EXHIBIT 1.1
1,250,000 UNITS
KANEB PIPE LINE PARTNERS, L.P.
REPRESENTING LIMITED PARTNER INTERESTS
UNDERWRITING AGREEMENT
January 15, 2002
XXXXXXX XXXXX XXXXXX INC.
UBS WARBURG LLC
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 1,250,000 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 150,000 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 LLC, a Delaware
limited liability company and the general partner of the Partnership (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 Holding, Inc., a
Delaware corporation ("STH"), StanTrans Partners, L.P., a Delaware limited
partnership ("STP"), ST/Center Terminal LLC, a Delaware limited liability
company ("STC"), ST Linden Terminal LLC, a Delaware limited liability company
("STL"), ST Services Limited, a United Kingdom corporation ("STK"), ST Eastham
Limited, a United Kingdom corporation ("STE") and Shore Terminals LLC, a
Delaware limited liability company ("Shore"), (the Operating Partnership, STOP,
STS, STI, STH, STP, STL, STC, STK, STE and Shore 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. Such registration statement has been
declared effective by the Commission. 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. "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, 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, or the Final Prospectus, as the case may be.
Any reference in this Agreement to the registration statement, the Registration
Statement, the Basic 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, 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, or the
Final Prospectus shall be deemed to refer to 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 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
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Underwriter, severally and not jointly, agrees to purchase from the Partnership,
at a purchase price of $41.65 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 150,000 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
March 31, 2002 (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 March 31, 2002.
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.
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 January 18, 2002 (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 Xxxxxx & Xxxxxx L.L.P., 0000 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.
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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 Xxxxxx & Xxxxxx L.L.P., 0000 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.
(b) Prior to the end of the period of time referred to in the
second sentence of paragraph (e) 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, 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 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 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 Final Prospectus (as then amended or supplemented) to comply with the Act,
the Exchange Act or any other applicable securities laws. If at any time prior
to the end of the period of time referred to in the second sentence of paragraph
(e) below, the Commission shall issue any stop order
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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 copies of the manually signed copy of the Registration Statement
corresponding to the XXXXX version as 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) such number of copies of the exhibits to the Incorporated Documents as you
may reasonably request.
(d) Prior to the end of the period of time referred to in the
second sentence of paragraph (e) 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) 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.
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(f) 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.
(g) 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 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.
(h) 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.
(i) If this Agreement shall terminate or shall be terminated
after execution pursuant to any provisions hereof (otherwise than pursuant to
the second sentence 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.
(j) Except as provided in this Agreement, neither the
Partnership nor the General Partner will sell, contract to sell or otherwise
dispose of or hedge 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 (j) during the Lock-Up
Period.
(k) 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
LLC ("KSL") (on behalf of itself and its affiliates).
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(l) Except as stated in this Agreement and in the 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.
(m) 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.
(n) 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.
(o) The Partnership, during the period of time referred to in
the second sentence in paragraph (e) 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 Final 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 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 expressly for use
therein. The Commission has not issued any order preventing or suspending the
use of the Basic Prospectus or the Final 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) under the Act. 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
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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, 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 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.
(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
8
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 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 KSL, 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 Final Prospectus.
(p) All of the issued and outstanding member interests of each
of STL and STC have been duly authorized and validly issued and are fully paid
and non-assessable and are free of any preemptive or similar rights; STOP owns a
50% managing member interest in each of STL and STC, free and clear of any lien,
adverse claim, security interest, equity, or other encumbrance.
10
(q) All of the issued and outstanding member interests of
Shore have been duly authorized and validly issued and are fully paid and
non-assessable and are free of any preemptive or similar rights and free and
clear of any lien, adverse claim, security interest, equity or other
encumbrance.
(r) 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.
(s) All the Partnership's subsidiaries (collectively, the
"Subsidiaries") are listed in an exhibit to the Partnership's Annual Report on
Form 10-K, for the year ended December 31, 2000 which is incorporated by
reference into the Registration Statement except for STC which was not listed as
a subsidiary on the exhibit to such Annual Report. The Partnership has no
Subsidiaries other than the Operating Entities.
(t) 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.
(u) 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.
(v) 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 the Partnership or the General Partner of the
transactions contemplated hereby (i) requires any
11
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.
(w) The accountants, KPMG LLP and Xxxxxx Xxxxxxxx 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.
(x) 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.
(y) 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 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.
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(z) 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.
(aa) 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.
(bb) 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, 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,
13
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.
(cc) 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 Final Prospectus or other materials, if any, permitted by the
Act.
(dd) 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.
(ee) 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 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.
(ff) 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.
(gg) 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
14
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.
(hh) 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.
(ii) 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.
(jj) 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.
(kk) 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 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.
(ll) 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.
(mm) 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.
(nn) 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.
15
(oo) Except as described in the Final Prospectus, there are no
preemptive rights or other rights to subscribe for or to purchase, nor any
restriction upon the voting or transfer of, any interests in the Partnership or
any Subsidiary pursuant to any agreement or other instrument to which the
Partnership or any Subsidiary is a party or by which any one of them may be
bound. Neither the filing of the Registration Statement nor the offering or sale
of the Units as contemplated by this Agreement gives rise to any rights for or
relating to the registration of any Units or other securities of the Partnership
or any Subsidiary, except such rights as have been waived or satisfied. The
Units, when issued and delivered against payment therefor as provided herein,
will conform in all material respects to the description thereof contained in
the Final Prospectus.
(pp) None of the Companies has sustained since the date of the
latest audited financial statements included in the Final Prospectus any
material loss or interference with its business from fire, explosion, flood or
other calamity whether or not covered by insurance, or from any labor dispute or
court or governmental action, investigation, order or decree, otherwise than as
set forth or contemplated in the Final Prospectus.
(qq) No labor dispute by the employees of any of the Companies
exists or, to the knowledge of the Companies, is imminent, which might
reasonably be expected to 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.
(rr) The Companies maintain insurance covering their
properties, operations, personnel and businesses against such losses and risks
as are reasonably adequate to protect them and their businesses in a manner
consistent with other businesses similarly situated. None of the Companies has
received notice from any insurer or agent of such insurer that substantial
capital improvements or other expenditures will have to be made in order to
continue such insurance, and all such insurance is outstanding and duly in force
on the date hereof and will be outstanding and duly in force on the Closing
Date.
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 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.
16
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 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
17
you expressly for use in the Registration Statement or the Final 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 or the Final 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.
(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
18
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 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
19
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. 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, special corporate 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 on the Closing Date an opinion of
Xxxxxx & Xxxxxx 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 (15), (17), (18), (23) (but only with
respect to the Registration Statement and the Final Prospectus and any
supplements or amendments thereto) and the first paragraph following clause (27)
of EXHIBIT A and such other related matters as you may reasonably request.
(f) You shall have received letters addressed to you, as
Representatives of the several Underwriters, and dated the date hereof and the
Closing Date from KPMG LLP and Xxxxxx Xxxxxxxx LLP, independent certified public
accountants, substantially in the forms heretofore approved by you.
(g) (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
20
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(g) and in Section 8(j) hereof.
(h) 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.
(i) 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.
(j) 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. 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 (j) shall be dated the Option Closing Date in
question and the opinions called for by paragraphs (c), (d) and (e) 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
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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), 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, 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(f)
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(i), Section 7 and
this Section 9 hereof, the Underwriters will pay all of their own costs and
expenses associated with the offering of the 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
22
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 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 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
23
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. 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(i)
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.
24
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 LLC,
ITS GENERAL PARTNER
By: /s/ X. X. XXXXXXX
----------------------------------------
Name: X. X. Xxxxxxx
--------------------------------------
Title: Chairman and Chief Executive Officer
-------------------------------------
KANEB PIPE LINE COMPANY LLC
By: /s/ X. X. XXXXXXX
----------------------------------------
Name: X. X. Xxxxxxx
--------------------------------------
Title: Chairman and Chief Executive Officer
----------------------------------------
25
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.
UBS WARBURG LLC
AS REPRESENTATIVES OF THE SEVERAL UNDERWRITERS
By: XXXXXXX XXXXX BARNEY INC.
By: /s/ XXXXX XXXXXX
-----------------------------------------
Name: Xxxxx Xxxxxx
---------------------------------------
Title: VP
--------------------------------------
26
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
January 15, 2002 (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 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;
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 limited liability company 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, 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 member interests of the General Partner have been duly
authorized and validly issued; and all of the outstanding member interests 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 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. Each of STL and STC 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 and STC have been duly authorized and
validly issued, are fully paid and non-assessable, and a 50% managing member
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interest in each of STL and STC 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. Shore 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 Shore have been duly authorized and validly issued, are fully paid
and non-assessable and are owned of record by the Operating Partnership, free
and clear, to our knowledge, of any security interests, lien, encumbrance or
adverse claim.
13. 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;
14. 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 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;
15. 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;
16. The form of certificates for the Units conforms in all material
respects to the requirements of the Partnership Agreement;
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17. 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
and the Final Prospectus pursuant to Rule 424(b) has been made in accordance
with Rule 424(b);
18. The Agreement has been duly authorized, executed and delivered by
each of the Partnership and the General Partner;
19. 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.
20. 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, 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;
21. 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;
22. 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);
A-4
23. The Registration Statement 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;
24. 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;
25. 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;
26. 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
27. 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
A-5
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 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 January __, 2002, have
devoted substantive attention to legal matters on behalf of the Companies since
January 1, 2001.
A-6
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.
A-7
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;
(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 limited liability company 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 limited liability company, 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 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
limited liability company, 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
B-2
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) STC has been duly qualified or registered as a foreign limited
liability company and is in good standing under the laws of the State of
Illinois, and to the knowledge of such counsel, such jurisdiction is the only
jurisdiction in which STC owns or leases property, or conducts any business, so
as to require qualification or registration to conduct business as a foreign
limited liability company, and in which the failure so to qualify or register
would be likely in the judgment of such counsel to subject STC to any liability
or disability which is material to the financial condition, business,
properties, net worth or results of operations of STC 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;
(11) 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;
(12) 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;
(13) Shore has been duly qualified and registered as a foreign limited
liability company and is in good standing under the laws of the State of
Delaware, and to the knowledge of such counsel, such jurisdiction is the only
jurisdiction in which Shore owns or leases property, or conducts any business,
so as to require qualification or registration to conduct business as a foreign
limited liability company, and in which the failure so to qualify or register
would be likely, in the judgment of such counsel, to subject Shore 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; and
(14) 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.
B-3
SCHEDULE I
KANEB PIPE LINE PARTNERS, L.P.
NUMBER OF
UNDERWRITER FIRM UNITS
----------- ----------
Xxxxxxx Xxxxx Xxxxxx Inc............................. 625,000
UBS Warburg LLC...................................... 625,000
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Total........................................... 1,250,000
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