SECTION 2.  Representations and Warranties of the Partnership .  The Company represents and warrants to and agrees with the Manager that:

 

(a)  The Partnership has prepared and filed with the Securities and Exchange Commission (the “ Commission ”), pursuant to the Securities Act of 1933, as amended (the “ Act ”) and the rules and regulations adopted by the Commission thereunder (the “ Rules ”), a registration statement on Form S-3 (Registration Statement No. 333-153598), including a prospectus, relating to the Units, and such registration statement has become effective.  Such registration statement, as amended to the date of this Agreement, and including (1) financial statements, exhibits and Incorporated Documents (as hereinafter defined), (2) any information contained or incorporated by reference in a prospectus filed with the Commission pursuant to Rule 424(b) of the Rules, to the extent such information is deemed, pursuant to Rule 430B or Rule 430C of the Rules, to be part of the registration statement at the time of such registration statement’s effectiveness for purposes of Section 11 of the Act, as such section applies to the Manager, and (3) any registration statement filed to register the offer and sale of Units pursuant to Rule 462(b) of the Rules, is hereinafter referred to as the “ Registration Statement ,” and includes any new registration statement, post-effective amendment to such registration statement or new shelf registration statement as may have been filed pursuant to Section 4(f)  of this Agreement.  The prospectus dated December 15, 2008 filed as part of the Registration Statement is hereinafter referred to as the “ Base Prospectus ,” unless a new registration statement has been filed under Section 4(f)  of this Agreement and become effective, in which case the “Base Prospectus” shall be the final prospectus first filed with the Commission pursuant to Rule 424(b) after the effectiveness of such new registration statement.  Except with respect to Section 7 , the most recent prospectus supplement relating to the Units filed with the Commission pursuant to Rule 424(b) of the Rules is hereinafter referred to as the “ Prospectus Supplement .”  The Base Prospectus, as supplemented by the Prospectus Supplement, is hereinafter referred to as the “ Prospectus .”  Any reference herein to the Registration Statement, the Base Prospectus, any Prospectus Supplement or the Prospectus shall be deemed to include all documents incorporated, or deemed to be incorporated, therein by reference pursuant to the requirements of Item 12 of Form S-3 under the Act (the “ Incorporated Documents ”). For purposes of this Agreement, all references to the Registration Statement, the Base Prospectus, the Prospectus Supplement, the Prospectus or any amendment or supplement to any of the foregoing shall be deemed to include the copy filed with the Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval system (“ EDGAR ”), which EDGAR copy is substantially identical to the other copies of such material, except to the extent permitted by Regulation S-T.

 

(b)  The Partnership has reasonable grounds to believe that it meets the requirements for the use of Form S-3 under the Act.  For purposes of

 

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each offering of the Units pursuant to transactions under this Agreement that are not firm commitment underwritings, the Partnership will be an “ineligible issuer” (as defined in Rule 405 under the Act) as of each relevant eligibility determination date for purposes of Rules 164 and 433 under the Act.

 

(c)  The Commission has not issued an order preventing or suspending the use of the Base Prospectus, the Prospectus Supplement or the Prospectus, or the effectiveness of the Registration Statement, and no proceeding for that purpose or pursuant to Section 8A of the Act has been instituted or, to the Partnership’s knowledge, threatened by the Commission.

 

(d)  The Registration Statement, at the time it originally became effective, as of the date hereof, as of the time of each sale of Units pursuant to this Agreement (each, a “ Time of Sale ”), at each Settlement Date (as defined in Section 3(a)(vi) ) and at all times during which a prospectus is required by the Act to be delivered (whether physically, deemed to be delivered pursuant to Rule 153 of the Rules or through compliance with Rule 172 of the Rules or any similar rule) in connection with any sale of Units, will comply, in all material respects, with the applicable requirements of the Act and the Rules; the Incorporated Documents, when they were or are filed with the Commission, conformed or will conform as of their respective dates in all material respects with the applicable requirements of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), and the applicable rules and regulations adopted by the Commission thereunder; and the Prospectus will comply, as of the date that each Prospectus Supplement is filed with the Commission, each Time of Sale, each Settlement Date, and at all times during which a prospectus is required by the Act to be delivered (whether physically, deemed to be delivered pursuant to Rule 153 of the Rules or through compliance with Rule 172 of the Rules or any similar rule) in connection with any sale of Units, in all material respects, with the requirements of the Act (including, without limitation, Section 10(a) of the Act).

 

(e)  (i) Each part of the Registration Statement and any amendment thereto, at the time it became or becomes effective did not and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; (ii) the Registration Statement meets, and the offering and sale of the Units as contemplated hereby complies with, the requirements of Rule 415 of the Rules; (iii) the Base Prospectus and any amendment thereto, at the time it was filed or will be filed with the Commission, did not and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; (iv) the Prospectus and any amendment or supplement thereto, at the time it was filed or will be filed with the Commission pursuant to Rule 424 of the Rules, did not and will not contain an untrue statement of a material fact necessary in

 

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order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and (v) as of each Time of Sale, each related Settlement Date and at the time a prospectus relating to the Units is required by the Act to be delivered (whether physically, deemed to be delivered pursuant to Rule 153 of the Rules or through compliance with Rule 172 of the Rules or any similar rule), the Prospectus, as then amended or supplemented, did not and will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided , however , that the Partnership makes no representation or warranty with respect to any statement contained in the Registration Statement or the Prospectus in reliance upon and in conformity with information furnished in writing by or on behalf of the Manager expressly for use in the Registration Statement or the Prospectus.

 

(f)  Prior to the execution of this Agreement, the Partnership has not, directly or indirectly, offered or sold any Units by means of any “prospectus” (within the meaning of the Act) or used any “prospectus” (within the meaning of the Act) in connection with the offer or sale of the Units, in each case other than the Base Prospectus; the Partnership has not, directly or indirectly, prepared, used or referred to any issuer free writing prospectus, as defined in Rule 433 of the Rules, with respect to the Units, although the Partnership makes no representation with respect to actions taken by the Manager.

 

(g)  The consolidated financial statements included or incorporated by reference in the Registration Statement and the Prospectus present fairly the financial position of the Partnership and its consolidated subsidiaries as of the dates shown and their results of operations, partners’ capital and cash flows for the periods shown, and, except as otherwise disclosed in the Registration Statement and the Prospectus, such financial statements have been prepared in conformity with generally accepted accounting principles in the United States applied on a consistent basis; any schedules included in the Registration Statement present fairly the information required to be stated therein; any summary or selected financial data included in the Registration Statement and the Prospectus present fairly the information shown therein and, to the extent based upon or derived from the financial statements, have been compiled on a basis consistent with the financial statements presented therein except as otherwise stated therein or in the notes thereto; and as to any pro forma financial statements included or incorporated by reference in the Registration Statement and the Prospectus, the assumptions used in preparing the pro forma financial statements so included or incorporated by reference in the Registration Statement and the Prospectus provide a reasonable basis for presenting the significant effects directly attributable to the transactions or events described therein, the related pro forma

 

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adjustments give appropriate effect to those assumptions, and the pro forma columns therein reflect the proper application of those adjustments to the corresponding historical financial statement amounts.

 

(h)  The Partnership is a limited partnership duly formed, validly existing and in good standing under the laws of the State of Delaware, with all necessary partnership power and authority to own its properties and conduct its business as described in the Prospectus and is in good standing under the laws of each other jurisdiction in which it owns or leases properties or conducts any business so as to require such qualification, except where the failure to be so qualified would not, individually or in the aggregate, have a material adverse effect on the consolidated financial condition, results of operations or business of the Partnership and its subsidiaries, taken as a whole (a “ Material Adverse Effect ”).

 

(i)  All of the outstanding shares of capital stock, limited partner interests, general partner interests, or limited liability company interests, as applicable, of each of the Partnership’s subsidiaries that is a “significant subsidiary” as defined in Rule 1-02 of Regulation S-X, and Trailblazer Pipeline Company and TransColorado Gas Transmission Company (collectively, the “ Significant Subsidiaries ”), have been duly and validly authorized and issued and are fully paid and (except (A) as required to the contrary by the Delaware Limited Liability Company Act (the “ Delaware LLC Act ”) and the Delaware Revised Uniform Limited Partnership Act (the “ Delaware LP Act ”) and (B) with respect to any general partner interests) non-assessable, and are owned by the Partnership directly or indirectly through one or more wholly-owned subsidiaries or Kinder Morgan G.P., Inc., a Delaware corporation (the “ General Partner ”).  All of such shares or interests owned directly or indirectly by the Partnership or the General Partner are owned free and clear of any lien, encumbrance, security interest, equity or charge (except for such liens, encumbrances, security interests, equities or charges as are not, individually or in the aggregate, material to such ownership or as described in the Prospectus).

 

(j)  Each of the Significant Subsidiaries has been duly incorporated or formed and is validly existing as a corporation, limited partnership, general partnership, or limited liability company, as the case may be, in good standing under the laws of the jurisdiction in which it is chartered or organized, with full entity power and authority to own or lease, as the case may be, and to operate its properties and conduct its business as described in the Prospectus, and is duly qualified to do business as a corporation, limited partnership, general partnership, or limited liability company, as the case may be, and is in good standing under the laws of each jurisdiction which requires such qualification, except where the failure to be so qualified would not, individually or in the aggregate, have a Material Adverse Effect.

 

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(k)  The General Partner is the sole general partner of the Partnership and Kinder Morgan Operating L.P. “A,” a Delaware limited partnership (“ OLP-A ”), Kinder Morgan Operating L.P. “B,” a Delaware limited partnership (“ OLP-B ”), Kinder Morgan Operating L.P. “C,” a Delaware limited partnership (“ OLP-C ”), Kinder Morgan Operating L.P. “D,” a Delaware limited partnership (“ OLP-D ”), and Kinder Morgan CO2 Company, L.P., a Texas limited partnership (“ CO2 ”, and together with OLP-A, OLP-B, OLP-C, and OLP-D, the “ Operating Partnerships ”); the General Partner owns general partner interests in the Partnership and the Operating Partnerships; each such general partner interest is duly authorized by the Agreement of Limited Partnership of the Partnership, as amended and restated, or the agreement of limited partnership, as amended and restated, of the respective Operating Partnership, as the case may be, and was validly issued to or acquired by the General Partner; and the General Partner owns such general partner interests free and clear of any lien, encumbrance, security interest, equity or charge (except for such liens, encumbrances, security interests, equities or charges as are not, individually or in the aggregate, material to such ownership or as described in the Prospectus).

 

(l)  The General Partner has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware; the General Partner is an indirect subsidiary of Kinder Morgan, Inc., a Kansas corporation; and the General Partner has all necessary corporate power and authority to own its properties and conduct its business as described in the Prospectus and has been duly qualified as a foreign corporation for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties or conducts any business so as to require such qualification, except where the failure to be so qualified would not, individually or in the aggregate, have a Material Adverse Effect.

 

(m)     Kinder Morgan Management, LLC, a Delaware limited liability company (the “ Company ”), all of the shares of which that may vote for the election of directors are owned by the General Partner, is the delegate of the General Partner pursuant to that certain Delegation of Control Agreement among the General Partner, the Company, the Partnership and the Operating Partnerships dated as of May 18, 2001, as amended from time to time (the “ Delegation of Control Agreement ”); the Company is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware; and the Company has all the necessary limited liability company power and authority to perform its functions as the delegate of the General Partner.

 

(n)  The Partnership has all necessary partnership power and authority to authorize, issue and sell the Units as contemplated by this Agreement; and all action required to be taken by the Partnership for the due

 

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and proper authorization, execution and delivery of this Agreement and the consummation of the transactions contemplated hereby has been duly and validly taken.

 

(o)  The Units have been duly and validly authorized and when issued and delivered against payment therefor pursuant to this Agreement on each Settlement Date such Units will be validly issued, fully paid and (except as required to the contrary by the Delaware LP Act) non-assessable and will conform in all material respects to the description thereof contained in the Prospectus; and the common unitholders of the Partnership have no preemptive rights with respect to the Units.

 

(p)  The execution, delivery and performance of this Agreement, and the issuance and sale of the Units hereunder, will not result in a breach or violation of any of the terms and provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the General Partner, the Company, the Partnership or any of the Significant Subsidiaries is a party or by which the General Partner, the Company, the Partnership or any of the Significant Subsidiaries is bound or to which any of the property of the General Partner, the Company, the Partnership or any of the Significant Subsidiaries is subject, except where any such foregoing occurrence will not prevent the consummation of the transactions contemplated herein or would not have a Material Adverse Effect, nor will such action result in any violation of the provisions of the certificate of incorporation, bylaws, partnership agreement or other formation document, as the case may be, of the General Partner, the Company, the Partnership or any of the Significant Subsidiaries, or any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the General Partner, the Company, the Partnership or any of the Significant Subsidiaries or any of the properties of any such entities, and no consent, approval, authorization, order, registration or qualification of or with any court or governmental agency or body having jurisdiction over the General Partner, the Company, the Partnership or any of the Significant Subsidiaries or any of the properties of such entities is required for the issuance and sale of the Units by the Partnership, except such as have been obtained or made under the Act, and such consents, approvals, authorizations, registrations or qualifications as may be required under the state securities or Blue Sky laws.

 

(q)  Other than as set forth or incorporated by reference in the Prospectus, there are no legal or governmental proceedings pending to which the Partnership or any of its subsidiaries is a party or of which any property of the Partnership or any of its subsidiaries is the subject which would be reasonably likely to, individually or in the aggregate, have a Material Adverse Effect; and, to the Partnership’s knowledge, no such proceedings are threatened or contemplated.

 

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(r)  Except as disclosed (including by means of incorporation by reference) in the Prospectus, none of the Partnership or any of its subsidiaries has violated any federal or state law or regulation relating to the protection of human health or the environment, except for any violations and remedial actions as would not be reasonably likely to, individually or in the aggregate, have a Material Adverse Effect.

 

(s)  Except as disclosed in or contemplated by the Prospectus, (i) since the date of the latest audited financial statements included or incorporated by reference in the Prospectus, there has been no change, nor any development or event involving a prospective change, that would have a Material Adverse Effect, (ii) the Partnership and its subsidiaries have not sustained since the date of the latest audited financial statements included or incorporated by reference in the Prospectus, any loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree that could reasonably be expected to have a Material Adverse Effect, and (iii) since the respective dates as of which information is given in the Prospectus, there has not been any change, or any development involving a prospective change, in the partnership interests, capital stock or long-term debt of the Partnership or any of its subsidiaries that would constitute a material adverse change to the Partnership and its subsidiaries taken as a whole, or any material adverse change in the general affairs, management, financial position or results of operations of the Partnership and its subsidiaries taken as a whole, whether or not arising in the ordinary course of business.

 

(t)  Each of the Partnership and the Significant Subsidiaries owns or leases all properties as are necessary to the conduct of its operations as described in the Prospectus, except where the failure to own or lease any of such properties would not, individually or in the aggregate, have a Material Adverse Effect.

 

(u)  The Partnership is, and after giving effect to the offering and sale of the Units and the application of the proceeds thereof as described in the Prospectus, will be, exempt from regulation as an “investment company,” as defined in the Investment Company Act of 1940, as amended.

 

(v)  None of the Partnership, KMGP Services Company, Inc., the General Partner, the Company or any of the Significant Subsidiaries is involved in any labor dispute and, to the knowledge of the Partnership, no such dispute has been threatened, except for such disputes as would not, individually or in the aggregate, have a Material Adverse Effect.

 

(w)  To the Partnership’s knowledge, PricewaterhouseCoopers LLP, who has certified certain financial statements of the Partnership and its

 

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subsidiaries, is an independent registered public accounting firm as required by the Act and the Rules.

 

(x)  The offering and sale of Units, as contemplated by this Agreement, does not give rise to any rights, other than those which have been waived or satisfied, for or relating to the registration of any securities of the Partnership (except as otherwise described in the Prospectus); and except as described in the Prospectus, or provided in the various employee or director stock or unit based benefit or compensation plans, there are no outstanding options or warrants to purchase any Units, Common Units or other securities of the Partnership.

 

(y)  None of the General Partner, Kinder Morgan, Inc., the Company, the Partnership or any of the Significant Subsidiaries, nor any of their respective directors and officers has taken any action that is or was designed to or that has constituted or that might have reasonably been expected to cause or result in the stabilization or manipulation of the price of any security of the Partnership to facilitate the offer or sale of the Units.

 

(z)  The Partnership maintains a system of internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) that complies with the requirements of the Exchange Act and has been designed by the Partnership’s principal executive officer and principal financial officer, or under their 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; and the Partnership believes that its internal control over financial reporting is effective.

 

(aa)  Since the date of the Partnership’s latest financial statements (audited or unaudited) included or incorporated by reference in the Prospectus, there has been no change in the Partnership’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Partnership’s internal control over financial reporting.

 

(bb)  The Partnership maintains disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Exchange Act) that comply with the requirements of the Exchange Act; such disclosure controls and procedures have been designed to ensure that material information relating to the Partnership and its consolidated subsidiaries is made known to the principal executive officer and principal financial officer of the Company by others within those entities; and the Partnership believes that its disclosure controls and procedures are effective in all material respects to provide reasonable assurance that information required to be disclosed in the reports the

 

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Partnership files under the Exchange Act is recorded, processed, summarized and reported as and when required.

 

(cc)  The Partnership has not distributed and, prior to the later to occur of the Settlement Date and completion of the distribution of the Units, will not distribute any offering material in connection with the offering and sale of the Units other than Prospectus to which the Manager has consented to the use thereof.

 

(dd)  The Common Units are an “actively-traded security” excepted from the requirements of Rule 101 of Regulation M under the Exchange Act by subsection (c)(1) of such rule.

 

SECTION 3.  Sale and Delivery of Securities .  (a) On the basis of the representations, warranties and agreements herein contained, but subject to the terms and conditions herein set forth, the Partnership agrees to issue and sell through the Manager, as sales agent, and the Manager agrees to use its reasonable efforts to sell, as sales agent for the Partnership, the Units on the following terms.

 

(i)  The Units are to be sold on a daily basis or otherwise as shall be agreed to by the Partnership and the Manager on any day that (A) is a trading day for the New York Stock Exchange (the “ NYSE ”) (other than a day on which the NYSE is scheduled to close prior to its regular weekday closing time), (B) the Partnership through any of the individuals identified as authorized representatives of the Partnership in a certificate to be furnished by the Partnership to the Manager, as updated from time to time (the “ Authorized Partnership Representatives ”) has instructed the individuals identified by the Manager as authorized representatives of the Manager in a certificate to be furnished by the Manager to the Partnership, as updated from time to time (“ Authorized Manager Representatives ”), by telephone (confirmed promptly by electronic mail) to make such sales and (C) the Partnership has satisfied its obligations under Section 6 of this Agreement.  The Partnership will designate the maximum amount of the Units to be sold by the Manager daily as agreed to by the Manager and in any event not in excess of the amount available for issuance under the currently effective Registration Statement. Subject to the terms and conditions hereof, the Manager shall use its reasonable efforts to sell all of the Units designated.

 

(ii)  Notwithstanding the foregoing, the Partnership, through any of the Authorized Partnership Representatives, may instruct the Authorized Manager Representatives by telephone (confirmed promptly by electronic mail) not to sell the Units if such sales cannot be effected at or above the price designated by the Partnership in any such instruction.  In addition, the Partnership or the Manager may, upon notice to the other party hereto by telephone (confirmed promptly by electronic mail), suspend the offering of the Units; provided , however , that such suspension or

 

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termination shall not affect or impair the parties’ respective obligations with respect to the Units sold hereunder prior to the giving of such notice.

 

(iii)  The Manager hereby covenants and agrees not to make any sales of the Units on behalf of the Partnership pursuant to this Section 3(a) , other than (A) by means of ordinary brokers’ transactions between members of the NYSE that qualify for delivery of a prospectus to the NYSE in accordance with Rule 153 of the Rules (such transactions are hereinafter referred to as “ At the Market Offerings ”) and (B) such other sales of the Units on behalf of the Partnership in its capacity as agent of the Partnership as shall be agreed by the Partnership and the Manager.  The Manager has no obligations under Section 3(a)(i)  to effect: (A) a sale of Units on behalf of the Partnership that would constitute the sale of a “block” under Rule 10b-18(a)(5) under the Exchange Act, (B) an offer or sale of Units on behalf of the Partnership that would constitute a “distribution” within the meaning of Rule 100 of Regulation M under the Exchange Act, or (C) an offer or sale in which the Manager reasonably believes it would be an “underwriter” under the Act in a transaction pursuant to this Agreement that is not an At-the-Market Offering.

 

(iv)  The compensation to the Manager, as an agent of the Partnership, for sales of Units pursuant to this Section 3(a)  shall be up to 2% of the gross sales price of the Units sold as specified in Schedule A attached hereto.  Such rate of compensation shall not apply when the Manager acts as principal.  The remaining proceeds, after further deduction for any transaction fees imposed by any governmental or self-regulatory organization in respect of such sales, shall constitute the net proceeds to the Partnership for such Units (the “ Net Proceeds ”).

 

(v)  The Manager shall provide written confirmation to the Partnership following the close of trading on the NYSE each day in which the Units are sold under this Section 3(a)  setting forth the amount of the Units sold on such day, the aggregate gross sales proceeds, any transaction fees deducted pursuant to Section 3(a)(iv) , the Net Proceeds to the Partnership, and the compensation payable by the Partnership to the Manager with respect to such sales.

 

(vi)  Settlement for sales of the Units pursuant to this Section 3(a)  will occur on the third business day following the date on which such sales are made (each such day, a “ Settlement Date ”) at such time on the applicable Settlement Date as the Partnership and the Manager may mutually agree.  On each Settlement Date, the Units sold through the Manager for settlement on such date shall be issued and delivered by the Partnership to the Manager against payment of the Net Proceeds for the sale of such Units.  Settlement for all such Units shall be effected by free delivery of the Units to the Manager’s account at The Depository Trust Company through its Deposit and Withdrawal at Custodian System (“ DWAC ”) or by such other means of delivery as may be mutually agreed upon by the parties hereto, which in all cases shall be freely tradable, transferable, registered Common Units, in return for payments in same day funds delivered to the account designated by the Partnership. 

 

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If the Partnership, or its transfer agent (as applicable), shall default on its obligation to deliver the Units on any Settlement Date, the Partnership shall (A) indemnify and hold the Manager harmless against any loss, claim or damage arising from or as a result of such default by the Partnership and (B) pay the Manager any commission to which it would otherwise be entitled absent such default.  The Authorized Partnership Representatives shall be the contact persons for the Partnership for all matters related to the settlement of the transfer of the Units through DWAC for purposes of this Section 3(a)(vi) .  If the Manager breaches this Agreement by failing to deliver proceeds on any Settlement Date for the Units delivered by the Partnership, the Manager will pay the Partnership interest based on the effective overnight Federal Funds rate.

 

(vii)  At each Time of Sale, Settlement Date and Representation Date (as defined in Section 4(n) ), the Partnership shall be deemed to have affirmed each representation and warranty contained in this Agreement.  Any obligation of the Manager to use its reasonable efforts to sell the Units on behalf of the Partnership shall be subject to the continuing accuracy of the representations and warranties of the Partnership herein, to the performance by the Partnership of its obligations hereunder and to the continuing satisfaction of the additional conditions specified in Section 6 of this Agreement.

 

(viii)  The Partnership acknowledges and agrees that (A) there can be no assurance that the Manager will be successful in selling the Units, (B) the Manager will incur no liability or obligation to the Partnership or any other person or entity if it does not sell Units for any reason other than a failure by the Manager to use its reasonable efforts consistent with its normal trading and sales practices and applicable law and regulations to sell such Units in accordance with the terms of this Agreement, and (C) the Manager shall be under no obligation to purchase Units on a principal basis pursuant to this Agreement, except as otherwise specifically agreed by the Manager and the Partnership.  The Partnership hereby acknowledges that the Manager may trade in the Common Units for the Manager’s own account and for the account of its clients at the same time as sales of the Units occur pursuant to this Agreement.

 

(b)  (i) If the Partnership wishes to issue and sell the Units other than as set forth in Section 3(a)  of this Agreement (each, a “ Placement ”), it will notify the Manager of the proposed terms of such Placement.  If the Manager, acting as principal, wishes to accept such proposed terms (which it may decline to do for any reason in its sole discretion) or, following discussions with the Partnership, wishes to accept amended terms, the Manager and the Partnership will enter into a Terms Agreement setting forth the terms of such Placement.

 

(ii)  The terms set forth in a Terms Agreement will not be binding on the Partnership or the Manager unless and until the Partnership and the Manager have each executed such Terms Agreement accepting all of the terms of such Terms

 

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Agreement.  In the event of a conflict between the terms of this Agreement and the terms of a Terms Agreement, the terms of such Terms Agreement will control.

 

(c)  (i)  Under no circumstances shall the aggregate gross sales proceeds of the Units sold pursuant to this Agreement exceed the dollar amount set forth in Section 1 , nor shall the price of the Units so sold exceed the price parameters, if any, authorized by the Company’s board of directors, or a duly authorized committee thereof.

 

(i)  If either party has reason to believe that the exemptive provisions set forth in Rule 101(c)(1) of Regulation M under the Exchange Act are not satisfied with respect to the Units, it shall promptly notify the other party and sales of the Units under this Agreement shall be suspended until that or other exemptive provisions have been satisfied in the judgment of each party.

 

(d)  Each sale of the Units shall be made in accordance with the terms of this Agreement or, if applicable, a Terms Agreement.

 

(e)  Subject to the limitations set forth herein and as may be mutually agreed upon by the Partnership and the Manager, sales pursuant to this Agreement may not be requested by the Partnership and need not be made by the Manager except during the period that begins after the filing of a quarterly report on Form 10-Q or an annual report on Form 10-K as of and within the period required by the Exchange Act (each such date, a “ Filing Date ”) and ends, for all periods, on the earlier of (i) the date directors and officers are no longer permitted to trade pursuant to the Partnership’s policy on insider trading as in effect from time to time and (ii) the end of the quarter in which the applicable Filing Date occurs.  Notwithstanding the foregoing, without the prior written consent of each of the Partnership and the Manager, no sales of Units shall take place, and the Partnership shall not request the sale of any Units that would be sold, and the Manager shall not be obligated to sell, during any period in which the Partnership is in possession of material non-public information.

 

SECTION 4.  Covenants of the Partnership .  The Partnership agrees with the Manager:

 

(a)  During any period in which a prospectus relating to the Units is required to be delivered under the Act (whether physically, deemed to be delivered pursuant to Rule 153 of the Rules or through compliance with Rule 172 of the Rules or any similar rule), to advise the Manager promptly of any amendment or supplement to the Registration Statement or the Prospectus which is proposed to be filed (other than any amendment or supplement which does not relate to the sale of the Units and not including any report or document which is the subject of Section 4(d)  hereof) and not to effect such amendment or supplement in a form to which the Manager reasonably objects; and to cause each amendment or supplement to the Base Prospectus or the Prospectus

 

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relating to the sale of the Units to be filed with the Commission as required pursuant to the applicable paragraph of Rule 424(b) of the Rules.

 

(b)  As soon as it is advised thereof, to advise the Manager of (i) the initiation or threatening by the Commission of any proceedings for the issuance of any order suspending the effectiveness of the Registration Statement or suspending the use of the Prospectus, (ii) receipt by it or any representative or attorney of it of any other communication from the Commission relating to the Partnership, the Registration Statement or the Prospectus, or (iii) suspension of qualification of the Units for offering or sale in any jurisdiction or the institution or threatening of any proceeding for such purpose. The Partnership will make every reasonable effort to prevent the issuance of an order suspending the effectiveness of the Registration Statement, or the use of the Prospectus, and if any such order is issued, to obtain as soon as possible the lifting thereof.

 

(c)  To make available to the Manager, as soon as practicable after the date of this Agreement, and thereafter from time to time to furnish to the Manager, as many copies of the Prospectus (or of the Prospectus as amended or supplemented if the Partnership shall have made any amendments or supplements thereto after the date of this Agreement) as the Manager may request for the purposes contemplated by the Act; in case the Manager is required to deliver (whether physically, deemed to be delivered pursuant to Rule 153 of the Rules or through compliance with Rule 172 of the Rules or any similar rule), in connection with the sale of the Units, a prospectus after the nine-month period referred to in Section 10(a)(3) of the Act, or after the time a post-effective amendment to the Registration Statement is required pursuant to Item 512(a) of Regulation S-K under the Act, the Partnership will prepare, at its expense, promptly upon request such amendment or amendments to the Registration Statement and the Prospectus as may be necessary to permit compliance with the requirements of Section 10(a)(3) of the Act or Item 512(a) of Regulation S-K under the Act, as the case may be.

 

(d)  To file promptly all reports and documents and any preliminary or definitive proxy or information statement required to be filed by the Partnership with the Commission in orde