EXHIBIT 1.1
$250,000,000
KANEB PIPE LINE OPERATING PARTNERSHIP, L.P.
7.750% SENIOR UNSECURED NOTES DUE 2012
UNDERWRITING AGREEMENT
New York, New York
February 15, 2002
Banc of America Securities LLC
Bank of America Corporate Center
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▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
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As Representatives of the Underwriters
Ladies and Gentlemen:
Kaneb Pipe Line Operating Partnership, L.P., a Delaware limited
partnership (the "Partnership"), proposes to sell $250,000,000 aggregate
principal amount of the Partnership's 7.750% Senior Unsecured Notes due 2012
(the "Notes") to the Underwriters named in Schedule I hereto (the
"Underwriters"). The Notes are to be issued pursuant to an Indenture dated on or
about February 21, 2002, as amended by First Supplemental Indenture (as so
amended and supplemented) (the "Indenture") between the Partnership and JPMorgan
Chase Bank, as Trustee (the "Trustee"), which establishes the form and terms of
the Notes pursuant to Section 2.01 of the Indenture. To the extent there are no
additional underwriters listed on Schedule I other than you, the term
Representatives as used herein shall mean you, as Underwriters, and the terms
Representatives and Underwriters shall mean either the singular or plural as the
context requires.
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 Underwriters, if any, on whose behalf you are
acting, in connection with the several purchases of the Notes by the
Underwriters. The Partnership, the General Partner, Kaneb Pipe Line Partners,
L.P., a Delaware limited partnership (the "Parent 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"), (STOP, STS, STI, STH, STP, STL, STC, STK, STE and
Shore are collectively referred to herein as the "Operating
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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. 333-71638) under
the Act (the "registration statement"), including a prospectus subject to
completion relating to the Notes. 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 with the
Commission and must be declared effective before the offering of the Notes 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 Notes may commence, the term "Registration Statement" as used in
this Agreement includes such registration statement. "Basic Prospectus" means
the prospectus in the form included in the Registration Statement at the time
that the Registration Statement was declared effective or in the form in which
it has been most recently filed with the Commission on or prior to the date of
this Agreement. "Preliminary Prospectus" means any preliminary prospectus
supplement to the Basic Prospectus, together with the Basic Prospectus, that
describes the Notes and the offering thereof, is filed pursuant to Rule 424(b)
under the Act and is used prior to the filing of the Final Prospectus. "Final
Prospectus" means the prospectus supplement relating to the Notes and the
offering thereof that is first filed pursuant to Rule 424(b) under the Act after
the date and time this Agreement is executed and delivered by the parties
hereto, together with the Basic Prospectus.
All references in this Agreement to financial statements and schedules and
other information that is "contained", "included" or "stated" in the
registration statement, the Registration Statement, the Basic Prospectus, the
Preliminary Prospectus or the Final Prospectus (or other references of like
import) shall be deemed to mean and include all such financial statements and
schedules and other information that is incorporated by reference in the
registration statement, Registration Statement, the Basic Prospectus, the
Preliminary Prospectus or the Final Prospectus, as the case may be. Any
reference in this Agreement to the registration statement, the Registration
Statement, the Basic Prospectus, the Preliminary Prospectus or the Final
Prospectus shall be deemed to refer to and include the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 under the Act, as of the date
of the registration statement, the Registration Statement, the Basic Prospectus,
the Preliminary Prospectus or the Final Prospectus, as the case may be, and any
reference to any amendment or supplement to the registration statement, the
Registration Statement, the Basic Prospectus, the Preliminary Prospectus or the
Final Prospectus shall be deemed to refer to and include any documents filed
after such date under the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Commission thereunder (the "Exchange Act") which,
upon filing, are
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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 Basic Prospectus, the Preliminary Prospectus, the Final Prospectus, or any
amendment or supplement thereto.
2. REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIP AND THE GENERAL
PARTNER. Each of the Partnership and the General Partner represents and warrants
to each Underwriter that:
(a) The Basic Prospectus included as part of the registration
statement as originally filed or as part of any amendment or supplement
thereto, and the Preliminary Prospectus 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 the Trust Indenture
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. The Indenture did or will comply in
all material respects with the applicable requirements of the Trust
Indenture Act and the rules thereunder.
(b) The Partnership and the offering of the Notes 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 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; provided
however that neither the Partnership nor the General Partner makes any
representations or warranties as to (i) that part of the Registration
Statement which shall constitute the Statement of Eligibility and
Qualification (Form T-1) under the Trust Indenture Act of the Trustee or
(ii) the information contained in or omitted from the Registration
Statement, the Basic Prospectus, the Preliminary Prospectus or the Final
Prospectus in reliance upon and in conforming with information furnished
in writing to the Partnership by or on behalf of any Underwriter through
the Representatives specifically for inclusion in the Registration
Statement or the Prospectus (or any supplement thereto). The Partnership
has not received any order of the Commission preventing or suspending the
use of the Basic Prospectus, the Preliminary Prospectus or the Final
Prospectus.
(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), conform or conformed in all material
respects with the requirements of the Exchange Act, any further
Incorporated Documents so filed will, when they are filed, conform in all
material respects with the requirements of the Exchange Act; 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
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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 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 States of Colorado, Iowa, Kansas, Nebraska, North Dakota,
Oregon, South Dakota, Texas, Washington and Wyoming, 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 Parent Partnership 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.
(e) The Parent 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 in each case as described in the Final Prospectus and
the Incorporated Documents, 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 Parent Partnership or the Partnership and the Operating Entities
considered as a whole or would subject the limited partners of the Parent
Partnership or the Partnership to any material liability or disability.
(f) Each of the Operating Entities that is a limited partnership has
been duly formed and is validly existing as a limited partnership in good
standing under the Delaware Act, with partnership power and authority to
own or lease its properties and conduct its business as described in the
Final Prospectus and is duly qualified or registered as a foreign limited
partnership for the transaction of business the laws of each jurisdiction
in which it owns or leases properties or conducts any business so as to
require such qualification or registration, other than any jurisdiction 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 Parent Partnership or the Partnership and the Operating
Entities considered as a whole or would subject the limited partners of
the Parent Partnership or the Partnership to any material liability or
disability.
(g) The General Partner is the sole general partner of the Parent
Partnership with a general partner interest in the Parent Partnership of
1/99th; such general partner interest is duly authorized by the Amended
and Restated Agreement of Limited Partnership dated as of July 23, 1998
(the "Parent 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.
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(h) The General Partner is the sole general partner of the
Partnership with a general partner interest in the Partnership of 1%; such
general partner interest is duly authorized by the Amended and Restated
Agreement of Limited Partnership dated as of September 27, 1989 (the
"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
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 Parent 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 Parent Partnership is the sole limited partner of the
Partnership, with a limited partner interest in the Partnership of 99%;
such limited partner interest is authorized by the Partnership Agreement,
has been validly issued and is fully paid and non-assessable; and the
Parent Partnership owns such limited partner interest in the Partnership
free and clear of any lien, adverse claim, security interest, equity, or
other encumbrance.
(l) The 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; and the 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; 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 Parent
Partnership and (in the case of STS) to act as general partner of STOP and
(in the case of STI) to
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act as general partner of STP, in each case as described in the Final
Prospectus and the Incorporated Documents, 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 Parent
Partnership or the Partnership and the Operating Entities considered as a
whole or would subject the limited partners of the Parent Partnership or
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
Kaneb Services LLC ("KS"), 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 Partnership, free and clear of any
lien, adverse claim, security interest, equity, or other encumbrance,
except as described in the Preliminary Prospectus and the Final
Prospectus.
(p) All of the issued and outstanding member interests of 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.
(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, moratorium 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 Parent 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) The Indenture has been duly authorized, executed and delivered,
has been duly qualified under the Trust Indenture Act, and constitutes a
legal, valid and binding instrument enforceable against the Partnership in
accordance with its terms (subject as to
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enforcement, to applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general applicability relating to or affecting
creditors' rights generally from time to time in effect and to general
principles of equity, including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing, regardless of
whether considered in a proceeding in equity or at law); and the Notes
have been duly authorized and, when executed and authenticated in
accordance with the provisions of the Indenture and delivered to and paid
for by the Underwriters pursuant to this Agreement, will constitute legal,
valid and binding obligations of the Partnership entitled to the benefits
of the Indenture. The Indenture and the Notes conform, in all material
respects, to the descriptions thereof contained in the Final Prospectus.
(u) 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 (i) could
reasonably be expected to have a material adverse effect on the
performance of this Agreement or the Indenture or the consummation of any
of the transactions contemplated hereby or thereby or (ii) could
reasonably be expected to have a material adverse effect on the condition,
prospects, earnings, business or properties of the Companies, whether or
not arising from transactions in the ordinary course of business, that are
required to be described in the Registration Statement or the Final
Prospectus but are not therein 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.
(v) 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 Parent Partnership or the Partnership and the Operating Entities
considered as a whole or would subject the limited partners of the Parent
Partnership or 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 Parent Partnership or the Partnership and the
Operating Entities considered as a whole or would subject the limited
partners of the Parent Partnership or the Partnership to any material
liability or disability.
(w) Neither the issuance and sale of the Notes, 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 consent,
approval, authorization or other order of or registration or filing with,
any court,
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regulatory body, administrative agency or other governmental body, agency
or official (except such as may be required for the registration of the
Notes under the Act and the Trust Indenture 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, loan agreement and credit facilities 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.
(x) The accountants, KPMG LLP and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 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.
(y) 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
and the Parent Partnership, 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, the Parent Partnership and the General Partner, as the
case may be. The pro forma financial data included in the Final Prospectus
include assumptions that provide a reasonable basis for presenting the
significant effects directly attributable to the proposed acquisition of
the terminating subsidiaries of Statia Terminals Group N.V. and the other
transactions and events described therein, the related pro forma
adjustments give appropriate effect to those assumptions, and the pro
forma adjustments reflect the proper application of those adjustments to
the historical financial statement amounts in the pro forma data included
in the Final Prospectus. The pro forma financial data included in the
Final Prospectus comply as to form in all material respects with the
applicable accounting requirements of Regulation S-X under the Act and the
pro forma adjustments have been properly applied to the historical amounts
in the compilation of this data.
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(z) 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, moratorium and
other laws of general applicability relating to or affecting creditors'
rights and to general equitable principles.
(aa) 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 Parent
Partnership and the General Partner or to the Parent Partnership 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 Parent
Partnership or the Partnership and the Operating Entities taken as a whole
or which is material to the limited partners of the Parent Partnership or
the Partnership.
(bb) 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 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 Partnership's ability to use the Transmission Assets, and
all the property described in the Final Prospectus as being held under
lease by each of the Companies is held by it under valid, subsisting and
enforceable leases.
(cc) 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 Parent Partnership or the Partnership and the
Operating Entities considered as a whole or would subject the limited
partners of the Parent Partnership or 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,
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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,
investigations 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.
(dd) 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 Notes, will distribute any offering material in connection with the
offering and sale of the Notes other than the Registration Statement, the
Basic Prospectus, the Preliminary Prospectus and the Final Prospectus or
other materials, if any, permitted by the Act.
(ee) Each of the Companies has such permits, licenses, franchises
and authorizations of governmental or regulatory authorities ("permits")
as are necessary to own its 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 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 Parent Partnership or the
Partnership and the Operating Entities considered as a whole or would
subject the limited partners of the Parent Partnership or 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 Parent Partnership or the Partnership and the
Operating Entities considered as a whole or would subject the limited
partners of the Parent Partnership or 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.
10
(ff) 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.
(gg) No more than ten percent of the net proceeds from the sale of
the Notes 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.
(hh) Each of the Companies has filed all tax returns required to be
filed, the failure of which to file would subject any of them to any
liability or disability which is material to the financial condition,
business, properties, net worth or results of operations of the General
Partner or the Parent Partnership or the Partnership and the Operating
Entities considered as a whole or would subject the limited partners of
the Parent Partnership or 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 Parent
Partnership or the Partnership and the Operating Entities considered as a
whole or would subject the limited partners of the Parent Partnership or
the Partnership to any material liability or disability.
(ii) 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 or the
Parent Partnership because of the filing of the Registration Statement or
consummation of the transactions contemplated by this Agreement.
(jj) Each of the Companies owns or possesses all patents,
trademarks, trademark registrations, service marks, service mark
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 neither the Partnership nor 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.
(kk) 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.
(ll) 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
11
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.
(mm) For all taxable years beginning before December 31, 1996, the
General Partner had (excluding its interests in the Parent Partnership and
the Partnership and any notes or receivables due from the Partnership) a
net worth of at least $5 million.
(nn) For all taxable years beginning before December 31, 1996, STS
had (excluding its interests in STOP and any notes or receivables due from
STOP) a net worth of at least $5 million.
(oo) For each taxable year of the Partnership and the Parent
Partnership, less than 10% of the gross income of the Partnership and the
Parent Partnership, respectively, 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.
(pp) 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, the Parent Partnership or any Operating Entity pursuant to
any agreement or other instrument to which the Partnership, the Parent
Partnership or any Operating Entity 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 Notes as contemplated by this Agreement gives rise
to any rights for or relating to the registration of any other securities
of the Partnership, the Parent Partnership or any Operating Entity, except
such rights as have been waived or satisfied. The Notes, 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.
(qq) 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.
(rr) 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 Parent Partnership or the Partnership and the Operating Entities
considered as a whole.
(ss) 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,
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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.
(tt) No subsidiary of the Partnership is currently prohibited,
directly or indirectly, from paying any dividends to the Partnership, from
making any other distribution on such subsidiary's capital stock, from
repaying to the Partnership any loans or advances to such subsidiary from
the Partnership or from transferring any of such subsidiary's property or
assets to the Partnership or any other subsidiary of the Partnership,
except as described in or contemplated by the Final Prospectus.
(uu) The execution and delivery of and performance by KS of the
letter from KS to the Partnership dated February 12, 2002, respecting KS's
agreement, upon the request of the Partnership, to purchase up to $15
million of outstanding 11 3/4% first mortgage notes of Statia Terminals
International N.V. has been duly and validly authorized by KS and
constitutes the valid and legally binding agreement of KS enforceable
against KS in accordance with its terms except as to enforcement generally
may be subject to bankruptcy, insolvency, reorganization, moratorium and
other laws of general applicability relating to or affecting creditors'
rights and to general equitable principles.
3. AGREEMENTS TO SELL AND PURCHASE. The Partnership hereby agrees, subject
to all the terms and conditions set forth herein, to sell to each Underwriter
and, upon the basis of the representations, warranties and agreements of the
Partnership and the General Partner herein contained and subject to all the
terms and conditions set forth herein, each Underwriter, severally and not
jointly, agrees to purchase from the Partnership, at a purchase price of 99.350%
of the principal amount thereof, Notes in the amount set forth opposite the name
of such Underwriter in Schedule I hereto.
4. TERMS OF PUBLIC OFFERING. It is understood that the Underwriters
propose to offer the Notes for sale to the public as set forth in the Final
Prospectus.
5. DELIVERY OF THE NOTES AND PAYMENT THEREFOR. Delivery of and payment for
the Notes shall be made by 10:00 A.M., New York City time, on February 21, 2002
or at such time or such later date not more than three business days after the
foregoing date as the Underwriters may elect (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 ▇▇▇▇▇▇ &
▇▇▇▇▇▇ L.L.P., ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇. The place of closing for the
Notes and the Closing Date may be varied by agreement between you and the
Partnership. Delivery of the Notes shall be made through the facilities of the
Depository Trust Company ("DTC") unless the Underwriters otherwise instruct.
6. AGREEMENTS OF THE PARTNERSHIP AND THE GENERAL PARTNER. Each of the
Partnership and the General Partner agrees with the 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 Notes may
commence, the Partnership will endeavor to cause the Registration
Statement or such post-effective amendment to become effective as soon as
possible and
13
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 (f) below, the Partnership will advise you promptly
and, if requested by you, will confirm such advice in writing: (i) of any
request by the Commission for amendment of or a supplement to the
Registration Statement, the Basic Prospectus, the Preliminary Prospectus
or the Final Prospectus or for additional information; (ii) of the
issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement or of the suspension of qualification of the
Notes for offering or sale in any jurisdiction or the initiation of any
proceeding for such purpose; and (iii) of any change in any of the
Companies' financial condition, business, properties, net worth or results
of operations, or of the happening of any event, which makes any statement
of a material fact made in the Registration Statement, the Preliminary
Prospectus or the Final Prospectus (as then amended or supplemented)
untrue or which requires the making of any additions to or changes in the
Registration Statement, the Preliminary Prospectus or the Final Prospectus
(as then amended or supplemented) in order to state a material fact
required by the Act to be stated therein or necessary in order to make the
statements therein not misleading, or of the necessity to amend or
supplement the Preliminary Prospectus or the Final Prospectus (as then
amended or supplemented) to comply with the Act, the Exchange Act or any
other applicable securities laws. If at any time prior to the end of the
period of time referred to in the second sentence of paragraph (f) below,
the Commission shall issue any stop order suspending the effectiveness of
the Registration Statement, the Partnership will make every reasonable
effort to obtain the withdrawal of such order at the earliest possible
time.
(c) The Partnership will furnish to you, without charge (i) three
copies of the manually signed copy of the Registration Statement
corresponding to the ▇▇▇▇▇ 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 (f) below, the Partnership will not file any
amendment to the Registration Statement or make any amendment or
supplement to the Prospectus or any Rule 462(b) Registration Statement or
file any document which, upon filing becomes an Incorporated Document, of
which you shall not previously have been advised or to which, after you
shall have received a copy of the document proposed to be filed, you shall
reasonably object.
(e) Prior to the execution and delivery of this Agreement, the
Partnership has delivered to you, without charge, in such quantities as
you have reasonably requested, copies of each form of the Preliminary
Prospectus, if any. The Partnership consents to the use, so long as such
use by the Underwriters and by dealers is in accordance with the
provisions of the Act and with the securities or Blue Sky laws of the
jurisdictions in which the Notes are offered by the
14
Underwriters and by dealers, prior to the date of the Final Prospectus, of
each Preliminary Prospectus so furnished by the Partnership.
(f) The Partnership shall cause the Final Prospectus to be filed
pursuant to, and in compliance with, Rule 424(b) under the Act. As soon
after the execution and delivery of this Agreement as possible and
thereafter from time to time for such period as in the opinion of counsel
for the Underwriters a prospectus is required by the Act to be delivered
in connection with sales by any Underwriter or dealer, the Partnership
will expeditiously deliver to each Underwriter and each dealer, without
charge, as many copies of the Final Prospectus (and of any amendment or
supplement thereto) as you may reasonably request. The Partnership
consents to the use of the Final Prospectus (and of any amendment or
supplement thereto) in accordance with the provisions of the Act and with
the securities or Blue Sky laws of the jurisdictions in which the Notes
are offered by the Underwriters and by all dealers to whom Notes may be
sold, both in connection with the offering and sale of the Notes 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
Underwriters, agree that the Final Prospectus should be amended or
supplemented, the Partnership, if requested by you, will promptly issue a
press release announcing or disclosing the matters to be covered by the
proposed amendment or supplement.
(g) The Partnership will cooperate with you and with counsel for the
Underwriters in connection with the registration or qualification of the
Notes for offering and sale by the 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 Notes, in any
jurisdiction where it is not now so subject.
(h) The Partnership will make generally available to its security
holders a consolidated earnings statement, which need not be audited,
covering a twelve-month period commencing after the effective date of the
Registration Statement and ending not later than 15 months thereafter, as
soon as practicable after the end of such period, which shall satisfy the
provisions of Section 11(a) of the Act.
(i) During the period of five years hereafter, the Partnership will
furnish to you (i) as soon as available, a copy of each report of the
Partnership mailed to unitholders or
15
filed with the Commission, and (ii) from time to time such other
information concerning the Partnership as you may request.
(j) If this Agreement shall terminate or shall be terminated after
execution pursuant to any provisions hereof (otherwise than pursuant to
the second 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.
(k) The Partnership will not, without the prior written consent of
Banc of America Securities LLC and ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., offer, sell,
contract to sell, pledge, or otherwise dispose of, (or enter into any
transaction which is designed to, or might reasonably be expected to,
result in the disposition (whether by actual disposition or effective
economic disposition due to cash settlement or otherwise) by the
Partnership or any affiliate of the Partnership or any person in privity
with the Partnership or any affiliate of the Partnership) directly or
indirectly, including the filing (or participation in the filing) of a
registration statement with the Commission in respect of, or establish or
increase a put equivalent position or liquidate or decrease a call
equivalent position within the meaning of Section 16 of the Exchange Act,
any debt securities issued or guaranteed by the Partnership (other than
the Notes) or publicly announce an intention to effect any such
transaction, for a period of 90 days after the date of this Agreement.
(l) Except as stated in this Agreement and in the Preliminary
Prospectus and 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 Notes to facilitate
the sale or resale of the Notes.
(m) The Partnership will apply the net proceeds from the sale of the
Notes substantially in accordance with the description set forth in the
Final Prospectus.
(n) The Partnership, during the period of time referred to in the
second sentence in paragraph (f) above, will file all documents required
to be filed with the Commission pursuant to the Exchange Act within the
time periods required by the Exchange Act.
7. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The several obligations of the
Underwriters to purchase the Notes 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 Notes may
commence, the Registration Statement or such post-effective amendment
shall have become effective not later than (i) 6:00 P.M., New York City
time, on the
16
date of determination of the public offering price if such determination
occurred at or prior to 3:00 P.M. New York City time on such date or (ii)
9:30 A.M. New York City time on the Business Day following the day on
which the public offering price was determined if such determination
occurred after 3:00 P.M. New York City time, or at such later date and
time as shall be consented to in writing by you, and all filings, if any,
required by Rule 424 under the Act shall have been timely made; no stop
order suspending the effectiveness of the registration statement shall
have been issued and no proceeding for that purpose shall have been
instituted or, to the knowledge of the Partnership, the General Partner,
or any Underwriter, threatened by the Commission, and any request of the
Commission for additional information (to be included in the Registration
Statement or the Final Prospectus or otherwise) shall have been complied
with to your satisfaction.
(b) Subsequent to the effective date of this Agreement, there shall
not have occurred (i) any change, or any development involving a
prospective change, in or affecting the financial condition, business,
properties, net worth, or results of operations of the Companies not
contemplated by the Final Prospectus, which in your opinion, as
Representatives of the Underwriters, would materially, adversely affect
the market for the Notes, 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
Final 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 Final
Prospectus to reflect such event or development would, in your opinion, as
Representatives of the Underwriters, adversely affect the market for the
Notes.
(c) You shall have received on the Closing Date, an opinion of
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ L.L.P., special counsel for the Partnership and the
General Partner, dated the Closing Date and addressed to you, as
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
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, special corporate counsel for the Partnership and the
General Partner, dated the Closing Date and addressed to you, as
Underwriters, substantially in the form of EXHIBIT B attached hereto.
(e) You shall have received on the Closing Date an opinion of ▇▇▇▇▇▇
& ▇▇▇▇▇▇ L.L.P., counsel for the Underwriters, dated the Closing Date and
addressed to you, as Underwriters, with respect to the matters referred to
in clauses 1, 13, 14, and 15 (but only with respect to the Registration
Statement and the Final Prospectus and any supplements or amendments
thereto) and the first paragraph following clause 23 of EXHIBIT A and such
other related matters as you may reasonably request.
17
(f) You shall have received letters addressed to you, as
Underwriters, and dated the date hereof and the Closing Date from KPMG LLP
and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 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
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 7(g)
and in Section 7(h) 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) Subsequent to the date of this Agreement, there shall not have
been any decrease in the rating of any of the Partnership's debt
securities by any "nationally recognized statistical rating organization"
(as defined for purposes of Rule 436(g) under the Act) or any notice given
of any intended or potential decrease in any such rating or of a possible
change in such rating that does not indicate the direction of the possible
change.
(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,
18
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.
8. INDEMNIFICATION AND CONTRIBUTION.
(a) Each of the Partnership and the General Partner, jointly and
severally, agrees to indemnify and hold harmless each Underwriter, the
directors, officers, employees and agents of each Underwriter and each
person, if any, who controls any Underwriter within the meaning of Section
15 of the Act or Section 20 of the Exchange Act from and against any and
all losses, claims, damages, liabilities and expenses (including
reasonable costs of investigation) arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Preliminary Prospectus, the Final Prospectus or the Registration Statement
or in any amendment or supplement thereto, or arising out of or based upon
any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages, liabilities or
expenses arise out of or are based upon any untrue statement or omission
or alleged untrue statement or omission which has been made therein or
omitted therefrom in reliance upon and in conformity with the information
relating to such Underwriter furnished in writing to the Partnership by or
on behalf of any Underwriter through you expressly for use in connection
therewith; provided, however, that the indemnification contained in this
paragraph (a) with respect to the Preliminary Prospectus shall not inure
to the benefit of any Underwriter (or to the benefit of any director,
officer, employee, agent or controlling person of such Underwriter) on
account of any such loss, claim, damage, liability or expense arising from
the sale of the Notes by such Underwriter to any person if a copy of the
Final Prospectus shall not have been delivered or sent to such person
within the time required by the Act and the regulations thereunder, and
the untrue statement or alleged untrue statement or omission or alleged
omission of a material fact contained in the Preliminary Prospectus was
corrected in the Final Prospectus, provided that the Partnership has
complied with Section 6(f) of this Agreement. 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
19
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 Banc of America Securities LLC and ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ 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 you expressly for use in the Registration Statement or the Final
Prospectus or the Preliminary Prospectus or any amendment or supplement
thereto. If any action, suit or proceeding shall be brought against the
Partnership or the General Partner, any of the directors of the General
Partner, any such officer of the General Partner, or any such controlling
person based on the Registration Statement or the Final Prospectus or the
Preliminary Prospectus or any amendment or supplement thereto, and in
respect of which indemnification may be sought against any Underwriter
pursuant to this paragraph (c), such Underwriter shall have the rights and
duties given to the Partnership and the General Partner by paragraph (b)
above (except that if the Partnership or the General Partner shall have
assumed the defense thereof such Underwriter shall not be required to do
so, but may employ separate counsel therein and participate in the defense
thereof, but the fees and expenses of such counsel shall be at such
Underwriter's expense), and the Partnership and the General Partner, the
directors of the General Partner, any such officer of the General Partner,
and any such controlling person shall have the rights and duties given to
the Underwriters by paragraph (b) above. The foregoing indemnity agreement
shall be in addition to any liability which the Underwriters may otherwise
have.
(d) If the indemnification provided for in this Section 8 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
20
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 Notes, or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of the Partnership and the
General Partner on the one hand and the Underwriters on the other in
connection with the statements or omissions that resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the
Partnership and the General Partner on the one hand and the Underwriters
on the other shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deducting expenses) received by the
Partnership bear to the total underwriting discounts and commissions
received by the Underwriters, in each case as set forth in the table on
the cover page of the Final Prospectus. The relative fault of the
Partnership and the General Partner on the one hand and the Underwriters
on the other hand shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to
information supplied by the Partnership and the General Partner on the one
hand or by the Underwriters on the other hand and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission, including, with respect to any
Underwriter, the extent to which any such loss, claim, damage or liability
arises from the sale of Notes by such Underwriter to any person if a copy
of the Final Prospectus shall not have been delivered or sent to such
person within the time required by the Act and the regulations thereunder,
and the untrue statement or alleged untrue statement or omission or
alleged omission of a material fact contained in the Preliminary
Prospectus was corrected in the Final Prospectus, provided that the
Partnership has complied with Section 6(f) of this Agreement.
(e) The Partnership, the General Partner and the Underwriters agree
that it would not be just and equitable if contribution pursuant to this
Section 8 were determined by a pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other
method of allocation that does not take account of the equitable
considerations referred to in paragraph (d) above. The amount paid or
payable by an indemnified party as a result of the losses, claims,
damages, liabilities and expenses referred to in paragraph (d) above shall
be deemed to include, subject to the limitations set forth above, any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating any claim or defending any such action, suit
or proceeding. Notwithstanding the provisions of this Section 8, no
Underwriter shall be required to contribute any amount in excess of the
amount by which the total price of the Notes 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 8 are several in proportion to the
respective amount of Notes set forth opposite their names in Schedule I
hereto (or such numbers of Notes increased as set forth in Section 10
hereof) and not joint.
21
(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 8 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 8 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 Notes 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 8. The term "successor" as used in
this Agreement shall not include a purchaser from any Underwriter of any
Notes in his status as such purchaser.
9. EXPENSES. Each of the Partnership and the General Partner, jointly and
severally, agrees to pay the following costs and expenses and all other costs
and expenses incident to the performance by the Partnership and the General
Partner of any of their obligations hereunder: (i) the preparation, printing or
reproduction, and filing with the Commission of the registration statement
(including financial statements and exhibits thereto), each Preliminary
Prospectus, the Final Prospectus, and each amendment or supplement to any of
them; (ii) the printing (or reproduction) and delivery (including postage, air
freight charges and charges for counting and packaging) of such copies of the
Registration Statement, each Preliminary Prospectus, the Final Prospectus, the
Incorporated Documents, and all amendments or supplements to any of them, as may
be reasonably requested for use in connection with the offering and sale of the
Notes; (iii) the preparation, printing, authentication, issuance and delivery of
certificates for the Notes, including any stamp taxes in connection with the
original issuance and sale of the Notes; (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 Notes; (v) the listing of the Notes on the
New York Stock Exchange; (vi) the registration or qualification of the Notes for
offer and sale under the securities or Blue Sky laws of the several states as
provided in Section 6(g) hereof (including the reasonable fees, expenses and
disbursements of counsel for the Underwriters relating to the preparation,
reproduction, and delivery of the preliminary and supplemental Blue Sky
Memoranda and such registration and qualification); (vii) the filing fees in
connection with any filings required to be made with the National Association of
Securities Dealers, Inc.; (viii) the transportation and other expenses incurred
by or on behalf of the
22
Partnership's, the General Partner's or any Operating Entities' representatives
in connection with presentations to prospective purchasers of the Notes; (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; (x) the fees and expenses of the Trustee
under the Indenture and (xi) any fees payable to DTC. It is understood, however,
that, except as provided in Section 6(j), Section 8 and this Section 9 hereof,
the Underwriters will pay all of their own costs and expenses associated with
the offering of the Notes, including the fees of their counsel, transfer taxes
on resale of any of the Notes by them.
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 Notes 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 Underwriters, by notifying the Partnership. If any one or more
of the Underwriters shall fail or refuse to purchase Notes which it or they have
agreed to purchase hereunder, and the aggregate number of Notes 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 Notes, each
non-defaulting Underwriter shall be obligated, severally, in the proportion
which the number of Notes set forth opposite its name in Schedule I hereto bears
to the aggregate number of Notes 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 each of
Banc of America Securities LLC and ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., to purchase the
Notes which such defaulting Underwriter or Underwriters agreed, but failed or
refused, to purchase. If any Underwriter or Underwriters shall fail or refuse to
purchase Notes and the aggregate number of Notes with respect to which such
default occurs is more than one-tenth of the aggregate number of Notes and
arrangements satisfactory to you and the Partnership for the purchase of such
Notes 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 Notes 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, (i) trading in the Parent Partnership Units shall have been suspended by
the Commission or the New York Stock
23
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, (iii) there shall have occurred any material
disruption in securities settlement or clearance services or (iv) 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 Notes as contemplated by
the Final Prospectus (exclusive of any supplement thereto) or to enforce
contracts for the resale of the Notes by the Underwriters. Notice of such
termination may be given to the Partnership by telegram, telecopy or telephone
and shall be subsequently confirmed by letter.
12. INFORMATION FURNISHED BY THE UNDERWRITERS. The statements set forth in
the last paragraph on the cover page, the stabilization legend on the inside
front cover, and the first, third, seventh, ninth, tenth and eleventh paragraphs
under the caption "Underwriting" in the Preliminary Prospectus and in the Final
Prospectus, constitute the only information furnished by or on behalf of the
Underwriters through you as such information is referred to in Sections 7(b) and
8 hereof.
13. MISCELLANEOUS. Except as otherwise provided in Sections 6, 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 ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ c/o Kaneb Pipe Line Company, Attention: ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, Chairman of the Board; or (ii) if to you, as Representatives of the
several Underwriters, care of Banc of America Securities LLC, Bank of America
Corporate Center, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇,
attention: General Counsel and ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention General Counsel. This Agreement has been and
is made solely for the benefit of the Underwriters, the Partnership, the Parent
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 8 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
Notes in his status as such purchaser. As the National Association of Securities
Dealers, Inc. ("NASD") views the Notes as interests in a direct participation
program, each Underwriter agrees that it will offer the Notes 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.
24
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 8 hereof, and will survive delivery
of and payment for the Notes. The provisions of Sections 6(j) and 8 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.
16. HEADINGS. The section headings used herein are for convenience only
and shall not affect the construction hereof.
25
Please confirm that the foregoing correctly sets forth the agreement
between the Partnership, the General Partner and the Underwriters.
Very truly yours,
KANEB PIPE LINE OPERATING PARTNERSHIP, L.P.
BY: KANEB PIPE LINE COMPANY LLC,
ITS GENERAL PARTNER
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman of the Board
KANEB PIPE LINE COMPANY LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman of the Board
26
Confirmed as of the date first
above mentioned on behalf of
themselves and the other several
Underwriters named in Schedule I hereto.
BANC OF AMERICA SECURITIES LLC
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ INC.
AS REPRESENTATIVES OF THE UNDERWRITERS
By: BANC OF AMERICA SECURITIES LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------
Title: Principal
------------------------------
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------
Title: Vice President
------------------------------
27
EXHIBIT A
FORM OF OPINION OF ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ L.L.P.
We have acted as special counsel to the Partnership and the General
Partner in connection with the sale to you of the Notes pursuant to an
Underwriting Agreement dated February 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 6(c) of the Agreement.
We have participated in the preparation of, and have examined, the
Registration Statement on Form S-3 (Registration No. 333-71638) filed by the
Partnership under the Securities Act of 1933, as amended (the "Act"), which
became effective on October 22, 2001 (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, or limited liability company records of the General Partner,
certificates and other communications of public officials, certificates of
officers of the General Partner, 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, and on the factual
representations of the General Partner and the Partnership 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 subject to the limitations, qualifications,
assumptions and exceptions stated herein, we are of the opinion that:
1. Each of the Partnership, the Parent 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 General Partner 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, to
conduct its businesses and to act as the general partner of the Partnership and
the Parent 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 KS, free and clear, to our knowledge,
of any security interest, lien, encumbrance or adverse claim;
3. 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 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 or herein;
4. The General Partner is the sole general partner of the Parent
Partnership and the Partnership with a general partner interest in the Parent
Partnership of 1/99th and a general partner interest in the Partnership of 1%;
such general partner interests are duly authorized by the Parent Partnership
Agreement and the 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, except as described in the Final Prospectus or
herein;
5. The Parent Partnership is the sole limited partner of the Partnership,
with a limited partner interest of 99%; such limited partner interest is duly
authorized by the Parent Partnership Agreement and is validly issued, fully paid
and non-assessable; the Partnership to our knowledge beneficially owns such
limited partner interest in the Parent Partnership free and clear, to our
knowledge, of any security interest, lien, encumbrance or adverse claim;
6. 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;
7. The 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;
the 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, except as described in the Final Prospectus or
herein;
8. 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 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;
9. ▇▇▇ 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
A-2
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;
10. 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; 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;
11. 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 Partnership, free and clear,
to our knowledge, of any security interests, lien, encumbrance or adverse claim.
12. KS is the sole member of the General Partner and 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;
13. The Indenture has been duly authorized, executed and delivered, has
been duly qualified under the Trust Indenture Act, and, under the laws of the
State of New York, constitutes a legal, valid and binding obligation of the
Partnership enforceable against the Partnership in accordance with its terms.
The Notes are in the form contemplated by the Indenture, have been duly
authorized and, when executed and authenticated in accordance with the
provisions of the Indenture and delivered to and paid for by the Underwriters
pursuant to this Agreement, will, under the laws of the State of New York,
constitute legal, valid and binding obligations of the Partnership, enforceable
against the Partnership in accordance with their terms;
14. The Notes and the Indentures conform as to legal matters in all
material respect to the descriptions thereof described in the Final Prospectus
under the captions "Description of the Notes" and "Description of the Debt
Securities";
15. 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);
16. The Agreement has been duly authorized, executed and delivered by each
of the Partnership and the General Partner;
17. 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,
A-3
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.
18. Neither the offer, sale or delivery of the Notes by the Partnership,
the execution or delivery of the Agreement, the Notes and the Indenture, nor
performance by the Partnership and the General Partner of their obligations
under the Agreement, the Notes and the Indenture 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 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 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;
19. 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 Partnership Units or other
security of the Partnership because of the filing of the Registration Statement
or consummation of the transactions contemplated by the Agreement;
20. 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 Notes by the Underwriters, as to
which we express no opinion);
21. 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;
22. 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
A-4
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; and
23. Each of the Partnership, the General Partner and the Operating Entities is
not and, after giving effect to the offering and sale of the Notes 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.
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.
Very truly yours,
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ L.L.P.
A-5
EXHIBIT B
FORM OF OPINION OF ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
(1) The Parent 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 Parent 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 Parent
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 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, North Dakota, Oregon, South Dakota, Texas,
Washington and Wyoming, and to the knowledge of such counsel, such jurisdictions
are the only jurisdictions 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 Parent
Partnership, 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 Parent Partnership or 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 Parent Partnership, 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 Parent
Partnership or 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 Parent Partnership, 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 Parent
Partnership or 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, North Dakota, Oregon, South Dakota, Texas,
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 Parent Partnership, 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 Parent
Partnership or 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 Parent
Partnership, 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 Parent Partnership or 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 Parent Partnership, 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 Parent Partnership or 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
B-2
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 or the Parent
Partnership, 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 Parent Partnership or 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 Parent Partnership,
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
Parent Partnership or 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 Parent Partnership,
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
Parent Partnership or 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 Parent Partnership, the Partnership and
the Operating Entities considered as a whole.
B-3
SCHEDULE I
KANEB PIPE LINE PARTNERS, L.P.
UNDERWRITER
-----------
Banc of America Securities LLC...... 75,000,000
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc............ 75,000,000
Sun Trust Capital Markets, Inc...... 75,000,000
Banc One Capital Markets, Inc....... 12,500,000
Fleet Securities, Inc............... 12,500,000
---------------
Total............................ 250,000,000
===============
