2,250,000 UNITS
KANEB PIPE LINE PARTNERS, L.P.
REPRESENTING LIMITED PARTNER INTERESTS
UNDERWRITING AGREEMENT
July 22, 1999
XXXXXXX XXXXX XXXXXX INC.
X. X. XXXXXXX & SONS, INC.
PAINEWEBBER INCORPORATED
As Representatives of the Several Underwriters
c/o XXXXXXX XXXXX BARNEY INC.
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Kaneb Pipe Line Partners, L.P., a Delaware limited partnership
(the "Partnership"), proposes to sell an aggregate of 2,250,000 units (the "Firm
Units") representing limited partner interests in the Partnership, to the
several Underwriters named in Schedule I hereto (the "Underwriters"). The
Partnership also proposes to sell to the Underwriters, upon the terms and
conditions set forth in Section 2 hereof, up to an additional 337,500 units (the
"Additional Units"). The Firm Units and the Additional Units are hereinafter
collectively referred to as the "Offered Units", and the Offered Units and each
unit representing a limited partner interest in the Partnership outstanding on
the date hereof are collectively referred to as the "Units."
Each of the Partnership and Kaneb Pipe Line Company, a Delaware
corporation and the general partner of the Partnership ("KPL" or the "General
Partner") wishes to confirm as follows its agreement with you (the
"Representatives") and the other several Underwriters on whose behalf you are
acting, in connection with the several purchases of the Offered Units by the
Underwriters. The Partnership, the General Partner, Kaneb Pipe Line Operating
Partnership, L.P., a Delaware limited partnership (the "Operating Partnership"),
Support Terminals Operating Partnership, L.P., a Delaware limited partnership
("STOP"), Support Terminal Services, Inc., a Delaware corporation ("STS"),
StanTrans, Inc., a Delaware corporation ("STI"), StanTrans Holdings, Inc., a
Delaware corporation ("STH"), StanTrans Partners, L.P., a Delaware limited
partnership ("STP"), ST Linden Terminals, LLC, a Delaware limited liability
company ("STL"), ST Services, Ltd., a United Kingdom corporation ("STK"), and ST
Eastham, Ltd., a United Kingdom corporation ("STE"), (the Operating Partnership,
STOP, STS, STI, STH, STP, STL, STK and STE are collectively referred to
herein as the "Operating Entities", and individually referred to herein as an
"Operating Entity"), are sometimes collectively referred to herein as the
"Companies".
1. REGISTRATION STATEMENT AND PROSPECTUS. The Partnership
has prepared and filed with the Securities and Exchange Commission (the
"Commission") in accordance with the provisions of the Securities Act of
1933, as amended, and the rules and regulations of the Commission thereunder
(collectively, the "Act"), a registration statement on Form S-3 (Registration
No. 333-76067) under the Act (the "registration statement"), including a
prospectus subject to completion relating to the Offered Units. The term
"Registration Statement" as used in this Agreement means the registration
statement (including all financial schedules and exhibits), as amended at the
time it becomes effective, or, if the registration statement became effective
prior to the execution of this Agreement, as supplemented or amended prior to
the execution of this Agreement. If it is contemplated, at the time this
Agreement is executed, that a post-effective amendment to the registration
statement will be filed and must be declared effective before the offering of
the Offered Units may commence, the term "Registration Statement" as used in
this Agreement means the registration statement as amended by said
post-effective amendment. If it is contemplated, at the time this Agreement
is executed, that a registration statement will be filed pursuant to Rule
462(b) under the Act before the offering of the Offered Units may commence,
the term "Registration Statement" as used in this Agreement includes such
registration statement. "Basic Prospectus" means the prospectus in the form
included in the Registration Statement at the time that the Registration
Statement was declared effective or in the form in which it has been most
recently filed with the Commission on or prior to the date of this Agreement.
"Preliminary Prospectus" means any preliminary prospectus supplement to the
Basic Prospectus, together with the Basic Prospectus, that describes the
Offered Units and the offering thereof, is filed pursuant to Rule 424(b)
under the Act and is used prior to the filing of the Final Prospectus.
"Final Prospectus" means the prospectus supplement relating to the Offered
Units and the offering thereof that is first filed pursuant to Rule 424(b)
under the Act after the date and time this Agreement is executed and
delivered by the parties hereto, together with the Basic Prospectus.
All references in this Agreement to financial statements and
schedules and other information that is "contained", "included" or "stated"
in the registration statement, the Registration Statement, the Basic
Prospectus, the Preliminary Prospectus or the Final Prospectus (or other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information that is incorporated
by reference in the registration statement, Registration Statement, the Basic
Prospectus, the Preliminary Prospectus or the Final Prospectus, as the case
may be. Any reference in this Agreement to the registration statement, the
Registration Statement, the Basic Prospectus, the Preliminary Prospectus or
the Final Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 under the
Act, as of the date of the registration statement, the Registration
Statement, the Basic Prospectus, the Preliminary Prospectus or the Final
Prospectus, as the case may be, and any reference to any amendment or
supplement to the registration statement, the Registration Statement, the
Basic Prospectus, the Preliminary Prospectus or the Final Prospectus shall be
deemed to refer to
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and include any documents filed after such date under the Securities Exchange
Act of 1934, as amended (the "Exchange Act") which, upon filing, are
incorporated by reference therein, as required by paragraph (b) of Item 12 of
Form S-3. As used herein, the term "Incorporated Documents" means the
documents which at the time are incorporated by reference in the registration
statement, the Registration Statement, the Basic Prospectus, the Preliminary
Prospectus, the Final Prospectus, or any amendment or supplement thereto.
2. AGREEMENTS TO SELL AND PURCHASE. The Partnership hereby
agrees, subject to all the terms and conditions set forth herein, to sell to
each Underwriter and, upon the basis of the representations, warranties and
agreements of the Partnership and the General Partner herein contained and
subject to all the terms and conditions set forth herein, each Underwriter,
severally and not jointly, agrees to purchase from the Partnership, at a
purchase price of $30 3/4 per Unit (the "Purchase Price Per Unit"), the
number of Firm Units set forth opposite the name of such Underwriter in
Schedule I hereto (or such number of Firm Units increased as set forth in
Section 10 hereof).
The Partnership also agrees, subject to all the terms and
conditions set forth herein, to sell to the Underwriters, and, upon the basis
of the representations, warranties and agreements of the Partnership and the
General Partner herein contained and subject to all the terms and conditions
set forth herein, the Underwriters shall have the right to purchase from the
Partnership, at the per unit purchase price described below, pursuant to an
option (the "over-allotment option") which may be exercised at any time and
from time to time prior to 9:00 P.M., New York City time, on the 30th day
after the date of the Prospectus (or, if such 30th day shall be a Saturday or
Sunday or a holiday, on the next business day thereafter when the New York
Stock Exchange is open for trading), up to an aggregate of 337,500 Additional
Units. If the Option Closing Date (as defined below) occurs prior to or on
the record date for the Partnership's quarterly cash distribution with
respect to the quarter ended June 30, 1999 (the "Record Date"), then the per
Unit purchase price for each Additional Unit purchased pursuant to the
over-allotment option shall equal the Purchase Price Per Unit. If the Option
Closing Date occurs after the Record Date, then the per Unit purchase price
for each Additional Unit purchased pursuant to the over-allotment option
shall be an amount equal to (x) the Purchase Price Per Unit less (y) the per
Unit amount of the Partnership's quarterly cash distribution with respect to
the quarter ended June 30, 1999. Additional Units may be purchased only for
the purpose of covering over-allotments made in connection with the offering
of the Firm Units. Upon any exercise of the over-allotment option, each
Underwriter, severally and not jointly, agrees to purchase from the
Partnership the number of Additional Units (subject to such adjustments as
you may determine in order to avoid fractional units) which bears the same
proportion to the number of Additional Units to be purchased by the
Underwriters as the number of Firm Units set forth opposite the name of such
Underwriter in Schedule I hereto (or such number of Firm Units increased as
set forth in Section 10 hereof) bears to the aggregate number of Firm Units.
3. TERMS OF PUBLIC OFFERING. It is understood that the
several Underwriters propose to offer the Offered Units for sale to the public
as set forth in the Final Prospectus.
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4. DELIVERY OF THE OFFERED UNITS AND PAYMENT THEREFOR. The
Offered Units to be purchased hereunder will be represented by one or more
definitive global certificates in book-entry form that will be deposited by or
on behalf of the Partnership with The Depository Trust Company ("DTC") or its
designated custodian.
Delivery to the Underwriters of the Firm Units, against payment
of the purchase price therefor in immediately available funds, shall be made
by causing DTC to credit the Firm Units to the account or accounts designated
by Xxxxxxx Xxxxx Xxxxxx Inc. on behalf of the Underwriters at DTC. The time
and date of such delivery shall be 10:00 A.M., New York City time, on July
27, 1999 (the "Closing Date"). The other documents to be delivered at the
Closing Date by or on behalf of the parties hereto shall be delivered at such
time and date at the offices of Xxxxxxx & Xxxxx L.L.P., 000 Xxxxxx Xxxxxx,
Xxxxxxx, Xxxxx 00000. The place of closing for the Firm Units and the
Closing Date may be varied by agreement between you and the Partnership.
Delivery to the Underwriters of any Additional Units to be
purchased by the Underwriters, against payment of the purchase price therefor in
immediately available funds, shall be made by causing DTC to credit the
Additional Units to the account or accounts designated by Xxxxxxx Xxxxx Xxxxxx
Inc. on behalf of the Underwriters at DTC at such time on such date (the "Option
Closing Date"), which may be the same as the Closing Date but shall in no event
be earlier than the Closing Date nor earlier than two nor later than ten
business days after the giving of the notice hereinafter referred to, as shall
be specified in a written notice from you on behalf of the Underwriters to the
Partnership of the Underwriters' determination to purchase a number, specified
in such notice, of Additional Units. The other documents to be delivered at the
Option Closing Date by or on behalf of the parties hereto shall be delivered at
such time and date at the offices of Xxxxxxx & Xxxxx L.L.P., 000 Xxxxxx Xxxxxx,
Xxxxxxx, Xxxxx 00000. The place of closing for any Additional Units and the
Option Closing Date for such Additional Units may be varied by agreement between
you and the Partnership.
The global certificates for the Offered Units to be purchased
hereunder shall be made available to you at the offices of DTC or its custodian
for inspection not later than 9:30 A.M., New York City time, on the business day
preceding the Closing Date or any Option Closing Date, as the case may be.
5. AGREEMENTS OF THE PARTNERSHIP AND THE GENERAL PARTNER.
Each of the Partnership and the General Partner agrees with the several
Underwriters as follows:
(a) If, at the time this Agreement is executed and
delivered, it is necessary for the Registration Statement or a post-effective
amendment thereto to be declared effective before the offering of the Offered
Units may commence, the Partnership will endeavor to cause the Registration
Statement or such post-effective amendment to become effective as soon as
possible and will advise you promptly and, if requested by you, will confirm
such advice in writing, when the Registration Statement or such post-effective
amendment has become effective.
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(b) Prior to the end of the period of time referred to
in the second sentence of paragraph (f) below, the Partnership will advise you
promptly and, if requested by you, will confirm such advice in writing: (i) of
any request by the Commission for amendment of or a supplement to the
Registration Statement, the Basic Prospectus, the Preliminary Prospectus or the
Final Prospectus or for additional information; (ii) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or of the suspension of qualification of the Offered Units for
offering or sale in any jurisdiction or the initiation of any proceeding for
such purpose; and (iii) of any change in any of the Companies' financial
condition, business, properties, net worth or results of operations, or of the
happening of any event, which makes any statement of a material fact made in the
Registration Statement, the Preliminary Prospectus or the Final Prospectus (as
then amended or supplemented) untrue or which requires the making of any
additions to or changes in the Registration Statement, the Preliminary
Prospectus or the Final Prospectus (as then amended or supplemented) in order to
state a material fact required by the Act to be stated therein or necessary in
order to make the statements therein not misleading, or of the necessity to
amend or supplement the Preliminary Prospectus or the Final Prospectus (as then
amended or supplemented) to comply with the Act, the Exchange Act or any other
state securities or Blue Sky laws. If at any time prior to the end of the
period of time referred to in the second sentence of paragraph (f) below, the
Commission shall issue any stop order suspending the effectiveness of the
Registration Statement, the Partnership will make every reasonable effort to
obtain the withdrawal of such order at the earliest possible time.
(c) The Partnership will furnish to you, without charge
(i) three signed copies of the Registration Statement as originally filed with
the Commission and of each amendment thereto, including financial statements and
all exhibits to the registration statement, (ii) such number of conformed copies
of the Registration Statement as originally filed and of each amendment thereto,
but without exhibits, as you may reasonably request, (iii) such number of copies
of the Incorporated Documents, without exhibits, as you may reasonably request,
and (iv) three copies of the exhibits to the Incorporated Documents.
(d) Prior to the end of the period of time referred to
in the second sentence of paragraph (f) below, the Partnership will not file any
amendment to the Registration Statement or make any amendment or supplement to
the Prospectus or file any document which, upon filing becomes an Incorporated
Document, of which you shall not previously have been advised or to which, after
you shall have received a copy of the document proposed to be filed, you shall
reasonably object.
(e) Prior to the execution and delivery of this
Agreement, the Partnership has delivered to you, without charge, in such
quantities as you have reasonably requested, copies of each form of the
Preliminary Prospectus. The Partnership consents to the use, so long as such
use by the several Underwriters and by dealers is in accordance with the
provisions of the Act and with the securities or Blue Sky laws of the
jurisdictions in which the Offered Units are offered by the
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several Underwriters and by dealers, prior to the date of the Final
Prospectus, of each Preliminary Prospectus so furnished by the Partnership.
(f) The Partnership shall cause the Final Prospectus to
be filed pursuant to, and in compliance with, Rule 424(b) under the Act. As
soon after the execution and delivery of this Agreement as possible and
thereafter from time to time for such period as in the opinion of counsel for
the Underwriters a prospectus is required by the Act to be delivered in
connection with sales by any Underwriter or dealer, the Partnership will
expeditiously deliver to each Underwriter and each dealer, without charge, as
many copies of the Final Prospectus (and of any amendment or supplement thereto)
as you may reasonably request. The Partnership consents to the use of the Final
Prospectus (and of any amendment or supplement thereto) in accordance with the
provisions of the Act and with the securities or Blue Sky laws of the
jurisdictions in which the Offered Units are offered by the several Underwriters
and by all dealers to whom Offered Units may be sold, both in connection with
the offering and sale of the Offered Units and for such period of time
thereafter as the Final Prospectus is required by the Act to be delivered in
connection with sales by any Underwriter or dealer. If during such period of
time any event shall occur that in the judgment of the Partnership or in the
opinion of counsel for the Underwriters is required to be set forth in the Final
Prospectus (as then amended or supplemented) or should be set forth therein in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, or if it is necessary to supplement or
amend the Final Prospectus (or to file under the Exchange Act any document
which, upon filing, becomes an Incorporated Document) in order to comply with
the Act or any other law, the Partnership will forthwith prepare and, subject to
the provisions of paragraph (d) above, file with the Commission an appropriate
supplement or amendment thereto (or to such document), and will expeditiously
furnish to the Underwriters and dealers a reasonable number of copies thereof.
In the event that the Partnership and you, as Representatives of the several
Underwriters, agree that the Final Prospectus should be amended or supplemented,
the Partnership, if requested by you, will promptly issue a press release
announcing or disclosing the matters to be covered by the proposed amendment or
supplement.
(g) The Partnership will cooperate with you and with
counsel for the Underwriters in connection with the registration or
qualification of the Offered Units for offering and sale by the several
Underwriters and by dealers under the securities or Blue Sky laws of such
jurisdictions as you may designate and will file such consents to service of
process or other documents necessary or appropriate in order to effect such
registration or qualification; provided that in no event shall the Partnership
be obligated to qualify to do business in any jurisdiction where it is not now
so qualified or to take any action which would subject it to service of process
in suits, other than those arising out of the offering or sale of the Offered
Units, in any jurisdiction where it is not now so subject.
(h) The Partnership will make generally available to its
security holders a consolidated earnings statement, which need not be audited,
covering a twelve-month period commencing after the effective date of the
Registration Statement and ending not later than 15
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months thereafter, as soon as practicable after the end of such period, which
consolidated earnings statement shall satisfy the provisions of Section 11(a)
of the Act.
(i) During the period of five years hereafter, the
Partnership will furnish to you (i) as soon as available, a copy of each report
of the Partnership mailed to Unitholders or filed with the Commission, and
(ii) from time to time such other information concerning the Partnership as you
may request.
(j) If this Agreement shall terminate or shall be
terminated after execution pursuant to any provisions hereof (otherwise than
pursuant to the second paragraph of Section 10 hereof or by notice given by you
terminating this Agreement pursuant to Section 10 or Section 11 hereof) or if
this Agreement shall be terminated by the Underwriters because of any failure or
refusal on the part of the Partnership or the General Partner to comply with the
terms or fulfill any of the conditions of this Agreement, the Partnership and
the General Partner, jointly and severally, agree to reimburse the Underwriters
for all out-of-pocket expenses (including reasonable fees and expenses of
counsel for the Underwriters) incurred by them in connection herewith.
(k) Except as provided in this Agreement, neither the
Partnership nor KPL will sell, contract to sell or otherwise dispose of any
Units or any securities substantially similar to, convertible into or
exercisable or exchangeable for Units, or grant any options or warrants to
purchase any securities substantially similar to, convertible into or
exercisable or exchangeable for Units, for a period of 90 days after the date of
the Final Prospectus (the "Lock Up Period"), without the prior written consent
of Xxxxxxx Xxxxx Xxxxxx Inc. Notwithstanding the foregoing, the Partnership may
issue Units to sellers of terminalling facilities or pipelines in connection
with acquisitions from such sellers of such terminalling facilities or pipelines
by the Partnership; provided that the Partnership has received assurance from
such sellers that they will not sell or otherwise dispose of such units in
contravention of this paragraph (k) during the Lock Up Period.
(l) The Partnership has furnished or will furnish to you
"lock-up" letters, in form and substance satisfactory to you, signed by each of
the current officers and directors of the General Partner and by Kaneb Services,
Inc. (on behalf of itself and its affiliates).
(m) Except as stated in this Agreement and in the
Preliminary Prospectus and Final Prospectus, the Partnership and the General
Partner have not taken, nor will they take, directly or indirectly, any action
designed to or that might reasonably be expected to cause or result in
stabilization or manipulation of the price of the Units to facilitate the sale
or resale of the Offered Units.
(n) The Partnership and the General Partner will use
their best efforts to have the Offered Units listed, subject to notice of
issuance, on the New York Stock Exchange on or before the Closing Date.
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(o) The Partnership will apply the net proceeds from the
sale of the Offered Units substantially in accordance with the description set
forth in the Final Prospectus.
(p) The Partnership, during the period of time referred
to in the second sentence in paragraph (f) above, will file all documents
required to be filed with the Commission pursuant to the Exchange Act within the
time periods required by the Exchange Act.
6. REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIP AND THE
GENERAL PARTNER. Each of the Partnership and the General Partner represents and
warrants to each Underwriter that:
(a) The Basic Prospectus included as part of the
registration statement as originally filed or as part of any amendment or
supplement thereto, and the Preliminary Prospectus filed pursuant to Rule 424(b)
under the Act, complied when so filed in all material respects with the
provisions of the Act and did not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, and the statements made in such documents within the
coverage of Rule 175(b) under the Act were made with a reasonable basis and in
good faith, except that this representation and warranty does not apply to
statements in or omissions from the Basic Prospectus or the Preliminary
Prospectus made in reliance upon and in conformity with information relating to
any Underwriter furnished to the Partnership in writing by or on behalf of any
Underwriter expressly for use therein. The Commission has not issued any order
preventing or suspending the use of the Basic Prospectus or the Preliminary
Prospectus.
(b) The Partnership and the offering of the Offered
Units contemplated by this Agreement meet the requirements for using Form S-3
under the Act and the Registration Statement meets the requirements set forth in
Rule 415(a)(1)(x). The Registration Statement in the form in which it became or
becomes effective and also in such form as it may be when any post-effective
amendment thereto shall become effective and the Final Prospectus and any
supplement or amendment thereto when filed with the Commission under Rule 424(b)
under the Act, complied or will comply in all material respects with the
provisions of the Act and will not at any such times 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, and the
statements made or to be made in such documents within the coverage of
Rule 175(b) under the Act were made or will be made with a reasonable basis and
in good faith, except that this representation and warranty does not apply to
statements in or omissions from the Registration Statement or the Final
Prospectus made in reliance upon and in conformity with information relating to
any Underwriter furnished to the Partnership in writing by or on behalf of any
Underwriter through you expressly for use therein.
(c) The Incorporated Documents heretofore filed, when
they were filed (or, if any amendment with respect to any such document was
filed, when such amendment was filed), conformed in all material respects with
the requirements of the Exchange Act and the rules and regulations thereunder,
any further Incorporated Documents so filed will, when they are filed,
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conform in all material respects with the requirements of the Exchange Act
and the rules and regulations thereunder; no such document when it was filed
(or, if an amendment with respect to any such document was filed, when such
amendment was filed), contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein not misleading; and no such further
document, when it is filed, will contain an untrue statement of a material
fact or will omit to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading.
(d) The capitalization of the Partnership is as set
forth in the Registration Statement and the Final Prospectus under
"Capitalization". All the outstanding Units and the limited partner interests
represented thereby have been duly authorized and validly issued, are fully paid
and non-assessable (except as such non-assessability may be affected by matters
described in the Prospectus under the caption "Risk Factors -- Risks Relating to
Our Partnership Structure -- Unitholders may not have limited liability in the
circumstances described below and may be liable for the return of wrongful
distributions" (hereinafter referred to as "Risk Factors -- Limited Liability")
and are free of any preemptive or similar rights; the Offered Units and the
limited partner interests represented thereby have been duly authorized and,
when issued, delivered and paid for in accordance with Section 4 hereof, will be
validly issued, fully paid and non-assessable (except as such non-assessability
may be affected by matters described in the Final Prospectus under the caption
"Risk Factors -- Limited Liability") and free of any preemptive or similar
rights and the Underwriters will acquire the Offered Units free and clear of any
lien, adverse claim, security interest, equity, or other encumbrance; and the
Units and the Amended and Restated Agreement of Limited Partnership of the
partnership dated as of July 23, 1998 (the "Partnership Agreement") conform to
the descriptions thereof in the Registration Statement and the Final Prospectus.
(e) The Partnership has been duly formed and is validly
existing as a limited partnership in good standing under the Delaware Revised
Uniform Limited Partnership Act (the "Delaware Act"), with partnership power and
authority to own or lease its properties and conduct its business in each case
as described in the Prospectus, and is duly qualified or registered as a foreign
limited partnership for the transaction of business under the laws of the State
of Texas, and there are no other jurisdictions in which the failure so to
qualify or register would subject it to any liability of disability which is
material to the financial condition, business, properties, net worth or results
of operations of the General Partner or the Partnership and the Operating
Entities considered as a whole or would subject the limited partners of the
Partnership to any material liability or disability.
(f) Each of the Operating Entities that is a limited
partnership has been duly formed and is validly existing as a limited
partnership in good standing under the Delaware Act, with partnership power and
authority to own or lease its properties and conduct its business as described
in the Final Prospectus and is duly qualified or registered as a foreign limited
partnership for the transaction of business the laws of each jurisdiction
in which it owns or leases properties or conducts any business so as to
require such qualification or registration, other than any jurisdiction
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in which the failure so to qualify or register would not subject it to any
liability or disability which is material to the financial condition,
business, properties, net worth or results of operations of the General
Partner or the Partnership and the Operating Entities considered as a whole
or would subject the limited partners of the Partnership to any material
liability or disability.
(g) The General Partner is the sole general partner of
the Partnership with a general partner interest in the Partnership of 1/99th;
such general partner interest is duly authorized by the Partnership Agreement,
and was validly issued to the General Partner and is fully paid; the General
Partner owns such general partner interest free and clear of any lien, adverse
claim, security interest, equity, or other encumbrance.
(h) The General Partner is the sole general partner of
the Operating Partnership with a general partner interest in the Operating
Partnership of 1%; such general partner interest is duly authorized by the
Amended and Restated Agreement of Limited Partnership of the Operating
Partnership dated as of September 27, 1989 (the "Operating Partnership
Agreement"), by and between the General Partner and the Partnership, and was
validly issued to the General Partner and is fully paid; and the General Partner
owns such general partner interest free and clear of any lien, adverse claim,
security interest, equity, or other encumbrance.
(i) STS is the sole general partner of STOP with a
general partner interest in STOP of 1%; such general partner interest is duly
authorized by the Agreement of Limited Partnership of STOP dated as of
February 10, 1993 (the "STOP Partnership Agreement"), by and between STS and the
Operating Partnership, and was validly issued to STS and is fully paid; and STS
owns such general partner interest free and clear of any lien, adverse claim,
security interest, equity, or other encumbrance.
(j) STI is the sole general partner of STP with a
general partner interest in STP of 1%; such general partner interest is duly
authorized by the Agreement of Limited Partnership of STP dated as of March 11,
1996 (the "STP Partnership Agreement" and, together with the Partnership
Agreement, the Operating Partnership Agreement and the STOP Partnership
Agreement, the "Partnership Agreements"), by and between STI and STH, and was
validly issued to STI and is fully paid; and STI owns such general partner
interest free and clear of any lien, adverse claim, security interest, equity,
or other encumbrance.
(k) The Partnership is the sole limited partner of
the Operating Partnership, with a limited partner interest in the Operating
Partnership of 99%; such limited partner interest is authorized by the
Operating Partnership Agreement, has been validly issued and is fully paid
and non-assessable (except as such non-assessability may be affected by
matters described in the Final Prospectus under the caption "Risk Factors --
Limited Liability"); and the Partnership owns such limited partner interest
in the Operating Partnership free and clear of any lien, adverse claim,
security interest, equity, or other encumbrance.
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(l) The Operating Partnership is the sole limited
partner of STOP, with a limited partner interest in STOP of 99%; such limited
partner interest is authorized by the STOP Partnership Agreement, has been
validly issued and is fully paid and non-assessable (except as such
non-assessability may be affected by matters described in the Final
Prospectus under the caption "Risk Factors -- Limited Liability"); and the
Operating Partnership owns such limited partner interest in STOP free and
clear of any lien, adverse claim, security interest, equity, or other
encumbrance.
(m) STH is the sole limited partner of STP, with a
limited partner interest in STP of 99%; such limited partner interest is
authorized by the STP Partnership Agreement, has been validly issued and is
fully paid and non-assessable (except as such non-assessability may be
affected by matters described in the Final Prospectus under the caption "
Risk Factors -Limited Liability"); and STH owns such limited partner interest
free and clear of any lien, adverse claim, security interest, equity, or
other encumbrance.
(n) The General Partner and each of the Operating
Entities that is a United States or foreign corporation or limited liability
company has been duly organized and is validly existing as a corporation or
limited liability company, as the case may be, in good standing under the
laws of the jurisdiction of its organization, with corporate or limited
liability company, as the case may be, power and authority to own or lease
its properties, to conduct its business and (in the case of the General
Partner) to act as general partner of the Partnership and the Operating
Partnership and (in the case of STS) to act as general partner of STOP and
(in the case of STI) to act as general partner of STP, in each case as
described in the Final Prospectus, and is duly qualified or registered as a
foreign corporation or limited liability company, as the case may be, for the
transaction of business and is in good standing under the laws of each
jurisdiction in which it owns or leases properties, or conducts any business,
so as to require such qualification or registration, other than any
jurisdiction in which the failure so to qualify or register would not subject
it to any liability or disability which is material to the financial
condition, business, properties, net worth or results of operations of the
General Partner or the Partnership and the Operating Entities considered as a
whole or would subject the limited partners of the Partnership to any
material liability or disability.
(o) All of the issued and outstanding shares of
capital stock of each of the General Partner, STS, STI, STH, STK and STE have
been duly authorized and validly issued and are fully paid and non-assessable
and are free of any preemptive or similar rights; all of the issued and
outstanding shares of capital stock of the General Partner are owned by KSI,
free and clear of any lien, adverse claim, security interest, equity, or
other encumbrance; all of the issued and outstanding shares of capital stock
of STS, STI, STH, STK and STE are owned directly or indirectly by the
Operating Partnership, free and clear of any lien, adverse claim, security
interest, equity, or other encumbrance, except as described in the
Preliminary Prospectus and the Final Prospectus.
(p) All of the issued and outstanding member
interests of STL have been duly authorized and validly issued and are fully
paid and non-assessable and are free of any
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preemptive or similar rights; STOP owns a 50% managing member interest in
STL, free and clear of any lien, adverse claim, security interest, equity, or
other encumbrance.
(q) Each of the Partnership Agreements has been duly
authorized, executed and delivered by the parties thereto and is a valid and
legally binding agreement of the parties thereto, enforceable against the
parties thereto in accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general equitable principles.
(r) All the Partnership's subsidiaries (collectively,
the "Subsidiaries") are listed in an exhibit to the Partnership's Annual Report
on Form 10-K, as amended by a Form 10-K/A filed on July 19, 1999, for the year
ended December 31, 1998 which is incorporated by reference into the Registration
Statement. The Partnership has no Subsidiaries other than the Operating
Entities.
(s) There are no legal or governmental proceedings
pending or, to the knowledge of the Partnership or the General Partner,
threatened against any of the Companies, or to which any of the Companies, or to
which any of their respective properties is subject, that are required to be
described in the Registration Statement or the Final Prospectus but are not
described as required, and there are no agreements, contracts, indentures,
leases or other instruments that are required to be described in the
Registration Statement or the Final Prospectus or to be filed as an exhibit to
the Registration Statement or any Incorporated Document that are not described
or filed as required by the Act or the Exchange Act.
(t) None of the Companies (i) is in violation of its
partnership agreement, certificate or articles of incorporation, bylaws, member
agreement, or other organizational documents, as the case may be, or (ii) is in
violation of any law, ordinance, administrative or governmental rule or
regulation applicable to any of the Companies or of any decree of any court or
governmental agency or body having jurisdiction over any of the Companies, which
violation would subject any of them to any liability or disability which is
material to the financial condition, business, properties, net worth or results
of operations of the General Partner or the Partnership and the Operating
Entities considered as a whole or would subject the limited partners of the
Partnership to any material liability or disability, or in default in any
respect in the performance of any obligation, agreement or condition contained
in any bond, debenture, note or any other evidence of indebtedness or in any
agreement, indenture, lease or other instrument to which any of the Companies is
a party or by which any of them or any of their respective properties may be
bound which default would subject any of them to any liability or disability
which is material to the financial condition, business, properties, net worth or
results of operations of the General Partner or the Partnership and the
Operating Entities considered as a whole or would subject the limited partners
of the Partnership to any material liability or disability.
(u) Neither the issuance and sale of the Units, the
execution, delivery or performance of this Agreement by the Partnership or the
General Partner nor the consummation by
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the Partnership or the General Partner of the transactions contemplated
hereby (i) requires any consent, approval, authorization or other order of or
registration or filing with, any court, regulatory body, administrative
agency or other governmental body, agency or official (except such as may be
required for the registration of the Offered Units under the Act and the
Exchange Act, which have been or will be effected in accordance with this
Agreement and except as may be required for compliance with the securities or
Blue Sky laws of various jurisdictions) or conflicts or will conflict with or
constitutes or will constitute a breach of, or a default under, the
partnership agreement, the certificate or articles of incorporation, bylaws,
member agreement, or other organizational documents, as the case may be, of
any of the Companies, or (ii) conflicts or will conflict with or constitutes
or will constitute a breach of, or a default under, any material agreement,
indenture, lease or other material instrument to which any of the Companies
is a party or by which any of them or any of their respective properties may
be bound, or violates or will violate any statute, law, regulation or filing
or judgment, injunction, order or decree applicable to any of the Companies
or any of their respective properties, or will result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of
any of the Companies pursuant to the terms of any agreement or instrument to
which any of them is a party or by which any of them may be bound or to which
any of the property or assets of any of them is subject.
(v) The accountants, Pricewaterhouse Coopers LLP, and
KPMG LLP, who have certified or shall certify the financial statements audited
by it included or incorporated by reference in the Registration Statement and
the Final Prospectus (or any amendment or supplement thereto) are independent
public accountants as required by the Act.
(w) The historical financial statements, together with
related schedules and notes, included or incorporated by reference in the
Registration Statement and the Final Prospectus (and any amendment or supplement
thereto), present fairly (i) the consolidated financial position, results of
operations and cash flows of the Partnership and the Operating Entities, and
(ii) the financial position of the General Partner, in each case on the basis
stated in the Registration Statement at the respective dates or for the
respective periods to which they apply; such statements and related schedules
and notes have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved, except as
disclosed therein; and the other financial and statistical information and data
included or incorporated by reference in the Registration Statement and the
Final Prospectus (and any amendment or supplement thereto) are accurately
presented and prepared on a basis consistent with such financial statements and
the books and records of the Partnership and the Operating Entities and the
General Partner, as the case may be.
(x) The execution and delivery of, and the
performance by each of the Partnership and the General Partner of its
obligations under this Agreement have been duly and validly authorized by
each of the Partnership and the General Partner, as the case may be, and this
Agreement has been duly executed and delivered by each of the Partnership and
the General Partner and constitutes the valid and legally binding agreement
of each of the Partnership and the General
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Partner, enforceable against each of the Partnership and the General Partner
in accordance with its terms, except (i) as rights to indemnification and
contribution hereunder may be limited by federal or state securities laws and
(ii) as to enforcement generally may be subject to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or
affecting creditors rights and to general equitable principles.
(y) Except as disclosed in the Registration Statement
and the Final Prospectus (or any amendment or supplement thereto), subsequent to
the respective dates as of which such information is given in the Registration
Statement and the Final Prospectus (or any amendment or supplement thereto),
none of the Companies has incurred any liability or obligation, direct or
contingent, or entered into any transaction, not in the ordinary course of
business, that is material to the limited partners of the Partnership, the
General Partner or the Partnership and the Operating Entities taken as a whole,
and there has not been any change in the capital stock, member interests or
partner's capital, or material increase in the short-term debt or long-term
debt, of any of the Companies, or any material adverse change, or any
development involving or which may reasonably be expected to involve, a
prospective material adverse change, in the financial condition, business,
properties, net worth or results of operations of the General Partner or the
Partnership and the Operating Entities taken as a whole or which is material to
the limited partners of the Partnership.
(z) Each of the Companies has good and marketable title
to all property (real and personal) described in the Final Prospectus as being
owned by it, free and clear of all liens, claims, security interests or other
encumbrances except such as are described or referred to in the Registration
Statement and the Final Prospectus or in a document filed as an exhibit to the
Registration Statement or except as do not materially interfere with the
ownership or benefits of ownership of such property, taken as a whole, provided
that with respect to the Transmission Assets (defined as all pipelines,
easements, rights of way, leases and appurtenant facilities for the transmission
and distribution of refined petroleum products), the Operating Partnership has
sufficient title to enable it to use the Transmission Assets in its business and
that any lack of title has not had, and to their best knowledge, will not have
any material adverse effect on the Operating Partnership's ability to use the
Transmission Assets and all the property described in the Prospectus as being
held under lease by each of the Companies is held by it under valid, subsisting
and enforceable leases.
(aa) Except as disclosed in the Registration Statement
and the Final Prospectus and except as would not, individually or in the
aggregate, result in a liability or disability that is material to the financial
condition, business, properties, net worth or results of operations of the
General Partner or the Partnership and the Operating Entities considered as a
whole or would subject the limited partners of the Partnership to any material
liability or disability, (i) neither the Partnership nor any of the Operating
Entities is in violation of any federal, state, local or foreign statute, law,
rule, regulation, ordinance, code, policy or rule of common law or any judicial
or administrative interpretation thereof including any judicial or
administrative order, consent, decree or judgment, relating to pollution or
protection of human health, the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata) or
wildlife,
-14-
including, without limitation, laws and regulations relating to the release
or threatened release of chemicals, pollutants, contaminants, wastes, toxic
substances, hazardous substances, petroleum or petroleum products
(collectively, "Hazardous Materials") or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials (collectively, "Environmental Laws"), (ii) neither the
Partnership nor any of the Operating Entities fails to possess any permit,
authorization or approval required under any applicable Environmental Laws or
to be in compliance with their requirements, (iii) there are no pending or
threatened administrative, regulatory or judicial actions, suits, demands,
demand letters, claims, liens, notices of noncompliance or violation,
investigation or proceedings relating to any Environmental Law against the
Partnership or any of the Operating Entities, and (iv) there are no events or
circumstances that might reasonably be expected to form the basis of an order
or claim for cost recovery, contribution, natural resource damages, clean-up
or remediation, or an action, suit or proceeding by any private party or
governmental body or agency, against or affecting the Partnership or any of
the Operating Entities relating to Hazardous Materials or any Environmental
Laws.
(bb) None of the Companies has distributed and, prior to
the later to occur of (i) the Closing Date and (ii) completion of the
distribution of the Offered Units, will distribute any offering material in
connection with the offering and sale of the Offered Units other than the
Registration Statement, the Preliminary Prospectus, the Final Prospectus or
other materials, if any, permitted by the Act.
(cc) Each of the Companies has such permits, licenses,
franchises and authorizations of governmental or regulatory authorities
("permits") as are necessary to own its respective properties and to conduct its
business in the manner described in the Final Prospectus, subject to such
qualifications as may be set forth in the Final Prospectus, the lack of which
would subject any of them to any liability or disability which is material to
the financial condition, business, properties, net worth or results of
operations of the General Partner or the Partnership and the Operating Entities
considered as a whole or would subject the limited partners of the Partnership
to any material liability or disability; each of the Companies has fulfilled and
performed all its material obligations with respect to such permits and no event
has occurred which allows, or after notice or lapse of time would allow,
revocation or termination thereof or results in any other material impairment of
the rights of the holder of any such permit, subject in each case to such
qualification as may be set forth in the Final Prospectus, the revocation or
termination of which would subject any of them to any liability or disability
which is material to the financial condition, business, properties, net worth or
results of operations of the General Partner or the Partnership and the
Operating Entities considered as a whole or would subject the limited partners
of the Partnership to any material liability or disability; and, except as
described in the Final Prospectus, none of such permits contains any restriction
that is materially burdensome to any of the Companies.
(dd) The Partnership maintains a system of internal
accounting controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management's general or
specific authorization; (ii) transactions are recorded as necessary to permit
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preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (iii) access
to assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
(ee) No more than ten percent of the net proceeds from
the sale of the Offered Units are intended to be or will be paid to members of
the National Association of Securities Dealers or associated or affiliated
persons of such members, or members of the immediate family of such members.
(ff) Each of the Companies has filed all tax returns
required to be filed, the failure of which to file would subject any of them to
any liability or disability which is material to the financial condition,
business, properties, net worth or results of operations of the General Partner
or the Partnership and the Operating Entities considered as a whole or would
subject the limited partners of the Partnership to any material liability or
disability, which returns are complete and correct, and none of the Companies is
in default in the payment of any taxes which were due and payable pursuant to
said returns or any assessments with respect thereto, which default would
subject any of them to any liability or disability which is material to the
financial condition, business, properties, net worth or results of operations of
the General Partner or the Partnership and the Operating Entities considered as
a whole or would subject the limited partners of the Partnership to any material
liability or disability.
(gg) Except for the General Partner who has waived its
rights, no holder of any interest in or security of the Partnership or any other
person has any right to require registration of Units or any other partnership
interest in or other security of the Partnership because of the filing of the
Registration Statement or consummation of the transactions contemplated by this
Agreement.
(hh) Each of the Companies owns or possesses all patents,
trademarks, trademark registrations, service marks, service xxxx registrations,
trade names, copyrights, licenses, inventions, trade secrets and rights
described in the Final Prospectus as being owned by them or any of them or
necessary for the conduct of their respective businesses, and none of the
Partnership or the General Partner is aware of any claim to the contrary or any
challenge by any other person to the rights of any of the Companies with respect
to the foregoing.
(ii) None of the Companies is, or as of the Closing Date
will be, an "Investment Company" as that term is defined in the Investment
Company Act of 1940, as amended (the "Investment Company Act"), or subject to
regulation under the Investment Company Act.
(jj) None of the Companies is a "public utility company"
or a "holding company,"or a "subsidiary company" of a "holding company,"or an
"affiliate" of a "holding
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company" or of a "subsidiary company" of a "holding company,"as such terms
are defined in the Public Utility Company Act of 1935, as amended; none of
the Companies is subject to regulation under the Public Utility Holding
Company Act of 1935, as amended.
(kk) For all taxable years beginning before December 31,
1996, the General Partner has (excluding its interests in the Partnership and
the Operating Partnership and any notes or receivables due from the Operating
Partnership) a net worth of at least $5 million.
(ll) For all taxable years beginning before December 31,
1996, STS has (excluding its interests in STOP and any notes or receivables due
from STOP) a net worth of at least $5 million.
(mm) For each taxable year of the Partnership, less than
10% of the gross income of the Partnership has been derived from sources other
than (i) the exploration, development, production, processing, refining,
transportation or marketing of any mineral or natural resource, including oil,
gas or products thereof, or (ii) other items of qualifying income within the
meaning of Section 7704(d) of the Code.
7. INDEMNIFICATION AND CONTRIBUTION. (a) Each of the
Partnership and the General Partner, jointly and severally, agrees to indemnify
and hold harmless each Underwriter, the directors, officers, employees and
agents of each Underwriter and each person, if any, who controls any Underwriter
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act
from and against any and all losses, claims, damages, liabilities and expenses
(including reasonable costs of investigation) arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained in the
Preliminary Prospectus, the Final Prospectus or the Registration Statement or in
any amendment or supplement thereto, or arising out of or based upon any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or expenses arise
out of or are based upon any untrue statement or omission or alleged untrue
statement or omission which has been made therein or omitted therefrom in
reliance upon and in conformity with the information relating to such
Underwriter furnished in writing to the Partnership by or on behalf of any
Underwriter through you expressly for use in connection therewith; provided,
however, that the indemnification contained in this paragraph (a) with respect
to the Preliminary Prospectus shall not inure to the benefit of any Underwriter
(or to the benefit of any director, officer, employee, agent or controlling
person of such Underwriter) on account of any such loss, claim, damage,
liability or expense arising from the sale of the Offered Units by such
Underwriter to any person if a copy of the Final Prospectus shall not have been
delivered or sent to such person within the time required by the Act and the
regulations thereunder, and the untrue statement or alleged untrue statement or
omission or alleged omission of a material fact contained in the Preliminary
Prospectus was corrected in the Final Prospectus, provided that the Partnership
has delivered the Prospectus to the several Underwriters in requisite quantity
on a timely basis to permit such delivery or sending.
-17-
The foregoing indemnity agreement shall be in addition to any liability which
the Partnership or the General Partner may otherwise have.
(b) If any action, suit or proceeding shall be brought
against any Underwriter, any director, officer, employee or agent of any
Underwriter or any person controlling any Underwriter in respect of which
indemnification may be sought against the Partnership or the General Partner,
such Underwriter or such director, officer, employee, agent or controlling
person shall promptly notify the Partnership and the Partnership and the General
Partner shall assume the defense thereof, including the employment of counsel
and payment of all fees and expenses. Such Underwriter or any such director,
officer, employee, agent or controlling person shall have the right to employ
separate counsel in any such action, suit or proceeding and to participate in
the defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Underwriter or such director, officer, employee, agent or
controlling person unless (i) the Partnership and the General Partner have
agreed in writing to pay such fees and expenses, (ii) the Partnership and the
General Partner have failed to assume the defense and employ counsel, or
(iii) the named parties to any such action, suit or proceeding (including any
impleaded parties) include both such Underwriter or such director, officer,
employee, agent or controlling person and the Partnership or the General Partner
and such Underwriter or such director, officer, employee, agent or controlling
person shall have been advised by its counsel that representation of such
indemnified party and the Partnership or the General Partner by the same counsel
would be inappropriate under applicable standards of professional conduct
(whether or not such representation by the same counsel has been proposed) due
to actual or potential differing interests between them (in which case the
Partnership and the General Partner shall not have the right to assume the
defense of such action, suit or proceeding on behalf of such Underwriter or such
controlling person). It is understood, however, that the Partnership and the
General Partner shall, in connection with any one such action, suit or
proceeding or separate but substantially similar or related actions, suits or
proceedings in the same jurisdiction arising out of the same general allegations
or circumstances, be liable for the reasonable fees and expenses of only one
separate firm of attorneys (in addition to any local counsel) at any time for
all such Underwriters, directors, officers, employees, agents and controlling
persons not having actual or potential differing interests with you or among
themselves, which firm shall be designated in writing by Xxxxxxx Xxxxx Xxxxxx
Inc., and that all such fees and expenses shall be reimbursed as they are
incurred. The Partnership and the General Partner shall not be liable for any
settlement of any such action, suit or proceeding effected without its written
consent, but if settled with such written consent, or if there be a final
judgment for the plaintiff in any such action, suit or proceeding, each of the
Partnership and the General Partner jointly and severally, agrees to indemnify
and hold harmless any Underwriter, to the extent provided in the preceding
paragraph, and any such controlling person from and against any loss, claim,
damage, liability or expense by reason of such settlement or judgment.
(c) Each Underwriter agrees, severally and not jointly,
to indemnify and hold harmless each of the Partnership and the General Partner,
the directors of the General Partner, the officers of the General Partner who
sign the Registration Statement, and any person who controls
-18-
the Partnership or the General Partner within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act, to the same extent as the
foregoing indemnity from the Partnership and the General Partner to each
Underwriter, but only with respect to information relating to such
Underwriter furnished in writing by or on behalf of such Underwriter through
you expressly for use in the Registration Statement, the Final Prospectus or
the Preliminary Prospectus, or any amendment or supplement thereto. If any
action, suit or proceeding shall be brought against the Partnership or the
General Partner, any of the directors of the General Partner, any such
officer of the General Partner, or any such controlling person based on the
Registration Statement, the Final Prospectus or the Preliminary Prospectus,
or any amendment or supplement thereto, and in respect of which
indemnification may be sought against any Underwriter pursuant to this
paragraph (c), such Underwriter shall have the rights and duties given to the
Partnership and the General Partner by paragraph (b) above (except that if
the Partnership or the General Partner shall have assumed the defense thereof
such Underwriter shall not be required to do so, but may employ separate
counsel therein and participate in the defense thereof, but the fees and
expenses of such counsel shall be at such Underwriter's expense), and the
Partnership and the General Partner, the directors of the General Partner,
any such officer of the General Partner, and any such controlling person
shall have the rights and duties given to the Underwriters by paragraph (b)
above. The foregoing indemnity agreement shall be in addition to any
liability which the Underwriters may otherwise have.
(d) If the indemnification provided for in this
Section 7 is unavailable to an indemnified party under paragraphs (a) or (c)
hereof in respect of any losses, claims, damages, liabilities or expenses
referred to therein, then an indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses (i) in such proportion as is appropriate to reflect the relative
benefits received by the Partnership and the General Partner on the one hand and
the Underwriters on the other hand from the offering of the Offered Units, or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Partnership and the General Partner on the one hand and the Underwriters on
the other in connection with the statements or omissions that resulted in such
losses, claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Partnership and
the General Partner on the one hand and the Underwriters on the other shall be
deemed to be in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Partnership bear to the total
underwriting discounts and commissions received by the Underwriters, in each
case as set forth in the table on the cover page of the Final Prospectus. The
relative fault of the Partnership and the General Partner on the one hand and
the Underwriters on the other hand shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Partnership and the General Partner on the one hand
or by the Underwriters on the other hand and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission, including, with respect to any Underwriter, the extent to
which any such loss, claim, damage or liability arises from the sale
-19-
of Offered Units by such Underwriter to any person if a copy of the Final
Prospectus shall not have been delivered or sent to such person within the
time required by the Act and the regulations thereunder, and the untrue
statement or alleged untrue statement or omission or alleged omission of a
material fact contained in the Preliminary Prospectus was corrected in the
Final Prospectus, provided that the Partnership has delivered the Final
Prospectus to the several Underwriters in requisite quantity on a timely
basis to permit such delivery or sending.
(e) The Partnership, the General Partner and the
Underwriters agree that it would not be just and equitable if contribution
pursuant to this Section 7 were determined by a pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other method
of allocation that does not take account of the equitable considerations
referred to in paragraph (d) above. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages, liabilities and
expenses referred to in paragraph (d) above shall be deemed to include, subject
to the limitations set forth above, any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating any claim or
defending any such action, suit or proceeding. Notwithstanding the provisions
of this Section 7, no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price of the Offered Units underwritten
by it and distributed to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute
pursuant to this Section 7 are several in proportion to the respective numbers
of Firm Units set forth opposite their names in Schedule I hereto (or such
numbers of Firm Units increased as set forth in Section 10 hereof) and not
joint.
(f) No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any pending
or threatened action, suit or proceeding in respect of which any indemnified
party is or could have been a party and indemnity could have been sought
hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such action, suit or proceeding.
(g) Any losses, claims, damages, liabilities or expenses
for which an indemnified party is entitled to indemnification or contribution
under this Section 7 shall be paid by the indemnifying party to the indemnified
party as such losses, claims, damages, liabilities or expenses are incurred.
The indemnity and contribution agreements contained in this Section 7 and the
representations and warranties of the Partnership and the General Partner set
forth in this Agreement shall remain operative and in full force and effect,
regardless of (i) any investigation made by or on behalf of any Underwriter, any
director, officer, employee or agent of any Underwriter or any person
controlling any Underwriter, the Partnership or the General Partner, the
directors of the General Partner or officers of the General Partner, or any
person controlling the
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Partnership or the General Partner, (ii) acceptance of any Offered Units and
payment therefor hereunder, and (iii) any termination of this Agreement. A
successor to any Underwriter, any director, officer, employee or agent of any
Underwriter or any person controlling any Underwriter, or to the Partnership
or the General Partner, directors or officers of the General Partner, or any
person controlling the Partnership or the General Partner, shall be entitled
to the benefits of the indemnity, contribution and reimbursement agreements
contained in this Section 7. The term "successor" as used in this Agreement
shall not include a purchaser from any Underwriter of any Offered Units in
his status as such purchaser.
8. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The several
obligations of the Underwriters to purchase the Firm Units hereunder are subject
to the following conditions:
(a) If, at the time this Agreement is executed and
delivered, it is necessary for the registration statement or a post effective
amendment thereto to be declared effective before the offering of the Offered
Units may commence, the registration statement or such post-effective amendment
shall have become effective not later than 5:30 P.M., New York City time, on the
date hereof, or at such later date and time as shall be consented to in writing
by you, and all filings, if any, required by Rule 424 under the Act shall have
been timely made; no stop order suspending the effectiveness of the registration
statement shall have been issued and no proceeding for that purpose shall have
been instituted or, to the knowledge of the Partnership, the General Partner, or
any Underwriter, threatened by the Commission, and any request of the Commission
for additional information (to be included in the Registration Statement or the
Final Prospectus or otherwise) shall have been complied with to your
satisfaction.
(b) Subsequent to the effective date of this Agreement,
there shall not have occurred (i) any change, or any development involving a
prospective change, in or affecting the financial condition, business,
properties, net worth, or results of operations of the Companies not
contemplated by the Prospectus, which in your opinion, as Representatives of the
several Underwriters, would materially, adversely affect the market for the
Offered Units, or (ii) any event or development relating to or involving any of
the Companies or any officer or director of the General Partner which makes any
statement made in the Prospectus untrue or which, in the opinion of the
Partnership and its counsel or the Underwriters and their counsel, requires the
making of any addition to or change in the Prospectus in order to state a
material fact required by the Act or any other law to be stated therein or
necessary in order to make the statements therein not misleading, if amending or
supplementing the Prospectus to reflect such event or development would, in your
opinion, as Representatives of the several Underwriters, adversely affect the
market for the Offered Units.
(c) You shall have received on the Closing Date, an
opinion of Fulbright & Xxxxxxxx L.L.P., special counsel for the Partnership and
the General Partner, dated the Closing Date and addressed to you, as
Representatives of the several Underwriters, substantially in the form of
EXHIBIT A attached hereto.
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In addition, such special counsel shall have furnished to
you their written opinion, dated such Closing Date, in form and substance
satisfactory to you in your reasonable judgment, with respect to the legal
conclusions described in the Final Prospectus under the caption "Federal Income
Tax Considerations."
(d) You shall have received on the Closing Date, an
opinion of Xxxxxxx X. Xxxxxx, counsel for the Partnership and the General
Partner, dated the Closing Date and addressed to you, as Representatives of the
several Underwriters, substantially in the form of EXHIBIT B attached hereto.
(e) You shall have received opinions of
(i) Holme Xxxxxxx & Xxxx LLC, with respect to the
State of Colorado,
(ii) Foulston & Siefkin, LLP, with respect to the
State of Kansas,
(iii) Xxxxx & Xxxxxx, with respect to the State of
Nebraska,
(iv) Richardson, Groseclose, Xxxxxxxx & Xxxx, with
respect to the State of South Dakota,
(v) Vogel, Brantner, Kelly, Knutson, Xxxx & Bye,
Ltd., with respect to the State of North Dakota,
(vi) Davis, Hockenberg, Wine, Xxxxx, Xxxxx &
Shors, P.C. with respect to the State of Iowa, and
(vii) Xxxxx & XxXxxxxx with respect to the State of
Wyoming,
in each case dated the Closing Date and addressed to you, as Representative of
the several Underwriters, substantially in the form of EXHIBIT C attached
hereto.
(f) You shall have received on the Closing Date an
opinion of Xxxxxxx & Xxxxx L.L.P., counsel for the Underwriters, dated the
Closing Date and addressed to you, as Representatives of the several
Underwriters, with respect to the matters referred to in clauses (14), (16),
(17), (22) (but only with respect to the Registration Statement, the Preliminary
Prospectus and the Final Prospectus and any supplements or amendments thereto)
and the first paragraph following clause (26) of EXHIBIT A and such other
related matters as you may reasonably request.
(g) You shall have received letters addressed to you, as
Representatives of the several Underwriters, and dated the date hereof and the
Closing Date from Pricewaterhouse
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Coopers LLP and dated the Closing Date from KPMG LLP, independent certified
public accountants, substantially in the forms heretofore approved by you.
(h) (i) No stop order suspending the effectiveness of
the Registration Statement shall have been issued and no proceedings for that
purpose shall have been taken or, to the knowledge of the Companies, shall be
contemplated by the Commission at or prior to the Closing Date; (ii) there
shall not have been any change in the partnership interests, member interests or
capital stock of the Companies nor any material increase in the short term or
long term debt of the Companies (other than in the ordinary course of business)
from that set forth or contemplated in the Registration Statement or the Final
Prospectus (or any amendment or supplement thereto); (iii) there shall not have
been, since the respective dates as of which information is given in the
Registration Statement and the Final Prospectus (or any amendment or supplement
thereto), except as may otherwise be stated in the Registration Statement and
Final Prospectus (or any amendment or supplement thereto), any material adverse
change in the financial condition, business, properties, net worth or results of
operations of the General Partner or the Partnership and the Operating Entities
taken as a whole; (iv) none of the Companies shall have any liabilities or
obligations, direct or contingent (whether or not in the ordinary course of
business), that are material to the limited partners of the Partnership, or the
General Partner or the Partnership and the Operating Entities, taken as a whole,
other than those reflected in the Registration Statement or the Prospectus (or
any amendment or supplement thereto); and (v) all the representations and
warranties of the Partnership and the General Partner contained in this
Agreement shall be true and correct on and as of the date hereof and on and as
of the Closing Date as if made on and as of the Closing Date, and you shall have
received certificates, dated the Closing Date and signed by the chief executive
officer and the chief financial officer of the General Partner for and on behalf
of the General Partner and the Partnership (or such other officers as are
acceptable to you), to the effect set forth in this Section 8(h) and in
Section 8(i) hereof.
(i) None of the Partnership or the General Partner shall
have failed at or prior to the Closing Date to have performed or complied with
any of its agreements herein contained and required to be performed or complied
with by it hereunder at or prior to the Closing Date.
(j) Prior to commencement of the offering of the Offered
Units, the Offered Units shall have been listed, subject to notice of issuance,
on the New York Stock Exchange.
(k) Each of the Partnership and the General Partner
shall have furnished or caused to be furnished to you such further certificates
and documents as you shall have reasonably requested that are customary in
closing transactions of the nature contemplated by this Agreement.
All such opinions, certificates, letters and other documents will
be in compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to you and your counsel.
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Any certificate or document signed by any officer of the General
Partner, for its own account or on behalf of the Partnership and delivered to
you pursuant to the terms or requirements of this Agreement, as Representatives
of the Underwriters, or to counsel for the Underwriters, shall be deemed a
representation and warranty by the Partnership and the General Partner to each
Underwriter as to the statements made therein.
The several obligations of the Underwriters to purchase Additional
Units hereunder are subject to the satisfaction on and as of any Option Closing
Date of the conditions set forth in this Section 8, except that, if any Option
Closing Date is other than the Closing Date, the certificates, opinions and
letters referred to in paragraphs (c) through (k) shall be dated the Option
Closing Date in question and the opinions called for by paragraphs (c), (d), (e)
and (f) shall be revised to reflect the sale of Additional Units.
9. EXPENSES. Each of the Partnership and the General Partner,
jointly and severally, agrees to pay the following costs and expenses and all
other costs and expenses incident to the performance by the Partnership and the
General Partner of any of their obligations hereunder: (i) the preparation,
printing or reproduction, and filing with the Commission of the registration
statement (including financial statements and exhibits thereto), each
Preliminary Prospectus, the Final Prospectus, and each amendment or supplement
to any of them; (ii) the printing (or reproduction) and delivery (including
postage, air freight charges and charges for counting and packaging) of such
copies of the Registration Statement, each Preliminary Prospectus, the Final
Prospectus, the Incorporated Documents, and all amendments or supplements to any
of them, as may be reasonably requested for use in connection with the offering
and sale of the Offered Units; (iii) the preparation, printing, authentication,
issuance and delivery of certificates for the Offered Units, including any stamp
taxes in connection with the original issuance and sale of the Offered Units;
(iv) the reproduction and delivery of this Agreement, the preliminary and
supplemental Blue Sky Memoranda and all other agreements or documents printed
(or reproduced) and delivered in connection with the offering of the Offered
Units; (v) the listing of the Offered Units on the New York Stock Exchange;
(vi) the registration or qualification of the Offered Units for offer and sale
under the securities or Blue Sky laws of the several states as provided in
Section 5(g) hereof (including the reasonable fees, expenses and disbursements
of counsel for the Underwriters relating to the preparation, reproduction, and
delivery of the preliminary and supplemental Blue Sky Memoranda and such
registration and qualification); (vii) the filing fees in connection with any
filings required to be made with the National Association of Securities Dealers,
Inc.; (viii) the transportation and other expenses incurred by or on behalf of
the Partnership's, the General Partner's or any Operating Entities'
representatives in connection with presentations to prospective purchasers of
the Offered Units; (ix) the fees and expenses of the Partnership's and General
Partner's accountants and the fees and expenses of counsel (including local and
special counsel) for the Partnership and the General Partner; and (x) any fees
payable to DTC. It is understood, however, that, except as provided in Section
5(j), Section 7 and this Section 9 hereof, the Underwriters will pay all of
their own costs and expenses associated with the offering of the
-24-
Offered Units, including the fees of their counsel, transfer taxes on resale
of any of the Offered Units by them, and any advertising expenses connected
with any offers they may make.
10. EFFECTIVE DATE OF AGREEMENT. This Agreement shall
become effective: (i) upon the execution and delivery hereof by the parties
hereto; or (ii) if, at the time this Agreement is executed and delivered, it
is necessary for the Registration Statement or a post-effective amendment
thereto to be declared effective before the offering of the Offered Units may
commence, when notification of the effectiveness of the Registration
Statement or such post-effective amendment has been released by the
Commission. Until such time as this Agreement shall have become effective,
it may be terminated by the Partnership, by notifying you, or by you, as
Representatives of the several Underwriters, by notifying the Partnership.
If any one or more of the Underwriters shall fail or refuse to
purchase Offered Units which it or they have agreed to purchase hereunder,
and the aggregate number of Offered Units which such defaulting Underwriter
or Underwriters agreed but failed or refused to purchase is not more than
one-tenth of the aggregate number of the Offered Units, each non-defaulting
Underwriter shall be obligated, severally, in the proportion which the number
of Offered Units set forth opposite its name in Schedule I hereto bears to
the aggregate number of Offered Units set forth opposite the names of all
non-defaulting Underwriters or in such other proportion as you may specify in
accordance with Section 20 of the Master Agreement Among Underwriters of
Xxxxxxx Xxxxx Barney Inc., to purchase the Offered Units which such
defaulting Underwriter or Underwriters agreed, but failed or refused, to
purchase. If any Underwriter or Underwriters shall fail or refuse to
purchase Offered Units and the aggregate number of Offered Units with respect
to which such default occurs is more than one-tenth of the aggregate number
of Offered Units and arrangements satisfactory to you and the Partnership for
the purchase of such Offered Units by one or more non-defaulting Underwriters
or other party or parties approved by you and the Partnership are not made
within 36 hours after such default, this Agreement will terminate without
liability on the part of any non-defaulting Underwriter or the Partnership.
In any such case which does not result in termination of this Agreement,
either you or the Partnership shall have the right to postpone the Closing
Date, but in no event for longer than seven days, in order that the required
changes, if any, in the Registration Statement and the Final Prospectus or
any other documents or arrangements may be effected. Any action taken under
this paragraph shall not relieve any defaulting Underwriter from liability in
respect of any such default of any such Underwriter under this Agreement.
The term "Underwriter" as used in this Agreement includes, for all purposes
of this Agreement, any party not listed in Schedule I hereto who, with your
approval and the approval of the Partnership, purchases Offered Units which a
defaulting Underwriter agreed, but failed or refused, to purchase.
Any notice under this Section 10 may be given by telegram,
telecopy or telephone but shall be subsequently confirmed by letter.
11. TERMINATION OF AGREEMENT. This Agreement shall be subject
to termination without liability on the part of any Underwriter to the
Partnership or the General Partner by notice
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to the Partnership, if prior to the Closing Date or any Option Closing Date
(if different from the Closing Date and then only as to the Additional
Units), as the case may be, (i) trading in the Units shall have been
suspended by the Commission or the New York Stock Exchange or trading in
securities generally on the New York Stock Exchange, American Stock Exchange
or the Nasdaq National Market shall have been suspended or materially limited
or minimum prices shall have been established on any such exchange or the
Nasdaq National Market, (ii) a general moratorium on commercial banking
activities in New York or Texas shall have been declared by either federal or
state authorities, or (iii) there shall have occurred any outbreak or
escalation of hostilities, declaration by the United States of a national
emergency or war, or other international or domestic calamity, crisis or
change in political, financial or economic conditions, the effect of which on
the financial markets of the United States is such as to make it, in the sole
judgment of the Representatives, impracticable or inadvisable to commence or
continue the offering or delivery of the Offered Units as contemplated by the
Final Prospectus (exclusive of any supplement thereto) or to enforce
contracts for the resale of the Offered Units by the Underwriters. Notice of
such termination may be given to the Partnership by telegram, telecopy or
telephone and shall be subsequently confirmed by letter.
12. INFORMATION FURNISHED BY THE UNDERWRITERS. The statements
set forth in the last paragraph on the cover page, the stabilization legend on
the inside front cover, and the first, third, seventh, ninth, tenth and eleventh
paragraphs under the caption "Underwriting" in the Preliminary Prospectus and in
the Final Prospectus, constitute the only information furnished by or on behalf
of the Underwriters through you as such information is referred to in
Sections 6(b) and 7 hereof.
13. MISCELLANEOUS. Except as otherwise provided in Sections 5,
10 and 11 hereof, notice given pursuant to any provision of this Agreement shall
be in writing and shall be delivered (i) if to the Partnership or the General
Partner, at the office of the Partnership at 0000 X. Xxxxxxx Xxxxxxxxxx, Xxxxx
000, Xxxxxxxxxx, Xxxxx 00000 c/o Kaneb Pipe Line Company, Attention: Xxxxxx X.
Xxxxxxx, Chairman of the Board; or (ii) if to you, as Representatives of the
several Underwriters, care of Xxxxxxx Xxxxx Barney Inc., 000 Xxxxxxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Attention General Counsel.
This Agreement has been and is made solely for the benefit of the
several Underwriters, the Partnership, the General Partner and the directors,
officers, employees and agents of the Underwriters, the directors and officers
of the General Partner, and the other controlling persons referred to in
Section 7 hereof and their respective successors and assigns, to the extent
provided herein, and no other person shall acquire or have any right under or by
virtue of this Agreement. Neither the term "successor" nor the term "successors
and assigns" as used in this Agreement shall include a purchaser from any
Underwriter of any of the Offered Units in his status as such purchaser.
-26-
As the National Association of Securities Dealers, Inc. ("NASD")
views the Units as interests in a direct participation program, each Underwriter
agrees that it will offer the Offered Units in compliance with Rule 2810 of the
NASD's Conduct Rules.
14. APPLICABLE LAW; COUNTERPARTS. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
applicable to contracts made and to be performed within the State of New York.
15. REPRESENTATIONS, AGREEMENTS AND INDEMNITIES TO SURVIVE.
The respective agreements, representations, warranties, indemnities and other
statements of the Partnership, the General Partner and its officers and of the
Underwriters set forth in or made pursuant to this Agreement will remain in full
force and effect, regardless of any investigation made by or on behalf of any
Underwriter or the Partnership or any of the officers, directors, employees,
agents or controlling persons referred to in Section 7 hereof, and will survive
delivery of and payment for the Offered Units. The provisions of Sections 5(j)
and 7 hereof shall survive the termination or cancellation of this Agreement.
This Agreement may be signed in various counterparts which
together constitute one and the same instrument. If signed in counterparts,
this Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
-27-
Please confirm that the foregoing correctly sets forth the
agreement between the Partnership, the General Partner and the several
Underwriters.
Very truly yours,
KANEB PIPE LINE PARTNERS, L.P.
BY: KANEB PIPE LINE COMPANY, ITS GENERAL
PARTNER
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
KANEB PIPE LINE COMPANY
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
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Confirmed as of the date first
above mentioned on behalf of
themselves and the other several
Underwriters named in Schedule I
hereto.
XXXXXXX XXXXX XXXXXX INC.
X.X. XXXXXXX & SONS, INC.
PAINEWEBBER INCORPORATED
AS REPRESENTATIVES OF THE SEVERAL UNDERWRITERS
By: XXXXXXX XXXXX BARNEY INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
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EXHIBIT A
FORM OF OPINION OF FULBRIGHT & XXXXXXXX L.L.P.
We have acted as special counsel to the Companies in connection with the
sale to you of the Offered Units pursuant to an Underwriting Agreement dated
July 22, 1999 (the "Agreement"), among you, the Partnership and the General
Partner. Capitalized terms used but not defined herein have the same meanings
herein as such terms have in the Agreement. The opinions expressed herein are
being furnished to you at the request of the Partnership pursuant to Section
8(c) of the Agreement.
We have participated in the preparation of, and have examined, the
Registration Statement on Form S-3 (Registration No. 333-76067) filed by the
Partnership under the Securities Act, which became effective on June 25, 1999
(the "Effective Date"), and the Basic Prospectus, the Preliminary Prospectus and
the Final Prospectus.
We have also examined originals or copies of such partnership records of
the Partnership, corporate records of the General Partner, certificates and
other communications of public officials, certificates of officers of the
General Partner, certificates of the transfer agent for the Units and such other
documents as we have deemed necessary for the purpose of rendering the opinions
expressed herein. As to questions of fact material to those opinions, we have,
to the extent we deemed appropriate, relied on certificates of officers of the
General Partner, certificates and other communications of public officials,
certificates of the transfer agent for the Units and on the factual
representations of the General Partner contained in the Agreement. We have
assumed the genuineness of all signatures on, and the authenticity of, all
documents submitted to us as originals, the conformity to authentic original
documents of all documents submitted to us as copies, the due authorization,
execution and delivery by the parties thereto, other than the Partnership and
the General Partner, of all documents examined by us, and the legal capacity of
each individual who signed any of those documents.
Based upon the foregoing, and having regard for such legal considerations
as we deem relevant, we are of the opinion that:
1. Each of the Partnership, the Operating Partnership, STOP
and STP has been duly formed and is validly existing as a limited partnership in
good standing under the Delaware Act, with partnership power and authority to
own or lease its properties and conduct its business as described in the Final
Prospectus;
-30-
2. The Unitholders are not liable under the laws of the States
of California and Texas for the liabilities of the Partnership or the Operating
Entities, except in each case to the same extent as under the laws of the State
of Delaware or as otherwise described in the Final Prospectus;
3. The General Partner is a corporation duly organized and
validly existing in good standing under the laws of the State of Delaware, with
corporate power and authority to own or lease its properties, to conduct its
businesses and to act as the general partner of the Partnership and the
Operating Partnership, in each case as described in the Final Prospectus; all of
the outstanding shares of capital stock of the General Partner have been duly
authorized and validly issued; and all of the outstanding shares of capital
stock of the General Partner are owned of record by KSI, free and clear, to our
knowledge, of any security interest, lien, encumbrance or adverse claim;
4. Each of STH, STI and STS is a corporation duly organized
and validly existing in good standing under the laws of the State of Delaware,
with corporate power and authority to own or lease its properties and to conduct
its business as described in the Final Prospectus; all of the outstanding
shares of capital stock of each of STH, STI and STS have been duly authorized
and validly issued; and all of the outstanding shares of capital stock of STH
are owned of record by STI, all of the outstanding shares of capital stock of
STI are owned of record by STS and all of the outstanding shares of capital
stock of STS are owned of record by the Operating Partnership, in each case free
and clear, to our knowledge, of any security interest, lien, encumbrance or
adverse claim, except as described in the Final Prospectus;
5. The General Partner is the sole general partner of the
Partnership and the Operating Partnership with a general partner interest in the
Partnership of 1/99th and a general partner interest in the Operating
Partnership of 1%; such general partner interests are duly authorized by the
Partnership Agreement and the Operating Partnership Agreement, respectively, and
are validly issued, and the General Partner to our knowledge beneficially owns
such general partner interests free and clear, to our knowledge, of any security
interest, lien, encumbrance or adverse claim;
6. The Partnership is the sole limited partner of the
Operating Partnership, with a limited partner interest of 99%; such limited
partner interest is duly authorized by the Operating Partnership Agreement
and is validly issued, fully paid and non-assessable, except as such
non-assessability may be affected by matters described in the Final
Prospectus under the caption "Risk Factors -- Limited Liability"; the
Partnership to our knowledge beneficially owns such limited partner interest
in the Operating Partnership free and clear, to our knowledge, of any
security interest, lien, encumbrance or adverse claim;
7. STS is the sole general partner of STOP with a general
partner interest in STOP of 1%; such general partner interest is duly authorized
by the STOP Partnership
-31-
Agreement, is validly issued and STS to our knowledge beneficially owns such
general partner interest free and clear, to our knowledge, of any security
interest, lien, encumbrance, or adverse claim;
8. The Operating Partnership is the sole limited partner of
STOP, with a limited partner interest of 99%; such limited partner interest is
duly authorized by the STOP Partnership Agreement and is validly issued, fully
paid and non-assessable, except as such non-assessability may be affected by
matters described in the Final Prospectus under the caption "Risk Factors --
Limited Liability"; the Operating Partnership to our knowledge beneficially owns
such limited partner interest in STOP free and clear, to our knowledge, of any
security interest, lien, encumbrance or adverse claim;
9. STL is a limited liability company duly organized and
validly existing in good standing under the laws of the State of Delaware, with
limited liability company power and authority to own or lease its properties and
conduct its business as described in the Final Prospectus; all the outstanding
member interests of STL have been duly authorized and validly issued, are fully
paid and non-assessable, and a 50% managing member interest is owned of record
by STOP, free and clear, to our knowledge of any security interest, lien,
encumbrance or adverse claim;
10. STI is the sole general partner of STP with a general
partner interest in STP of 1%; such general partner interest is duly authorized
by the STP Partnership Agreement, is validly issued and STI to our knowledge
beneficially owns such general partner interest free and clear, to our
knowledge, of any security interest, lien, encumbrance, or adverse claim;
11. STH is the sole limited partner of STP, with a limited
partner interest of 99%; such limited partner interest is duly authorized by the
STP Partnership Agreement and is validly issued, fully paid and non-assessable,
except as such non-assessability may be affected by matters described in the
Final Prospectus under the caption "Risk Factors -- Limited Liability"; STH to
our knowledge beneficially owns such limited partner interest in STP free and
clear, to our knowledge, of any security interest, lien, encumbrance or adverse
claim;
12. The authorized and outstanding partnership interests of the
Partnership are as set forth under the caption "Kaneb Partners" in the Final
Prospectus; and the authorized partnership interests of the Partnership conform
in all material respects as to legal matters to the description thereof set
forth under the captions "Risk Factors -- Limited Liability," "Cash
Distributions" and "Federal Income Tax Considerations" in the Final Prospectus;
13. All the partnership interests of the Partnership have been
duly authorized and validly issued, and are fully paid and non-assessable,
except as such non-assessability may be affected by matters described in the
Final Prospectus under the caption "Risk Factors -- Limited Liability", and
there are no preemptive or other rights to subscribe for or to
-32-
purchase partnership interests of the Partnership pursuant to any statute,
the Partnership Agreement or any agreement or other instrument to which the
Partnership is a party filed as an exhibit to, or incorporated by reference
in, the Registration Statement;
14. The Offered Units have been duly authorized and, when
issued and delivered to the Underwriters against payment therefor in
accordance with the terms of the Agreement, will be validly issued, fully
paid and non-assessable, except as such non-assessability may be affected by
matters described in the Final Prospectus under the caption "Risk Factors --
Limited Liability," and free of any preemptive, or to the knowledge of such
counsel, similar rights that entitle or will entitle any person to acquire
any partnership interest in the Partnership upon the issuance thereof by the
Partnership;
15. The form of certificates for the Units conforms in all
material respects to the requirements of the Partnership Agreement;
16. The Registration Statement and all post-effective
amendments, if any, have become effective under the Act and, to the knowledge
of such counsel, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose
have been instituted or are threatened by the Commission; and any required
filing of the Basic Prospectus, the Preliminary Prospectus and the Final
Prospectus pursuant to Rule 424(b) has been made in accordance with Rule
424(b);
17. The Agreement has been duly authorized, executed and
delivered by each of the Partnership and the General Partner;
18. Each of the Partnership Agreements has been duly
authorized, executed and delivered by the parties thereto and is a valid and
legally binding agreement of the parties thereto, enforceable against the
parties thereto in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or transfer or other similar laws affecting
creditors rights generally and by general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at
law) and to the extent that rights to indemnity and contribution under the
Partnership Agreements may be limited by federal or state securities laws or
the public policy underlying such laws.
19. Neither the offer, sale or delivery of the Offered Units by
the Partnership, the execution, delivery or performance of the Agreement, nor
performance by the Partnership and the General Partner of their obligations
under the Agreement constitutes or will constitute a breach of, or a default
under, any agreement, indenture, lease or other instrument to which any of the
Companies is a party or by which any of them or any of their respective
properties is bound that has been filed as an exhibit to the Registration
Statement or to any Incorporated Document,
-33-
or will result in the creation or imposition of any lien, charge or
encumbrance under the terms thereof upon any property or assets of any of the
Companies, nor will any such action result in any violation of (a) the
partnership agreement, certificate or articles of incorporation, bylaws,
member agreement or other organizational documents of any of the Companies,
as the case may be, (b) any statutory law, regulation or ruling (assuming
compliance with all applicable state securities and Blue Sky laws), or (c)
any judgment, injunction, order or decree of any court, governmental agency
or arbitrator that is known to us to be applicable to any of the Companies or
any of their respective properties;
20. To our knowledge, except for the General Partner who has
waived its rights, no holder of any interest in or security of the Partnership
or any other person has any right to require registration of Units or any other
partnership interest or other security of the Partnership because of the filing
of the Registration Statement or consummation of the transactions contemplated
by the Agreement;
21. No consent, approval, authorization or waiver of, or notice
to or filing with, or other action by, any governmental authority is required by
any statutory law, regulation or ruling as a condition to the execution and
delivery by the Partnership or the General Partner of the Agreement, or the
performance by the Partnership or the General Partner of their obligations under
the Agreement, except such as have been obtained under the Act and the Exchange
Act (and except such as may be required under state securities or Blue Sky laws
governing the purchase and distribution of the Offered Units by the
Underwriters, as to which we express no opinion);
22. The Registration Statement, the Preliminary Prospectus and
the Final Prospectus and any supplements or amendments thereto (except for the
financial statements and the notes thereto and the schedules and other financial
data included therein, as to which we express no opinion) comply as to form in
all material respects with the requirements of the Act; and each of the
Incorporated Documents (except for the financial statements and the notes
thereto and the schedules and other financial data included therein, as to which
we express no opinion) complies as to form in all material respects with the
Exchange Act and the rules and regulations of the Commission thereunder;
23. To our knowledge (a) other than as disclosed in the Final
Prospectus (or any supplement thereto), there are no legal or governmental
proceedings pending to which any of the Companies is a party or threatened
against any of the Companies which are required to be disclosed in the
Registration Statement or the Final Prospectus (or any amendment or supplement
thereto) and (b) there are no contracts or leases that are required to be
described in the Registration Statement or the Final Prospectus (or any
amendment or supplement thereto) or to be filed as an exhibit to the
Registration Statement or any Incorporated Document that are not described or
filed as required, as the case may be;
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24. The statements in the Registration Statement and the Final
Prospectus, under the captions "Cash Distributions", "Conflicts of Interest and
Fiduciary Responsibilities -- Fiduciary Responsibility of the General Partner"
and "Investment in Kaneb Partners by Employee Benefit Plans", insofar as they
are descriptions of contracts, agreements or other legal documents, or refer to
statements of law or legal conclusions, are accurate in all material respects
and present fairly the information required to be shown;
25. Each of the Partnership, the General Partner and the
Operating Entities is not and, after giving effect to the offering and sale of
the Offered Units and the application of the proceeds thereof as described in
the Final Prospectus, will not be an "investment company" or a company
"controlled" by an "investment company" as such terms are defined in the
Investment Company Act or a "public utility company" or a "holding company,"or a
"subsidiary company" of a "holding company,"or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company,"as such terms are
defined in the Public Utility Holding Company Act of 1935, as amended; none of
the Partnership, the General Partner or any of the Operating Entities is subject
to regulation under the Public Utility Holding Company Act of 1935, as amended;
and
26. Upon delivery of the Offered Units to the Underwriters
pursuant to the Agreement and payment therefor as contemplated therein, the
Underwriters will acquire the Offered Units free and clear of any liens,
encumbrances, security interests, charges or claims of record (a) in respect of
which a financing statement under the Uniform Commercial Code of the State of
Delaware naming the General Partner or the Partnership as debtor is on file in
the office of the Secretary of State of the State of Delaware or (b) otherwise
known (based solely upon our participation as special counsel in matters
relating to the offering of the Offered Units and without having conducted an
independent investigation) to us, except as created by the Agreement or by the
Underwriters or any person who acquires an interest in the Offered Units through
the Underwriters or as provided by the Delaware Act.
Although we have not undertaken, except as otherwise indicated in
our opinion, to determine independently, and are not passing upon and do not
assume any responsibility for, the accuracy, completeness or fairness of any of
the statements in the Registration Statement, we have participated in the
preparation of the Registration Statement and the Final Prospectus, including
review and discussion of the contents thereof (including review and discussion
of the contents of all Incorporated Documents), and nothing has come to our
attention that has caused us to believe that the Registration Statement
(including the Incorporated Documents) at the time the Registration Statement
became effective, or the Final Prospectus, as of its date and as of the date
hereof, contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading or that any amendment or supplement to the Final
Prospectus, as of its respective date, and as of the date hereof, as the case
may be, contained any untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading (it being
understood that we express no opinion with
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respect to the financial statements and the notes thereto and the schedules
and other financial data included in the Registration Statement or the Final
Prospectus or any Incorporated Document).
To our knowledge, there are no material legal or governmental
proceedings pending or threatened against any of the Operating Entities, by or
before the Federal Energy Regulatory Commission ("FERC") or on appeal from the
FERC, except as set forth in or contemplated by the Final Prospectus.
The opinions expressed herein are limited exclusively to the laws
of the State of California, the laws of the State of Texas, the laws of the
State of New York, the General Corporation Law of the State of Delaware, the
Revised Uniform Limited Partnership Act of the State of Delaware and the federal
laws of the United States of America.
As used herein, the phrase "to our knowledge" or words of similar
import means conscious awareness of facts or other information by the lawyers in
our firm who, based on our records as of 3:00 p.m. on July 22, 1999, have
devoted substantive attention to legal matters on behalf of the Companies since
January 1, 1999.
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The opinions expressed herein are furnished to you for your sole
benefit in connection with the transactions contemplated by the Agreement. The
opinions expressed herein may not be relied upon by you for any other purpose
and may not be relied upon for any purpose by any other person without our prior
written consent, except that the transfer agent for the Units may rely upon this
opinion in connection with those transactions.
Very truly yours,
Fulbright & Xxxxxxxx L.L.P.
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EXHIBIT B
FORM OF OPINION OF XXXXXXX X. XXXXXX
(1) The Partnership has been duly qualified as a foreign
limited partnership for the transaction of business under the laws of the
State of Texas, and to the knowledge of such counsel, such jurisdiction
is the only jurisdiction in which the Partnership owns or leases
property, or conducts any business, so as to require qualification or
registration to conduct business as a foreign limited partnership, and in
which the failure so to qualify or register would be likely in the
judgment of such counsel to subject it to any liability or disability
which is material to the financial condition, business, properties, net
worth or results of operations of the Partnership and the Operating
Entities considered as a whole or would be likely in the judgment of such
counsel to subject the limited partners of the Partnership to any
material liability or disability;
(2) The Operating Partnership has been duly qualified as a
foreign limited partnership for the transaction of business under the
laws of the States of Colorado, Iowa, Kansas, Nebraska, Xxxxx Xxxxxx,
Xxxxxx, Xxxxx Xxxxxx, Xxxxx, Washington and Wyoming, and to the knowledge
of such counsel, such jurisdictions are the only jurisdictions in which
the Operating Partnership owns or leases property, or conducts any
business, so as to require qualification or registration to conduct
business as a foreign limited partnership, and in which the failure so to
qualify or register would be likely in the judgment of such counsel to
subject it to any liability or disability which is material to the
financial condition, business, properties, net worth or results of
operations of the Partnership and the Operating Entities considered as a
whole or would be likely in the judgment of such counsel to subject the
limited partners of the Partnership to any material liability or
disability;
(3) STOP has been duly qualified as a foreign limited
partnership for the transaction of business under the laws of the States
of Alabama, Arizona, California, Florida, Georgia, Illinois, Indiana,
Kansas, Louisiana, Maryland, Minnesota, New Mexico, Oklahoma, Texas,
Virginia and Wisconsin and the District of Columbia, and to the knowledge
of such counsel, such jurisdictions are the only jurisdictions in which
STOP owns or leases property, or conducts any business, so as to require
qualification or registration to conduct business as a foreign limited
partnership, and in which the failure so to qualify or register would be
likely in the judgment of such counsel to subject it to any liability or
disability which is material to the financial condition, business,
properties, net worth or results of operations of the Partnership and the
Operating Entities considered as a whole or would be likely in the
judgment of such counsel to subject the limited partners of the
Partnership to any material liability or disability;
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(4) STP has been duly qualified as a foreign limited
partnership for the transaction of business under the laws of the State
of Texas, and to the knowledge of such counsel, such jurisdictions are
the only jurisdictions in which STP owns or leases property, or conducts
any business, so as to require qualification or registration to conduct
business as a foreign limited partnership, and in which the failure so to
qualify or register would be likely in the judgment of such counsel to
subject it to any liability or disability which is material to the
financial condition, business, properties, net worth or results of
operations of the Partnership and the Operating Entities considered as a
whole or would be likely in the judgment of such counsel to subject the
limited partners of the Partnership to any material liability or
disability;
(5) The General Partner has been duly qualified or registered
as a foreign corporation and is in good standing under the laws of the
States of Colorado, Iowa, Kansas, Nebraska, Xxxxx Xxxxxx, Xxxxxx, Xxxxx
Xxxxxx, Xxxxx, Washington and Wyoming, and to the knowledge of such
counsel, such jurisdictions are the only jurisdictions in which the
General Partner owns or leases property, or conducts any business, so as
to require qualification or registration to conduct business as a foreign
corporation, and in which the failure so to qualify or register would be
likely in the judgment of such counsel to subject the General Partner to
any liability or disability which is material to the financial condition,
business, properties, net worth or results of operations of the General
Partner or the Partnership and the Operating Entities considered as a
whole or would be likely in the judgment of such counsel to subject the
limited partners of the Partnership to any material liability or
disability;
(6) STS has been duly qualified or registered as a foreign
corporation and is in good standing under the laws of the States of
Alabama, Arizona, California, Florida, Georgia, Illinois, Indiana,
Kansas, Louisiana, Maryland, Minnesota, New Mexico, Oklahoma, Texas,
Virginia, Washington and Wisconsin and the District of Columbia, and to
the knowledge of such counsel, such jurisdictions are the only
jurisdictions in which STS owns or leases property, or conducts any
business, so as to require qualification or registration to conduct
business as a foreign corporation, and in which the failure so to qualify
or register would be likely in the judgment of such counsel to subject
STS to any liability or disability which is material to the financial
condition, business, properties, net worth or results of operations of
STS or the Partnership and the Operating Entities considered as a whole
or would be likely in the judgment of such counsel to subject the limited
partners of the Partnership to any material liability or disability;
(7) STI has been duly qualified or registered as a foreign
corporation and is in good standing under the laws of the State of Texas,
and to the knowledge of such counsel, such jurisdiction is the only
jurisdiction in which STI owns or leases property, or conducts any
business, so as to require qualification or registration to conduct
business as a foreign corporation, and in which the failure so to qualify
or register would be likely
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in the judgment of such counsel to subject STI to any liability or
disability which is material to the financial condition, business,
properties, net worth or results of operations of STI or the
Partnership and the Operating Entities considered as a whole or would
be likely in the judgment of such counsel to subject the limited partners
of the Partnership to any material liability or disability;
(8) STH is not required to qualify or register as a foreign
corporation under the laws of any jurisdiction;
(9) STL has been duly qualified or registered as a foreign
limited liability company and is in good standing under the laws of the
State of New Jersey, and to the knowledge of such counsel, such
jurisdiction is the only jurisdiction in which STL owns or leases
property, or conducts any business, so as to require qualification or
registration to conduct business as a foreign corporation, and in which
the failure so to qualify or register would be likely in the judgment of
such counsel to subject STL to any liability or disability which is
material to the financial condition, business, properties, net worth or
results of operations of STL or the Partnership and the Operating
Entities considered as a whole or would be likely in the judgment of such
counsel to subject the limited partners of the Partnership to any
material liability or disability;
(10) STK is a corporation duly organized and validly existing in
good standing under the laws of the United Kingdom, with corporate power
and authority to own or lease its properties and to conduct its business
as described in the Final Prospectus; STK is not required to qualify or
register as a foreign corporation under the laws of any jurisdiction;
(11) STE is a corporation duly organized and validly existing in
good standing under the laws of the United Kingdom, with corporate power
and authority to own or lease its properties and to conduct its business
as described in the Final Prospectus; STE is not required to qualify or
register as a foreign corporation under the laws of any jurisdiction; and
(12) None of the Companies is in violation of its respective
partnership agreement, certificate or articles of incorporation or
bylaws, member agreement or other organizational documents, or to the
knowledge of such counsel, is in default in the performance of any
material obligation, agreement or condition contained in any bond,
debenture, note or other evidence of indebtedness, except as may be
disclosed in the Prospectus, except for such defaults which, individually
or in the aggregate, would not have a material adverse effect on the
financial condition, business, properties, net worth or results of
operations of the General Partner or the Partnership and the Operating
Entities considered as a whole.
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EXHIBIT C
FORM OF LOCAL COUNSEL OPINION
(1) The Operating Partnership has all requisite power and
authority as a limited partnership under the laws of such state to own or
lease its properties and to conduct its business in such state as
described in the Final Prospectus; and the Unitholders are not liable
under the laws of such state for the liabilities of the Partnership or
the Operating Entities, except in each case to the same extent as under
the laws of the State of Delaware or as otherwise described in the Final
Prospectus;
(2) Neither the offer, sale or delivery of the Offered Units,
the execution, delivery or performance of the Agreement, compliance by
the Partnership and the General Partner with the provisions thereof nor
consummation by the Partnership and the General Partner of the
transactions contemplated thereby will result in any violation of any
existing law, regulation, ruling (assuming compliance with all applicable
state securities and Blue Sky laws), judgment, injunction, order or
decree known to such counsel after reasonable inquiry, applicable to any
of the Companies or any of their respective properties; and
(3) No consent, approval, authorization or other order of, or
registration or filing with, any court, regulatory body, administrative
agency or other governmental body, agency, or official is required on the
part of the Companies (except as have been obtained under the Act and the
Exchange Act or such as may be required under state securities or Blue
Sky laws governing the purchase and distribution of the Units, as to
which counsel need express no opinion) for the valid sale of the Offered
Units to the Underwriters as contemplated by the Agreement.
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SCHEDULE I
KANEB PIPE LINE PARTNERS, L.P.
Number of
Underwriter Firm Units
-------------------------------- ----------
Xxxxxxx Xxxxx Xxxxxx Inc. 751,500
X. X. Xxxxxxx & Sons, Inc. 749,250
PaineWebber Incorporated 749,250
---------
Total 2,250,000
---------
---------
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