays Bank PLC,
1301 Sixth Avenue
New York, NY 10019
Attn: Bobby Fitzpatrick
Phone: 201-499-5043
E-mail: bobby.fitzpatrick@barclays.com and 12145455230@tls.ldsprod.com
Re: Kinder Morgan, Inc. – Interest Election Request
Ladies and Gentlemen:
Reference is made to the Revolving Credit Agreement, dated as of November 16, 2018 (as amended,
amended and restated, supplemented or otherwise modified from time to time, the “5-Year Credit
Agreement”), among Kinder Morgan, Inc., a Delaware corporation (the “Borrower”), the Lenders party
thereto from time to time, Barclays Bank PLC as Administrative Agent, and the other parties thereto from
time to time. Capitalized terms used but not otherwise defined in this Interest Election Request shall have
the meanings assigned to such terms in the 5-Year Credit Agreement.
1.
Interest Election Request. This Interest Election Request relates to the Borrower’s election
to (i) continue a Eurodollar Borrowing, (ii) convert a Eurodollar Borrowing or (iii) convert a Base Rate
Borrowing on ___________ (the “Interest Election Date”), as indicated below (check each that applies):
Continuation of Eurodollar Borrowing.
Pursuant to Section 2.07 of the 5-Year Credit Agreement, this Interest Election Request
confirms our written election on the date hereof to continue the following outstanding Borrowing
comprised of Eurodollar Loans on the Interest Election Date, as follows:
(A)
Expiration date of current
Interest Period:
(B) Aggregate amount
________________________
of outstanding Borrowing:
________________________
(C) Aggregate amount to be
continued as Eurodollar Loans: ________________________
(D)
Elected Interest Period:
________________________
Conversion of Eurodollar Borrowing.
Pursuant to Section 2.07 of the 5-Year Credit Agreement, this Interest Election Request
confirms our written election on the date hereof to convert the following outstanding Borrowing
EXHIBIT 10.14
comprised of Eurodollar Loans to Borrowing(s) comprised of ABR Loans on the Interest Election
Date, as follows:
(A)
Expiration date of current
Interest Period:
(B) Aggregate amount
________________________
of outstanding Borrowing:
________________________
(C) Aggregate amount to be
converted to ABR Loans:
________________________
Conversion of Base Rate Borrowing.
Pursuant to Section 2.07 of the 5-Year Credit Agreement, this Interest Election Request
confirms our written election on the date hereof that the following outstanding Borrowing comprised
of ABR Loans be converted to a Borrowing comprised of Eurodollar Loans on the Interest Election
Date, as follows:
(A)
Date of Conversion:
________________________
(B) Aggregate amount
of outstanding Borrowing:
________________________
(C) Aggregate amount to be
converted to Eurodollar Loans: ________________________
(D)
Elected Interest Period:
________________________
2.
Certifications. The Borrower hereby represents and warrants to the Lenders that, as of the
date of this Interest Election Request and after giving effect to the continuations or conversions being
requested under Section 1 hereof, no Default or Event of Default has occurred and is continuing.
[Signature page follows]
EXHIBIT 10.14
IN WITNESS WHEREOF, the undersigned has executed this Interest Election Request this
_____ day of ___________________, ____.
KINDER MORGAN, INC.,
as the Borrower
By:__________________________________________
Name:________________________________________
Title:_________________________________________
FORM OF NOTICE OF PREPAYMENT
EXHIBIT 10.14
EXHIBIT 2.10
Date: _______, ____
To: Barclays Bank PLC,
1301 Sixth Avenue
New York, NY 10019
Attn: Patrick Shields
Phone: 212-526-9531
E-mail: bobby.fitzpatrick@barclays.com, 12145455230@tls.ldsprod.com and
Patrick.shields@barclays.com
Ladies and Gentlemen:
Reference is made to that certain Revolving Credit Agreement, dated as of November
16, 2018 (as may be amended, restated, amended and restated, extended, supplemented or otherwise
modified in writing from time to time in accordance with its terms, the “5-Year Credit Agreement”; the
terms defined therein being used herein as therein defined), among Kinder Morgan, Inc., a Delaware
corporation (the “Borrower”), the Lenders party thereto from time to time, Barclays Bank PLC, as
Administrative Agent, and the other parties thereto. All capitalized terms used but not defined herein
have the meanings assigned in the 5-Year Credit Agreement.
This Prepayment Notice is delivered to you pursuant to Section 2.10 of the Agreement.
The Borrower hereby gives notice of a prepayment of Loans as follows:
1.
(select Class of Loans)
Committed Loans
Swingline Loans
2.
(select Type(s) of Loans)
ABR Loans in the aggregate principal amount of $________.
Eurodollar Loans with an Interest Period ending ______, 201_ in the
aggregate principal amount of $________.
3.
On __________, 201_ (a Business Day).
IN WITNESS WHEREOF, the undersigned have executed this Prepayment Notice this
_____ day of _______________, _____.
KINDER MORGAN, INC.,
as the Borrower
By: __________________________________________
Name:________________________________________
Title:_________________________________________
EXHIBIT 10.14
EXHIBIT 2.16-A
[FORM OF]
U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)
Reference is hereby made to the Revolving Credit Agreement, dated as of November 16,
2018 (as further amended, supplemented or otherwise modified from time to time, the “5-Year Credit
Agreement”), among Kinder Morgan, Inc. (the “Borrower”), Barclays Bank PLC, as administrative agent
for the lenders party thereto (the “Lenders”) and such Lenders.
Pursuant to the provisions of Section 2.16(g) of the 5-Year Credit Agreement, the
undersigned hereby certifies that (i) it is the sole record and beneficial owner of the Loan(s) (as well as any
Note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) it is not a bank within
the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of the Borrower
within the meaning of Section 881(c)(3)(B) of the Code and (iv) it is not a controlled foreign corporation
related to the Borrower as described in Section 881(c)(3)(C) of the Code.
The undersigned has furnished the Administrative Agent and the Borrower with a certificate
of its non-U.S. Person status on IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable. By executing
this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the
undersigned shall promptly so inform the Borrower and the Administrative Agent, and (2) the undersigned
shall have at all times furnished the Borrower and the Administrative Agent with a properly completed and
currently effective certificate in either the calendar year in which each payment is to be made to the
undersigned, or in either of the two calendar years preceding such payments.
Unless otherwise defined herein, terms defined in the 5-Year Credit Agreement and used
herein shall have the meanings given to them in the 5-Year Credit Agreement.
[NAME OF LENDER]
By:
Name:
Title:
Date: ________ __, 20[ ]
EXHIBIT 10.14
EXHIBIT 2.16-B
[FORM OF]
U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)
Reference is hereby made to the Revolving Credit Agreement, dated as of November 16,
2018 (as further amended, supplemented or otherwise modified from time to time, the “5-Year Credit
Agreement”), among Kinder Morgan, Inc. (the “Borrower”), Barclays Bank PLC, as administrative agent
for the lenders party thereto (the “Lenders”) and such Lenders.
Pursuant to the provisions of Section 2.16(g) of the 5-Year Credit Agreement, the
undersigned hereby certifies that (i) it is the sole record and beneficial owner of the participation in respect
of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of
the Code, (iii) it is not a ten percent shareholder of the Borrower within the meaning of Section 881(c)(3)
(B) of the Code, and (iv) it is not a controlled foreign corporation related to the Borrower as described in
Section 881(c)(3)(C) of the Code.
The undersigned has furnished its participating Lender with a certificate of its non-U.S.
Person status on IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable. By executing this certificate,
the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall
promptly so inform such Lender in writing, and (2) the undersigned shall have at all times furnished such
Lender with a properly completed and currently effective certificate in either the calendar year in which each
payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.
Unless otherwise defined herein, terms defined in the 5-Year Credit Agreement and used
herein shall have the meanings given to them in the 5-Year Credit Agreement.
[NAME OF PARTICIPANT]
By:
Name:
Title:
Date: ________ __, 20[ ]
EXHIBIT 10.14
EXHIBIT 2.16-C
[FORM OF]
U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)
Reference is hereby made to the Revolving Credit Agreement, dated as of November 16,
2018 (as further amended, supplemented or otherwise modified from time to time, the “5-Year Credit
Agreement”), among Kinder Morgan, Inc. (the “Borrower), Barclays Bank PLC, as administrative agent for
the lenders party thereto (the “Lenders”) and such Lenders.
Pursuant to the provisions of Section 2.16(g) of the 5-Year Credit Agreement, the
undersigned hereby certifies that (i) it is the sole record owner of the participation in respect of which it is
providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such
participation, (iii) with respect such participation, neither the undersigned nor any of its direct or indirect
partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course
of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct or
indirect partners/members is a ten percent shareholder of the Borrower within the meaning of Section 881(c)
(3)(B) of the Code and (v) none of its direct or indirect partners/members is a controlled foreign corporation
related to the Borrower as described in Section 881(c)(3)(C) of the Code.
The undersigned has furnished its participating Lender with IRS Form W-8IMY
accompanied by one of the following forms from each of its partners/members that is claiming the portfolio
interest exemption: (i) an IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable, or (ii) an IRS Form
W-8IMY accompanied by an IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable, from each of such
partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By executing this
certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the
undersigned shall promptly so inform such Lender and (2) the undersigned shall have at all times furnished
such Lender with a properly completed and currently effective certificate in either the calendar year in which
each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.
Unless otherwise defined herein, terms defined in the 5-Year Credit Agreement and used
herein shall have the meanings given to them in the 5-Year Credit Agreement.
[NAME OF PARTICIPANT]
By:
Name:
Title:
Date: ________ __, 20[ ]
EXHIBIT 10.14
EXHIBIT 2.16-D
[FORM OF]
U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)
Reference is hereby made to the Revolving Credit Agreement, dated as of November 16,
2018 (as further amended, supplemented or otherwise modified from time to time, the “5-Year Credit
Agreement”), among Kinder Morgan, Inc. (the “Borrower”), Barclays Bank PLC, as administrative agent
for the lenders party thereto (the “Lenders”) and such Lenders.
Pursuant to the provisions of Section 2.16(g) of the 5-Year Credit Agreement, the
undersigned hereby certifies that (i) it is the sole record owner of the Loan(s) (as well as any Note(s) evidencing
such Loan(s)) in respect of which it is providing this certificate, (ii) its direct or indirect partners/members
are the sole beneficial owners of such Loan(s) (as well as any Note(s) evidencing such Loan(s)), (iii) with
respect to the extension of credit pursuant to this 5-Year Credit Agreement or any other Loan Document,
neither the undersigned nor any of its direct or indirect partners/members is a bank extending credit pursuant
to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section
881(c)(3)(A) of the Code, (iv) none of its direct or indirect partners/members is a ten percent shareholder of
the Borrower within the meaning of Section 881(c)(3)(B) of the Code and (v) none of its direct or indirect
partners/members is a controlled foreign corporation related to the Borrower as described in Section 881(c)
(3)(C) of the Code.
The undersigned has furnished the Administrative Agent and the Borrower with IRS Form
W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the
portfolio interest exemption: (i) an IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable, or (ii) an
IRS Form W-8IMY accompanied by an IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable, from
each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By
executing this certificate, the undersigned agrees that (1) if the information provided on this certificate
changes, the undersigned shall promptly so inform the Borrower and the Administrative Agent, and (2) the
undersigned shall have at all times furnished the Borrower and the Administrative Agent with a properly
completed and currently effective certificate in either the calendar year in which each payment is to be made
to the undersigned, or in either of the two calendar years preceding such payments.
Unless otherwise defined herein, terms defined in the 5-Year Credit Agreement and used
herein shall have the meanings given to them in the 5-Year Credit Agreement.
[NAME OF LENDER]
By:
Name:
Title:
Date: ________ __, 20[ ]
EXHIBIT 10.14
EXHIBIT 2.21
FORM OF NEW LOAN INCREASE JOINDER
NEW LOAN INCREASE JOINDER, dated as of [____________], 201[_] (this
“Agreement”), by and among [NEW LENDERS] (each, a “New Lender” and, collectively, the “New
Lenders”), Kinder Morgan, Inc., a Delaware corporation (the “Borrower”) and Barclays Bank PLC, as
Administrative Agent in such capacity (the “Administrative Agent”).
R E C I T A L S
WHEREAS, reference is hereby made to the Revolving Credit Agreement, dated as of
November 16, 2018 (as amended, restated, supplemented or otherwise modified, refinanced or replaced from
time to time, the “5-Year Credit Agreement”), among the Borrower, the Lenders party thereto, Barclays Bank
PLC as Administrative Agent, and the other parties thereto (capitalized terms used but not defined herein
having the meaning provided in the 5-Year Credit Agreement); and
WHEREAS, subject to the terms and conditions of the 5-Year Credit Agreement, the
Borrower may establish New Commitments by, among other things, entering into one or more New Loan
Increase Joinders with New Lenders;
NOW, THEREFORE, in consideration of the premises and agreements, provisions and
covenants herein contained, the parties hereto agree as follows:
Each New Lender party hereto hereby agrees to commit to provide its respective New
Commitment, as set forth opposite its name on Schedule A annexed hereto, on the terms and subject to the
conditions set forth below.
Each New Lender (i) confirms that it has received a copy of the 5-Year Credit Agreement
and the other Loan Documents and the exhibits thereto, together with copies of the financial statements
referred to therein and such other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Agreement; (ii) agrees that it will, independently and without
reliance upon the Administrative Agent, the Syndication Agent, any Documentation Agent, any other New
Lender or any other Lender and based on such documents and information as it shall deem appropriate at
the time, continue to make its own credit decisions in taking or not taking action under the 5-Year Credit
Agreement; (iii) appoints and authorizes the Administrative Agent to take such action as agent on its behalf
and to exercise such powers under the 5-Year Credit Agreement and the other Loan Documents as are
delegated to the Administrative Agent by the terms thereof, together with such powers as are reasonably
incidental thereto; and (iv) agrees that it will perform in accordance with their terms all of the obligations
which by the terms of the 5-Year Credit Agreement are required to be performed by it as a New Lender.
Each New Lender hereby agrees to make its respective Commitment on the following terms
and conditions:
1.
Proposed Increase to Revolving Facility. This Agreement represents the Borrower’s
request to increase the Total Commitment pursuant to Section 2.21 of the 5-Year Credit Agreement through
New Commitments from the New Lenders as follows (the “Proposed Commitment Increase”):
EXHIBIT 10.14
(a) Business Day of Proposed Revolving Credit Commitment Increase: _______, ____
(the “Increased Amount Date”)
(b) Amount of Proposed Commitment Increase: $_______________1
2.
[Acknowledgment and Agreement. Each New Lender acknowledges and agrees
that upon its execution of this Agreement and the making of New Loans that such New Lender shall become
a “Lender” under, and for all purposes of, the 5-Year Credit Agreement and the other Loan Documents, and
shall be subject to and bound by the terms thereof, and shall perform all the obligations of and shall have all
rights of a Lender thereunder.]2
3.
5-Year Credit Agreement Governs. Except as set forth in this Agreement, the New
Commitments shall otherwise be subject to the provisions of the 5-Year Credit Agreement and the other
Loan Documents.
4.
Borrower’s Certifications. By its execution of this Agreement, the undersigned
officer of the Borrower, to the best of his or her knowledge, hereby certifies that:
covenants that:
i.
ii.
The representations and warranties set forth in the 5-Year Credit Agreement and
the other Loan Documents are true and correct in all material respects on and as of
the date hereof (unless such representation and warranty expressly relates to an
earlier date); and
No Event of Default exists on such Increased Amount Date before or after giving
effect to such New Commitments.
5.
Borrower Covenants. By its execution of this Agreement, Borrower hereby
i.
ii.
iii.
Borrower shall make any payments required pursuant the 5-Year Credit Agreement
(including Section 2.15 thereof) to the Administrative Agent and the Lenders (other
than any Defaulting Lender), in connection with the New Commitments;
Borrower shall deliver or cause to be delivered the following legal opinions and
documents: [___________], together with all other legal opinions and other
documents reasonably requested by the Administrative Agent in connection with
this Agreement; and
Set forth on the attached Officers’ Certificate are the calculations (in reasonable
detail) demonstrating compliance on a pro forma basis with the financial tests
described in Section 6.07 of the 5-Year Credit Agreement as of the Increased Amount
Date and as of the Most Recent Financial Statement Date, after giving effect to such
New Commitments (assuming for the purposes of such calculation that any New
Commitments are fully drawn) and other customary and appropriate pro forma
adjustments, including any acquisitions or dispositions
__________________________
1
2
Amount not to exceed $1,000,000,000 in the aggregate with all other New Commitments.
Insert bracketed language if the lending institution is not already a Lender.
EXHIBIT 10.14
after the beginning of the relevant determination period and prior to or simultaneous
with the effectiveness of such New Commitments.
7.
Consents. The Administrative Agent, the Swingline Lender and the Issuing Banks
have consented to each New Lender on or prior to the date hereof.
8.
Notice. For purposes of the 5-Year Credit Agreement, the initial notice address of
each New Lender that is not a Lender under the 5-Year Credit Agreement shall be as set forth below its
signature below.
9.
Tax Forms. For each relevant New Lender, delivered herewith to the Administrative
Agent are such forms, certificates or other evidence with respect to United States federal income tax
withholding matters as such New Lender may be required to deliver to the Administrative Agent pursuant
to Section 2.16(g) of the 5-Year Credit Agreement.
10.
Recordation of the New Revolving Credit Commitments. Upon execution and
delivery hereof, the Administrative Agent will record the New Commitments made by each New Lender in
the Register.
11.
Amendment, Modification and Waiver. This Agreement may not be amended,
modified or waived except by an instrument or instruments in writing signed and delivered on behalf of each
of the parties hereto.
12.
Entire Agreement. This Agreement, the 5-Year Credit Agreement and the other
Loan Documents constitute the entire agreement among the parties with respect to the subject matter hereof
and thereof and supersede all other prior agreements and understandings, both written and verbal, among
the parties or any of them with respect to the subject matter hereof.
13.
THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
GOVERNING LAW.
14.
Severability. Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity
or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in
any other jurisdiction. If any provision of this Agreement is so broad as to be unenforceable, the provision
shall be interpreted to be only so broad as would be enforceable.
15.
Counterparts. This Agreement may be executed in counterparts, each of which shall
be deemed to be an original, but all of which shall constitute one and the same agreement.
EXHIBIT 10.14
IN WITNESS WHEREOF, each of the undersigned has caused its duly authorized officer to execute and
deliver this New Loan Increase Joinder as of _______________, _____.
[NEW REVOLVING LOAN LENDER]
By:
Name:
Title:
[Notice Address:
Attention:
Telephone:
Facsimile:]3
KINDER MORGAN, INC., as Borrower
By:
Name:
Title:
[NAME OF ADMINISTRATIVE AGENT], as
Administrative Agent
By:
Name:
Title:
__________________________
3
Insert notice information if such New Revolving Loan Lender is not a Revolving Credit Lender under the
5-Year Credit Agreement.
EXHIBIT 10.14
Consented to:
[NAME OF ADMINISTRATIVE AGENT], as
Administrative Agent
By: _________________________________
Name:
Title:
[NAME OF EACH RELEVANT PARTY]4
By: _________________________________
Name:
Title:
__________________________
4
Requires consent of the Administrative Agent, each Swingline Lender and each Issuing Bank.
EXHIBIT 10.14
EXHIBIT 5.01
FORM OF COMPLIANCE CERTIFICATE
The undersigned hereby certifies that he is the ____________________________ of
KINDER MORGAN, INC., a Delaware corporation (the “Borrower”), and that as such he is authorized to
execute this certificate on behalf of the Borrower. With reference to the Revolving Credit Agreement dated
as of November 16, 2018 (as further restated, amended, modified, supplemented and in effect from time to
time, the “5-Year Credit Agreement”) among the Borrower, Barclays Bank PLC, as Administrative Agent,
for the lenders (the “Lenders”) and such Lenders, the undersigned represents and warrants as follows (each
capitalized term used herein having the same meaning given to it in the 5-Year Credit Agreement unless
otherwise specified);
Attached hereto as Annex I are the detailed computations necessary to determine whether
the Borrower is in compliance with Section 6.07 of the 5-Year Credit Agreement as of the end of the [fiscal
quarter][fiscal year] ending ________________.
[Attached hereto as Annex II is a list of the Material Subsidiaries.]1
[There has been no change in the list of Material Subsidiaries since [ ], the date
of the last Compliance Certificate delivered prior to the date hereof.] [Attached hereto as Annex II is an
update to the list of Material Subsidiaries to reflect changes in such list since [ ], the date of
the last Compliance Certificate delivered prior to the date hereof.]2
There does not exist any Default or Event of Default under the 5-Year Credit Agreement as
of the date of this Compliance Certificate, except as set forth in a separate attachment, if any, to this
Compliance Certificate, setting forth the details thereof and the action taken or proposed to be taken by the
Borrower with respect thereto.
EXECUTED AND DELIVERED this _____ day of ________________, ______.
KINDER MORGAN, INC.,
as the Borrower
By: __________________________________________
Name:________________________________________
Title:_________________________________________
__________________________
1
2
To be included in the compliance certificate delivered simultaneously with the first set of financial
statements delivered following the Closing Date.
Select the appropriate option for each Compliance Certificate delivered simultaneously with the second set
of financial statements delivered following the Closing Date and each set of financial statements delivered
thereafter.
EXHIBIT 10.15
$500,000,000
REVOLVING CREDIT AGREEMENT
dated as of
November 16, 2018
among
KINDER MORGAN, INC.,
as the Borrower,
THE LENDERS PARTY HERETO
and
BARCLAYS BANK PLC,
as the Administrative Agent
___________________________________
JPMORGAN CHASE BANK, N.A.,
as the Syndication Agent,
and
BARCLAYS BANK PLC,
JPMORGAN CHASE BANK, N.A.,
BANK OF AMERICA, N.A.,
BMO HARRIS BANK N.A.,
CITIGROUP GLOBAL MARKETS INC.,
CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH,
MIZUHO BANK, LTD.,
MUFG BANK, LTD.,
ROYAL BANK OF CANADA,
THE BANK OF NOVA SCOTIA, HOUSTON BRANCH and
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as the Documentation Agents,
_______________________________________________
BARCLAYS BANK PLC,
JPMORGAN SECURITIES LLC,
BMO CAPITAL MARKETS CORP.,
CITIGROUP GLOBAL MARKETS INC.,
CREDIT SUISSE SECURITIES (USA) LLC,
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,
MIZUHO BANK, LTD.,
MUFG BANK, LTD.,
RBC CAPITAL MARKETS,
THE BANK OF NOVA SCOTIA, HOUSTON BRANCH and
WELLS FARGO SECURITIES, LLC,
as the Joint Lead Arrangers and the Joint Book Runners
EXHIBIT 10.15
TABLE OF CONTENTS
ARTICLE I DEFINITIONS
SECTION 1.01 Defined Terms
SECTION 1.02 Classification of Loans and Borrowings
SECTION 1.03 Accounting Terms; Changes in GAAP
SECTION 1.04 Interpretation
ARTICLE II THE CREDITS
SECTION 2.01 Commitments
SECTION 2.02 Loans and Borrowings
SECTION 2.03 Requests for Borrowings
SECTION 2.04 [Reserved]
SECTION 2.05 [Reserved]
SECTION 2.06 Funding of Borrowings
SECTION 2.07 Interest Elections
SECTION 2.08 Termination and Reduction of Commitments; Mandatory Prepayments
SECTION 2.09 Repayment of Loans; Evidence of Debt
SECTION 2.10 Voluntary Prepayment of Loans
SECTION 2.11 Fees
SECTION 2.12 Interest
SECTION 2.13 Alternate Rate of Interest
SECTION 2.14 Increased Costs
SECTION 2.15 Break Funding Payments
SECTION 2.16 Taxes
SECTION 2.17 Payments Generally; Pro Rata Treatment; Sharing of Set-offs
SECTION 2.18 Mitigation of Obligations; Replacement of Lenders
SECTION 2.19 Defaulting Lenders
ARTICLE III CONDITIONS PRECEDENT
SECTION 3.01 Conditions Precedent to the Closing Date
SECTION 3.02 Conditions Precedent to Each Credit Event
ARTICLE IV REPRESENTATIONS AND WARRANTIES
SECTION 4.01 Organization and Qualification
SECTION 4.02 Authorization, Validity, Etc
SECTION 4.03 Governmental Consents, Etc
SECTION 4.04 No Breach or Violation of Agreements or Restrictions, Etc
SECTION 4.05 Properties
-i-
Page
1
1
22
22
22
23
23
23
24
25
25
25
25
26
27
28
29
29
30
31
32
32
36
37
38
39
39
41
41
41
41
42
42
42
SECTION 4.06 Litigation and Environmental Matters
SECTION 4.07 Financial Statements
SECTION 4.08 Disclosure
SECTION 4.09 Investment Company Act
SECTION 4.10 ERISA
SECTION 4.11 Tax Returns and Payments
SECTION 4.12 Compliance with Laws and Agreements
SECTION 4.13 Purpose of Loans
SECTION 4.14 Foreign Assets Control Regulations, etc.
SECTION 4.15 Solvency.
ARTICLE V AFFIRMATIVE COVENANTS
SECTION 5.01 Financial Statements and Other Information
SECTION 5.02 Existence, Conduct of Business
SECTION 5.03 Payment of Obligations
SECTION 5.04 Maintenance of Properties; Insurance
SECTION 5.05 Books and Records; Inspection Rights
SECTION 5.06 Compliance with Laws
SECTION 5.07 Use of Proceeds
SECTION 5.08 Additional Guarantors
ARTICLE VI NEGATIVE COVENANTS
SECTION 6.01 Indebtedness of Non-Guarantor Subsidiaries
SECTION 6.02 Liens
SECTION 6.03 Fundamental Changes
SECTION 6.04 Restricted Payments
SECTION 6.05 Transactions with Affiliates
SECTION 6.06 Restrictive Agreements
SECTION 6.07 Ratio of Consolidated Net Indebtedness to Consolidated EBITDA
SECTION 6.08 Use of Proceeds
ARTICLE VII EVENTS OF DEFAULT
SECTION 7.01 Events of Default and Remedies
ARTICLE VIII THE ADMINISTRATIVE AGENT
SECTION 8.01 Appointment and Authority
SECTION 8.02 Rights as a Lender
SECTION 8.03 Exculpatory Provisions
SECTION 8.04 Reliance by Administrative Agent
SECTION 8.05 Delegation of Duties
ii
EXHIBIT 10.15
42
42
43
43
43
44
44
44
45
45
45
45
47
47
48
48
48
48
48
49
49
49
50
50
50
51
52
52
52
52
54
54
54
55
55
56
EXHIBIT 10.15
SECTION 8.06 Resignation of Administrative Agent
SECTION 8.07 Non-Reliance on Administrative Agent and Other Lenders
SECTION 8.08 INDEMNIFICATION
SECTION 8.09 No Reliance on Agents or other Lenders
SECTION 8.10 Duties of the Syndication Agent, Documentation Agents, Arrangers
SECTION 8.11 Certain ERISA Matters
ARTICLE IX MISCELLANEOUS
SECTION 9.01 Notices, Etc.
SECTION 9.02 Waivers; Amendments; Releases
SECTION 9.03 Payment of Expenses, Indemnities, etc.
SECTION 9.04 Successors and Assigns Generally
SECTION 9.05 Assignments by Lenders
SECTION 9.06 Survival; Reinstatement
SECTION 9.07 Counterparts; Integration; Effectiveness; Electronic Execution
SECTION 9.08 Severability
SECTION 9.09 Right of Setoff
SECTION 9.10 Governing Law; Jurisdiction; Consent to Service of Process
SECTION 9.11 WAIVER OF JURY TRIAL
SECTION 9.12 Confidentiality
SECTION 9.13 Interest Rate Limitation
SECTION 9.14 EXCULPATION PROVISIONS
SECTION 9.15 U.S. Patriot Act
SECTION 9.16 No Advisory or Fiduciary Responsibility
SECTION 9.17 Headings
SECTION 9.18 Acknowledgement and Consent to Bail-In of EEA Financial Institutions
56
57
57
58
58
58
60
60
61
63
65
65
68
69
69
69
70
71
71
72
72
73
73
73
73
iii
EXHIBIT 10.15
SCHEDULES:
Schedule 1.01
Schedule 1.01A
Schedule 6.01
Schedule 6.05
Schedule 6.06
EXHIBITS:
Exhibit 1.01-A
Exhibit 1.01-B
Exhibit 1.01-C
Exhibit 2.03
Exhibit 2.07
Exhibit 2.10
Exhibit 2.16-A
Exhibit 2.16-B
Exhibit 2.16-C
Exhibit 2.16-D
Exhibit 5.01
Commitments
Excluded Subsidiaries
Existing Non-Guarantor Indebtedness
Existing Transactions with Affiliates
Existing Restrictive Agreements
Form of Assignment and Acceptance
Form of Guaranty Agreement
Form of Committed Note
Form of Borrowing Request
Form of Interest Election Request
Form of Notice of Prepayment
Form of U.S. Tax Compliance Certificate
Form of U.S. Tax Compliance Certificate
Form of U.S. Tax Compliance Certificate
Form of U.S. Tax Compliance Certificate
Form of Compliance Certificate
iv
EXHIBIT 10.15
REVOLVING CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT, dated as of November 16, 2018 (this
“Agreement”) is among:
(a)
Kinder Morgan, Inc., a Delaware corporation (the “Borrower”);
(b)
the banks, financial institutions and other lenders listed on the signature pages
hereof under the caption “Lenders” (the “Lenders” and together with each other Person that becomes a
Lender pursuant to Section 9.05, collectively, the “Lenders”); and
(c)
Barclays Bank PLC, individually as a Lender and as the administrative agent for
the Lenders (in such latter capacity together with any other Person that becomes Administrative Agent
pursuant to Section 8.08, the “Administrative Agent”).
PRELIMINARY STATEMENTS
The Borrower has requested that the Lenders extend credit to the Borrower in the form of
Loans (as defined below) in an aggregate principal amount of $500,000,000 (the “Transactions”) to be used
by Borrower and its subsidiaries for working capital and general corporate purposes, and the Lenders have
indicated their willingness to lend on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01
Defined Terms. As used in this Agreement, the following terms have
the meanings specified below:
“ABR”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or
the Loans comprising such Borrowing, bear interest at a rate determined by reference to the Alternate Base
Rate.
“Adjusted LIBO Rate” means, with respect to any Eurodollar Loan for any Interest Period
for such Loan, a rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) determined by
the Administrative Agent to be equal to the product of (i) the Eurodollar Rate for such Loan for such Interest
Period multiplied by (ii) the Reserve Requirement for such Loan for such Interest Period. In no case shall
the Adjusted LIBO Rate be less than zero.
“Administrative Agent” has the meaning specified in the introduction to this Agreement.
“Administrative Agent Fee Letter” has the meaning specified in Section 2.11(c).
“Administrative Questionnaire” means an Administrative Questionnaire in the form
supplied by the Administrative Agent.
“Affiliate” of any Person means (i) any Person directly or indirectly controlled by, controlling
or under common control with such first Person, (ii) any director or officer of such first Person or of any
Person referred to in clause (i) above and (iii) if any Person in clause (i) above is an individual, any member
of the immediate family (including parents, siblings, spouse and children) of such individual and any trust
1
EXHIBIT 10.15
whose principal beneficiary is such individual or one or more members of such immediate family and any
Person who is controlled by any such member or trust. For purposes of this definition, any Person that owns
directly or indirectly 25% or more of the securities having ordinary voting power for the election of directors
or other governing body of a corporation or 25% or more of the partnership or other ownership interests of
any other Person (other than as a limited partner of such other Person) will be deemed to “control” (including,
with its correlative meanings, “controlled by” and “under common control with”) such corporation or other
Person. In no event shall the Administrative Agent or any Lender be deemed to an Affiliate of the Borrower
of any of its Subsidiaries.
“Affiliated Entities” means unconsolidated Subsidiaries of the Borrower and Persons not
otherwise constituting Subsidiaries of the Borrower in which the Borrower has an equity investment.
“Agreement” has the meaning specified in the introduction to this Agreement (subject,
however, to Section 1.04(e) hereof).
“Alternate Base Rate” means, for any day, a fluctuating rate per annum equal to the greatest
of (a) the Federal Funds Effective Rate in effect on such day plus ½ of 1%, (b) the Prime Rate in effect for
such day, and (c) the Adjusted LIBO Rate for a Eurodollar Loan with a one month Interest Period that begins
on such day (and if such day is not a Business Day, the immediately preceding Business Day) plus 1%. Any
change in the Alternate Base Rate due to a change in the Prime Rate, the Federal Funds Effective Rate or
the Adjusted LIBO Rate shall be effective from the effective date of such change in the Prime Rate, the
Federal Funds Effective Rate or the Adjusted LIBO Rate, respectively.
“Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction applicable
to the Borrower or any of its Subsidiaries from time to time concerning or relating to bribery or corruption.
“Applicable Commitment Fee Rate” means, at any time and from time to time, the percentage
per annum equal to the applicable percentage set forth below for the corresponding Performance Level at
such time:
Performance Level
I
II
III
IV
V
VI
Applicable Commitment
Fee Rate
0.090%
0.100%
0.125%
0.175%
0.225%
0.275%
The Applicable Commitment Fee Rate shall be determined by reference to the Performance
Level in effect from time to time and any change in the Applicable Commitment Fee Rate shall be effective
from the effective date of the change in the applicable Performance Level giving rise thereto.
2
“Applicable Margin” means, as to any ABR Borrowing or any Eurodollar Borrowing, as
the case may be, at any time and from time to time, a percentage per annum equal to the applicable percentage
set forth below for the corresponding Performance Level at such time:
EXHIBIT 10.15
Performance Level
I
II
III
IV
V
VI
Eurodollar Borrowings
Applicable
Margin Percentage
1.000%
ABR Borrowings
Applicable
Margin Percentage
0.100%
1.125%
1.250%
1.500%
1.750%
2.000%
0.125%
0.250%
0.500%
0.750%
1.000%
The Applicable Margin shall be determined by reference to the Performance Level in effect
from time to time, and any change in the Applicable Margin shall be effective from the effective date of any
change in the applicable Performance Level giving rise thereto.
“Applicable Percentage” means at any time, for each Lender, the percentage obtained by
dividing (a) such Lender’s Commitment by (b) the amount of the Total Commitment, provided that at any
time when the Total Commitment shall have been terminated, each Lender’s Applicable Percentage shall be
the percentage obtained by dividing (a) such Lender’s Credit Exposure by (b) the aggregate Credit Exposure
of all Lenders.
“Approved Fund” means any Fund that is administered or managed by (a) a Lender, (b) an
Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.
“Arrangers” means Barclays Bank PLC, J.P. Morgan Securities LLC., Merrill Lynch, Pierce,
Fenner & Smith Incorporated (or any other registered broker-dealer wholly-owned by Bank of America
Corporation to which all or substantially all of Bank of America Corporation’s or any of its subsidiaries’
investment banking, commercial lending services or related businesses may be transferred following the
date of this Agreement), BMO Capital Markets Corp., Citigroup Global Markets Inc., Credit Suisse Securities
(USA) LLC, Mizuho Bank, Ltd., MUFG Bank, Ltd., RBC Capital Markets, The Bank of Nova Scotia,
Houston Branch and Wells Fargo Securities LLC, as joint lead arrangers and joint book runners.
“Assignment and Acceptance” means an assignment and acceptance entered into by a Lender
and an assignee (with the consent of any party whose consent is required by Section 9.05), and accepted by
the Administrative Agent, in the form of Exhibit 1.01-A or any other form approved by the Administrative
Agent.
“Availability Period” means the period from the Closing Date to the earlier of (i) the Maturity
Date or (ii) the date of termination of the Total Commitment.
3
EXHIBIT 10.15
“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the
applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.
“Bail-In Legislation” means, with respect to any EEA Member Country implementing
Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union,
the implementing law for such EEA Member Country from time to time which is described in the EU Bail-
In Legislation Schedule.
“Beneficial Ownership Certification” means a certification regarding beneficial ownership
or control as required by the Beneficial Ownership Regulation, which certification shall be substantially
similar in form and substance to the form of Certification Regarding Beneficial Owners of Legal Entity
Customers published jointly, in May 2018, by the Loan Syndications and Trading Association and Securities
Industry and Financial Markets Association.
“Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.
“Benefit Arrangement” means at any time an employee benefit plan within the meaning of
Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan and which is maintained or otherwise
contributed to by any member of the ERISA Group.
“Benefit Plan” means any of (a) an “employee benefit plan” (as defined in Section 3(3) of
ERISA) that is subject to Title I of ERISA, (b) a “plan” as defined in Section 4975 of the Code to which
Section 4975 of the Code applies, and (c) any Person whose assets include (for purposes of the Plan Asset
Regulations or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any
such “employee benefit plan” or “plan”.
“Board” means the Board of Governors of the Federal Reserve System of the United States
of America.
“Board of Directors” means, with respect to any Person, the Board of Directors of such
Person or any committee of the Board of Directors of such Person duly authorized to act on behalf of the
Board of Directors of such Person.
“Bonds” means the Port Facility Refunding Revenue Bonds (Enron Transportation Services,
L.P. Project) Series 1994 in the original aggregate principal amount of $23,700,000, as issued by the Jackson-
Union Regional Port District.
“Borrower” has the meaning specified in the introduction to this Agreement.
“Borrower Debt Rating” means, with respect to the Borrower as of any date of determination,
the rating that has been most recently announced by each of S&P or Moody’s for any non-credit enhanced,
unsecured long-term senior debt issued or to be issued by the Borrower. For purposes of the foregoing:
(a)
if, at any time, neither S&P nor Moody’s shall have in effect a Borrower Debt Rating,
the Applicable Margin or the Applicable Commitment Fee Rate, as the case may be, shall be set in accordance
with Performance Level VI under the definition of “Applicable Margin” or “Applicable Commitment Fee
Rate”, as the case may be;
(b)
if the ratings established by S&P and Moody’s shall fall within different Performance
Levels, the Applicable Margin or the Applicable Commitment Fee Rate, as the case may be,
4
EXHIBIT 10.15
shall be based upon the higher rating; provided, however, that, if the lower of such ratings is two or more
Performance Levels below the higher of such ratings, the Applicable Margin or the Applicable Commitment
Fee Rate, as the case may be, shall be based upon the rating that is one Performance Level higher than the
lower rating;
(c)
if any rating established by S&P or Moody’s shall be changed, such change shall
be effective as of the date on which such change is announced publicly by the rating agency making such
change;
(d)
if S&P or Moody’s shall change the basis on which ratings are established by it,
each reference to the Borrower Debt Rating announced by S&P or Moody’s shall refer to the then equivalent
rating by S&P or Moody’s, as the case may be.
“Borrowing” means a borrowing comprised of Committed Loans of the same Type, made,
converted or continued on the same date and, in the case of Eurodollar Loans, as to which a single Interest
Period is in effect.
“Borrowing Date” means the Business Day upon which any Loans are to be made available
to the Borrower.
“Borrowing Request” has the meaning specified in Section 2.03.
“Business Day” means any day that is not a Saturday, Sunday or other day on which
commercial banks in Houston, Texas or New York, New York are authorized or required by law to remain
closed; provided that, when used in connection with a rate of interest determined by reference to the Eurodollar
Rate, the term “Business Day” shall also exclude any day on which banks are not open for dealings in dollar
deposits in the London interbank market.
“Capital Lease Obligations” of any Person means the obligations of such Person to pay rent
or other amounts under any lease of (or other arrangement conveying the right to use) real or personal
property, or a combination thereof, which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the
capitalized amount thereof determined in accordance with GAAP.
“Capital Stock” means, with respect to any Person, any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents (however designated) of such Person’s equity,
including (a) all common stock and preferred stock, any limited or general partnership interest and any
limited liability company member interest, (b) beneficial interests in trusts, and (c) any other interest or
participation that confers upon a Person the right to receive a share of the profits and losses of, or distribution
of assets of, the issuing Person.
“Cash Equivalents” means (a) securities issued or unconditionally guaranteed by the United
States government or any agency or instrumentality thereof, in each case having maturities of not more than
24 months from the date of acquisition thereof; (b) securities issued by any state of the United States of
America or any political subdivision of any such state or any public instrumentality thereof or any political
subdivision of any such state or any public instrumentality thereof having maturities of not more than 24
months from the date of acquisition thereof and, at the time of acquisition, having an investment grade rating
generally obtainable from either S&P or Moody’s (or, if at any time neither S&P nor Moody’s shall be rating
such obligations, then from another nationally recognized rating service); (c) commercial paper issued by
any Lender or any bank holding company owning any Lender; (d) commercial paper maturing no more than
5
EXHIBIT 10.15
12 months after the date of creation thereof and, at the time of acquisition, having a rating of at least A-2 or
P-2 from either S&P or Moody’s (or, if at any time neither S&P nor Moody’s shall be rating such obligations,
an equivalent rating from another nationally recognized rating service); (e) domestic and Eurodollar Rate
certificates of deposit or bankers’ acceptances maturing no more than two years after the date of acquisition
thereof issued by any Lender or any other bank having combined capital and surplus of not less than
$250,000,000 in the case of domestic banks and $100,000,000 (or the equivalent in dollars thereof) in the
case of foreign banks; (f) repurchase agreements with a term of not more than 30 days for underlying securities
of the type described in clauses (a), (b) and (e) above entered into with any bank meeting the qualifications
specified in clause (e) above or securities dealers of recognized national standing; (g) marketable short-term
money market and similar funds (i) either having assets in excess of $250,000,000 or (ii) having a rating of
at least A-2 or P-2 from either S&P or Moody’s (or, if at any time neither S&P nor Moody’s shall be rating
such obligations, an equivalent rating from another nationally recognized rating service); (h) shares of
investment companies that are registered under the Investment Company Act of 1940 and substantially all
the investments of which are one or more of the types of securities described in clauses (a) through (g) above;
and (i) in the case of investments by any Foreign Subsidiary, other customarily utilized high-quality
investments in the country where such Foreign Subsidiary is located.
“Certain Items” means such items that are required to be included in the calculation of Net
Income in accordance with GAAP that either (i) are non-cash or (ii) by their nature are separately identifiable
from the Borrower and the Subsidiaries’ normal business operations and are likely to occur only sporadically,
and are reflected as such in the Annual Report on Form 10-K of the Borrower or in the Quarterly Report on
Form 10-Q of the Borrower, in each case filed with the SEC. For the avoidance of doubt, Certain Items will
be unadjusted for noncontrolling interests related thereto.
“CFC” means a Person that is a “controlled foreign corporation” within the meaning of
Section 957 of the Code.
“Change in Control” means and will be deemed to have occurred if (a) any person, entity
or “group” (within the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended)
shall at any time have acquired direct or indirect beneficial ownership of a percentage of the voting power
of the outstanding Voting Stock of the Borrower that exceeds 50% of the voting power of all the outstanding
Voting Stock of the Borrower; or (b) Continuing Directors shall not constitute at least a majority of the board
of directors of the Borrower.
“Change in Law” means the occurrence, after the date of this Agreement, of any of the
following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law,
rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by
any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether
or not having the force of law) by any Governmental Authority; provided that notwithstanding anything
herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests,
rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules,
guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on
Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory
authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless
of the date enacted, adopted or issued.
“Charges” has the meaning specified in Section 9.13.
“Closing Date” means the date on which the conditions specified in Section 3.01 are satisfied
(or waived in accordance with Section 9.02).
6
EXHIBIT 10.15
“Code” means the Internal Revenue Code of 1986, as amended from time to time.
“Commitment” means, with respect to each Lender, the commitment of such Lender to make
Committed Loans pursuant to Section 2.01, expressed as an amount representing the maximum aggregate
amount of such Lender’s Credit Exposure hereunder, as such commitment may be reduced or increased from
time to time pursuant to the terms hereof. The initial amount of each Lender’s Commitment as of the Closing
Date is set forth on Schedule 1.01, or in the Register maintained by the Administrative Agent pursuant to
Section 9.05.
“Commitment Fee” has the meaning specified in Section 2.11(a).
“Committed Loan” means a Loan made pursuant to Section 2.03.
“Committed Note” means a promissory note of the Borrower payable to the order of each
Lender, in substantially the form of Exhibit 1.01-C, together with all modifications, extensions, renewals
and rearrangements thereof.
“Communications” has the meaning specified in Section 9.01(a).
“Connection Income Taxes” means Other Connection Taxes that are imposed on or measured
by net income (however denominated) or that are franchise Taxes or branch profits Taxes.
“Consolidated Assets” means, at the date of any determination thereof, the total assets of
the Borrower and the Subsidiaries as set forth on a consolidated balance sheet of the Borrower and the
Subsidiaries for their most recently completed fiscal quarter, prepared in accordance with GAAP.
“Consolidated EBITDA” means, for any period (without duplication), the Net Income of
the Borrower and the Subsidiaries for such period determined on a consolidated basis in accordance with
GAAP, increased (a) (to the extent deducted in determining Net Income for such period) by the sum of (i)
all book taxes of the Borrower and the Subsidiaries paid or accrued and reflected in the Annual Report on
Form 10-K of the Borrower or in the Quarterly Report on Form 10-Q of the Borrower, in each case filed
with the SEC, and the pro rata portion of book taxes attributable to Affiliated Entities (net of (x) the
noncontrolling interest’s portion of such book taxes of KML and (y) the consolidating joint venture partners’
share of such book taxes of such consolidating joint venture), for such period; (ii) Consolidated Interest
Expense for such period, (iii) all DD&A of the Borrower and the Subsidiaries and the pro rata portion of
DD&A attributable to Affiliated Entities (net of (x) the noncontrolling interest’s portion of such DD&A of
KML and (y) the consolidating joint venture partners’ share of such DD&A of such consolidating joint
venture), for such period; (iv) Certain Items charges or losses, and (v) amortization, write-off or write-down
of debt discount, capitalized interest and debt issuance costs and commissions, discounts and other fees,
charges and expenses associated with any letters of credit or Indebtedness, including in connection with the
repurchase or repayment thereof, including any premium and acceleration of fees or discounts and other
expenses, minus (b) Certain Items of income or gain which were included in determining such consolidated
Net Income for such period; provided, that Consolidated EBITDA shall be calculated after giving pro forma
effect to acquisitions of any Person, property, business or asset (to the extent not subsequently sold,
transferred, abandoned or otherwise disposed) and any sale, transfer, abandonment or other disposition of
any Person, property, business or asset made by the Borrower or any Subsidiary during such period, as if
the acquisition, sale, transfer, abandonment or other disposition had been effected on the first date of such
period.
7
EXHIBIT 10.15
“Consolidated Interest Expense” means, for any period, the Interest Expense of the Borrower
and the Subsidiaries for such period determined on a consolidated basis in accordance with GAAP.
“Consolidated Net Indebtedness” means, at the date of any determination thereof, (a)
Indebtedness of the Borrower and the Subsidiaries determined on a consolidated basis in accordance with
GAAP minus (b) (i) the aggregate cash included in the cash accounts listed on the consolidated balance sheet
of the Borrower and the Subsidiaries as at such date and (ii) Cash Equivalents of the Borrower and the
Subsidiaries as at such date, in the case of each of clauses (i) and (ii), to the extent the use thereof for
application to payment of Indebtedness is not prohibited by any Requirement of Law or any contract to
which the Borrower or any of the Subsidiaries is a party.
“Consolidated Net Tangible Assets” means, at the date of any determination thereof,
Consolidated Tangible Assets after deducting therefrom all current liabilities, excluding (i) any current
liabilities that by their terms are extendable or renewable at the option of the obligor thereon to a time more
than 12 months after the time as of which the amount thereof is being computed; and (ii) current maturities
of long-term debt, all as set forth, or on a pro forma basis would be set forth, on a consolidated balance sheet
of the Borrower and the Subsidiaries for their most recently completed fiscal quarter, prepared in accordance
with GAAP.
“Consolidated Tangible Assets” means, at the date of any determination thereof,
Consolidated Assets after deducting therefrom the value, net of any applicable reserves and accumulated
amortization, of all goodwill, trade names, trademarks, patents and other like intangible assets, all as set
forth, or on a pro forma basis would be set forth, on a consolidated balance sheet of the Borrower and the
Subsidiaries for their most recently completed fiscal quarter, prepared in accordance with GAAP.
“Continuing Director” means, at any date, an individual (a) who is a member of the board
of directors of the Borrower on the Closing Date, (b) who, as at such date, has been a member of such board
of directors for at least the twelve preceding months, or (c) who has been nominated to be a member of such
board of directors by, or elected to such board of directors with the approval of, a majority of the other
Continuing Directors then in office.
“Credit Event” means the making of any Loan.
“Credit Exposure” means, with respect to any Lender at any time, the outstanding principal
amount of such Lender’s Committed Loans.
“DD&A” means depreciation, depletion and amortization (including amortization of
goodwill) and the amortization of excess costs of equity investments, determined in accordance with GAAP.
“Debtor Relief Laws” means the Bankruptcy Code of the United States of America, and all
other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium,
rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States
or other applicable jurisdictions from time to time in effect.
“Default” means any event or condition which upon notice, lapse of time or both would,
unless cured or waived, become an Event of Default.
“Defaulting Lender” means, subject to Section 2.19(b), any Lender that (a) has failed to (i)
fund all or any portion of its Loans within three Business Days of the date such Loans were required to
8
EXHIBIT 10.15
be funded hereunder unless such Lender notifies the Administrative Agent and the Borrower in writing that
such failure is the result of such Lender’s determination that one or more conditions precedent to funding
(each of which conditions precedent, together with any applicable default, shall be specifically identified in
such writing) has not been satisfied, or (ii) pay to the Administrative Agent or any Lender any other amount
required to be paid by it hereunder within two Business Days of the date when due, (b) has notified the
Borrower or the Administrative Agent in writing that it does not intend to comply with its funding obligations
hereunder, or has made a public statement to that effect (unless such writing or public statement relates to
such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s
determination that a condition precedent to funding (which condition precedent, together with any applicable
default, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) has failed,
within three Business Days after written request by the Administrative Agent or the Borrower, to confirm
in writing to the Administrative Agent and the Borrower that it will comply with its prospective funding
obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause
(c) upon receipt of such written confirmation by the Administrative Agent and the Borrower), or (d) has, or
has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor
Relief Law, (ii) become subject of a Bail-In Action, or (iii) had appointed for it a receiver, custodian,
conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with
reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation
or any other state or federal regulatory authority acting in such a capacity; provided that, for the avoidance
of doubt, a Lender shall not be a Defaulting Lender solely by virtue of (i) the ownership or acquisition of
any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental
Authority, or (ii), in the case of a solvent Person, the precautionary appointment of an administrator, guardian,
custodian or other similar official by a Governmental Authority under or based on the law of the country
where such Person is subject to home jurisdiction supervision if applicable law requires that such appointment
not be publicly disclosed, in each of such cases, so long as such ownership interest or such appointment does
not result in or provide such Lender with immunity from the jurisdiction of courts within the United States
or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such
Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with
such Lender. Any determination by the Administrative Agent that a Lender is a Defaulting Lender under
any one or more of clauses (a) through (d) above shall be conclusive and binding absent manifest error, and
such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.19(b)) upon delivery of written
notice of such determination to the Borrower and each Lender.
“Dividing Person” has the meaning assigned to such term in the definition of “Division”.
“Division” means the division of the assets, liabilities and/or obligations of a Person (the
“Dividing Person”) among two or more Persons (whether pursuant to a “plan of division” or similar
arrangement), which may or may not include the Dividing Person and pursuant to which the Dividing Person
may or may not survive.
“Division Successor” means any Person that, upon the consummation of a Division of a
Dividing Person, holds all or any portion of the assets, liabilities and/or obligations previously held by such
Dividing Person immediately prior to the consummation of such Division. A Dividing Person which retains
any of its assets, liabilities and/or obligations after a Division shall be deemed a Division Successor upon
the occurrence of such Division.
“Documentation Agents” means Barclays Bank PLC, JPMorgan Chase Bank, N.A., Bank
of America, N.A., BMO Harris Bank N.A., Citigroup Global Markets Inc., Credit Suisse AG, Cayman Islands
Branch, Mizuho Bank, Ltd., MUFG Bank, Ltd., Royal Bank of Canada, The Bank of Nova Scotia, Houston
Branch and Wells Fargo Bank, National Association, as documentation agents.
9
EXHIBIT 10.15
“dollars” or “$” refers to lawful money of the United States of America.
“Domestic Subsidiary” means any Subsidiary of the Borrower organized under the laws of
any jurisdiction within the United States.
“EEA Financial Institution” means (a) any credit institution or investment firm established
in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any
entity established in an EEA Member Country which is a parent of an institution described in clause (a) of
this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary
of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision
with its parent.
“EEA Member Country” means any of the member states of the European Union, Iceland,
Liechtenstein, and Norway.
“EEA Resolution Authority” means any public administrative authority or any person
entrusted with public administrative authority of any EEA Member Country (including any delegee) having
responsibility for the resolution of any EEA Financial Institution.
“Eligible Assignee” means any Person that meets the requirements to be an assignee under
Section 9.05(a)(iii), (v) and (vi) (subject to such consents, if any, as may be required under Section 9.05(a)
(iii)).
“Environmental Laws” means all laws, rules, regulations, codes, ordinances, orders, decrees,
judgments, injunctions, notices or binding agreements issued, promulgated or entered into by any
Governmental Authority, relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous Material or to health and safety
matters.
“Environmental Liability” means any liability, contingent or otherwise (including any
liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the Borrower
or any Subsidiary directly or indirectly resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials,
(c) exposure to any Hazardous Materials, (d) the release of any Hazardous Materials into the environment,
or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or
imposed with respect to any of the foregoing.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from
time to time.
“ERISA Group” means the Borrower and all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control which, together with the
Borrower, are treated as a single employer under Section 414 of the Code or Section 4001(a)(14) of ERISA.
“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published
by the Loan Market Association (or any successor person), as in effect from time to time.
“Eurodollar”, when used in reference to any Loan or Borrowing, refers to whether such
Loan, or the Loans comprising such Borrowing, bear interest at a rate determined by reference to the Adjusted
LIBO Rate.
10
EXHIBIT 10.15
“Eurodollar Rate” means for any Interest Period as to any Eurodollar Loan, (i) the rate per
annum determined by the Administrative Agent to be the offered rate which appears on the page of the
Reuters Screen which displays the London interbank offered rate administered by ICE Benchmark
Administration Limited (such page currently being the LIBOR01 page) (the “LIBO Rate”) for deposits (for
delivery on the first day of such Interest Period) with a term equivalent to such Interest Period in Dollars,
determined as of approximately 11:00 a.m. (London, England time), two Business Days prior to the
commencement of such Interest Period, or (ii) in the event the rate referenced in the preceding clause (i)
does not appear on such page or service or if such page or service shall cease to be available, the rate
determined by the Administrative Agent to be the offered rate on such other page or other service which
displays the LIBO Rate for deposits (for delivery on the first day of such Interest Period) with a term equivalent
to such Interest Period in Dollars, determined as of approximately 11:00 a.m. (London, England time) two
Business Days prior to the commencement of such Interest Period; provided that if LIBO Rates are quoted
under either of the preceding clauses (i) or (ii), but there is no such quotation for the Interest Period elected,
the LIBO Rate shall be equal to the Interpolated Rate; and provided, further, that if any such rate determined
pursuant to the preceding clauses (i) or (ii) is less than zero, the Eurodollar Rate will be deemed to be zero.
“Event of Default” has the meaning specified in Section 7.01.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Excluded Subsidiary” means (i) any Subsidiary that is not a Wholly-owned Domestic
Operating Subsidiary, (ii) any Domestic Subsidiary that is a Subsidiary of a CFC or any Domestic Subsidiary
(including a disregarded entity for U.S. federal income Tax purposes) substantially all of whose assets (held
directly or through Subsidiaries) consist of Capital Stock of one or more CFCs or Indebtedness of such CFCs,
(iii) any Immaterial Subsidiary, (iv) any Subsidiary listed on Schedule 1.01A, (v) any other Subsidiary with
respect to which, in the reasonable judgment of the Administrative Agent (confirmed in writing by notice to
the Borrower), the cost or other consequences (including any adverse Tax consequences) of providing a
Guaranty shall be excessive in view of the benefits to be obtained by the Lenders therefrom, (vi) any not-
for-profit Subsidiary, (vii) any Subsidiary that is prohibited by a Requirement of Law from providing a
Guaranty of the Obligations, and (ix) any Subsidiary acquired by the Borrower and its Subsidiaries after the
Closing Date to the extent, and so long as, the financing documentation governing any existing Indebtedness
of such Subsidiary (other than Indebtedness created or incurred in anticipation of, or with the intent to
circumvent the terms of, this Agreement) that is permitted to survive pursuant to Section 6.01 (and does
survive) prohibits such Subsidiary from guaranteeing the Obligations; provided, that notwithstanding the
foregoing, any Subsidiary that Guarantees any senior notes or senior debt securities issued by the Borrower
shall not constitute an Excluded Subsidiary for so long as such Guarantee is in effect.
“Excluded Taxes” means any of the following Taxes imposed on or with respect to a Recipient
or required to be withheld or deducted from a payment to a Recipient, (a) Taxes imposed on or measured by
net income (however denominated), franchise Taxes and branch profits Taxes, in each case, (i) imposed as
a result of such Recipient being organized under the laws of, or having its principal office or, in the case of
any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political
subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal
withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an
applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (i) such Lender
acquires such interest in the Loan or Commitment or becomes a party to this Agreement (other than pursuant
to an assignment request by the Borrower under Section 2.18(b) or (ii) such Lender changes its lending
office, except in each case to the extent that, pursuant to Section 2.16, amounts with respect to such Taxes
were payable either to such Lender’s assignor immediately before such Lender
11
EXHIBIT 10.15
became a party hereto or to such Lender immediately before it changed its lending office, (c) Taxes attributable
to such Recipient’s failure to comply with Section 2.16(g) and (d) any U.S. federal withholding Taxes imposed
under FATCA.
“Executive Summary” means the Confidential Information Memorandum relating to this
Agreement and the Transactions dated October 2018.
“Existing Credit Agreement” means the Revolving Credit Agreement, dated as of September
19, 2014 (as amended, restated or otherwise modified), among the Borrower, the banks and other financial
institutions party thereto as lenders and Barclays Bank, PLC as administrative agent.
“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement
(or any amended or successor version that is substantively comparable and not materially more onerous to
comply with), any current or future regulations or official interpretations thereof, any agreements entered
into pursuant to Section 1471(b)(1) of the Code, and any law, regulation, rule, promulgation, guidance notes,
practices or official agreement implementing an intergovernmental agreement, treaty or convention with
respect to the foregoing.
“Federal Funds Effective Rate” means, for any day, the rate calculated by the Federal Reserve
Bank of New York based on such day’s federal funds transactions by depository institutions (as determined
in such manner as the Federal Reserve Bank of New York shall set forth on its public website from time to
time) and published on the next succeeding Business Day by the Federal Reserve Bank of New York as the
federal funds effective rate; provided, that if the Federal Funds Effective Rate for any day is less than zero,
the Federal Funds Effective Rate for such day will be deemed to be zero.
“Fee Letter” has the meaning specified in Section 2.11(c).
“Fee Letters” means, collectively, the Administrative Agent Fee Letter and the Fee Letter.
“Foreign Lender” means any Lender that is not a U.S. Person.
“Foreign Subsidiary” means any Subsidiary of the Borrower that is not a Domestic
Subsidiary.
“Fund” means any Person (other than a natural person) that is (or will be) engaged in making,
purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary
course of its business.
“GAAP” means generally accepted accounting principles in the United States of America
from time to time, including as set forth in the opinions, statements and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and the Financing Accounting
Standards Board.
“Governmental Authority” means the government of the United States of America or any
other nation, or of any political subdivision thereof, whether state or local, and any agency, authority,
instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra
national bodies such as the European Union or the European Central Bank).
12
EXHIBIT 10.15
“Guarantee” of or by any Person (the “guarantor”) means any obligation, contingent or
otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or
other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly,
and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply
funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance
or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property,
securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the
payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition
or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other
obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support
such Indebtedness or obligation; provided that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business.
“Guarantors” means each Person that guarantees the Obligations pursuant to the Guaranty.
“Guaranty” means the Guaranty Agreement substantially in the form of Exhibit 1.01-B
hereto.
“Hazardous Materials” means all explosive or radioactive substances or wastes and all
hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates,
asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any Environmental Law.
“Hedging Agreement” means a financial instrument or security which is used as a cash flow
or fair value hedge to manage the risk associated with a change in interest rates, foreign currency exchange
rates or commodity prices.
“Hybrid Securities” means any trust preferred securities, or deferrable interest subordinated
debt with a maturity of at least 20 years, which provides for the optional or mandatory deferral of interest
or distributions, issued by the Borrower, or any business trusts, limited liability companies, limited
partnerships or similar entities (i) substantially all of the common equity, general partner or similar interests
of which are owned (either directly or indirectly through one or more Wholly-owned Subsidiaries) at all
times by the Borrower or any of the Subsidiaries, (ii) that have been formed for the purpose of issuing trust
preferred securities or deferrable interest subordinated debt, and (iii) substantially all the assets of which
consist of (A) subordinated debt of the Borrower or a Subsidiary, and (B) payments made from time to time
on the subordinated debt.
“Immaterial Subsidiary” means any Subsidiary that is not a Material Subsidiary.
“Indebtedness” of any Person means, without duplication, (a) all obligations of such Person
for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar
instruments (other than surety, performance and guaranty bonds), (c) all obligations of such Person under
conditional sale or other title retention agreements relating to property acquired by such Person, (d) all
obligations of such Person in respect of the deferred purchase price of property or services (excluding trade
accounts payable incurred in the ordinary course of business), (e) all Indebtedness of others secured by (or
for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby
has been assumed (determined as the lesser of the amount of the Indebtedness so secured and such property’s
fair market value), (f) all Guarantees by such Person of Indebtedness of others (provided that in the event
that any Indebtedness of the Borrower or any Subsidiary shall be the subject of a Guarantee by one or more
13
EXHIBIT 10.15
Subsidiaries or by the Borrower, as the case may be, the aggregate amount of the outstanding Indebtedness
of the Borrower and the Subsidiaries in respect thereof shall be determined by reference to the primary
Indebtedness so guaranteed, and without duplication by reason of the existence of any such guarantee), (g)
all Capital Lease Obligations of such Person, (h) all obligations of such Person as an account party in respect
of (i) the full face amount of all letters of credit (drawn or undrawn) supporting the exposure of such Person
under Hedging Agreements and (ii) the drawn portion of all other letters of credit and letters of guaranty, (i)
all obligations, contingent or otherwise, of such Person in respect of funded bankers’ acceptances and (j)
Hybrid Securities. The Indebtedness of any Person shall include the Indebtedness of any other Person
(including any partnership in which such Person is a general partner) to the extent such Person is liable
therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to
the extent the terms of such Indebtedness provide that such Person is not liable therefor: provided that
Indebtedness shall not include (1) non-recourse debt, (2) performance guaranties, (3) monetary obligations
or guaranties of monetary obligations of Person as lessees under leases that are in accordance with GAAP,
recorded as operating leases (and giving effect to the proviso in Section 1.03), and (4) guarantees by such
Person of obligations of others which are not obligations described in clauses (a) through (j) of this definition,
and provided further, that where any such indebtedness or obligation of such Person is made jointly, or jointly
and severally, with any third party or parties other than any Subsidiary of such Person, the amount thereof
for the purpose of this definition only shall be the pro rata portion thereof payable by such Person, so long
as such third party or parties have not defaulted on its or their joint and several portions thereof and can
reasonably be expected to perform its or their obligations thereunder. For the avoidance of doubt, except as
expressly provided in clause (h)(i) above, “Indebtedness” of a Person in respect of such letters of credit shall
include, without duplication, only the principal amount of the unreimbursed obligations of such Person in
respect of such letters of credit that have been drawn upon by the beneficiaries to the extent of the amount
drawn, and shall include no other obligations in respect of such letters of credit.
“Indemnified Parties” has the meaning specified in Section 9.03(b).
“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect
to any payment made by or on account of any Obligation and (b) to the extent not otherwise described in
(a), Other Taxes.
“Indemnity Matters” means, with respect to any Indemnified Party, all losses, liabilities,
claims and damages (including reasonable legal fees and expenses).
“Interest Election Request” has the meaning specified in Section 2.07(b).
“Interest Expense” means (without duplication), with respect to any period for any Person
(a) the aggregate amount of interest, whether expensed or capitalized, paid, accrued or scheduled to be paid
during such period in respect of the Indebtedness of such Person including (i) the interest portion of any
deferred payment obligation; (ii) the portion of any rental obligation in respect of Capital Lease Obligations
allocable to interest expenses; and (iii) any non-cash interest payments or accruals, all determined in
accordance with GAAP, less (b) Interest Income of such Person for such period.
“Interest Income” means, with respect to any period for any Person, interest actually received
by such Person during such period.
“Interest Payment Date” means (a) with respect to any ABR Loan, the last Business Day of
each March, June, September and December, and (b) with respect to any Eurodollar Loan, the last Business
Day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a
Eurodollar Borrowing with an Interest Period of more than three months’ duration, each day prior to the last
14
EXHIBIT 10.15
day of such Interest Period that occurs at intervals of three months’ duration after the first day of such Interest
Period.
“Interest Period” means with respect to any Eurodollar Borrowing, the period commencing
on the date of such Borrowing and ending (a) on the date that is one week thereafter or (b) on the numerically
corresponding day in the calendar month that is one, two, three or six months thereafter, in each case as the
Borrower may elect; provided (i) if any Interest Period would end on a day other than a Business Day, such
Interest Period shall be extended to the next succeeding Business Day unless, in the case of any Eurodollar
Borrowing, such next succeeding Business Day would fall in the next calendar month, in which case such
Interest Period shall end on the next preceding Business Day, (ii) any Interest Period that commences on the
last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in
the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month
of such Interest Period and (iii) no Interest Period shall end after the Stated Maturity Date. For purposes
hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and, in the case
of a Eurodollar Borrowing, thereafter shall be the effective date of the most recent conversion or continuation
of such Borrowing.
“Interpolated Rate” means, in relation to the LIBO Rate, the rate which results from
interpolating on a linear basis between:
(a)
the applicable LIBO Rate for the longest period (for which that LIBO Rate is
available) which is less than the Interest Period of that Loan; and
(b)
the applicable LIBO Rate for the shortest period (for which that LIBO Rate is
available) which exceeds the Interest Period of that Loan,
each as of approximately 11:00 a.m. (London, England time) two Business Days prior to the commencement
of such Interest Period of that Loan.
“IRS” means the United States Internal Revenue Service.
“KML” means Kinder Morgan Canada Limited and its consolidated subsidiaries.
“Laws” means, collectively, all international, foreign, federal, state and local statutes,
treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or
authorities, including the interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all applicable administrative orders,
directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental
Authority.
“Lenders” has the meaning specified in the introduction to this Agreement.
“LIBO Rate” shall have the meaning ascribed thereto in the definition of “Eurodollar Rate”.
“Lien” means, with respect to any asset (a) any mortgage, deed of trust, lien, pledge,
hypothecation, encumbrance, charge or security interest in, on or of such asset, and (b) the interest of a
vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the foregoing) relating to such asset.
15
EXHIBIT 10.15
“Loan Documents” mean, collectively, this Agreement, the Guaranty, the Notes, if any, the
Fee Letters and all other instruments and documents from time to time executed and delivered by the Borrower
or the Guarantors in connection herewith and therewith.
“Loan Party” means the Borrower and each Guarantor.
“Loans” means advances made by the Lenders to the Borrower pursuant to this Agreement.
“Material Adverse Effect” means, relative to any occurrence of whatever nature, a material
adverse effect on (a) the business assets, liabilities or financial condition of the Borrower and the Subsidiaries
taken as a whole, (b) the ability of the Borrower and the Guarantors, taken as a whole, to perform the
Obligations or (c) the rights and remedies of the Administrative Agent or any Lender against the Borrower
or, taken as a whole, the Guarantors, under any material provision of this Agreement or any other Loan
Document.
“Material Subsidiary” means, as at any date of determination, any Subsidiary of the Borrower
whose total tangible assets (for purposes of the below, when combined with the tangible assets of such
Subsidiary’s Subsidiaries, after eliminating intercompany obligations) as at such date of determination are
greater than or equal to 5% of Consolidated Tangible Assets as of the last day of the fiscal quarter most
recently ended for which financial statements have been delivered pursuant to Section 5.01(a) or (b) (the
“Most Recent Financial Statement Date”), as the case may be; provided that if the aggregate total tangible
assets of all Material Subsidiaries is less than 85% of Consolidated Tangible Assets as of the Most Recent
Financial Statement Date, the Borrower shall designate Subsidiaries as “Material Subsidiaries” in writing
to the Administrative Agent along with the delivery of the applicable financial statements pursuant to Section
5.01(a) or (b) such that the deficit described in this proviso ceases to exist; provided further that KML shall
not be eligible to be considered as a Material Subsidiary (if applicable) until June 30, 2019.
“Maturity Date” means the earlier of (a) the Stated Maturity Date and (b) the acceleration
of the Obligations pursuant to Section 7.01.
“Maximum Rate” has the meaning specified in Section 9.13.
“Moody’s” means Moody’s Investors Service, Inc.
“Most Recent Financial Statement Date” has the meaning specified in the definition of
Material Subsidiary.
“Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3) of
ERISA.
“Net Income” means with respect to any Person for any period that net income of such
Person for such period determined in accordance with GAAP; provided that there shall be excluded, without
duplication, from such net income (to the extent otherwise included therein).
(a)
net extraordinary gains and losses (other than, in the case of losses, losses resulting
from charges against net income to establish or increase reserves for potential environmental liabilities and
reserves for exposure of such Person under rate cases);
16
EXHIBIT 10.15
(b)
course of business;
(c)
(d)
net gains or losses in respect of dispositions of assets other than in the ordinary
any gains or losses attributable to write-ups or write-downs of assets; and
proceeds of any key man insurance, or any insurance on property, plant or equipment.
“Net Worth” means, as to the Borrower at any date, the sum of the amount of shareholders’
equity of the Borrower determined as of such date in accordance with GAAP, provided there shall be excluded,
without duplication, from such determination (to the extent otherwise included therein) the amount of
accumulated other comprehensive gain or loss as of such date.
“Non-Consenting Lender” means any Lender that does not approve any consent, waiver or
amendment that (i) requires the approval of all Lenders or all affected Lenders in accordance with the terms
of Section 9.02 and (ii) has been approved by the Required Lenders.
“Non-Defaulting Lender” means, at any time, each Lender that is not a Defaulting Lender
at such time.
Subsidiary.
“Non-Guarantor Subsidiary” has the meaning specified in Section 6.01.
“Non-Wholly-owned Subsidiary” means any Subsidiary that is not a Wholly-owned
“Note” means a Committed Note.
“Notice of Default” has the meaning specified in Section 7.01.
“Notice of Prepayment” has the meaning specified in Section 2.10(b).
“Obligations” means collectively:
(a)
the payment of all indebtedness and liabilities by, and performance of all other
obligations of, the Borrower in respect of the Loans;
(b)
[reserved];
(c)
the payment of all other indebtedness and liabilities by and performance of all other
obligations of the Borrower to the Administrative Agent and the Lenders under, with respect to, and arising
in connection with, the Loan Documents, and the payment of all indebtedness and liabilities of the Borrower
to the Administrative Agent and the Lenders for fees, costs, indemnification and expenses (including
reasonable attorneys’ fees and expenses) under the Loan Documents;
(d)
the reimbursement of all sums advanced and costs and expenses incurred by the
Administrative Agent under any Loan Document (whether directly or indirectly) in connection with the
Obligations or any part thereof or any renewal, extension or change of or substitution for the Obligations or,
any part thereof, whether such advances, costs and expenses were made or incurred at the request of the
Borrower or the Administrative Agent; and
(e)
all renewals, extensions, amendments and changes of, or substitutions or
replacements for, all or any part of the items described under clauses (a) through (d) above.
17
EXHIBIT 10.15
“OLP “B”” means Kinder Morgan Operating L.P. “B”, a Delaware limited partnership.
“Operating Subsidiary” means any operating company that is a Subsidiary of the Borrower.
“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result
of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than
connections arising from such Recipient having executed, delivered, become a party to, performed its
obligations under, received payments under, received or perfected a security interest under, engaged in any
other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan
or any Loan Document).
“Other Taxes” means all present or future stamp, court or documentary, intangible, recording,
filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance,
enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with
respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect
to an assignment (other than an assignment made pursuant to Section 2.18(b)).
“Participant” has the meaning assigned to such term in Section 9.05(c).
“Participant Register” has the meaning specified in Section 9.05(c).
“Patriot Act” has the meaning specified in Section 9.15.
“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA
and any successor entity performing similar functions.
“Performance Level” means a reference to one of Performance Level I, Performance Level
II, Performance Level III, Performance Level IV, Performance Level V or Performance Level VI.
“Performance Level I” means, at any date of determination, that the Borrower shall have a
Borrower Debt Rating in effect on such date of at least A- by S&P or at least A3 by Moody’s.
“Performance Level II” means, at any date of determination, (a) that the Performance Level
does not meet the requirements of Performance Level I and (b) that the Borrower shall have a Borrower
Debt Rating in effect on such date of at least BBB+ by S&P or at least Baa1 by Moody’s.
“Performance Level III” means, at any date of determination, (a) that the Performance Level
does not meet the requirements of Performance Level I or Performance Level II and (b) that the Borrower
shall have a Borrower Debt Rating in effect on such date of at least BBB by S&P, or at least Baa2 by Moody’s.
“Performance Level IV” means, at any date of determination, (a) that the Performance Level
does not meet the requirements of Performance Level I, Performance Level II or Performance Level III and
(b) that the Borrower shall have a Borrower Debt Rating in effect on such date of at least BBB- by S&P, or
at least Baa3 by Moody’s.
“Performance Level V” means, at any date of determination, (a) that the Performance Level
does not meet the requirements of Performance Level I, Performance Level II, Performance Level III or
Performance Level IV and (b) that the Borrower shall have a Borrower Debt Rating in effect on such date
of at least BB+ by S&P, or at least Ba1 by Moody’s.
18
EXHIBIT 10.15
“Performance Level VI” means, at any date of determination, that the Performance Level
does not meet the requirements of Performance Level I, Performance Level II, Performance Level III,
Performance Level IV or Performance Level V.
“Person” means any natural person, corporation, limited liability company, trust, joint
venture, association, company, partnership, Governmental Authority or other entity.
“Plan” means any employee pension benefit plan (other than a Multiemployer Plan) subject
to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect
of which the Borrower or any member of its ERISA Group is (or, if such plan were terminated, would under
Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.
“Plan Asset Regulations” means 29 CFR § 2510.3-101 et seq., as modified by Section 3(42)
of ERISA, as amended from time to time.
“Prime Rate” means the rate of interest last quoted by The Wall Street Journal as the “Prime
Rate” in the U.S. or, if The Wall Street Journal ceases to quote such rate, the highest per annum interest rate
published by the Federal Reserve Board in Federal Reserve Statistical Release H.15 (519) (Selected Interest
Rates) as the “bank prime loan” rate or, if such rate is no longer quoted therein, any similar rate quoted
therein (as determined by the Administrative Agent) or any similar release by the Federal Reserve Board (as
determined by the Administrative Agent).
“Principal Office” means the principal office of the Administrative Agent, presently located
in New York, New York, or such other location as designated by the Administrative Agent from time to time.
“Recipient” means (a) the Administrative Agent and (b) any Lender, as applicable.
“Register” has the meaning specified in Section 9.05(b).
“Regulation D” means Regulation D of the Board, as the same is from time to time in effect,
and all official rulings and interpretations thereunder or thereof.
“Regulation T” means Regulation T of the Board, as the same is from time to time in effect,
and all official rulings and interpretations thereunder or thereof.
“Regulation U” means Regulation U of the Board, as the same is from time to time in effect,
and all official rulings and interpretations thereunder or thereof.
“Regulation X” means Regulation X of the Board, as the same is from time to time in effect,
and all official rulings and interpretations thereunder or thereof.
“Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners,
directors, officers, employees, agents, trustees, administrators, managers, advisors and representatives of
such Person and of such Person’s Affiliates.
“Required Lenders” means, at any time, subject to the provisions of Section 9.02(b), Lenders
having Credit Exposure and unused Commitments representing more than 50% of the sum of the total Credit
Exposures and unused Commitments at such time.
19
EXHIBIT 10.15
“Requirement of Law” means any law, statute, code, ordinance, order, determination, rule,
regulation, judgment, decree, injunction, franchise, permit, certificate, license, authorization or other
directive or requirement (whether or not having the force of law), including Environmental Laws, energy
regulations and occupational, safety and health standards or controls, of any Governmental Authority.
“Reserve Requirement” means, for any day a fraction (expressed as a decimal), the numerator
of which is the number one and the denominator of which is the number one minus the aggregate of the
maximum reserve percentage (including any marginal, special, emergency or supplemental reserves)
expressed as a decimal established by the Board or other Governmental Authority to which the Administrative
Agent is subject with respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred to as
“Eurocurrency Liabilities” in Regulation D of the Board). Such reserve percentage shall include those
imposed pursuant to such Regulation D. Eurodollar Loans shall be deemed to constitute eurocurrency funding
and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets
that may be available from time to time to any Lender under such Regulation D or any comparable regulations.
The Reserve Requirement shall be adjusted automatically on and as of the effective date of any change in
any such reserve percentage.
“Responsible Officer” means, as used with respect to the Borrower, the Chairman, Vice
Chairman, President, any Vice President, Chief Executive Officer, Chief Financial Officer, Controller or
Treasurer of the Borrower.
“Restricted Payment” means any distribution (whether in cash, securities or other property)
with respect to any Capital Stock in the Borrower, or any payment (whether in cash, securities or other
property), including any deposit, on account of the purchase, redemption, retirement, acquisition, cancellation
or termination of any such Capital Stock or any option or other right to acquire any such Capital Stock.
“S&P” means Standard & Poor’s Ratings Group, a division of The McGraw-Hill Companies,
Inc.
“Sanctioned Country” means, at any time, a country, region or territory which is itself the
subject or target of any Sanctions (at the time of this Agreement, Crimea, Cuba, Iran, North Korea, and
Syria).
“Sanctioned Person” means, at any time, (a) any Person listed in any Sanctions-related list
of designated Persons maintained by the Office of Foreign Assets Control of the U.S. Department of the
Treasury, the U.S. Department of State, (b) any Person operating, organized or resident in a Sanctioned
Country or (c) any Person owned or controlled by any such Person or Persons described in the foregoing
clauses (a) or (b).
“Sanctions” has the meaning specified in Section 4.14(a).
“SEC” means the Securities and Exchange Commission or any Governmental Authority
succeeding to its function.
“Solvent” means, with respect to any Person as of any date, that as of such date, (a)(i) the
sum of such Person’s indebtedness (including contingent liabilities) does not exceed the present fair saleable
value of such Person’s present assets; (ii) such Person’s capital is not unreasonably small in relation to its
business as contemplated on such date; and (iii) such Person has not incurred, and does not intend to incur,
or believe that it will incur indebtedness (including current obligations) beyond its ability to pay principal
and interest on such indebtedness as it becomes due (whether at maturity or otherwise); and (b) such Person
20
EXHIBIT 10.15
is “solvent” within the meaning given that term and similar terms under applicable laws relating to fraudulent
transfers and conveyances. For the purposes of this definition, the amount of any contingent liability at any
time shall be computed as the amount that, in light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or matured liability (irrespective
of whether such contingent liabilities meet the criteria for accrual under Statement of Financial Accounting
Standard No. 5).
“Stated Maturity Date” means, for any Lender, the date that is 364 days following the Closing
Date or, if such date is not a Business Day, the immediately preceding Business Day.
“Subsidiary” means, with respect to any Person (the “parent”) at any date, any corporation,
limited liability company, partnership, association or other entity the accounts of which would be consolidated
with those of the parent in the parent’s consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company,
partnership, association or other entity that is, as of such date, otherwise controlled, by the parent or one or
more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent. Unless the context
otherwise clearly requires, references in this Agreement to a “Subsidiary” or the “Subsidiaries” refer to a
Subsidiary or the Subsidiaries of the Borrower.
“Syndication Agent” means JPMorgan Chase Bank, N.A.
“Taxes” means all present or future taxes, levies, imposts, duties, deductions, or withholdings
(including backup withholding) assets, fees or other charges imposed by any Governmental Authority
including any interest, additions to tax or penalties applicable thereto.
“Total Capitalization” means, as to the Borrower at any date, the sum of Consolidated Net
Indebtedness (determined at such date) and the Net Worth (determined as at the end of the most recent fiscal
quarter of the Borrower for which financial statements pursuant to Section 5.01(a) or Section 5.01(b), as
applicable, have been delivered).
“Total Commitment” means the sum of the Commitments of the Lenders.
“Transactions” has the meaning specified in the Preliminary Statements.
“Type”, when used in reference to any Loan or Borrowing, refers to whether the rate of
interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the Adjusted
LIBO Rate or the Alternate Base Rate.
“United States” and “U.S.” each means United States of America.
“U.S. Person” means any Person that is a “United States Person” as defined in Section
7701(a)(30) of the Code.
“U.S. Tax Compliance Certificate” has the meaning specified in Section 2.16(g)(ii)(B)(3).
“Voting Stock” means, with respect to any Person, securities of any class or classes of Capital
Stock in such Person entitling holders thereof (whether at all times or only so long as no senior class of stock
has voting power by reason of any contingency) to vote in the election of members of the
21
EXHIBIT 10.15
Board of Directors or other governing body of such Person or its managing member or its general partner
(or its managing general partner if there is more than one general partner).
“Wholly-owned Domestic Operating Subsidiary” means any Wholly-owned Subsidiary that
constitutes (i) a Domestic Subsidiary and (ii) an Operating Subsidiary.
“Wholly-owned Subsidiary” means a Subsidiary of which all issued and outstanding Capital
Stock (excluding in the case of a corporation, directors’ qualifying shares) is directly or indirectly owned by
the Borrower.
“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a complete or
partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title
IV of ERISA.
“Withholding Agent” means the Administrative Agent and the Borrower.
“Write-Down and Conversion Powers” means, with respect to any EEA Resolution
Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under
the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers
are described in the EU Bail-In Legislation Schedule.
SECTION 1.02
Classification of Loans and Borrowings. For purposes of this
Agreement, Loans and Borrowings may be classified and referred to by Type (e.g., a “Eurodollar Loan” or
“Eurodollar Borrowing” or an “ABR Loan” or “ABR Borrowing”).
SECTION 1.03
Accounting Terms; Changes in GAAP. All accounting and financial
terms used herein and not otherwise defined herein and the compliance with each covenant contained herein
which relates to financial matters shall be determined in accordance with GAAP applied by the Borrower
on a consistent basis, except to the extent that a deviation therefrom is expressly stated. Should there be a
change in GAAP from that in effect on the Closing Date, such that any of the defined terms set forth in
Section 1.01 and/or compliance with the covenants set forth in Article VI would then be calculated in a
different manner or with different components or any of such covenants and/or defined terms used therein
would no longer constitute meaningful criteria for evaluating the matters addressed thereby prior to such
change in GAAP (a) the Borrower and the Required Lenders agree, within the 60 day period following any
such change, to negotiate in good faith and enter into an amendment to this Agreement in order to modify
the defined terms set forth in Section 1.01 or the covenants set forth in Article VI, or both, in such respects
as shall reasonably be deemed necessary by the Required Lenders that the criteria for evaluating the matters
addressed by such covenants are substantially the same criteria as were effective prior to any such change
in GAAP, and (b) the Borrower shall be deemed to be in compliance with such covenants during the 60-day
period following any such change, or until the earlier date of execution of such amendment, if and to the
extent that the Borrower would have been in compliance therewith under GAAP as in effect immediately
prior to such change; provided, however, that for the avoidance of doubt, any lease that was accounted for
by the Borrower or the Subsidiaries as an operating lease as of the Closing Date and any other lease entered
into after the Closing Date by the Borrower or any Subsidiary shall be accounted for as an operating lease
and not a capital lease to the extent that such lease would have been characterized as an operating lease as
of the Closing Date.
SECTION 1.04
Interpretation. In this Agreement, unless a clear contrary intention
appears:
(a)
the singular number includes the plural number and vice versa;
22
EXHIBIT 10.15
(b)
(c)
reference to any gender includes each other gender;
the words “herein”, “hereof” and “hereunder” and other words of similar import
refer to this Agreement as a whole and not to any particular Article, Section or other subdivision;
(d)
reference to any Person includes such Person’s successors and assigns but, if
applicable, only if such successors and assigns are permitted by this Agreement, and reference to a Person
in a particular capacity excludes such Person in any other capacity or individually; provided that nothing in
this clause (d) is intended to authorize any assignment not otherwise permitted by this Agreement;
(e)
except as expressly provided to the contrary herein, reference to any agreement,
document or instrument (including this Agreement) means such agreement, document or instrument as
amended, supplemented or modified, or extended, renewed, refunded, substituted or replaced, and in effect
from time to time in accordance with the terms thereof and, if applicable, the terms hereof, and reference to
any Note or other note or Indebtedness or other indebtedness includes any note or indebtedness issued
pursuant hereto in extension or renewal or refunding thereof or in substitution or replacement therefor;
(f)
unless the context indicates otherwise, reference to any Article, Section, Schedule
or Exhibit means such Article or Section hereof or such Schedule or Exhibit hereto;
(g)
the word “including” (and with correlative meaning “include”) means including,
without limiting the generality of any description preceding such term;
with respect to the determination of any period of time, except as expressly provided
to the contrary, the word “from” means “from and including” and the word “to” means “to but excluding”;
(h)
(i)
reference to any law, rule or regulation means such as amended, modified, codified
or reenacted, in whole or in part, and in effect from time to time; and
(j)
the words “asset” and “property” shall be construed to have the same meaning and
effect and refer to any and all tangible and intangible assets and properties.
ARTICLE II
THE CREDITS
SECTION 2.01
Commitments.
Subject to the terms and conditions set forth herein, each Lender agrees to make Committed
Loans in U.S. dollars to the Borrower from time to time during the Availability Period in an aggregate
principal amount that will not result in (i) such Lender’s Credit Exposure exceeding such Lender’s
Commitment or (ii) the sum of the total Credit Exposures exceeding the Total Commitment. Within the
foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, prepay
and reborrow Committed Loans.
SECTION 2.02
Loans and Borrowings.
(a)
Each Committed Loan shall be made as part of a Borrowing consisting of Committed
Loans denominated in U.S. dollars made by the Lenders, ratably in accordance with their Applicable
Percentage of the Total Commitment on the date such Loan is made hereunder. The failure of
23
EXHIBIT 10.15
any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations
hereunder; provided that the Commitments of the Lenders are several and no Lender shall be responsible
for any other Lender’s failure to make Loans as required.
(b)
Subject to Section 2.13, each Borrowing shall be comprised entirely of ABR Loans
or Eurodollar Loans as the Borrower may request in accordance herewith. Each Lender at its option may
make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such Lender to make
such Loan; provided that any exercise of such option shall not affect the obligation of the Borrower to repay
such Loan in accordance with the terms of this Agreement.
(c)
At the commencement of each Interest Period for any Eurodollar Borrowing, such
Borrowing shall be in an aggregate amount that is an integral multiple of $1,000,000 and not less than
$3,000,000. At the time that each ABR Borrowing is made, such Borrowing shall be in an aggregate amount
that is an integral multiple of $1,000,000 and not less than $1,000,000; provided that an ABR Borrowing
may be in an aggregate amount that is equal to the entire unused balance of the Total Commitment.
(d)
There shall not at any time be more than a total of twelve Eurodollar Borrowings
outstanding.
(e)
Notwithstanding any other provision of this Agreement, the Borrower shall not be
entitled to request, or to elect to convert or continue, any Borrowing if the Interest Period requested with
respect thereto would end after the Stated Maturity Date.
SECTION 2.03
Requests for Borrowings.
To request a Borrowing, the Borrower shall notify the Administrative Agent of such request
(which request shall be in writing unless otherwise agreed to by the Administrative Agent) (a) in the case of
a Eurodollar Borrowing, not later than 11:00 a.m., New York, New York time, three Business Days before
the date of the proposed Borrowing and (b) in the case of an ABR Borrowing, not later than 10:00 a.m., New
York, New York, time, on the date of the proposed Borrowing. Each such Borrowing Request shall be
irrevocable and shall be made by hand delivery, telecopy or electronic communication (e-mail) to the
Administrative Agent of a written Borrowing Request in a form of Exhibit 2.03 (a “Borrowing Request”)
and signed by the Borrower. Each such Borrowing Request shall specify the following information in
compliance with Section 2.02:
(i)
the aggregate amount of the requested Borrowing;
(ii)
the date of such Borrowing, which shall be a Business Day;
(iii)
whether such Borrowing is to be an ABR Borrowing or a Eurodollar
Borrowing;
(iv)
in the case of a Eurodollar Borrowing, the initial Interest Period to be
applicable thereto, which shall be a period contemplated by the definition of the term “Interest
Period”; and
(v)
the location and number of the Borrower’s account to which funds are to
be disbursed, which shall comply with the requirements of Section 2.06;
24
EXHIBIT 10.15
If no election as to the Type of Borrowing is specified, then the requested Borrowing shall
be an ABR Borrowing. If no Interest Period is specified with respect to any requested Eurodollar Borrowing,
then the Borrower shall be deemed to have selected an Interest Period of one month’s duration. Promptly
following receipt of a Borrowing Request in accordance with this Section 2.03, the Administrative Agent
shall advise each Lender in writing of the details thereof and of the amount of such Lender’s Loan to be
made as part of the requested Borrowing.
SECTION 2.04
[Reserved].
SECTION 2.05
[Reserved].
SECTION 2.06
Funding of Borrowings.
(a)
Each Lender shall make each Loan to be made by it hereunder on the proposed date
thereof by wire transfer of immediately available funds by 2:00 p.m., New York, New York time, to the
account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders.
The Borrower hereby irrevocably authorizes the Administrative Agent to disburse the proceeds of each
Borrowing requested pursuant to Section 2.03 in immediately available funds by crediting or wiring such
proceeds to the deposit account of the Borrower identified in the Borrowing Request or otherwise agreed
upon by the Borrower and the Administrative Agent from time to time.
(b)
Unless the Administrative Agent shall have received notice from a Lender prior to
the proposed date of any Borrowing (or prior to 11:00 a.m., New York, New York, time, on such date in the
case of an ABR Borrowing) that such Lender will not make available to the Administrative Agent such
Lender’s Applicable Percentage of such Borrowing, the Administrative Agent may assume that such Lender
has made such Applicable Percentage of such Borrowing available on such date in accordance with
Section 2.06(a) and may, in reliance upon such assumption, make available to the Borrower a corresponding
amount. In such event, if a Lender has not in fact made its Applicable Percentage of the applicable Borrowing
available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay
to the Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each
day from the date such amount is made available to the Borrower to the date of payment to the Administrative
Agent, at (i) in the case of such Lender, the greater of the Federal Funds Effective Rate and a rate determined
by the Administrative Agent in accordance with banking industry rules on interbank compensation, or (ii)
in the case of the Borrower, the interest rate applicable to ABR Loans. If the Borrower and such Lender
shall pay such interest to the Administrative Agent for the same or an overlapping period, the Administrative
Agent shall promptly remit to the Borrower the amount of such interest paid by the Borrower for such period.
If such Lender pays its share of the applicable Borrowing to the Administrative Agent, then the amount so
paid shall constitute such Lender’s Loan included in such Borrowing. Any payment by the Borrower shall
be without prejudice to any claim the Borrower may have against a Lender that shall have failed to make
such payment to the Administrative Agent.
SECTION 2.07
Interest Elections.
(a)
Subject to Section 2.13, each Borrowing initially shall be of the Type specified in
the applicable Borrowing Request and, in the case of a Eurodollar Borrowing, shall have an initial Interest
Period as specified in such Borrowing Request. Thereafter, subject to Section 2.13, the Borrower may elect
to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Eurodollar
Borrowing, may elect Interest Periods therefor, all as provided in this Section 2.07. The Borrower may elect
different options with respect to different portions of the affected Borrowing, in which case each such portion
25
EXHIBIT 10.15
shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans
comprising each such portion shall be considered a separate Borrowing.
(b)
To make an election pursuant to this Section 2.07, the Borrower shall notify the
Administrative Agent of such election (which notification shall be in writing unless otherwise agreed to by
the Administrative Agent) by the time that a Borrowing Request would be required under Section 2.03 if the
Borrower were requesting a Borrowing of the Type resulting from such election to be made on the effective
date of such election. Each such Interest Election Request shall be irrevocable and shall be made by hand
delivery or telecopy or by electronic communication (e-mail) to the Administrative Agent of an Interest
Election Request in the form of Exhibit 2.07 (an “Interest Election Request”).
(c)
Each Interest Election Request shall specify the following information in
compliance with Section 2.02:
(i)
the Borrowing to which such Interest Election Request applies and, if
different options are being elected with respect to different portions thereof, the portions thereof to
be allocated to each resulting Borrowing (in which case the information to be specified pursuant to
clauses (iii) and (iv) below shall be specified for each resulting Borrowing);
(ii)
the effective date of the election made pursuant to such Interest Election
Request, which shall be a Business Day;
(iii)
whether the resulting Borrowing is to be an ABR Borrowing or a Eurodollar
Borrowing; and
(iv)
if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period
to be applicable thereto after giving effect to such election, which shall be a period contemplated
by the definition of the term “Interest Period”.
If any such Interest Election Request requests a Eurodollar Borrowing but does not specify
an Interest Period, then the Borrower shall be deemed to have selected an Interest Period of one month’s
duration.
(d)
Promptly following receipt of an Interest Election Request, the Administrative
Agent shall advise each Lender in writing of the details thereof and of such Lender’s portion of each resulting
Borrowing.
(e)
If the Borrower fails to deliver a timely Interest Election Request with respect to a
Eurodollar Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing
is repaid as provided herein, at the end of such Interest Period such Borrowing shall be converted to an ABR
Borrowing. Notwithstanding any contrary provision hereof, if and so long as an Event of Default is continuing
and the Administrative Agent, at the request of the Required Lenders, so notifies the Borrower, then so long
as an Event of Default has occurred and is continuing (i) no outstanding Borrowing may be converted to or
continued as a Eurodollar Borrowing, and (ii) unless repaid, each Eurodollar Borrowing shall be converted
to an ABR Borrowing at the end of the Interest Period applicable thereto.
SECTION 2.08
Termination and Reduction of Commitments; Mandatory Prepayments.
26
EXHIBIT 10.15
(a)
Unless previously terminated, the Total Commitment shall terminate on the Maturity
Date.
(b)
The Borrower may at any time terminate, or from time to time reduce, the Total
Commitment, in whole or in part; provided that (i) each partial reduction of the Total Commitment shall be
in an amount that is an integral multiple of $1,000,000 and not less than $5,000,000 and (ii) the Borrower
shall not terminate or reduce the Commitments if, after giving effect to any concurrent prepayment of the
Loans in accordance with Section 2.10, the total Credit Exposures would exceed the Total Commitment.
(c)
The Borrower shall notify the Administrative Agent of any election to terminate or
reduce the Total Commitment under Section 2.08(a) at least three Business Days prior to the effective date
of such termination or reduction, specifying such election and the effective date thereof. Promptly following
receipt of any notice, the Administrative Agent shall advise the Lenders of the contents thereof. Each notice
delivered by the Borrower pursuant to this Section 2.08 shall be irrevocable; provided that a notice of
termination of the Total Commitment delivered by the Borrower may state that such notice is conditioned
upon the effectiveness of other credit facilities or other event, in which case such notice may be revoked by
the Borrower (by notice to the Administrative Agent on or prior to the specified effective date) if such
condition is not satisfied. Any termination or reduction of the Total Commitment shall be permanent. Except
as expressly provided in Section 2.19, each reduction of the Total Commitment shall be made ratably among
the Lenders in accordance with their Applicable Percentages.
SECTION 2.09
Repayment of Loans; Evidence of Debt.
(a)
The Borrower hereby unconditionally promises to pay to the Administrative Agent
for the account of each Lender the then unpaid principal amount of each Committed Loan on the Maturity
Date. In addition, if the total Credit Exposures exceeds the Total Commitment, the Borrower shall pay to
the Administrative Agent for the account of each Lender an aggregate principal amount of Committed Loans
sufficient to cause the total Credit Exposures not to exceed the Total Commitment; provided, however, if the
repayment of the outstanding Committed Loans does not cause the total Credit Exposures, to be equal to or
less than the Total Commitment, the Borrower shall deposit in an account with the Administrative Agent in
the name of the Administrative Agent and for the benefit of the Lenders, an amount in cash equal to the
amount by which the total Credit Exposures exceeds the Total Commitment, which cash deposit shall be
held by the Administrative Agent for the payment of the Obligations of the Borrower under this Agreement
and the other Loan Documents. The Administrative Agent shall have exclusive dominion and control,
including the exclusive right of withdrawal, over such account other than any interest earned on the investment
of such deposit (which investments shall be made at the option and sole discretion of the Administrative
Agent, but only in investments rated at least AA (or equivalent) by at least one nationally recognized rating
agency, unless an Event of Default shall have occurred and be continuing, and in any event at the Borrower’s
risk and expense). Interest or profits, if any, on such investments shall accumulate in such account. Moneys
in such account shall be applied to satisfy other obligations of the Borrower under this Agreement and the
other Loan Documents. At any time when the sum of the total Credit Exposures does not exceed the Total
Commitment and so long as no Default under Section 7.01(b) or Event of Default shall then exist, upon the
request of the Borrower the amount of such deposit (to the extent not applied as aforesaid) shall be returned
to the Borrower within three Business Days after receipt of such request.
(b)
Each Lender shall maintain in accordance with its usual practice an account or
accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by
such Lender, including the amounts of principal and interest payable and paid to such Lender from time to
time hereunder.
27
EXHIBIT 10.15
(c)
The Administrative Agent shall maintain accounts in which it shall record (i) the
amount of each Loan made hereunder, the Type thereof and the Interest Period applicable thereto, (ii) the
amount of any principal or interest due and payable or to become due and payable from the Borrower to
each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder for
the account of the Lenders and each Lender’s share thereof.
(d)
The entries made in the accounts maintained pursuant to Section 2.09(b) or (c) shall
be prima facie evidence of the existence and amounts of the obligations recorded therein; provided that the
failure of any Lender or the Administrative Agent to maintain such accounts or any error or conflict therein
shall not in any manner affect the obligation of the Borrower to repay the Loans in accordance with the terms
of this Agreement.
(e)
Any Lender may request that Loans made by it be evidenced by a Committed Note.
In such event, the Borrower shall prepare, execute and deliver to such Lender a Committed Note. Thereafter,
the Loans evidenced by such Committed Note and interest thereon shall at all times (including after
assignment pursuant to Section 9.05) be represented by one or more Committed Notes in such forms payable
to the payee named therein.
SECTION 2.10
Voluntary Prepayment of Loans.
(a)
The Borrower shall have the right at any time and from time to time to prepay any
Borrowing in whole or in part, subject to prior notice in accordance with Section 2.10(b).
(b)
The Borrower shall notify the Administrative Agent (which notice shall be made in
writing by telecopy or electronic communication (e-mail) in the form of Exhibit 2.10 (a “Notice of
Prepayment”)) of any prepayment hereunder (i) in the case of prepayment of a Eurodollar Borrowing, not
later than 11:00 a.m., New York, New York time, three Business Days before the date of prepayment or (ii)
in the case of prepayment of an ABR Borrowing, not later than 11:00 a.m., New York, New York time, one
Business Day prior to the date of prepayment. Each such notice shall be irrevocable and shall specify the
prepayment date, Type and the principal amount of each Borrowing or portion thereof to be prepaid; provided
that, if a notice of prepayment is given in connection with a conditional notice of termination of the Total
Commitment as contemplated by Section 2.08, then such notice of prepayment may be revoked if such notice
of termination of the Total Commitment is revoked in accordance with Section 2.08. Each partial prepayment
shall be in an aggregate amount not less than, and shall be an integral multiple of, the amounts shown below
with respect to the applicable Type of Loan or Borrowing:
Type of
Loan/Borrowing
Eurodollar Borrowing
ABR Borrowing
Integral
Multiple of
Minimum
Aggregate Amount
$1,000,000
$1,000,000
$3,000,000
$1,000,000
Promptly following receipt of any such notice relating to a Borrowing, the Administrative Agent shall advise
the Lenders in writing of the contents thereof. If the Borrower fails to designate the Type of Borrowings to
be prepaid, partial prepayments shall be applied first to the outstanding ABR Borrowings until the outstanding
principal amount of all ABR Borrowings is repaid in full, and then to the outstanding principal amount of
Eurodollar Borrowings. Each partial prepayment of any Borrowing shall be in an amount that would be
permitted in the case of an advance of a Borrowing of the same Type as provided in Section 2.02. Each
prepayment of a Borrowing shall be applied to the Loans included in the prepaid Borrowing in accordance
28
EXHIBIT 10.15
with the Lenders’ Applicable Percentage of such Borrowing. Prepayments shall be accompanied by accrued
interest to the extent required by Section 2.12.
SECTION 2.11
Fees.
(a)
The Borrower agrees to pay to the Administrative Agent for the account of each
Lender (other than a Defaulting Lender) a commitment fee (the “Commitment Fee”), which shall be equal
to (a) the Applicable Commitment Fee Rate times (b) the daily average undrawn portion of the such Lender’s
Commitment, during the period from the Closing Date to the later of (i) the date on which such Commitment
terminates and (ii) the date on which the Loans are paid in full; provided that, if such Lender continues to
have any Credit Exposure after its Commitment terminates, then such Commitment Fee shall continue to
accrue on the daily amount of such Lender’s Credit Exposure from the date on which its Commitment
terminates to the date on which such Lender ceases to have any Credit Exposure. Accrued Commitment
Fees shall be payable in arrears on the last Business Day of March, June, September and December of each
year and on the date on which the Commitments terminate and the date the Loans are paid in full, commencing
on the first such date to occur after the Closing Date. All Commitment Fees shall be computed on the basis
of a year of 365 or 366 days, as the case may be, and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day).
(b)
[Reserved].
(c)
The Borrower agrees to pay, without duplication, to (i) the Administrative Agent
and the Lenders, for their own accounts (or that of their applicable Affiliate), fees payable in the amounts
and at the times specified in that letter agreement dated October 23, 2018 among the Borrower, Barclays
Bank PLC and JPMorgan Chase Bank, N.A. (as from time to time amended, the “Fee Letter”) and (ii) the
Administrative Agent, for its own account (or that of its applicable Affiliate), fees payable in amounts and
at the times specified in that letter agreement dated October 23, 2018 among the Borrower and Barclays
Bank PLC (the “Administrative Agent Fee Letter”).
(d)
All fees payable hereunder shall be paid on the dates due, in immediately available
funds, to the Administrative Agent (for distribution, in the case of Commitment Fees and participation fees,
to the Lenders). Except as required by law, fees paid shall not be refundable under any circumstance.
SECTION 2.12
Interest.
(a)
The Loans comprising each ABR Borrowing shall bear interest at a rate per annum
equal to the sum of Alternate Base Rate plus the Applicable Margin.
(b)
The Loans comprising each Eurodollar Borrowing shall bear interest at the Adjusted
LIBO Rate for the Interest Period in effect for such Borrowing plus the Applicable Margin.
(c)
Notwithstanding the foregoing, if any principal of or interest on any Loan or any
fee or other amount payable by the Borrower hereunder is not paid when due, whether at stated maturity,
upon acceleration or otherwise, such overdue amount shall bear interest, after as well as before judgment,
at a rate per annum equal to (i) in the case of overdue principal of any Loan, 2% plus the rate otherwise
applicable to such Loan as provided above or (ii) in the case of any other amount, 2% plus the Alternate
Base Rate.
Accrued interest on each Loan shall be payable in arrears on each Interest Payment
Date for such Loan; provided that (i) interest accrued pursuant to Section 2.12(c) shall be payable on demand,
(d)
29
EXHIBIT 10.15
(ii) in the event of any repayment or prepayment of any Loan (other than a prepayment of an ABR Committed
Loan prior to the end of the Availability Period), accrued interest on the principal amount repaid or prepaid
shall be payable on the date of such repayment or prepayment, (iii) in the event of any conversion of any
Eurodollar Committed Loan prior to the end of the current Interest Period therefor, accrued interest on such
Loan shall be payable on the effective date of such conversion and (iv) all accrued interest shall be payable
upon termination of the Total Commitment.
(e)
All interest hereunder shall be computed on the basis of a year of 360-day year,
except that interest computed by reference to the Alternate Base Rate at times when the Alternate Base Rate
is based on the Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year),
and in each case shall be payable for the actual number of days elapsed (including the first day but excluding
the last day). The applicable Alternate Base Rate, Adjusted LIBO Rate or LIBO Rate shall be determined
by the Administrative Agent, and such determination shall be conclusive absent manifest error.
SECTION 2.13
Alternate Rate of Interest.
(a)
If prior to the commencement of any Interest Period for a Eurodollar Borrowing:
(i)
the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining
the Adjusted LIBO Rate or the LIBO Rate for such Interest Period; or
(ii)
the Administrative Agent is advised by the Required Lenders that the
Adjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest Period will not adequately
and fairly reflect the cost to such Lenders of making or maintaining their Loans included in such
Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and the Lenders in writing as promptly
as practicable thereafter and, until the Administrative Agent notifies the Borrower and the Lenders in writing
that the circumstances giving rise to such notice no longer exist, (i) any Interest Election Request that requests
the conversion of any Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing shall be
ineffective, and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such Borrowing shall be
made as an ABR Borrowing.
(b)
If at any time the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that (i) the circumstances set forth in clause (a)(i) have arisen and such
circumstances are unlikely to be temporary or (ii) the circumstances set forth in clause (a)(i) have not arisen
but the supervisor for the administrator of the LIBO Rate or a Governmental Authority having jurisdiction
over the Administrative Agent has made a public statement identifying a specific date after which the LIBO
Rate shall no longer be used for determining interest rates for loans, then the Administrative Agent and the
Borrower shall endeavor to establish an alternate rate of interest to the LIBO Rate that gives due consideration
to the then prevailing market convention for determining a rate of interest for syndicated loans in the United
States at such time, and shall enter into an amendment to this Agreement to reflect such alternate rate of
interest and such other related changes to this Agreement as may be applicable (but for the avoidance of
doubt, such related changes shall not include a reduction of the Applicable Margin). Notwithstanding
anything to the contrary in Section 9.02, such amendment shall become effective without any further action
or consent of any other party to this Agreement so long as the Administrative Agent shall not have received,
within five Business Days of the date notice of such alternate rate of interest is provided to the Lenders, a
written notice from the Required Lenders stating that such Required Lenders object to such amendment.
Until an alternate rate of interest shall be
30
EXHIBIT 10.15
determined in accordance with this clause (b) (but, in the case of the circumstances described in clause (ii)
of the first sentence of this Section 2.13(b), only to the extent the LIBO Rate for such Interest Period is not
available or published at such time on a current basis), (x) any Interest Election Request that requests the
conversion of any Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing shall be
ineffective and (y) if any Borrowing Request requests a Eurodollar Borrowing, such Borrowing shall be
made as an ABR Borrowing; provided that, if such alternate rate of interest shall be less than zero, such rate
shall be deemed to be zero for the purposes of this Agreement.
SECTION 2.14
Increased Costs.
(a)
If any Change in Law shall:
(i)
impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of, or credit extended by, any Lender
(except any such reserve requirement reflected in the Adjusted LIBO Rate);
(ii)
subject any Recipient to any Taxes (other than (A) Indemnified Taxes, (B)
Taxes described in clauses (b) through (d) of the definition of Excluded Taxes and (C) Connection
Income Taxes) on its Loans, loan principal, Commitments, or other Obligations, or its deposits,
reserves, other liabilities or capital attributable thereto; or
(iii)
impose on any Lender or the London interbank market any other condition,
cost or expense (other than Taxes) affecting this Agreement or Eurodollar Loans made by such
Lender;
and the result of any of the foregoing shall be to increase the cost to such Lender or such other Recipient of
making, converting to, continuing or maintaining any Loan or of maintaining its obligation to make any such
Loan, or to reduce the amount of any sum received or receivable by such Lender or other Recipient hereunder
(whether of principal, interest or any other amount) then, upon request of such Lender or other Recipient,
the Borrower will pay to such Lender or other Recipient, as the case may be, such additional amount or
amounts as will compensate such Lender or other Recipient, as the case may be, for such additional costs
incurred or reduction suffered.
(b)
If any Lender determines that any Change in Law affecting such Lender or any
lending office of such Lender or such Lender’s holding company, if any, regarding capital or liquidity
requirements, has or would have the effect of reducing the rate of return on such Lender’s capital or on the
capital of such Lender’s holding company, if any, as a consequence of this Agreement, the Commitment of
such Lender or the Loans made by such Lender, to a level below that which such Lender or such Lender’s
holding company could have achieved but for such Change in Law (taking into consideration such Lender’s
policies and the policies of such Lender’s holding company with respect to capital adequacy and/or liquidity
requirements), then from time to time the Borrower will pay to such Lender such additional amount or
amounts as will compensate such Lender or such Lender’s holding company for any such reduction suffered.
(c)
A certificate of a Lender setting forth the amount or amounts necessary to
compensate such Lender or its holding company, as the case may be, as specified in paragraph (a) or (b) of
this Section 2.14 and delivered to the Borrower, shall be conclusive absent manifest error. The Borrower
shall pay such Lender the amount shown as due on any such certificate within 10 Business Days after receipt
thereof.
31
EXHIBIT 10.15
(d)
Failure or delay on the part of any Lender to demand compensation pursuant to this
Section 2.14 shall not constitute a waiver of such Lender’s right to demand such compensation; provided
that the Borrower shall not be required to compensate a Lender pursuant to this Section 2.14 for any increased
costs or reductions incurred more than six months prior to the date that such Lender notifies the Borrower
of the Change in Law giving rise to such increased costs or reductions and of such Lender’s intention to
claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or
reductions is retroactive, then the six-month period referred to above shall be extended to include the period
of retroactive effect thereof).
SECTION 2.15
Break Funding Payments. In the event of (a) the payment of any
principal of any Eurodollar Loan other than on the last day of an Interest Period applicable thereto (including
as a result of an Event of Default), (b) the conversion of any Eurodollar Loan other than on the last day of
the Interest Period applicable thereto, (c) the failure to borrow (unless such failure was caused by the failure
of a Lender to make such Loan), convert, continue or prepay any Eurodollar Loan, or the failure to convert
an ABR Loan to a Eurodollar Loan, on the date specified in any notice delivered pursuant hereto (regardless
of whether such notice is permitted to be revocable under Section 2.08 and is revoked in accordance herewith),
or (d) the assignment of any Eurodollar Loan other than on the last day of the Interest Period applicable
thereto as a result of a request by the Borrower pursuant to Section 2.18, then, in any such event, the Borrower
shall compensate each Lender for the loss, cost and expense attributable to such event. In the case of a
Eurodollar Loan, the loss to any Lender attributable to any such event shall be deemed to include an amount
determined by such Lender to be equal to the excess, if any, of (i) the amount of interest that such Lender
would pay for a deposit equal to the principal amount of such Loan for the period from the date of such
payment, conversion, failure or assignment to the last day of the then current Interest Period for such Loan
(or, in the case of a failure to borrow, convert or continue, the duration of the Interest Period that would have
resulted from such borrowing, conversion or continuation) if the interest rate payable on such deposit were
equal to the Adjusted LIBO Rate for such Interest Period, over (ii) the amount of interest that such Lender
would earn on such principal amount for such period if such Lender were to invest such principal amount
for such period at the interest rate that would be bid by such Lender (or an affiliate of such Lender) for dollar
deposits from other banks in the Eurodollar market at the commencement of such period. A certificate of
any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section
2.15 shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall
pay such Lender the amount shown as due on any such certificate within 10 Business Days after receipt
thereof.
SECTION 2.16
Taxes.
(a)
Defined Terms. For purposes of this Section 2.16, the term “Requirement of Law”
includes FATCA.
(b)
Payments Free of Taxes. Any and all payments by or on account of any obligation
of the Borrower under any Loan Document shall be made without deduction or withholding for any Taxes,
except as required by a Requirement of Law. If any Requirement of Law (as determined in the good faith
discretion of the Withholding Agent) requires the deduction or withholding of any Tax from any such payment
by the Withholding Agent, then the Withholding Agent shall be entitled to make such deduction or withholding
and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in
accordance with applicable Requirement of Law and, if such Tax is an Indemnified Tax, then the sum payable
by the Borrower shall be increased as necessary so that after such deduction or withholding has been made
(including such deductions and withholdings applicable to additional sums payable under this Section 2.16)
the applicable Recipient receives an amount equal to the sum it would have received had no such deduction
or withholding been made.
32
EXHIBIT 10.15
(c)
Payment of Other Taxes by the Borrower. Without duplication of any obligation
under this Section 2.16, the Borrower shall timely pay to the relevant Governmental Authority in accordance
with applicable Requirement of Law, or at the option of the Administrative Agent timely reimburse it for
the payment of, any Other Taxes.
(d)
Indemnification by the Borrower. Without duplication of any obligation under this
Section 2.16, the Borrower shall indemnify each Recipient, within 10 days after demand therefor, for the
full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable
to amounts payable under this Section) payable or paid by such Recipient or required to be withheld or
deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect
thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority; provided, however, the Borrower shall not be required to indemnify a Recipient
pursuant to this Section 2.16(d) for any Indemnified Taxes unless such Recipient makes written demand on
the Borrower for indemnification for such Indemnified Taxes no later than six months after the earlier of (i)
the date on which such Recipient receives written demand from the relevant Governmental Authority for
payment of such Indemnified Taxes or (ii) the date on which such Recipient has made payment of such
Indemnified Taxes. A certificate as to the amount of such payment or liability delivered to the Borrower by
a Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on
behalf of a Lender, shall be conclusive absent manifest error.
(e)
Indemnification by the Lenders. Each Lender shall severally indemnify the
Administrative Agent, within 10 days after demand therefor, for (i) any Taxes attributable to such Lender
(but only to the extent that the Borrower has not already indemnified the Administrative Agent for such
Taxes and without limiting the obligation of the Borrower to do so), (ii) any Taxes attributable to such
Lender’s failure to comply with the provisions of Section 9.05(c) relating to the maintenance of a Participant
Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by
the Administrative Agent in connection with any Loan Document, and any reasonable expenses arising
therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted
by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered
to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby
authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such
Lender under any Loan Document or otherwise payable by the Administrative Agent to the Lender from any
other source against any amount due to the Administrative Agent under this paragraph (e).
(f)
Evidence of Payments. As soon as practicable after any payment of Taxes by the
Borrower to a Governmental Authority pursuant to this Section 2.16, the Borrower shall deliver to the
Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority
evidencing such payment, a copy of the return reporting such payment or other evidence of such payment
reasonably satisfactory to the Administrative Agent.
(g)
Status of Lenders. (i) Any Lender that is entitled to an exemption from or reduction
of withholding Tax with respect to payments made under any Loan Document shall deliver to the Borrower
and the Administrative Agent, at the time or times reasonably requested by the Borrower or the Administrative
Agent, such properly completed and executed documentation reasonably requested by the Borrower or the
Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of
withholding. In addition, any Lender, if reasonably requested by the Borrower or the Administrative Agent,
shall deliver such other documentation prescribed by applicable Requirement of Law or reasonably requested
by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to
determine whether or not such Lender is subject to backup withholding or
33
EXHIBIT 10.15
information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences,
the completion, execution and submission of such documentation (other than such documentation set forth
in subsections (ii)(A), (ii)(B) and (ii)(D) below) shall not be required if in the Lender’s reasonable judgment
such completion, execution or submission would subject such Lender to any material unreimbursed cost or
expense or would materially prejudice the legal or commercial position of such Lender.
(ii) Without limiting the generality of the foregoing, in the event that the
Borrower is a U.S. Borrower,
(A)
any Lender that is a U.S. Person shall deliver to the Borrower and
the Administrative Agent on or prior to the date on which such Lender becomes a Lender
under this Agreement (and from time to time thereafter upon the reasonable request of the
Borrower or the Administrative Agent), executed originals of IRS Form W-9 certifying that
such Lender is exempt from U.S. federal backup withholding Tax;
(B)
any Foreign Lender shall, to the extent it is legally entitled to do
so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall
be requested by the recipient) on or prior to the date on which such Foreign Lender becomes
a Lender under this Agreement (and from time to time thereafter upon the reasonable request
of the Borrower or the Administrative Agent), whichever of the following is applicable:
(1)
in the case of a Foreign Lender claiming the benefits of an
income Tax treaty to which the United States is a party (x) executed originals of
IRS Form W-8BEN or IRS Form W-8BEN-E establishing an exemption from, or
reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such
Tax treaty and (y) IRS Form W-8BEN or IRS Form W-8BEN-E establishing an
exemption from, or reduction of, U.S. federal withholding Tax pursuant to the
“business profits” or “other income” article of such Tax treaty;
(2)
executed originals of IRS Form W-8ECI;
(3)
in the case of a Foreign Lender claiming the benefits of the
exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate
substantially in the form of Exhibit 2.16-A to the effect that such Foreign Lender
is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10
percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B)
of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)
(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y) executed originals
of IRS Form W-8BEN or IRS Form W-8BEN-E; or
(4)
to the extent a Foreign Lender is not the beneficial owner,
executed originals of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS
Form W-8BEN or IRS Form W-8BEN-E, a U.S. Tax Compliance Certificate
substantially in the form of Exhibit 2.16-B or Exhibit 2.16-C, IRS Form W-9, and/
or other certification documents from each beneficial owner, as applicable; provided
that if the Foreign Lender is a partnership and one or more direct or indirect partners
of such Foreign Lender are claiming the portfolio interest exemption, such Foreign
Lender may provide a U.S. Tax Compliance Certificate substantially in the form of
Exhibit 2.16-D on behalf of each such direct and indirect partner;
34
EXHIBIT 10.15
(C)
any Foreign Lender shall, to the extent it is legally entitled to do
so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall
be requested by the recipient) on or prior to the date on which such Foreign Lender becomes
a Lender under this Agreement (and from time to time thereafter upon the reasonable request
of the Borrower or the Administrative Agent), executed originals of any other form
prescribed by applicable Requirement of Law as a basis for claiming exemption from or a
reduction in U.S. federal withholding Tax, duly completed and executed, together with such
supplementary documentation as may be prescribed by applicable Requirement of Law to
permit the Borrower or the Administrative Agent to determine the withholding or deduction
required to be made; and
(D)
if a payment made to a Lender under any Loan Document would
be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail
to comply with the applicable reporting requirements of FATCA (including those contained
in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the
Borrower and the Administrative Agent at the time or times prescribed by Requirement of
Law and at such time or times reasonably requested by the Borrower or the Administrative
Agent such documentation prescribed by applicable Requirement of Law (including as
prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation
reasonably requested by the Borrower or the Administrative Agent as may be necessary for
the Borrower and the Administrative Agent to comply with their obligations under FATCA
and to determine that such Lender has complied with such Lender’s obligations under FATCA
or to determine the amount to deduct and withhold from such payment. Solely for purposes
of this clause (D), “FATCA” shall include any amendments made to FATCA after the date
of this Agreement.
Each Lender agrees that if any form or certification it previously delivered expires or
becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify
the Borrower and the Administrative Agent in writing of its legal inability to do so.
(h)
Treatment of Certain Refunds. If any party determines, in its sole discretion
exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant
to this Section 2.16 (including by the payment of additional amounts pursuant to this Section 2.16), it shall
pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments
made under this Section with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses
(including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant
Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such
indemnified party, shall repay to such indemnified party the amount paid over pursuant to this paragraph (h)
(plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event
that such indemnified party is required to repay such refund to such Governmental Authority.
Notwithstanding anything to the contrary in this paragraph (h), in no event will the indemnified party be
required to pay any amount to an indemnifying party pursuant to this paragraph (h) the payment of which
would place the indemnified party in a less favorable net after-Tax position than the indemnified party would
have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted,
withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such
Tax had never been paid. This paragraph shall not be construed to require any indemnified party to make
available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the
indemnifying party or any other Person.
35
EXHIBIT 10.15
(i)
On or before the date that Barclays Bank PLC (or any successor or replacement
Administrative Agent) becomes the Administrative Agent hereunder, it shall deliver to the Borrower two
duly executed originals of either (i) IRS Form W-9 (or any applicable successor form) certifying that the
Administrative Agent is not subject to backup withholding, or (ii) IRS Form W-8IMY (or any applicable
successor form) establishing that the Administrative Agent will act as a withholding agent for any U.S. federal
withholding tax imposed with respect to any payments made to Lenders under any Loan Document.
(j)
Survival. Each party’s obligations under this Section 2.16 shall survive the
resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement
of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all
obligations under any Loan Document.
SECTION 2.17
Payments Generally; Pro Rata Treatment; Sharing of Set-offs.
(a)
The Borrower shall make each payment required to be made by the Borrower
hereunder (whether of principal, interest or fees, or under Section 2.14, 2.15 or 2.16, or otherwise) prior to
12:00 noon, New York, New York time, on the date when due, in immediately available funds, without set-
off or counterclaim. Any amounts received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes
of calculating interest thereon. All such payments shall be made to the Administrative Agent at its Principal
Office, except that payments pursuant to Sections 2.14, 2.15, 2.16 and 9.03 shall be made directly to the
Persons entitled thereto. The Administrative Agent shall distribute any such payments received by it for the
account of any other Person to the appropriate recipient promptly following receipt thereof. If any payment
hereunder shall be due on a day that is not a Business Day, the date for payment shall be extended to the
next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be
payable for the period of such extension. All payments hereunder shall be made in dollars.
(b)
If at any time insufficient funds are received by and available to the Administrative
Agent to pay fully all amounts of principal, interest and fees then due hereunder, such funds shall be applied
to pay interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the
amounts of interest and fees then due to such parties.
(c)
If any Lender shall, by exercising any right of setoff or counterclaim or otherwise,
obtain payment in respect of any principal of or interest on any of its Loans or other obligations hereunder
resulting in such Lender receiving payment of a proportion of the aggregate amount of its Loans and accrued
interest thereon or other such obligations greater than its pro rata share thereof as provided herein, then the
Lender receiving such greater proportion shall (a) notify the Administrative Agent of such fact, and (b)
purchase (for cash at face value) participations in the Loans and such other obligations of the other Lenders,
or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared
by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their
respective Loans and other amounts owing them; provided that:
(i)
if any such participations are purchased and all or any portion of the payment
giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored
to the extent of such recovery, without interest; and
(ii)
the provisions of this paragraph shall not be construed to apply to (x) any
payment made by the Borrower pursuant to and in accordance with the express terms of this
Agreement (including the application of funds arising from the existence of a Defaulting Lender),
or (y) any payment obtained by a Lender as consideration for the assignment of or sale of a
36
EXHIBIT 10.15
participation in any of its Loans to any assignee or participant, other than to the Borrower or any
Subsidiary thereof (as to which the provisions of this paragraph shall apply).
The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable
law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against
the Borrower rights of setoff and counterclaim with respect to such participation as fully as if such Lender
were a direct creditor of the Borrower in the amount of such participation.
(d)
Unless the Administrative Agent shall have received notice from the Borrower prior
to the date on which any payment is due to the Administrative Agent for the account of the Lenders hereunder
that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has
made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute
to the Lenders the amount due. In such event, if the Borrower has not in fact made such payment, then each
of the Lenders severally agrees to repay to the Administrative Agent forthwith on demand the amount so
distributed to such Lender with interest thereon, for each day from the date such amount is distributed to it
to the date of payment to the Administrative Agent, at the greater of the Federal Funds Effective Rate and a
rate determined by the Administrative Agent in accordance with banking industry rules or interbank
compensation.
(e)
If any Lender shall fail to make any payment required to be made by it pursuant to
Section 2.06(b), 2.17(d) or 8.08, then the Administrative Agent may, in its discretion (notwithstanding any
contrary provision hereof), (i) apply any amounts thereafter received by the Administrative Agent for the
account of such Lender to satisfy such Lender’s obligations under such Sections until all such unsatisfied
obligations are fully paid and/or (ii) hold any such amounts in a segregated account as cash collateral for,
and application to, any future funding obligations of such Lender under such Sections; in the case of each
of (i) and (ii) above, in any order as determined by the Administrative Agent in its discretion.
SECTION 2.18 Mitigation of Obligations; Replacement of Lenders.
(a)
Designation of a Different Lending Office. If any Lender requests compensation
under Section 2.14, or requires the Borrower to pay any Indemnified Taxes or additional amounts to any
Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.16, then such
Lender shall (at the request of the Borrower) use reasonable efforts to designate a different lending office
for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its
offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would
eliminate or reduce amounts payable pursuant to Section 2.14 or 2.16, as the case may be, in the future, and
(ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be
disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses
incurred by any Lender in connection with any such designation or assignment.
(b)
Replacement of Lenders. If any Lender requests compensation under Section 2.14,
or if the Borrower is required to pay any Indemnified Taxes or additional amounts to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.16 and, in each case, such
Lender has declined or is unable to designate a different lending office in accordance with Section 2.18(a),
or if any Lender is a Defaulting Lender or a Non-Consenting Lender, then the Borrower may, at its sole
expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign
and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents
required by, Section 9.05), all of its interests, rights (other than its existing rights to payments pursuant to
Section 2.14 or Section 2.16) and obligations under this Agreement and the related Loan Documents to an
37
EXHIBIT 10.15
Eligible Assignee that shall assume such obligations (which assignee may be another Lender, if a Lender
accepts such assignment); provided that:
(i)
fee (if any) specified in Section 9.05;
the Borrower shall have paid to the Administrative Agent the assignment
(ii)
such Lender shall have received payment of an amount equal to the
outstanding principal of its Loans, accrued interest thereon, accrued fees and all other amounts
payable to it hereunder and under the other Loan Documents (including any amounts under Section
2.15) from the assignee (to the extent of such outstanding principal and accrued interest and fees)
or the Borrower (in the case of all other amounts);
(iii)
in the case of any such assignment resulting from a claim for compensation
under Section 2.14 or payments required to be made pursuant to Section 2.16, such assignment will
result in a reduction in such compensation or payments thereafter;
(iv)
such assignment does not conflict with applicable law; and
(v)
in the case of any assignment resulting from a Lender becoming a Non-
Consenting Lender, the applicable assignee shall have consented to the applicable amendment,
waiver or consent.
A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result
of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment
and delegation cease to apply.
SECTION 2.19
Defaulting Lenders. (a) Notwithstanding anything to the contrary
contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as such Lender
is no longer a Defaulting Lender, to the extent permitted by applicable law:
(i)
Such Defaulting Lender’s right to approve or disapprove any amendment,
waiver or consent with respect to this Agreement shall be restricted as set forth in Section 9.02.
(ii)
Any payment of principal, interest, fees or other amounts received by the
Administrative Agent for the account of such Defaulting Lender (whether voluntary or mandatory,
at maturity, pursuant to Article VII or otherwise) or received by the Administrative Agent from a
Defaulting Lender pursuant to Section 9.09 shall be applied at such time or times as may be
determined by the Administrative Agent as follows: first, to the payment of any amounts owing by
such Defaulting Lender to the Administrative Agent hereunder; second, as the Company may request
(so long as no Default or Event of Default exists), to the funding of any Loan in respect of which
such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as
determined by the Administrative Agent; third, if so determined by the Administrative Agent and
the Borrower, to be held in a deposit account and released pro rata in order to satisfy such Defaulting
Lender’s potential future funding obligations with respect to Loans under this Agreement; fourth,
to the payment of any amounts owing to the Lenders as a result of any judgment of a court of
competent jurisdiction obtained by any Lender against such Defaulting Lender as a result of such
Defaulting Lender’s breach of its obligations under this Agreement; fifth, so long as no Default or
Event of Default exists, to the payment of any amounts owing to the Borrower as a result of any
judgment of a court of competent jurisdiction obtained by the Borrower against such Defaulting
Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; and
38
EXHIBIT 10.15
sixth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction;
provided that if (x) such payment is a payment of the principal amount of any Loans in respect of
which such Defaulting Lender has not fully funded its appropriate share, and (y) such Loans were
made at a time when the conditions set forth in Section 3.02 were satisfied or waived, such payment
shall be applied solely to pay the Loans of all Non-Defaulting Lenders on a pro rata basis prior to
being applied to the payment of any Loans of such Defaulting Lender until such time as all Loans
are held by the Lenders pro rata in accordance with the Commitments. Any payments, prepayments
or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts
owed by a Defaulting Lender shall be deemed paid to and redirected by such Defaulting Lender,
and each Lender irrevocably consents hereto.
(iii)
(A) Each Defaulting Lender shall be entitled to receive a Commitment Fee
for any period during which that Lender is a Defaulting Lender only to extent allocable to the
outstanding principal amount of the Loans funded by it.
(B) With respect to any Commitment Fee under Section 2.11(b) not
required to be paid to any Defaulting Lender pursuant to clause (A) above, the Borrower
shall not be required to pay the remaining amount of any such fee.
(b)
If the Borrower and the Administrative Agent agree in writing that a Lender is no
longer a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the
effective date specified in such notice and subject to any conditions set forth therein, that Lender will, to the
extent applicable, purchase at par that portion of outstanding Loans of the other Lenders or take such other
actions as the Administrative Agent may determine to be necessary to cause the Loans to be held pro rata
by the Lenders in accordance with their respective Commitments, whereupon, that Lender will cease to be
a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued
or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; and provided,
further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder
from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder
arising from that Lender’s having been a Defaulting Lender.
ARTICLE III
CONDITIONS PRECEDENT
SECTION 3.01
Conditions Precedent to the Closing Date. The obligations of the
Lenders to make Loans hereunder shall not become effective until the date on which each of the following
conditions is satisfied or waived in accordance with Section 9.02:
(a)
The Administrative Agent shall have received the following, each dated as of the
Closing Date:
(i)
this Agreement executed by each party hereto;
(ii)
the Guaranty executed by each party thereto;
(iii)
a certificate of an officer and of the secretary or an assistant secretary of
the Borrower and each Guarantor, certifying, inter alia (A) true and complete copies of each of the
certificate of incorporation or other appropriate organizational document, as amended and in effect,
of such Person, the bylaws or similar organizational document, as amended and in effect, of such
Person and the resolutions adopted by the Board of Directors or similar governing body of such
Person (1) authorizing the execution, delivery and performance by such Person of each Loan
39
EXHIBIT 10.15
Document to which such Person is or will be a party, (2) approving the Loan Documents to which
such Person is or will be a party and (3) authorizing officers of such Person to execute and deliver
the Loan Documents to which such Person is or will be a party and any related documents and (B)
the incumbency and specimen signatures of the officers of such Person executing any documents
on its behalf; provided, that there shall be no requirement to deliver such certificates for any Guarantor
that is not a Material Subsidiary;
(iv)
a certificate of a Responsible Officer of the Borrower certifying as to the
satisfaction of the conditions in Sections 3.01(c) and (e); and
(v)
signed opinions addressed to the Administrative Agent and the Lenders
from legal counsel to the Borrower and the Guarantors covering the matters reasonably requested
by the Administrative Agent; provided, that there shall be no requirement to deliver opinions of legal
counsel for any Guarantor that is not a Material Subsidiary.
(b)
The Administrative Agent shall have received a certificate of appropriate officials
as to the existence and good standing of the Borrower and each Guarantor.
(c)
There shall not have occurred any change, effect, event or occurrence since
December 31, 2017 that, individually or in the aggregate, has had, or would reasonably be expected to have,
a Material Adverse Effect.
(d)
The Administrative Agent shall have received evidence that the Existing Credit
Agreement has been, or substantially concurrently with the Closing Date will be, terminated and the
obligations outstanding thereunder repaid in full pursuant to customary payoff documentation, including
evidence of the release of Liens, if any, granted in connection therewith.
(e)
The conditions precedent set forth in Sections 3.02(b) and (d) shall have theretofore
been satisfied or waived in accordance with Section 9.02.
(f)
(i) The Administrative Agent shall have received (for distribution to the Lenders so
requesting) at least three business days prior to the Closing Date all documentation and other information
about the Borrower and Guarantors as required by regulatory authorities under applicable “know your
customer” and anti-money laundering rules and regulations, including without limitation the Patriot Act, to
the extent reasonably requested by any Lender to the Administrative Agent and conveyed by the
Administrative Agent to the Borrower in writing at least 10 days prior to the Closing Date and (ii) to the
extent the Borrower qualifies as a “legal entity customer” under the Beneficial Ownership Regulation, at
least five days prior to the Closing Date, any Lender that has requested, in a written notice to the Borrower
at least 10 days prior to the Closing Date, a Beneficial Ownership Certification in relation to the Borrower
shall have received such Beneficial Ownership Certification (provided that, upon the execution and delivery
by such Lender of its signature page to this Agreement, the condition set forth in this clause (ii) shall be
deemed to be satisfied).
(g)
All fees required to be paid on the Closing Date pursuant to the Fee Letters referenced
in Section 2.11(c) and all reasonable out-of-pocket expenses required to be paid on the Closing Date, to the
extent invoiced at least two Business Days prior to the Closing Date shall have been paid.
The Administrative Agent shall notify the Borrower and the Lenders of the Closing Date in writing
promptly upon such conditions precedent being satisfied (or waived in accordance with Section 9.02), and
such notice shall be conclusive and binding.
40
EXHIBIT 10.15
SECTION 3.02
Conditions Precedent to Each Credit Event. The obligations of the
Lenders to make Loans hereunder is subject to the satisfaction or waiver in accordance with Section 9.02
of the following conditions precedent:
(a)
The conditions precedent set forth in Section 3.01 shall have theretofore been
satisfied or waived in accordance with Section 9.02;
(b)
The representations and warranties set forth in Article IV and in the other Loan
Documents shall be true and correct in all material respects as of, and as if such representations and warranties
were made on, the Borrowing Date of the proposed Loan (unless such representation and warranty expressly
relates to an earlier date), and by the Borrower’s delivery of a Borrowing Request, the Borrower shall be
deemed to have certified to the Administrative Agent and the Lenders that such representations and warranties
are true and correct in all material respects;
(c)
The Company shall have complied with the provisions of Section 2.03;
(d)
result from such Credit Event; and
No Default or Event of Default shall have occurred and be continuing or would
(e)
A Borrowing Request shall have been delivered in accordance with the terms of
Section 2.03.
The acceptance by the Borrower of the benefits of each Credit Event shall constitute a representation
and warranty by the Borrower to each of the Lenders that all of the conditions specified in this Section 3.02
above exist as of that time.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
On the Closing Date and on each Borrowing Date, the Borrower makes the following
representations and warranties to the Administrative Agent and the Lenders:
SECTION 4.01
Organization and Qualification. The Borrower and each of the Material
Subsidiaries (a) is a corporation, partnership or limited liability company duly organized or formed, validly
existing and in good standing under the laws of the state of its incorporation, organization or formation, (b)
has all requisite corporate, partnership, limited liability company or other power and all material governmental
licenses, authorizations, consents and approvals required to carry on its business as now conducted and (c)
is duly qualified to do business and is in good standing in every jurisdiction in which the failure to be so
qualified would, individually or together with all such other failures of the Borrower and the Subsidiaries,
have a Material Adverse Effect.
SECTION 4.02
Authorization, Validity, Etc. The Borrower and each Guarantor has all
requisite corporate (or other organizational) power and authority to execute and deliver, and to incur and
perform its obligations under this Agreement and under the other Loan Documents to which it is a party and,
in the case of the Borrower, to make the Borrowings hereunder, and all such actions have been duly authorized
by all necessary proceedings on its behalf. This Agreement and the other Loan Documents have been duly
and validly executed and delivered by or on behalf of the Borrower (and, on the Closing Date, with respect
to the Guaranty, each Guarantor) party thereto and constitute valid and legally binding agreements of the
Borrower and each Guarantor, as applicable, enforceable against the Borrower or the Guarantor in accordance
with the respective terms thereof, except (a) as may be limited by bankruptcy, insolvency, reorganization,
41
EXHIBIT 10.15
moratorium, fraudulent transfer, fraudulent conveyance or other similar laws relating to or affecting the
enforcement of creditors’ rights generally, and by general principles of equity (including principles of good
faith, reasonableness, materiality and fair dealing) which may, among other things, limit the right to obtain
equitable remedies (regardless of whether considered in a proceeding in equity or at law) and (b) as to the
enforceability of provisions for indemnification for violation of applicable securities laws, limitations thereon
arising as a matter of law or public policy.
SECTION 4.03
Governmental Consents, Etc. No authorization, consent, approval,
license or exemption of or registration, declaration or filing with any Governmental Authority, is necessary
for the valid execution and delivery of, or the incurrence and performance by the Borrower or each Guarantor
of its obligations under, any Loan Document to which it is a party, except those that have been obtained and
such matters relating to performance as would ordinarily be done in the ordinary course of business after
the Closing Date.
SECTION 4.04
No Breach or Violation of Agreements or Restrictions, Etc. Neither
the execution and delivery of, nor the incurrence and performance by any Loan Party of its obligations under,
the Loan Documents to which it is a party, nor the extensions of credit contemplated by the Loan Documents,
will (a) breach or violate any applicable Requirement of Law, (b) result in any breach or violation of any of
the terms, covenants, conditions or provisions of, or constitute a default under, or result in the creation or
imposition of (or the obligation to create or impose) any Lien upon any of its property or assets (other than
Liens created or contemplated by this Agreement) pursuant to the terms of, any indenture, mortgage, deed
of trust, agreement or other instrument to which it or any of the Subsidiaries is party or by which any of its
properties or assets, or those of any of the Subsidiaries is bound or to which it is subject, except for breaches,
violations and defaults under clauses (a) and (b) that neither individually nor in the aggregate could reasonably
be expected to result in a Material Adverse Effect, or (c) violate any provision of the organizational documents
of such Loan Party.
SECTION 4.05
Properties. Each of the Borrower and the Material Subsidiaries has
good title to, or valid leasehold or other interests in, all its real and personal property material to its business
free of all Liens securing Indebtedness except for such Liens permitted under Section 6.02.
SECTION 4.06
Litigation and Environmental Matters. (a) Except as disclosed in the
most recent Annual Report on Form 10-K delivered by the Borrower to the Lenders, there is no action, suit
or proceeding by or before any arbitrator or Governmental Authority pending against or, to the knowledge
of the Borrower, threatened against or affecting the Borrower or any of the Material Subsidiaries as to which
there is a reasonable possibility of an adverse determination and that, if adversely determined, could
reasonably be expected to result in a Material Adverse Effect.
(b)
Except as disclosed in the most recent Annual Report on Form 10-K delivered by
the Borrower to the Lenders, the associated liabilities and costs of the Borrower’s compliance with
Environmental Laws (including any capital or operating expenditures required for clean-up or closure of
properties currently or previously owned, any capital or operating expenditures required to achieve or
maintain compliance with environmental protection standards imposed by Environmental Laws or as a
condition of any license, permit or contract, any related constraints on operating activities, including any
periodic or permanent shutdown of any facility or reduction in the level of or change in the nature of operations
conducted thereat, any costs or liabilities in connection with off-site disposal of wastes or Hazardous
Materials, and any actual or potential liabilities to third parties, including employees, and any related costs
and expenses) are unlikely to result in a Material Adverse Effect.
SECTION 4.07
Financial Statements.
42
EXHIBIT 10.15
(a)
The consolidated balance sheet of the Borrower and the Subsidiaries as at December
31, 2017 and the related consolidated statements of income, comprehensive income, shareholders’ equity
and cash flows of the Borrower and the Subsidiaries for the fiscal year ended on said date, with the opinion
thereon of PricewaterhouseCoopers LLP and set forth in the Borrower’s 2017 Annual Report on Form 10-
K, as filed with the SEC, fairly present, in all material respects, the consolidated financial position of the
Borrower and the Subsidiaries as of such date and their consolidated results of operations and cash flows
for such fiscal year in accordance with GAAP.
(b)
The unaudited consolidated balance sheets of the Borrower and the Subsidiaries as
at March 31, 2018, June 30, 2018 and September 30, 2018 and the related consolidated statements of income
and cash flows of the Borrower and the Subsidiaries for the three month period ended on such date and set
forth in the Borrower’s Quarterly Report on Form 10-Q for its fiscal quarter then ended, as filed with the
SEC, fairly present, in all material respects, the consolidated financial position of the Borrower and the
Subsidiaries as of such date and their consolidated results of their operations cash flows for the applicable
time period ended on said date (subject to the absence of footnotes and to normal year-end and audit
adjustments), in accordance with GAAP applied on a basis consistent with the financial statements referred
to in Section 4.07(a).
(c)
On the Closing Date and since the date of the Annual Report on Form 10-K delivered
by the Borrower to the Lenders with respect to the fiscal year ended December 31, 2017, there has been no
material adverse change in the business, assets, liabilities or financial condition of the Borrower and the
Subsidiaries, taken as a whole.
SECTION 4.08
Disclosure.
(a)
As of the Closing Date only, information heretofore furnished by the Borrower to
the Administrative Agent or any Lender for purposes of or in connection with this Agreement or any
transaction contemplated hereby, together with the Executive Summary is, when taken as a whole, true and
accurate in all material respects on the date as of which such information is stated or certified. The Executive
Summary and the reports, financial statements, certificates or other written information furnished by or on
behalf of the Borrower to the Administrative Agent or any Lender in connection with the syndication or
negotiation of this Agreement or delivered hereunder (as modified or supplemented by other information so
furnished) on or prior to the Closing Date, when taken as a whole, do not contain any material misstatement
of fact or omits to state any material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that, with respect to any projected
financial information, the Borrower represents only that such information was prepared in good faith based
upon assumptions believed by the Borrower to be reasonable at the time (it being recognized, however, that
projections as to future events are not to be viewed as facts and that the actual results during the period or
periods covered by any projects may materially different from the projected results).
(b)
As of the Closing Date, to the knowledge of the Borrower, the information included
in the Beneficial Ownership Certification provided on or prior to the Closing Date to any Lender in connection
with this Agreement is true and correct in all respects.
SECTION 4.09
Investment Company Act. The Borrower is not, and no Loan Party is
required to register as, an “investment company,” as such term is defined in the Investment Company Act
of 1940, as amended.
ERISA. Each member of the ERISA Group has fulfilled its obligations
under the minimum funding standards of ERISA and the Code with respect to each Plan and is in compliance
SECTION 4.10
43
EXHIBIT 10.15
in all material respects with the presently applicable provisions of ERISA and the Code with respect to each
Plan, except where the failure to so fulfill such obligations and such noncompliance individually, or together
with all such failures to fulfill such obligations and all such noncompliance, could not reasonably be expected
to result in a Material Adverse Effect. No member of the ERISA Group has (i) sought a waiver of the
minimum funding standard under Section 412 of the Code in respect of any Plan, (ii) failed to make any
contribution or payment to any Plan or Multiemployer Plan or in respect of any Benefit Arrangement, or
made any amendment to any Plan or Benefit Arrangement, which has resulted or could result in the imposition
of a Lien or the posting of a bond or other security under ERISA or the Code or (iii) incurred any liability
under Title IV of ERISA other than a liability to the PBGC for premiums under Section 4007 of ERISA,
which waiver, failure, amendment or liability individually, or collectively with all such waivers, failures,
amendments or liabilities, could reasonably be expected to result in a Material Adverse Effect. Except where
the failure to so fulfill such obligations and such noncompliance could individually, or together with all such
failures to fulfill such obligations and all such noncompliance could reasonably be expected to result in a
Material Adverse Effect, (i) no “reportable event”, as defined in Section 4043 of ERISA or the regulations
issued thereunder, has occurred with respect to a Plan (other than an event for which the 30 day notice period
is waived),. (ii) neither the Borrower nor any member of its ERISA Group has received any notice from the
PBGC or a plan administrator relating to an intention to terminate any Plan or Plans or to appoint a trustee
to administer any Plan and (iii) neither the Borrower or any members of its ERISA Group has any liability
with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan, nor has the
Borrower, any members of its ERISA Group, or any Multiemployer Plan from the Borrower or member of
its ERISA Group received any notice concerning the imposition of Withdrawal Liability or a determination
that a Multiemployer Plan is, or is expected to be, insolvent within the meaning of Title IV of ERISA.
SECTION 4.11
Tax Returns and Payments. The Borrower and the Material Subsidiaries
have caused to be filed all federal income Tax returns and other material Tax returns, statements and reports
(or obtained extensions with respect thereto) which are required to be filed and have paid or deposited or
made adequate provision in accordance with GAAP for the payment of all Taxes (including estimated Taxes
shown on such returns, statements and reports) which are shown to be due pursuant to such returns, except
for Taxes being contested in good faith by appropriate proceedings for which adequate reserves in accordance
with GAAP have been created on the books of the Borrower and the Subsidiaries and where the failure to
pay such Taxes (individually or in the aggregate for the Borrower and the Subsidiaries) would not have a
Material Adverse Effect.
SECTION 4.12
Compliance with Laws and Agreements. Each of the Borrower and the
Material Subsidiaries is in compliance with all laws, regulations and orders of any Governmental Authority
applicable to it or its property and all indentures, agreements and other instruments binding upon it or its
property, except where the failure to do so, individually or in the aggregate for the Borrower and the Material
Subsidiaries, could not reasonably be expected to result in a Material Adverse Effect.
SECTION 4.13
Purpose of Loans.
(a)
All proceeds of the Loans will be used for the purposes set forth in Section 5.07.
(b)
Neither the Borrower nor any agent acting on its behalf has taken or will take any
action which might cause this Agreement or any other Loan Document to violate Regulation T, Regulation
U, Regulation X, or any other regulation of the Board or to violate the Exchange Act. Margin stock does
not constitute more than 25% of the assets of the Borrower, or of the Borrower and the Subsidiaries on a
consolidated basis, and the Borrower does not intend or foresee that it will ever do so.
44
EXHIBIT 10.15
SECTION 4.14
Foreign Assets Control Regulations, etc. (a) To the extent applicable,
no part of the proceeds of the Loans will (i) be used to violate in any material respect the Trading with the
Enemy Act, as amended, or (ii) be used, directly or indirectly or made available to any subsidiary, joint
venture partner or any other Person to fund or support any activities or business of or with any Person, or
in any country or territory, that, at the time of such funding or extension, is, or whose government is, at the
time of making such Loans, the subject of any economic or financial sanctions or trade embargoes
administered or enforced by the U.S. Government, including any enforced by the U.S. Department of
Treasury’s Office of Foreign Assets Control or the U.S. Department of State (collectively, “Sanctions”).
(b)
Neither the Borrower nor any Subsidiary, nor, to the knowledge of the Borrower,
any director, officer, employee, agent, affiliate or representative of the Borrower or any Subsidiary is a Person
that is, or is owned or controlled by, a Sanctioned Person. The Borrower and the Subsidiaries are in
compliance, in all material respects, with the Patriot Act.
(c)
No part of the proceeds of the Loans will be used, directly or indirectly, for any
payments to any person in violation of any Anti-Corruption Laws, to the extent the Anti-Corruption Laws
apply to the Borrower or one of the Subsidiaries.
SECTION 4.15
Solvency. On the Closing Date, after giving effect to the Transactions,
the Borrower and its Subsidiaries, on a consolidated basis, are Solvent.
ARTICLE V
AFFIRMATIVE COVENANTS
From the Closing Date until the Commitments have expired or been terminated and principal
of and interest on each Loan and all fees payable hereunder shall have been paid in full, the Borrower
covenants and agrees with the Lenders that:
SECTION 5.01
Financial Statements and Other Information. The Borrower will furnish
to the Administrative Agent:
(a)
within ten days after the date in each fiscal year on which the Borrower is required
to file its Annual Report on Form 10-K with the SEC or, if earlier, 100 days after the end of each fiscal year
(i) such Annual Report, and (ii) its audited consolidated balance sheet and the related consolidated statements
of income, comprehensive income, operations, shareholders’ equity and cash flows as of the end of and for
such year, setting forth in each case in comparative form the figures as of the end of and for the previous
fiscal year, all reported on by, and accompanied by an opinion (without a “going concern” or like qualification
or exception and without any qualification or exception as to the scope of their audit) of,
PricewaterhouseCoopers LLP, or other independent public accountants of recognized national standing to
the effect that such consolidated financial statements present fairly in all material respects the financial
position, results of operations and cash flows of the Borrower and the Subsidiaries on a consolidated basis
in accordance with GAAP; provided, however, that (x) the Borrower shall be deemed to have furnished said
Annual Report on Form 10-K for purposes of clause (i) if it shall have timely made the same available on
“EDGAR” and/or on its home page on the worldwide web (at the date of this Agreement located at http://
www.kindermorgan.com) and complied with the last grammatical paragraph of this Section 5.01 in respect
thereof, and (y) if said Annual Report contains such consolidated balance sheet and such consolidated
statements of results of income, comprehensive income, shareholders’ equity and cash flows, and the report
thereon of such independent public accountants (without qualification or exception, and to the effect, as
specified above), the Borrower shall not be required to comply with clause (ii);
45
EXHIBIT 10.15
(b)
within five days after each date in each fiscal year on which the Borrower is required
to file a Quarterly Report on Form 10-Q with the SEC or, if earlier, 50 days after the end of each fiscal quarter
(i) such Quarterly Report, and (ii) its consolidated balance sheet and the related consolidated statements of
income and cash flows as of the end of and for the fiscal quarter to which said Quarterly Report relates and
the then elapsed portion of the fiscal year, setting forth in each case in comparative form the figures as of
the end and for the corresponding period or periods of the previous fiscal year, all certified by a Responsible
Officer as presenting fairly in all material respects the financial condition and results of operations of the
Borrower and the Subsidiaries on a consolidated basis in accordance with GAAP, subject to normal year-
end audit adjustments and the absence of footnotes; provided, however, that (x) the Borrower shall be deemed
to have furnished said Quarterly Report for purposes of clause (i) if it shall have timely made the same
available on “EDGAR” and/or on its home page on the worldwide web (at the date of this Agreement located
at http://www.kindermorgan.com) and complied with the last grammatical paragraph of this Section 5.01 in
respect thereof, and (y) if said Quarterly Report contains such consolidated balance sheet and consolidated
statements of income and cash flows, and such certifications, the Borrower shall not be required to comply
with clause (ii);
(c)
simultaneously with the delivery of each set of financial statements referred to in
clauses (a) and (b) above, a certificate in substantially the form of Exhibit 5.01 signed by an authorized
financial or accounting officer of the Borrower (i) setting forth in reasonable detail the calculations required
to establish whether the Borrower was in compliance with the requirements of Section 6.07, (ii) (A) in the
case of the first set of financial statements delivered following the Closing Date, setting forth a list of the
Material Subsidiaries, and (B) in the case of each set of financial statements delivered thereafter, an update
of any change in the list of the Material Subsidiaries or stating that there has been no such change, and
(iii) stating whether any Default or Event of Default exists on the date of such certificate and, if any Default
or Event of Default then exists, setting forth the details thereof and the action which the Borrower is taking
or proposes to take with respect thereto;
(d)
prompt written notice of the following:
(i)
the occurrence of any Default or Event of Default;
(ii)
any other development that results in, or could reasonably be expected to
result in, a Material Adverse Effect; and
(iii)
any change in the information provided in the Beneficial Ownership
Certification delivered to such Lender that would result in a change to the list of beneficial owners
identified in such certification;
(each notice delivered under this Section 5.01(d) to be accompanied by a statement of a Responsible Officer
setting forth the details of the event or development requiring such notice and any action taken or proposed
to be taken with respect thereto);
(e)
without duplication of any other requirement of this Section 5.01, promptly upon
the mailing thereof to the public shareholders of the Borrower generally, copies of all financial statements,
reports and proxy statements so mailed;
(f)
promptly upon the filing thereof with the SEC, copies of all registration statements
(other than the exhibits thereto and any registration statements on Form S-8 or its equivalent) and reports
on Form 8-K which the Borrower shall have filed with the SEC;
46
EXHIBIT 10.15
(g)
if and when any member of the ERISA Group (i) gives or is required to give notice
to the PBGC of any “reportable event” (as defined in Section 4043 of ERISA) (other than such event as to
which the 30-day notice requirement is waived) with respect to any Plan which would reasonably be expected
to constitute grounds for a termination of such Plan under Title IV of ERISA, or knows that the plan
administrator of any Plan has given or is required to give notice of any such reportable event, a copy of the
notice of such reportable event given or required to be given to the PBGC; (ii) receives notice of complete
or partial material Withdrawal Liability under Title IV of ERISA or notice that any Multiemployer Plan is
insolvent, is in “endangered” or “critical” status (within the meaning of Section 432 of the Code or Section
305 of ERISA) or has been terminated, a copy of such notice; (iii) receives notice from the PBGC under
Title IV of ERISA of an intent to terminate, impose liability (other than for premiums under Section 4007
of ERISA) in respect of, or appoint a trustee to administer any Plan, a copy of such notice; (iv) fails to satisfy,
or applies for a waiver of, the minimum funding standard under Section 412 of the Code, a copy of such
application; (v) gives notice of intent to terminate any Plan under Section 4041(c) of ERISA, a copy of such
notice and other information filed with the PBGC; (vi) gives notice of withdrawal from any Plan pursuant
to Section 4063 of ERISA, a copy of such notice; or (vii) fails to make any payment or contribution to any
Plan or Multiemployer Plan or in respect of any Benefit Arrangement or makes any amendment to any Plan
or Benefit Arrangement which has resulted or could result in the imposition of a Lien or the posting of a
bond or other security, a certificate of the chief financial officer or the chief accounting officer of the Borrower
setting forth details as to such occurrence and action, if any, which the Borrower or applicable member of
the ERISA Group is required or proposes to take; and
(h)
(x) from time to time such other information (other than projections) regarding the
business, affairs or financial condition of the Borrower or any Subsidiary as the Required Lenders or the
Administrative Agent may reasonably request and (y) promptly following any request therefor, information
and documentation reasonably requested by the Administrative Agent for distribution to the Lenders so
requesting for purposes of compliance with applicable “know your customer” and anti-money laundering
rules and regulations, including the Patriot Act and the Beneficial Ownership Regulation.
Information required to be delivered pursuant to Section 5.01(a), 5.01(b) or 5.01(f) above
shall be deemed to have been delivered on the date on which the Borrower provides notice to the
Administrative Agent and the Lenders that such information has been posted on “EDGAR” or the Borrower’s
website or another website identified in such notice and accessible by the Administrative Agent and the
Lenders without charge (and the Borrower hereby agrees to provide such notice); provided that such notice
may be included in a certificate delivered pursuant to Section 5.01(c).
SECTION 5.02
Existence, Conduct of Business. The Borrower will, and will cause
each of the Material Subsidiaries to, do or cause to be done all things necessary to preserve, renew and keep
in full force and effect its legal existence and the rights, licenses, permits, privileges and franchises material
to the conduct of its business, except where the failure to do so (individually or collectively with all such
failures) could not reasonably expected to have a Material Adverse Effect; provided that the foregoing shall
not prohibit any merger, consolidation, liquidation or dissolution permitted under Section 6.03.
SECTION 5.03
Payment of Obligations. The Borrower will, and will cause each of the
Material Subsidiaries to, pay, before the same shall become delinquent or in default, its Indebtedness and
Tax liabilities but excluding Indebtedness (other than the Obligations) that is not in excess of $150,000,000,
except where (a) the validity or amount thereof is being contested in good faith by appropriate proceedings,
(b) the Borrower or such Material Subsidiary has set aside on its books adequate reserves with respect thereto
in accordance with GAAP or (c) the failure to make payment pending such contest could not reasonably be
expected to result in a Material Adverse Effect.
47
EXHIBIT 10.15
SECTION 5.04 Maintenance of Properties; Insurance.
(a)
The Borrower will keep, and will cause each Material Subsidiary to keep, all property
material to the conduct its business (taken as a whole) in good working order and condition, ordinary wear
and tear excepted, in the reasonable judgment of the Borrower.
(b)
The Borrower will maintain or cause to be maintained with, in the good faith
judgment of the Borrower, financially sound and reputable insurers, or through self-insurance, insurance
with respect to its properties and business and the properties and businesses of the Subsidiaries against loss
or damage of the kinds customarily insured against by business enterprises of established reputation engaged
in the same or similar business and similarly situated, of such types and in such amounts as are customarily
carried under similar circumstances by such other corporations. Such insurance may include self-insurance
or be subject to co-insurance, deductibility or similar clauses which, in effect, result in self-insurance of
certain losses, provided that such self-insurance is in accord with the approved practices of business
enterprises of established reputation similarly situated and adequate insurance reserves are maintained in
connection with such self-insurance, and, notwithstanding the foregoing provisions of this Section 5.04 the
Borrower or any Subsidiary may effect workers’ compensation or similar insurance in respect of operations
in any state or other jurisdiction any through an insurance fund operated by such state or other jurisdiction
or by causing to be maintained a system or systems of self-insurance in accord with applicable laws.
SECTION 5.05
Books and Records; Inspection Rights. The Borrower will, and will
cause each of the Material Subsidiaries to, keep, in accordance with GAAP, books of record and account.
The Borrower will, and will cause each of the Material Subsidiaries to, permit any representatives designated
by the Administrative Agent or any Lender, upon reasonable prior notice during normal business hours, and,
if the Borrower shall so request, in the presence of a Responsible Officer or an appointee of a Responsible
Officer, at the expense of the Administrative Agent or such Lender (unless an Event of Default exists, in
which event the expense shall be that of the Borrower) to visit and inspect its properties, to examine and
make extracts from its books and records (subject to compliance with confidentiality agreements and
applicable copyright law), and to discuss its affairs, finances and condition with its officers, all at such times,
and as often, as reasonably requested, but unless an Event of Default exists, no more frequently than once
during each calendar year.
SECTION 5.06
Compliance with Laws. The Borrower will, and will cause each of the
Material Subsidiaries to, comply with all Requirements of Law applicable to it or its property, except where
the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect. The Borrower will maintain in effect and enforce policies and procedures designed to ensure
compliance by the Borrower, its Subsidiaries and their respective directors, officers, employees and agents
with Anti-Corruption Laws and applicable Sanctions.
SECTION 5.07
Use of Proceeds. The proceeds of the Loans will be used for working
capital and other general corporate purposes.
SECTION 5.08
Additional Guarantors. The Borrower shall cause each Subsidiary
(including, without limitation, any Division Successor) (other than any Excluded Subsidiary) formed or
otherwise purchased or acquired after the Closing Date (including each Subsidiary that ceases to constitute
an Excluded Subsidiary after the Closing Date) to execute a supplement to the Guaranty and become a
Guarantor within 45 days of the occurrence of the applicable event specified in this Section 5.08 (or such
longer period of time as the Administrative Agent shall reasonably agree).
48
EXHIBIT 10.15
ARTICLE VI
NEGATIVE COVENANTS
From the Closing Date until the Commitments have expired or terminated and principal of
and interest on each Loan and all fees payable hereunder have been paid in full, the Borrower covenants and
agrees with the Lenders that:
SECTION 6.01
Indebtedness of Non-Guarantor Subsidiaries. The Borrower will not
permit any Subsidiary that is not a Guarantor (each a “Non-Guarantor Subsidiary”) to create, incur or assume
Indebtedness other than the following:
(a)
Indebtedness existing as of the Closing Date and set forth on Schedule 6.01 and
any Indebtedness incurred to refund, extend, refinance or otherwise replace such Indebtedness; provided
that the principal amount of such Indebtedness does not exceed the principal amount of Indebtedness
refinanced (plus the amount of penalties, premiums, fees, accrued interest and reasonable expenses and other
obligations incurred therewith) at the time of the refinancing;
(b)
Indebtedness owing to the Borrower or its Subsidiaries;
(c)
Indebtedness that is (or was) secured by Liens permitted pursuant to Section 6.02(b)
or (c) and any Indebtedness incurred to refund, extend, refinance or otherwise replace such Indebtedness;
provided, that the principal amount of such Indebtedness does not exceed the principal amount of
Indebtedness refinanced (plus the amount of penalties, premiums, fees, accrued interest and reasonable
expenses and other obligations incurred therewith) at the time of refinancing;
(d)
(i) Indebtedness attaching to any property or asset prior to the acquisition thereof
by any Non-Guarantor Subsidiary or of, or attaching to any property or asset of, any Person that becomes a
Non-Guarantor Subsidiary after the date hereof prior to the time such Person becomes a Non-Guarantor
Subsidiary, in each case, outstanding prior to the acquisition of such property or asset or such Person becoming
a Non-Guarantor Subsidiary; provided that such Indebtedness was not incurred in contemplation of or in
connection with such acquisition or such Person becoming a Non-Guarantor Subsidiary, as the case may be
and (ii) and any Indebtedness incurred to refund, extend, refinance or otherwise replace such Indebtedness
(plus the amount of penalties, premiums, fees, accrued interest and reasonable expenses and other obligations
incurred therewith);
(e)
(f)
Indebtedness of Foreign Subsidiaries; and
Indebtedness of Non-Wholly-owned Subsidiaries.
SECTION 6.02
Liens. The Borrower will not, and will not permit any Subsidiary to,
create, incur, assume or permit to exist any Lien securing Indebtedness on any property or asset now owned
or hereafter acquired by it except:
(a)
Liens existing as of the Closing Date (including any replacement, extension or
renewal of any such Lien permitted upon or in the same assets (other than after acquired property that is
affixed or incorporated into the property covered by such Lien) theretofore subject to such Lien or the
replacement, extension or renewal (without increase in the amount or change in any direct or contingent
obligor except to the extent otherwise permitted hereunder) of the Indebtedness secured thereby);
Liens securing (A) Capital Lease Obligations, or (B) Indebtedness incurred to
finance the acquisition, construction, expansion or improvement of any fixed or capital assets of the Borrower
(b)
49
EXHIBIT 10.15
or its Subsidiaries; provided that (x) such Liens attach at all times only to the assets so financed except for
accessions to such property, improvements thereof and general intangibles relating thereto, and the proceeds
and the products thereof and (y) individual financings of equipment provided by one lender may be cross
collateralized to other financings of equipment provided by such lender;
(c)
Liens existing on any property or asset prior to the acquisition thereof by the
Borrower or any Subsidiary or existing on any property or asset of any Person that becomes a Subsidiary
after the date hereof prior to the time such Person becomes a Subsidiary, in each case, pursuant to security
documents in effect prior to the acquisition of such property or asset or such Person becoming a Subsidiary
(“Existing Security Documents”), and securing Indebtedness whose incurrence, for purposes of this
Agreement, by virtue of acquisition of such property or asset, or by virtue of such Person so becoming a
Subsidiary, would not result in a violation of Section 6.07; provided that (i) such Lien is not created in
contemplation of or in connection with such acquisition or such Person becoming a Subsidiary, as the case
may be, (ii) such Lien shall not apply to any other property or assets of the Borrower or any Subsidiary
except to the extent such Lien attaches to such property or assets pursuant to Existing Security Documents,
(iii) such Lien shall secure only those obligations which it secures on the date of such acquisition or the date
such Person becomes a Subsidiary, as the case may be, and extensions, renewals and replacements thereof
that do not increase the outstanding principal amount thereof. For purposes of this Section 6.02(c), the
Indebtedness so secured shall be deemed to have been incurred on the last day of the fiscal quarter then most
recently ended; and
(d)
Liens, not otherwise permitted by the foregoing clauses (a) and (b), securing
Indebtedness in an aggregate amount not exceeding 15% of Consolidated Net Tangible Assets.
SECTION 6.03
Fundamental Changes. The Borrower will not, and will not permit any
Material Subsidiary to, merge into or consolidate with any other Person, or permit any other Person to merge
into or consolidate with it, or sell, transfer, lease or otherwise dispose of (including pursuant to a Division
and whether in one transaction or in a series of transactions) all (or substantially all) of its assets, or all or
substantially all of the stock of or other equity interest in any of the Material Subsidiaries (in each case,
whether now owned or hereafter acquired), or liquidate or dissolve, unless: (a) at the time thereof and
immediately after giving effect thereto no Event of Default or Default shall have occurred and be continuing;
and (b) (i) the Borrower or a Material Subsidiary is the surviving entity or the recipient of the assets so sold,
transferred, leased or otherwise disposed of in any such sale, transfer, lease or other disposition of assets,
provided, that no such merger, consolidation, sale, transfer, lease or other disposition shall have the effect
of releasing the Borrower from any of the Obligations or (ii) such merger, consolidation, sale, transfer, lease
or other disposition, when taken together with all other consolidations, mergers or sales of assets by the
Borrower or any Material Subsidiary since the Closing Date, shall not result in the disposition by the Borrower
and the Material Subsidiaries of assets in an amount that would constitute all or substantially all of the
consolidated assets of the Borrower and the Material Subsidiaries.
SECTION 6.04
Restricted Payments. The Borrower will not declare or make, or agree
to pay or make, directly or indirectly, any Restricted Payment except (a) distributions with respect to the
Capital Stock of the Borrower, so long as both before and after the making of such distribution, no Event of
Default shall have occurred and be continuing, (b) any Capital Stock split, Capital Stock reverse split, dividend
of Borrower Capital Stock or similar transaction will not constitute a Restricted Payment, and (c) acquisitions
by officers, directors and employees of the Borrower of equity interests in the Borrower through cashless
exercise of options pursuant to, and in accordance with the terms of, management and/or employee stock
plans, stock subscription agreements or shareholder agreements.
Transactions with Affiliates. The Borrower will conduct, and cause
each of the Subsidiaries to conduct, all transactions with any of its Affiliates (other than the Borrower or the
SECTION 6.05
50
EXHIBIT 10.15
Subsidiaries) on terms that are substantially as favorable to the Borrower or such Subsidiary as it would
obtain in a comparable arm’s-length transaction with a Person that is not an Affiliate, provided that the
foregoing shall be deemed to be satisfied with respect to any transaction that is approved by a majority of
the independent members of the Borrower’s board of directors, or of a committee thereof consisting solely
of independent directors, and provided, further that the foregoing restrictions shall not apply to:
(a)
the payment of customary fees for management, consulting and financial services
rendered to the Borrower and the Subsidiaries and (ii) customary investment banking fees paid for services
rendered to the Borrower and the Subsidiaries in connection with divestitures, acquisitions, financings and
other transactions;
(b)
transactions permitted by Section 6.04;
(c)
the payment of any fees or expenses incurred or paid by the Borrower or any of its
Subsidiaries in connection with the Transactions, this Agreement and the other Loan Documents and the
transactions contemplated hereby and thereby;
(d)
the issuance of Capital Stock of the Borrower to the management of the Borrower
or any of its Subsidiaries in connection with the Transactions or pursuant to arrangements described in clause
(f) of this Section 6.05;
(e)
loans, advances, provision of credit support and other investments by (or to) the
Borrower and the Subsidiaries;
(f)
employment and severance arrangements among the Borrower and the Subsidiaries
and their respective officers and employees in the ordinary course of business;
(g)
payments by the Borrower and the Subsidiaries pursuant to tax sharing agreements
among the Borrower and the Subsidiaries on customary terms to the extent attributable to the ownership or
operation of the Borrower and the Subsidiaries;
(h)
the payment of customary fees and reasonable out of pocket costs to, and indemnities
provided on behalf of, directors, managers, consultants, officers and employees of the Borrower and the
Subsidiaries in the ordinary course of business to the extent attributable to the ownership or operation of the
Borrower and the Subsidiaries; and
(i)
transactions pursuant to agreements set forth on Schedule 6.05 or any amendment
thereto to the extent such an amendment is not adverse, taken as a whole, to the Lenders in any material
respect.
SECTION 6.06
Restrictive Agreements. The Borrower will not, and will not permit
any of the Material Subsidiaries that are not Guarantors to, directly or indirectly, enter into, incur or permit
to exist any agreement or other arrangement that prohibits, restricts or imposes any condition upon the ability
of any non-Guarantor Material Subsidiary to pay dividends or other distributions with respect to any shares
of its Capital Stock or to make or repay loans (including subordinate loans) or advances to the Borrower or
any Guarantor, provided that the foregoing shall not apply to (a) restrictions and conditions imposed by law
or by this Agreement, (b) customary restrictions and conditions contained in agreements relating to the sale
of all or substantially all of the Capital Stock or assets of a Subsidiary pending such sale, provided such
restrictions and conditions apply only to the Subsidiary that is to be sold and such sale is permitted hereunder,
(c) restrictions and conditions existing on the date hereof identified on Schedule 6.06 (but shall apply to
any extension or renewal of, or any amendment or modification expanding the scope of, any such restriction
51
EXHIBIT 10.15
or condition) and (d) restrictions or conditions contained in, or existing by reason of, any agreement or
instrument relating to any Subsidiary at the time such Subsidiary was merged or consolidated with or into,
or acquired by, the Borrower or a Subsidiary or became a Subsidiary and not created in contemplation thereof.
SECTION 6.07
Ratio of Consolidated Net Indebtedness to Consolidated EBITDA.
Commencing with the last day of the first full fiscal quarter following the Closing Date and on the last day
of each fiscal quarter ended thereafter, the Borrower will not permit the ratio of Consolidated Net Indebtedness
to Consolidated EBITDA for the most recent four full fiscal quarters ended as of the last day of such applicable
fiscal quarter, to exceed 5.50:1.00.
In addition, for purposes of this Section 6.07, Hybrid Securities up to an aggregate amount
of 5% of Total Capitalization (after giving effect to the following exclusion) shall be excluded from
Consolidated Net Indebtedness.
SECTION 6.08
Use of Proceeds. The Borrower will not request any Borrowing, and
the Borrower shall not use, and shall procure that its Subsidiaries and its or their respective directors, officers,
employees and agents shall not use, the proceeds of any Borrowing (A) in furtherance of an offer, payment,
promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person
in violation of any Anti-Corruption Laws, (B) for the purpose of funding, financing or facilitating any
activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country, or (C) in
any manner that would result in the violation of any Sanctions applicable to any party hereto.
ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.01
Events of Default and Remedies. If any of the following events (“Events
of Default”) shall occur and be continuing:
(a)
the principal of any Loan shall not be paid when and as the same shall become due
and payable, whether at the due date thereof or at a date fixed for prepayment thereof or otherwise;
(b)
any interest on any Loan or any fee or any other amount (other than an amount
referred to in clause (a) of this Article) payable by a Loan Party under this Agreement or any other Loan
Document shall not be paid, when and as the same shall become due and payable, and such failure shall
continue unremedied for a period of five Business Days;
(c)
any representation or warranty made or, for purposes of Article III, deemed made
by or on behalf of the Borrower herein, at the direction of the Borrower or by any Loan Party in any other
Loan Document or in any document, certificate or financial statement delivered in connection with this
Agreement or any other Loan Document shall prove to have been incorrect in any material respect when
made or deemed made or reaffirmed, as the case may be;
(d)
the Borrower shall fail to observe or perform any covenant, condition or agreement
contained in Section 5.01(d)(i), 5.02 (with respect to the Borrower’s existence) or 5.07 or in Article VI;
(e)
any Loan Party shall fail to perform or observe any other term, covenant or agreement
contained in this Agreement (other than those specified in Section 7.01(a), Section 7.01(b) or Section 7.01(d))
or any other Loan Document to which it is a party and, in any event, such failure shall
52
EXHIBIT 10.15
remain unremedied for 30 calendar days after the earlier of (i) written notice of such failure shall have been
given to the Borrower by the Administrative Agent or any Lender or, (ii) a Responsible Officer of the Borrower
becomes aware of such failure;
(f)
other than as specified in Section 7.01(a) or (b), (i) the Borrower or any Subsidiary
fails to make (whether as primary obligor or as guarantor or other surety) any payment of principal of, or
interest or premium, if any, on any item or items of Indebtedness (other than as specified in Section 7.01(a)
or Section 7.01(b)) or any payment in respect of any Hedging Agreement, in each case when the same
becomes due and payable (whether by scheduled maturity, required payment or prepayment, acceleration,
demand or otherwise), beyond any period of grace provided with respect thereto (not to exceed 30 days);
provided that the aggregate outstanding principal amount of all Indebtedness or payment obligations in
respect of all Hedging Agreements as to which such a payment default shall occur and be continuing is equal
to or exceeds $150,000,000, or (ii) the Borrower or any Subsidiary fails to duly observe, perform or comply
with any agreement with any Person or any term or condition of any instrument, if such failure, either
individually or in the aggregate, shall have resulted in the acceleration of the payment of Indebtedness with
an aggregate face amount which is equal to or exceeds $150,000,000; provided that this Section 7.01(f) shall
not apply to secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property
or assets securing such Indebtedness, so long as such Indebtedness is paid in full when due;
(g)
an involuntary case shall be commenced or an involuntary petition shall be filed
seeking (i) liquidation, reorganization or other relief in respect of the Borrower or any Material Subsidiary
or its debts, or of a substantial part of its assets, under any Debtor Relief Laws or (ii) the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any Material
Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall
continue undismissed for 60 days or an order or decree approving or ordering any of the foregoing shall be
entered;
(h)
the Borrower or any Material Subsidiary shall (i) voluntarily commence any
proceeding or file any petition seeking liquidation, winding-up, reorganization or other relief under any
Debtor Relief Laws, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner,
any proceeding or petition described in Section 7.01(g), (iii) apply for or consent to the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any Material
Subsidiary or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a
petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or
(vi) take any action for the purpose of effecting any of the foregoing;
(i)
the Borrower or any Material Subsidiary shall become unable, admit in writing or
fail generally to pay its debts as they become due;
(j)
one or more judgments for the payment of money in an aggregate amount in excess
of $150,000,000 shall be rendered against the Borrower, any Subsidiary or any combination thereof and the
same shall (x) not be covered by insurance and (y) remain undischarged for a period of 60 consecutive days
during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment
creditor to attach or levy upon any assets of the Borrower or any Subsidiary to enforce any such judgment;
(k)
a Change in Control shall occur;
(l)
any member of the ERISA Group shall fail to pay when due an amount which it
shall have become liable to pay under Title IV of ERISA; or notice of intent to terminate a Plan shall be filed
under Title IV of ERISA by any member of the ERISA Group, any plan administrator or any combination
53
EXHIBIT 10.15
of the foregoing; or the PBGC shall institute proceedings under Title IV of ERISA to terminate, to impose
liability (other than for premiums under Section 4007 of ERISA) in respect of, or to cause a trustee to be
appointed to administer any Plan; or a condition shall exist by reason of which the PBGC would be entitled
to obtain a decree adjudicating that any Plan must be terminated; or there shall occur a complete or partial
withdrawal from, or a default, within the meaning of Section 4219(c)(5) of ERISA, with respect to, one or
more Multiemployer Plans which could cause one or more members of the ERISA Group to incur a current
payment obligation; and in each of the foregoing instances such condition could reasonably be expected to
result in a Material Adverse Effect;
then, and in any such event, and at any time thereafter (but for the avoidance of doubt, in each case, not prior
to the Closing Date) if any Event of Default shall then be continuing, the Administrative Agent, may, and
upon the written request of the Required Lenders shall, by written notice (including notice sent by telecopy
or electronic mail) to the Borrower (a “Notice of Default”) take any or all of the following actions, without
prejudice to the rights of the Administrative Agent, any Lender or other holder of any of the Obligations to
enforce its claims against the Borrower (provided that, if an Event of Default specified in Section 7.01(g)
or Section 7.01(h) shall occur with respect to the Borrower or any Material Subsidiary, the actions described
in clauses (i), (ii) and (v) below shall occur automatically without the giving of any Notice of Default): (i)
declare the Total Commitment terminated, whereupon the Commitments of the Lenders shall forthwith
terminate immediately and any accrued Commitment Fees shall forthwith become due and payable without
any other notice of any kind; (ii) declare the principal of and any accrued interest in respect of all Loans,
and all the other Obligations owing hereunder and under the other Loan Documents, to be, whereupon the
same shall become, forthwith due and payable without presentment, demand, notice of demand or of dishonor
and nonpayment, protest, notice of protest, notice of intent to accelerate, declaration or notice of acceleration
or any other notice of any kind, all of which are hereby waived by the Borrower; and (iii) exercise any rights
or remedies under the Loan Documents.
ARTICLE VIII
THE ADMINISTRATIVE AGENT
SECTION 8.01
Appointment and Authority. Each of the Lenders hereby irrevocably
appoints Barclays Bank PLC to act on its behalf as the Administrative Agent hereunder and under the other
Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise
such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such
actions and powers as are reasonably incidental thereto. The provisions of this Article are solely for the
benefit of the Administrative Agent, the Lenders and, except as specifically provided in Section 8.06(a) and
(b), the Borrower shall not have rights as a third-party beneficiary of any of such provisions. It is understood
and agreed that the use of the term “agent” herein or in any other Loan Documents (or any other similar
term) with reference to the Administrative Agent is not intended to connote any fiduciary or other implied
(or express) obligations arising under agency doctrine of any applicable law. Instead such term is used as a
matter of market custom, and is intended to create or reflect only an administrative relationship between
contracting parties.
SECTION 8.02
Rights as a Lender. The Person serving as the Administrative Agent
hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not the Administrative Agent, and the term “Lender” or “Lenders” shall,
unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as
the Administrative Agent hereunder in its individual capacity. Such Person and its Affiliates may accept
deposits from, lend money to, own securities of, act as the financial advisor or in any other advisory capacity
for, and generally engage in any kind of business with, the Borrower or any Subsidiary or other Affiliate
54
EXHIBIT 10.15
thereof as if such Person were not the Administrative Agent hereunder and without any duty to account
therefor to the Lenders.
SECTION 8.03
Exculpatory Provisions.
(a)
The Administrative Agent shall not have any duties or obligations except those
expressly set forth herein and in the other Loan Documents, and its duties hereunder shall be administrative
in nature. Without limiting the generality of the foregoing, the Administrative Agent:
(i)
shall not be subject to any fiduciary or other implied duties, regardless of
whether a Default or an Event of Default has occurred and is continuing;
(ii)
shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly contemplated hereby or by
the other Loan Documents that the Administrative Agent is required to exercise as directed in writing
by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly
provided for herein or in the other Loan Documents); provided that the Administrative Agent shall
not be required to take any action that, in its opinion or the opinion of its counsel, may expose the
Administrative Agent to liability or that is contrary to any Loan Document or applicable law,
including for the avoidance of doubt any action that may be in violation of the automatic stay under
any Debtor Relief Law or that may effect a forfeiture, modification or termination of property of a
Defaulting Lender in violation of any Debtor Relief Law; and
(iii)
shall not, except as expressly set forth herein and in the other Loan
Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any
information relating to the Borrower or any of its Affiliates that is communicated to or obtained by
the Person serving as the Administrative Agent or any of its Affiliates in any capacity.
(b)
The Administrative Agent shall not be liable for any action taken or not taken by it
(i) with the consent or at the request of the Required Lenders (or such other number or percentage of the
Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary,
under the circumstances as provided in Sections 9.02 and 9.03) or (ii) in the absence of its own gross
negligence or willful misconduct as determined by a court of competent jurisdiction by final and
nonappealable judgment. The Administrative Agent shall be deemed not to have knowledge of any Default
or Event of Default unless and until notice describing such Default is given to the Administrative Agent in
writing by the Borrower or a Lender.
(c)
The Administrative Agent shall not be responsible for or have any duty to ascertain
or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement
or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder
or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the
covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default
or Event of Default or the enforceability, effectiveness or genuineness of this Agreement, any other Loan
Document or any other agreement, instrument or document, or (v) the satisfaction of any condition set forth
in Article III or elsewhere herein, other than to confirm receipt of items expressly required to be delivered
to the Administrative Agent.
SECTION 8.04
Reliance by Administrative Agent. The Administrative Agent shall be
entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing (including any electronic message, Internet or intranet
55
EXHIBIT 10.15
website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise
authenticated by the proper Person. The Administrative Agent also may rely upon any statement made to it
orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any
liability for relying thereon. In determining compliance with any condition hereunder to the making or
extension of a Loan that by its terms must be fulfilled to the satisfaction of a Lender, the Administrative
Agent may presume that such condition is satisfactory to such Lender unless the Administrative Agent shall
have received notice to the contrary from such Lender prior to the making or extension of such Loan. The
Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent
accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in
accordance with the advice of any such counsel, accountants or experts.
SECTION 8.05
Delegation of Duties. The Administrative Agent may perform any and
all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through
any one or more sub agents appointed by the Administrative Agent. The Administrative Agent and any such
sub agent may perform any and all of its duties and exercise its rights and powers by or through their respective
Related Parties. The exculpatory provisions of this Article shall apply to any such sub agent and to the
Related Parties of the Administrative Agent and any such sub agent, and shall apply to their respective
activities in connection with the syndication of the revolving credit facility provided for herein as well as
activities as Administrative Agent. The Administrative Agent shall not be responsible for the negligence or
misconduct of any sub-agents except to the extent that a court of competent jurisdiction determines in a final
and nonappealable judgment that the Administrative Agent acted with gross negligence or willful misconduct
in the selection of such sub agents.
SECTION 8.06
Resignation of Administrative Agent.
(a)
The Administrative Agent may at any time give notice of its resignation to the
Lenders and the Borrower. Upon receipt of any such notice of resignation, the Required Lenders shall have
the right to appoint a successor, subject to (so long as no Default or Event of Default exists) the prior written
consent of the Borrower (which consent will not be unreasonably withheld or delayed), which shall be a
bank with an office in the United States, or an Affiliate of any such bank with an office in the United States.
If no such successor shall have been so appointed by the Required Lenders and shall have accepted such
appointment within 30 days after the retiring Administrative Agent gives notice of its resignation (or such
earlier day as shall be agreed by the Required Lenders) (the “Resignation Effective Date”), then the retiring
Administrative Agent may (but shall not be obligated to), subject to (so long as no Default or Event of Default
exists) the prior written consent of the Borrower (which consent will not be unreasonably withheld), on
behalf of the Lenders, appoint a successor Administrative Agent meeting the qualifications set forth above.
Whether or not a successor has been appointed, such resignation shall become effective in accordance with
such notice on the Resignation Effective Date.
(b)
If the Person serving as Administrative Agent is a Defaulting Lender pursuant to
clause (d) of the definition thereof, the Required Lenders may, to the extent permitted by applicable law, by
notice in writing to the Borrower and such Person remove such Person as Administrative Agent and, subject
to (so long as no Default or Event of Default exists) the prior written consent of the Borrower (which consent
will not be unreasonably withheld or delayed), appoint a successor. If no such successor shall have been so
appointed by the Required Lenders and shall have accepted such appointment within 30 days (or such earlier
day as shall be agreed by the Required Lenders) (the “Removal Effective Date”), then such removal shall
nonetheless become effective in accordance with such notice on the Removal Effective Date.
With effect from the Resignation Effective Date or the Removal Effective Date (as
applicable) (1) the retiring or removed Administrative Agent shall be discharged from its duties and
(c)
56
EXHIBIT 10.15
obligations hereunder and under the other Loan Documents (except that in the case of any collateral security
held by the Administrative Agent on behalf of the Lenders under any of the Loan Documents, the retiring
or removed Administrative Agent shall continue to hold such collateral security until such time as a successor
Administrative Agent is appointed) and (2) except for any indemnity payments owed to the retiring or
removed Administrative Agent, all payments, communications and determinations provided to be made by,
to or through the Administrative Agent shall instead be made by or to each Lender directly, until such time,
if any, as the Required Lenders appoint a successor Administrative Agent as provided for above. Upon the
acceptance of a successor’s appointment as Administrative Agent hereunder, such successor shall succeed
to and become vested with all of the rights, powers, privileges and duties of the retiring or removed
Administrative Agent (other than any rights to indemnity payments owed to the retiring or removed
Administrative Agent), and the retiring or removed Administrative Agent shall be discharged from all of its
duties and obligations hereunder or under the other Loan Documents. The fees payable by the Borrower to
a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise
agreed between the Borrower and such successor. After the retiring or removed Administrative Agent’s
resignation or removal hereunder and under the other Loan Documents, the provisions of this Article and
Section 9.03 shall continue in effect for the benefit of such retiring or removed Administrative Agent, its sub
agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of
them while the retiring or removed Administrative Agent was acting as Administrative Agent.
SECTION 8.07
Non-Reliance on Administrative Agent and Other Lenders.
(a)
Each Lender acknowledges that it has, independently and without reliance upon the
Administrative Agent or any other Lender or any of their Related Parties and based on such documents and
information as it has deemed appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender or any of their Related Parties and based on such documents and
information as it shall from time to time deem appropriate, continue to make its own decisions in taking or
not taking action under or based upon this Agreement, any other Loan Document or any related agreement
or any document furnished hereunder or thereunder.
(b)
Each Lender acknowledges that Simpson Thacher & Bartlett LLP is acting in this
transaction as special legal counsel to the Administrative Agent only. Each Lender will consult with its own
legal counsel to the extent it deems necessary with this Agreement and the other Loan Documents and the
matters contemplated herein and therein.
SECTION 8.08
INDEMNIFICATION. THE LENDERS AGREE TO INDEMNIFY
THE ADMINISTRATIVE AGENT, THE ARRANGERS, THE SYNDICATION AGENT AND THE
DOCUMENTATION AGENTS RATABLY IN ACCORDANCE WITH THEIR APPLICABLE
PERCENTAGES FOR THE INDEMNITY MATTERS AS DESCRIBED IN SECTION 9.03 TO THE
EXTENT NOT INDEMNIFIED OR REIMBURSED BY THE BORROWER UNDER SECTION 9.03,
BUT WITHOUT LIMITING THE OBLIGATIONS OF THE BORROWER UNDER SAID SECTION
9.03 AND FOR ANY AND ALL OTHER LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES,
PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES OR DISBURSEMENTS OF
ANY KIND AND NATURE WHATSOEVER WHICH MAY BE IMPOSED ON, INCURRED BY OR
ASSERTED AGAINST THE ADMINISTRATIVE AGENT, ANY ARRANGER, THE
SYNDICATION AGENT OR ANY DOCUMENTATION AGENT IN ANY WAY RELATING TO OR
(A) THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
ARISING OUT OF:
CONTEMPLATED BY OR REFERRED TO HEREIN OR THE TRANSACTIONS
CONTEMPLATED HEREBY, BUT EXCLUDING, UNLESS A DEFAULT OR AN EVENT OF
DEFAULT HAS OCCURRED AND IS CONTINUING, NORMAL ADMINISTRATIVE COSTS AND
57
EXHIBIT 10.15
EXPENSES INCIDENT TO THE PERFORMANCE OF ITS AGENCY DUTIES, IF ANY,
HEREUNDER OR UNDER ANY SUCH OTHER LOAN DOCUMENT OR (B) THE
ENFORCEMENT OF ANY OF THE TERMS OF THIS AGREEMENT OR OF ANY OTHER LOAN
DOCUMENT; WHETHER OR NOT ANY OF THE FOREGOING SPECIFIED IN THIS SECTION
8.08 ARISES FROM THE SOLE OR CONCURRENT NEGLIGENCE OF THE ADMINISTRATIVE
AGENT, ANY ARRANGER, THE SYNDICATION AGENT OR ANY DOCUMENTATION AGENT,
AS THE CASE MAY BE; PROVIDED THAT NO LENDER SHALL BE LIABLE FOR ANY OF THE
FOREGOING TO THE EXTENT THEY ARISE FROM THE GROSS NEGLIGENCE, WILLFUL
MISCONDUCT OR UNLAWFUL CONDUCT OF THE ADMINISTRATIVE AGENT, ANY
ARRANGER, THE SYNDICATION AGENT OR ANY DOCUMENTATION AGENT AS
DETERMINED BY A COURT OF COMPETENT JURISDICTION IN A FINAL AND
NONAPPEALABLE JUDGMENT.
SECTION 8.09
No Reliance on Agents or other Lenders. Each Lender acknowledges
and agrees that it has, independently and without reliance on the Administrative Agent, any Arranger, the
Syndication Agent, any Documentation Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own credit analysis of the Borrower and its Subsidiaries
and its decision to enter into this Agreement, and that it will, independently and without reliance upon the
Administrative Agent, any Arranger, the Syndication Agent, any Documentation Agent or any other Lender,
and based on such documents and information as it shall deem appropriate at the time, continue to make its
own analysis and decisions in taking or not taking action under this Agreement. None of the Administrative
Agent, the Arrangers, the Syndication Agent or the Documentation Agents shall be required to keep itself
informed as to the performance or observance by the Borrower of this Agreement, the other Loan Documents
or any other document referred to or provided for herein or to inspect the properties or books of the Borrower.
Except for notices, reports and other documents and information expressly required to be furnished to the
Lenders by the Administrative Agent hereunder, none of the Administrative Agent, the Arrangers, the
Syndication Agent or the Documentation Agents shall have any duty or responsibility to provide any Lender
with any credit or other information concerning the affairs, financial condition or business of the Borrower
(or any of its Affiliates) which may come into the possession of the Administrative Agent, any Arranger, the
Syndication Agent, any Documentation Agent or any of their respective Affiliates. In this regard, each Lender
acknowledges that Simpson Thacher & Bartlett LLP is acting in this transaction as special counsel to the
Administrative Agent only. Each Lender will consult with its own legal counsel to the extent that it deems
necessary in connection with this Agreement and other Loan Documents and the matters contemplated herein
and therein.
SECTION 8.10
Duties of the Syndication Agent, Documentation Agents, Arrangers.
Notwithstanding the indemnity of the Syndication Agent, the Documentation Agents and the Arrangers
contained in Section 8.08 and in Section 9.03, nothing contained in this Agreement shall be construed to
impose any obligation or duty whatsoever on any Person named on the cover of this Agreement or elsewhere
in this Agreement as a Syndication Agent, a Documentation Agent, an Arranger, a “lead arranger” or a
“bookrunner”, other than those applicable to all Lenders as such.
SECTION 8.11
Certain ERISA Matters.
(a)
Each Lender (x) represents and warrants, as of the date such Person became a Lender
party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such
Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent and the Joint Lead
Arrangers and their respective Affiliates, and not, for the avoidance of doubt, to or for the benefit of the
Borrower or any other Loan Party, that at least one of the following is and will be true:
58
EXHIBIT 10.15
(i)
such Lender is not using “plan assets” (within the meaning of the Plan Asset
Regulations) of one or more Benefit Plans in connection with the Loans or the Commitments,
(ii)
the transaction exemption set forth in one or more PTEs, such as PTE 84-14
(a class exemption for certain transactions determined by independent qualified professional asset
managers), PTE 95-60 (a class exemption for certain transactions involving insurance company
general accounts), PTE 90-1 (a class exemption for certain transactions involving insurance company
pooled separate accounts), PTE 91-38 (a class exemption for certain transactions involving bank
collective investment funds) or PTE 96-23 (a class exemption for certain transactions determined
by in-house asset managers), is applicable with respect to such Lender’s entrance into, participation
in, administration of and performance of the Loans, the Commitments and this Agreement, and the
conditions for exemptive relief thereunder are and will continue to be satisfied in connection
therewith,
(iii)
(A) such Lender is an investment fund managed by a “Qualified
Professional Asset Manager” (within the meaning of Part VI of PTE 84-14), (B) such Qualified
Professional Asset Manager made the investment decision on behalf of such Lender to enter into,
participate in, administer and perform the Loans, the Commitments and this Agreement, (C) the
entrance into, participation in, administration of and performance of the Loans, the Commitments
and this Agreement satisfies the requirements of sub-sections (b) through (g) of Part I of PTE 84-14
and (D) to the best knowledge of such Lender, the requirements of subsection (a) of Part I of PTE
84-14 are satisfied with respect to such Lender’s entrance into, participation in, administration of
and performance of the Loans, the Commitments and this Agreement, or
(iv)
such other representation, warranty and covenant as may be agreed in
writing between the Administrative Agent, in its sole discretion, and such Lender.
(b)
In addition, unless sub-clause (i) in the immediately preceding clause (a) is true
with respect to a Lender or such Lender has not provided another representation, warranty and covenant as
provided in sub-clause (iv) in the immediately preceding clause (a), such Lender further (x) represents and
warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such
Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the
benefit of, the Administrative Agent and the Joint Lead Arrangers and their respective Affiliates, and not,
for the avoidance of doubt, to or for the benefit of the Borrower or any other Loan Party, that none of the
Administrative Agent or the Joint Leader Arrangers or any of their respective Affiliates is a fiduciary with
respect to the assets of such Lender (including in connection with the reservation or exercise of any rights
by the Administrative Agent under this Agreement, any Loan Document or any documents related to hereto
or thereto),
(c)
The Administrative Agent and the Joint Leader Arrangers hereby inform the Lenders
that each such Person is not undertaking to provide impartial investment advice, or to give advice in a
fiduciary capacity, in connection with the transactions contemplated hereby, and that such Person has a
financial interest in the transactions contemplated hereby in that such Person or an Affiliate thereof (i) may
receive interest or other payments with respect to the Loans, the Commitments and this Agreement, (ii) may
recognize a gain if it extended the Loans or the Commitments for an amount less than the amount being paid
for an interest in the Loans or the Commitments by such Lender or (iii) may receive fees or other payments
in connection with the transactions contemplated hereby, the Loan Documents or otherwise, including
structuring fees, commitment fees, arrangement fees, facility fees, upfront fees, underwriting fees, ticking
fees, agency fees, administrative agent or collateral agent fees, utilization fees, minimum usage fees, letter
of credit fees, fronting fees, deal-away or alternate transaction fees, amendment fees, processing fees, term
59
out premiums, banker’s acceptance fees, breakage or other early termination fees or fees similar to the
foregoing.
EXHIBIT 10.15
ARTICLE IX
MISCELLANEOUS
SECTION 9.01
Notices, Etc.
(a)
All notices, consents, requests, approvals, demands and other communications
(collectively “Communications”) provided for herein shall be in writing (including facsimile
Communications) and mailed, telecopied or delivered:
(i)
if to the Borrower, to it at:
1001 Louisiana Street, Suite 1000
Houston, Texas 77002
Anthony Ashley
Attention:
Telecopy No.: (713) 445-8302;
With a copy to:
1001 Louisiana Street, Suite 1000
Houston, Texas 77002
Attention:
General Counsel
Telecopy No.: (713) 495-2877;
(ii)
if to the Administrative Agent, to it at
c/o Barclays Bank PLC
745 Seventh Avenue
27th Floor
New York, NY 10019
Attention: Patrick Shields
Email: patrick.shields@barclays.com
Phone: 212-526-9531
(i)
if to any other Lender, to it at its address (or telecopy number) set forth in
the Administrative Questionnaire delivered by such Person to the Administrative Agent or in the
Assignment and Acceptance executed by such Person;
or, in the case of any party hereto, such other address or telecopy number as such party may hereafter specify
for such purpose by notice to the other parties.
(b)
Communications to the Lenders hereunder may be delivered or furnished by
electronic communications (including electronic mail and internet or intranet websites) pursuant to
procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices
pursuant to Article II unless otherwise agreed by the Administrative Agent and the applicable Lender. The
Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications
to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval
of such procedures may be limited to particular notices or communications.
60
EXHIBIT 10.15
(c)
Unless the Administrative Agent otherwise prescribes, (i) notices and other
communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an
acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available,
return e-mail or other written acknowledgement), and (ii) notices or communications posted to an Internet
or intranet website shall be deemed received upon the deemed receipt by the intended recipient, at its e-mail
address as described in the foregoing clause (i), of notification that such notice or communication is available
and identifying the website address therefor; provided that, for both clauses (i) and (ii) above, if such notice,
email or other communication is not sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on the next business day for
the recipient.
(d)
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto.
(e)
Platform.
(i)
The Borrower agrees that the Administrative Agent may, but shall not be
obligated to, make the Communications available to the Lenders by posting the Communications
on Debt Domain, Intralinks, Syndtrak or a substantially similar electronic transmission system (the
“Platform”).
The Platform is provided “as is” and “as available.” The Agent Parties (as defined below) do not warrant
the adequacy of the Platform and expressly disclaim liability for errors or omissions in the Electronic
Communications (as defined below). No warranty of any kind, express, implied or statutory, including,
without limitation, any warranty of merchantability, fitness for a particular purpose, non-infringement of
third-party rights or freedom from viruses or other code defects, is made by any Agent Party in connection
with the Communications or the Platform. In no event shall the Administrative Agent or any of its Related
Parties (collectively, the “Agent Parties”) have any liability to the Borrower, any Lender or any other Person
or entity for damages of any kind, including, without limitation, direct or indirect, special, incidental or
consequential damages, losses or expenses (whether in tort, contract or otherwise) arising out of the Borrower
or the Administrative Agent’s transmission of communications through the Platform. “Electronic
Communications” means, collectively, any notice, demand, communication, information, document or other
material provided by or on behalf of the Borrower pursuant to any Loan Document or the transactions
contemplated therein which is distributed to the Administrative Agent or any Lender by means of electronic
communications pursuant to this Section, including through the Platform.
SECTION 9.02 Waivers; Amendments; Releases.
(a)
No failure or delay by the Administrative Agent or any Lender in exercising, and
no course of dealing with respect to, any right or power hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right
or power. No notice to or demand on the Borrower in any case shall entitle the Borrower to any other or
further notice or demand in similar or other circumstances. No waiver of any provision of this Agreement
or consent to any departure therefrom shall in any event be effective unless the same shall be permitted by
Section 9.02(b), and then such waiver or consent shall be effective only in the specific instance and for the
purpose for which given. Without limiting the generality of the foregoing, the making of a Loan shall not
be construed as a waiver of any Default or Event of Default, regardless of whether the Administrative Agent
or any Lender may have had notice or knowledge of such Default at the time.
61
EXHIBIT 10.15
(b)
No provision of this Agreement or any other Loan Document (other than each Fee
Letter, which may be amended by the parties thereto) provision may be waived, amended or modified except
pursuant to an agreement or agreements in writing entered into by the Borrower (or to the extent another
Loan Party and not the Borrower is party thereto, such Loan Party) and the Required Lenders or by the
Borrower and the Administrative Agent with the consent of the Required Lenders; provided that no such
agreement shall (i) increase the Commitment of any Lender without the written consent of such Lender, (ii)
reduce the principal amount of any Loan or reduce the rate of interest thereon, or reduce any fees payable
hereunder, without the written consent of each Lender affected thereby (for the avoidance of doubt, any
amendment imposing an alternative interest rate basis in accordance with Section 2.13(b) shall become
effective as provided in Section 2.13(b)), (iii) postpone the scheduled date of payment of the principal amount
of any Loan, or any interest thereon, or any fees or other amounts payable hereunder, or reduce the amount
of, waive or excuse any such payment, or postpone the scheduled date of expiration of any Commitment,
without the written consent of each Lender affected thereby, (iv) change Section 2.17(b) or (c) in a manner
that would alter the pro rata sharing of payments required thereby, without the written consent of each
Lender, (v) amend Section 2.19 without the consent of the Administrative Agent, in addition to the consent
of the Required Lenders, (vi) release all or substantially all of the value of the Guarantees under the Guaranty
or change any of the provisions of this Section 9.02(b), or the definition of “Required Lenders” or any other
provision hereof specifying the number or percentage of Lenders required to waive, amend or modify any
rights hereunder or make any determination or grant any consent hereunder, without the written consent of
each Lender; provided, further, that no such agreement shall amend, modify or otherwise affect the rights
or duties of the Administrative Agent hereunder without the prior written consent of the Administrative
Agent. Except as provided herein, during such period as a Lender is a Defaulting Lender, to the fullest extent
permitted by applicable law, such Lender will not be entitled to vote in respect of amendments and waivers
hereunder and the Commitment and the outstanding Loans or other extensions of credit of such Lender
hereunder will not be taken into account in determining whether the Required Lenders or all of the Lenders,
as required, have approved any such amendment or waiver (and the definition of “Required Lenders” will
automatically be deemed modified accordingly for the duration of such period); provided that any such
amendment or waiver referred to in clauses (i) through (vi) or the first of this Section 9.02(b) above or that
would alter the terms set forth in such proviso shall require the consent of such Defaulting Lender.
Notwithstanding the foregoing, the Administrative Agent and the Borrower may amend any Loan Document
to correct any obvious errors, mistakes, omissions, defects or inconsistencies and such amendment shall
become effective without any further consent of any other party to such Loan Document other than the
Administrative Agent and the Borrower.
(c)
The Lenders hereby irrevocably agree that any Guarantor shall be automatically
released from the Guarantee upon consummation of any transaction not prohibited hereunder resulting in
such Subsidiary ceasing to constitute a Subsidiary or upon any Subsidiary becoming an Excluded Subsidiary,
provided that with respect to any Excluded Subsidiary that is a Guarantor on the Closing Date or that has
become a Guarantor after the Closing Date at the request of the Borrower, such Excluded Subsidiary shall
be automatically released from the Guaranty upon written notice thereof from a Responsible Officer of the
Borrower to the Administrative Agent certifying that (i) such Excluded Subsidiary is an Excluded Subsidiary
and (ii) on such date, or concurrently with such release, such Excluded Subsidiary shall be automatically
released as a guarantor under the Cross Guarantee Agreement, dated as of November 26, 2014 (as amended,
restated, supplemented or otherwise modified from time to time) entered by the Borrower and the other
signatories party thereto, and is not a guarantor of the Bonds or any other material Indebtedness of the
Borrower or any Subsidiary. The Lenders hereby authorize the Administrative Agent to execute and deliver
any instruments, documents, and agreements necessary or desirable to evidence and confirm the release of
any Guarantor pursuant to the foregoing provisions of this paragraph, all without the further consent or
joinder of any Lender.
62
EXHIBIT 10.15
SECTION 9.03
Payment of Expenses, Indemnities, etc. The Borrower agrees:
(a)
to pay (i) all reasonable out-of-pocket expenses incurred by the Administrative
Agent and its Affiliates, including the reasonable fees, charges and disbursements of counsel for the
Administrative Agent, in connection with the syndication of the credit facility provided for herein, the
preparation and administration of this Agreement or any amendments, modifications or waivers of the
provisions hereof and (ii) all out-of-pocket expenses incurred by the Administrative Agent or any Lender,
including the fees, charges and disbursements of any counsel for the Administrative Agent or any Lender,
in connection with the enforcement or protection of its rights in connection with this Agreement, including
its rights under this Section, or in connection with the Loans made hereunder, including all such out-of-
pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans.
(b)
TO INDEMNIFY THE ADMINISTRATIVE AGENT, EACH ARRANGER, THE
SYNDICATION AGENT, EACH DOCUMENTATION AGENT AND EACH LENDER AND EACH OF
THEIR AFFILIATES AND EACH OF THEIR OFFICERS, DIRECTORS, EMPLOYEES,
REPRESENTATIVES, AGENTS, ATTORNEYS, ACCOUNTANTS AND EXPERTS (“INDEMNIFIED
PARTIES”) FROM, HOLD EACH OF THEM HARMLESS AGAINST AND PROMPTLY UPON
DEMAND PAY OR REIMBURSE EACH OF THEM FOR, THE INDEMNITY MATTERS WHICH MAY
BE REASONABLY INCURRED BY OR ASSERTED AGAINST OR INVOLVE ANY OF THEM
(WHETHER OR NOT ANY OF THEM IS DESIGNATED A PARTY THERETO AND WHETHER OR
NOT THE CLAIM IS BROUGHT BY THE BORROWER OR A THIRD PARTY) AS A RESULT OF,
ARISING OUT OF OR IN ANY WAY RELATED TO (I) ANY ACTUAL OR PROPOSED USE BY THE
BORROWER OF THE PROCEEDS OF ANY OF THE LOANS, (II) THE EXECUTION, DELIVERY AND
PERFORMANCE OF THE LOAN DOCUMENTS, (III) THE OPERATIONS OF THE BUSINESS OF
THE BORROWER AND THE SUBSIDIARIES, (IV) THE FAILURE OF THE BORROWER OR ANY
SUBSIDIARY TO COMPLY WITH THE TERMS OF THIS AGREEMENT, OR WITH ANY
REQUIREMENT OF LAW, (V) ANY INACCURACY OF ANY REPRESENTATION OR ANY BREACH
OF ANY WARRANTY OF THE BORROWER SET FORTH IN ANY OF THE LOAN DOCUMENTS OR
(VI) ANY OTHER ASPECT OF THE LOAN DOCUMENTS, INCLUDING THE REASONABLE FEES
AND DISBURSEMENTS OF COUNSEL AND ALL OTHER EXPENSES INCURRED IN CONNECTION
WITH INVESTIGATING, DEFENDING OR PREPARING TO DEFEND ANY SUCH ACTION, SUIT,
PROCEEDING (INCLUDING ANY INVESTIGATIONS, LITIGATION OR INQUIRIES) OR CLAIM
AND INCLUDING ALL INDEMNITY MATTERS ARISING BY REASON OF THE ORDINARY
NEGLIGENCE OF ANY INDEMNIFIED PARTY, BUT EXCLUDING ALL INDEMNITY MATTERS
ARISING SOLELY (I) BY REASON OF CLAIMS BETWEEN THE LENDERS OR ANY LENDER AND
THE ADMINISTRATIVE AGENT, ANY ARRANGER, THE SYNDICATION AGENT, ANY
DOCUMENTATION AGENT, OR A
SHAREHOLDERS AGAINST THE
ADMINISTRATIVE AGENT OR LENDER (OTHER THAN CLAIMS IN ITS ROLE AS AGENT OR
ARRANGER) OR (II) BY REASON OF THE GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR
INDEMNIFIED PARTY SEEKING
UNLAWFUL CONDUCT ON THE PART OF THE
INDEMNIFICATION AS DETERMINED BY A COURT OF COMPETENT JURISDICTION IN A FINAL
AND NONAPPEALABLE JUDGMENT. FOR THE AVOIDANCE OF DOUBT, THIS SECTION 9.03(B)
SHALL NOT APPLY WITH RESPECT TO TAXES OTHER THAN ANY TAXES THAT REPRESENT
LOSSES, CLAIMS, DAMAGES, ETC. ARISING FROM ANY NON-TAX CLAIM.
LENDER’S
(c)
TO INDEMNIFY AND HOLD HARMLESS FROM TIME TO TIME THE
INDEMNIFIED PARTIES FROM AND AGAINST ANY AND ALL LOSSES, CLAIMS, COST
RECOVERY ACTIONS, ADMINISTRATIVE ORDERS OR PROCEEDINGS, DAMAGES AND
63
EXHIBIT 10.15
LIABILITIES TO WHICH ANY SUCH PERSON MAY BECOME SUBJECT (I) UNDER ANY
ENVIRONMENTAL LAW APPLICABLE TO THE BORROWER OR ANY SUBSIDIARY OR ANY OF
THEIR PROPERTIES OR ASSETS, INCLUDING THE TREATMENT OR DISPOSAL OF HAZARDOUS
MATERIALS ON ANY OF THEIR PROPERTIES OR ASSETS, (II) AS A RESULT OF THE BREACH
OR NON-COMPLIANCE BY THE BORROWER OR ANY SUBSIDIARY WITH ANY
ENVIRONMENTAL LAW APPLICABLE TO THE BORROWER OR ANY SUBSIDIARY, (III) DUE TO
PAST OWNERSHIP BY THE BORROWER OR ANY SUBSIDIARY OF ANY OF THEIR PROPERTIES
OR ASSETS OR PAST ACTIVITY ON ANY OF THEIR PROPERTIES OR ASSETS WHICH, THOUGH
LAWFUL AND FULLY PERMISSIBLE AT THE TIME, COULD RESULT IN PRESENT LIABILITY,
(IV) THE PRESENCE, USE, RELEASE, STORAGE, TREATMENT OR DISPOSAL OF HAZARDOUS
MATERIALS ON OR AT ANY OF THE PROPERTIES OWNED OR OPERATED BY THE BORROWER
OR ANY SUBSIDIARY, OR (V) ANY OTHER ENVIRONMENTAL, HEALTH OR SAFETY
CONDITION IN CONNECTION WITH THE LOAN DOCUMENTS (EXPRESSLY INCLUDING ANY
SUCH CLAIM, DAMAGE LOSS, LIABILITY, COST, PENALTY, FEE OR EXPENSE ATTRIBUTABLE
TO THE ORDINARY, SOLE OR CONTRIBUTORY NEGLIGENCE OF SUCH INDEMNIFIED PARTY,
BUT EXCLUDING ANY SUCH CLAIM, DAMAGE, LOSS, LIABILITY, COST, PENALTY, FEE OR
EXPENSE RESULTING FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH
INDEMNIFIED PARTY AS DETERMINED BY A COURT OF COMPETENT JURISDICTION IN A
FINAL AND NONAPPEALABLE JUDGMENT). FOR THE AVOIDANCE OF DOUBT, THIS SECTION
9.03(C) SHALL NOT APPLY WITH RESPECT TO TAXES OTHER THAN ANY TAXES THAT
REPRESENT LOSSES, CLAIMS, DAMAGES, ETC. ARISING FROM ANY NON-TAX CLAIM.
(d)
No Indemnified Party may settle any claim to be indemnified without the consent
of the indemnitor, such consent not to be unreasonably withheld; provided that the indemnitor may not
reasonably withhold consent to any settlement that an Indemnified Party proposes, if the indemnitor does
not have the financial ability to pay all its obligations outstanding and asserted against the indemnitor at that
time, including the maximum potential claims against the Indemnified Party to be indemnified pursuant to
this Section 9.03.
(e)
In the case of any indemnification hereunder, the Indemnified Party, as appropriate,
shall give notice to the Borrower of any such claim or demand being made against the Indemnified Party
and the Borrower shall have the non-exclusive right to join in the defense against any such claim or demand;
provided that if the Borrower provides a defense, the Indemnified Party shall bear its own cost of defense
unless there is a conflict between the Borrower and such Indemnified Party.
(f)
THE FOREGOING INDEMNITIES SHALL EXTEND TO THE INDEMNIFIED
PARTIES NOTWITHSTANDING THE SOLE OR CONCURRENT NEGLIGENCE OF EVERY KIND
OR CHARACTER WHATSOEVER, WHETHER ACTIVE OR PASSIVE, WHETHER AN
AFFIRMATIVE ACT OR AN OMISSION, INCLUDING, ALL TYPES OF NEGLIGENT CONDUCT
IDENTIFIED IN THE RESTATEMENT (SECOND) OF TORTS OF ONE OR MORE OF THE
INDEMNIFIED PARTIES OR BY REASON OF STRICT LIABILITY IMPOSED WITHOUT FAULT ON
ANY ONE OR MORE OF THE INDEMNIFIED PARTIES. TO THE EXTENT THAT AN INDEMNIFIED
PARTY IS FOUND TO HAVE COMMITTED AN ACT OF GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OR ENGAGED IN UNLAWFUL CONDUCT (AS DETERMINED BY A COURT OF
COMPETENT JURISDICTION IN A FINAL AND NONAPPEALABLE JUDGMENT), THIS
CONTRACTUAL OBLIGATION OF INDEMNIFICATION SHALL CONTINUE BUT SHALL ONLY
EXTEND TO THE PORTION OF THE CLAIM THAT IS DEEMED TO HAVE OCCURRED BY REASON
OF EVENTS OTHER THAN THE GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR UNLAWFUL
CONDUCT OF THE INDEMNIFIED
64
EXHIBIT 10.15
PARTY (AS DETERMINED BY A COURT OF COMPETENT JURISDICTION IN A FINAL AND
NONAPPEALABLE JUDGMENT).
(g)
The Borrower’s obligations under this Section 9.03 shall survive any termination
of this Agreement, the payment of the Loans and shall continue thereafter in full force and effect.
(h)
To the extent that the Borrower fails to pay any amount required to be paid by it to
the Administrative Agent under this Section 9.03, each Lender severally agrees to pay to the Administrative
Agent such Lender’s Applicable Percentage (determined as of the time that the applicable unreimbursed
expense or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed expense
or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or
asserted against the Administrative Agent in its capacity as such.
(i)
The Borrower shall pay any amounts due under this Section 9.03 within 30 days of
the receipt by the Borrower of notice of the amount due.
(j)
To the fullest extent permitted by applicable law, no party shall assert, and each
party hereby waives, any claim against any other party, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection
with, or as a result of this Agreement, any other Loan Document or any agreement or instrument contemplated
hereby, the transactions contemplated hereby or thereby, any Loan or the use of the proceeds thereof; provided,
however, that the foregoing limitation shall not be deemed to impair or affect the indemnification obligations
of the Borrower under the Loan Documents. No Indemnified Party referred to in paragraph (b) above shall
be liable for any damages arising from the use by unintended recipients of any information or other materials
distributed by it through telecommunications, electronic or other information transmission systems in
connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or
thereby.
SECTION 9.04
Successors and Assigns Generally. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns
permitted hereby, except that the Borrower may not assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of the Administrative Agent and each Lender, and no Lender
may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in
accordance with the provisions of Section 9.05(a), (ii) by way of participation in accordance with the
provisions of Section 9.05(c), or (iii) by way of pledge or assignment of a security interest subject to the
restrictions of Section 9.05(d) (and any other attempted assignment or transfer by any party hereto shall be
null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any
Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants
to the extent provided in Section 9.05(c) and, to the extent expressly contemplated hereby, the Related Parties
of each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or
by reason of this Agreement.
SECTION 9.05
Assignments by Lenders.
(a)
Any Lender may at any time assign to one or more assignees all or a portion of its
rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at
the time owing to it); provided that any such assignment shall be subject to the following conditions:
(i)
in the case of an assignment of the entire remaining amount of the
assigning Lender’s Commitment and/or the Loans at the time owing to it or contemporaneous
(A)
65
EXHIBIT 10.15
assignments to related Approved Funds that equal at least the amount specified in paragraph
(a)(i)(B) of this Section; and
(B)
in any case not described in the proviso to paragraph (a)(i)(A) of
this Section, the aggregate amount of the Commitment (which for this purpose includes
Loans outstanding thereunder) or, if the applicable Commitment is not then in effect, the
principal outstanding balance of the Loans of the assigning Lender subject to each such
assignment (determined as of the date the Assignment and Acceptance with respect to such
assignment is delivered to the Administrative Agent or, if “Trade Date” is specified in the
Assignment and Acceptance, as of the Trade Date) shall not be less than $5,000,000, unless
each of the Administrative Agent and, so long as no Event of Default has occurred and is
continuing, the Borrower otherwise consents (each such consent not to be unreasonably
withheld or delayed); provided, however, in the case of an assignment to a Lender, an Affiliate
of a Lender or an Approved Fund, no minimum amount need be assigned.
(ii)
Each partial assignment shall be made as an assignment of a proportionate
part of all the assigning Lender’s rights and obligations under this Agreement with respect to the
Loans or the Commitment assigned.
(iii)
No consent shall be required for any assignment except to the extent required
by paragraph (a)(i)(B) of this Section and, in addition:
(A)
the consent of the Borrower (such consent not to be unreasonably
withheld or delayed) shall be required unless (x) an Event of Default has occurred and is
continuing at the time of such assignment or (y) such assignment is to a Lender, an Affiliate
of a Lender or an Approved Fund, provided that the Borrower’s consent shall not be required
during the primary syndication of the credit facility evidenced by this Agreement; and
(B)
the consent of the Administrative Agent (such consent not to be
unreasonably withheld or delayed) shall be required for assignments if such assignment is
to a Person that is not a Lender, an Affiliate of such Lender or an Approved Fund with respect
to such Lender.
(iv)
The parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Acceptance, together with a processing and recordation
fee of $3,500; provided that the Administrative Agent may, in its sole discretion, elect to waive such
processing and recordation fee in the case of any assignment. The assignee, if it is not a Lender,
shall deliver to the Administrative Agent an Administrative Questionnaire.
(v)
No such assignment shall be made to (A) the Borrower or any of the
Borrower’s Affiliates or Subsidiaries or (B) to any Defaulting Lender or any of its Subsidiaries, or
any Person who, upon becoming a Lender hereunder, would constitute any of the foregoing Persons
described in this clause (B).
(vi)
No such assignment shall be made to a natural Person.
(vii)
In connection with any assignment of rights and obligations of any
Defaulting Lender hereunder, no such assignment shall be effective unless and until, in addition to
the other conditions thereto set forth herein, the parties to the assignment shall make such additional
payments to the Administrative Agent in an aggregate amount sufficient, upon distribution thereof
66
EXHIBIT 10.15
as appropriate (which may be outright payment, purchases by the assignee of participations or
subparticipations, or other compensating actions, including funding, with the consent of the Borrower
and the Administrative Agent, the applicable pro rata share of Loans previously requested but not
funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby
irrevocably consent), to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting
Lender to the Administrative Agent and each other Lender hereunder (and interest and fees accrued
thereon), and (y) acquire (and fund as appropriate) its full pro rata share of all Loans in accordance
with its Applicable Percentage. Notwithstanding the foregoing, in the event that any assignment of
rights and obligations of any Defaulting Lender hereunder shall become effective under applicable
law without compliance with the provisions of this paragraph, then the assignee of such interest
shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance
occurs.
Subject to acceptance and recording thereof by the Administrative Agent pursuant to paragraph (b) of this
Section, from and after the effective date specified in each Assignment and Acceptance, the assignee
thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment
and Acceptance, have the rights and obligations of a Lender under this Agreement, and the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and Acceptance, be released from
its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all of the
assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto)
but shall continue to be entitled to the benefits of Sections 2.14, 2.15 and 9.03 and with respect to facts and
circumstances occurring prior to the effective date of such assignment; provided, that except to the extent
otherwise expressly agreed by the affected parties, no assignment by a Defaulting Lender will constitute a
waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting
Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not
comply with this paragraph shall be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with paragraph (c) of this Section.
(b)
Upon its receipt of a duly completed Assignment and Acceptance executed by an
assigning Lender and an assignee, the assignee’s completed Administrative Questionnaire (unless the
assignee shall already be a Lender hereunder), the processing and recordation fee, if any, referred to in Section
9.05(a) and any written consent to such assignment required by Section 9.05(a), the Administrative Agent
shall accept such Assignment and Acceptance and record the information contained therein in the Register
(as defined below). No assignment shall be effective for purposes of this Agreement unless it has been
recorded in the Register as provided in this paragraph. The Administrative Agent, acting solely for this
purpose as a non-fiduciary agent of the Borrower, shall maintain at one of its offices in New York, New York
a copy of each Assignment and Acceptance delivered to it and a register for the recordation of the names
and addresses of the Lenders, and the Commitments of, and principal amounts (and stated interest) of the
Loans owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries
in the Register shall be conclusive absent manifest error, and the Borrower, the Administrative Agent and
the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as
a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the
Borrower and any Lender (with respect to its own interest only), at any reasonable time and from time to
time upon reasonable prior notice.
(c)
Any Lender may at any time, without the consent of, or notice to, the Borrower or
the Administrative Agent, sell participations to any Person (other than a natural Person or the Borrower or
any of the Borrower’s Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion of such Lender’s
rights and/or obligations under this Agreement (including all or a portion of its Commitment
67
EXHIBIT 10.15
and/or the Loans owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance
of such obligations, and (iii) the Borrower, the Administrative Agent and the Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender’s rights and obligations under this
Agreement. For the avoidance of doubt, each Lender shall be responsible for the indemnity under Section
8.08 with respect to any payments made by such Lender to its Participant(s).
Any agreement or instrument pursuant to which a Lender sells such a participation shall
provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant, agree to any amendment,
modification or waiver described in the first proviso Section 9.02(b) that affects such Participant. The
Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.14, 2.15 and 2.16 (subject
to the requirements and limitations therein, including the requirements under Section 2.16 (it being understood
that the documentation required under Section 2.16 shall be delivered to the participating Lender)) to the
same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (a) of
this Section; provided that such Participant (A) agrees to be subject to the provisions of Sections 2.18 as if
it were an assignee under paragraph (a) of this Section; and (B) shall not be entitled to receive any greater
payment under Sections 2.14 and 2.16, with respect to any participation, than its participating Lender would
have been entitled to receive, except to the extent such entitlement to receive a greater payment results from
a Change in Law that occurs after the Participant acquired the applicable participation. Each Lender that
sells a participation agrees, at the Borrower’s request and expense, to use reasonable efforts to cooperate
with the Borrower to effectuate the provisions of Section 2.18 with respect to any Participant. To the extent
permitted by law, each Participant also shall be entitled to the benefits of Section 9.09 as though it were a
Lender; provided that such Participant agrees to be subject to Section 2.17 as though it were a Lender. Each
Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower,
maintain a register on which it enters the name and address of each Participant and the principal amounts
(and stated interest) of each Participant’s interest in the Loans or other obligations under the Loan Documents
(the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion
of the Participant Register (including the identity of any Participant or any information relating to a
Participant’s interest in any commitments, loans, letters of credit or its other obligations under any Loan
Document) to any Person except to the extent that such disclosure is necessary to establish that such
commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the
United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest
error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the
owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary.
For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have
no responsibility for maintaining a Participant Register.
(d)
Any Lender may at any time pledge or assign a security interest in all or any portion
of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment
to secure obligations to a Federal Reserve Bank or any central bank having jurisdiction over such Lender;
provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder
or substitute any such pledgee or assignee for such Lender as a party hereto.
SECTION 9.06
Survival; Reinstatement.
(a)
All covenants, agreements, representations and warranties made by the Borrower
herein and in the certificates or other instruments delivered in connection with or pursuant to this Agreement
shall be considered to have been relied upon by the other parties hereto and shall survive the execution and
68
EXHIBIT 10.15
delivery of this Agreement and the making of any Loans, regardless of any investigation made by any such
other party or on its behalf and notwithstanding that the Administrative Agent or any Lender may have had
notice or knowledge of any Default or Event of Default or incorrect representation or warranty at the time
any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any
accrued interest on any Loan or any fee or any other amount payable under this Agreement is outstanding
and unpaid. The provisions of Sections 2.14, 2.15, 2.16 and 9.03 and Article VIII shall survive and remain
in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment
of the Loans, the expiration or termination of the Commitments or the termination of this Agreement or any
provision hereof.
(b)
To the extent that any payments on the Obligations are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, debtor in possession,
receiver or other Person under any bankruptcy law, common law or equitable cause, then to such extent, the
Obligations so satisfied shall be revived and continue as if such payment or proceeds had not been received.
SECTION 9.07
Counterparts; Integration; Effectiveness; Electronic Execution.
(a)
This Agreement may be executed in counterparts (and by different parties hereto
on different counterparts), each of which shall constitute an original, but all of which when taken together
shall constitute a single contract. This Agreement, the other Loan Documents and the Fee Letters constitute
the entire contract among the parties hereto relating to the subject matter hereof and supersede any and all
previous agreements and understandings, oral or written, relating to the subject matter hereof (including the
Executive Summary). Except as provided in Section 3.01, this Agreement shall become effective when it
shall have been executed by the Administrative Agent and when the Administrative Agent shall have received
counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors
and assigns. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or
electronic (i.e., “pdf” or “tif”) format shall be effective as delivery of a manually executed counterpart of
this Agreement.
(b)
The words “execution,” “signed,” “signature,” and words of like import in any
Assignment and Acceptance shall be deemed to include electronic signatures or the keeping of records in
electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually
executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and
as provided for in any applicable law, including the Federal Electronic Signatures in Global and National
Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws
based on the Uniform Electronic Transactions Act.
SECTION 9.08
Severability. Any provision of this Agreement held to be invalid, illegal
or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity,
illegality or unenforceability without affecting the validity, legality and enforceability of the remaining
provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate
such provision in any other jurisdiction.
SECTION 9.09
Right of Setoff. If an Event of Default shall have occurred and be
continuing, each Lender and each of its respective Affiliates is hereby authorized at any time and from time
to time, to the fullest extent permitted by applicable law, to set off and apply any and all deposits (general
or special, time or demand, provisional or final, in whatever currency) at any time held, and other obligations
(in whatever currency) at any time owing, by such Lender or any such Affiliate, to or for the credit or the
account of a Loan Party against any and all of the obligations of a Loan Party now or hereafter existing under
69
EXHIBIT 10.15
this Agreement or any other Loan Document to such Lender or its respective Affiliates, irrespective of whether
or not such Lender or Affiliate shall have made any demand under this Agreement or any other Loan Document
and although such obligations of the Loan Parties may be contingent or unmatured or are owed to a branch,
office or Affiliate of such Lender different from the branch, office or Affiliate holding such deposit or obligated
on such indebtedness; provided that in the event that any Defaulting Lender shall exercise any such right of
setoff, (x) all amounts so set off shall be paid over immediately to the Administrative Agent for further
application in accordance with the provisions of Section 2.19 pending such payment, shall be segregated by
such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Administrative
Agent and the Lenders, and (y) the Defaulting Lender shall provide promptly to the Administrative Agent
a statement describing in reasonable detail the Obligations owing to such Defaulting Lender as to which it
exercised such right of setoff. The rights of each Lender and its respective Affiliates under this Section are
in addition to other rights and remedies (including other rights of setoff) that such Lender or its respective
Affiliates may have. Each Lender agrees to notify the Borrower and the Administrative Agent promptly
after any such setoff and application; provided that the failure to give such notice shall not affect the validity
of such setoff and application. The rights of each Lender under this Section 9.09 are in addition to other
rights and remedies (including other rights of setoff) which such Lender may have.
SECTION 9.10
Governing Law; Jurisdiction; Consent to Service of Process. (a) This
Agreement and the other Loan Documents shall be construed in accordance with and governed by the laws
of the State of New York.
(b)
ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE BROUGHT IN THE COURTS
OF THE STATE OF NEW YORK SITTING IN THE BOROUGH OF MANHATTAN OR OF THE
UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK AND, BY EXECUTION
AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY AND ASSETS,
UNCONDITIONALLY, THE EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS
WITH RESPECT TO ANY SUCH ACTION OR PROCEEDING. THE BORROWER HEREBY
IRREVOCABLY DESIGNATES, APPOINTS AND EMPOWERS C T CORPORATION SYSTEM,
WITH OFFICES ON THE DATE HEREOF AT 111 8TH AVENUE, NEW YORK, NEW YORK 10011,
AS ITS DESIGNEE, APPOINTEE AND AGENT TO RECEIVE AND ACCEPT FOR AND ON ITS
BEHALF, AND IN RESPECT OF ITS PROPERTY, SERVICE OF ANY AND ALL LEGAL
PROCESS, SUMMONS, NOTICES AND DOCUMENTS WHICH MAY BE SERVED IN ANY SUCH
ACTION OR PROCEEDING. IF FOR ANY REASON SUCH DESIGNEE, APPOINTEE AND
AGENT SHALL CEASE TO BE AVAILABLE TO ACT AS SUCH, THE BORROWER AGREES TO
DESIGNATE A NEW DESIGNEE, APPOINTEE AND AGENT IN NEW YORK, NEW YORK ON
THE TERMS AND FOR THE PURPOSES OF THIS PROVISION SATISFACTORY TO THE
ADMINISTRATIVE AGENT. THE BORROWER FURTHER IRREVOCABLY CONSENTS TO
THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY
SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED
OR CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT ITS ADDRESS PROVIDED IN SECTION
9.01, SUCH SERVICE TO BECOME EFFECTIVE THIRTY DAYS AFTER SUCH MAILING.
NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT OR ANY
LENDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
(c)
THE BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE
AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN
70
EXHIBIT 10.15
CONNECTION WITH THIS AGREEMENT BROUGHT IN THE COURTS REFERRED TO IN
CLAUSE (b) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES, TO THE MAXIMUM
EXTENT PERMITTED BY APPLICABLE LAW, THE RIGHT TO PLEAD OR CLAIM, AND
AGREES NOT TO PLEAD OR CLAIM, THAT ANY SUCH ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(d)
EACH PARTY HERETO HEREBY (i) IRREVOCABLY WAIVES, TO THE
MAXIMUM EXTENT PERMITTED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR
RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES; (ii) CERTIFIES THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR
AGENT OR COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND (iii) ACKNOWLEDGES
THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER THINGS,
THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION 9.10.
SECTION 9.11 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT
MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.11.
SECTION 9.12
Confidentiality. Each of the Administrative Agent and the Lenders
agrees to maintain the confidentiality of the Information (as defined below), except that Information may
be disclosed (a) to their Affiliates, to their and their Affiliates’ directors, officers and employees and agents,
including accountants, legal counsel and other advisors who have been informed of the confidential nature
of the information provided, (b) disclosures in connection with any pledge or assignment permitted under
Section 9.05(d) and, to the extent requested by any regulatory authority, including any self-regulatory
authority such as the National Association of Insurance Commissioners or any similar organization, or any
nationally recognized rating agency that requires access to information about a Lender’s investment portfolio,
(c) to the extent a Lender reasonably believes it is required by applicable laws or regulations or by any
subpoena or similar legal process (and, to the extent not prohibited under applicable law), such Lender will
provide prompt notice thereof to the Borrower), (d) to any other party to this Agreement, (e) in connection
with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or
any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an understanding
with such Person that such Person will comply with this Section 9.12, to (i) any assignee of or Participant
in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or
(ii) any actual or prospective party (or its Related Parties) to any swap, derivative, or other transaction under
which payments are to be made by reference to the Borrower, and its obligations under this Agreement or
the payments hereunder, (g) with the consent of the Borrower or (h) to the extent such Information (i) becomes
publicly available other than as a result of a breach of this Section 9.12 or (ii) becomes available to the
Administrative Agent or any Lender from a source other than the Borrower (unless such source is actually
71
EXHIBIT 10.15
known by the individual providing the information to be bound by a confidentiality agreement or other legal
or contractual obligation of confidentiality with respect to such information). In addition, the Administrative
Agent and the Lenders may disclose the existence of this Agreement and information about this Agreement
to market data collectors, similar service providers to the lending industry and service providers to the
Administrative Agent and the Lenders in connection with the administration of this Agreement, the other
Loan Documents, and the Commitments. For the purposes of this Section 9.12, “Information” means all
information received from the Borrower relating to the Borrower or its business, other than any such
information that is known to a Lender, publicly known or otherwise available to the Administrative Agent
or any Lender other than through disclosure (a) by the Borrower, or (b) from a source actually known to a
Lender to be bound by a confidentiality agreement or other legal or contractual obligation of confidentiality
with respect to such information. Any Person required to maintain the confidentiality of Information as
provided in this Section 9.12 shall be considered to have complied with its obligation to do so if such Person
maintains the confidentiality of such Information in accordance with procedures adopted in good faith to
protect confidential Information of third parties delivered to a lender.
SECTION 9.13
Interest Rate Limitation. Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges and other
amounts which are treated as interest on such Loan under applicable law (collectively the “Charges”), shall
exceed the maximum lawful rate (the “Maximum Rate”) which may be contracted for, charged, taken,
received or reserved by the Lender holding such Loan in accordance with applicable law, the rate of interest
payable in respect of such Loan hereunder, together with all Charges payable in respect thereof, shall be
limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable
in respect of such Loan but were not payable as a result of the operation of this Section 9.13 shall be cumulated
and the interest and Charges payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at
the Federal Funds Effective Rate to the date of repayment, shall have been received by such Lender.
SECTION 9.14
EXCULPATION PROVISIONS. EACH OF THE PARTIES
HERETO SPECIFICALLY AGREES THAT IT HAS A DUTY TO READ THIS AGREEMENT, THE
NOTES AND (IN THE CASE OF THE BORROWER AND THE ADMINISTRATIVE AGENT) THE FEE
LETTERS AND AGREES THAT IT IS CHARGED WITH NOTICE AND KNOWLEDGE OF THE TERMS
OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; THAT IT HAS IN FACT READ THIS
AGREEMENT AND IS FULLY INFORMED AND HAS FULL NOTICE AND KNOWLEDGE OF THE
TERMS, CONDITIONS AND EFFECTS OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS; THAT IT HAS BEEN REPRESENTED BY INDEPENDENT LEGAL COUNSEL OF ITS
CHOICE THROUGHOUT THE NEGOTIATIONS PRECEDING ITS EXECUTION OF THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND HAS RECEIVED THE ADVICE OF ITS
ATTORNEY IN ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND
THAT IT RECOGNIZES THAT CERTAIN OF THE TERMS OF THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS RESULT IN ONE PARTY ASSUMING THE LIABILITY INHERENT IN SOME
ASPECTS OF THE TRANSACTION AND RELIEVING THE OTHER PARTY OF ITS RESPONSIBILITY
FOR SUCH LIABILITY. EACH PARTY HERETO AGREES AND COVENANTS THAT IT WILL NOT
CONTEST THE VALIDITY OR ENFORCEABILITY OF ANY EXCULPATORY PROVISION OF THIS
AGREEMENT ON THE BASIS THAT THE PARTY HAD NO NOTICE OR KNOWLEDGE OF SUCH
PROVISION OR THAT THE PROVISION IS NOT “CONSPICUOUS.”
72
EXHIBIT 10.15
SECTION 9.15
U.S. Patriot Act. Each Lender that is subject to the requirements of the
USA PATRIOT ACT (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Patriot Act”) and
the Beneficial Ownership Regulation hereby notifies the Loan Parties that pursuant to the requirements of
the Patriot Act and the Beneficial Ownership Regulation, it is required to obtain, verify, and record information
that identifies the Loan Parties, which information includes the name and address of the Loan Parties and
other information that will allow such Lender to identify the Loan Parties in accordance with the Patriot Act
and the Beneficial Ownership Regulation.
SECTION 9.16
No Advisory or Fiduciary Responsibility. In connection with all aspects
of each transaction contemplated hereby, the Borrower acknowledges and agrees, and acknowledges its
Affiliates’ understanding, that: (i) the credit facility provided for hereunder and any related arranging or
other services in connection therewith (including in connection with any amendment, waiver or other
modification hereof or of any other Loan Document) are an arm’s-length commercial transaction between
the Borrower, on the one hand, and the Administrative Agent, the Arrangers, the Syndication Agent, the
Documentation Agents and the Lenders, on the other hand, and the Borrower is capable of evaluating and
understanding and understands and accepts the terms, risks and conditions of the transactions contemplated
hereby and by the other Loan Documents (including any amendments, waiver or other modification hereof
or thereof); (ii) in connection with the process leading to such transaction, the Administrative Agent, the
Arrangers, the Syndication Agent, the Documentation Agents and the Lenders are and have been acting
solely as principals and are not the financial advisors, agents or fiduciaries, for the Borrower or any of its
Affiliates, stockholders, creditors or employees or any other Person; (iii) the Administrative Agent, the
Arrangers, Syndication Agent, the Documentation Agents and the Lenders have not assumed and will not
assume an advisory, agency or fiduciary responsibility in favor of the Borrower with respect to any of the
transactions contemplated hereby or the process leading thereto, including with respect to any amendment,
waiver or other modification hereof or of any other Loan Document (irrespective of whether the
Administrative Agent, any Arranger, the Syndication Agent, any Documentation Agent or any Lender advised
or is currently advising the Borrower or any of its Affiliates on other matters) and the Administrative Agent,
the Arrangers, the Syndication Agent, the Documentation Agents and the Lenders have no obligation to the
Borrower or any of its Affiliates with respect to the transactions contemplated hereby except those obligations
expressly set forth herein and in the other Loan Documents; (iv) the Administrative Agent, the Arrangers,
the Syndication Agent, the Documentation Agents, the Lenders and their respective Affiliates may be engaged
in a broad range of transactions that involve interests that differ from those of the Borrower and its Affiliates,
and the Administrative Agent, the Arrangers, the Syndication Agent, the Documentation Agents and the
Lenders have no obligation to disclose any of such interests by virtue of any advisory, agency or fiduciary
relationship; and (v) the Administrative Agent, the Arrangers, the Syndication Agent, the Documentation
Agents and the Lenders have not provided and will not provide any legal, accounting, regulatory or Tax
advice with respect to any of the transactions contemplated hereby (including any amendment, waiver or
other modification hereof or of any other Loan Document) and the Loan Parties have consulted its own legal,
accounting, regulatory and Tax advisors to the extent it has deemed appropriate. Each Loan Parties hereby
waive and release, to the fullest extent permitted by law, any claims that it may have against the Administrative
Agent, the Arrangers, the Syndication Agent, the Documentation Agents or the Lenders with respect to any
breach or alleged breach of agency or fiduciary duty.
SECTION 9.17
Headings. Section headings herein are included herein for convenience
of reference only and shall not constitute a part hereof for any other purpose or be given any substantive
effect.
SECTION 9.18 Acknowledgement and Consent to Bail-In of EEA
Financial Institutions. (a) Notwithstanding anything to the contrary in any Loan Document or in any other
agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any
73
EXHIBIT 10.15
liability of any EEA Financial Institution arising under any Loan Document, to the extent such liability is
unsecured, may be subject to the write-down and conversion powers of an EEA Resolution Authority and
agrees and consents to, and acknowledges and agrees to be bound by: (a) the application of any Write-Down
and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may
be payable to it by any party hereto that is an EEA Financial Institution; and
(b)
the effects of any Bail-in Action on any such liability, including, if applicable:
(i)
a reduction in full or in part or cancellation of any such liability;
(ii)
a conversion of all, or a portion of, such liability into shares or other
instruments of ownership in such EEA Financial Institution, its parent undertaking, or a bridge
institution that may be issued to it or otherwise conferred on it, and that such shares or other
instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability
under this Agreement or any other Loan Document; or
(iii)
the variation of the terms of such liability in connection with the exercise
of the write-down and conversion powers of any EEA Resolution Authority.
[The rest of this page intentionally left blank]
74
The parties hereto have caused this Agreement to be duly executed as of the date and year
first above written.
EXHIBIT 10.15
KINDER MORGAN, INC.,
as the Borrower
/s/ Anthony B. Ashley /s/
By:
Name: Anthony B. Ashley
Title: Treasurer
[364-Day Revolving Credit Agreement]
EXHIBIT 10.15
BARCLAYS BANK PLC,
as the Administrative Agent and as a Lender
/s/ Sydney G. Dennis /s/
By:
Name: Sydney G. Dennis
Title: Director
[364-Day Revolving Credit Agreement]
EXHIBIT 10.15
JPMORGAN CHASE BANK, N.A.,
as a Lender
/s/ Stephanie Balette /s/
By:
Name: Stephanie Balette
Title: Authorized Officer
[364-Day Revolving Credit Agreement]
EXHIBIT 10.15
Bank of America, N.A.,
as a Lender
/s/ Tyler Ellis /s/
By:
Name: Tyler Ellis
Title: Director
[364-Day Revolving Credit Agreement]
EXHIBIT 10.15
BMO Harris Bank, N.A.,
as a Lender
/s/ Melissa Guzman /s/
By:
Name: Melissa Guzman
Title: Director
[364-Day Revolving Credit Agreement]
EXHIBIT 10.15
CITIBANK, N.A.,
as a Lender
/s/ Maureen Maroney /s/
By:
Name: Maureen Maroney
Title: Vice President
[364-Day Revolving Credit Agreement]
EXHIBIT 10.15
CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH,
as a Lender
/s/ Nupur Kumar /s/
By:
Name: Nupur Kumar
Title: Authorized Signatory
/s/ Christopher Zybrick /s/
By:
Name: Christopher Zybrick
Title: Authorized Signatory
[364-Day Revolving Credit Agreement]
EXHIBIT 10.15
Mizuho Bank, Ltd.,
as a Lender
/s/ Donna DeMagistris /s/
By:
Name: Donna DeMagistris
Title: Authorized Signatory
[364-Day Revolving Credit Agreement]
EXHIBIT 10.15
MUFG BANK, LTD.
as a Lender
/s/ Christopher Facenda /s/
By:
Name: Christopher Facenda
Title: Director
[364-Day Revolving Credit Agreement]
EXHIBIT 10.15
ROYAL BANK OF CANADA,
as a Lender
/s/ Jason S. York /s/
By:
Name: Jason S. York
Title: Authorized Signatory
[364-Day Revolving Credit Agreement]
EXHIBIT 10.15
The Bank of Nova Scotia, Houston Branch,
as a Lender
/s/ Alfredo Brahim /s/
By:
Name: Alfredo Brahim
Title: Director
[364-Day Revolving Credit Agreement]
EXHIBIT 10.15
Wells Fargo Bank, N.A.,
as a Lender
/s/ Doug McDowell /s/
By:
Name: Doug McDowell
Title: Managing Director
[364-Day Revolving Credit Agreement]
EXHIBIT 10.15
Commerzbank AG, New York Branch,
as a Lender
/s/ Barbara Stacks /s/
By:
Name: Barbara Stacks
Title: Director
/s/ James Boyle /s/
By:
Name: James Boyle
Title: Director
[364-Day Revolving Credit Agreement]
EXHIBIT 10.15
Sumitomo Mitsui Banking Corporation,
as a Lender
/s/ Katsuyuki Kubo /s/
By:
Name: Katsuyuki Kubo
Title: Managing Director
[364-Day Revolving Credit Agreement]
EXHIBIT 10.15
CANADIAN IMPERIAL BANK OF COMMERCE,
New York Branch,
as a Lender
/s/ Donovan C. Broussard /s/
By:
Name: Donovan C. Broussard
Title: Authorized Signatory
/s/ Trudy Nelson /s/
By:
Name: Trudy Nelson
Title: Authorized Signatory
[364-Day Revolving Credit Agreement]
EXHIBIT 10.15
CREDIT AGRICOLE CORPORATE AND
INVESTMENT BANK,
as a Lender
/s/ Dixon Schultz /s/
By:
Name: Dixon Schultz
Title: Managing Director
/s/ Michael Willis /s/
By:
Name: Michael Willis
Title: Managing Director
[364-Day Revolving Credit Agreement]
EXHIBIT 10.15
SUNTRUST BANK,
as a Lender
/s/ Carmen Malizia /s/
By:
Name: Carmen Malizia
Title: Director
[364-Day Revolving Credit Agreement]
EXHIBIT 10.15
PNC Bank, National Association,
as a Lender
/s/ Stephen Monto /s/
By:
Name: Stephen Monto
Title: SVP
[364-Day Revolving Credit Agreement]
EXHIBIT 10.15
SOCIETE GENERALE,
as a Lender
/s/ Diego Medina /s/
By:
Name: Diego Medina
Title: Director
[364-Day Revolving Credit Agreement]
EXHIBIT 10.15
THE TORONTO-DOMINION BANK, NEW YORK
BRANCH
as a Lender
/s/ Annie Dorval /s/
By:
Name: Annie Dorval
Title: Authorized Signatory
[364-Day Revolving Credit Agreement]
EXHIBIT 10.15
MORGAN STANLEY SENIOR FUNDING, INC.,
as a Lender
/s/ Michael King /s/
By:
Name: Michael King
Title: Vice President
[364-Day Revolving Credit Agreement]
EXHIBIT 10.15
MORGAN STANLEY BANK, N.A.,
as a Lender
/s/ Michael King /s/
By:
Name: Michael King
Title: Authorized Signatory
[364-Day Revolving Credit Agreement]
EXHIBIT 10.15
Compass Bank,
as a Lender
/s/ Mark H. Wolf /s/
By:
Name: Mark H. Wolf
Title: Senior Vice President
[364-Day Revolving Credit Agreement]
EXHIBIT 10.15
ING Capital LLC,
as a Lender
/s/ Subha Pasumarti /s/
By:
Name: Subha Pasumarti
Title: Managing Director
/s/ Tanja van der Woude /s/
By:
Name: Tanja van der Woude
Title: Director
[364-Day Revolving Credit Agreement]
EXHIBIT 10.15
REGIONS BANK,
as a Lender
/s/ David Valentine /s/
By:
Name: David Valentine
Title: Managing Director
[364-Day Revolving Credit Agreement]
EXHIBIT 10.15
Intesa Sanpaolo S.p.A. – New York Branch,
as a Lender
/s/ Christophe Hamonet /s/
By:
Name: Christophe Hamonet
Title: Reginal Business Manager
/s/ Francesco Di Mario /s/
By:
Name: Francesco Di Mario
Title: FVP – Head of Credit
[364-Day Revolving Credit Agreement]
EXHIBIT 10.15
NATIONAL BANK OF CANADA,
as a Lender
/s/ Rahul Rahul /s/
By:
Name: Rahul Rahul
Title: Authorized Signatory
/s/ Mark Williamson /s/
By:
Name: Mark Williamson
Title: Authorized Signatory
[364-Day Revolving Credit Agreement]
EXHIBIT 10.15
[364-Day Revolving Credit Agreement]
EXHIBIT 10.15
SCHEDULE 1.01
Commitments
Lender
Barclays Bank PLC
JPMorgan Chase Bank, N.A.
Bank of America, N.A.
BMO Harris Bank, N.A.
Citibank, N.A.
Credit Suisse AG, Cayman Islands Branch
Mizuho Bank, Ltd.
MUFG Bank, Ltd.
Royal Bank of Canada
The Bank of Nova Scotia, Houston Branch
Wells Fargo Bank, N.A.
Commerzbank AG, New York Branch
Sumitomo Mitsui Banking Corporation
Canadian Imperial Bank of Commerce,
New York Branch
Credit Agricole Corporate and Investment
Bank
SunTrust Bank
PNC Bank, National Association
Societe Generale
The Toronto-Dominion Bank, New York
Branch
Morgan Stanley Senior Funding, Inc.
Compass Bank
ING Capital LLC
Regions Bank
Intesa Sanpaolo S.p.A.-New York Branch
National Bank of Canada
Total
Commitment
$24,000,000
$24,000,000
$24,000,000
$24,000,000
$24,000,000
$24,000,000
$24,000,000
$24,000,000
$24,000,000
$24,000,000
$24,000,000
$17,500,000
$17,500,000
$17,500,000
$17,500,000
$17,500,000
$17,500,000
$17,500,000
$17,500,000
$16,000,000
$16,000,000
$16,000,000
$16,000,000
$16,000,000
$16,000,000
$500,000,000
EXHIBIT 10.15
SCHEDULE 1.01A
Excluded Subsidiaries
ANR Real Estate Corporation
Calnev Pipeline LLC
Coastal Eagle Point Oil Company
Coastal Oil New England, Inc.
Colton Processing Facility
Coscol Petroleum Corporation
El Paso CGP Company, L.L.C.
El Paso Energy Argentina Service Company
El Paso Energy Capital Trust I
El Paso Energy E.S.T. Company
El Paso Energy International Company
El Paso Marketing Company, L.L.C.
El Paso Merchant Energy North America Company, L.L.C.
El Paso Merchant Energy-Petroleum Company
El Paso Reata Energy Company, L.L.C.
El Paso Remediation Company
El Paso Services Holding Company
EPC Building, LLC
EPC Property Holdings, Inc.
EPEC Corporation
EPEC Oil Company Liquidating Trust
EPEC Polymers, Inc.
EPEC Realty, Inc.
EPED Holding Company
I.M.T Land Corp.
International Marine Terminals Partnership
Kinder Morgan Foundation
Kinder Morgan G.P., Inc.
Kinder Morgan Mexico LLC
Kinder Morgan Services International LLC
Kinder Morgan Tejas Pipeline GP LLC
Kinder Morgan Urban Renewal, L.L.C.
Kinder Morgan Urban Renewal II, LLC
KM Express LLC
KM Insurance Texas Inc.
KN Capital Trust I
KN Capital Trust III
Mesquite Investors, L.L.C.
SFPP, L.P.
Note the Excluded Subsidiaries listed on this Schedule 1.01A may also be Excluded Subsidiaries
pursuant to other exceptions set forth in the definition of “Excluded Subsidiary”.
EXHIBIT 10.15
SCHEDULE 6.01
Existing Non-Guarantor Indebtedness
• Certificate of Designations of Series A Fixed-to-Floating Rate Term Cumulative
Preferred Stock due 2057 of Kinder Morgan G.P., Inc.
• EPC Building, LLC, promissory note, 3.967%, due 2013 through 2035
• K N Capital Trust I 8.56% capital trust securities due 2027
• K N Capital Trust III 7.63% capital trust securities due 2028
• El Paso Energy Capital Trust I 4.75% preferred securities due 2028
•
International Marine Terminals Partnership 2002 floating rate notes due 2025
EXHIBIT 10.15
SCHEDULE 6.05
Existing Transactions with Affiliates
None.
EXHIBIT 10.15
SCHEDULE 6.06
Existing Restrictive Agreements
• Certificate of Designations of Series A Fixed-to-Floating Rate Term Cumulative
Preferred Stock due 2057 of Kinder Morgan G.P., Inc.
• Constituent documents of Kinder Morgan Canada Limited and its subsidiaries, each as
amended to date, setting forth terms related to Kinder Morgan Canada Limited’s (i)
Cumulative Redeemable Minimum Rate Reset Preferred Shares, Series 1; and (ii)
Cumulative Redeemable Minimum Rate Reset Preferred Shares, Series 3:
o Certificate and Articles of Incorporation of Kinder Morgan Canada Limited
o Certificate and Articles of Incorporation of Kinder Morgan Canada GP Inc.
o Certificate of Limited Partnership of Kinder Morgan Canada Limited Partnership
o Second Amended and Restated Limited Partnership Agreement of Kinder Morgan
Canada Limited Partnership
o Articles of Association of Kinder Morgan Cochin ULC
• Credit Agreement, dated August 31, 2018, by and among Kinder Morgan Cochin ULC,
Royal Bank of Canada and the lenders party thereto
EXHIBIT 10.15
EXHIBIT 1.01-A
FORM OF ASSIGNMENT AND ASSUMPTION
This Assignment and Assumption (the “Assignment and Assumption”) is dated as of the
Effective Date set forth below and is entered into by and between [the][each]1 Assignor identified in item
1 below ([the][each, an] “Assignor”) and [the][each]2 Assignee identified in item 2 below ([the][each, an]
“Assignee”). [It is understood and agreed that the rights and obligations of [the Assignors][the Assignees]3
hereunder are several and not joint.]4 Capitalized terms used but not defined herein shall have the meanings
given to them in the 364-Day Credit Agreement identified below (as further restated, amended, modified,
supplemented and in effect, the “364-Day Credit Agreement”), receipt of a copy of which is hereby
acknowledged by [the][each] Assignee. The Standard Terms and Conditions set forth in Annex 1 attached
hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and
Assumption as if set forth herein in full.
For an agreed consideration, [the][each] Assignor hereby irrevocably sells and assigns to
[the Assignee][the respective Assignees], and [the][each] Assignee hereby irrevocably purchases and
assumes from [the Assignor][the respective Assignors], subject to and in accordance with the Standard Terms
and Conditions and the 364-Day Credit Agreement, as of the Effective Date inserted by the Administrative
Agent as contemplated below (i) all of [the Assignor’s][the respective Assignors’] rights and obligations in
[its capacity as a Lender][their respective capacities as Lenders] under the 364-Day Credit Agreement and
any other documents or instruments delivered pursuant thereto to the extent related to the amount and
percentage interest identified below of all of such outstanding rights and obligations of [the Assignor][the
respective Assignors] under the revolving credit facility identified below, and (ii) to the extent permitted to
be assigned under applicable law, all claims, suits, causes of action and any other right of [the Assignor (in
its capacity as a Lender)][the respective Assignors (in their respective capacities as Lenders)] against any
Person, whether known or unknown, arising under or in connection with the 364-Day Credit Agreement,
any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or
in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort
claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and
obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned by
[the][any] Assignor to [the][any] Assignee pursuant to clauses (i) and (ii) above being referred to herein
collectively as [the][an] “Assigned Interest”). Each such sale and assignment is without recourse to [the]
[any] Assignor and, except as expressly provided in this Assignment and Assumption, without representation
or warranty by [the][any] Assignor.
____________________________
1
For bracketed language here and elsewhere in this form relating to the Assignor(s), if the assignment is
from a single Assignor, choose the first bracketed language. If the assignment is from multiple Assignors,
choose the second bracketed language.
2
3
4
For bracketed language here and elsewhere in this form relating to the Assignee(s), if the assignment is to a
single Assignee, choose the first bracketed language. If the assignment is to multiple Assignees, choose the
second bracketed language.
Select as appropriate.
Include bracketed language if there are either multiple Assignors or multiple Assignees.
EXHIBIT 10.15
1.
Assignor[s]:
______________________________
______________________________
[Assignor [is] [is not] a Defaulting Lender]
2.
Assignee[s]:
______________________________
______________________________
3.
4.
5.
[for each Assignee, indicate [Affiliate][Approved Fund] of [identify Lender]
Borrower:
Kinder Morgan, Inc.
Administrative Agent: ______________________, as the administrative agent
under the 364-Day Credit Agreement
364-Day Credit Agreement:
The Revolving Credit Agreement dated as of
November 16, 2018 among Kinder Morgan, Inc., the Lenders parties thereto,
Barclays Bank PLC, as Administrative Agent, and the other agents parties thereto
6.
Assigned Interest[s]:
Assignor[s]5 Assignee[s]6
Aggregate Amount
of
Commitment/Loans
for all Lenders7
Amount of
Commitment/Loans
Assigned8
Percentage
Assigned of
Commitment/
Loans8
CUSIP
Number
$
$
$
$
$
$
%
%
%
[7.
Trade Date:
______________]9
Effective Date: _____________ ___, 20___ [TO BE INSERTED BY ADMINISTRATIVE AGENT AND
WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER
THEREFOR.]
The terms set forth in this Assignment and Assumption are hereby agreed to:
_________________________
5
List each Assignor, as appropriate.
6
7
8
List each Assignee, as appropriate.
Amount to be adjusted by the counterparties to take into account any payments or prepayments made
between the Trade Date and the Effective Date.
Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder.
-2-
9
To be completed if the Assignor(s) and the Assignee(s) intend that the minimum assignment amount is to be
determined as of the Trade Date.
EXHIBIT 10.15
ASSIGNOR[S]10
[NAME OF ASSIGNOR]
By:______________________________
Title:
[NAME OF ASSIGNOR]
By:______________________________
Title:
ASSIGNEE[S]11
[NAME OF ASSIGNEE]
By:______________________________
Title:
[NAME OF ASSIGNEE]
By:______________________________
Title:
__________________________
10
Add additional signature blocks as needed. Include both Fund/Pension Plan and manager making the trade
(if applicable).
-3-
11
Add additional signature blocks as needed. Include both Fund/Pension Plan and manager making the trade
(if applicable).
EXHIBIT 10.15
[Consented to and]12 Accepted:
[NAME OF ADMINISTRATIVE AGENT], as
Administrative Agent
By: _________________________________
Title:
[Consented to:]13
[NAME OF THE RELEVANT PARTY]
By: ________________________________
Title:
__________________________
12
To be added only if the consent of the Administrative Agent is required by the terms of the 364-Day Credit
Agreement.
-4-
EXHIBIT 10.15
13
To be added only if the consent of the Borrower and/or other parties is required by the terms of the 364-Day
Credit Agreement.
ANNEX 1 TO ASSIGNMENT AND ASSUMPTION
STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION
1.
Representations and Warranties.
1.1.
Assignor. [The][Each] Assignor (a) represents and warrants that (i) it is the legal and
beneficial owner of [the][[the relevant] Assigned Interest, (ii) [the][such] Assigned Interest is free and clear
of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all
action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or
representations made in or in connection with the 364-Day Credit Agreement or any other Loan Document,
(ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents
or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates
or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by
the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations
under any Loan Document.
1.2.
Assignee. [The][Each] Assignee (a) represents and warrants that (i) it has full power and
authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and
to consummate the transactions contemplated hereby and to become a Lender under the 364-Day Credit
Agreement, (ii) it meets all the requirements to be an assignee under the paragraph following Section 9.05(a)
(vii) and Section 9.05(b) of the 364-Day Credit Agreement (subject to such consents, if any, as may be
required under Section 9.05(a)(iii) of the 364-Day Credit Agreement), (iii) from and after the Effective Date,
it shall be bound by the provisions of the 364-Day Credit Agreement as a Lender thereunder and, to the
extent of [the][the relevant] Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it is
sophisticated with respect to decisions to acquire assets of the type represented by [the][such] Assigned
Interest and either it, or the Person exercising discretion in making its decision to acquire [the][such] Assigned
Interest, is experienced in acquiring assets of such type, (v) it has received a copy of the 364-Day Credit
Agreement, and has received or has been accorded the opportunity to receive copies of the most recent
financial statements delivered pursuant to Section 5.01 of the 364-Day Credit Agreement, as applicable, and
such other documents and information as it deems appropriate to make its own credit analysis and decision
to enter into this Assignment and Assumption and to purchase [the][such] Assigned Interest, (vi) it has,
independently and without reliance upon the Administrative Agent or any other Lender and based on such
documents and information as it has deemed appropriate, made its own credit analysis and decision to enter
into this Assignment and Assumption and to purchase [the][such] Assigned Interest and (vii) attached to
this Assignment and Assumption is any documentation required to be delivered by it pursuant to Section
2.16 of the 364-Day Credit Agreement; and (b) agrees that (i) it will, independently and without reliance
upon the Administrative Agent, [the][any] Assignor or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of
the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.
2.
Payments. From and after the Effective Date, the Administrative Agent shall make all
payments in respect of [the][each] Assigned Interest (including payments of principal, interest, fees and other
-5-
EXHIBIT 10.15
amounts) to [the][the relevant] Assignor for amounts which have accrued to but excluding the Effective Date
and to [the][the relevant] Assignee for amounts which have accrued from and after the Effective Date.
3.
General Provisions.
3.1. In accordance with Sections 9.04 and 9.05 of the 364-Day Credit Agreement, upon execution,
delivery, acceptance and recording of this Assignment and Assumption, from and after the Effective Date,
(a) the Assignee shall be a party to the 364-Day Credit Agreement and, to the extent provided in this
Assignment and Assumption, have the rights and obligations of a Lender under the 364-Day Credit Agreement
with a Commitment as set forth herein and (b) the Assignor shall, to the extent of the Assigned Interest
assigned pursuant to this Assignment and Assumption, be released from its obligations under the 364-Day
Credit Agreement (and, in the case of this Assignment and Assumption covers all of the Assignor’s rights
and obligations under the 364-Day Credit Agreement, the Assignor shall cease to be a party to the 364-Day
Credit Agreement but shall continue to be entitled to the benefits of Sections 2.14, 2.15, 2.16 and 9.03
thereof).
3.2.
This Assignment and Assumption shall be binding upon, and inure to the benefit of, the
parties hereto and their respective successors and assigns. This Assignment and Assumption may be executed
in any number of counterparts, which together shall constitute one instrument. Delivery of an executed
counterpart of a signature page of this Assignment and Assumption by telecopy shall be effective as delivery
of a manually executed counterpart of this Assignment and Assumption. This Assignment and Assumption
shall be governed by, and construed in accordance with, the laws of the State of New York.
-6-
EXHIBIT 10.15
EXHIBIT 1.01-B
FORM OF GUARANTY AGREEMENT
[See attached.]
-1-
FORM OF COMMITTED NOTE
EXHIBIT 10.15
EXHIBIT 1.01-C
_____________, _____
(the
“Borrower”), HEREBY
FOR VALUE RECEIVED, the undersigned, KINDER MORGAN, INC., a Delaware
corporation
of
PROMISES TO
_______________________________________________________ (the “Lender”), the lesser of (i) such
Lender’s Commitment and (ii) the aggregate amount of Committed Loans made by the Lender and
outstanding on the Maturity Date. The principal amount of the Committed Loans made by the Lender to
the Borrower shall be due and payable on the dates and in the amounts as are specified in that certain
Revolving Credit Agreement, dated as of November 16, 2018 (as further restated, amended, modified,
supplemented and in effect from time to time, the “364-Day Credit Agreement”), among the Borrower, the
Lender, certain other lenders that are party thereto, Barclays Bank PLC, as Administrative Agent for the
Lender and such other lenders, and the other agents named therein. All capitalized terms used herein and
not otherwise defined shall have the meanings as defined in the 364-Day Credit Agreement.
order
PAY
the
to
The Borrower promises to pay interest on the unpaid principal amount of each Committed
Loan outstanding from time to time from the date thereof until such principal amount is paid in full, at such
interest rates and payable on such dates as are specified in the 364-Day Credit Agreement. Principal and
interest are payable in same day funds in lawful money of the United States of America to the Administrative
Agent at its Principal Office, or at such other place as the Administrative Agent shall designate in writing to
the Borrower.
This Note is one of the Committed Notes referred to in, and this Note and all provisions
herein are entitled to the benefits of, the 364-Day Credit Agreement. The 364-Day Credit Agreement, among
other things (a) provides for the making of Committed Loans by the Lender and the other lenders to the
Borrower from time to time, and (b) contains provisions for acceleration of the maturity hereof upon the
happening of certain stated events, for prepayments on account of principal hereof prior to the maturity
hereof upon the terms and conditions therein specified, and for limitations on the amount of interest paid
such that no provision of the 364-Day Credit Agreement or this Note shall require the payment or permit
the collection of interest in excess of the Maximum Rate.
This Note may be held by the Lender for the account of its applicable lending office and
may be transferred from one lending office to another lending office from time to time as the Lender may
determine.
The Borrower and any and all endorsers, guarantors and sureties severally waive grace,
demand, presentment for payment, notice of dishonor, default or intent to accelerate, protest and notice of
protest and diligence in collecting and bringing of suit against any party hereto, and agree to all renewals,
extensions or partial payments hereon and to any release or substitution of security herefor, in whole or in
part, with or without notice, before or after maturity.
-1-
EXHIBIT 10.15
This Note shall be governed by and construed under the laws of the State of New York and
the applicable laws of the United States of America.
KINDER MORGAN, INC.,
as the Borrower
By: __________________________________________
Name:________________________________________
Title:_________________________________________
-2-
EXHIBIT 10.15
EXHIBIT 2.03
FORM OF BORROWING REQUEST
Dated __________
Barclays Bank PLC,
1301 Sixth Avenue
New York, NY 10019
Attn: Bobby Fitzpatrick
Phone: 201-499-5043
E-mail: bobby.fitzpatrick@barclays.com and 12145455230@tls.ldsprod.com
Ladies and Gentlemen:
This Borrowing Request is delivered to you by Kinder Morgan, Inc. (the “Borrower”), a
Delaware corporation, under Section 2.03 of the Revolving Credit Agreement, dated as of November 16,
2018 (as further restated, amended, modified, supplemented and in effect, the “364-Day Credit Agreement”),
by and among the Borrower, the Lenders party thereto, Barclays Bank PLC, as Administrative Agent, and
the other agents named therein.
1.
The Borrower hereby requests that the Lenders make a Committed Loan or Loans
in the aggregate principal amount of $______________./1
2.
The Borrower hereby requests that the Committed Loan or Loans be made on the
following Business Day: ________________./2
3.
The Borrower hereby requests that the Borrowing be [an ABR Borrowing] [a
Eurodollar Borrowing]. /3
4.
In the case of a Eurodollar Borrowing, the initial Interest Period shall be [one week]
[one month] [two months] [three months] [six months].
5.
The Borrower hereby requests that the funds from the requested Loan or Loans be
disbursed to the following bank account: ______________________________.
6.
After giving effect to the requested Loan or Loans, the aggregate Credit Exposures
outstanding as of the date hereof (including the requested Loans) does not exceed the maximum amount
permitted to be outstanding pursuant to the terms of the 364-Day Credit Agreement.
7.
The representations and warranties set forth in the 364-Day Credit Agreement and
the other Loan Documents are true and correct in all material respects on and as of the date hereof (unless
such representation and warranty expressly relates to an earlier date).
__________________________
1
Complete with an amount in accordance with Section 2.03 of the 364-Day Credit Agreement.
2
3
Complete with a Business Day in accordance with Section 2.03 of the 364-Day Credit Agreement.
If no election as to Type of Borrowing is made for a Committed Loan, the Requested Borrowing shall be an
ABR Borrowing.
-1-
EXHIBIT 10.15
8.
No Default or Event of Default has occurred and is continuing on the date hereof
or would result after giving effect to the Loans requested hereby.
9.
All capitalized undefined terms used herein have the meanings assigned thereto in
the 364-Day Credit Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Borrowing Request this
_____ day of _______________, ______.
KINDER MORGAN, INC.,
as the Borrower
By: __________________________________________
Name:________________________________________
Title:_________________________________________
-2-
EXHIBIT 10.15
EXHIBIT 2.07
FORM OF INTEREST ELECTION REQUEST
Date: [__________], 20[__]
Barclays Bank PLC,
1301 Sixth Avenue
New York, NY 10019
Attn: Bobby Fitzpatrick
Phone: 201-499-5043
E-mail: bobby.fitzpatrick@barclays.com and 12145455230@tls.ldsprod.com
Re: Kinder Morgan, Inc. – Interest Election Request
Ladies and Gentlemen:
Reference is made to the Revolving Credit Agreement, dated as of November 16, 2018 (as amended,
amended and restated, supplemented or otherwise modified from time to time, the “364-Day Credit
Agreement”), among Kinder Morgan, Inc., a Delaware corporation (the “Borrower”), the Lenders party
thereto from time to time, Barclays Bank PLC as Administrative Agent, and the other parties thereto from
time to time. Capitalized terms used but not otherwise defined in this Interest Election Request shall have
the meanings assigned to such terms in the 364-Day Credit Agreement.
1.
Interest Election Request. This Interest Election Request relates to the Borrower’s election
to (i) continue a Eurodollar Borrowing, (ii) convert a Eurodollar Borrowing or (iii) convert a Base Rate
Borrowing on ___________ (the “Interest Election Date”), as indicated below (check each that applies):
Continuation of Eurodollar Borrowing.
Pursuant to Section 2.07 of the 364-Day Credit Agreement, this Interest Election Request
confirms our written election on the date hereof to continue the following outstanding Borrowing
comprised of Eurodollar Loans on the Interest Election Date, as follows:
(A)
Expiration date of current
Interest Period:
(B) Aggregate amount
________________________
of outstanding Borrowing:
________________________
(C) Aggregate amount to be
continued as Eurodollar Loans: ________________________
(D)
Elected Interest Period:
________________________
Conversion of Eurodollar Borrowing.
Pursuant to Section 2.07 of the 364-Day Credit Agreement, this Interest Election Request
confirms our written election on the date hereof to convert the following outstanding Borrowing
-1-
EXHIBIT 10.15
comprised of Eurodollar Loans to Borrowing(s) comprised of ABR Loans on the Interest Election
Date, as follows:
(A)
Expiration date of current
Interest Period:
(B) Aggregate amount
________________________
of outstanding Borrowing:
________________________
(C) Aggregate amount to be
converted to ABR Loans:
________________________
Conversion of Base Rate Borrowing.
Pursuant to Section 2.07 of the 364-Day Credit Agreement, this Interest Election Request
confirms our written election on the date hereof that the following outstanding Borrowing comprised
of ABR Loans be converted to a Borrowing comprised of Eurodollar Loans on the Interest Election
Date, as follows:
(A)
Date of Conversion:
________________________
(B) Aggregate amount
of outstanding Borrowing:
________________________
(C) Aggregate amount to be
converted to Eurodollar Loans: ________________________
(D)
Elected Interest Period:
________________________
2.
Certifications. The Borrower hereby represents and warrants to the Lenders that, as of the
date of this Interest Election Request and after giving effect to the continuations or conversions being
requested under Section 1 hereof, no Default or Event of Default has occurred and is continuing.
[Signature page follows]
-2-
EXHIBIT 10.15
IN WITNESS WHEREOF, the undersigned has executed this Interest Election Request this
_____ day of ___________________, ____.
KINDER MORGAN, INC.,
as the Borrower
By: __________________________________________
Name:________________________________________
Title:_________________________________________
-3-
FORM OF NOTICE OF PREPAYMENT
EXHIBIT 10.15
EXHIBIT 2.10
Date: _______, ____
To: Barclays Bank PLC,
1301 Sixth Avenue
New York, NY 10019
Attn: Patrick Shields
Phone: 212-526-9531
E-mail: bobby.fitzpatrick@barclays.com, 12145455230@tls.ldsprod.com and
Patrick.shields@barclays.com
Ladies and Gentlemen:
Reference is made to that certain Revolving Credit Agreement, dated as of November
16, 2018 (as may be amended, restated, amended and restated, extended, supplemented or otherwise
modified in writing from time to time in accordance with its terms, the “364-Day Credit Agreement”;
the terms defined therein being used herein as therein defined), among Kinder Morgan, Inc., a Delaware
corporation (the “Borrower”), the Lenders party thereto from time to time, Barclays Bank PLC, as
Administrative Agent, and the other parties thereto. All capitalized terms used but not defined herein
have the meanings assigned in the 364-Day Credit Agreement.
This Prepayment Notice is delivered to you pursuant to Section 2.10 of the Agreement.
The Borrower hereby gives notice of a prepayment of Committed Loans as follows:
1.
(select Type(s) of Loans)
ABR Loans in the aggregate principal amount of $________.
the aggregate principal amount of $________.
Eurodollar Loans with an Interest Period ending ______, 201_ in
2.
On __________, 201_ (a Business Day).
IN WITNESS WHEREOF, the undersigned have executed this Prepayment Notice this
_____ day of _______________, _____.
KINDER MORGAN, INC.,
as the Borrower
By: __________________________________________
Name:________________________________________
Title:_________________________________________
-1-
EXHIBIT 10.15
EXHIBIT 2.16-A
[FORM OF]
U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)
Reference is hereby made to the Revolving Credit Agreement, dated as of November 16,
2018 (as further amended, supplemented or otherwise modified from time to time, the “364-Day Credit
Agreement”), among Kinder Morgan, Inc. (the “Borrower”), Barclays Bank PLC, as administrative agent
for the lenders party thereto (the “Lenders”) and such Lenders.
Pursuant to the provisions of Section 2.16(g) of the 364-Day Credit Agreement, the
undersigned hereby certifies that (i) it is the sole record and beneficial owner of the Loan(s) (as well as any
Note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) it is not a bank within
the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of the Borrower
within the meaning of Section 881(c)(3)(B) of the Code and (iv) it is not a controlled foreign corporation
related to the Borrower as described in Section 881(c)(3)(C) of the Code.
The undersigned has furnished the Administrative Agent and the Borrower with a certificate
of its non-U.S. Person status on IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable. By executing
this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the
undersigned shall promptly so inform the Borrower and the Administrative Agent, and (2) the undersigned
shall have at all times furnished the Borrower and the Administrative Agent with a properly completed and
currently effective certificate in either the calendar year in which each payment is to be made to the
undersigned, or in either of the two calendar years preceding such payments.
Unless otherwise defined herein, terms defined in the 364-Day Credit Agreement and used
herein shall have the meanings given to them in the 364-Day Credit Agreement.
[NAME OF LENDER]
By:
Name:
Title:
Date: ________ __, 20[ ]
-1-
EXHIBIT 10.15
EXHIBIT 2.16-B
[FORM OF]
U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)
Reference is hereby made to the Revolving Credit Agreement, dated as of November 16,
2018 (as further amended, supplemented or otherwise modified from time to time, the “364-Day Credit
Agreement”), among Kinder Morgan, Inc. (the “Borrower”), Barclays Bank PLC, as administrative agent
for the lenders party thereto (the “Lenders”) and such Lenders.
Pursuant to the provisions of Section 2.16(g) of the 364-Day Credit Agreement, the
undersigned hereby certifies that (i) it is the sole record and beneficial owner of the participation in respect
of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of
the Code, (iii) it is not a ten percent shareholder of the Borrower within the meaning of Section 881(c)(3)
(B) of the Code, and (iv) it is not a controlled foreign corporation related to the Borrower as described in
Section 881(c)(3)(C) of the Code.
The undersigned has furnished its participating Lender with a certificate of its non-U.S.
Person status on IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable. By executing this certificate,
the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall
promptly so inform such Lender in writing, and (2) the undersigned shall have at all times furnished such
Lender with a properly completed and currently effective certificate in either the calendar year in which each
payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.
Unless otherwise defined herein, terms defined in the 364-Day Credit Agreement and used
herein shall have the meanings given to them in the 364-Day Credit Agreement.
[NAME OF PARTICIPANT]
By:
Name:
Title:
Date: ________ __, 20[ ]
-1-
EXHIBIT 10.15
EXHIBIT 2.16-C
[FORM OF]
U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)
Reference is hereby made to the Revolving Credit Agreement, dated as of November 16,
2018 (as further amended, supplemented or otherwise modified from time to time, the “364-Day Credit
Agreement”), among Kinder Morgan, Inc. (the “Borrower), Barclays Bank PLC, as administrative agent for
the lenders party thereto (the “Lenders”) and such Lenders.
Pursuant to the provisions of Section 2.16(g) of the 364-Day Credit Agreement, the
undersigned hereby certifies that (i) it is the sole record owner of the participation in respect of which it is
providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such
participation, (iii) with respect such participation, neither the undersigned nor any of its direct or indirect
partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course
of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct or
indirect partners/members is a ten percent shareholder of the Borrower within the meaning of Section 881(c)
(3)(B) of the Code and (v) none of its direct or indirect partners/members is a controlled foreign corporation
related to the Borrower as described in Section 881(c)(3)(C) of the Code.
The undersigned has furnished its participating Lender with IRS Form W-8IMY
accompanied by one of the following forms from each of its partners/members that is claiming the portfolio
interest exemption: (i) an IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable, or (ii) an IRS Form
W-8IMY accompanied by an IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable, from each of such
partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By executing this
certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the
undersigned shall promptly so inform such Lender and (2) the undersigned shall have at all times furnished
such Lender with a properly completed and currently effective certificate in either the calendar year in which
each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.
Unless otherwise defined herein, terms defined in the 364-Day Credit Agreement and used
herein shall have the meanings given to them in the 364-Day Credit Agreement.
[NAME OF PARTICIPANT]
By:
Name:
Title:
Date: ________ __, 20[ ]
-1-
EXHIBIT 10.15
EXHIBIT 2.16-D
[FORM OF]
U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)
Reference is hereby made to the Revolving Credit Agreement, dated as of November 16,
2018 (as further amended, supplemented or otherwise modified from time to time, the “364-Day Credit
Agreement”), among Kinder Morgan, Inc. (the “Borrower”), Barclays Bank PLC, as administrative agent
for the lenders party thereto (the “Lenders”) and such Lenders.
Pursuant to the provisions of Section 2.16(g) of the 364-Day Credit Agreement, the
undersigned hereby certifies that (i) it is the sole record owner of the Loan(s) (as well as any Note(s) evidencing
such Loan(s)) in respect of which it is providing this certificate, (ii) its direct or indirect partners/members
are the sole beneficial owners of such Loan(s) (as well as any Note(s) evidencing such Loan(s)), (iii) with
respect to the extension of credit pursuant to this 364-Day Credit Agreement or any other Loan Document,
neither the undersigned nor any of its direct or indirect partners/members is a bank extending credit pursuant
to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section
881(c)(3)(A) of the Code, (iv) none of its direct or indirect partners/members is a ten percent shareholder of
the Borrower within the meaning of Section 881(c)(3)(B) of the Code and (v) none of its direct or indirect
partners/members is a controlled foreign corporation related to the Borrower as described in Section 881(c)
(3)(C) of the Code.
The undersigned has furnished the Administrative Agent and the Borrower with IRS Form
W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the
portfolio interest exemption: (i) an IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable, or (ii) an
IRS Form W-8IMY accompanied by an IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable, from
each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By
executing this certificate, the undersigned agrees that (1) if the information provided on this certificate
changes, the undersigned shall promptly so inform the Borrower and the Administrative Agent, and (2) the
undersigned shall have at all times furnished the Borrower and the Administrative Agent with a properly
completed and currently effective certificate in either the calendar year in which each payment is to be made
to the undersigned, or in either of the two calendar years preceding such payments.
Unless otherwise defined herein, terms defined in the 364-Day Credit Agreement and used
herein shall have the meanings given to them in the 364-Day Credit Agreement.
[NAME OF LENDER]
By:
Name:
Title:
Date: ________ __, 20[ ]
-1-
EXHIBIT 10.15
EXHIBIT 5.01
FORM OF COMPLIANCE CERTIFICATE
The undersigned hereby certifies that he is the ____________________________ of
KINDER MORGAN, INC., a Delaware corporation (the “Borrower”), and that as such he is authorized to
execute this certificate on behalf of the Borrower. With reference to the Revolving Credit Agreement dated
as of November 16, 2018 (as further restated, amended, modified, supplemented and in effect from time to
time, the “364-Day Credit Agreement”) among the Borrower, Barclays Bank PLC, as Administrative Agent,
for the lenders (the “Lenders”) and such Lenders, the undersigned represents and warrants as follows (each
capitalized term used herein having the same meaning given to it in the 364-Day Credit Agreement unless
otherwise specified);
Attached hereto as Annex I are the detailed computations necessary to determine whether
the Borrower is in compliance with Section 6.07 of the 364-Day Credit Agreement as of the end of the [fiscal
quarter][fiscal year] ending ________________.
[Attached hereto as Annex II is a list of the Material Subsidiaries.]1
[There has been no change in the list of Material Subsidiaries since [ ], the date
of the last Compliance Certificate delivered prior to the date hereof.] [Attached hereto as Annex II is an
update to the list of Material Subsidiaries to reflect changes in such list since [ ], the date of
the last Compliance Certificate delivered prior to the date hereof.]2
There does not exist any Default or Event of Default under the 364-Day Credit Agreement
as of the date of this Compliance Certificate, except as set forth in a separate attachment, if any, to this
Compliance Certificate, setting forth the details thereof and the action taken or proposed to be taken by the
Borrower with respect thereto.
EXECUTED AND DELIVERED this _____ day of ________________, ______.
KINDER MORGAN, INC.,
as the Borrower
By: __________________________________________
Name:________________________________________
Title:_________________________________________
__________________________
1
To be included in the compliance certificate delivered simultaneously with the first set of financial
statements delivered following the Closing Date.
2
Select the appropriate option for each Compliance Certificate delivered simultaneously with the second set
of financial statements delivered following the Closing Date and each set of financial statements delivered
thereafter.
Exhibit 10.16
CROSS GUARANTEE AGREEMENT
This CROSS GUARANTEE AGREEMENT is dated as of November 26, 2014 (as amended, restated,
supplemented or otherwise modified from time to time, this “Agreement”), by each of the signatories listed
on the signature pages hereto and each of the other entities that becomes a party hereto pursuant to Section
19 (the “Guarantors” and individually, a “Guarantor”), for the benefit of the Guaranteed Parties (as defined
below).
W I T N E S S E T H:
WHEREAS, Kinder Morgan, Inc., a Delaware corporation (“KMI”), and certain of its direct and
indirect Subsidiaries have outstanding senior, unsecured Indebtedness and may from time to time issue
additional senior, unsecured Indebtedness;
WHEREAS, each Guarantor, other than KMI, is a direct or indirect Subsidiary of KMI;
WHEREAS, each Guarantor desires to provide the guarantee set forth herein with respect to the
Indebtedness of such Guarantors that constitutes the Guaranteed Obligations; and
WHEREAS, each Guarantor acknowledges that it will derive substantial direct and indirect benefit
from the making of the guarantees hereby;
NOW, THEREFORE, in consideration of the premises, the Guarantors hereby agree with each other
for the benefit of the Guaranteed Parties as follows:
1.
Defined Terms.
(a)
As used in this Agreement, the following terms have the meanings specified below:
“Agreement” has the meaning provided in the preamble hereto.
“Bankruptcy Code” means Title 11 of the United States Code, as now or hereafter in effect,
or any successor thereto.
“Capital Stock” means, with respect to any Person, any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents (however designated) of such Person’s equity,
including (i) all common stock and preferred stock, any limited or general partnership interest and any limited
liability company member interest, (ii) beneficial interests in trusts, and (iii) any other interest or participation
that confers upon a Person the right to receive a share of the profits and losses of, or distribution of assets
of, the issuing Person.
“CFC” means a Person that is a “controlled foreign corporation” within the meaning of
Section 957 of the Internal Revenue Code of 1986, as amended.
“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.),
as amended from time to time, and any successor statute.
“Consolidated Assets” means, at the date of any determination thereof, the total assets of
KMI and its Subsidiaries as set forth on a consolidated balance sheet of KMI and its Subsidiaries for their
most recently completed fiscal quarter, prepared in accordance with GAAP.
“Consolidated Tangible Assets” means, at the date of any determination thereof,
Consolidated Assets after deducting therefrom the value, net of any applicable reserves and accumulated
Exhibit 10.16
amortization, of all goodwill, trade names, trademarks, patents and other like intangible assets, all as set
forth, or on a pro forma basis would be set forth, on a consolidated balance sheet of KMI and its Subsidiaries
for their most recently completed fiscal quarter, prepared in accordance with GAAP.
“Domestic Subsidiary” means any Subsidiary of KMI organized under the laws of any
jurisdiction within the United States.
“Excluded Subsidiary” means (i) any Subsidiary that is not a Wholly-owned Domestic
Operating Subsidiary, (ii) any Domestic Subsidiary that is a Subsidiary of a CFC or any Domestic Subsidiary
(including a disregarded entity for U.S. federal income tax purposes) substantially all of whose assets (held
directly or through Subsidiaries) consist of Capital Stock of one or more CFCs or Indebtedness of such CFCs,
(iii) any Immaterial Subsidiary, (iv) any Subsidiary listed on Schedule III, (v) each of Calnev Pipe Line LLC,
SFPP, L.P., Kinder Morgan G.P., Inc. and EPEC Realty, Inc. and each of its Subsidiaries, (vi) any other
Subsidiary that is not a Guarantor under the Revolving Credit Agreement Guarantee, (vii) any not-for-profit
Subsidiary, (viii) any Subsidiary that is prohibited by a Requirement of Law from guaranteeing the Guaranteed
Obligations, and (ix) any Subsidiary acquired by KMI or its Subsidiaries after the date of this Agreement to
the extent, and so long as, the financing documentation governing any existing Indebtedness of such
Subsidiary that survives such acquisition prohibits such Subsidiary from guaranteeing the Guaranteed
Obligations; provided, that notwithstanding the foregoing, any Subsidiary that is party to the Revolving
Credit Agreement Guarantee or that Guarantees any senior notes or senior debt securities issued by KMI
(other than pursuant to this Agreement) shall not constitute an Excluded Subsidiary for so long as such
Guarantee is in effect.
“Excluded Swap Obligation” means, with respect to any Guarantor, any Swap Obligation
if, and to the extent that, all or a portion of the Guarantee of such Guarantor of such Swap Obligation (or
any Guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or
order of the Commodity Futures Trading Commission (or the application or official interpretation of any
thereof) by virtue of such Guarantor’s failure for any reason to constitute an “eligible contract participant”
as defined in the Commodity Exchange Act and the regulations thereunder at the time the Guarantee of such
Guarantor becomes effective with respect to such Swap Obligation. If a Swap Obligation arises under a
master agreement governing more than one swap, such exclusion shall apply only to the portion of such
Swap Obligation that is attributable to swaps for which such Guarantee is or becomes illegal.
“GAAP” means generally accepted accounting principles in the United States of America
from time to time, including as set forth in the opinions, statements and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and the Financial Accounting
Standards Board.
“Governmental Authority” means the government of the United States of America or any
other nation, or of any political subdivision thereof, whether state or local, and any agency, authority,
instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra
national bodies such as the European Union or the European Central Bank).
“Guarantee” of or by any Person (the “guarantor”) means any obligation, contingent or
otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or
other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly,
and including any obligation of the guarantor, direct or indirect, (i) to purchase or pay (or advance or supply
funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance
or supply funds for the purchase of) any security for the payment thereof, (ii) to purchase or lease property,
securities or services for the purpose of assuring the owner of such Indebtedness
2
Exhibit 10.16
or other obligation of the payment thereof, (iii) to maintain working capital, equity capital or any other
financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay
such Indebtedness or other obligation or (iv) as an account party in respect of any letter of credit or letter of
guaranty issued to support such Indebtedness or obligation; provided that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business.
“Guarantee Termination Date” has the meaning set forth in Section 2(d).
“Guaranteed Obligations” means the Indebtedness set forth on Schedule I hereto, as such
schedule may be amended from time to time in accordance with the terms of this Agreement; provided that
the term “Guaranteed Obligations” shall exclude any Excluded Swap Obligations.
“Guaranteed Parties” means, collectively, (i) in the case of Guaranteed Obligations that are
governed by trust indentures, the holders (as that term is defined in the applicable trust indenture) of such
Guaranteed Obligations, (ii) in the case of Guaranteed Obligations that are governed by loan agreements,
credit agreements, or similar agreements, the lenders providing such loans or credit, and (iii) in the case of
Guaranteed Obligations with respect to Hedging Agreements, the counterparties under such agreements.
“Guarantor” has the meaning provided in the preamble hereto. Schedule II hereto, as such
schedule may be amended from time to time in accordance with the terms of this Agreement, sets forth the
name of each Guarantor.
“Hedging Agreement” means a financial instrument, agreement or security which hedges
or is used to hedge or manage the risk associated with a change in interest rates, foreign currency exchange
rates or commodity prices (but excluding any purchase, swap, derivative contract or similar agreement
relating to power, electricity or any related commodity product).
“Immaterial Subsidiary” means any Subsidiary that is not a Material Subsidiary.
“Indebtedness” means, collectively, (i) any senior, unsecured obligation created or assumed
by any Person for borrowed money, including all obligations of such Person evidenced by bonds, debentures,
notes or similar instruments (other than surety, performance and guaranty bonds), and (ii) all payment
obligations of any Person with respect to obligations under Hedging Agreements.
“Investment Grade Rating” means a rating equal to or higher than Baa3 by Moody’s and
BBB- by S&P; provided, however, that if (i) either of Moody’s or S&P changes its rating system, such ratings
shall be the equivalent ratings after such changes or (ii) Moody’s or S&P shall not make a rating of a
Guaranteed Obligation publicly available, the references above to Moody’s or S&P or both of them, as the
case may be, shall be to a nationally recognized U.S. rating agency or agencies, as the case may be, selected
by KMI and the references to the ratings categories above shall be to the corresponding rating categories of
such rating agency or rating agencies, as the case may be.
“Issuer” means the issuer, borrower, or other applicable primary obligor of a Guaranteed
Obligation.
“KMI” has the meaning provided in the recitals hereto.
“Lien” means, with respect to any asset (i) any mortgage, deed of trust, lien, pledge,
hypothecation, encumbrance, charge or security interest in, on or of such asset, and (ii) the interest of a
vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the foregoing) relating to such asset.
3
Exhibit 10.16
“Material Subsidiary” means, as at any date of determination, any Subsidiary of KMI whose
total tangible assets (for purposes of the below, when combined with the tangible assets of such Subsidiary’s
Subsidiaries, after eliminating intercompany obligations) as at such date of determination are greater than
or equal to 5% of Consolidated Tangible Assets as of the last day of the fiscal quarter most recently ended
for which financial statements of KMI have been filed with the SEC.
“Moody’s” means Moody’s Investors Service, Inc. and its successors.
“Operating Subsidiary” means any operating company that is a Subsidiary of KMI.
“Person” means any natural person, corporation, limited liability company, trust, joint
venture, association, company, partnership, Governmental Authority or other entity.
“Qualified ECP Guarantor” means, in respect of any Swap Obligation, each Guarantor that
has total assets exceeding $10,000,000 at the time the relevant Guarantee becomes effective with respect to
such Swap Obligation or such other person as constitutes an “eligible contract participant” under the
Commodity Exchange Act or any regulations promulgated thereunder and can cause another person to qualify
as an “eligible contract participant” at such time by entering into a keepwell under Section 1a(18)(A)(v)(II)
of the Commodity Exchange Act.
“Rating Agencies” means Moody’s and S&P; provided that, if at the relevant time neither
Moody’s nor S&P shall be rating the relevant Guaranteed Obligation, then “Rating Agencies” shall mean
another nationally recognized rating service that rates such Guaranteed Obligation.
“Rating Date” means the date immediately prior to the earlier of (i) the occurrence of a
Release Event and (ii) public notice of the intention to effect a Release Event.
“Rating Decline” means, with respect to a Guaranteed Obligation, the occurrence of the
following on, or within 90 days after, the date of the occurrence of a Release Event or of public notice of
the intention to effect a Release Event (which period may be extended so long as the rating of such Guaranteed
Obligation is under publicly announced consideration for possible downgrade by either of the Rating
Agencies): (i) in the event such Guaranteed Obligation is assigned an Investment Grade Rating by both
Rating Agencies on the Rating Date, the rating of such Guaranteed Obligation by one or both of the Rating
Agencies shall be below an Investment Grade Rating; or (ii) in the event such Guaranteed Obligation is rated
below an Investment Grade Rating by either of the Rating Agencies on the Rating Date, any such below-
Investment Grade Rating of such Guaranteed Obligation shall be decreased by one or more gradations
(including gradations within rating categories as well as between rating categories).
“Release Event” has the meaning set forth in Section 6(b).
“Requirement of Law” means any law, statute, code, ordinance, order, determination, rule,
regulation, judgment, decree, injunction, franchise, permit, certificate, license, authorization or other
directive or requirement (whether or not having the force of law), including environmental laws, energy
regulations and occupational, safety and health standards or controls, of any Governmental Authority.
4
Exhibit 10.16
“Revolving Credit Agreement” means the Revolving Credit Agreement, dated as of
September 19, 2014, among KMI, the lenders party thereto and Barclays Bank PLC, as administrative agent,
as such credit agreement may be amended, modified, supplemented or restated from time to time, or refunded,
refinanced, restructured, replaced, renewed, repaid or extended from time to time (whether with the original
agents and lenders or other agents or lenders or trustee or otherwise, and whether provided under the original
credit agreement or other credit agreements or note indentures or otherwise), including, without limitation,
increasing the amount of available borrowings or other Indebtedness thereunder.
“Revolving Credit Agreement Guarantee” means the Guarantee Agreement, dated as of
November 26, 2014, made by the Subsidiaries of KMI party thereto in favor of Barclays Bank PLC, as
administrative agent, for the benefit of the lenders and the issuing banks under the Revolving Credit
Agreement, as such guarantee agreement may be amended, modified, supplemented or restated from time
to time, and as it may be replaced or renewed from time to time in connection with any amendment,
modification, supplement, restatement, refunding, refinancing, restructuring, replacement, renewal,
repayment, or extension of any Revolving Credit Agreement from time to time.
“S&P” means Standard & Poor’s Rating Services, a division of The McGraw-Hill
Companies, Inc., and its successors.
“SEC” means the United States Securities and Exchange Commission.
“Subsidiary” means, with respect to any Person (the “parent”) at any date, any corporation,
limited liability company, partnership, association or other entity the accounts of which would be consolidated
with those of the parent in the parent’s consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company,
partnership, association or other entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more
than 50% of the general partner interests are, as of such date, owned, controlled or held, or (b) that is, as of
such date, otherwise controlled, by the parent or one or more Subsidiaries of the parent or by the parent and
one or more Subsidiaries of the parent. Unless the context otherwise clearly requires, references in this
Agreement to a “Subsidiary” or the “Subsidiaries” refer to a Subsidiary or the Subsidiaries of KMI.
Notwithstanding the foregoing, Plantation Pipe Line Company, a Delaware and Virginia corporation, shall
not be a Subsidiary of KMI until such time as its assets and liabilities, profit or loss and cash flow are required
under GAAP to be consolidated with those of KMI.
“Swap Obligation” means, with respect to any Guarantor, any obligation to pay or perform
under any agreement, contract or transaction that constitutes a “swap” within the meaning of Section 1a(47)
of the Commodity Exchange Act.
“Wholly-owned Domestic Operating Subsidiary” means any Wholly-owned Subsidiary that
constitutes (i) a Domestic Subsidiary and (ii) an Operating Subsidiary.
“Wholly-owned Subsidiary” means a Subsidiary of which all issued and outstanding Capital
Stock (excluding in the case of a corporation, directors’ qualifying shares) is directly or indirectly owned by
KMI.
(b)
The words “hereof”, “herein” and “hereunder” and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this
5
Exhibit 10.16
Agreement, and Section references are to Sections of this Agreement unless otherwise specified. The words
“include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”.
(c)
The meanings given to terms defined herein shall be equally applicable to both the
singular and plural forms of such terms.
2.
Guarantee.
(a)
Subject to the provisions of Section 2(b), each of the Guarantors hereby, jointly and
severally, unconditionally and irrevocably, guarantees, as primary obligor and not merely as surety, for the
benefit of the Guaranteed Parties, the prompt and complete payment when due (whether at the stated maturity,
by acceleration or otherwise) of the Guaranteed Obligations; provided that each Guarantor shall be released
from its respective guarantee obligations under this Agreement as provided in Section 6(b). Upon the failure
of an Issuer to punctually pay any Guaranteed Obligation, each Guarantor shall, upon written demand by
the applicable Guaranteed Party to such Guarantor, pay or cause to be paid such amounts.
(b)
Anything herein to the contrary notwithstanding, the maximum liability of each
Guarantor hereunder shall in no event exceed the amount that can be guaranteed by such Guarantor under
the Bankruptcy Code or any applicable laws relating to fraudulent conveyances, fraudulent transfers or the
insolvency of debtors after giving full effect to the liability under this Agreement and its related contribution
rights set forth in this Section 2, but before taking into account any liabilities under any other Guarantees.
(c)
Each Guarantor agrees that the Guaranteed Obligations may at any time and from
time to time exceed the amount of the liability of such Guarantor hereunder (as a result of the limitations set
forth in Section 2(b) or elsewhere in this Agreement) without impairing this Agreement or affecting the rights
and remedies of any Guaranteed Party hereunder.
(d)
No payment or payments made by any Issuer, any of the Guarantors, any other
guarantor or any other Person or received or collected by any Guaranteed Party from any Issuer, any of the
Guarantors, any other guarantor or any other Person by virtue of any action or proceeding or any set-off or
appropriation or application at any time or from time to time in reduction of or in payment of any Guaranteed
Obligation shall be deemed to modify, reduce, release or otherwise affect the liability of any Guarantor
hereunder, which shall, notwithstanding any such payment or payments, other than payments made by such
Guarantor in respect of such Guaranteed Obligation or payments received or collected from such Guarantor
in respect of such Guaranteed Obligation, remain liable for the Guaranteed Obligations up to the maximum
liability of such Guarantor hereunder until all Guaranteed Obligations (other than any contingent indemnity
obligations not then due and any letters of credit that remain outstanding which have been fully cash
collateralized or otherwise back-stopped to the reasonable satisfaction of the applicable issuing bank) shall
have been discharged by payment in full or shall have been deemed paid and discharged by defeasance
pursuant to the terms of the instruments governing such Guaranteed Obligations (the “Guarantee Termination
Date”).
(e)
If and to the extent required in order for the obligations of any Guarantor hereunder
to be enforceable under applicable federal, state and other laws relating to the insolvency of debtors, the
maximum liability of such Guarantor hereunder shall be limited to the greatest amount which can lawfully
be guaranteed by such Guarantor under such laws, after giving effect to any rights of contribution,
reimbursement and subrogation arising hereunder. Each Guarantor acknowledges and agrees
6
Exhibit 10.16
that, to the extent not prohibited by applicable law, (i) such Guarantor (as opposed to its creditors,
representatives of creditors or bankruptcy trustee, including such Guarantor in its capacity as debtor in
possession exercising any powers of a bankruptcy trustee) has no personal right under such laws to reduce,
or request any judicial relief that has the effect of reducing, the amount of its liability under this Agreement,
(ii) such Guarantor (as opposed to its creditors, representatives of creditors or bankruptcy trustee, including
such Guarantor in its capacity as debtor in possession exercising any powers of a bankruptcy trustee) has no
personal right to enforce the limitation set forth in this Section 2(e) or to reduce, or request judicial relief
reducing, the amount of its liability under this Agreement, and (iii) the limitation set forth in this Section
2(e) may be enforced only to the extent required under such laws in order for the obligations of such Guarantor
under this Agreement to be enforceable under such laws and only by or for the benefit of a creditor,
representative of creditors or bankruptcy trustee of such Guarantor or other Person entitled, under such laws,
to enforce the provisions hereof.
3.
Right of Contribution. Each Guarantor hereby agrees that to the extent that a Guarantor
shall have paid more than its proportionate share of any payment made hereunder (including by way of set-
off rights being exercised against it), such Guarantor shall be entitled to seek and receive contribution from
and against any other Guarantor hereunder who has not paid its proportionate share of such payment as set
forth in this Section 3. To the extent that any Guarantor shall be required hereunder to pay any portion of
any Guaranteed Obligation guaranteed hereunder exceeding the greater of (a) the amount of the value actually
received by such Guarantor and its Subsidiaries from such Guaranteed Obligation and (b) the amount such
Guarantor would otherwise have paid if such Guarantor had paid the aggregate amount of such Guaranteed
Obligation guaranteed hereunder (excluding the amount thereof repaid by the Issuer of such Guaranteed
Obligation) in the same proportion as such Guarantor’s net worth on the date enforcement is sought hereunder
bears to the aggregate net worth of all the Guarantors on such date, then such Guarantor shall be reimbursed
by such other Guarantors for the amount of such excess, pro rata, based on the respective net worth of such
other Guarantors on such date; provided that any Guarantor’s right of reimbursement shall be subject to the
terms and conditions of Section 5 hereof. For purposes of determining the net worth of any Guarantor in
connection with the foregoing, all Guarantees of such Guarantor other than pursuant to this Agreement will
be deemed to be enforceable and payable after its obligations pursuant to this Agreement. The provisions
of this Section 3 shall in no respect limit the obligations and liabilities of any Guarantor to the Guaranteed
Parties, and each Guarantor shall remain liable to the Guaranteed Parties for the full amount guaranteed by
such Guarantor hereunder.
4.
No Right of Set-off. No Guaranteed Party shall have, as a result of this Agreement, any
right of set-off against any amount owing by such Guaranteed Party to or for the credit or the account of a
Guarantor.
5.
No Subrogation. Notwithstanding any payment or payments made by any of the Guarantors
hereunder, no Guarantor shall be entitled to be subrogated to any of the rights (or if subrogated by operation
of law, such Guarantor hereby waives such rights to the extent permitted by applicable law) of any Guaranteed
Party against any Issuer or any other Guarantor or any collateral security or guarantee or right of offset held
by any Guaranteed Party for the payment of any Guaranteed Obligation, nor shall any Guarantor seek or be
entitled to seek any contribution or reimbursement from any Issuer or any other Guarantor in respect of
payments made by such Guarantor hereunder, until the Guarantee Termination Date. If any amount shall
be paid to any Guarantor on account of such subrogation, contribution or reimbursement rights at any time
prior to the Guarantee Termination Date, such amount shall be held by such Guarantor in trust for the
applicable Guaranteed Parties, segregated from other funds of such Guarantor, and shall, forthwith upon
receipt by such Guarantor, be turned over to the applicable Guaranteed Parties in the exact form received
by such Guarantor (duly indorsed by such
7
Exhibit 10.16
Guarantor to the applicable Guaranteed Parties if required), to be applied against the applicable Guaranteed
Obligation, whether due or to become due.
6.
Amendments, etc. with Respect to the Guaranteed Obligations; Waiver of Rights; Release.
(a)
Each Guarantor shall remain obligated hereunder notwithstanding that, without any
reservation of rights against any Guarantor and without notice to or further assent by any Guarantor, (i) any
demand for payment of any Guaranteed Obligation made by any Guaranteed Party may be rescinded by such
party and any Guaranteed Obligation continued, (ii) a Guaranteed Obligation, or the liability of any other
party upon or for any part thereof, or any collateral security or guarantee therefor or right of offset with
respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified,
accelerated, compromised, waived, allowed to lapse, surrendered or released by any Guaranteed Party,
(iii) the instruments governing any Guaranteed Obligation may be amended, modified, supplemented or
terminated, in whole or in part, and (iv) any collateral security, guarantee or right of offset at any time held
by any Guaranteed Party for the payment of any Guaranteed Obligation may be sold, exchanged, waived,
allowed to lapse, surrendered or released. No Guaranteed Party shall have any obligation to protect, secure,
perfect or insure any Lien at any time held by it as security for the Guaranteed Obligations or for this
Agreement or any property subject thereto. When making any demand hereunder against any Guarantor, a
Guaranteed Party may, but shall be under no obligation to, make a similar demand on the Issuer of the
applicable Guaranteed Obligation or any other Guarantor or any other person, and any failure by a Guaranteed
Party to make any such demand or to collect any payments from such Issuer or any other Guarantor or any
other person or any release of such Issuer or any other Guarantor or any other person shall not relieve any
Guarantor in respect of which a demand or collection is not made or any Guarantor not so released of its
several obligations or liabilities hereunder, and shall not impair or affect the rights and remedies, express or
implied, or as a matter of law, of any Guaranteed Party against any Guarantor. For the purposes hereof
“demand” shall include the commencement and continuance of any legal proceedings.
(b)
A Guarantor shall be automatically released from its guarantee hereunder upon
release of such Guarantor from the Revolving Credit Agreement Guarantee, including upon consummation
of any transaction resulting in such Guarantor ceasing to constitute a Subsidiary or upon any Guarantor
becoming an Excluded Subsidiary (such transaction or event, a “Release Event”).
(c)
Upon the occurrence of a Release Event, each Guaranteed Obligation for which
such released Guarantor was the Issuer shall be automatically released from the provisions of this Agreement
and shall cease to constitute a Guaranteed Obligation hereunder; provided that in the case of any Guaranteed
Obligation that has been assigned an Investment Grade Rating by the Rating Agencies, such Guaranteed
Obligation shall be so released, effective as of the 91st day after the occurrence of the Release Event, if and
only if a Rating Decline with respect to such Guaranteed Obligation does not occur.
7.
Guarantee Absolute and Unconditional.
(a)
Each Guarantor waives any and all notice of the creation, contraction, incurrence,
renewal, extension, amendment, waiver or accrual of any of the Guaranteed Obligations, and notice of or
proof of reliance by any Guaranteed Party upon this Agreement or acceptance of this Agreement. To the
fullest extent permitted by applicable law, each Guarantor waives diligence, promptness, presentment, protest
and notice of protest, demand for payment or performance, notice of default or nonpayment, notice of
acceptance and any other notice in respect of the Guaranteed Obligations or any part of them, and any defense
arising by reason of any disability or other defense of any Issuer or any of the Guarantors
8
Exhibit 10.16
with respect to the Guaranteed Obligations. Each Guarantor understands and agrees that this Agreement
shall be construed as a continuing, absolute and unconditional guarantee of payment without regard to (i) the
validity, regularity or enforceability of any of the Guaranteed Obligations, the indenture, loan agreement,
note or other instrument evidencing or governing any of the Guaranteed Obligations or any collateral security
therefor or guarantee or right of offset with respect thereto at any time or from time to time held by any
Guaranteed Party, (ii) any defense, set-off or counterclaim (other than a defense of payment or performance)
that may at any time be available to or be asserted by any Issuer against any Guaranteed Party or (iii) any
other circumstance whatsoever (with or without notice to or knowledge of any Issuer or such Guarantor)
that constitutes, or might be construed to constitute, an equitable or legal discharge of any Issuer for any of
the Guaranteed Obligations, or of such Guarantor under this Agreement, in bankruptcy or in any other
instance. When pursuing its rights and remedies hereunder against any Guarantor, any Guaranteed Party
may, but shall be under no obligation to, pursue such rights and remedies as it may have against the Issuer
or any other Person or against any collateral security or guarantee for the Guaranteed Obligations or any
right of offset with respect thereto, and any failure by any Guaranteed Party to pursue such other rights or
remedies or to collect any payments from the Issuer or any such other Person or to realize upon any such
collateral security or guarantee or to exercise any such right of offset, or any release of the Issuer or any such
other Person or any such collateral security, guarantee or right of offset, shall not relieve such Guarantor of
any liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied or
available as a matter of law, of the other Guaranteed Parties against such Guarantor.
(b)
This Agreement shall remain in full force and effect and be binding in accordance
with and to the extent of its terms upon each Guarantor and the successors and assigns thereof and shall
inure to the benefit of the Guaranteed Parties and their respective successors, indorsees, transferees and
assigns until the Guarantee Termination Date.
8.
Reinstatement. This Agreement shall continue to be effective, or be reinstated, as the case
may be, if at any time payment, or any part thereof, of any of the Guaranteed Obligations is rescinded or
must otherwise be restored or returned by any Guaranteed Party upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of any Issuer or any Guarantor, or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for, any Issuer or any Guarantor or any
substantial part of its property, or otherwise, all as though such payments had not been made.
9.
Payments. Each Guarantor hereby guarantees that payments hereunder will be paid to the
applicable Guaranteed Parties without set-off or counterclaim in dollars.
10.
Representations and Warranties. Each Guarantor hereby represents and warrants to each
Guaranteed Party that the following representations and warranties are true and correct in all material respects
as of the date of this Agreement or as of the date such Guarantor became a party to this Agreement, as
applicable:
(a)
such Guarantor (i) is a corporation, partnership or limited liability company duly
organized or formed, validly existing and in good standing under the laws of the state of its incorporation,
organization or formation, (ii) has all requisite corporate, partnership, limited liability company or other
power and all material governmental licenses, authorizations, consents and approvals required to carry on
its business as now conducted and (iii) is duly qualified to do business and is in good standing in every
jurisdiction in which the failure to be so qualified would have a material adverse effect on its ability to
perform its obligations under this Agreement;
9
Exhibit 10.16
(b)
such Guarantor has all requisite corporate (or other organizational) power and
authority to execute and deliver and to perform its obligations under this Agreement, and all such actions
have been duly authorized by all necessary proceedings on its behalf;
(c)
this Agreement has been duly and validly executed and delivered by or on behalf
of such Guarantor and constitutes the valid and legally binding agreement of such Guarantor, enforceable
against such Guarantor in accordance with its terms, except (i) as may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer, fraudulent conveyance or other similar laws relating to or
affecting the enforcement of creditors’ rights generally, and by general principles of equity (including
principles of good faith, reasonableness, materiality and fair dealing) which may, among other things, limit
the right to obtain equitable remedies (regardless of whether considered in a proceeding in equity or at law)
and (ii) as to the enforceability of provisions for indemnification for violation of applicable securities laws,
limitations thereon arising as a matter of law or public policy;
(d)
no authorization, consent, approval, license or exemption of or registration,
declaration or filing with any Governmental Authority is necessary for the valid execution and delivery of,
or the performance by such Guarantor of its obligations hereunder, except those that have been obtained and
such matters relating to performance as would ordinarily be done in the ordinary course of business after
the date of this Agreement or as of the date such Guarantor became a party to this Agreement, as applicable;
and
(e)
neither the execution and delivery of, nor the performance by such Guarantor of its
obligations under, this Agreement will (i) breach or violate any applicable Requirement of Law, (ii) result
in any breach or violation of any of the terms, covenants, conditions or provisions of, or constitute a default
under, or result in the creation or imposition of (or the obligation to create or impose) any Lien upon any of
its property or assets (other than Liens created or contemplated by this Agreement) pursuant to the terms of,
any indenture, mortgage, deed of trust, agreement or other instrument to which it or any of its Subsidiaries
is party or by which any of its properties or assets, or those of any of its Subsidiaries is bound or to which
it is subject, except for breaches, violations and defaults under clauses (i) and (ii) that neither individually
nor in the aggregate could reasonably be expected to result in a material adverse effect on its ability to perform
its obligations under this Agreement, or (iii) violate any provision of the organizational documents of such
Guarantor.
11.
Rights of Guaranteed Parties. Each Guarantor acknowledges and agrees that any changes
in the identity of the Persons from time to time comprising the Guaranteed Parties gives rise to an equivalent
change in the Guaranteed Parties, without any further act. Upon such an occurrence, the persons then
comprising the Guaranteed Parties are vested with the rights, remedies and discretions of the Guaranteed
Parties under this Agreement.
12.
Notices.
(a)
All notices, requests, demands and other communications to any Guarantor pursuant
hereto shall be in writing and mailed, telecopied or delivered to such Guarantor in care of KMI, 1001 Louisiana
Street, Suite 1000, Houston, Texas 77002, Attention: Treasurer, Telecopy: (713) 445-8302.
(b)
KMI will provide a copy of this Agreement, including the most recently amended
schedules and supplements hereto, to any Guaranteed Party upon written request to the address set forth in
Section 12(a); provided, however, that KMI’s obligations under this Section 12(b) shall be deemed satisfied
if KMI has filed a copy of this Agreement, including the most recently amended schedules and
10
Exhibit 10.16
supplements hereto, with the SEC within three months preceding the date on which KMI receives such
written request.
13.
Counterparts. This Agreement may be executed by one or more of the parties to this
Agreement on any number of separate counterparts (including by facsimile or other electronic transmission),
and all of said counterparts taken together shall be deemed to constitute one and the same instrument. A set
of the copies of this Agreement signed by all the parties shall be lodged with KMI.
14.
Severability. Any provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. The parties
hereto shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions
with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal
or unenforceable provisions.
15.
Integration. This Agreement represents the agreement of each Guarantor with respect to
the subject matter hereof, and there are no promises, undertakings, representations or warranties by any
Guaranteed Party relative to the subject matter hereof not expressly set forth or referred to herein.
16.
Amendments; No Waiver; Cumulative Remedies.
(a)
None of the terms or provisions of this Agreement may be waived, amended,
supplemented or otherwise modified except by a written instrument executed by the affected Guarantors and
KMI.
(b)
The Guarantors may amend or supplement this Agreement by a written instrument
executed by all Guarantors:
(i)
to cure any ambiguity, defect or inconsistency;
(ii)
to reflect a change in the Guarantors or the Guaranteed Obligations made in
accordance with this Agreement;
(iii)
to make any change that would provide any additional rights or benefits to the
Guaranteed Parties or that would not adversely affect the legal rights hereunder of any
Guaranteed Party in any material respect; or
(iv)
to conform this Agreement to any change made to the Revolving Credit
Agreement or to the Revolving Credit Agreement Guarantee.
Except as set forth in this clause (b) or otherwise provided herein, the Guarantors may not amend, supplement
or otherwise modify this Agreement prior to the Guarantee Termination Date without the prior written consent
of the holders of the majority of the outstanding principal amount of the Guaranteed Obligations (excluding
obligations with respect to Hedging Agreements). Notwithstanding the foregoing, in the case of an
amendment that would reasonably be expected to adversely, materially and disproportionately affect
Guaranteed Parties with Guaranteed Obligations existing under Hedging Agreements relative to the other
Guaranteed Parties, the foregoing exclusion of obligations with respect to Hedging Agreements shall not
apply, and the outstanding principal amount attributable to each such Guaranteed Party’s Guaranteed
Obligations shall be deemed to be equal to the termination payment that
11
Exhibit 10.16
would be due to such Guaranteed Party as if the valuation date were an “Early Termination Date” under and
calculated in accordance with each applicable Hedging Agreement.
(c)
No Guaranteed Party shall by any act, delay, indulgence, omission or otherwise be
deemed to have waived any right or remedy hereunder or to have acquiesced in any breach of any of the
terms and conditions hereof. No failure to exercise, nor any delay in exercising, on the part of any Guaranteed
Party, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise
of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by a Guaranteed Party of any right or remedy hereunder on
any one occasion shall not be construed as a bar to any right or remedy that such Guaranteed Party would
otherwise have on any future occasion.
(d)
The rights, remedies, powers and privileges herein provided are cumulative, may
be exercised singly or concurrently and are not exclusive of any other rights or remedies provided by law.
17.
Section Headings. The Section headings used in this Agreement are for convenience of
reference only and are not to affect the construction hereof or be taken into consideration in the interpretation
hereof.
18.
Successors and Assigns. This Agreement shall be binding upon the successors and assigns
of each Guarantor and shall inure to the benefit of the Guaranteed Parties and their respective successors
and permitted assigns, except that no Guarantor may assign, transfer or delegate any of its rights or obligations
under this Agreement except pursuant to a transaction permitted by the Revolving Credit Agreement and in
connection with a corresponding assignment under the Revolving Credit Agreement Guarantee.
19.
Additional Guarantors.
(a)
KMI shall cause each Subsidiary (other than any Excluded Subsidiary) formed or
otherwise purchased or acquired after the date of this Agreement (including each Subsidiary that ceases to
constitute an Excluded Subsidiary after the date of this Agreement) to execute a supplement to this Agreement
and become a Guarantor within 45 days of the occurrence of the applicable event specified in this Section
19(a).
(b)
Each Subsidiary of KMI that becomes, at the request of KMI, or that is required
pursuant to Section 19(a) to become, a party to this Agreement shall become a Guarantor, with the same
force and effect as if originally named as a Guarantor herein, for all purposes of this Agreement upon execution
and delivery by such Subsidiary of a written supplement substantially in the form of Annex A hereto. The
execution and delivery of any instrument adding an additional Guarantor as a party to this Agreement shall
not require the consent of any other Guarantor hereunder. The rights and obligations of each Guarantor
hereunder shall remain in full force and effect notwithstanding the addition of any new Guarantor as a party
to this Agreement.
20.
Additional Guaranteed Obligations. Any Indebtedness issued by a Guarantor or for which
a Guarantor otherwise becomes obligated after the date of this Agreement shall become a Guaranteed
Obligation upon the execution by all Guarantors of a notation of guarantee substantially in the form of Annex
B hereto, which shall be affixed to the instrument or instruments evidencing such Indebtedness. Each such
notation of guarantee shall be signed on behalf of each Guarantor by a duly authorized officer prior to the
authentication or issuance of such Indebtedness.
12
Exhibit 10.16
21.
GOVERNING LAW.
THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK.
22.
Keepwell. Each Qualified ECP Guarantor hereby jointly and severally absolutely,
unconditionally and irrevocably undertakes to provide such funds or other support as may be needed from
time to time by each other Guarantor to honor all of its obligations under this Agreement in respect of Swap
Obligations (provided, however, that each Qualified ECP Guarantor shall only be liable under this Section
22 for the maximum amount of such liability that can be hereby incurred without rendering its obligations
under this Section 22, or otherwise under this Agreement, voidable under applicable law relating to fraudulent
conveyance or fraudulent transfer, and not for any greater amount). The obligations of each Qualified ECP
Guarantor under this Section shall remain in full force and effect until the Guarantee Termination Date. Each
Qualified ECP Guarantor intends that this Section 22 constitute, and this Section 22 shall be deemed to
constitute, a “keepwell, support, or other agreement” for the benefit of each other Guarantor for all purposes
of Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.
[Signature pages follow]
13
IN WITNESS WHEREOF, each of the undersigned has caused this Agreement to be duly executed and
delivered by its duly authorized officer or other representative as of the day and year first above written.
Exhibit 10.16
KINDER MORGAN, INC.
By:
/s/ Anthony B. Ashley
Name: Anthony B. Ashley
Title: Treasurer
AGNES B CRANE, LLC
AMERICAN PETROLEUM TANKERS II LLC
AMERICAN PETROLEUM TANKERS III LLC
AMERICAN PETROLEUM TANKERS IV LLC
AMERICAN PETROLEUM TANKERS LLC
AMERICAN PETROLEUM TANKERS PARENT LLC
AMERICAN PETROLEUM TANKERS V LLC
AMERICAN PETROLEUM TANKERS VI LLC
AMERICAN PETROLEUM TANKERS VII LLC
APT FLORIDA LLC
APT INTERMEDIATE HOLDCO LLC
APT NEW INTERMEDIATE HOLDCO LLC
APT PENNSYLVANIA LLC
APT SUNSHINE STATE LLC
AUDREY TUG LLC
BEAR CREEK STORAGE COMPANY, L.L.C.
BETTY LOU LLC
CAMINO REAL GATHERING COMPANY, L.L.C.
CANTERA GAS COMPANY LLC
CDE PIPELINE LLC
CENTRAL FLORIDA PIPELINE LLC
CHEYENNE PLAINS GAS PIPELINE COMPANY, L.L.C.
CIG GAS STORAGE COMPANY LLC
CIG PIPELINE SERVICES COMPANY, L.L.C.
CIMMARRON GATHERING LLC
COLORADO INTERSTATE GAS COMPANY, L.L.C.
COLORADO INTERSTATE ISSUING CORPORATION
COPANO DOUBLE EAGLE LLC
COPANO ENERGY FINANCE CORPORATION
COPANO ENERGY, L.L.C.
COPANO ENERGY SERVICES/UPPER GULF COAST LLC
COPANO FIELD SERVICES GP, L.L.C.
COPANO FIELD SERVICES/NORTH TEXAS, L.L.C.
COPANO FIELD SERVICES/SOUTH TEXAS LLC
COPANO FIELD SERVICES/UPPER GULF COAST LLC
COPANO LIBERTY, LLC
COPANO NGL SERVICES (MARKHAM), L.L.C.
COPANO NGL SERVICES LLC
COPANO PIPELINES GROUP, L.L.C.
[Signature Page to Cross Guarantee]
Exhibit 10.16
COPANO PIPELINES/NORTH TEXAS, L.L.C.
COPANO PIPELINES/ROCKY MOUNTAINS, LLC
COPANO PIPELINES/SOUTH TEXAS LLC
COPANO PIPELINES/UPPER GULF COAST LLC
COPANO PROCESSING LLC
COPANO RISK MANAGEMENT LLC
COPANO/WEBB-DUVAL PIPELINE LLC
CPNO SERVICES LLC
DAKOTA BULK TERMINAL, INC.
DELTA TERMINAL SERVICES LLC
EAGLE FORD GATHERING LLC
EL PASO CHEYENNE HOLDINGS, L.L.C.
EL PASO CITRUS HOLDINGS, INC.
EL PASO CNG COMPANY, L.L.C.
EL PASO ENERGY SERVICE COMPANY, L.L.C.
EL PASO LLC
EL PASO MIDSTREAM GROUP LLC
EL PASO NATURAL GAS COMPANY, L.L.C.
EL PASO NORIC INVESTMENTS III, L.L.C.
EL PASO PIPELINE CORPORATION
EL PASO PIPELINE GP COMPANY, L.L.C.
EL PASO PIPELINE HOLDING COMPANY, L.L.C.
EL PASO PIPELINE LP HOLDINGS, L.L.C.
EL PASO PIPELINE PARTNERS, L.P.
By El Paso Pipeline GP Company, L.L.C., its general partner
EL PASO PIPELINE PARTNERS OPERATING COMPANY, L.L.C.
EL PASO RUBY HOLDING COMPANY, L.L.C.
EL PASO TENNESSEE PIPELINE CO., L.L.C.
ELBA EXPRESS COMPANY, L.L.C.
ELIZABETH RIVER TERMINALS LLC
EMORY B CRANE, LLC
EPBGP CONTRACTING SERVICES LLC
EP ENERGY HOLDING COMPANY
EP RUBY LLC
EPTP ISSUING CORPORATION
FERNANDINA MARINE CONSTRUCTION MANAGEMENT LLC
FRANK L. CRANE, LLC
GENERAL STEVEDORES GP, LLC
GENERAL STEVEDORES HOLDINGS LLC
GLOBAL AMERICAN TERMINALS LLC
HAMPSHIRE LLC
HARRAH MIDSTREAM LLC
HBM ENVIRONMENTAL, INC.
ICPT, L.L.C
J.R. NICHOLLS LLC
JAVELINA TUG LLC
JEANNIE BREWER LLC
JV TANKER CHARTERER LLC
KINDER MORGAN (DELAWARE), INC.
KINDER MORGAN 2-MILE LLC
KINDER MORGAN ADMINISTRATIVE SERVICES TAMPA LLC
KINDER MORGAN ALTAMONT LLC
[Signature Page to Cross Guarantee]
Exhibit 10.16
KINDER MORGAN AMORY LLC
KINDER MORGAN ARROW TERMINALS HOLDINGS, INC.
KINDER MORGAN ARROW TERMINALS, L.P.
By Kinder Morgan River Terminals, LLC, its general partner
KINDER MORGAN BALTIMORE TRANSLOAD TERMINAL LLC
KINDER MORGAN BATTLEGROUND OIL LLC
KINDER MORGAN BORDER PIPELINE LLC
KINDER MORGAN BULK TERMINALS, INC.
KINDER MORGAN CARBON DIOXIDE TRANSPORTATION
COMPANY
KINDER MORGAN CO2 COMPANY, L.P.
By Kinder Morgan G.P., Inc., its general partner
KINDER MORGAN COCHIN LLC
KINDER MORGAN COLUMBUS LLC
KINDER MORGAN COMMERCIAL SERVICES LLC
KINDER MORGAN CRUDE & CONDENSATE LLC
KINDER MORGAN CRUDE OIL PIPELINES LLC
KINDER MORGAN CRUDE TO RAIL LLC
KINDER MORGAN CUSHING LLC
KINDER MORGAN DALLAS FORT WORTH RAIL TERMINAL LLC
KINDER MORGAN ENDEAVOR LLC
KINDER MORGAN ENERGY PARTNERS, L.P.
By Kinder Morgan G.P., Inc., its general partner
KINDER MORGAN EP MIDSTREAM LLC
KINDER MORGAN FINANCE COMPANY LLC
KINDER MORGAN FLEETING LLC
KINDER MORGAN FREEDOM PIPELINE LLC
KINDER MORGAN KEYSTONE GAS STORAGE LLC
KINDER MORGAN KMAP LLC
KINDER MORGAN LAS VEGAS LLC
KINDER MORGAN LINDEN TRANSLOAD TERMINAL LLC
KINDER MORGAN LIQUIDS TERMINALS LLC
KINDER MORGAN LIQUIDS TERMINALS ST. GABRIEL LLC
KINDER MORGAN MARINE SERVICES LLC
KINDER MORGAN MATERIALS SERVICES, LLC
KINDER MORGAN MID ATLANTIC MARINE SERVICES LLC
KINDER MORGAN NATGAS O&M LLC
KINDER MORGAN NORTH TEXAS PIPELINE LLC
KINDER MORGAN OPERATING L.P. “A”
By Kinder Morgan G.P., Inc., its general partner
KINDER MORGAN OPERATING L.P. “B”
By Kinder Morgan G.P., Inc., its general partner
KINDER MORGAN OPERATING L.P. “C”
By Kinder Morgan G.P., Inc., its general partner
KINDER MORGAN OPERATING L.P. “D”
By Kinder Morgan G.P., Inc., its general partner
KINDER MORGAN PECOS LLC
KINDER MORGAN PECOS VALLEY LLC
KINDER MORGAN PETCOKE GP LLC
[Signature Page to Cross Guarantee]
Exhibit 10.16
KINDER MORGAN PETCOKE, L.P.
By Kinder Morgan Petcoke GP LLC, its general partner
KINDER MORGAN PETCOKE LP LLC
KINDER MORGAN PETROLEUM TANKERS LLC
KINDER MORGAN PIPELINE LLC
KINDER MORGAN PIPELINES (USA) INC.
KINDER MORGAN PORT MANATEE TERMINAL LLC
KINDER MORGAN PORT SUTTON TERMINAL LLC
KINDER MORGAN PORT TERMINALS USA LLC
KINDER MORGAN PRODUCTION COMPANY LLC
KINDER MORGAN RAIL SERVICES LLC
KINDER MORGAN RESOURCES II LLC
KINDER MORGAN RESOURCES III LLC
KINDER MORGAN RESOURCES LLC
KINDER MORGAN RIVER TERMINALS LLC
KINDER MORGAN SERVICES LLC
KINDER MORGAN SEVEN OAKS LLC
KINDER MORGAN SOUTHEAST TERMINALS LLC
KINDER MORGAN TANK STORAGE TERMINALS LLC
KINDER MORGAN TEJAS PIPELINE LLC
KINDER MORGAN TERMINALS, INC.
KINDER MORGAN TEXAS PIPELINE LLC
KINDER MORGAN TEXAS TERMINALS, L.P.
By General Stevedores GP, LLC, its general partner
KINDER MORGAN TRANSMIX COMPANY, LLC
KINDER MORGAN TREATING LP
By KM Treating GP LLC, its general partner
KINDER MORGAN URBAN RENEWAL, L.L.C.
KINDER MORGAN UTICA LLC
KINDER MORGAN VIRGINIA LIQUIDS TERMINALS LLC
KINDER MORGAN WINK PIPELINE LLC
KINDERHAWK FIELD SERVICES LLC
KM CRANE LLC
KM DECATUR, INC.
KM EAGLE GATHERING LLC
KM GATHERING LLC
KM KASKASKIA DOCK LLC
KM LIQUIDS TERMINALS LLC
KM NORTH CAHOKIA LAND LLC
KM NORTH CAHOKIA SPECIAL PROJECT LLC
KM NORTH CAHOKIA TERMINAL PROJECT LLC
KM SHIP CHANNEL SERVICES LLC
KM TREATING GP LLC
KM TREATING PRODUCTION LLC
KMBT LLC
KMGP CONTRACTING SERVICES LLC
KMGP SERVICES COMPANY, INC.
KN TELECOMMUNICATIONS, INC.
KNIGHT POWER COMPANY LLC
LOMITA RAIL TERMINAL LLC
MILWAUKEE BULK TERMINALS LLC
MJR OPERATING LLC
MOJAVE PIPELINE COMPANY, L.L.C.
MOJAVE PIPELINE OPERATING COMPANY, L.L.C.
MR. BENNETT LLC
[Signature Page to Cross Guarantee]
Exhibit 10.16
MR. VANCE LLC
NASSAU TERMINALS LLC
NGPL HOLDCO INC.
NS 307 HOLDINGS INC.
PADDY RYAN CRANE, LLC
PALMETTO PRODUCTS PIPE LINE LLC
PI 2 PELICAN STATE LLC
PINNEY DOCK & TRANSPORT LLC
QUEEN CITY TERMINALS LLC
RAHWAY RIVER LAND LLC
RAZORBACK TUG LLC
RCI HOLDINGS, INC.
RIVER TERMINALS PROPERTIES GP LLC
RIVER TERMINAL PROPERTIES, L.P.
By River Terminals Properties GP LLC, its general partner
SCISSORTAIL ENERGY, LLC
SNG PIPELINE SERVICES COMPANY, L.L.C.
SOUTHERN GULF LNG COMPANY, L.L.C.
SOUTHERN LIQUEFACTION COMPANY LLC
SOUTHERN LNG COMPANY, L.L.C.
SOUTHERN NATURAL GAS COMPANY, L.L.C.
SOUTHERN NATURAL ISSUING CORPORATION
SOUTHTEX TREATERS LLC
SOUTHWEST FLORIDA PIPELINE LLC
SRT VESSELS LLC
STEVEDORE HOLDINGS, L.P.
By Kinder Morgan Petcoke GP LLC, its general partner
TAJON HOLDINGS, INC.
TEJAS GAS, LLC
TEJAS NATURAL GAS, LLC
TENNESSEE GAS PIPELINE COMPANY, L.L.C.
TENNESSEE GAS PIPELINE ISSUING CORPORATION
TEXAN TUG LLC
TGP PIPELINE SERVICES COMPANY, L.L.C.
TRANS MOUNTAIN PIPELINE (PUGET SOUND) LLC
TRANSCOLORADO GAS TRANSMISSION COMPANY LLC
TRANSLOAD SERVICES, LLC
UTICA MARCELLUS TEXAS PIPELINE LLC
WESTERN PLANT SERVICES, INC.
WYOMING INTERSTATE COMPANY, L.L.C.
By:
/s/ Anthony B. Ashley
Anthony Ashley
Vice President
[Signature Page to Cross Guarantee]
Exhibit 10.16
ANNEX A TO
THE CROSS GUARANTEE AGREEMENT
SUPPLEMENT NO. [ ] dated as of [ ] to the CROSS GUARANTEE AGREEMENT dated as of
[ ] (the “Agreement”), among each of the Guarantors listed on the signature pages thereto and each of the
other entities that becomes a party thereto pursuant to Section 19 of the Agreement (each such entity individually, a
“Guarantor” and, collectively, the “Guarantors”). Unless otherwise defined herein, terms defined in the Agreement
and used herein shall have the meanings given to them in the Agreement.
A.
The Guarantors consist of Kinder Morgan, Inc., a Delaware corporation (“KMI”), and certain of its
direct and indirect Subsidiaries, and the Guarantors have entered into the Agreement in order to provide guarantees of
certain of the Guarantors’ senior, unsecured Indebtedness outstanding from time to time.
B.
Section 19 of the Agreement provides that additional Subsidiaries may become Guarantors under the
Agreement by execution and delivery of an instrument in the form of this Supplement. Each undersigned Subsidiary
(each a “New Guarantor”) is executing this Supplement at the request of KMI or in accordance with the requirements
of the Agreement to become a Guarantor under the Agreement.
Accordingly, each New Guarantor agrees as follows:
SECTION 1.
In accordance with Section 19 of the Agreement, each New Guarantor by its signature below
becomes a Guarantor under the Agreement with the same force and effect as if originally named therein as a Guarantor
and each New Guarantor hereby (a) agrees to all the terms and provisions of the Agreement applicable to it as a
Guarantor thereunder and (b) represents and warrants that the representations and warranties made by it as a Guarantor
thereunder are true and correct on and as of the date hereof. Each reference to a Guarantor in the Agreement shall be
deemed to include each New Guarantor. The Agreement is hereby incorporated herein by reference.
SECTION 2. Each New Guarantor represents and warrants to the Guaranteed Parties that this Supplement
has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable
against it in accordance with its terms.
SECTION 3. This Supplement may be executed by one or more of the parties to this Supplement on any
number of separate counterparts (including by facsimile or other electronic transmission), and all of said counterparts
taken together shall be deemed to constitute one and the same instrument. A set of the copies of this Supplement signed
by all the parties shall be lodged with KMI. This Supplement shall become effective as to each New Guarantor when
KMI shall have received a counterpart of this Supplement that bears the signature of such New Guarantor.
SECTION 4. Except as expressly supplemented hereby, the Agreement shall remain in full force and
effect.
SECTION 5. THIS SUPPLEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK.
Exhibit 10.16
SECTION 6. Any provision of this Supplement that is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof and in the Agreement, and any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other jurisdiction. The parties hereto shall endeavor
in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic
effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.
SECTION 7. All notices, requests and demands pursuant hereto shall be made in accordance with Section
12 of the Agreement. All communications and notices hereunder to each New Guarantor shall be given to it in care
of KMI at the address set forth in Section 12 of the Agreement.
[Signature Pages Follow]
IN WITNESS WHEREOF, each New Guarantor has duly executed this Supplement to the Agreement as of
the day and year first above written.
Exhibit 10.16
_________________________________
as Guarantor
By:______________________________
Name:
Title:
Exhibit 10.16
ANNEX B TO
THE CROSS GUARANTEE AGREEMENT
FORM OF NOTATION OF GUARANTEE
Subject to the limitations set forth in the Cross Guarantee Agreement, dated as of [•] (the “Guarantee
Agreement”), the undersigned Guarantors hereby certify that this [Indebtedness] constitutes a Guaranteed Obligation,
entitled to all the rights as such set forth in the Guarantee Agreement. The Guarantors may be released from their
guarantees upon the terms and subject to the conditions provided in the Guarantee Agreement. Capitalized terms used
but not defined in this notation of guarantee have the meanings assigned such terms in the Guarantee Agreement, a
copy of which will be provided to [a holder of this instrument] upon request to [Issuer].
Schedule I of the Guarantee Agreement is hereby deemed to be automatically updated to include this
[Indebtedness] thereon as a Guaranteed Obligation.
[GUARANTORS],
as Guarantor
By:
______________________________
Name:
Title:
SCHEDULE I
Guaranteed Obligations
Current as of: December 31, 2018
Issuer
Kinder Morgan, Inc.
Kinder Morgan, Inc.
Kinder Morgan, Inc.
Kinder Morgan, Inc.
Kinder Morgan, Inc.
Kinder Morgan, Inc.
Kinder Morgan, Inc.
Kinder Morgan, Inc.
Kinder Morgan, Inc.
Kinder Morgan, Inc.
Kinder Morgan, Inc.
Kinder Morgan, Inc.
Kinder Morgan, Inc.
Kinder Morgan, Inc.
Kinder Morgan, Inc.
Kinder Morgan, Inc.
Kinder Morgan, Inc.
Kinder Morgan, Inc.
Kinder Morgan, Inc.
Kinder Morgan, Inc.
Kinder Morgan, Inc.
Kinder Morgan, Inc.
Kinder Morgan, Inc.
Kinder Morgan, Inc.
Kinder Morgan, Inc.
Kinder Morgan, Inc.
Kinder Morgan Energy Partners, L.P.
Kinder Morgan Energy Partners, L.P.
Kinder Morgan Energy Partners, L.P.
Kinder Morgan Energy Partners, L.P.
Kinder Morgan Energy Partners, L.P.
Kinder Morgan Energy Partners, L.P.
Kinder Morgan Energy Partners, L.P.
Kinder Morgan Energy Partners, L.P.
Kinder Morgan Energy Partners, L.P.
Kinder Morgan Energy Partners, L.P.
Kinder Morgan Energy Partners, L.P.
Kinder Morgan Energy Partners, L.P.
Kinder Morgan Energy Partners, L.P.
Kinder Morgan Energy Partners, L.P.
Kinder Morgan Energy Partners, L.P.
Kinder Morgan Energy Partners, L.P.
Kinder Morgan Energy Partners, L.P.
Kinder Morgan Energy Partners, L.P.
Kinder Morgan Energy Partners, L.P.
Indebtedness
3.05% notes
6.50% bonds
5.00% notes
1.500% notes
3.150% bonds
Floating rate bonds
5.625% notes
4.30% notes
6.70% bonds (Coastal)
2.250% notes
6.67% debentures
7.25% debentures
4.30% notes
6.95% bonds (Coastal)
8.05% bonds
7.80% bonds
7.75% bonds
5.30% notes
7.75% bonds (Coastal)
6.40% notes
7.42% bonds (Coastal)
5.55% notes
5.050% notes
5.20% notes
7.45% debentures
$100 Million Letter of Credit Facility
9.00% bonds
2.65% bonds
6.85% bonds
5.30% bonds
5.80% bonds
3.50% bonds
4.15% bonds
3.95% bonds
3.45% bonds
3.50% bonds
4.15% bonds
4.25% bonds
7.40% bonds
7.75% bonds
7.30% bonds
5.80% bonds
6.50% bonds
6.95% bonds
6.50% bonds
Exhibit 10.16
Maturity
December 1, 2019
September 15, 2020
February 15, 2021
March 16, 2022
January 15, 2023
January 15, 2023
November 15, 2023
June 1, 2025
February 15, 2027
March 16, 2027
November 1, 2027
March 1, 2028
March 1, 2028
June 1, 2028
October 15, 2030
August 1, 2031
January 15, 2032
December 1, 2034
October 15, 2035
January 5, 2036
February 15, 2037
June 1, 2045
February 15, 2046
March 1, 2048
March 1, 2098
January 31, 2019
February 1, 2019
February 1, 2019
February 15, 2020
September 15, 2020
March 1, 2021
March 1, 2021
March 1, 2022
September 1, 2022
February 15, 2023
September 1, 2023
February 1, 2024
September 1, 2024
March 15, 2031
March 15, 2032
August 15, 2033
March 15, 2035
February 1, 2037
January 15, 2038
September 1, 2039
Exhibit 10.16
Schedule I
(Guaranteed Obligations)
Current as of: December 31, 2018
Issuer
Kinder Morgan Energy Partners, L.P.
Kinder Morgan Energy Partners, L.P.
Kinder Morgan Energy Partners, L.P.
Kinder Morgan Energy Partners, L.P.
Kinder Morgan Energy Partners, L.P.
Kinder Morgan Energy Partners, L.P.
Kinder Morgan Energy Partners, L.P.
Kinder Morgan Energy Partners, L.P.(1)
Kinder Morgan Energy Partners, L.P.(1)
Kinder Morgan Energy Partners, L.P.(1)
Kinder Morgan Energy Partners, L.P.(1)
Kinder Morgan Energy Partners, L.P.(1)
Tennessee Gas Pipeline Company, L.L.C.
Tennessee Gas Pipeline Company, L.L.C.
Tennessee Gas Pipeline Company, L.L.C.
Tennessee Gas Pipeline Company, L.L.C.
El Paso Natural Gas Company, L.L.C.
El Paso Natural Gas Company, L.L.C.
El Paso Natural Gas Company, L.L.C.
Colorado Interstate Gas Company, L.L.C.
Colorado Interstate Gas Company, L.L.C.
El Paso Tennessee Pipeline Co. L.L.C.
Other
Indebtedness
6.55% bonds
6.375% bonds
5.625% bonds
5.00% bonds
5.00% bonds
5.50% bonds
5.40% bonds
6.50% bonds
5.00% bonds
4.30% bonds
7.50% bonds
4.70% bonds
7.00% bonds
7.00% bonds
8.375% bonds
7.625% bonds
8.625% bonds
7.50% bonds
8.375% bonds
4.15% notes
6.85% bonds
7.25% bonds
Cora industrial revenue bonds
_________________________________________________
Maturity
September 15, 2040
March 1, 2041
September 1, 2041
August 15, 2042
March 1, 2043
March 1, 2044
September 1, 2044
April 1, 2020
October 1, 2021
May 1, 2024
November 15, 2040
November 1, 2042
March 15, 2027
October 15, 2028
June 15, 2032
April 1, 2037
January 15, 2022
November 15, 2026
June 15, 2032
August 15, 2026
June 15, 2037
December 15, 2025
April 1, 2024
(1) The original issuer, El Paso Pipeline Partners, L.P. merged with and into Kinder Morgan Energy
Partners, L.P. effective January 1, 2015.
2
Hedging Agreements1
Issuer
Kinder Morgan, Inc.
Kinder Morgan, Inc.
Kinder Morgan, Inc.
Kinder Morgan, Inc.
Kinder Morgan, Inc.
Kinder Morgan, Inc.
Kinder Morgan, Inc.
Kinder Morgan, Inc.
Kinder Morgan, Inc.
Kinder Morgan, Inc.
Kinder Morgan, Inc.
Kinder Morgan, Inc.
Kinder Morgan, Inc.
Kinder Morgan, Inc.
Kinder Morgan, Inc.
Kinder Morgan, Inc.
Kinder Morgan, Inc.
Kinder Morgan, Inc.
Kinder Morgan, Inc.
Kinder Morgan, Inc.
Kinder Morgan, Inc.
Kinder Morgan, Inc.
Kinder Morgan, Inc.
Kinder Morgan, Inc.
Exhibit 10.16
Schedule I
(Guaranteed Obligations)
Current as of: December 31, 2018
Guaranteed Party
Bank of America, N.A.
BNP Paribas
Citibank, N.A.
J. Aron & Company
SunTrust Bank
Barclays Bank PLC
Bank of Tokyo-Mitsubishi, Ltd., New York
Branch
Date
January 4, 2018
September 15, 2016
March 16, 2017
December 23, 2011
August 29, 2001
November 26, 2014
November 26, 2014
Canadian Imperial Bank of Commerce
November 26, 2014
Compass Bank
Credit Agricole Corporate and Investment
Bank
Credit Suisse International
Deutsche Bank AG
ING Capital Markets LLC
JPMorgan Chase Bank, N.A.
March 24, 2015
November 26, 2014
November 26, 2014
November 26, 2014
November 26, 2014
February 19, 2015
Mizuho Capital Markets Corporation
November 26, 2014
Morgan Stanley Capital Services LLC
July 9, 2018
Royal Bank of Canada
SMBC Capital Markets, Inc.
The Bank of Nova Scotia
The Royal Bank of Scotland PLC
Societe Generale
The Toronto-Dominion Bank
UBS AG
Wells Fargo Bank, N.A.
November 26, 2014
April 26, 2017
November 26, 2014
November 26, 2014
November 26, 2014
October 2, 2017
November 26, 2014
November 26, 2014
April 14, 1999
November 23, 2004
November 18, 2003
August 4, 2011
March 14, 2002
June 20, 2014
May 14, 2010
April 2, 2009
Kinder Morgan Energy Partners, L.P.
Bank of America, N.A.
Kinder Morgan Energy Partners, L.P.
Bank of Tokyo-Mitsubishi, Ltd., New York
Branch
Kinder Morgan Energy Partners, L.P.
Barclays Bank PLC
Kinder Morgan Energy Partners, L.P.
Canadian Imperial Bank of Commerce
Kinder Morgan Energy Partners, L.P.
Citibank, N.A.
Kinder Morgan Energy Partners, L.P.
Credit Agricole Corporate and Investment
Bank
Kinder Morgan Energy Partners, L.P.
Credit Suisse International
Kinder Morgan Energy Partners, L.P.
Deutsche Bank AG
Kinder Morgan Energy Partners, L.P.
_________________________________________________
ING Capital Markets LLC
September 21, 2011
1 Guaranteed Obligations with respect to Hedging Agreements include International Swaps and
Derivatives Association Master Agreements (“ISDAs”) and all transactions entered into pursuant to
any ISDA listed on this Schedule I.
3
Hedging Agreements1
Issuer
Kinder Morgan Energy Partners, L.P.
Guaranteed Party
J. Aron & Company
Kinder Morgan Energy Partners, L.P.
JPMorgan Chase Bank
Exhibit 10.16
Schedule I
(Guaranteed Obligations)
Current as of: December 31, 2018
Date
November 11, 2004
August 29, 2001
Kinder Morgan Energy Partners, L.P.
Mizuho Capital Markets Corporation
July 11, 2014
Kinder Morgan Energy Partners, L.P.
Morgan Stanley Capital Services Inc.
Kinder Morgan Energy Partners, L.P.
Royal Bank of Canada
Kinder Morgan Energy Partners, L.P.
The Royal Bank of Scotland PLC
Kinder Morgan Energy Partners, L.P.
The Bank of Nova Scotia
Kinder Morgan Energy Partners, L.P.
Societe Generale
Kinder Morgan Energy Partners, L.P.
SunTrust Bank
Kinder Morgan Energy Partners, L.P.
UBS AG
Kinder Morgan Energy Partners, L.P.
Wells Fargo Bank, N.A.
Kinder Morgan Texas Pipeline LLC
Barclays Bank PLC
Kinder Morgan Texas Pipeline LLC
BNP Paribas
March 10, 2010
March 12, 2009
March 20, 2009
August 14, 2003
July 18, 2014
March 14, 2002
February 23, 2011
July 31, 2007
January 10, 2003
March 2, 2005
Kinder Morgan Texas Pipeline LLC
Canadian Imperial Bank of Commerce
December 18, 2006
Kinder Morgan Texas Pipeline LLC
Citibank, N.A.
Kinder Morgan Texas Pipeline LLC
Credit Suisse International
Kinder Morgan Texas Pipeline LLC
Deutsche Bank AG
Kinder Morgan Texas Pipeline LLC
Kinder Morgan Production LLC
ING Capital Markets LLC
J. Aron & Company
Kinder Morgan Texas Pipeline LLC
J. Aron & Company
Kinder Morgan Texas Pipeline LLC
JPMorgan Chase Bank, N.A.
Kinder Morgan Texas Pipeline LLC
Macquarie Bank Limited
Kinder Morgan Texas Pipeline LLC
Merrill Lynch Commodities, Inc.
Kinder Morgan Texas Pipeline LLC
Morgan Stanley Capital Group Inc.
Kinder Morgan Texas Pipeline LLC
Natixis
Kinder Morgan Texas Pipeline LLC
Phillips 66 Company
Kinder Morgan Texas Pipeline LLC
PNC Bank, National Association
Kinder Morgan Texas Pipeline LLC
Royal Bank of Canada
Kinder Morgan Texas Pipeline LLC
The Bank of Nova Scotia
Kinder Morgan Texas Pipeline LLC
Societe Generale
Kinder Morgan Texas Pipeline LLC
Wells Fargo Bank, N.A.
Copano Risk Management, LLC
Citibank, N.A.
February 22, 2005
August 31, 2012
June 13, 2007
April 17, 2014
June 12, 2006
June 8, 2000
September 7, 2006
September 20, 2010
October 24, 2001
January 15, 2004
June 13, 2011
March 30, 2015
July 11, 2018
October 18, 2018
May 8, 2014
January 14, 2003
June 1, 2013
July 21, 2008
Copano Risk Management, LLC
J. Aron & Company
December 12, 2005
Copano Risk Management, LLC
Morgan Stanley Capital Group Inc.
May 4, 2007
Copano Risk Management, LLC
_________________________________________________
Wells Fargo Bank, N.A.
October 19, 2007
1 Guaranteed Obligations with respect to Hedging Agreements include International Swaps and
Derivatives Association Master Agreements (“ISDAs”) and all transactions entered into pursuant to
any ISDA listed on this Schedule I.
4
Exhibit 10.16
SCHEDULE II
Guarantors
Current as of: December 31, 2018
Agnes B Crane, LLC
American Petroleum Tankers II LLC
American Petroleum Tankers III LLC
American Petroleum Tankers IV LLC
American Petroleum Tankers LLC
American Petroleum Tankers Parent LLC
American Petroleum Tankers V LLC
American Petroleum Tankers VI LLC
American Petroleum Tankers VII LLC
American Petroleum Tankers VIII LLC
American Petroleum Tankers IX LLC
American Petroleum Tankers X LLC
American Petroleum Tankers XI LLC
APT Florida LLC
APT Intermediate Holdco LLC
APT New Intermediate Holdco LLC
APT Pennsylvania LLC
APT Sunshine State LLC
Betty Lou LLC
Camino Real Gathering Company, L.L.C.
Cantera Gas Company LLC
CDE Pipeline LLC
Central Florida Pipeline LLC
Cheyenne Plains Gas Pipeline Company, L.L.C.
CIG Gas Storage Company LLC
CIG Pipeline Services Company, L.L.C.
Colorado Interstate Gas Company, L.L.C.
Colorado Interstate Issuing Corporation
Copano Double Eagle LLC
Copano Energy Finance Corporation
Copano Energy Services/Upper Gulf Coast LLC
Copano Energy, L.L.C.
Copano Field Services GP, L.L.C.
Copano Field Services/North Texas, L.L.C.
Copano Field Services/South Texas LLC
Copano Field Services/Upper Gulf Coast LLC
Copano Liberty, LLC
Copano Liquids Marketing LLC
Copano NGL Services (Markham), L.L.C.
Copano NGL Services LLC
Copano Pipelines Group, L.L.C.
Copano Pipelines/North Texas, L.L.C.
Copano Pipelines/Rocky Mountains, LLC
Copano Pipelines/South Texas LLC
Copano Pipelines/Upper Gulf Coast LLC
Copano Processing LLC
Copano Risk Management LLC
Copano/Webb-Duval Pipeline LLC
CPNO Services LLC
Dakota Bulk Terminal LLC
Delta Terminal Services LLC
Eagle Ford Gathering LLC
El Paso Cheyenne Holdings, L.L.C.
El Paso Citrus Holdings, Inc.
El Paso CNG Company, L.L.C.
El Paso Energy Service Company, L.L.C.
El Paso LLC
El Paso Midstream Group LLC
El Paso Natural Gas Company, L.L.C.
El Paso Noric Investments III, L.L.C.
El Paso Ruby Holding Company, L.L.C.
El Paso Tennessee Pipeline Co., L.L.C.
Elba Express Company, L.L.C.
Elizabeth River Terminals LLC
Emory B Crane, LLC
EP Ruby LLC
EPBGP Contracting Services LLC
EPTP Issuing Corporation
Frank L. Crane, LLC
General Stevedores GP, LLC
General Stevedores Holdings LLC
Glenpool West Gathering LLC
Harrah Midstream LLC
HBM Environmental LLC
Hiland Crude, LLC
Hiland Partners Finance Corp.
Hiland Partners Holdings LLC
HPH Oklahoma Gathering LLC
ICPT, L.L.C
Independent Trading & Transportation
Company I, L.L.C.
JV Tanker Charterer LLC
Kinder Morgan 2-Mile LLC
Kinder Morgan Administrative Services Tampa LLC
Kinder Morgan Altamont LLC
Kinder Morgan Baltimore Transload Terminal
LLC
Kinder Morgan Battleground Oil LLC
Kinder Morgan Border Pipeline LLC
Kinder Morgan Bulk Terminals LLC
Kinder Morgan Carbon Dioxide Transportation
Company
Kinder Morgan CO2 Company, L.P.
Kinder Morgan Cochin LLC
Exhibit 10.16
Schedule II
(Guarantors)
Current as of: December 31, 2018
Kinder Morgan Commercial Services LLC
Kinder Morgan Contracting Services LLC
Kinder Morgan Crude & Condensate LLC
Kinder Morgan Crude Marketing LLC
Kinder Morgan Crude Oil Pipelines LLC
Kinder Morgan Crude to Rail LLC
Kinder Morgan Cushing LLC
Kinder Morgan Dallas Fort Worth Rail Terminal
LLC
Kinder Morgan Deeprock North Holdco LLC
Kinder Morgan Endeavor LLC
Kinder Morgan Energy Partners, L.P.
Kinder Morgan EP Midstream LLC
Kinder Morgan Finance Company LLC
Kinder Morgan Freedom Pipeline LLC
Kinder Morgan Galena Park West LLC
Kinder Morgan IMT Holdco LLC
Kinder Morgan, Inc.
Kinder Morgan Keystone Gas Storage LLC
Kinder Morgan KMAP LLC
Kinder Morgan Las Vegas LLC
Kinder Morgan Linden Transload Terminal LLC
Kinder Morgan Liquids Terminals LLC
Kinder Morgan Liquids Terminals St. Gabriel LLC
Kinder Morgan Louisiana Pipeline Holding LLC
Kinder Morgan Louisiana Pipeline LLC
Kinder Morgan Marine Services LLC
Kinder Morgan Materials Services, LLC
Kinder Morgan Mid Atlantic Marine Services LLC
Kinder Morgan NatGas O&M LLC
Kinder Morgan NGPL Holdings LLC
Kinder Morgan North Texas Pipeline LLC
Kinder Morgan Operating L.P. “A”
Kinder Morgan Operating L.P. “B”
Kinder Morgan Operating L.P. “C”
Kinder Morgan Operating L.P. “D”
Kinder Morgan Pecos LLC
Kinder Morgan Pecos Valley LLC
Kinder Morgan Petcoke GP LLC
Kinder Morgan Petcoke LP LLC
Kinder Morgan Petcoke, L.P.
Kinder Morgan Petroleum Tankers LLC
Kinder Morgan Pipeline LLC
Kinder Morgan Port Manatee Terminal LLC
Kinder Morgan Port Sutton Terminal LLC
Kinder Morgan Port Terminals USA LLC
Kinder Morgan Production Company LLC
Kinder Morgan Products Terminals LLC
Kinder Morgan Rail Services LLC
Kinder Morgan Resources II LLC
Kinder Morgan Resources III LLC
Kinder Morgan Resources LLC
Kinder Morgan Seven Oaks LLC
Kinder Morgan SNG Operator LLC
Kinder Morgan Southeast Terminals LLC
Kinder Morgan Scurry Connector LLC
Kinder Morgan Tank Storage Terminals LLC
Kinder Morgan Tejas Pipeline LLC
Kinder Morgan Terminals, Inc.
Kinder Morgan Terminals Wilmington LLC
Kinder Morgan Texas Pipeline LLC
Kinder Morgan Texas Terminals, L.P.
Kinder Morgan Transmix Company, LLC
Kinder Morgan Treating LP
Kinder Morgan Urban Renewal, L.L.C.
Kinder Morgan Utica LLC
Kinder Morgan Vehicle Services LLC
Kinder Morgan Virginia Liquids Terminals LLC
Kinder Morgan Wink Pipeline LLC
KinderHawk Field Services LLC
KM Crane LLC
KM Decatur LLC
KM Eagle Gathering LLC
KM Gathering LLC
KM Kaskaskia Dock LLC
KM Liquids Terminals LLC
KM North Cahokia Land LLC
KM North Cahokia Special Project LLC
KM North Cahokia Terminal Project LLC
KM Ship Channel Services LLC
KM Treating GP LLC
KM Treating Production LLC
KMBT Legacy Holdings LLC
KMBT LLC
KMGP Services Company, Inc.
KN Telecommunications, Inc.
Knight Power Company LLC
Lomita Rail Terminal LLC
Milwaukee Bulk Terminals LLC
MJR Operating LLC
Mojave Pipeline Company, L.L.C.
Mojave Pipeline Operating Company, L.L.C.
Paddy Ryan Crane, LLC
Palmetto Products Pipe Line LLC
PI 2 Pelican State LLC
Pinney Dock & Transport LLC
Queen City Terminals LLC
Rahway River Land LLC
River Terminals Properties GP LLC
River Terminal Properties, L.P.
2
Exhibit 10.16
Schedule II
(Guarantors)
Current as of: December 31, 2018
ScissorTail Energy, LLC
SNG Pipeline Services Company, L.L.C.
Southern Dome, LLC
Southern Gulf LNG Company, L.L.C.
Southern Liquefaction Company LLC
Southern LNG Company, L.L.C.
Southern Oklahoma Gathering LLC
SouthTex Treaters LLC
Southwest Florida Pipeline LLC
SRT Vessels LLC
Stevedore Holdings, L.P.
Tejas Gas, LLC
Tejas Natural Gas, LLC
Tennessee Gas Pipeline Company, L.L.C.
Tennessee Gas Pipeline Issuing Corporation
Texan Tug LLC
TGP Pipeline Services Company, L.L.C.
TransColorado Gas Transmission Company LLC
Transload Services, LLC
Utica Marcellus Texas Pipeline LLC
Western Plant Services LLC
Wyoming Interstate Company, L.L.C.
3
Exhibit 10.16
SCHEDULE III
Excluded Subsidiaries
ANR Real Estate Corporation
Coastal Eagle Point Oil Company
Coastal Oil New England, Inc.
Colton Processing Facility
Coscol Petroleum Corporation
El Paso CGP Company, L.L.C.
El Paso Energy Capital Trust I
El Paso Energy E.S.T. Company
El Paso Energy International Company
El Paso Marketing Company, L.L.C.
El Paso Merchant Energy North America Company, L.L.C.
El Paso Merchant Energy-Petroleum Company
El Paso Reata Energy Company, L.L.C.
El Paso Remediation Company
El Paso Services Holding Company
EPEC Corporation
EPEC Oil Company Liquidating Trust
EPEC Polymers, Inc.
EPED Holding Company
KN Capital Trust I
KN Capital Trust III
Mesquite Investors, L.L.C.
Note: The Excluded Subsidiaries listed on this Schedule III may also be Excluded Subsidiaries pursuant to other
exceptions set forth in the definition of “Excluded Subsidiary”.
Kinder Morgan, Inc.
Subsidiaries of the Registrant as of December 31, 2018
Exhibit 21.1
Entity Name
2043155 Alberta Ltd.
Agnes B Crane, LLC
American Petroleum Tankers II LLC
American Petroleum Tankers III LLC
American Petroleum Tankers IV LLC
American Petroleum Tankers IX LLC
American Petroleum Tankers LLC
American Petroleum Tankers Parent LLC
American Petroleum Tankers V LLC
American Petroleum Tankers VI LLC
American Petroleum Tankers VII LLC
American Petroleum Tankers VIII LLC
American Petroleum Tankers X LLC
American Petroleum Tankers XI LLC
ANR Advance Holdings, Inc.
ANR Real Estate Corporation
APT Florida LLC
APT Intermediate Holdco LLC
APT New Intermediate Holdco LLC
APT Pennsylvania LLC
APT Sunshine State LLC
Ascension Holding Company, L.L.C.
Banquete Hub LLC
Baseline Terminal East Limited Partnership
Battleground Oil Specialty Terminal Company LLC
Bear Creek Storage Company, L.L.C.
Berkshire Feedline Acquisition Limited Partnership
Betty Lou LLC
BHP Billiton Petroleum (Eagle Ford Gathering) LLC
Bighorn Gas Gathering, L.L.C.
Calnev Pipe Line LLC
Camino Real Gathering Company, L.L.C.
Cantera Gas Company LLC
CDE Pipeline LLC
Cedar Cove Midstream LLC
Central Florida Pipeline LLC
Cheyenne Plains Gas Pipeline Company, L.L.C.
CIG Gas Storage Company LLC
CIG Pipeline Services Company, L.L.C.
Citrus Energy Services, Inc.
Place of Incorporation
Canada (Alberta)
Louisiana
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Canada (Manitoba)
Delaware
Louisiana
Massachusetts
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Kinder Morgan, Inc.
Subsidiaries of the Registrant as of December 31, 2018
Exhibit 21.1
Entity Name
Citrus LLC
Cliffside Helium, LLC
Cliffside Refiners, L.P.
Coastal Eagle Point Oil Company
Coastal Energy Resources Ltd.
Coastal Oil New England, Inc.
Coastal Wartsila Petroleum Private Limited
Colorado Interstate Gas Company, L.L.C.
Colorado Interstate Issuing Corporation
Colton Processing Facility
Copano Double Eagle LLC
Copano Energy Finance Corporation
Copano Energy L.L.C.
Copano Energy Services/Upper Gulf Coast LLC
Copano Field Services GP, L.L.C.
Copano Field Services/North Texas, L.L.C.
Copano Field Services/South Texas LLC
Copano Field Services/Upper Gulf Coast LLC
Copano Liberty, LLC
Copano Liquids Marketing LLC
Copano NGL Services (Markham), L.L.C.
Copano NGL Services LLC
Copano Pipelines Group, L.L.C.
Copano Pipelines/North Texas, L.L.C.
Copano Pipelines/Rocky Mountains, LLC
Copano Pipelines/South Texas LLC
Copano Pipelines/Upper Gulf Coast LLC
Copano Processing LLC
Copano Risk Management LLC
Copano/Webb-Duval Pipeline LLC
Cortez Capital Corporation
Cortez Expansion Capital Corporation
Cortez Pipeline Company
Coscol Petroleum Corporation
Coyote Gas Treating Limited Liability Company
CPNO Services LLC
Cross Country Development L.L.C.
Cypress Interstate Pipeline LLC
Dakota Bulk Terminal LLC
Deeprock Development, LLC
Place of Incorporation
Delaware
Delaware
Delaware
Delaware
Mauritius
Massachusetts
India
Delaware
Delaware
[California]
Delaware
Delaware
Delaware
Texas
Delaware
Delaware
Texas
Texas
Delaware
Delaware
Delaware
Texas
Delaware
Delaware
Delaware
Texas
Texas
Texas
Texas
Delaware
Delaware
Delaware
Texas
Delaware
Colorado
Texas
Delaware
Delaware
Delaware
Delaware
Kinder Morgan, Inc.
Subsidiaries of the Registrant as of December 31, 2018
Exhibit 21.1
Entity Name
Delta Terminal Services LLC
Double Eagle Pipeline LLC
Eagle Ford Gathering LLC
El Paso Amazonas Energia Ltda.
El Paso CGP Company, L.L.C.
El Paso Cheyenne Holdings, L.L.C.
El Paso Citrus Holdings, Inc.
El Paso CNG Company, L.L.C.
El Paso Energia do Brasil Ltda.
El Paso Energy Argentina Service Company
El Paso Energy Capital Trust I
El Paso Energy E.S.T. Company
El Paso Energy International Company
El Paso Energy Marketing de Mexico, S. de R.L. de C.V.
El Paso Energy Service Company, L.L.C.
El Paso LLC
El Paso Marketing Company, L.L.C.
El Paso Merchant Energy North America Company, L.L.C.
El Paso Merchant Energy-Petroleum Company
El Paso Mexico Holding B.V.
El Paso Midstream Group LLC
El Paso Natural Gas Company, L.L.C.
El Paso Noric Investments III, L.L.C.
El Paso Reata Energy Company, L.L.C.
El Paso Remediation Company
El Paso Rio Negro Energia Ltda.
El Paso Ruby Holding Company, L.L.C.
El Paso Services Holding Company
El Paso Tennessee Pipeline Co., L.L.C.
Elba Express Company, L.L.C.
Elba Liquefaction Company, L.L.C.
Elizabeth River Terminals LLC
Emory B Crane, LLC
EP Ruby LLC
EPBGP Contracting Services LLC
EPC Building LLC
EPC Property Holdings, Inc.
EPEC Corporation
EPEC Oil Company Liquidating Trust
EPEC Polymers, Inc.
Place of Incorporation
Delaware
Delaware
Delaware
Brazil
Delaware
Delaware
Delaware
Delaware
Brazil
Delaware
Delaware
Delaware
Delaware
Mexico
Delaware
Delaware
Delaware
Delaware
Delaware
Netherlands
Delaware
Delaware
Delaware
Delaware
Delaware
Brazil
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Louisiana
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware Law
Delaware
Kinder Morgan, Inc.
Subsidiaries of the Registrant as of December 31, 2018
Exhibit 21.1
Entity Name
EPEC Realty, Inc.
EPED B Company
EPED Holding Company
EPTP Issuing Corporation
Fayetteville Express Pipeline LLC
Fife Power
Florida Gas Transmission Company, LLC
Fort Union Gas Gathering, L.L.C.
Frank L Crane, LLC
GEBF, L.L.C.
General Stevedores GP, LLC
General Stevedores Holdings LLC
Glenpool West Gathering LLC
Greens Port CBR, LLC
Place of Incorporation
Delaware
Cayman Islands
Delaware
Delaware
Delaware
Scotland
Delaware
Delaware
Louisiana
Louisiana
Texas
Delaware
Delaware
Delaware
Guilford County Terminal Company, LLC
North Carolina
Gulf Coast Express Pipeline LLC
Gulf LNG Energy (Port), LLC
Gulf LNG Energy, LLC
Gulf LNG Holdings Group, LLC
Gulf LNG Liquefaction Company, LLC
Gulf LNG Pipeline, LLC
Harrah Midstream LLC
HBM Environmental LLC
Hiland Crude, LLC
Hiland Partners Finance Corp.
Hiland Partners Holdings LLC
Horizon Pipeline Company, L.L.C.
HPH Oklahoma Gathering LLC
I.M.T. Land Corp.
ICPT, L.L.C.
Independent Trading & Transportation Company I, L.L.C.
Interenergy Company
International Marine Terminals Partnership
Johnston County Terminal, LLC
JV Tanker Charterer LLC
Kellogg Terminal, LLC
Kinder Morgan 2-Mile LLC
Kinder Morgan Administrative Services Tampa LLC
Kinder Morgan Altamont LLC
Kinder Morgan Baltimore Transload Terminal LLC
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Oklahoma
Delaware
Delaware
Delaware
Delaware
Louisiana
Louisiana
Oklahoma
Cayman Islands
Louisiana
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Kinder Morgan, Inc.
Subsidiaries of the Registrant as of December 31, 2018
Exhibit 21.1
Entity Name
Kinder Morgan Battleground Oil LLC
Kinder Morgan Border Pipeline LLC
Kinder Morgan Bulk Terminals LLC
Kinder Morgan Canada (Jet Fuel) Inc.
Kinder Morgan Canada Company
Kinder Morgan Canada GP Inc.
Kinder Morgan Canada Limited
Kinder Morgan Canada Limited Partnership
Kinder Morgan Canada Services Inc.
Kinder Morgan Carbon Dioxide Transportation Company
Kinder Morgan CO2 Company, L.P.
Kinder Morgan Cochin LLC
Kinder Morgan Cochin ULC
Kinder Morgan Commercial Services LLC
Kinder Morgan Contracting Services LLC
Kinder Morgan Crude & Condensate LLC
Kinder Morgan Crude Marketing LLC
Kinder Morgan Crude Oil Pipelines LLC
Kinder Morgan Crude to Rail LLC
Kinder Morgan Cushing LLC
Kinder Morgan Dallas Fort Worth Rail Terminal LLC
Kinder Morgan Deeprock North Holdco LLC
Kinder Morgan Endeavor LLC
Kinder Morgan Energy Partners, L.P.
Kinder Morgan EP Midstream LLC
Kinder Morgan Finance Company LLC
Kinder Morgan Foundation
Kinder Morgan Freedom Pipeline LLC
Kinder Morgan G.P., Inc.
Kinder Morgan Galena Park West LLC
Kinder Morgan Gas Natural de Mexico, S. de R.L. de C.V.
Kinder Morgan Heartland ULC
Kinder Morgan Illinois Pipeline LLC
Kinder Morgan IMT Holdco LLC
Kinder Morgan Keystone Gas Storage LLC
Kinder Morgan KMAP LLC
Kinder Morgan Las Vegas LLC
Kinder Morgan Linden Transload Terminal LLC
Kinder Morgan Liquids Terminals LLC
Kinder Morgan Liquids Terminals St. Gabriel LLC
Place of Incorporation
Delaware
Delaware
Louisiana
Canada (British Columbia)
Canada (Nova Scotia)
Canada (Alberta)
Canada (Alberta)
Canada (Alberta)
Canada (Alberta)
Delaware
Texas
Delaware
Canada (Nova Scotia)
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Colorado
Delaware
Delaware
Delaware
Mexico
Canada (Alberta)
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Kinder Morgan, Inc.
Subsidiaries of the Registrant as of December 31, 2018
Exhibit 21.1
Entity Name
Kinder Morgan Louisiana Pipeline Holding LLC
Kinder Morgan Louisiana Pipeline LLC
Kinder Morgan Marine Services LLC
Kinder Morgan Materials Services, LLC
Kinder Morgan Mexico LLC
Kinder Morgan Mid Atlantic Marine Services LLC
Kinder Morgan NatGas O & M LLC
Kinder Morgan NGPL Holdings LLC
Kinder Morgan North Texas Pipeline LLC
Kinder Morgan Operating L.P. "A"
Kinder Morgan Operating L.P. "B"
Kinder Morgan Operating L.P. "C"
Kinder Morgan Operating L.P. "D"
Kinder Morgan Pecos LLC
Kinder Morgan Pecos Valley LLC
Kinder Morgan Petcoke GP LLC
Kinder Morgan Petcoke LP LLC
Kinder Morgan Petcoke, L.P.
Kinder Morgan Petroleum Tankers LLC
Kinder Morgan Pipeline LLC
Kinder Morgan Pipeline Servicios de Mexico S. de R.L. de C.V.
Kinder Morgan Port Manatee Terminal LLC
Kinder Morgan Port Sutton Terminal LLC
Kinder Morgan Port Terminals USA LLC
Kinder Morgan Production Company LLC
Kinder Morgan Products Terminals LLC
Kinder Morgan Rail Services LLC
Kinder Morgan Resources II LLC
Kinder Morgan Resources III LLC
Kinder Morgan Resources LLC
Kinder Morgan Scurry Connector LLC
Kinder Morgan Services International LLC
Kinder Morgan Seven Oaks LLC
Kinder Morgan SNG Operator LLC
Kinder Morgan Southeast Terminals LLC
Kinder Morgan Tank Storage Terminals LLC
Kinder Morgan Tejas Pipeline GP LLC
Kinder Morgan Tejas Pipeline LLC
Kinder Morgan Terminals Wilmington LLC
Kinder Morgan Terminals, Inc.
Place of Incorporation
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Mexico
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Kinder Morgan, Inc.
Subsidiaries of the Registrant as of December 31, 2018
Exhibit 21.1
Entity Name
Kinder Morgan Texas Pipeline LLC
Kinder Morgan Texas Terminals, L.P.
Kinder Morgan Transmix Company, LLC
Kinder Morgan Treating LP
Kinder Morgan Urban Renewal II, LLC
Kinder Morgan Urban Renewal, L.L.C.
Kinder Morgan Utica LLC
Kinder Morgan Utopia Holdco LLC
Kinder Morgan Utopia LLC
Kinder Morgan Utopia Ltd.
Kinder Morgan Vehicle Services LLC
Kinder Morgan Virginia Liquids Terminals LLC
Kinder Morgan Wink Pipeline LLC
KinderHawk Field Services LLC
Kiowa Lateral LLC
KM Canada Edmonton North Rail Terminal Limited Partnership
KM Canada Edmonton South Rail Terminal Limited Partnership
KM Canada Marine Terminal Limited Partnership
KM Canada North 40 Limited Partnership
KM Canada Rail Holdings GP Limited
KM Canada Terminals GP ULC
KM Canada Terminals ULC
KM Crane LLC
KM Decatur LLC
KM Eagle Gathering LLC
KM Express LLC
KM Gathering LLC
KM Insurance Texas Inc.
KM Kaskaskia Dock LLC
KM Liquids Terminals LLC
KM North Cahokia Land LLC
KM North Cahokia Special Project LLC
KM North Cahokia Terminal Project LLC
KM Phoenix Holdings LLC
KM Ship Channel Services LLC
KM Treating GP LLC
KM Treating Production LLC
KMBT Legacy Holdings LLC
KMBT LLC
KMGP Services Company, Inc.
Place of Incorporation
Delaware
Delaware
Delaware
Delaware
New Jersey
New Jersey
Delaware
Delaware
Delaware
Canada (Alberta)
Delaware
Delaware
Delaware
Delaware
Delaware
Canada (Manitoba)
Canada (Manitoba)
Canada (British Columbia)
Canada (Manitoba)
Canada (Alberta)
Canada (Alberta)
Canada (Alberta)
Maryland
Delaware
Delaware
Delaware
Delaware
Texas
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Tennessee
Delaware
Delaware
Kinder Morgan, Inc.
Subsidiaries of the Registrant as of December 31, 2018
Exhibit 21.1
Entity Name
KN Telecommunications, Inc.
Knight Power Company LLC
KW Express, LLC
Liberty Pipeline Group, LLC
Lomita Rail Terminal LLC
Mesquite Investors, L.L.C.
Midco LLC
Midcontinent Express Pipeline LLC
Mid-Ship Group LLC
Mid-Ship Oil Brokers LLC
Milwaukee Bulk Terminals LLC
MJR Operating LLC
Mojave Pipeline Company, L.L.C.
Mojave Pipeline Operating Company, L.L.C.
Natural Gas Pipeline Company of America LLC
NGPL Finance LLC
NGPL Holdings LLC
NGPL Intermediate Holdings LLC
NGPL PipeCo LLC
North Cahokia Industrial, LLC
North Cahokia Real Estate, LLC
North Cahokia Terminal, LLC
Paddy Ryan Crane, LLC
Palmetto Products Pipe Line LLC
Permian Highway Pipeline LLC
PI 2 Pelican State LLC
Pinney Dock & Transport LLC
Plantation Pipe Line Company
Plantation Services LLC
Queen City Terminals LLC
Rahway River Land LLC
Red Cedar Gathering Company
River Terminals Properties GP LLC
River Terminals Properties, L.P.
Ruby Investment Company, L.L.C.
Ruby Pipeline Holding Company, L.L.C.
Ruby Pipeline, L.L.C.
Sage Refined Products GP, LLC
Sage Refined Products, Ltd.
ScissorTail Energy, LLC
Place of Incorporation
Colorado
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Wisconsin
Maryland
Delaware
Texas
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Louisiana
Delaware
Delaware
Delaware
Delaware
Delaware and Virginia
Delaware
Delaware
Delaware
Colorado
Delaware
Tennessee
Delaware
Delaware
Delaware
Texas
Texas
Delaware
Kinder Morgan, Inc.
Subsidiaries of the Registrant as of December 31, 2018
Exhibit 21.1
Entity Name
SFPP, L.P.
Sierrita Gas Pipeline LLC
SNG Pipeline Services Company, L.L.C.
Sonoran Pipeline LLC
Southern Dome, LLC
Southern Gulf LNG Company, L.L.C.
Southern Liquefaction Company LLC
Southern LNG Company, L.L.C.
Southern Natural Gas Company, L.L.C.
Southern Natural Issuing Corporation
Southern Oklahoma Gathering LLC
SouthTex Treaters LLC
Southwest Florida Pipeline LLC
SRT Vessels LLC
Stevedore Holdings, L.P.
Tejas Gas, LLC
Tejas Natural Gas, LLC
Tennessee Gas Pipeline Company, L.L.C.
Tennessee Gas Pipeline Issuing Corporation
Texan Tug LLC
TGP Pipeline Services Company, L.L.C.
The Pecos Carbon Dioxide Pipeline Company
TransColorado Gas Transmission Company LLC
Transload Services, LLC
Transport USA, Inc.
Utica Marcellus Texas Pipeline LLC
Webb/Duval Gatherers
Western Plant Services LLC
WYCO Development LLC
Wyoming Interstate Company, L.L.C.
Young Gas Storage Company, Ltd.
Place of Incorporation
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Texas
Delaware
Illinois
Pennsylvania
Delaware
Texas
Delaware
Colorado
Delaware
Colorado
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-172170,
333-172582, 333-172584, 333-172606, 333-181782 and 333-205430) of Kinder Morgan, Inc. of our report dated February 8,
2019 relating to the financial statements and the effectiveness of internal control over financial reporting, which appears in this
Form 10-K.
Exhibit 23.1
/s/ PricewaterhouseCoopers LLP
Houston, Texas
February 8, 2019
KINDER MORGAN, INC. AND SUBSIDIARIES
CERTIFICATION PURSUANT TO RULE 13A-14(A) OR 15D-14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 31.1
I, Steven J. Kean, certify that:
1.
I have reviewed this annual report on Form 10-K of Kinder Morgan, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in
all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in
which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to
be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles in the United States;
c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during
the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial
reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons
performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and
report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in
the registrant's internal control over financial reporting.
Date: February 8, 2019
/s/ Steven J. Kean
Steven J. Kean
Chief Executive Officer
Exhibit 31.2
KINDER MORGAN, INC. AND SUBSIDIARIES
CERTIFICATION PURSUANT TO RULE 13A-14(A) OR 15D-14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, David P. Michels, certify that:
1.
2.
3.
4.
I have reviewed this annual report on Form 10-K of Kinder Morgan, Inc.;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of,
and for, the periods presented in this report;
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.
b.
c.
d.
designed such disclosure controls and procedures, or caused such disclosure controls and procedures
to be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles in the United States;
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
disclosed in this report any change in the registrant's internal control over financial reporting that
occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the
case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and
5.
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):
a.
b.
all significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information; and
any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant's internal control over financial reporting.
Date: February 8, 2019
/s/ David P. Michels
David P. Michels
Vice President and Chief Financial Officer
Exhibit 32.1
KINDER MORGAN, INC. AND SUBSIDIARIES
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906
OF THE
SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report on Form 10-K of Kinder Morgan, Inc. (the "Company") for the yearly period ended
December 31, 2018, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned,
in the capacity and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934;
and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results
of operations of the Company.
Date: February 8, 2019
/s/ Steven J. Kean
Steven J. Kean
Chief Executive Officer
Exhibit 32.2
KINDER MORGAN, INC.
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906
OF THE
SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report on Form 10-K of Kinder Morgan, Inc. (the "Company") for the yearly period ended
December 31, 2018, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned,
in the capacity and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934;
and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results
of operations of the Company.
Date: February 8, 2019
/s/ David P. Michels
David P. Michels
Vice President and Chief Financial Officer