Exhibit 1.1
KANEB PIPE LINE PARTNERS, L.P.
3,000,000 UNITS
REPRESENTING LIMITED PARTNER INTERESTS
UNDERWRITING AGREEMENT
March 18, 2003
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ INC.
As Representative of the Several Underwriters listed on Schedule I
c/o ▇▇▇▇▇▇▇ ▇▇▇▇▇ BARNEY INC.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
Kaneb Pipe Line Partners, L.P., a Delaware limited partnership (the
"Partnership"), proposes to sell an aggregate of 3,000,000 units (the "Firm
Units") representing limited partner interests in the Partnership, to the
several Underwriters named in Schedule I hereto (the "Underwriters"). The
Partnership also proposes to sell to the Underwriters, upon the terms and
conditions set forth in Section 2 hereof, up to an additional 450,000 units (the
"Additional Units"). The Firm Units and the Additional Units are hereinafter
collectively referred to as the "Offered Units," and the Offered Units and each
unit representing a limited partner interest in the Partnership outstanding on
the date hereof are collectively referred to as the "Units." The term
"Representative" as used herein means ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. and the term
"Underwriters" means either the singular or the plural as the context requires.
The Partnership, the General Partner, Kaneb Pipe Line Operating
Partnership, L.P., a Delaware limited partnership (the "Operating Partnership"),
Support Terminals Operating Partnership, L.P., a Delaware limited partnership
("STOP"), Support Terminal Services, Inc., a Delaware corporation ("STS"),
StanTrans, Inc., a Delaware corporation ("STI"), StanTrans Holding, Inc., a
Delaware corporation ("STH"), StanTrans Partners, L.P., a Delaware limited
partnership ("STP"), ST/Center Chillicothe Terminal, LLC, a Delaware limited
liability company ("STC"), ST Linden Terminal, LLC, a Delaware limited liability
company ("STL"), ST Services Ltd., a United Kingdom corporation ("STK"), ST
Eastham Ltd., a United Kingdom corporation ("STE"), Shore Terminals LLC, a
Delaware limited liability company ("Shore"), Kaneb Pipe Line Holding Company
LLC, a Delaware limited liability company ("KPH"), Statia Terminals
International N.V., a Netherlands Antilles limited liability company ("Statia
International"), Statia Technology, Inc., a Delaware corporation ("Statia
Technology"), and Statia Marine, Inc., a Cayman Islands company ("Statia Marine"
and, together with Statia International and Statia Technology, collectively the
"Statia Companies"), (the Operating Partnership, STOP, STS, STI, STH, STP, STL,
STC, STK, STE, Shore, KPH and the Statia Companies are collectively referred to
herein as the "Operating Entities," and individually referred to herein as an
"Operating Entity"), are sometimes collectively referred to herein as the
"Companies."
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"), confirms as follows its agreement with you, as the Representative of
the Underwriters, and each of the other Underwriters, on whose behalf you are
acting, in connection with the purchases of the Offered Units by the
Underwriters.
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. 333-98621) under
the Act (the "registration statement"). 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 Offered
Units may commence, the term "Registration Statement" as used in this Agreement
means the registration statement as amended by said post-effective amendment. If
it is contemplated, at the time this Agreement is executed, that a registration
statement will be filed pursuant to Rule 462(b) under the Act before the
offering of the Offered Units may commence, the term "Registration Statement" as
used in this Agreement includes such registration statement. "Basic Prospectus"
means the prospectus in the form included in the Registration Statement at the
time that the Registration Statement was declared effective or in the form in
which it has been most recently filed with the Commission on or prior to the
date of this Agreement. "Final Prospectus" means the prospectus supplement
relating to the Offered Units and the offering thereof that is first filed
pursuant to Rule 424(b) under the Act after the date and time this Agreement is
executed and delivered by the parties hereto, together with the Basic
Prospectus.
All references in this Agreement to financial statements and schedules and
other information that is "contained," "included" or "stated" in the
registration statement, the Registration Statement, the Basic Prospectus, or the
Final Prospectus (or other references of like import) shall be deemed to mean
and include all such financial statements and schedules and other information
that is filed as a part of or incorporated by reference in the registration
statement, Registration Statement, the Basic Prospectus, or the Final
Prospectus, as the case may be. Any reference in this Agreement to the
registration statement, the Registration Statement, the Basic Prospectus, or the
Final Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 under the Act,
as of the date of the registration statement, the Registration Statement, the
Basic Prospectus, or the Final Prospectus, as the case may be, and any reference
to any amendment or supplement to the registration statement, the Registration
Statement, the Basic Prospectus, or the Final Prospectus shall be deemed to
refer to and include any documents filed after such date under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") which, upon filing, are
incorporated by reference therein, as required by paragraph (b) of Item 12 of
Form S-3. As used herein, the term "Incorporated Documents" means the documents
which at the time are incorporated by reference in the registration statement,
the Registration Statement, the Basic Prospectus, the Final Prospectus, or any
amendment or supplement thereto.
2. AGREEMENTS TO SELL AND PURCHASE. The Partnership hereby agrees, subject
to all the terms and conditions set forth herein, to sell to each Underwriter
and, upon the basis of the representations, warranties and agreements of the
Partnership and the General Partner herein contained and subject to all the
terms and conditions set forth herein, each Underwriter, severally and not
jointly, agrees to purchase from the Partnership, at a purchase price of $34.99
per Unit (the "Purchase Price Per Unit"), the number of Firm Units set forth
opposite the name of such Underwriter in Schedule I hereto (or such number of
Firm Units increased as set forth in Section 10 hereof).
Over-Allotment. The Partnership also agrees, subject to all the terms and
conditions set forth herein, to sell to the Underwriters, and, upon the basis of
the representations, warranties and agreements of the Partnership and the
General Partner herein contained and subject to all the terms and conditions set
forth herein, the Underwriters shall have the right to purchase from the
Partnership, at the per unit purchase price described below, pursuant to an
option (the "over-allotment option") which may be exercised at any time and from
time to time prior to 9:00 P.M., New York City time, on the 30th day after the
date of the Final Prospectus (or, if such 30th day shall be a Saturday or Sunday
or a holiday, on the next business day thereafter when the New York Stock
Exchange is open for trading), up to an aggregate of 450,000 Additional Units.
Additional Units may be purchased only for the purpose of covering
over-allotments made in connection with the offering of the Firm Units. Upon any
exercise of the over-allotment option, each Underwriter, severally and not
jointly, agrees to purchase from the Partnership the number of Additional Units
(subject to such adjustments as you may determine in order to avoid fractional
units) which bears the same proportion to the number of Additional Units to be
purchased by the Underwriters as the number of Firm Units set forth opposite the
name of such Underwriter in Schedule I hereto (or such number of Firm Units
increased as set forth in Section 10 hereof) bears to the aggregate number of
Firm Units.
3. TERMS OF PUBLIC OFFERING. It is understood that the several Underwriters
propose to offer the Offered Units for sale to the public as set forth in the
Final Prospectus.
4. DELIVERY OF THE OFFERED UNITS AND PAYMENT THEREFOR.
Delivery to the Underwriters of the Firm Units, against payment of the
purchase price therefor in immediately available funds, shall be made by causing
The Depository Trust Company ("DTC") to credit the Firm Units to the account or
accounts designated by ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. on behalf of the Underwriters
at DTC. The time and date of such delivery shall be no later than 11:00 A.M.,
New York City time, on March 21, 2003 (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 Firm
Units and the Closing Date may be varied by agreement between you and the
Partnership.
Delivery to the Underwriters of any Additional Units to be purchased by the
Underwriters, against payment of the purchase price therefor in immediately
available funds, shall be made by causing DTC to credit the Additional Units to
the account or accounts designated by ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. on behalf of the
Underwriters at DTC at such time on such date (the "Option Closing Date"), which
may be the same as the Closing Date but shall in no event be earlier than the
Closing Date nor earlier than two nor later than ten business days after the
giving of the notice hereinafter referred to, as shall be specified in a written
notice from you on behalf of the Underwriters to the Partnership of the
Underwriters' determination to purchase a number, specified in such notice, of
Additional Units. The other documents to be delivered at the Option Closing Date
by or on behalf of the parties hereto shall be delivered at such time and date
at the offices of ▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P., ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇. The place of closing for any Additional Units and the Option Closing Date
for such Additional Units may be varied by agreement between you and the
Partnership.
5. AGREEMENTS OF THE PARTNERSHIP AND THE GENERAL PARTNER. Each of the
Partnership and the General Partner agrees with the several Underwriters as
follows:
(a) If, at the time this Agreement is executed and delivered, it is
necessary for the Registration Statement or a post-effective amendment thereto
to be declared effective before the offering of the Offered Units may commence,
the Partnership will endeavor to cause the Registration Statement or such
post-effective amendment to become effective as soon as possible and will advise
you promptly and, if requested by you, will confirm such advice in writing, when
the Registration Statement or such post-effective amendment has become
effective.
(b) Prior to the end of the period of time referred to in the second
sentence of paragraph (e) below, the Partnership will advise you promptly and,
if requested by you, will confirm such advice in writing: (i) of any request by
the Commission for amendment of or a supplement to the Registration Statement,
the Basic Prospectus, or the Final Prospectus or for additional information;
(ii) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of the suspension of
qualification of the Offered Units for offering or sale in any jurisdiction or
the initiation of any proceeding for such purpose; and (iii) of any change in
any of the Companies' financial condition, business, properties, net worth or
results of operations, or of the happening of any event, which makes any
statement of a material fact made in the Registration Statement, the Basic
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 Basic 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 Basic 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
(e) 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) six 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 (e) below, the Partnership will not file any amendment to
the Registration Statement or make any amendment or supplement to the Final
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) The Partnership shall cause the Final Prospectus to be filed pursuant
to, and in compliance with, Rule 424(b) under the Act. As soon after the
execution and delivery of this Agreement as possible and thereafter from time to
time for such period as in the opinion of counsel for the Underwriters a
prospectus is required by the Act to be delivered in connection with sales by
any Underwriter or dealer, the Partnership will expeditiously deliver to each
Underwriter and each dealer, without charge, as many copies of the Final
Prospectus (and of any amendment or supplement thereto) as you may reasonably
request. The Partnership consents to the use of the Final Prospectus (and of any
amendment or supplement thereto) in accordance with the provisions of the Act
and with the securities or Blue Sky laws of the jurisdictions in which the
Offered Units are offered by the several Underwriters and by all dealers to whom
Offered Units may be sold, both in connection with the offering and sale of the
Offered Units and for such period of time thereafter as the Final Prospectus is
required by the Act to be delivered in connection with sales by any Underwriter
or dealer. If during such period of time any event shall occur that in the
judgment of the Partnership or in the opinion of counsel for the Underwriters is
required to be set forth in the Final Prospectus (as then amended or
supplemented) or should be set forth therein in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, or if it is necessary to supplement or amend the Final Prospectus
(or to file under the Exchange Act any document which, upon filing, becomes an
Incorporated Document) in order to comply with the Act or any other law, the
Partnership will forthwith prepare and, subject to the provisions of paragraph
(d) above, file with the Commission an appropriate supplement or amendment
thereto (or to such document), and will expeditiously furnish to the
Underwriters and dealers a reasonable number of copies thereof. In the event
that the Partnership and you, as Representative of the several Underwriters,
agree that the Final Prospectus should be amended or supplemented, the
Partnership, if requested by you, will promptly issue a press release announcing
or disclosing the matters to be covered by the proposed amendment or supplement.
(f) The Partnership will cooperate with you and with counsel for the
Underwriters in connection with the registration or qualification of the Offered
Units for offering and sale by the several Underwriters and by dealers under the
securities or Blue Sky laws of such jurisdictions as you may designate and will
file such consents to service of process or other documents necessary or
appropriate in order to effect such registration or qualification; provided that
in no event shall the Partnership be obligated to qualify to do business in any
jurisdiction where it is not now so qualified or to take any action which would
subject it to service of process in suits, other than those arising out of the
offering or sale of the Offered Units, in any jurisdiction where it is not now
so subject.
(g) The Partnership will make generally available to its security holders a
consolidated earnings statement, which need not be audited, covering a
twelve-month period commencing after the effective date of the Registration
Statement and ending not later than 15 months thereafter, as soon as practicable
after the end of such period, which consolidated earnings statement shall
satisfy the provisions of Section 11(a) of the Act.
(h) During the period of five years hereafter, the Partnership will furnish
to you (i) as soon as available, a copy of each report of the Partnership mailed
to unitholders or filed with the Commission, and (ii) from time to time such
other information concerning the Partnership as you may request.
(i) If this Agreement shall terminate or shall be terminated after
execution pursuant to any provisions hereof (otherwise than pursuant to the
second sentence of Section 10 hereof or by notice given by you terminating this
Agreement pursuant to Section 10 or Section 11 hereof) or if this Agreement
shall be terminated by the Underwriters because of any failure or refusal on the
part of the Partnership or the General Partner to comply with the terms or
fulfill any of the conditions of this Agreement, the Partnership and the General
Partner, jointly and severally, agree to reimburse the Underwriters for all
out-of-pocket expenses (including reasonable fees and expenses of counsel for
the Underwriters) incurred by them in connection herewith.
(j) Except as provided in this Agreement, neither the Partnership nor the
General Partner will sell, contract to sell or otherwise dispose of or hedge any
Units or any securities substantially similar to, convertible into or
exercisable or exchangeable for Units, or grant any options or warrants to
purchase any securities substantially similar to, convertible into or
exercisable or exchangeable for Units, for a period of 90 days after the date of
the Final Prospectus (the "Lock-Up Period"), without the prior written consent
of ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. Notwithstanding the foregoing, the Partnership may
issue Units to sellers of terminalling facilities or pipelines in connection
with acquisitions from such sellers of such terminalling facilities or pipelines
by the Partnership; provided that the Partnership has received assurance from
such sellers that they will not sell or otherwise dispose of such units in
contravention of this paragraph (j) during the Lock-Up Period.
(k) The Partnership has furnished to you "lock-up" letters, in form and
substance satisfactory to you, signed by each of the current officers and
directors of the General Partner set forth on Schedule II hereto and by Kaneb
Services LLC ("KSL") (on behalf of itself and its affiliates).
(l) Except as stated in this Agreement and in the Final Prospectus, the
Partnership and the General Partner have not taken, nor will they take, directly
or indirectly, any action designed to or that might reasonably be expected to
cause or result in stabilization or manipulation of the price of the Units to
facilitate the sale or resale of the Offered Units.
(m) The Partnership and the General Partner will use their best efforts to
have the Offered Units listed, subject to notice of issuance, on the New York
Stock Exchange on or before the Closing Date.
(n) The Partnership will apply the net proceeds from the sale of the
Offered Units substantially in accordance with the description set forth in the
Final Prospectus.
(o) The Partnership, during the period of time referred to in the second
sentence in paragraph (e) above, will file all documents required to be filed
with the Commission pursuant to the Exchange Act within the time periods
required by the Exchange Act.
6. REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIP AND THE GENERAL PARTNER.
Each of the Partnership and the General Partner represents and warrants to each
Underwriter that:
(a) Disclosure. The Basic Prospectus included as part of the registration
statement as originally filed or as part of any amendment or supplement thereto,
and the Final Prospectus filed pursuant to Rule 424(b) under the Act, complied
when so filed in all material respects with the provisions of the Act and did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
and the statements made in such documents within the coverage of Rule 175(b)
under the Act were made with a reasonable basis and in good faith, except that
this representation and warranty does not apply to statements in or omissions
from the Basic Prospectus or the Final Prospectus made in reliance upon and in
conformity with information relating to any Underwriter furnished to the
Partnership in writing by or on behalf of any Underwriter expressly for use
therein. The Commission has not issued any order preventing or suspending the
use of the Basic Prospectus or the Final Prospectus.
(b) Compliance with Registration Requirements. The Partnership and the
offering of the Offered Units contemplated by this Agreement meet the
requirements for using Form S-3 under the Act, and the Registration Statement
meets the requirements set forth in Rule 415(a)(1)(x) under the Act. The
Registration Statement in the form in which it became effective and also in such
form as it may be when any post-effective amendment thereto shall become
effective and the Final Prospectus and any supplement or amendment thereto when
filed with the Commission under Rule 424(b) under the Act, complied or will
comply in all material respects with the provisions of the Act and will not at
any such times contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and the statements made or to be made in such documents
within the coverage of Rule 175(b) under the Act were made or will be made with
a reasonable basis and in good faith, except that this representation and
warranty does not apply to statements in or omissions from the Registration
Statement or the Final Prospectus made in reliance upon and in conformity with
information relating to any Underwriter furnished to the Partnership in writing
by or on behalf of any Underwriter through you expressly for use therein.
(c) Incorporated Documents. The Incorporated Documents heretofore filed,
when they were filed (or, if any amendment with respect to any such document was
filed, when such amendment was filed), conformed in all material respects with
the requirements of the Exchange Act and the rules and regulations thereunder,
any further Incorporated Documents so filed will, when they are filed, conform
in all material respects with the requirements of the Exchange Act and the rules
and regulations thereunder; no such document when it was filed (or, if an
amendment with respect to any such document was filed, when such amendment was
filed), contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein not misleading; and no such further document, when it is
filed, will contain an untrue statement of a material fact or will omit to state
a material fact required to be stated therein or necessary in order to make the
statements therein not misleading.
(d) Capitalization of the Partnership and Authorization of Partnership
Interests. The capitalization of the Partnership is as set forth in the
Registration Statement and the Final Prospectus under "Capitalization." All the
outstanding Units and the limited partner interests represented thereby have
been duly authorized and validly issued, are fully paid and nonassessable
(except as provided in the Delaware Revised Uniform Limited Partnership Act (the
"Delaware Act") and are free of any preemptive or similar rights; the Offered
Units and the limited partner interests represented thereby have been duly
authorized and, when issued, delivered and paid for in accordance with Section 4
hereof, will be validly issued, fully paid and nonassessable except as provided
in the Delaware Act and free of any preemptive or similar rights and the
Underwriters will acquire the Offered Units free and clear of any lien, adverse
claim, security interest, equity, or other encumbrance; and the Units and the
Amended and Restated Agreement of Limited Partnership of the Partnership dated
as of July 23, 1998 (the "Partnership Agreement") conform to the descriptions
thereof in the Registration Statement and the Final Prospectus.
(e) Formation, Authority and Good Standing of the Partnership. The
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 to enter
into and perform its obligations under this Agreement, and is duly qualified or
registered and is in good standing as a foreign limited partnership for the
transaction of business under the laws of the State of Texas, and there are no
other jurisdictions in which the failure so to qualify or register would subject
it to any liability or disability which is material to the financial condition,
business, properties, net worth or results of operations of the General Partner
or the Partnership and the Operating Entities considered as a whole or would
subject the limited partners of the Partnership to any material liability or
disability.
(f) Formation, Authority and Good Standing of the Partnership Operating
Entities. Each of the Operating Partnership, STOP and STP has been duly formed
and is validly existing as a limited partnership in good standing under the
Delaware Act, with partnership power and authority to own or lease its
properties and conduct its business as described in the Final Prospectus and is
duly qualified or registered and in good standing as a foreign limited
partnership for the transaction of business under the laws of each jurisdiction
in which it owns or leases properties or conducts any business so as to require
such qualification or registration, other than any jurisdiction in which the
failure so to qualify or register would not subject it to any liability or
disability which is material to the financial condition, business, properties,
net worth or results of operations of the General Partner or the Partnership and
the Operating Entities considered as a whole or would subject the limited
partners of the Partnership to any material liability or disability.
(g) General Partner Interest in the Partnership. The General Partner is the
sole general partner of the Partnership with a general partner interest in the
Partnership of 1/99th; such general partner interest is duly authorized by the
Partnership Agreement, and has been validly issued to the General Partner and is
fully paid; the General Partner owns such general partner interest free and
clear of any lien, adverse claim, security interest, equity, or other
encumbrance.
(h) General Partner Interest in the Operating Partnership. The General
Partner is the sole general partner of the Operating Partnership with a general
partner interest in the Operating Partnership of 1%; such general partner
interest is duly authorized by the Amended and Restated Agreement of Limited
Partnership of the Operating Partnership dated as of September 27, 1989 (the
"Operating Partnership Agreement"), by and between the General Partner and the
Partnership, and has been 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) General Partner Interest in STOP. STS is the sole general partner of
STOP with a general partner interest in STOP of 1%; such general partner
interest is duly authorized by the Agreement of Limited Partnership of STOP
dated as of February 10, 1993 (the "STOP Partnership Agreement"), by and between
STS and the Operating Partnership, and has been 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) General Partner Interest in STP. STI is the sole general partner of STP
with a general partner interest in STP of 1%; such general partner interest is
duly authorized by the Agreement of Limited Partnership of STP dated as of March
11, 1996 (the "STP Partnership Agreement" and, together with the Partnership
Agreement, the Operating Partnership Agreement and the STOP Partnership
Agreement, the "Kaneb Partnership Agreements"), by and between STI and STH, and
has been 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) Limited Partner Interest in the Operating Partnership. The Partnership
is the sole limited partner of the Operating Partnership, with a limited partner
interest in the Operating Partnership of 99%; such limited partner interest is
authorized by the Operating Partnership Agreement, has been validly issued and
is fully paid and nonassessable (except as provided in the Delaware Act); and
the Partnership owns such limited partner interest in the Operating Partnership
free and clear of any lien, adverse claim, security interest, equity, or other
encumbrance.
(l) Limited Partner Interest in STOP. The Operating Partnership is the sole
limited partner of STOP, with a limited partner interest in STOP of 99%; such
limited partner interest is authorized by the STOP Partnership Agreement, has
been validly issued and is fully paid and nonassessable (except as provided in
the Delaware Act); and the Operating Partnership owns such limited partner
interest in STOP free and clear of any lien, adverse claim, security interest,
equity, or other encumbrance.
(m) Limited Partner Interest in STP. 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 nonassessable (except as provided in the Delaware Act);
and STH owns such limited partner interest free and clear of any lien, adverse
claim, security interest, equity, or other encumbrance.
(n) Formation, Authority and Good Standing of the General Partner and the
Non-Partnership Operating Entities. The General Partner and each of the
Operating Entities that is a United States or foreign corporation or limited
liability company has been duly organized and is validly existing as a
corporation or limited liability company, as the case may be, in good standing
under the laws of the jurisdiction of its organization, with corporate or
limited liability company, as the case may be, power and authority to own or
lease its properties, to conduct its business and, in the case of the General
Partner, to act as general partner of the Partnership and the Operating
Partnership and to enter into and perform its obligations under this Agreement
and, in the case of STS, to act as general partner of STOP and, in the case of
STI, to act as general partner of STP, in each case as described in the Final
Prospectus, and is duly qualified or registered and in good standing as a
foreign corporation or limited liability company, as the case may be, for the
transaction of business under the laws of each jurisdiction in which it owns or
leases properties, or conducts any business, so as to require such qualification
or registration, other than any jurisdiction in which the failure so to qualify
or register would not subject it to any liability or disability which is
material to the financial condition, business, properties, net worth or results
of operations of the General Partner or the Partnership and the Operating
Entities considered as a whole or would subject the limited partners of the
Partnership to any material liability or disability.
(o) Member Interests and Capital Stock of the General Partner and the
Corporate Operating Entities. All of the issued and outstanding member interests
or shares of capital stock, as the case may be, of each of the General Partner,
STS, STI, STH, STK and STE have been duly authorized and validly issued and are
fully paid and nonassessable and are free of any preemptive or similar rights;
all of the issued and outstanding member interests of the General Partner are
owned by KSL, free and clear of any lien, adverse claim, security interest,
equity, or other encumbrance; all of the issued and outstanding shares of
capital stock of STS, STI, STH, STK and STE are owned directly or indirectly by
the Operating Partnership, free and clear of any lien, adverse claim, security
interest, equity, or other encumbrance, except as described in the Final
Prospectus.
(p) Member Interests of STL and STC. 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 nonassessable 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) Member Interests of Shore. All of the issued and outstanding member
interests of Shore have been duly authorized and validly issued and are fully
paid and nonassessable and are free of any preemptive or similar rights; and all
of the issued and outstanding member interests of Shore are owned by the
Operating Partnership free and clear of any lien, adverse claim, security
interest, equity or other encumbrance.
(r) Capital Stock of Statia Companies. All of the issued and outstanding
shares of capital stock or member interests, as the case may be, of each of the
Statia Companies have been duly authorized and validly issued and are fully paid
and nonassessable and are free of any preemptive or similar rights; and all of
the issued and outstanding shares of capital stock or member interests, as the
case may be, of each of the Statia Companies are owned by the Operating
Partnership free and clear of any lien, adverse claim, security interest, equity
or other encumbrance.
(s) Kaneb Partnership Agreements. Each of the Kaneb 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.
(t) Subsidiaries. All the Partnership's subsidiaries (collectively, the
"Subsidiaries") are listed in an exhibit to the Partnership's Annual Report on
Form 10-K for the year ended December 31, 2001, which is incorporated by
reference into the Registration Statement except for STC, which was not listed,
and KPH, Statia International, Statia Technology and Statia Marine, which were
not Subsidiaries at the time. The Partnership has no Subsidiaries other than the
Operating Entities.
(u) Sufficiency of Disclosure. There are no legal or governmental
proceedings pending or, to the knowledge of the Partnership or the General
Partner, threatened against any of the Companies, or to which any of the
Companies, or to which any of their respective properties is subject, that are
required to be described in the Registration Statement or the Final Prospectus
but are not described as required, and there are no agreements, contracts,
indentures, leases or other instruments, and there are no affiliate
transactions, 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) Absence of Violations and Defaults; Absence of Proceedings. None of the
Companies is (i) in violation of (1) its partnership agreement, certificate or
articles of incorporation, bylaws, member agreement, or other organizational
documents, as the case may be, or (2) any law, ordinance, administrative or
governmental rule or regulation applicable to any of the Companies or of any
decree of any court or governmental agency or body having jurisdiction over any
of the Companies, which violation would subject any of them to any liability or
disability which is material to the financial condition, business, properties,
net worth or results of operations of the General Partner or the Partnership and
the Operating Entities considered as a whole or would subject the Partnership or
the limited partners of the Partnership to any material liability or disability,
or (ii) in default in any respect in the performance of any obligation,
agreement or condition contained in any bond, debenture, note or any other
evidence of indebtedness or in any agreement, indenture, lease or other
instrument to which any of the Companies is a party or by which any of them or
any of their respective properties may be bound which default would subject any
of them to any liability or disability which is material to the financial
condition, business, properties, net worth or results of operations of the
General Partner or the Partnership and the Operating Entities considered as a
whole or would subject the Partnership or the limited partners of the
Partnership to any material liability or disability. Except as disclosed in the
Prospectus, there are no actions, suits, claims, investigations or proceedings
pending or threatened to which any of the Companies or any of their respective
officers is a party or of which any of their respective properties is subject,
at law or in equity, or before or by any federal, state, local or foreign
governmental or regulatory commission, board, body, authority or agency which
could result in a judgment, decree or order that would subject any of the
Companies to any liability or disability which is material to the financial
condition, business, properties, net worth or results of operations of the
General Partner or the Partnership and the Operating Entities considered as a
whole or would subject the limited partners of the Partnership to any material
liability or disability or prevent consummation of the transactions contemplated
hereby.
(w) Absence of Consents, Conflicts and Violations. Neither the issuance and
sale of the Units, the execution, delivery or performance of this Agreement by
the Partnership or the General Partner nor the consummation by the Partnership
or the General Partner of the transactions contemplated hereby (i) requires any
consent, approval, authorization or other order of or registration or filing
with, any court, regulatory body, administrative agency or other governmental
body, agency or official (except such as may be required for the registration of
the Offered Units under the Act and the Exchange Act, which have been or will be
effected in accordance with this Agreement and except as may be required for
compliance with the securities or Blue Sky laws of various jurisdictions), or
(ii) 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 (iii) conflicts or will conflict
with or constitutes or will constitute a breach of, or a default under, any
material agreement, indenture, lease or other material instrument to which any
of the Companies is a party or by which any of them or any of their respective
properties may be bound, or (iv) 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) Independent Accountants. 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. After reasonable efforts, the Partnership
has not been able to obtain ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP's consent to the incorporation
by reference into the Registration Statement of its audit report with respect to
the Partnership's Form 8-K/A filed with the Commission on May 9, 2002.
(y) Financial Statements. 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 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 ("GAAP") 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, the Operating Entities
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
acquisition of the Statia Companies 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.
(z) Authorization of Underwriting Agreement. The execution and delivery of,
and the performance by each of the Partnership and the General Partner of its
obligations under this Agreement have been duly and validly authorized by each
of the Partnership and the General Partner, as the case may be, and this
Agreement has been duly executed and delivered by each of the Partnership and
the General Partner and constitutes the valid and legally binding agreement of
each of the Partnership and the General Partner, enforceable against each of the
Partnership and the General Partner in accordance with its terms, except (i) as
rights to indemnification and contribution hereunder may be limited by federal
or state securities laws and (ii) as to enforcement generally may be subject to
bankruptcy, insolvency, reorganization and other laws of general applicability
relating to or affecting creditors rights and to general equitable principles.
(aa) No Material Adverse Change. Except as disclosed in the Registration
Statement and the Final Prospectus (or any amendment or supplement thereto),
subsequent to the respective dates as of which such information is given in the
Registration Statement and the Final Prospectus (or any amendment or supplement
thereto), none of the Companies has incurred any liability or obligation, direct
or contingent, or entered into any transaction, not in the ordinary course of
business, that is material to the limited partners of the Partnership, the
General Partner or the Partnership and the Operating Entities taken as a whole,
and there has not been any change in the capital stock, member interests or
partners' capital, or material increase in the short-term debt or long-term
debt, of any of the Companies, or any material adverse change, or any
development involving or which may reasonably be expected to involve, a
prospective material adverse change, in the financial condition, business,
properties, net worth or results of operations of the General Partner or the
Partnership and the Operating Entities taken as a whole or which is material to
the limited partners of the Partnership.
(bb) Title to Property. Each of the Companies has good and marketable title
to all property (real and personal) described in the Final Prospectus as being
owned by it, free and clear of all liens, claims, security interests or other
encumbrances except such as are described or referred to in the Registration
Statement and the Final Prospectus or in a document filed as an exhibit to the
Registration Statement or except as do not materially interfere with the
ownership or benefits of ownership of such property, taken as a whole, provided
that with respect to the "Transmission Assets" (defined as all pipelines,
easements, rights of way, leases and appurtenant facilities for the transmission
and distribution of refined petroleum products), the Operating Partnership has
sufficient title to enable it to use the Transmission Assets in its business and
that any lack of title has not had, and to their best knowledge, will not have
any material adverse effect on the Operating Partnership's ability to use the
Transmission Assets, and all the property described in the Final Prospectus as
being held under lease by each of the Companies is held by it under valid,
subsisting and enforceable leases.
(cc) Environmental Laws. Except as disclosed in the Registration Statement
and the Final Prospectus and except as would not, individually or in the
aggregate, result in a liability or disability that is material to the financial
condition, business, properties, net worth or results of operations of the
General Partner or the Partnership and the Operating Entities considered as a
whole or would subject the Partnership or the limited partners of the
Partnership to any material liability or disability, (i) none of the Companies
is in violation of any federal, state, local or foreign statute, law, rule,
regulation, ordinance, code, policy or rule of common law or any judicial or
administrative interpretation thereof including any judicial or administrative
order, consent, decree or judgment, relating to pollution or protection of human
health, the environment (including, without limitation, ambient air, surface
water, groundwater, land surface or subsurface strata) or wildlife, including,
without limitation, laws and regulations relating to the release or threatened
release of chemicals, pollutants, contaminants, wastes, toxic substances,
hazardous substances, petroleum or petroleum products (collectively, "Hazardous
Materials") or to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Materials (collectively,
"Environmental Laws"), (ii) none of the Companies 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
Companies, 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 Companies relating to Hazardous Materials or any Environmental
Laws.
(dd) Absence of Offering Material. None of the Companies has distributed
and, prior to the later to occur of (i) the Closing Date and (ii) completion of
the distribution of the Offered Units, will distribute any offering material in
connection with the offering and sale of the Offered Units other than the
Registration Statement, the Basic Prospectus, the Final Prospectus or other
materials, if any, permitted by the Act.
(ee) Possession of Licenses and Permits. Each of the Companies has such
permits, licenses, franchises and authorizations of governmental or regulatory
authorities ("Permits") as are necessary to own its respective properties and to
conduct its business in the manner described in the Final Prospectus, subject to
such qualifications as may be set forth in the Final Prospectus, the lack of
which would subject any of them to any liability or disability which is material
to the financial condition, business, properties, net worth or results of
operations of the General Partner or the Partnership and the Operating Entities
considered as a whole or would subject the Partnership or the limited partners
of the Partnership to any material liability or disability; each of the
Companies has fulfilled and performed all its material obligations with respect
to such Permits and no event has occurred which allows, or after notice or lapse
of time would allow, revocation or termination thereof or results in any other
material impairment of the rights of the holder of any such Permit, subject in
each case to such qualification as may be set forth in the Final Prospectus, the
revocation or termination of which would subject any of them to any liability or
disability which is material to the financial condition, business, properties,
net worth or results of operations of the General Partner or the Partnership and
the Operating Entities considered as a whole or would subject the limited
partners of the Partnership to any material liability or disability; and, except
as described in the Final Prospectus, none of such Permits contains any
restriction that is materially burdensome to any of the Companies.
(ff) Internal Accounting Controls. The Companies maintain 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) Absence of NASD Conflict of Interest. No more than ten percent of the
net proceeds from the sale of the Offered Units are intended to be or will be
paid to members of the National Association of Securities Dealers or associated
or affiliated persons of such members, or members of the immediate family of
such members.
(hh) Tax Returns and Payments. Each of the Companies has filed all tax
returns required to be filed, the failure of which to file would subject any of
them to any liability or disability which is material to the financial
condition, business, properties, net worth or results of operations of the
General Partner or the Partnership and the Operating Entities considered as a
whole or would subject the limited partners of the Partnership to any material
liability or disability, which returns are complete and correct, and none of the
Companies is in default in the payment of any taxes which were due and payable
pursuant to said returns or any interest, penalties or assessments with respect
thereto, which default would subject any of them to any liability or disability
which is material to the financial condition, business, properties, net worth or
results of operations of the General Partner or the Partnership and the
Operating Entities considered as a whole or would subject the limited partners
of the Partnership to any material liability or disability. There are no tax
returns of any of the Companies that are currently being audited by state, local
or federal taxing authorities or agencies (and with respect to which any of the
Companies has received notice), where the findings of such audit, if adversely
determined, would subject any of the Companies to any liability or disability
which is material to the financial condition, business, properties, net worth or
results of operations of the General Partner or the Partnership and the
Operating Entities considered as a whole or would subject the limited partners
of the Partnership to any material liability or disability.
(ii) Absence of Registration Rights. Except for the General Partner who has
waived its rights, no holder of any interest in or security of the Partnership
or any other person has any right to require registration of Units or any other
partnership interest in or other security of the Partnership because of the
filing of the Registration Statement or consummation of the transactions
contemplated by this Agreement.
(jj) Possession of Intellectual Property. Each of the Companies owns or
possesses all patents, trademarks, trademark registrations, service marks,
service ▇▇▇▇ 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) Investment Company Act. 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) Public Utility Holding Company Act. None of the Companies is a "public
utility company" or a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," as such terms are defined in the Public Utility Company
Act of 1935, as amended; none of the Companies is subject to regulation under
the Public Utility Holding Company Act of 1935, as amended.
(mm) Net Worth of the General Partner. For all taxable years beginning
before December 31, 1997, the General Partner had (excluding its interests in
the Partnership and the Operating Partnership and any notes or receivables due
from the Operating Partnership) a net worth of at least $5 million.
(nn) Net Worth of STS. For all taxable years beginning before December 31,
1997, STS had (excluding its interests in STOP and any notes or receivables due
from STOP) a net worth of at least $5 million.
(oo) Qualifying Income. For each taxable year of the Partnership, less than
10% of the gross income of the Partnership has been derived from sources other
than (i) the exploration, development, production, processing, refining,
transportation or marketing of any mineral or natural resource, including oil,
gas or products thereof, or (ii) other items of qualifying income within the
meaning of Section 7704(d) of the Code.
(pp) Absence of Restrictions. Except as described in the Final Prospectus,
there are no preemptive rights or other rights to subscribe for or to purchase,
nor any restriction upon the voting or transfer of, any interests in the
Partnership or any Operating Entity pursuant to any agreement or other
instrument to which the 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 Units as contemplated by this
Agreement gives rise to any rights for or relating to the registration of any
Units or other securities of the Partnership or any Operating Entity, except
such rights as have been waived or satisfied. The Offered Units, when issued and
delivered against payment therefor as provided herein, will conform in all
material respects to the description thereof contained in the Final Prospectus.
(qq) No Business Interruptions. 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) Absence of Labor Dispute; Compliance with Labor Laws. No labor dispute
with the employees of any of the Companies exists or, to the knowledge of the
Companies, is imminent or threatened, which might reasonably be expected to
subject any of them to any liability or disability which is material to the
financial condition, business, properties, net worth or results of operations of
the General Partner or the Partnership and the Operating Entities considered as
a whole. Each of the Companies is in compliance with all federal, state and
local employment labor laws, including, but not limited to, laws relating to
non-discrimination in hiring, promotion and pay of employees, except for any
noncompliance that could not reasonably be expected to subject any of the
Companies to any liability or disability which is material to the financial
condition, business, properties, net worth or results of operations of the
General Partner or the Partnership and the Operating Entities considered as a
whole or would subject the limited partners of the Partnership to any material
liability or disability.
(ss) Insurance. The Companies maintain insurance covering their properties,
operations, personnel and businesses against such losses and risks as are
reasonably adequate to protect them and their businesses in a manner consistent
with other businesses similarly situated. None of the Companies has received
notice from any insurer or agent of such insurer that substantial capital
improvements or other expenditures will have to be made in order to continue
such insurance, and all such insurance is outstanding and duly in force on the
date hereof and will be outstanding and duly in force on the Closing Date.
(tt) Absence of Notice. None of the Companies have sent or received any
communication regarding termination of, or intent not to renew, any of the
contracts or agreements referred to or described in, or filed as an exhibit to,
the Registration Statement or Base Prospectus, and no such termination or
non-renewal has been threatened by the Partnership or, to the knowledge of the
Partnership after due inquiry, any other party to any such contract or
agreement, which termination or non-renewal would subject any of the Companies
to any liability or disability which is material to the financial condition,
business, properties, net worth or results of operations of the General Partner
or the Partnership and the Operating Entities considered as a whole or would
subject the limited partners of the Partnership to any material liability or
disability.
(uu) Stabilization. None of the Companies, nor any of their directors,
officers or controlling persons has taken, directly or indirectly, any action
intended, or which might reasonably be expected, to cause or result, under the
Act or otherwise, in or which has constituted, stabilization or manipulation of
the price of any security of the Partnership to facilitate the sale or resale of
the Units.
(vv) Violations. None of the Companies, nor to the Partnership's knowledge
after due inquiry, any employee or agent of the Companies, has made any payment
of funds of the Companies or received or retained any funds in violation of any
law, rule or regulation, which payment, receipt or retention of funds is of a
character required to be disclosed in the Registration Statement or Base
Prospectus.
(ww) Benefit Plans. With respect to each employee benefit plan, program and
arrangement (including, without limitation, any "employee benefit plan" as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) maintained or contributed to by any of the Companies, or
with respect to which any of the Companies could incur any liability under ERISA
(collectively, the "Benefit Plans"), no event has occurred and, to the best
knowledge of each of the Companies, there exists no condition or set of
circumstances, in connection with which any of the Companies could be subject to
any liability under the terms of such Benefit Plans, applicable law (including,
without limitation, ERISA and the Internal Revenue Code of 1986, as amended) or
any applicable agreement that would subject any of the Companies to any
liability or disability which is material to the financial condition, business,
properties, net worth or results of operations of the General Partner or the
Partnership and the Operating Entities considered as a whole or would subject
the limited partners of the Partnership to any material liability or disability.
7. INDEMNIFICATION AND CONTRIBUTION.
(a) Each of the Partnership and the General Partner, jointly and severally,
agrees to indemnify and hold harmless each Underwriter, the directors, officers,
employees and agents of each Underwriter and each person, if any, who controls
any Underwriter within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act from and against any and all losses, claims, damages, liabilities
and expenses (including reasonable costs of investigation) arising out of or
based upon any untrue statement or alleged untrue statement of a material fact
contained in the Basic 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 the Representative expressly for use in connection
therewith.
The foregoing indemnity agreement shall be in addition to any liability
which the Partnership or the General Partner may otherwise have.
(b) If any action, suit or proceeding shall be brought against any
Underwriter, any director, officer, employee or agent of any Underwriter or any
person controlling any Underwriter in respect of which indemnification may be
sought against the Partnership or the General Partner, such Underwriter or such
director, officer, employee, agent or controlling person shall promptly notify
the Partnership and the Partnership and the General Partner shall assume the
defense thereof, including the employment of counsel and payment of all fees and
expenses. Such Underwriter or any such director, officer, employee, agent or
controlling person shall have the right to employ separate counsel in any such
action, suit or proceeding and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of such Underwriter or
such director, officer, employee, agent or controlling person unless (i) the
Partnership and the General Partner have agreed in writing to pay such fees and
expenses, (ii) the Partnership and the General Partner have failed to assume the
defense and employ counsel, or (iii) the named parties to any such action, suit
or proceeding (including any impleaded parties) include both such Underwriter or
such director, officer, employee, agent or controlling person and the
Partnership or the General Partner and such Underwriter or such director,
officer, employee, agent or controlling person shall have been advised by its
counsel that representation of such indemnified party and the Partnership or the
General Partner by the same counsel would be inappropriate under applicable
standards of professional conduct (whether or not such representation by the
same counsel has been proposed) due to actual or potential differing interests
between them (in which case the Partnership and the General Partner shall not
have the right to assume the defense of such action, suit or proceeding on
behalf of such Underwriter or such controlling person). It is understood,
however, that the Partnership and the General Partner shall, in connection with
any one such action, suit or proceeding or separate but substantially similar or
related actions, suits or proceedings in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the reasonable fees
and expenses of only one separate firm of attorneys (in addition to any local
counsel) at any time for all such Underwriters, directors, officers, employees,
agents and controlling persons not having actual or potential differing
interests with you or among themselves, which firm shall be designated in
writing by ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ 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 the Representative expressly for use in the
Registration Statement or the Final Prospectus or any amendment or supplement
thereto. If any action, suit or proceeding shall be brought against the
Partnership or the General Partner, any of the directors of the General Partner,
any such officer of the General Partner, or any such controlling person based on
the Registration Statement or the Final Prospectus or any amendment or
supplement thereto, and in respect of which indemnification may be sought
against any Underwriter pursuant to this paragraph (c), such Underwriter shall
have the rights and duties given to the Partnership and the General Partner by
paragraph (b) above (except that if the Partnership or the General Partner shall
have assumed the defense thereof such Underwriter shall not be required to do
so, but may employ separate counsel therein and participate in the defense
thereof, but the fees and expenses of such counsel shall be at such
Underwriter's expense), and the Partnership and the General Partner, the
directors of the General Partner, any such officer of the General Partner, and
any such controlling person shall have the rights and duties given to the
Underwriters by paragraph (b) above. The foregoing indemnity agreement shall be
in addition to any liability which the Underwriters may otherwise have.
(d) If the indemnification provided for in this Section 7 is unavailable to
an indemnified party under paragraphs (a) or (c) hereof in respect of any
losses, claims, damages, liabilities or expenses referred to therein, then an
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or expenses (i) in such proportion
as is appropriate to reflect the relative benefits received by the Partnership
and the General Partner on the one hand and the Underwriters on the other hand
from the offering of the Offered Units, or (ii) if the allocation provided by
clause (i) immediately 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) immediately above but also the relative fault of the
Partnership and the General Partner on the one hand and the Underwriters on the
other in connection with the statements or omissions that resulted in such
losses, claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Partnership and
the General Partner on the one hand and the Underwriters on the other shall be
deemed to be in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Partnership bear to the total
underwriting discounts and commissions received by the Underwriters, in each
case as set forth in the table on the cover page of the Final Prospectus. The
relative fault of the Partnership and the General Partner on the one hand and
the Underwriters on the other hand shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Partnership and the General Partner on the one hand
or by the Underwriters on the other hand and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
(e) The Partnership, the General Partner and the Underwriters agree that it
would not be just and equitable if contribution pursuant to this Section 7 were
determined by a pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation that does not
take account of the equitable considerations referred to in paragraph (d) above.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities and expenses referred to in paragraph (d) above
shall be deemed to include, subject to the limitations set forth above, any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating any claim or defending any such action, suit or
proceeding. Notwithstanding the provisions of this Section 7, no Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price of the Offered Units underwritten by it and distributed to the
public exceeds the amount of any damages which such Underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to this
Section 7 are several in proportion to the respective numbers of Firm Units set
forth opposite their names in Schedule I hereto (or such numbers of Firm Units
increased as set forth in Section 10 hereof) and not joint.
(f) No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened action,
suit or proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such action, suit or proceeding.
(g) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 7 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 7 and the
representations and warranties of the Partnership and the General Partner set
forth in this Agreement shall remain operative and in full force and effect,
regardless of (i) any investigation made by or on behalf of any Underwriter, any
director, officer, employee or agent of any Underwriter or any person
controlling any Underwriter, the Partnership or the General Partner, the
directors of the General Partner or officers of the General Partner, or any
person controlling the Partnership or the General Partner, (ii) acceptance of
any Offered Units and payment therefor hereunder, and (iii) any termination of
this Agreement. A successor to any Underwriter, any director, officer, employee
or agent of any Underwriter or any person controlling any Underwriter, or to the
Partnership or the General Partner, directors or officers of the General
Partner, or any person controlling the Partnership or the General Partner, shall
be entitled to the benefits of the indemnity, contribution and reimbursement
agreements contained in this Section 7. The term "successor" as used in this
Agreement shall not include a purchaser from any Underwriter of any Offered
Units in his status as such purchaser.
8. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The several obligations of the
Underwriters to purchase the Firm Units hereunder are subject to the following
conditions:
(a) If, at the time this Agreement is executed and delivered, it is
necessary for the registration statement or a post effective amendment thereto
to be declared effective before the offering of the Offered Units may commence,
the registration statement or such post-effective amendment shall have become
effective not later than 5:30 P.M., New York City time, on the date hereof, or
at such later date and time as shall be consented to in writing by you, and all
filings, if any, required by Rule 424 under the Act shall have been timely made;
no stop order suspending the effectiveness of the registration statement shall
have been issued and no proceeding for that purpose shall have been instituted
or, to the knowledge of the Partnership, the General Partner, 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 Representative of the several Underwriters, would
materially, adversely affect the market for the Offered Units, or (ii) any event
or development relating to or involving any of the Companies or any officer or
director of the General Partner which makes any statement made in the Final
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
Representative of the several Underwriters, adversely affect the market for the
Offered Units.
(c) You shall have received on the Closing Date, an opinion of Fulbright &
▇▇▇▇▇▇▇▇ L.L.P., special counsel for the Partnership and the General Partner,
dated the Closing Date and addressed to the several Underwriters, substantially
in the form of Exhibit A attached hereto. In addition, such special counsel
shall have furnished to you their written opinion, dated such Closing Date, in
form and substance satisfactory to you in your reasonable judgment, with respect
to the legal conclusions described in the Final Prospectus under the caption
"Tax Considerations."
(d) 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 the several Underwriters, with respect to the matters referred to in clauses
(17), (19), (20), (25) (but only with respect to the Registration Statement and
the Final Prospectus and any supplements or amendments thereto) and the first
paragraph following clause (29) of Exhibit A and such other related matters as
you may reasonably request.
(e) You shall have received letters addressed to the several Underwriters,
and dated the date hereof and the Closing Date from KPMG LLP, independent
certified public accountants, substantially in the forms heretofore approved by
you.
(f) (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; (iii) there
shall not have been, since the respective dates as of which information is given
in the Registration Statement and the Final Prospectus, except as may otherwise
be stated in the Registration Statement and Final Prospectus, 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 Final 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
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 (or other comparable officers) and the chief financial officer of the
General Partner for and on behalf of the General Partner and the Partnership (or
such other officers as are acceptable to you), to the effect set forth in this
Section 8(g) and in Section 8(h) hereof, and with respect to such other matters
as you shall reasonably request.
(g) 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.
(h) Prior to commencement of the offering of the Offered Units, the Offered
Units shall have been listed, subject to notice of issuance, on the New York
Stock Exchange.
(i) 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 Representative
of the Underwriters, or to counsel for the Underwriters, shall be deemed a
representation and warranty by the Partnership and the General Partner to each
Underwriter as to the statements made therein. The several obligations of the
Underwriters to purchase Additional Units hereunder are subject to the
satisfaction on and as of any Option Closing Date of the conditions set forth in
this Section 8, except that, if any Option Closing Date is other than the
Closing Date, the certificates, opinions and letters referred to in paragraphs
(c) through (j) shall be dated the Option Closing Date in question and the
opinions called for by paragraphs (c), (d) and (e) shall be revised to reflect
the sale of Additional Units.
9. EXPENSES. Each of the Partnership and the General Partner, jointly and
severally, agrees to pay the following costs and expenses and all other costs
and expenses incident to the performance by the Partnership and the General
Partner of any of their obligations hereunder: (i) the preparation, printing or
reproduction, and filing with the Commission of the registration statement
(including financial statements and exhibits thereto), the Final Prospectus, and
each amendment or supplement to any of them; (ii) the printing (or reproduction)
and delivery (including postage, air freight charges and charges for counting
and packaging) of such copies of the Registration Statement, the Final
Prospectus, the Incorporated Documents, and all amendments or supplements to any
of them, as may be reasonably requested for use in connection with the offering
and sale of the Offered Units; (iii) the preparation, printing, authentication,
issuance and delivery of certificates for the Offered Units, including any stamp
taxes in connection with the original issuance and sale of the Offered Units;
(iv) the reproduction and delivery of this Agreement, the preliminary and
supplemental Blue Sky Memoranda and all other agreements or documents printed
(or reproduced) and delivered in connection with the offering of the Offered
Units; (v) the listing of the Offered Units on the New York Stock Exchange; (vi)
the registration or qualification of the Offered Units for offer and sale under
the securities or Blue Sky laws of the several states as provided in Section
5(f) hereof (including the reasonable fees, expenses and disbursements of
counsel for the Underwriters relating to the preparation, reproduction, and
delivery of the preliminary and supplemental Blue Sky Memoranda and such
registration and qualification); (vii) the filing fees in connection with any
filings required to be made with the National Association of Securities Dealers,
Inc.; (viii) the transportation and other expenses incurred by or on behalf of
the Partnership's, the General Partner's or any Operating Entities'
representatives in connection with presentations to prospective purchasers of
the Offered Units; (ix) the fees and expenses of the Partnership's and General
Partner's accountants and the fees and expenses of counsel (including local and
special counsel) for the Partnership and the General Partner; and (x) any fees
payable to DTC. It is understood, however, that, except as provided in Section
5(i), Section 7 and this Section 9 hereof, the Underwriters will pay all of
their own costs and expenses associated with the offering of the Offered Units,
including the fees of their counsel, transfer taxes on resale of any of the
Offered Units by them, and any advertising expenses connected with any offers
they may make.
10. EFFECTIVE DATE OF AGREEMENT. This Agreement shall become effective: (i) upon
the execution and delivery hereof by the parties hereto; or (ii) if, at the time
this Agreement is executed and delivered, it is necessary for the Registration
Statement or a post-effective amendment thereto to be declared effective before
the offering of the Offered Units may commence, when notification of the
effectiveness of the Registration Statement or such post-effective amendment has
been released by the Commission. Until such time as this Agreement shall have
become effective, it may be terminated by the Partnership, by notifying you, or
by you, as the Representative of the several Underwriters, by notifying the
Partnership. If any one or more of the Underwriters shall fail or refuse to
purchase Offered Units which it or they have agreed to purchase hereunder, and
the aggregate number of Offered Units which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase is not more than one-tenth
of the aggregate number of the Offered Units, each non-defaulting Underwriter
shall be obligated, severally, in the proportion which the number of Offered
Units set forth opposite its name in Schedule I hereto bears to the aggregate
number of Offered Units set forth opposite the names of all non-defaulting
Underwriters or in such other proportion as you may specify in accordance with
Section 20 of the Master Agreement Among Underwriters of ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney
Inc., to purchase the Offered Units which such defaulting Underwriter or
Underwriters agreed, but failed or refused, to purchase. If any Underwriter or
Underwriters shall fail or refuse to purchase Offered Units and the aggregate
number of Offered Units with respect to which such default occurs is more than
one-tenth of the aggregate number of Offered Units and arrangements satisfactory
to you and the Partnership for the purchase of such Offered Units by one or more
non-defaulting Underwriters or other party or parties approved by you and the
Partnership are not made within 36 hours after such default, this Agreement will
terminate without liability on the part of any non-defaulting Underwriter or the
Partnership. In any such case which does not result in termination of this
Agreement, either you or the Partnership shall have the right to postpone the
Closing Date, but in no event for longer than seven days, in order that the
required changes, if any, in the Registration Statement and the Final Prospectus
or any other documents or arrangements may be effected. Any action taken under
this paragraph shall not relieve any defaulting Underwriter from liability in
respect of any such default of any such Underwriter under this Agreement. The
term "Underwriter" as used in this Agreement includes, for all purposes of this
Agreement, any party not listed in Schedule I hereto who, with your approval and
the approval of the Partnership, purchases Offered Units which a defaulting
Underwriter agreed, but failed or refused, to purchase. Any notice under this
Section 10 may be given by telegram, telecopy or telephone but shall be
subsequently confirmed by letter.
11. TERMINATION OF AGREEMENT. This Agreement shall be subject to termination
without liability on the part of any Underwriter to the Partnership or the
General Partner by notice to the Partnership, if prior to the Closing Date or
any Option Closing Date (if different from the Closing Date and then only as to
the Additional Units), as the case may be, (i) trading in the Units shall have
been suspended by the Commission or the New York Stock Exchange or trading in
securities generally on the New York Stock Exchange, American Stock Exchange or
the Nasdaq National Market shall have been suspended or materially limited or
minimum prices shall have been established on any such exchange or the Nasdaq
National Market, (ii) a general moratorium on commercial banking activities in
New York or Texas shall have been declared by either federal or state
authorities, or (iii) there shall have occurred any 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 Representative, impracticable or inadvisable to commence or
continue the offering or delivery of the Offered Units as contemplated by the
Final Prospectus (exclusive of any supplement thereto) or to enforce contracts
for the resale of the Offered Units by the Underwriters. Notice of such
termination may be given to the Partnership by telegram, telecopy or telephone
and shall be subsequently confirmed by letter.
12. INFORMATION FURNISHED BY THE UNDERWRITERS. The statements set forth in the
third, ninth and tenth paragraphs under the caption "Underwriting" in the Final
Prospectus, constitute the only information furnished by or on behalf of the
Underwriters through you as such information is referred to in Sections 6(b) and
7 hereof.
13. MISCELLANEOUS. Except as otherwise provided in Sections 5, 10 and 11 hereof,
notice given pursuant to any provision of this Agreement shall be in writing and
shall be delivered (i) if to the Partnership or the General Partner, at the
office of the Partnership at ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇ c/o Kaneb Pipe Line Company, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chairman
of the Board; or (ii) if to you, as the Representative of the several
Underwriters, in care of ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc., ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: General Counsel. This Agreement has been and is
made solely for the benefit of the several Underwriters, the Partnership, the
General Partner and the directors, officers, employees and agents of the
Underwriters, the directors and officers of the General Partner, and the other
controlling persons referred to in Section 7 hereof and their respective
successors and assigns, to the extent provided herein, and no other person shall
acquire or have any right under or by virtue of this Agreement. Neither the term
"successor" nor the term "successors and assigns" as used in this Agreement
shall include a purchaser from any Underwriter of any of the Offered Units in
his status as such purchaser. As the National Association of Securities Dealers,
Inc. ("NASD") views the Units as interests in a direct participation program,
each Underwriter agrees that it will offer the Offered Units in compliance with
Rule 2810 of the NASD's Conduct Rules.
14. APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed within the State of New York.
15. REPRESENTATIONS, AGREEMENTS AND INDEMNITIES TO SURVIVE. The respective
agreements, representations, warranties, indemnities and other statements of the
Partnership, the General Partner and its officers and of the Underwriters set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation made by or on behalf of any Underwriter
or the Partnership or any of the officers, directors, employees, agents or
controlling persons referred to in Section 7 hereof, and will survive delivery
of and payment for the Offered Units. The provisions of Sections 5(i) and 7
hereof shall survive the termination or cancellation of this Agreement. This
Agreement may be signed in various counterparts which together constitute one
and the same instrument. If signed in counterparts, this Agreement shall not
become effective unless at least one counterpart hereof shall have been executed
and delivered on behalf of each party hereto.
16. SECTION HEADINGS; COUNTERPARTS. The section headings in this Agreement have
been inserted as a matter of convenience of reference and are not a part 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.
[Signatures to Follow]
Please confirm that the foregoing correctly sets forth the agreement
between the Partnership, the General Partner and the several Underwriters.
Very truly yours,
KANEB PIPE LINE PARTNERS, L.P.
BY: KANEB PIPE LINE COMPANY LLC,
its General Partner
By: /s/▇ ▇ ▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chairman of the Board and Chief
Executive Officer
KANEB PIPE LINE COMPANY LLC
By: /s/▇ ▇ ▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chairman of the Board and Chief
Executive Officer
Confirmed as of the date first above mentioned on behalf of itself and on
behalf of the other several Underwriters named in Schedule I hereto as their
Representative.
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ INC.
as Representative of the Several Underwriters
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇ BARNEY INC.
By: /s/ ABNAY PANDE
------------------------------------------
Abnay ▇. ▇▇▇▇▇
Vice President
EXHIBIT A
FORM OF OPINION OF ISSUER'S COUNSEL
We have acted as special counsel to the Companies in connection with the
sale to you an of aggregate 3,000,000 Units pursuant to an Underwriting
Agreement dated March [ ], 2003 (the "Agreement"), among the Underwriters, the
Partnership and the General Partner. Capitalized terms used but not defined
herein have the same meanings herein as such terms have in the Agreement. The
opinions expressed herein are being furnished to you at the request of the
Partnership pursuant to Section 8(c) of the Agreement.
We have participated in the preparation of, and have examined, the
Registration Statement on Form S-3 (Registration No. 333-98621) filed by the
Partnership under the Act, which became effective on September 3, 2002 (the
"Effective Date"), the Basic Prospectus and the Final Prospectus.
We have also examined originals or copies of such partnership records of
the Partnership, limited liability company records of the General Partner,
certificate and other communications of public officials, certificates of
officers of the General Partner, certificate of the transfer agent for the Units
and such other documents as we have deemed necessary for the purpose of
rendering the opinions expressed herein. As to questions of fact material to
those opinions, we have, to the extent we deemed appropriate, relied on
certificates of officers of the General Partner, certificates and other
communications of public officials, certificates of the transfer agent for the
Units and on the factual representations of the General Partner contained in the
Agreement. We have assumed the genuineness of all signatures on, and the
authenticity of, all documents submitted to us as originals, the conformity to
authentic original documents of all documents submitted to us as copies, the due
authorization, execution and delivery by the parties thereto, other than the
Partnership and the General Partner, of all documents examined by us, and the
legal capacity of each individual who signed any of those documents.
Based upon the foregoing, and having regard for such legal considerations
as we deem relevant, we are of the opinion that:
1. Each of the Partnership, the Operating Partnership, STOP and STP has
been duly formed and is validly existing as a limited partnership in good
standing under the Delaware Act, with partnership power and authority to own,
lease and operate its properties and to conduct its business as described in the
Final Prospectus and, with respect to the Partnership, to perform its
obligations pursuant to the Agreement and to issue, sell and deliver the Firm
Units as contemplated by the Agreement.
2. The Unitholders are not liable under the laws of the States of
California and Texas for the liabilities of the Partnership or the Operating
Entities, except in each case to the same extent as under the Delaware Act or as
otherwise described in the Final Prospectus.
3. The General Partner has been duly formed and is validly existing as a
limited liability company in good standing under the Delaware Limited Liability
Company Act (the "Delaware LLC Act"), with limited liability company power and
authority to own, lease and operate its properties, to conduct its businesses,
to act as the general partner of the Partnership and the Operating Partnership
and to perform its obligations pursuant to the Agreement in each case, as
described in the Final Prospectus; the outstanding member interests of the
General Partner have been duly authorized and validly issued and are fully paid
and nonassessable and are owned of record by KSL, free and clear, to our
knowledge, of any security interest, lien, encumbrance or adverse claim.
4. Each of STH, STI and STS has been duly organized and is validly existing
as a corporation in good standing under the General Corporation Law of the State
of Delaware (the "DGCL"), with corporate power and authority to own, lease and
operate 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, validly issued and are nonassessable; all of
the outstanding shares of capital stock of STH are owned of record by STI, all
of the outstanding shares of capital stock of STI are owned of record by STS and
all of the outstanding shares of capital stock of STS are owned of record by the
Operating Partnership, in each case, free and clear, to our knowledge, of any
security interest, lien, encumbrance or adverse claim.
5. The General Partner is the sole general partner of the Partnership and
the Operating Partnership with a general partner interest in the Partnership of
1/99th and a general partner interest in the Operating Partnership of 1%; such
general partner interests have been duly authorized and validly issued, and the
General Partner owns of record and, to our knowledge, beneficially owns such
general partner interests free and clear of any security interest, lien,
encumbrance or adverse claim.
6. The Partnership is the sole limited partner of the Operating
Partnership, with a limited partner interest of 99%; such limited partner
interest has been duly authorized and validly issued, and is fully paid and
nonassessable, except as provided in the Delaware Act; the Partnership owns of
record and, to our knowledge, beneficially owns such limited partner interest in
the Operating Partnership free and clear of any security interest, lien,
encumbrance or adverse claim.
7. STS is the sole general partner of STOP with a general partner interest
in STOP of 1%; such general partner interest has been duly authorized and
validly issued and STS owns of record and, to our knowledge, beneficially owns
such general partner interest free and clear of any security interest, lien,
encumbrance or adverse claim.
8. The Operating Partnership is the sole limited partner of STOP, with a
limited partner interest of 99%; such limited partner interest has been duly
authorized and validly issued and is fully paid and nonassessable, except as
provided in the Delaware Act; the Operating Partnership owns of record, and, to
our knowledge, beneficially owns such limited partner interest in STOP free and
clear of any security interest, lien, encumbrance or adverse claim.
9. Each of KPH, STL and STC has been duly formed and is validly existing as
a limited liability company in good standing under the Delaware LLC Act, with
limited liability company power and authority to own, lease and operate its
properties and conduct its business as described in the Final Prospectus; all
the outstanding member interests of KPH, STL and STC have been duly authorized
and validly issued, are fully paid and nonassessable, 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.
10. STI is the sole general partner of STP with a general partner interest
in STP of 1%; such general partner interest has been duly authorized and validly
issued and STI owns of record and, to our knowledge, beneficially owns such
general partner interest free and clear of any security interest, lien,
encumbrance or adverse claim.
11. STH is the sole limited partner of STP, with a limited partner interest
of 99%; such limited partner interest has been duly authorized and validly
issued, and is fully paid and nonassessable, except as provided in the Delaware
Act; STH owns of record and, to our knowledge, beneficially owns such limited
partner interest in STP free and clear of any security interest, lien,
encumbrance or adverse claim.
12. Shore has been duly formed and is validly existing as a limited
liability company in good standing under the Delaware LLC Act, with limited
liability company power and authority to own, lease and operate 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 and are fully paid and nonassessable and are owned of record by the
Operating Partnership, free and clear, to our knowledge, of any security
interests, lien, encumbrance or adverse claim.
13. Statia Technology has been duly organized and is validly existing in
good standing as a corporation under the DGCL, with power and authority to own,
lease and operate its properties and conduct its business as described in the
Final Prospectus; all of the issued and outstanding shares of capital stock of
Statia Technology have been duly authorized and validly issued and are fully
paid and nonassessable and are owned of record by the Operating Partnership,
free and clear, to our knowledge, of any security interests, lien, encumbrance
or adverse claim.
14. KSL is the sole member of the General Partner and has been duly formed
and is validly existing as a limited liability company in good standing under
the Delaware LLC Act, with limited liability company power and authority to own,
lease and operate its properties and conduct its business as described in the
Final Prospectus.
15. The authorized and outstanding partnership interests of the Partnership
are as set forth under the caption "Kaneb Partners" in the Final Prospectus; and
the authorized partnership interests of the Partnership conform in all material
respects as to legal matters to the description thereof set forth under the
captions "Cash Distributions" and "Tax Considerations" in the Final Prospectus.
16. All the partnership interests of the Partnership have been duly
authorized and validly issued, and are fully paid and nonassessable, except as
provided in the Delaware Act and there are no preemptive or other rights to
subscribe for or to purchase partnership interests of the Partnership pursuant
to any statute, the Partnership Agreement or any agreement or other instrument
to which the Partnership is a party filed as an exhibit to, or incorporated by
reference in, the Registration Statement.
17. The Offered Units have been duly authorized and, when issued and
delivered to the Underwriters against payment therefor in accordance with the
terms of the Agreement, will be validly issued, fully paid and nonassessable,
except as provided in the Delaware Act, and free of any preemptive or, to the
knowledge of such counsel, similar rights that entitle or will entitle any
person to acquire any partnership interest in the Partnership upon the issuance
thereof by the Partnership.
18. [The form of certificate for the Units conforms in all material
respects to the requirements of the Partnership Agreement].
19. The Registration Statement and all post-effective amendments, if any,
have become effective under the Act and, to our knowledge, 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) of the Act has been made in the manner and
within the time period required by Rule 424(b).
20. The Agreement has been duly authorized, executed and delivered by each
of the Partnership and the General Partner.
21. Each of the Kaneb Partnership Agreements has been duly authorized,
executed and delivered by the parties thereto and is a valid and legally binding
agreement of the parties thereto, enforceable against the parties thereto in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or transfer or other similar laws affecting creditors' rights
generally and by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and to the
extent that rights to indemnity and contribution under the Partnership
Agreements may be limited by federal or state securities laws or the public
policy underlying such laws.
22. Neither the offer, sale or delivery of the Offered Units by the
Partnership, the execution, delivery or performance of the Agreement, nor
performance by the Partnership and the General Partner of their obligations
under the Agreement constitutes or will constitute a breach of, or a default
under, any agreement, indenture, lease or other instrument to which any of the
Companies is a party or by which any of them or any of their respective
properties is bound or affected that has been filed as an exhibit to the
Registration Statement or to any Incorporated Document, or will result in the
creation or imposition of any lien, charge or encumbrance under the terms
thereof upon any property or assets of any of the Companies, nor will any such
action result in any violation of (a) the partnership agreement, certificate or
articles of incorporation, bylaws, member agreement or other organizational
documents of any of the Companies, as the case may be, (b) any statutory law,
regulation or ruling (assuming compliance with all applicable state securities
and Blue Sky laws), or (c) any judgment, injunction, order or decree of any
court, governmental agency or arbitrator that is known to us to be applicable to
any of the Companies or any of their respective properties.
23. To our knowledge, except for the General Partner, which has waived its
rights, no holder of any interest in or security of the Partnership or any other
person has any right to require registration of Units or any other partnership
interest or other security of the Partnership because of the filing of the
Registration Statement or consummation of the transactions contemplated by the
Agreement.
24. No consent, approval, authorization or waiver of, or notice to or
filing with, or other action by, any court or governmental authority is required
to be obtained or made by the Partnership or General Partner by any material
statutory law, regulation or ruling as a condition to the issuance or sale of
the Offered Units by the Partnership, 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 others as have been obtained or taken or are in full force and
effect and except such as may be required under state securities or Blue Sky
laws governing the purchase and distribution of the Offered Units by the
Underwriters, as to which we express no opinion.
25. 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; 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.
26. 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, licenses, agreements, leases or other documents of a character
that are required to be described in the Registration Statement or the Final
Prospectus (or any amendment or supplement thereto) or to be filed as an exhibit
to the Registration Statement or any Incorporated Document that are not
described or filed as required, as the case may be.
27. The statements in the Registration Statement and the Final Prospectus,
under the captions "Cash Distributions," "Conflicts of Interest and Fiduciary
Responsibilities -- Fiduciary Responsibility of the General Partner" and
"Investment in Kaneb Partners by Employee Benefit Plans," insofar as they are
descriptions of contracts, agreements or other legal documents, or refer to
statements of law or legal conclusions, are accurate in all material respects
and present fairly the information required to be shown.
28. None of the Companies is or will be, after giving effect to the
offering and sale of the Offered Units and the application of the proceeds
thereof as described in the Final Prospectus, an "investment company" or a
company "controlled" by an "investment company" or a "promoter" or "principal
underwriter" for a "registered 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 Companies is subject to regulation under the Public Utility Holding
Company Act of 1935, as amended.
29. Upon delivery of the Offered Units to the Underwriters pursuant to the
Agreement and payment therefor as contemplated therein, the Underwriters will
acquire the Offered Units free and clear of any liens, encumbrances, security
interests, charges or claims of record (a) in respect of which a financing
statement under the Uniform Commercial Code of the State of Delaware naming the
General Partner or the Partnership as debtor is on file in the office of the
Secretary of State of the State of Delaware or (b) otherwise known (based solely
upon our participation as special counsel in matters relating to the offering of
the Offered Units and without having conducted an independent investigation) to
us, except as created by the Agreement or by the Underwriters or any person who
acquires an interest in the Offered Units through the Underwriters or as
provided by the Delaware Act.
30. The Offered Units are duly authorized for listing, subject only to
official notice of issuance, on the New York Stock Exchange.
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 and as of the signing of the Agreement, 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).
In rendering the opinions expressed in paragraphs 3 through 13, terms used
therein that are defined in the UCC shall have the meanings assigned therein. In
rendering the opinions expressed in paragraphs 3 through 13, we have relied,
without investigation, upon the accuracy and completeness of the certifications
from the office of the Secretary of State of Delaware dated March , 2003, for
each of KSL, the General Partner, the Parent Partnership, the Partnership, KPH,
STI, STS, STH, STOP, STL, and STC that there are no presently effective
financing statements, federal tax liens, or utility security instruments filed
in the office of the Delaware Secretary of State that name such respective
entities as debtor and cover as collateral any of the ownership interests
identified in paragraphs 3 through 13, and further, we have assumed that at all
times from and including the date through which each UCC Search Certificate
conducted its search and to and through the date of the delivery of this opinion
letter, there have been no filings made in the Office of the Secretary of State
of the State of Delaware in which the applicable entities are named as a debtor
and that cover, in whole or in part, or any proceeds thereof.
To our knowledge, there are no material legal or governmental proceedings
pending or threatened against any of the Operating Entities, by or before the
Federal Energy Regulatory Commission ("FERC") or on appeal from the FERC, except
as set forth in or contemplated by the Final Prospectus.
The opinions expressed herein are limited exclusively to the laws of the
State of Texas, the DGCL, the Delaware Act, the Delaware LLC Act and the federal
statutory laws, rules and regulations of the United States of America.
As used herein, the phrase "to our knowledge" or words of similar import
means conscious awareness of facts or other information by the lawyers in our
firm who, based on our records as of 3:00 p.m. on March [ ], 2003, have devoted
substantive attention to legal matters on behalf of the Companies since January
1, 2001. With your consent, we have not examined any records of any court,
administrative tribunal or similar entity.
The opinions expressed herein are furnished to you for your sole benefit in
connection with the transactions contemplated by the Agreement. The opinions
expressed herein may not be relied upon by you for any other purpose and may not
be relied upon for any purpose by any other person without our prior written
consent, except that the transfer agent for the Units may rely upon this opinion
in connection with those transactions.
SCHEDULE I
Underwriter Number of
Firm Units
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc........................................................... 1,800,000
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc........................................................... 900,000
McDonald Investments, Inc.......................................................... 300,000
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Total......................................................................... 3,000,000
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SCHEDULE II
OFFICERS AND DIRECTORS
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Officers Directors
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ - Chairman of the Board and Chief Executive Officer ▇▇▇▇▇▇▇ ▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ - President ▇▇▇▇ ▇. ▇▇▇▇▇▇
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L. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Jr. - Vice President, Regulatory Affairs ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇ - Vice President, Operations ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ - Senior Vice President ▇▇▇▇▇▇▇ ▇. ▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ - Vice President, Treasurer and Secretary ▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇ - Vice President, Transportation ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇ - President of ST Services
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J. ▇▇▇▇ ▇▇▇▇▇ - Acquisition and Planning Manager
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▇▇▇ ▇. Childres - Vice President, Engineering
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▇▇▇ ▇▇▇▇▇▇ - Controller
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