Conformed Bridge Financing Agreement

CONFORMED BRIDGE FINANCING AGREEMENT*


between


KANEB PIPE LINE OPERATING PARTNERSHIP, L.P.,
as Borrower,


TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
as Agent,


and


TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
as initial Lender


$68,000,000


DECEMBER 18, 1995


* Conformed as executed. 2
TABLE OF CONTENTS


Exhibit 10.11


SECTION 1 DEFINITIONS AND TERMS 1
1.1 Definitions 1
1.2 Time References 12
1.3 Other References 12
1.4 Accounting Principles 12


SECTION 2 BORROWINGS 12
2.1 Commitments 12
2.2 Borrowings 12
2.3 Termination 13


SECTION 3 PAYMENT TERMS 13
3.1 Notes and Payments 13
3.2 Interest and Principal Payments 13
3.3 Interest Options 14
3.4 Quotation of Rates 14
3.5 Default Rate 14
3.6 Interest Recapture 14
3.7 Interest Calculations 15
3.8 Maximum Rate 15
3.9 Interest Periods 15
3.10 Conversions 15
3.11 Order of Application 16
3.12 Sharing of Payments, Etc. 16
3.13 Offset 16
3.14 Booking Borrowings 16
3.15 Basis Unavailable or Inadequate for LIBOR Rate 16
3.16 Additional Costs 17
3.17 Change in Laws 18
3.18 Foreign Lenders 18
3.19 Funding Loss 18


SECTION 4 FEES 18
4.1 Treatment of Fees 18
4.2 Agent's and Syndication Agents' Fees 18
4.3 Commitment Fee 18


SECTION 5 SECURITY 19
5.1 Guaranty 19
5.2 Collateral 19
5.3 Additional Security and Guaranties 19
5.4 Collateral Documentation 19


SECTION 6 CONDITIONS PRECEDENT 19
6.1 Initial Borrowing 19
6.2 All Borrowings 19
6.3 General 19


SECTION 7 REPRESENTATIONS AND WARRANTIES 20
7.1 Purpose of Credit Facility 20
7.2 Existence, Good Standing, and Authority 20
7.3 Subsidiaries 20
7.4 [INTENTIONALLY BLANK] 20


(ii) 3
7.5 Authorization and Contravention 20
7.6 Binding Effect 20
7.7 Financial Statements 20
7.8 Litigation 21
7.9 Taxes 21
7.10 Environmental Matters 21
7.11 Employee Plans 21
7.12 Properties; Liens 21
7.13 Government Regulations 21
7.14 Affiliate Transactions 22
7.15 [INTENTIONALLY BLANK]. 22
7.16 Material Agreements 22
7.17 Insurance 22
7.18 Labor Matters 22
7.19 Solvency 22
7.20 Trade Names 22
7.21 Intellectual Property 22
7.22 Full Disclosure 22


SECTION 8 AFFIRMATIVE COVENANTS 23
8.1 Items to be Furnished 23
8.2 Use of Proceeds 24
8.3 Books and Records 24
8.4 Inspections 24
8.5 Taxes 25
8.6 Payment of Obligations 25
8.7 Expenses 25
8.8 Maintenance of Existence, Assets, and Business 25
8.9 Insurance 25
8.10 Preservation and Protection of Rights; Separate Legal Entities 25
8.11 Environmental Laws 25
8.12 Subsidiaries 26
8.13 Indemnification 26


SECTION 9 NEGATIVE COVENANTS 26
9.1 Taxes 26
9.2 Employee Plans 26
9.3 Funded Debt 26
9.4 Liens 27
9.5 Affiliate Transactions 28
9.6 Compliance with Laws and Documents 28
9.7 Loans, Advances, and Investments 28
9.8 Distributions 28
9.9 Asset Transfers 30
9.10 Dissolutions, Mergers, and Consolidations 31
9.11 Assignment 31
9.12 Fiscal Year and Accounting Methods 32
9.13 New Businesses 32
9.14 Government Regulations 32


SECTION 10 FINANCIAL COVENANTS 32
10.1 Current Ratio 32
10.2 Tangible Net Worth 32
10.3 Leverage Ratio 32


(iii) 4
10.4 Fixed Charges Coverage Ratio 32


SECTION 11 DEFAULT 32
11.1 Obligation 32
11.2 Covenants 32
11.3 Debtor Relief 33
11.4 Misrepresentation 33
11.5 Judgments and Attachments 33
11.6 1994 Credit Agreement, Note Agreements, or Intercreditor Agreement 33
11.7 Default Under Other Agreements 33
11.8 Validity and Enforceability of Loan Papers 33
11.9 Change of Control 33
11.10 KPC Merger or Consolidation 33


SECTION 12 RIGHTS AND REMEDIES 34
12.1 Remedies Upon Default 34
12.2 KPP Company Waivers. 34
12.3 Performance by Agent 34
12.4 Not in Control 34
12.5 Course of Dealing 34
12.6 Cumulative Rights 35
12.7 Application of Proceeds 35
12.8 Diminution in Value of Collateral 35
12.9 Certain Proceedings 35


SECTION 13 AGREEMENT AMONG LENDERS 35
13.1 Agent 35
13.2 Expenses 36
13.3 Proportionate Absorption of Losses 37
13.4 Delegation of Duties; Reliance 37
13.5 Limitation of Agent's Liability 37
13.6 Default; Collateral 38
13.7 Limitation of Liability 38
13.8 Relationship of Lenders 38
13.9 Collateral Matters. 38
13.10 Benefits of Agreement 39


SECTION 14 MISCELLANEOUS 39
14.1 Nonbusiness Days 39
14.2 Communications 39
14.3 Form and Number of Documents 39
14.4 Exceptions to Covenants 40
14.5 Survival 40
14.6 Governing Law 40
14.7 Invalid Provisions 40
14.8 Venue; Service of Process; Jury Trial 40
14.9 Amendments, Consents, Conflicts, and Waivers 40
14.10 Multiple Counterparts 41
14.11 Successors and Assigns; Participations 41
14.12 Discharge Only Upon Payment in Full; Reinstatement in Certain Circumstances 43
14.13 Entirety 43


(iv) 5


SCHEDULES AND EXHIBITS


Schedule 2.1 Lenders, Commitments, and Wiring Instructions Schedule 6.1 Closing Documents Schedule 7.2 Jurisdictions of Organization and Business Schedule 7.3 Organizational Structure Schedule 7.8 Litigation Schedule 7.10 Environmental Matters Schedule 7.16 Material Agreements Schedule 7.20 Trade Names Schedule 8.9 Insurance Schedule 9.7 Permitted Investments


Exhibit A Promissory Note Exhibit B Guaranty Exhibit C-1 Amendment to Intercreditor Agreement Exhibit C-2 Amendment to Pledge Agreement Exhibit C-3 Modification to Mortgage Exhibit D-1 Notice of Borrowing Exhibit D-2 Notice of Conversion Exhibit D-3 Compliance Certificate Exhibit D-4 Financial Statements Certificate Exhibit E Opinion of General Counsel Exhibit F Assignment


(v) 6
BRIDGE FINANCING AGREEMENT


THIS AGREEMENT is entered into as of December 18, 1995, between KANEB PIPE LINE OPERATING PARTNERSHIP, L.P., a Delaware limited partnership ("BORROWER"), Lenders (defined below), and TEXAS COMMERCE BANK NATIONAL ASSOCIATION as agent for Lenders. Terms used in this agreement are defined in SECTION 1.


A. Borrower and STOP have entered into the Acquisition Agreement with Steuart Petroleum and certain of its Affiliates for the purpose of acquiring the Steuart Assets. Borrower has requested Agent and Lenders to enter into this agreement to provide Borrowings (that may never exceed the total Commitments) to Borrower on a revolving basis to finance, in part, the acquisition of the Steuart Assets.


B. As of December 22, 1994 (1) Borrower, Agent, and certain financial institutions entered into the December Credit Agreement, (2) Borrower and the other KPP Companies entered into the Note Agreements with Noteholders, and (3) Collateral Trustee, Agent, those certain financial institutions, and Noteholders entered into -- and Borrower and the other KPP Companies consented to -- the Intercreditor Agreement.


C. The Obligation under this agreement is (1) "Qualifying Debt," as that term is defined in the 1994 Credit Agreement, the Note Purchase Agreements, and the Intercreditor Agreement and (2) therefore permitted to be secured by the Collateral on a pari passu basis with the indebtedness under the December Credit Agreement and the Note Agreements.


D. Subject to and upon the terms and conditions of the Loan Papers, Agent and Lenders have agreed to extend Borrowings under the agreement to Borrower.


ACCORDINGLY, for adequate and sufficient consideration, Borrower, Lenders, and Agent agree as follows:


SECTION I. DEFINITIONS AND TERMS.


1.1 Definitions. As used in the Loan Papers:


ACQUISITION AGREEMENT means, collectively, (a) the Asset Purchase Agreement dated as of August 27, 1995, between Steuart Petroleum, SPC Terminals, Incorporated, STOP, and Borrower, (b) the Piney Point Pipeline Asset Purchase Agreement, dated as of August 27, 1995, between Piney Point Industries, Inc., STOP, and Borrower, and (c) the Purchase Agreement dated as of August 27, 1995, between Steuart Investment Company, STOP, and Borrower, for the purchase of assets at Cockpit Point, as each may be amended from time to time, providing for the purchase by STOP of the Steuart Assets and the guaranty of STOP's payment and performance under each of the above by Borrower.


ACTUAL TERMINATION DATE means the earlier of either (a) the Stated Termination Date or (b) the effective date that the Commitments are otherwise canceled or terminated under this agreement.


AFFILIATE of a Person means any other individual or entity who (directly or indirectly through ownership, voting securities, contract, or otherwise) controls, is controlled by, or under common control with that Person. For purposes of this definition (a) "control" or similar terms mean the power to direct or cause the direction of management or policies of that Person, but (b) none of the KPP Companies or Restricted Subsidiaries at any time are "Affiliates" of each other.


AGENT means, at any time, Texas Commerce Bank National Association (or its successor appointed under SECTION 13) acting as agent for Lenders under the Loan Papers.


ALTERNATE BASE RATE means, for any day, the annual interest rate (rounded upward, if necessary, to the nearest 0.0625%) equal to the highest of either (a) the Prime Rate, (b) the Secondary CD Rate plus 1%, or (c) the Federal Funds Rate plus 0.50%. 7
ALTERNATE BASE RATE BORROWING means a Borrowing bearing interest at the Alternate Base Rate.


BANK OF SCOTLAND LOAN AGREEMENT means the Loan Agreement dated as of December 1, 1995, between KSI, KPC, and Bank of Scotland, providing for a revolving line of credit up to an aggregate amount of $15,000,000.


BORROWER is defined in the preamble to this agreement.


BORROWER COMPANIES means Borrower and its Subsidiaries (other than, for all purposes except financial reporting and financial covenant calculations, its Insignificant Subsidiaries).


BORROWER PARTNERSHIP AGREEMENT means the Amended and Restated Agreement of Limited Partnership of Kaneb Pipe Line Operating Partnership, L.P., dated September 27, 1989, a certified copy of which has been delivered to Agent under SCHEDULE 6.1.


BORROWING means any amount disbursed (a) by one or more Lenders to Borrower under the Loan Papers, either as an original disbursement of funds or the continuation of an outstanding amount, or (b) by any Agent or Lender in accordance with, and to satisfy the obligations of any KPP Company under, any Loan Paper.


BORROWING DATE is defined in SECTION 2.2(a).


BUSINESS DAY means (a) for all purposes, any day other than Saturday, Sunday, and any other day that commercial banks are authorized by Law to be closed in Texas or New York and (b) for purposes of any LIBOR Rate Borrowing, a day when commercial banks are open for international business in London.


CLOSING DATE means the initial Borrowing Date, which must be no later than December 19, 1995, if ever.


CODE means the Internal Revenue Code of 1986.


COLLATERAL means all types and items of property described as collateral in the Security Documents.


COLLATERAL TRUSTEE means, at any time, Texas Commerce Bank National Association (or its successor appointed under the Intercreditor Agreement) acting as collateral trustee under the Intercreditor Agreement, Mortgage, and Pledge Agreement.


COMMITMENT means, for each Lender, the amount stated beside its name on SCHEDULE 2.1, which amount is subject to reduction and cancellation under this agreement.


COMMITMENT PERCENTAGE means, for any Lender, the proportion (stated as a percentage) that its Commitment bears to the total Commitments.


COMPLIANCE CERTIFICATE means, for any Person, a certificate substantially in the form of EXHIBIT D-3 and signed by a Responsible Officer of that Person.


CURRENT FINANCIALS means, for KPP or Borrower, as the case may be (a) either (i) their respective consolidated Financial Statements for the year ending December 31, 1994, together with their Financial Statements for the portion of the fiscal year ending on September 30, 1995, or (ii) at any time after their respective annual Financial Statements are first delivered under SECTION 8.1, their annual consolidated Financial Statements then most recently delivered to Lenders under SECTION 8.1, together with their quarterly Financial Statements then most recently delivered to Lenders under SECTION 8.1, but (b) does not include the results of operation and cash flows for any Company (except for Steuart Petroleum) for the time period before it becomes a member of KPP's or Borrower's, as the case may be, consolidated group except 8 for any periods for which that Company's Financial Statements were audited by an accounting firm reasonably acceptable to Agent.


DEBT -- for any Person, at any time, and without duplication -- means (a) any obligation of that Person either for borrowed money or incurred for the purchase price of assets or services, (b) any indebtedness or obligation secured by or constituting a Lien on property of that Person, whether or not that Person is directly liable for that indebtedness or obligation, (c) the face amount of all letters of credit, bankers' acceptances, or similar facilities, whether drawn or undrawn, for which that Person is the account party, (d) every lease obligation that should under GAAP be reflected on that Person's balance sheet as a capitalized-lease obligation, (e) the net amount payable by that Person for settlement of all interest-rate swaps or similar arrangements (based on the assumption that each such swap or similar arrangement terminated) as of the end of the most-recently-ended-fiscal quarter of that Person, and (f) all Guaranty Liabilities of that Person in respect of Debt of any other person or entity.


DEBTOR LAWS means the Bankruptcy Code of the United States of America and all other applicable liquidation, conservatorship, bankruptcy, moratorium, rearrangement, receivership, insolvency, reorganization, suspension of payments, fraudulent transfer or conveyance, or similar Laws generally affecting creditors' Rights.


DEFAULT is defined in SECTION 11.


DEFAULT PERCENTAGE means, for any Lender, the proportion (stated as a percentage) that the Principal Debt owed to it bears to the total Principal Debt.


DEFAULT RATE means, for any day, an annual interest rate equal from day to day to the lesser of either (a) the then-existing Alternate Base Rate plus 2.0% or (b) the Maximum Rate.


DETERMINING LENDERS means, at any time, any combination of Lenders holding at least 51% of either the total Commitments or, if the Commitments have been canceled or terminated, the Principal Debt.


DISTRIBUTION, for any shares of any capital stock, partnership units or interests, or other equity securities or interests (for purposes of this definition, "SECURITIES") issued by a Person, means (a) the retirement, redemption, purchase, or other acquisition for value of those securities, (b) the declaration or payment of any dividend or other distribution with respect to those securities, (c) any loan or advance by that Person to, or other investment by that Person in, the holder of any of those securities, and (d) any other payment by that Person with respect to those securities.


EBITDA -- for any Person, for any period, and without duplication -- means the sum of net income plus (to the extent actually deducted in calculating net income) deferred Taxes, depreciation, amortization, and cash interest payments on Debt (including the interest portion of capitalized leases).


(a) For the purpose of determining LIBOR Rate, whether
Funded Debt may be assumed or incurred in connection with the purchase
of assets of any Person or in connection with a merger or
consolidation, and the ratios described in SECTIONS 10.3 and 10.4:


(i) the determination of consolidated EBITDA for
any 12-calendar-month period includes the consolidated EBITDA
attributable solely to the assets or Person that has been or
is proposed to be purchased or merged or consolidated with for
that period, after elimination of the portions of earnings
included in that consolidated EBITDA that are or may be
attributable to (A) operations to be discontinued, (B) sources
of revenues that are unavailable to the KPP Companies after
the purchase, merger, or consolidation, (C) the gain (net of
any Tax effect) resulting from the sale of any capital assets
other than in the ordinary course of business, (D) the total
amount of unusual or nonrecurring gains (net of any Tax
effect), and (E) other adjustments (such as additional or
increased expenses) appropriate to reflect the earnings that
would have been realized by the KPP Companies had the purchase
of property or Person or the merger or consolidation occurred
at the inception of that period; only if 9
(ii) KPP's chief financial officer provides to
Agent a certificate, in form and substance acceptable to
...