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Bridge Loan Agreement

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Title:

Bridge Loan Agreement

Entities:

JPMorgan Chase Bank; Kaneb Pipe Line Partners LP; Kaneb Services LLC; McGraw-Hill Companies Inc.; Suntrust Capital Markets, Inc.; Bank of New York; Fulbright & Jaworski

Date:

2003

Size:

Preview shows 22KB of 229KB total

Price:

$57

ID:

#164250

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================================================================================

BRIDGE LOAN AGREEMENT

dated as of December __, 2002

among

KANEB PIPE LINE OPERATING PARTNERSHIP, L.P.

as Borrower

KANEB PIPE LINE PARTNERS, L.P.

as KPP

THE LENDERS FROM TIME TO TIME PARTY HERETO

and

SUNTRUST BANK

as Administrative Agent

================================================================================

SUNTRUST ROBINSON HUMPHREY,

a division of SUNTRUST CAPITAL MARKETS, INC.

as Lead Arranger and Book Manager

{PAGE}

TABLE OF CONTENTS

{TABLE}

{CAPTION}

Page

Article I DEFINITIONS; CONSTRUCTION

{S} {C} {C}

Section 1.1. Definitions..........................................................................................1

Section 1.2. Classifications of Loans............................................................................18

Section 1.3. Accounting Terms and Determination..................................................................18

Section 1.4. Terms Generally.....................................................................................19

Article II AMOUNT AND TERMS OF THE COMMITMENTS

Section 2.1. [Intentionally Omitted].............................................................................19

Section 2.2. The Bridge Loan.....................................................................................19

Section 2.3. Fees................................................................................................20

Section 2.4. Funding of the Bridge Loan..........................................................................20

Section 2.5. Interest Elections..................................................................................20

Section 2.6. [Intentionally Omitted].............................................................................21

Section 2.7. Repayment of the Bridge Loan........................................................................21

Section 2.8. Evidence of Indebtedness............................................................................21

Section 2.9. Prepayments.........................................................................................22

Section 2.10. Interest on Loans..................................................................................22

Section 2.11. [Intentionally Omitted]............................................................................23

Section 2.12. Computation of Interest............................................................................23

Section 2.13. Inability to Determine Interest Rates..............................................................23

Section 2.14. Illegality.........................................................................................24

Section 2.15. Increased Costs....................................................................................24

Section 2.16. Funding Indemnity..................................................................................25

Section 2.17. Taxes..............................................................................................25

Section 2.18. Payments Generally; Pro Rata Treatment; Sharing of Set-offs........................................27

Section 2.19. Mitigation of Obligations; Replacement of Lenders..................................................28

Article III CONDITIONS PRECEDENT TO LOANS

Section 3.1. Conditions To Effectiveness.........................................................................29

Article IV REPRESENTATIONS AND WARRANTIES

Section 4.1. Existence; Power....................................................................................31

Section 4.2. Organizational Power; Authorization; Enforceability.................................................31

Section 4.3. Governmental Approvals; No Conflicts................................................................31

Section 4.4. Financial Statements................................................................................31

Section 4.5. Litigation and Environmental Matters................................................................32

Section 4.6. Compliance with Laws and Agreements.................................................................32

Section 4.7. Investment Company Act, Etc.........................................................................32

Section 4.8. Taxes...............................................................................................32

Section 4.9. Margin Regulations................................................................................33

Section 4.10. ERISA..............................................................................................33

Section 4.11. Ownership of Property..............................................................................33

Section 4.12. Disclosure.........................................................................................33

Section 4.13. Labor Relations....................................................................................34

Section 4.14. Acquisition Agreement..............................................................................34

Section 4.15. Subsidiaries, Significant Affiliates and Guarantors................................................34

Section 4.16. Liens..............................................................................................34

Article V AFFIRMATIVE COVENANTS

Section 5.1. Financial Statements and Other Information..........................................................34

Section 5.2. Notices of Material Events..........................................................................36

Section 5.3. Existence; Conduct of Business......................................................................36

Section 5.4. Compliance with Laws, Etc...........................................................................36

Section 5.5. Payment of Obligations..............................................................................37

Section 5.6. Books and Records...................................................................................37

Section 5.7. Visitation, Inspection, Etc.........................................................................37

Section 5.8. Maintenance of Properties; Insurance................................................................37

Section 5.9. Use of Proceeds.....................................................................................37

Section 5.10. Additional Subsidiaries............................................................................38

Article VI FINANCIAL COVENANTS

Section 6.1. Funded Debt to EBITDA...............................................................................38

Section 6.2. Consolidated EBITDA to Consolidated Interest Expense................................................38

Section 6.3. Consolidated Net Worth..............................................................................38

Article VII NEGATIVE COVENANTS

Section 7.1. Indebtedness........................................................................................39

Section 7.2. Negative Pledge.....................................................................................39

Section 7.3. Fundamental Changes.................................................................................40

Section 7.4. Investments, Loans, Etc.............................................................................40

Section 7.5. Restricted Payments.................................................................................41

Section 7.6. Sale of Assets......................................................................................41

Section 7.7. Transactions with Affiliates........................................................................41

Section 7.8. Restrictive Agreements..............................................................................42

Section 7.9. Sale and Leaseback Transactions.....................................................................42

Section 7.10. Hedging Agreements.................................................................................42

Section 7.11. Amendment to Material Documents....................................................................42

Section 7.12. Accounting Changes.................................................................................42

Article VIII KPP GUARANTEe

Section 8.1. Guarantee...........................................................................................43

Section 8.2. Guaranteed Obligations Not Waived...................................................................43

Section 8.3. Guarantee of Payment................................................................................44

Section 8.4. No Discharge or Diminishment of Guarantee...........................................................44

Section 8.5. Defenses of Borrower Waived.........................................................................44

Section 8.6. Agreement to Pay; Subordination.....................................................................45

Section 8.7. Information.........................................................................................45

Section 8.8. Representations and Warranties......................................................................45

Section 8.9. Termination.........................................................................................45

Article IX EVENTS OF DEFAULT

Section 9.1. Events of Default...................................................................................46

Article X THE ADMINISTRATIVE AGENT

Section 10.1. Appointment of Administrative Agent................................................................48

Section 10.2. Nature of Duties of Administrative Agent...........................................................48

Section 10.3. Lack of Reliance on the Administrative Agent.......................................................49

Section 10.4. Certain Rights of the Administrative Agent.........................................................49

Section 10.5. Reliance by Administrative Agent...................................................................50

Section 10.6. The Administrative Agent in its Individual Capacity................................................50

Section 10.7. Successor Administrative Agent.....................................................................50

Section 10.8. Authorization to Execute other Loan Documents......................................................51

Article XI MISCELLANEOUS

Section 11.1. Notices............................................................................................51

Section 11.2. Waiver; Amendments.................................................................................52

Section 11.3. Expenses; Indemnification..........................................................................53

Section 11.4. Successors and Assigns.............................................................................54

Section 11.5. Governing Law; Jurisdiction; Consent to Service of Process.........................................57

Section 11.6. WAIVER OF JURY TRIAL...............................................................................57

Section 11.7. Right of Setoff....................................................................................58

Section 11.8. Counterparts; Integration..........................................................................58

Section 11.9. Survival...........................................................................................58

Section 11.10. Severability......................................................................................59

Section 11.11. Confidentiality...................................................................................59

Section 11.12. Interest Rate Limitation..........................................................................59

{/TABLE}

{PAGE}

Schedules

Schedule I - Applicable Margin

Schedule II - Existing Indebtedness

Schedule 4.5 - Environmental Matters

Schedule 4.15 - Subsidiaries

Schedule 7.2 - Existing Liens

Exhibits

Exhibit A - Form of Note

Exhibit B - Form of Assignment and Acceptance

Exhibit C - Form of Subsidiary Guarantee Agreement

Exhibit E - Form of Continuation/Conversion

Exhibit F - Form of Opinion

{PAGE}

BRIDGE LOAN AGREEMENT

THIS BRIDGE LOAN AGREEMENT (this Agreement") is made and entered into as of

December __, 2002, by and among KANEB PIPE LINE OPERATING PARTNERSHIP, L.P., a

Delaware limited partnership (the "Borrower"), KANEB PIPE LINE PARTNERS, L.P., a

Delaware limited partnership ("KPP"), the banks and other financial institutions

from time to time party hereto (the "Lenders") and SUNTRUST BANK, ("SunTrust")

as Administrative Agent for the Lenders (in such capacity, together with its

successors in such capacity, the "Administrative Agent").

W I T N E S S E T H:

WHEREAS, the Borrower has requested that the Lenders make to it an

unsecured bridge term loan in the initial principal amount of $175,000,000; and

WHEREAS, subject to the terms and conditions of this Agreement (including,

without limitation, the guaranty and other agreements of KPP set forth herein),

the Lenders to the extent of their respective Commitments as defined herein, are

willing severally to make such bridge term loan.

NOW, THEREFORE, in consideration of the premises and the mutual covenants

herein contained, the Borrower, KPP, the Lenders and the Administrative Agent

agree as follows:

Article I - DEFINITIONS; CONSTRUCTION

Section 1.1. Definitions.

In addition to the other terms defined herein, the following terms used

herein shall have the meanings herein specified (to be equally applicable to

both the singular and plural forms of the terms defined):

"Acquisition" shall mean the acquisition of the Seller's Northern

Great Plains Pipeline System and associated product terminals.

"Acquisition Agreement" shall mean the Asset Purchase Agreement dated

as of November 12, 2002, between the Borrower and the Seller.

"Acquisition Documents" shall mean, collectively, the Acquisition

Agreement and all other documents, instruments, agreements, notes,

guarantees, opinions, and certificates executed in connection therewith.

"Additional Debt" shall mean Indebtedness issued or incurred by KPP,

Borrower or any Significant Affiliate after the date hereof, other than

Indebtedness under this Agreement or under the Revolving Credit Agreement.

"Adjusted LIBO Rate" shall mean, with respect to each Interest Period

for a Eurodollar Loan, the rate per annum obtained by dividing (i) LIBOR

for such Interest Period by (ii) a percentage equal to 1.00 minus the

Eurodollar Reserve Percentage.

"Administrative Agent" shall have the meaning set forth in the opening

paragraph hereof.

"Administrative Questionnaire" shall mean, with respect to each

Lender, an administrative questionnaire in the form prepared by the

Administrative Agent and submitted to the Administrative Agent duly

completed by such Lender.

"Affiliate" shall mean, as to any Person, any other Person that

directly, or indirectly through one or more intermediaries, Controls, is

Controlled by, or is under common Control with, such Person.

"Aggregate Commitments" shall mean, collectively, all Commitments of

all Lenders hereunder which is $175,000,000.

"Applicable Lending Office" shall mean, for each Lender and for each

Type of Loan, the "Lending Office" of such Lender (or an Affiliate of such

Lender) designated for such Type of Loan in the Administrative

Questionnaire submitted by such Lender or such other office of such Lender

(or an Affiliate of such Lender) as such Lender may from time to time

specify to the Administrative Agent and the Borrower as the office by which

its Loans of such Type are to be made and maintained.

"Applicable Margin" shall mean a percentage per annum determined by

reference to the Reference Ratings then in effect as set forth on Schedule

I plus the Ticking Margin; provided, that any change in the Applicable

Margin resulting from a change in any Reference Rating shall be effective

on the day on which the applicable rating agency changes its rating and

shall continue until the day prior to the day that a further change becomes

effective. The Applicable Margin shall initially be set at Level I.

"Asset Disposition" shall mean, with respect to KPP or any Significant

Affiliate, any sale, transfer, conveyance, lease or other disposition

(including by way of merger, consolidation or sale-leaseback) by KPP or

such Significant Affiliate to any other Person (other than by any Person to

KPP or a Guarantor or by a Significant Affiliate to any other Significant

Affiliate) of any assets of KPP or such Significant Affiliate (including,

without limitation, any Equity Interests owned by KPP or such Significant

Affiliate). The term "Asset Disposition" shall not include (i) dispositions

of inventory in the ordinary course of business, (ii) dispositions of other

assets in the ordinary course of business having a Diluted Value of not

more than $15,000,000 in the aggregate during the Term of this Agreement,

(iii) the grant of a Lien by KPP or any Significant Affiliate in any assets

securing a borrowing by, or contractual performance obligation of, KPP or

such Significant Affiliate otherwise permitted under this Agreement, and

(iv) dispositions of Equity Interests in connection with directors'

qualifying shares or comparable Equity Interests.

"Assignment and Acceptance" shall mean an assignment and acceptance

entered into by a Lender and an assignee (with the consent of any party the

consent of which is required by Section 11.4(b)) and accepted by the

Administrative Agent, in the form of Exhibit B attached hereto or any other

form approved by the Administrative Agent.

"Base Rate" shall mean the higher of (i) the per annum rate which the

Administrative Agent publicly announces from time to time to be its prime

lending rate, as in effect from time to time, and (ii) the Federal Funds

Rate as in effect from time to time plus one-half of one percent (0.50%).

The Administrative Agent's prime lending rate is a reference rate and does

not necessarily represent the lowest or best rate charged to customers. The

Administrative Agent may make commercial loans or other loans at rates of

interest at, above or below the Administrative Agent's prime lending rate.

Each change in the Administrative Agent's prime lending rate shall be

effective from and including the date such change is publicly announced as

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