Exhibit 10.02


 




 


 





5-YEAR
TERM CREDIT AGREEMENT


 


dated
as of July 1, 2005


 


among


 


VALERO
LOGISTICS OPERATIONS, L.P.


 


VALERO
L.P.


 


The
Lenders Party Hereto


 


and


 


JPMORGAN
CHASE BANK, N.A.,


as
Administrative Agent


 


BARCLAYS
BANK PLC,


as
Syndication Agent


 


and


 


MIZUHO
CORPORATE BANK (USA),


ROYAL
BANK OF CANADA,


THE
ROYAL BANK OF SCOTLAND PLC,


THE
BANK OF NOVA SCOTIA,


 


and


 


SUNTRUST
BANK,


as
Co-Documentation Agents


 










 


J.P.
MORGAN SECURITIES INC. AND BARCLAYS CAPITAL


as
Joint Bookrunners and Co-Lead Arrangers


 




 





 





















 


TABLE OF CONTENTS


 


	
  ARTICLE I

  	
   

  
	
  Definitions

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 1.01.

  	
  Defined Terms

  	
   

  
	
  Section 1.02.

  	
  Classification of Loans and Borrowings

  	
   

  
	
  Section 1.03.

  	
  Terms Generally

  	
   

  
	
  Section 1.04.

  	
  Accounting Terms; GAAP

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
   

  
	
  The
  Credits

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.01.

  	
  Commitments

  	
   

  
	
  Section 2.02.

  	
  Loans and Borrowings

  	
   

  
	
  Section 2.03.

  	
  Requests for Borrowings

  	
   

  
	
  Section 2.04.

  	
  Funding of Borrowings

  	
   

  
	
  Section 2.05.

  	
  Interest Elections

  	
   

  
	
  Section 2.06.

  	
  Termination of Commitments

  	
   

  
	
  Section 2.07.

  	
  Repayment of Loans; Evidence of Debt

  	
   

  
	
  Section 2.08.

  	
  Prepayment of Loans

  	
   

  
	
  Section 2.09.

  	
  Fees

  	
   

  
	
  Section 2.10.

  	
  Interest

  	
   

  
	
  Section 2.11.

  	
  Alternate Rate of Interest

  	
   

  
	
  Section 2.12.

  	
  Increased Costs

  	
   

  
	
  Section 2.13.

  	
  Break Funding Payments

  	
   

  
	
  Section 2.14.

  	
  Taxes

  	
   

  
	
  Section 2.15.

  	
  Payments Generally; Pro Rata Treatment;
  Sharing of Set-offs

  	
   

  
	
  Section 2.16.

  	
  Mitigation Obligations; Replacement of
  Lenders

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
   

  
	
  Representations and Warranties

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 3.01.

  	
  Organization; Powers

  	
   

  
	
  Section 3.02.

  	
  Authorization; Enforceability

  	
   

  
	
  Section 3.03.

  	
  Governmental Approvals; No Conflicts

  	
   

  
	
  Section 3.04.

  	
  Financial Condition; No Material Adverse
  Change

  	
   

  
	
  Section 3.05.

  	
  Properties

  	
   

  
	
  Section 3.06.

  	
  Litigation and Environmental Matters

  	
   

  
	
  Section 3.07.

  	
  Compliance with Laws and Agreements

  	
   

  
	
  Section 3.08.

  	
  Investment and Holding Company Status

  	
   

  
	
  Section 3.09.

  	
  Taxes

  	
   

  
	
  Section 3.10.

  	
  ERISA

  	
   

  
	
  Section 3.11.

  	
  Disclosure

  	
   

  
	
  Section 3.12.

  	
  Investments and Guarantees

  	
   

  
	
  Section 3.13.

  	
  Casualties; Taking of Property

  	
   

  



 





















 


	
  ARTICLE IV

  	
   

  
	
  Conditions

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 4.01.

  	
  Effective Date

  	
   

  
	
  Section 4.02.

  	
  Each Credit Event

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
   

  
	
  Affirmative Covenants

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 5.01.

  	
  Financial Statements and Other Information

  	
   

  
	
  Section 5.02.

  	
  Notices of Material Events

  	
   

  
	
  Section 5.03.

  	
  Existence; Conduct of Business

  	
   

  
	
  Section 5.04.

  	
  Payment of Obligations

  	
   

  
	
  Section 5.05.

  	
  Maintenance of Properties; Insurance

  	
   

  
	
  Section 5.06.

  	
  Books and Records; Inspection Rights

  	
   

  
	
  Section 5.07.

  	
  Compliance with Laws

  	
   

  
	
  Section 5.08.

  	
  Use of Proceeds

  	
   

  
	
  Section 5.09.

  	
  Environmental Laws

  	
   

  
	
  Section 5.10.

  	
  Subsidiaries

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
   

  
	
  Negative Covenants

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 6.01.

  	
  Indebtedness

  	
   

  
	
  Section 6.02.

  	
  Liens

  	
   

  
	
  Section 6.03.

  	
  Fundamental Changes

  	
   

  
	
  Section 6.04.

  	
  Investments, Loans, Advances, Guarantees
  and Acquisitions

  	
   

  
	
  Section 6.05.

  	
  Swap Agreements

  	
   

  
	
  Section 6.06.

  	
  Restricted Payments

  	
   

  
	
  Section 6.07.

  	
  Transactions with Affiliates

  	
   

  
	
  Section 6.08.

  	
  Restrictive Agreements

  	
   

  
	
  Section 6.09.

  	
  Limitation on Modifications of Other
  Agreements

  	
   

  
	
  Section 6.10.

  	
  Creation of Subsidiaries

  	
   

  
	
  Section 6.11.

  	
  Financial Condition Covenants

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
   

  
	
  Events of Default

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
   

  
	
  MLP Guarantee

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 8.01.

  	
  MLP Guarantee

  	
   

  
	
  Section 8.02.

  	
  Subrogation

  	
   

  
	
  Section 8.03.

  	
  Amendments, etc. with respect to the
  Borrower Obligations

  	
   

  
	
  Section 8.04.

  	
  Guarantee Absolute and Unconditional

  	
   

  
	
  Section 8.05.

  	
  Reinstatement

  	
   

  
	
  Section 8.06.

  	
  Payments

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX

  	
   

  
	
  The Administrative Agent

  	
   

  



 


ii





















 


	
  ARTICLE X

  	
   

  
	
  Miscellaneous

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 10.01.

  	
  Notices

  	
   

  
	
  Section 10.02.

  	
  Waivers; Amendments

  	
   

  
	
  Section 10.03.

  	
  Expenses; Indemnity; Damage Waiver

  	
   

  
	
  Section 10.04.

  	
  Successors and Assigns

  	
   

  
	
  Section 10.05.

  	
  Survival

  	
   

  
	
  Section 10.06.

  	
  Counterparts; Integration; Effectiveness

  	
   

  
	
  Section 10.07.

  	
  Severability

  	
   

  
	
  Section 10.08.

  	
  Right of Setoff

  	
   

  
	
  Section 10.09.

  	
  Governing Law; Jurisdiction; Consent to
  Service of Process

  	
   

  
	
  Section 10.10.

  	
  WAIVER OF JURY TRIAL

  	
   

  
	
  Section 10.11.

  	
  Headings

  	
   

  
	
  Section 10.12.

  	
  Confidentiality

  	
   

  
	
  Section 10.13.

  	
  Interest Rate Limitation

  	
   

  
	
  Section 10.14.

  	
  Limitation of Liability

  	
   

  
	
  Section 10.15.

  	
  USA PATRIOT Act

  	
   

  
	
   

  	
   

  	
   

  
	
  SCHEDULES:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedule 2.01
  – Commitments

  	
   

  
	
  Schedule 3.06
  – Disclosed Matters

  	
   

  
	
  Schedule 6.01
  – Existing Indebtedness

  	
   

  
	
  Schedule 6.04
  – Existing Investments

  	
   

  
	
  Schedule 6.07
  – Affiliate Agreements

  	
   

  
	
  Schedule 6.08
  – Existing Restrictions

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBITS:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit A
  — Form of Assignment and Assumption

  	
   

  
	
  Exhibit B
  — Form of Opinion of the Borrower’s and the MLP’s Counsel

  	
   

  
	
  Exhibit C
  — Form of Subsidiary Guaranty Agreement

  	
   

  



 


iii





















 


5-YEAR TERM CREDIT
AGREEMENT dated as of July 1, 2005 among VALERO LOGISTICS OPERATIONS,
L.P., a Delaware limited partnership, VALERO L.P., a Delaware limited
partnership, the LENDERS party hereto, JPMORGAN CHASE BANK, N.A., as
Administrative Agent, BARCLAYS BANK PLC, as Syndication Agent, and MIZUHO
CORPORATE BANK (USA), ROYAL BANK OF CANADA, THE ROYAL BANK OF SCOTLAND PLC, THE
BANK OF NOVA SCOTIA, and SUNTRUST BANK, as Co-Documentation Agents.


 


The parties hereto agree
as follows:


 


ARTICLE I

Definitions


 


Section 1.01.                             Defined Terms.  As used in this Agreement, the following
terms have the meanings specified below:


 


“ABR”, when used
in reference to any Loan or Borrowing, refers to whether such Loan, or the
Loans comprising such Borrowing, are bearing interest at a rate determined by
reference to the Alternate Base Rate.


 


“Acquired Companies”
means, collectively, KSL and KPP, and their respective subsidiaries.


 


“Acquisition” means the mergers of KPP
and KSL into Wholly-Owned Subsidiaries of the MLP pursuant to the terms and
conditions of the Acquisition Documents.


 


“Acquisition Documents”
means (a) Agreement and Plan of Merger dated as of October 31, 2004
by and among Valero L.P., Riverwalk Logistics, L.P., Valero GP, LLC, VLI Sub A
LLC and KSL and (b) Agreement and Plan of Merger dated as of October 31,
2004 by and among Valero L.P., Riverwalk Logistics, L.P., Valero GP, LLC, VLI
Sub B LLC, KPP, and Kaneb Pipe Line Company LLC, in each case, as amended,
modified or supplemented.


 


“Adjusted LIBO Rate”
means, with respect to any Eurodollar Borrowing for any Interest Period, an
interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%)
equal to (a) the LIBO Rate for such Interest Period multiplied by (b) the
Statutory Reserve Rate.


 


“Administrative Agent”
means JPMorgan Chase Bank, N.A., in its capacity as administrative agent for
the Lenders hereunder.


 


“Administrative
Questionnaire” means an Administrative Questionnaire in a form supplied by
the Administrative Agent.


 


“Affiliate” means,
with respect to a specified Person, another Person that directly, or indirectly
through one or more intermediaries, Controls or is Controlled by or is under
common Control with the Person specified.


 


“Agreement” means
this 5-Year Term Credit Agreement, as the same may be amended, modified.
supplemented or restated from time to time in accordance herewith.


 


1





















 


“Alternate Base Rate”
means, for any day, a rate per annum equal to the higher of (a) the Prime
Rate in effect on such day and (b)  the Federal Funds Effective Rate in
effect on such day plus 1/2 of 1%.  Any
change in the Alternate Base Rate due to a change in the Prime Rate or the
Federal Funds Effective Rate shall be effective from and including the
effective date of such change in the Prime Rate or the Federal Funds Effective
Rate, respectively.


 


“Applicable Percentage”
means, with respect to any Lender (a) at any time prior to the expiration
of the Availability Period, the percentage of the total Commitments represented
by such Lender’s Commitment and (b) at any time after the expiration of
the Availability Period, the percentage of the aggregate Credit Exposures
represented by such Lender’s Credit Exposure, giving effect to any assignments.


 


“Applicable Rate” means, for any day,
with respect to any ABR Loan or Eurodollar Loan, as the case may be, the
applicable rate per annum set forth below under the caption “ABR Spread” or “Eurodollar
Spread”, as the case may be, based upon the ratings by Moody’s and/or S&P,
respectively, applicable on such date to the Index Debt:


 


	
  Index Debt Ratings:

  	
   

  	
  ABR

  Spread

  	
   

  	
  Eurodollar

  Spread

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Tier 1

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Greater than
  BBB or Baa2

  	
   

  	
  0.00

  	
  %

  	
  0.500

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Tier 2

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BBB or Baa2

  	
   

  	
  0.00

  	
  %

  	
  0.625

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Tier 3

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BBB- or Baa3

  	
   

  	
  0.000

  	
  %

  	
  0.750

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Tier 4

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BB+ or Ba1

  	
   

  	
  0.250

  	
  %

  	
  1.250

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Tier 5

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Less than
  BB+ or Ba1

  	
   

  	
  0.500

  	
  %

  	
  1.500

  	
  %

  



 


For purposes of the foregoing, (i) if either Moody’s or S&P
shall not have in effect a rating for the Index Debt (after having established
such a rating and other than by reason of the circumstances referred to in the
last sentence of this definition), then such rating agency shall be deemed to
have established a rating in Tier 5; (ii) if both Moody’s and S&P have
established a rating for the Index Debt and such ratings established or deemed
to have been established by Moody’s and S&P shall fall within different
Tiers, then (a) so long as either or both such ratings are Investment
Grade or better, the Applicable Rate shall be based on the higher of the two
ratings, unless one of the two ratings is two or more Tiers lower than the
other, in which case the Applicable Rate shall be determined by reference to
the Tier next below that of the higher of the


 


2





















 


two ratings; and (b) so long as both such ratings are below
Investment Grade, the Applicable Rate shall be based on the lower of the two
ratings, unless one of the two ratings is two or more Tiers lower than the
other, in which case the Applicable Rate shall be determined by reference to
the Tier next above that of the lower of the two ratings and (iii) if the
ratings established or deemed to have been established by Moody’s and S&P
for the Index Debt shall be changed (other than as a result of a change in the
rating system of Moody’s or S&P), such change shall be effective as of the
date on which it is first announced by the applicable rating agency,
irrespective of when notice of such change shall have been furnished by the
Borrower to the Administrative Agent and the Lenders pursuant to Section 5.01
or otherwise.  Each change in the
Applicable Rate shall apply during the period commencing on the effective date
of such change and ending on the date immediately preceding the effective date
of the next such change.  If the rating
system of Moody’s or S&P shall change, or if either such rating agency
shall cease to be in the business of rating corporate debt obligations, the
Borrower and the Lenders shall negotiate in good faith to amend this definition
to reflect such changed rating system or the unavailability of ratings from
such rating agency and, pending the effectiveness of any such amendment, the
Applicable Rate shall be determined by reference to the rating most recently in
effect prior to such change or cessation.


 


“Approved Fund” has the meaning
assigned to such term in Section 10.04.


 


“Assessment Rate”
means, for any day, the annual assessment rate in effect on such day that is
payable by a member of the Bank Insurance Fund classified as “well-capitalized”
and within supervisory subgroup “B” (or a comparable successor risk
classification) within the meaning of 12 C.F.R. Part 327 (or any successor
provision) to the Federal Deposit Insurance Corporation for insurance by such
Corporation of time deposits made in dollars at the offices of such member in
the United States; provided that if, as a result of any change in any
law, rule or regulation, it is no longer possible to determine the
Assessment Rate as aforesaid, then the Assessment Rate shall be such annual
rate as shall be determined by the Administrative Agent to be representative of
the cost of such insurance to the Lenders.


 


“Assignment and
Assumption” means an assignment and assumption entered into by a Lender and
an assignee (with the consent of any party whose consent is required by Section 10.04),
and accepted by the Administrative Agent, in the form of Exhibit A or any
other form approved by the Administrative Agent.


 


“Availability Period”
means the period from and including the Effective Date to but excluding the
earlier of the date that is ten days after the Effective Date and the date of
termination of the Commitments.


 


“Benefit Arrangement”
means at any time an employee benefit plan within the meaning of Section 3(3) of
ERISA which is not a Plan or a Multiemployer Plan and which is maintained or
otherwise contributed to by any ERISA Affiliate.


 


“Board” means the
Board of Governors of the Federal Reserve System of the United States of America.


 


“Borrower” means
Valero Logistics Operations, L.P., a Delaware limited partnership.


 


3





















 


“Borrower Obligations”
means the collective reference to all amounts owing by the Borrower and its
Subsidiaries pursuant to this Agreement and the other Guaranteed Documents,
including, without limitation, the unpaid principal of and interest on the
Loans and all other obligations and liabilities of the Borrower (including,
without limitation, interest accruing at the then applicable rate provided in
this Agreement after the maturity of the Loans and interest accruing at the
then applicable rate provided in this Agreement after the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization
or like proceeding, relating to the Borrower, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding) to the
Guaranteed Creditors, whether direct or indirect, absolute or contingent, due
or to become due, or now existing or hereafter incurred, which may arise under,
out of, or in connection with the Guaranteed Documents, whether on account of
principal, interest, reimbursement obligations, fees, indemnities, costs,
expenses or otherwise (including, without limitation, all fees and
disbursements of counsel to the Guaranteed Creditors that are required to be
paid by the Borrower pursuant to the terms of any of the foregoing agreements).


 


“Borrowing” means
Loans of the same Type, made, converted or continued on the same date and, in
the case of Eurodollar Loans, as to which a single Interest Period is in
effect.


 


“Borrowing Request”
means a request by the Borrower for a Borrowing in accordance with Section 2.03.


 


“Business Day”
means any day that is not a Saturday, Sunday or other day on which commercial
banks in New York City are authorized or required by law to remain closed; provided
that, when used in connection with a Eurodollar Loan, the term “Business Day”
shall also exclude any day on which banks are not open for dealings in dollar
deposits in the London interbank market.


 


“Capital Lease
Obligations” of any Person means the obligations of such Person to pay rent
or other amounts under any lease of (or other arrangement conveying the right
to use) real or personal property, or a combination thereof, which obligations
are required to be classified and accounted for as capital leases on a balance
sheet of such Person under GAAP, and the amount of such obligations shall be
the capitalized amount thereof determined in accordance with GAAP.


 


“Change in Control”
means any of the following events:


 


(a)                                  (i) Valero
Energy shall cease, indirectly or directly, to own at least a majority of the
issued and outstanding Equity Interests of, or shall cease to Control, the
general partner(s) of the MLP, or (ii) 100% (and not less than 100%) of
the issued and outstanding Equity Interest of the general partner(s) of the
Borrower shall cease to be owned, directly or indirectly, or the Borrower shall
cease to be Controlled, by Valero Energy and/or the MLP; or


 


(b)                                 100% (and not less
than 100%) of the limited partnership interests of the Borrower shall cease to
be owned in the aggregate, directly or indirectly, by the MLP and/or Valero
Energy.


 


“Change in Law”
means (a) the adoption of any law, rule or regulation after the date
of this Agreement, (b) any change in any law, rule or regulation or
in the interpretation or


 


4





















 


application
thereof by any Governmental Authority after the date of this Agreement or (c) compliance
by any Lender (or, for purposes of Section 2.12(b), by any lending office
of such Lender or by such Lender’s holding company, if any) with any request,
guideline or directive (whether or not having the force of law) of any Governmental
Authority made or issued after the date of this Agreement.


 


“Code” means the
Internal Revenue Code of 1986, as amended from time to time.


 


“Commitment”
means, with respect to each Lender, the commitment of such Lender to make Loans
hereunder, expressed as an amount representing the maximum aggregate amount of
such Lender’s Credit Exposure hereunder. 
The initial amount of each Lender’s Commitment is set forth on Schedule 2.01,
or in the Assignment and Assumption pursuant to which such Lender shall have
assumed its Commitment, as applicable. 
The initial aggregate amount of the Lenders’ Commitments is
$525,000,000.


 


“Common Units”
means the common units of limited partner interests in the MLP.


 


“Consolidated Debt
Coverage Ratio” means, for any day, the ratio of (a) all Indebtedness
of the MLP and its Subsidiaries, on a consolidated basis, as of the last day of
the then most recent Rolling Period over (b) Consolidated EBITDA for such
Rolling Period.


 


“Consolidated EBITDA”
means, without duplication, as to the MLP and its Subsidiaries, on a
consolidated basis for each Rolling Period, the amount equal to Consolidated
Operating Income for such period (a) plus the following to the extent
deducted from Consolidated Operating Income in such period:  (i) depreciation, amortization and other
non-cash charges for such period and (ii) cash distributions received by
the Borrower from Skelly-Belvieu Pipeline Company, and similar joint ventures,
during such period and (b) minus all non-cash income added to Consolidated
Operating Income in such period; provided that (i) Consolidated
EBITDA shall be adjusted from time to time as necessary to give pro forma
effect to permitted acquisitions or Investments (other than Joint Venture
Interests) or sales of property by the MLP and its Subsidiaries and (ii) Consolidated
EBITDA shall be adjusted to take into account pro
forma synergies as a result of the Acquisition in an amount equal to
(A) $17,500,000 for the Rolling Period ending on September 30, 2005, (B) $15,000,000
for the Rolling Period ending on December 31, 2005, (C) $10,000,000
for the Rolling Period ending on March 31, 2006 and (D) $5,000,000
for the Rolling Period ending on June 30, 2006.


 


“Consolidated Interest
Coverage Ratio” means, for any day, the ratio of (i) Consolidated
EBITDA for the then most recent Rolling Period to (ii) Consolidated
Interest Expense for such Rolling Period.


 


“Consolidated Interest
Expense” means, for any Rolling Period, total interest expense (including
that attributable to Capital Lease Obligations) of the MLP and its Subsidiaries
for such period with respect to all outstanding Indebtedness of the MLP and its
Subsidiaries (including, without limitation, all commissions, discounts and
other fees and charges owed with respect to letters of credit and bankers’
acceptance financing and net costs under any Swap Agreements to the extent such
net costs are allocable to such period in accordance with GAAP).


 


5





















 


“Consolidated
Operating Income” means, as to the MLP and its Subsidiaries on a
consolidated basis for each Rolling Period, the amount equal to gross income minus
operating expenses, general and administrative expenses, depreciation and
amortization, and taxes other than income taxes, in each case for such period.


 


“Consolidated Net
Worth” means, at any time, an amount equal to the consolidated
partners’ equity of the MLP and its Subsidiaries.


 


“Control” means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the
ability to exercise voting power, by contract or otherwise.  “Controlling” and “Controlled”
have meanings correlative thereto.


 


“Credit Exposure”
means, with respect to any Lender at any time, the sum of the outstanding
principal amount of such Lender’s Loans at such time.


 


“Default” means
any event or condition which constitutes an Event of Default or which upon
notice, lapse of time or both would, unless cured or waived, become an Event of
Default.


 


“Disclosed Matters”
means the actions, suits and proceedings and the environmental matters
disclosed in Schedule 3.06.


 


“dollars” or “$”
refers to lawful money of the United States of America.


 


“Domestic Subsidiary”
means any Subsidiary that is organized under the laws of the United States of
America or any state thereof or the District of Columbia.


 


“Effective Date”
means the date on which the conditions specified in Section 4.01 are
satisfied (or waived in accordance with Section 10.02).


 


“Environmental
Approvals” means any Governmental Approvals required under applicable
Environmental Laws.


 


“Environmental Laws”
means all laws, rules, regulations, codes, ordinances, orders, decrees,
judgments, injunctions, notices or binding agreements issued, promulgated or
entered into by any Governmental Authority, relating in any way to the
environment, preservation or reclamation of natural resources, the management,
release or threatened release of any Hazardous Material or to health and safety
matters.


 


“Environmental
Liability” means any liability, contingent or otherwise (including any
liability for damages, costs of environmental remediation, fines, penalties or
indemnities), of the MLP or any Subsidiary directly or indirectly resulting
from or based upon (a) violation of any Environmental Law, (b) the
generation, use, handling, transportation, storage, treatment or disposal of
any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the
release or threatened release of any Hazardous Materials into the environment
or (e) any contract, agreement or other consensual arrangement pursuant to
which liability is assumed or imposed with respect to any of the foregoing.


 


6





















 


“Equity Interest”
means any and all shares, interests, participations or other equivalents
(however designated) of capital stock of a corporation, any member interests in
a limited liability company, and general or limited partnership interests in a
partnership, any and all equivalent ownership interests in a Person and any and
all warrants, options or other rights to purchase any of the foregoing.  In addition, “Equity Interest” shall include,
without limitation, with respect to the Borrower, the limited partner interests
of the Borrower and the General Partner Interests and, with respect to the MLP,
the Units and the general partner interest of the MLP.


 


“ERISA” means the
Employee Retirement Income Security Act of 1974, as amended from time to time.


 


“ERISA Affiliate”
means any trade or business (whether or not incorporated) that, together with
the MLP, is treated as a single employer under Section 414(b) or (c) of
the Code or, solely for purposes of Section 302 of ERISA and Section 412
of the Code, is treated as a single employer under Section 414 of the
Code.


 


“ERISA Event”
means (a) any “reportable event”, as defined in Section 4043 of ERISA
or the regulations issued thereunder with respect to a Plan (other than an
event for which the 30-day notice period is waived); (b) the existence
with respect to any Plan of an “accumulated funding deficiency” (as defined in Section 412
of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of
ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (d) the incurrence by the MLP or any of its ERISA
Affiliates of any liability under Title IV of ERISA with respect to the
termination of any Plan; (e) the receipt by the MLP or any ERISA Affiliate
from the PBGC or a plan administrator of any notice relating to an intention to
terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f) the
incurrence by the MLP or any of its ERISA Affiliates of any liability with
respect to the withdrawal or partial withdrawal from any Plan or Multiemployer
Plan; or (g) the receipt by the MLP or any ERISA Affiliate of any notice,
or the receipt by any Multiemployer Plan from the MLP or any ERISA Affiliate of
any notice, concerning the imposition of Withdrawal Liability or a
determination that a Multiemployer Plan is, or is expected to be, insolvent or
in reorganization, within the meaning of Title IV of ERISA.


 


“Eurodollar”, when
used in reference to any Loan or Borrowing, refers to whether such Loan, or the
Loans comprising such Borrowing, are bearing interest at a rate determined by
reference to the Adjusted LIBO Rate.


 


“Event of Default”
has the meaning assigned to such term in Article VII.


 


“Excluded Taxes”
means, with respect to the Administrative Agent, any Lender or any other
recipient of any payment to be made by or on account of any obligation of the
Borrower hereunder, (a) income or franchise taxes imposed on (or measured
by) its net income  by the United States
of America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits taxes imposed by the United States of America or any similar tax
imposed by any other jurisdiction in which the Borrower is located and (c) in
the case of a Foreign Lender (other than an assignee pursuant to a request by
the


 


7





















 


Borrower under Section 2.16(b)),
any withholding tax that is imposed on amounts payable to such Foreign Lender
at the time such Foreign Lender becomes a party to this Agreement (or
designates a new lending office) or is attributable to such Foreign Lender’s
failure to comply with Section 2.14(e), except to the extent that such
Foreign Lender (or its assignor, if any) was entitled, at the time of
designation of a new lending office (or assignment), to receive additional
amounts from the Borrower with respect to such withholding tax pursuant to Section 2.14(a).


 


“Existing Credit
Agreement” means the Amended and Restated Credit Agreement, dated as of December 15,
2000, as amended and restated through March 6, 2003, by and among the
Borrower, the Lenders (as defined therein) party thereto, JPMorgan Chase Bank,
as Administrative Agent, Royal Bank of Canada, as syndication agent, and
SunTrust Bank and Mizuho Corporate Bank Ltd., as co-documentation agents, as
amended.


 


“Federal Funds
Effective Rate” means, for any day, the weighted average (rounded upwards,
if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published on the next succeeding Business Day by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day that
is a Business Day, the average (rounded upwards, if necessary, to the next
1/100 of 1%) of the quotations for such day for such transactions received by
the Administrative Agent from three Federal funds brokers of recognized
standing selected by it.


 


“Financial Officer”
means with respect to any Person, the chief accounting officer, chief financial
officer, treasurer or controller of such Person.


 


“Foreign Lender”
means any Lender that is organized under the laws of a jurisdiction other than
that in which the Borrower is located. 
For purposes of this definition, the United States of America, each
State thereof and the District of Columbia shall be deemed to constitute a
single jurisdiction.


 


“GAAP” means
generally accepted accounting principles in the United States of America.


 


“General Partner”
means Valero GP, Inc., a Delaware corporation.


 


“General Partner
Interest” means all general partner interests in the Borrower.


 


“Governmental
Authority” means the government of the United States of America, any other
nation or any political subdivision thereof, whether state or local, and any
agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.


 


“Guarantee” of or
by any Person (the “guarantor”) means any obligation, contingent or
otherwise, of the guarantor guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation of any other Person (the “primary
obligor”) in any manner, whether directly or indirectly, and including any
obligation of the guarantor, direct or indirect, (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such


 


8





















 


Indebtedness or
other obligation or to purchase (or to advance or supply funds for the purchase
of) any security for the payment thereof, (b) to purchase or lease
property, securities or services for the purpose of assuring the owner of such
Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay
such Indebtedness or other obligation or (d) as an account party in
respect of any letter of credit or letter of guaranty issued to support such
Indebtedness or obligation; provided, that the term Guarantee shall not
include endorsements for collection or deposit in the ordinary course of
business.


 


“Guaranteed Creditors”
means the collective reference to the Administrative Agent and the Lenders.


 


“Guaranteed Documents”
means the collective reference to this Agreement and the other Loan Documents.


 


“Guarantor” means
each of the MLP and each Subsidiary and other Person that from time to time
executes and delivers a Subsidiary Guaranty (or becomes a party thereto by
executing and delivering a supplement thereto or otherwise), other than any
such Person that is released from such Subsidiary Guaranty in accordance with
the terms thereof.


 


“Hazardous Materials”
means all explosive or radioactive substances or wastes and all hazardous or
toxic substances, wastes or other pollutants, including petroleum or petroleum
distillates, asbestos or asbestos containing materials, polychlorinated
biphenyls, radon gas, infectious or medical wastes and all other substances or
wastes of any nature regulated pursuant to any Environmental Law.


 


“Indebtedness” of
any Person means, without duplication, (a) all obligations of such Person
for borrowed money or with respect to deposits or advances of any kind, (b) all
obligations of such Person evidenced by bonds, debentures, notes or similar
instruments or by any other securities providing for the mandatory payment of
money (including, without limitation, preferred stock subject to mandatory
redemption or sinking fund provisions), (c) all obligations of such Person
upon which interest charges are customarily paid, (d) all obligations of
such Person under conditional sale or other title retention agreements relating
to property acquired by such Person, (e) all obligations of such Person in
respect of the deferred purchase price of property or services (excluding
current accounts payable incurred in the ordinary course of business), (f) all
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such Person, whether or not the Indebtedness
secured thereby has been assumed, (g) all Guarantees by such Person of
Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i) all
non-contingent obligations of such Person as an account party in respect of
letters of credit and letters of guaranty, (j) all obligations, contingent or
otherwise, of such Person in respect of bankers’ acceptances, (k) all
obligations of such Person with respect to any arrangement, directly or
indirectly, whereby such Person or its Subsidiaries shall sell or transfer any
material asset, and whereby such Person or any of its Subsidiaries shall then
or immediately thereafter rent or lease as lessee such asset or any part
thereof, and (l) all recourse and support obligations of such Person or
any of its Subsidiaries with respect to the sale or discount of any of its
accounts receivable.  The Indebtedness of
any Person shall include the


 


9





















 


Indebtedness of
any other entity (including any partnership in which such Person is a general
partner) to the extent such Person is liable therefor as a result of such
Person’s ownership interest in or other relationship with such entity, except
to the extent the terms of such Indebtedness provide that such Person is not
liable therefor.


 


“Indemnified Taxes”
means Taxes other than Excluded Taxes.


 


“Indenture” means
the Indenture, dated as of July 15, 2002, between the Borrower, as Issuer,
the MLP, as Guarantor, and The Bank of New York, as Trustee, relating to the
issuance of senior debt securities, as amended, modified and supplemented from
time to time in accordance herewith.


 


“Index Debt” means
senior, unsecured, long-term indebtedness for borrowed money of the Borrower
that is not guaranteed by any other Person other than the Guarantors or subject
to any other credit enhancement.


 


“Information
Memorandum” means, collectively, (a) the Confidential Information
Memorandum dated June 2005 relating to the Borrower and the Transactions
and (b) the Confidential Information Memorandum dated November 8,
2004 relating to the Borrower and the Transactions.


 


“Interest Election
Request” means a request by the Borrower to convert or continue a Borrowing
in accordance with Section 2.05.


 


“Interest Payment Date”
means (a) with respect to any ABR Loan, the last day of each March, June, September and
December and (b) with respect to any Eurodollar Loan, the last day of
the Interest Period applicable to the Borrowing of which such Loan is a part
and, in the case of a Eurodollar Borrowing with an Interest Period of more than
three months’ duration, each day prior to the last day of such Interest Period
that occurs at intervals of three months’ duration after the first day of such
Interest Period.


 


“Interest Period”
means with respect to any Eurodollar Borrowing, the period commencing on the
date of such Borrowing and ending on the numerically corresponding day in the
calendar month that is one, two, three or six-months thereafter (or, with the
consent of each Lender, such other period as the Lenders and the Borrower shall
mutually agree upon), as the Borrower may elect; provided, that (i) if
any Interest Period would end on a day other than a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless such next
succeeding Business Day would fall in the next calendar month, in which case
such Interest Period shall end on the next preceding Business Day and (ii) any
Interest Period pertaining to a Eurodollar Borrowing that commences on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the last calendar month of such Interest Period) shall end
on the last Business Day of the last calendar month of such Interest
Period.  For purposes hereof, the date of
a Borrowing initially shall be the date on which such Borrowing is made and
thereafter shall be the effective date of the most recent conversion or
continuation of such Borrowing.


 


“Investment”
means, as applied to any Person, any direct or indirect purchase or other
acquisition by such Person of any Equity Interests in any other Person, or any
direct or indirect


 


10





















 


loan, advance or
capital contribution by such Person to any other Person, including all
Indebtedness and receivables from such other Person which are not current
assets or did not arise from sales to such other Person in the ordinary course
of business, and any direct or indirect purchase or other acquisition by such
Person of any assets (other than any acquisition of assets in the ordinary
course of business).


 


“Investment Grade”
means a rating for Index Debt of BBB- or higher by S&P and Baa3 or higher
by Moody’s.


 


“Joint Venture
Interest” means an acquisition of or Investment in Equity Interests in
another Person, held directly or indirectly by the MLP, that will not be a
Subsidiary after giving effect to such acquisition or Investment.


 


“KPP” means Kaneb
Pipe Line Partners, L.P., a Delaware limited partnership.


 


“KSL” means Kaneb
Services LLC, a Delaware limited liability company.


 


“Lenders” means
the Persons listed on Schedule 2.01 and any other Person that shall have
become a party hereto pursuant to an Assignment and Assumption, other than any
such Person that ceases to be a party hereto pursuant to an Assignment and
Assumption.


 


“LIBO Rate” means,
with respect to any Eurodollar Borrowing for any Interest Period, the rate
appearing on Page 3750 of the Dow Jones Market Service (or on any
successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period. 
In the event that such rate is not available at such time for any
reason, then the “LIBO Rate” with respect to such Eurodollar Borrowing for such
Interest Period shall be the rate at which dollar deposits of $5,000,000 and
for a maturity comparable to such Interest Period are offered by the principal
London office of the Administrative Agent in immediately available funds in the
London interbank market at approximately 11:00 a.m., London time, two
Business Days prior to the commencement of such Interest Period.


 


“Lien” means, with
respect to any asset, (a) any mortgage, deed of trust, lien, pledge,
hypothecation, encumbrance, charge or security interest in, on or of such asset,
(b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement (or any financing lease
having substantially the same economic effect as any of the foregoing) relating
to such asset and (c) in the case of securities, any purchase option, call
or similar right of a third party with respect to such securities.


 


“Loan Documents”
means this Agreement, the Subsidiary Guaranty, and any notes issued pursuant to
Section 2.07(e), as each such agreement may be amended, supplemented or
otherwise modified from time to time as permitted hereby, and any and all
instruments, certificates, or other agreements delivered in connection with the
foregoing.


 


11





















 


“Loans” means the
term loans made by the Lenders to the Borrower pursuant to this Agreement.


 


“Material Adverse
Effect” means a material adverse effect on (a) the business, assets,
operations or condition (financial or otherwise) of the MLP and its
Subsidiaries (including the Borrower) taken as a whole, (b) the ability of
the MLP, the Borrower or any Guarantor to perform any of their obligations
under this Agreement or any other Loan Document or (c) the rights of or
benefits available to the Lenders under this Agreement or any other Loan
Document.


 


“Material Agreements”
means the Partnership Agreement (MLP) and the Indenture as each such agreement
may be amended, supplemented or otherwise modified from time to time as
permitted hereby.


 


“Material Domestic
Subsidiary” means any Material Subsidiary that is a Domestic Subsidiary.


 


“Material Subsidiary”
means, with respect to the MLP, any Subsidiary (other than the Borrower) that
meets any of the following conditions: (i) the MLP’s and its other
Subsidiaries’ equity in the income from continuing operations before interest
expense and all income taxes of such Subsidiary exceeds 10% of such income of
the MLP and its Subsidiaries consolidated for the most recently completed
fiscal year or (ii) the MLP’s and its other Subsidiaries’ proportionate
share of the total assets (after intercompany eliminations) of such Subsidiary
exceeds 10% of the total assets of the MLP and its Subsidiaries consolidated as
of the end of the most recently completed fiscal year.


 


“Material Indebtedness”
means Indebtedness (other than the Loans), or obligations in respect of one or
more Swap Agreements, of any one or more of the MLP and its Subsidiaries in an
aggregate principal amount exceeding $35,000,000.  For purposes of determining Material Indebtedness,
the “principal amount” of the obligations of the MLP or any Subsidiary in
respect of any Swap Agreement at any time shall be the maximum aggregate amount
(giving effect to any netting agreements) that such Person would be required to
pay if such Swap Agreement were terminated at such time.


 


“Maturity Date”
means the fifth anniversary of the Effective Date.


 


“MLP” means Valero
L.P., a Delaware limited partnership.


 


“MLP Obligations”
means the collective reference to (i) the Borrower Obligations and (ii) all
obligations and liabilities of the MLP which may arise under or in connection
with any Guaranteed Document to which the MLP is a party, in each case whether
on account of guarantee obligations, reimbursement obligations, loan
obligations, fees, indemnities, costs, expenses or otherwise (including,
without limitation, all fees and disbursements of counsel to any Guaranteed
Creditor under any Guaranteed Document).


 


“Moody’s” means
Moody’s Investors Service, Inc. (or any successor rating organization).


 


“Multiemployer Plan”
means a multiemployer plan as defined in Section 4001(a)(3) of ERISA,
to which the MLP or any ERISA Affiliate makes or is obligated to make
contributions.


 


12





















 


“Other Taxes”
means any and all present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies arising from any payment
made hereunder or from the execution, delivery or enforcement of, or otherwise
with respect to, this Agreement.


 


“Partnership Agreement
(Borrower)” means the Agreement of Limited Partnership of the Borrower
among the General Partner and the MLP in the form previously provided to the
Lenders, as amended, modified and supplemented from time to time in accordance
herewith.


 


“Partnership Agreement
(MLP)” means the Third Amended and Restated Agreement of Limited
Partnership of the MLP dated as of March 18, 2003, as amended, modified
and supplemented from time to time in accordance herewith.


 


“PBGC” means the
Pension Benefit Guaranty Corporation referred to and defined in ERISA and any
successor entity performing similar functions.


 


“Permitted
Encumbrances” means:


 


(a)                                  Liens imposed by law
for Taxes that are not yet due or are being contested in compliance with Section 5.04;


 


(b)                                 carriers’,
warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like Liens
imposed by law, arising in the ordinary course of business and securing
obligations that are not overdue by more than 30 days or are being contested in
compliance with Section 5.04;


 


(c)                                  pledges and deposits
made in the ordinary course of business in compliance with workers’
compensation, unemployment insurance and other social security laws or
regulations;


 


(d)                                 deposits to secure the
performance of bids, trade contracts, leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature, in each
case in the ordinary course of business;


 


(e)                                  judgment liens in
respect of judgments that do not constitute an Event of Default under
clause (j) of Article VII;


 


(f)                                    easements, zoning
restrictions, rights-of-way, minor irregularities in title, boundaries, or
other survey defects, servitudes, permits, reservations, exceptions, zoning
regulations, conditions, covenants, mineral or royalty rights or reservations
or oil, gas and mineral leases and rights of others in any property of the MLP
or any Subsidiary for streets, roads, bridges, pipes, pipe lines, railroads,
electric transmission and distribution lines, telegraph and telephone lines,
the removal of oil, gas or other minerals or other similar purposes, flood
control, water rights, rights of others with respect to navigable waters,
sewage and drainage rights and similar encumbrances on real property imposed by
law or arising in the ordinary course of business that do not secure any
monetary obligations and do not materially detract from the value of the
affected property or interfere with the ordinary conduct of business of the


 


13





















 


MLP or any Subsidiary; provided that the term “Permitted Encumbrances”
shall not include any Lien securing Indebtedness; and


 


(g)                                 Liens
securing an obligation of a third party neither created, assumed nor Guaranteed
by the MLP or any Subsidiary upon lands over which easements or similar rights
are acquired by the MLP or any Subsidiary in the ordinary course of business of
the MLP or any Subsidiary.


 


“Permitted Investments”
means:


 


(a)                                  direct obligations
of, or obligations the principal of and interest on which are unconditionally
guaranteed by, the United States of America (or by any agency thereof to the
extent such obligations are backed by the full faith and credit of the United
States of America), in each case maturing within one year from the date of acquisition
thereof;


 


(b)                                 investments in
commercial paper maturing within 270 days from the date of acquisition thereof
and having, at such date of acquisition, a short term deposit rating of no
lower than A2 or P2, as such rating is set forth by S&P or Moody’s,
respectively;


 


(c)                                  investments in
certificates of deposit, banker’s acceptances and time deposits maturing within
180 days from the date of acquisition thereof issued or guaranteed by or placed
with, and money market deposit accounts issued or offered by, any domestic
office of any commercial bank organized under the laws of the United States of
America or any State thereof which has a combined capital and surplus and
undivided profits of not less than $500,000,000;


 


(d)                                 fully collateralized
repurchase agreements with a term of not more than 30 days for securities
described in clause (a) above and entered into with a financial
institution satisfying the criteria described in clause (c) above;
and


 


(e)                                  investments in short
term debt obligations of an issuer rated at least BBB by S&P or Baa2 by
Moody’s, and maturing within 30 days from the date of acquisition, in an
aggregate amount not to exceed $50,000,000 at any time.


 


“Person” means any
natural person, corporation, limited liability company, trust, joint venture,
association, company, partnership, Governmental Authority or other entity.


 


“Plan” means any
employee pension benefit plan (other than a Multiemployer Plan) subject to the
provisions of Title IV of ERISA or Section 412 of the Code or Section 302
of ERISA, and in respect of which the MLP or any ERISA Affiliate contributes or
has an obligation to contribute and is (or, if such plan were terminated, would
under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of
ERISA.


 


“Prime Rate” means
the rate of interest per annum publicly announced from time to time by JPMorgan
Chase Bank, N.A. as its prime rate in effect at its principal office in New
York City; each change in the Prime Rate shall be effective from and including
the date such change is publicly announced as being effective.


 


“Register” has the
meaning set forth in Section 10.04.


 


14





















 


“Related Parties”
means, with respect to any specified Person, such Person’s Affiliates and the
respective directors, officers, employees, agents and advisors of such Person
and such Person’s Affiliates.


 


“Required Lenders”
means (a) at any time prior to the expiration of the Availability Period,
Lenders having Credit Exposures and unused Commitments representing greater
than 50% of the sum of the total Credit Exposures and unused Commitments at
such time and (b) at any time after the expiration of the Availability
Period, Lenders having Credit Exposures representing greater than 50% of the
sum of the total Credit Exposures.


 


“Restricted Payment”
means any dividend or other distribution (whether in cash, securities or other
property, with the exception of a Unit split, combination, or dividend, in each
case so long as the only consideration paid in connection therewith is an
in-kind payment of additional Units) with respect to any Equity Interest of the
MLP or any Subsidiary, or any payment (whether in cash, securities or other
property, with the exception of a Unit split, combination, or dividend, in each
case so long as the only consideration paid in connection therewith is an
in-kind payment of additional Units), including any sinking fund or similar
deposit, on account of the purchase, redemption, retirement, acquisition,
cancellation or termination of any such Equity Interest of the MLP or any
option, warrant or other right to acquire any such Equity Interest of the MLP.


 


“Revolving Credit
Agreement” means the 5-Year Revolving Credit Agreement dated as of December 20,
2004 among the Borrower, the MLP, JPMorgan Chase Bank, as Administrative Agent,
and the lenders and other agents from time to time party thereto, as the same
may from time to time be amended, modified or supplemented.


 


“Rolling Period”
means any period of four consecutive fiscal quarters.


 


“SEC” means the
Securities and Exchange Commission or any successor Governmental Authority.


 


“S&P” means
Standard & Poor’s Ratings Group, a division of McGraw-Hill Companies, Inc.
(or any successor rating organization).


 


“Statutory Reserve Rate”
means a fraction (expressed as a decimal), the numerator of which is the number
one and the denominator of which is the number one minus the aggregate of the
maximum reserve percentages (including any marginal, special, emergency or
supplemental reserves) expressed as a decimal established by the Board to which
the Administrative Agent is subject with respect to the Adjusted LIBO Rate, for
eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in
Regulation D of the Board).  Such reserve
percentages shall include those imposed pursuant to such
Regulation D.  Eurodollar Loans
shall be deemed to constitute eurocurrency funding and to be subject to such
reserve requirements without benefit of or credit for proration, exemptions or
offsets that may be available from time to time to any Lender under such
Regulation D or any comparable regulation. 
The Statutory Reserve Rate shall be adjusted automatically on and as of
the effective date of any change in any reserve percentage.


 


15





















 


“Subordinated Units”
means the subordinated units of limited partner interests in the MLP.


 


“subsidiary”
means, with respect to any Person (the “parent”) at any date, any
corporation, limited liability company, partnership, association or other
entity the accounts of which would be consolidated with those of the parent in
the parent’s consolidated financial statements if such financial statements
were prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other
entity (a) of which securities or other ownership interests representing
more than 50% of the equity or more than 50% of the ordinary voting power or,
in the case of a partnership, more than 50% of the general partnership
interests are, as of such date, owned, controlled or held, or (b) that is,
as of such date, otherwise Controlled, by the parent or one or more
subsidiaries of the parent or by the parent and one or more subsidiaries of the
parent.


 


“Subsidiary” means
any subsidiary of the MLP (including the Borrower).


 


“Subsidiary Guaranty”
means any guaranty executed and delivered pursuant to Section 5.10, as
from time to time amended, modified, or supplemented.


 


“Swap Agreement”
means any agreement with respect to any swap, forward, future or derivative
transaction or option or similar agreement involving, or settled by reference
to, one or more rates, currencies, commodities, equity or debt instruments or
securities, or economic, financial or pricing indices or measures of economic,
financial or pricing risk or value or any similar transaction or any
combination of these transactions; provided that no phantom stock or
similar plan providing for payments only on account of services provided by
current or former directors, officers, employees or consultants of the MLP or
the Subsidiaries shall be a Swap Agreement.


 


“Taxes” means any
and all present or future taxes, levies, imposts, duties, deductions, charges
or withholdings imposed by any Governmental Authority.


 


“Transactions”
means the execution, delivery and performance by the Borrower and the MLP of
this Agreement, the borrowing of Loans, the use of the proceeds thereof, and
the execution, delivery and performance of the Subsidiary Guaranty.


 


“Type”, when used
in reference to any Loan or Borrowing, refers to whether the rate of interest
on such Loan, or on the Loans comprising such Borrowing, is determined by
reference to the Adjusted LIBO Rate or the Alternate Base Rate.


 


“UK Credit Agreement”
means the Amended and Restated Credit Agreement, dated as of July 1, 2005,
between Kaneb Terminals Limited (formerly known as ST Services, Ltd.), the MLP,
Kaneb Pipeline Operating Partnership, L.P. and SunTrust Bank, as the same may
from time to time be amended, modified or supplemented.


 


“Units” means the
collective reference to the Common Units and the Subordinated Units.


 


“Valero Energy”
means Valero Energy Corporation, a Delaware corporation.


 


16





















 


“Wholly-Owned
Subsidiary” means, in respect of any Person, any subsidiary of such Person,
all of the Equity Interests of which (other than director’s qualifying shares,
as may be required by law) is owned by such Person, either directly or indirectly
through one or more Wholly-Owned Subsidiaries of such Person.  Unless otherwise indicated herein, each
reference to the term “Wholly-Owned Subsidiary” shall mean a
Wholly-Owned Subsidiary of the MLP.


 


“Withdrawal Liability”
means liability to a Multiemployer Plan as a result of a complete or partial
withdrawal from such Multiemployer Plan, as such terms are defined in Part I
of Subtitle E of Title IV of ERISA.


 


Section 1.02.                             Classification of Loans
and Borrowings.  For purposes of this
Agreement, Loans and Borrowings may be classified and referred to by Type
(e.g., a “Eurodollar Loan” or a “Eurodollar Borrowing”).


 


Section 1.03.                             Terms Generally.  The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms.  The words “include”, “includes” and “including”
shall be deemed to be followed by the phrase “without limitation”.  The word “will” shall be construed to have
the same meaning and effect as the word “shall”.  Unless the context requires otherwise (a) any
definition of or reference to any agreement, instrument or other document
herein shall be construed as referring to such agreement, instrument or other
document as from time to time amended, supplemented or otherwise modified
(subject to any restrictions on such amendments, supplements or modifications
set forth herein), (b) any reference herein to any Person shall be
construed to include such Person’s successors and assigns, (c) the words “herein”,
“hereof” and “hereunder”, and words of similar import, shall be construed to
refer to this Agreement in its entirety and not to any particular provision
hereof, (d) all references herein to Articles, Sections, Exhibits and
Schedules shall be construed to refer to Articles and Sections of, and Exhibits
and Schedules to, this Agreement and (e) the words “asset” and “property”
shall be construed to have the same meaning and effect and to refer to any and
all tangible and intangible assets and properties, including cash, securities,
accounts and contract rights.


 


Section 1.04.                             Accounting Terms; GAAP.  Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect from time to time; provided that, if
the Borrower notifies the Administrative Agent that the Borrower requests an
amendment to any provision hereof to eliminate the effect of any change
occurring after the date hereof in GAAP or in the application thereof on the
operation of such provision (or if the Administrative Agent notifies the
Borrower that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until  such notice shall have been withdrawn or such
provision  amended in accordance
herewith.


 


17





















 


ARTICLE II

The Credits


 


Section 2.01.                             Commitments.  Subject to the terms and conditions set forth
herein, each Lender agrees to make Loans to the Borrower from time to time
during the Availability Period in an aggregate principal amount that will not
result in (a) such Lender’s Credit Exposure exceeding such Lender’s
Commitment or (b) the sum of the total Credit Exposures exceeding the total
Commitments.  The Commitments are not
revolving in nature, and amounts repaid or prepaid may not be reborrowed under
any circumstance.  Any portion of the
Commitments not utilized by the Borrower on or before the last day of the
Availability Period shall be permanently canceled.


 


Section 2.02.                             Loans and Borrowings.  (a) Each Loan shall be made as part of a
Borrowing consisting of Loans made by the Lenders ratably in accordance with
their respective Commitments.  The
failure of any Lender to make any Loan required to be made by it shall not
relieve any other Lender of its obligations hereunder; provided that the
Commitments of the Lenders are several and no Lender shall be responsible for
any other Lender’s failure to make Loans as required.


 


(b)                                 Subject
to Section 2.11, each Borrowing shall be comprised entirely of ABR Loans
or Eurodollar Loans as the Borrower may request in accordance herewith.  Each Lender at its option may make any
Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such
Lender to make such Loan; provided that any exercise of such option
shall not affect the obligation of the Borrower to repay such Loan in
accordance with the terms of this Agreement.


 


(c)                                  At
the commencement of each Interest Period for any Eurodollar Borrowing, such
Borrowing shall be in an aggregate amount that is an integral multiple of
$1,000,000 and not less than $5,000,000. 
At the time that each ABR Borrowing is made, such Borrowing shall be in
an aggregate amount that is an integral multiple of $500,000 and not less than
$1,000,000; provided that an ABR Borrowing may be in an aggregate amount
that is equal to the entire unused balance of the total Commitments.  Borrowings of more than one Type may be
outstanding at the same time; provided that there shall not at any time be more
than a total of five Eurodollar Borrowings outstanding.


 


(d)                                 Notwithstanding
any other provision of this Agreement, the Borrower shall not be entitled to
elect to convert or continue any Borrowing if the Interest Period requested
with respect thereto would end after the Maturity Date.


 


Section 2.03.                             Requests for Borrowings.  To request a Borrowing, the Borrower shall
notify the Administrative Agent of such request by telephone (a) in the
case of a Eurodollar Borrowing, not later than 12:00 noon, New York City time,
three Business Days before the date of the proposed Borrowing or (b) in
the case of an ABR Borrowing, not later than 12:00 noon, New York City time, on
date of the proposed Borrowing.  Each
such telephonic Borrowing Request shall be irrevocable and shall be confirmed
promptly by hand delivery or telecopy to the Administrative Agent of a written
Borrowing Request in a form approved by the Administrative


 


18





















 


Agent and signed by the Borrower.  Each such telephonic and written Borrowing
Request shall specify the following information in compliance with Section 2.02:


 


(i)                                     the
aggregate amount of the requested Borrowing;


 


(ii)                                  the
date of such Borrowing, which shall be a Business Day;


 


(iii)                               whether
such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;


 


(iv)                              in
the case of a Eurodollar Borrowing, the initial Interest Period to be
applicable thereto, which shall be a period contemplated by the definition of the
term “Interest Period”; and


 


(v)                                 the
location and number of the Borrower’s account to which funds are to be
disbursed, which shall comply with the requirements of Section 2.04.


 


If no election as to the Type of Borrowing is specified, then the
requested Borrowing shall be an ABR Borrowing. 
If no Interest Period is specified with respect to any requested
Eurodollar Borrowing, then the Borrower shall be deemed to have selected an
Interest Period of one month’s duration. 
Promptly following receipt of a  Borrowing
Request in accordance with this Section, the Administrative Agent shall advise
each Lender of the details thereof and of the amount of such Lender’s Loan to
be made as part of the requested Borrowing.


 


Section 2.04.                             Funding of Borrowings.  (a) Each Lender shall make each Loan to
be made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds by 1:00 p.m., New York City time, to the
account of the Administrative Agent most recently designated by it for such
purpose by notice to the Lenders.  The
Administrative Agent will make such Loans available to the Borrower by promptly
crediting the amounts so received, in like funds, to an account of the Borrower
maintained with the Administrative Agent in New York City and designated by the
Borrower in the applicable Borrowing Request.


 


(b)                                 Unless
the Administrative Agent shall have received notice from a Lender prior to the
proposed time of any Borrowing that such Lender will not make available to the
Administrative Agent such Lender’s share of such Borrowing, the Administrative
Agent may assume that such Lender has made such share available on such date in
accordance with paragraph (a) of this Section and may, in
reliance upon such assumption, make available to the Borrower a corresponding
amount.  In such event, if a Lender has
not in fact made its share of the applicable Borrowing available to the
Administrative Agent, then the applicable Lender and the Borrower severally
agree to pay to the Administrative Agent forthwith on demand such corresponding
amount with interest thereon, for each day from and including the date such
amount is made available to the Borrower to but excluding the date of payment
to the Administrative Agent, at (i) in the case of such Lender, the greater
of the Federal Funds Effective Rate and a rate determined by the Administrative
Agent in accordance with banking industry rules on interbank compensation
or (ii) in the case of the Borrower, the interest rate applicable to ABR
Loans.  If such Lender pays such amount
to the Administrative Agent, then such amount shall constitute such Lender’s
Loan included in such Borrowing.


 


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Section 2.05.                             Interest Elections.  (a) Each Borrowing initially shall be of
the Type specified in the applicable Borrowing Request and, in the case of a
Eurodollar Borrowing, shall have an initial Interest Period as specified in
such Borrowing Request.  Thereafter, the
Borrower may elect to convert such Borrowing to a different Type or to continue
such Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest
Periods therefor, all as provided in this Section.  The Borrower may elect different options with
respect to different portions of the affected Borrowing, in which case each
such portion shall be allocated ratably among the Lenders holding the Loans
comprising such Borrowing, and the Loans comprising each such portion shall be
considered a separate Borrowing.


 


(b)                                 To
make an election pursuant to this Section, the Borrower shall notify the
Administrative Agent of such election by telephone by the time that a Borrowing
Request would be required under Section 2.03 if the Borrower were
requesting a Borrowing of the Type resulting from such election to be made on
the effective date of such election. 
Each such telephonic Interest Election Request shall be irrevocable and
shall be confirmed promptly by hand delivery or telecopy to the Administrative
Agent of a written Interest Election Request in a form approved by the Administrative
Agent and signed by the Borrower.


 


(c)                                  Each
telephonic and written Interest Election Request shall specify the following
information in compliance with Section 2.02:


 


(i)                                     the
Borrowing to which such Interest Election Request applies and, if different
options are being elected with respect to different portions thereof, the
portions thereof to be allocated to each resulting Borrowing (in which case the
information to be specified pursuant to clauses (iii) and (iv) below
shall be specified for each resulting Borrowing);


 


(ii)                                  the
effective date of the election made pursuant to such Interest Election Request,
which shall be a Business Day;


 


(iii)                               whether
the resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;
and


 


(iv)                              if
the resulting Borrowing is a Eurodollar Borrowing, the Interest Period to be
applicable thereto after giving effect to such election, which shall be a
period contemplated by the definition of the term “Interest Period”.


 


If any such Interest Election Request requests a Eurodollar Borrowing
but does not specify an Interest Period, then the Borrower shall be deemed to
have selected an Interest Period of one month’s duration.


 


(d)                                 Promptly
following receipt of an Interest Election Request, the Administrative Agent shall
advise each Lender of the details thereof and of such Lender’s portion of each
resulting Borrowing.


 


(e)                                  If
the Borrower fails to deliver a timely Interest Election Request with respect
to a Eurodollar Borrowing prior to the end of the Interest Period applicable
thereto, then, unless such Borrowing is repaid as provided herein, at the end
of such Interest Period such Borrowing shall be converted to an ABR
Borrowing.  Notwithstanding any contrary
provision


 


20





















 


hereof, if an Event of Default has occurred
and is continuing and the Administrative Agent, at the request of the Required
Lenders, so notifies the Borrower, then, so long as an Event of Default is
continuing (i) no outstanding Borrowing may be converted to or continued
as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar
Borrowing shall be converted to an ABR Borrowing at the end of the Interest
Period applicable thereto.


 


Section 2.06.                             Termination of
Commitments.  Unless previously terminated,
the Commitments shall terminate at 12:00 noon, New York City time, on the date
that is ten days after the Effective Date.


 


Section 2.07.                             Repayment of Loans;
Evidence of Debt.  (a) The
Borrower hereby unconditionally promises to pay to the Administrative Agent for
the account of each Lender the then unpaid principal amount of each Loan on the
Maturity Date.


 


(b)                                 Each
Lender shall maintain in accordance with its usual practice an account or
accounts evidencing the indebtedness of the Borrower to such Lender resulting
from each Loan made by such Lender, including the amounts of principal and
interest payable and paid to such Lender from time to time hereunder.


 


(c)                                  The
Administrative Agent shall maintain accounts in which it shall record (i) the
amount of each Loan made hereunder, the Type thereof and the Interest Period
applicable thereto, (ii) the amount of any principal or interest due and
payable or to become due and payable from the Borrower to each Lender hereunder
and (iii) the amount of any sum received by the Administrative Agent
hereunder for the account of the Lenders and each Lender’s share thereof.


 


(d)                                 The
entries made in the accounts maintained pursuant to paragraph (b) or (c) of
this Section shall be prima  facie evidence of the existence
and amounts of the obligations recorded therein; provided that the
failure of any Lender or the Administrative Agent to maintain such accounts or
any error therein shall not in any manner affect the obligation of the Borrower
to repay the Loans in accordance with the terms of this Agreement.


 


(e)                                  Any
Lender may request that Loans made by it be evidenced by a promissory
note.  In such event, the Borrower shall
prepare, execute and deliver to such Lender a promissory note payable to the
order of such Lender (or, if requested by such Lender, to such Lender and its
registered assigns) and in a form approved by the Administrative Agent.  Thereafter, the Loans evidenced by such
promissory note and interest thereon shall at all times be represented by one
or more promissory notes in such form payable to the order of the payee named
therein (or, if such promissory note is a registered note, to such payee and
its registered assigns).


 


Section 2.08.                             Prepayment of Loans.  (a) The Borrower shall have the right at
any time and from time to time to prepay any Borrowing in whole or in part,
subject to prior notice in accordance with paragraph (b) of this
Section.


 


(b)                                 The
Borrower shall notify the Administrative Agent by telephone (confirmed by
telecopy) of any prepayment hereunder (i) in the case of prepayment of a
Eurodollar Borrowing, not later than 11:00 a.m., New York City time, three
Business Days


 


21





















 


before the date of prepayment or (ii) in
the case of prepayment of an ABR Borrowing, not later than 11:00 a.m., New
York City time, one Business Day before the date of prepayment.  Each such notice shall be irrevocable and
shall specify the prepayment date and the principal amount of each Borrowing or
portion thereof to be prepaid.  Promptly
following receipt of any such notice relating to a Borrowing, the
Administrative Agent shall advise the Lenders of the contents thereof.   Each partial prepayment of any Borrowing
shall be in an amount that would be permitted in the case of an advance of a
Borrowing of the same Type as provided in Section 2.02.  Each prepayment of a Borrowing shall be
applied ratably to the Loans included in the prepaid Borrowing.  Prepayments shall be accompanied by accrued
interest to the extent required by Section 2.10 and any break funding
payments required by Section 2.13.


 


Section 2.09.                             Fees.  (a) The Borrower agrees to pay to the
Administrative Agent, for its own account, fees payable in the amounts and at
the times separately agreed upon between the Borrower and the Administrative
Agent.


 


(b)                                 All
fees payable hereunder shall be paid on the dates due, in immediately available
funds, to the Administrative Agent.  Fees
paid shall not be refundable under any circumstances.


 


Section 2.10.                             Interest.  (a) The Loans comprising each ABR
Borrowing shall bear interest at the Alternate Base Rate plus the Applicable
Rate.


 


(b)                                 The
Loans comprising each Eurodollar Borrowing shall bear interest at the Adjusted
LIBO Rate for the Interest Period in effect for such Borrowing plus the
Applicable Rate.


 


(c)                                  Notwithstanding
the foregoing, if any principal of or interest on any Loan or any fee or other
amount payable by the Borrower hereunder is not paid when due, whether at
stated maturity, upon acceleration or otherwise, such overdue amount shall bear
interest, after as well as before judgment, at a rate per annum equal to (i) in
the case of overdue principal of any Loan, 2% plus the  rate otherwise applicable to such Loan as
provided in the preceding paragraphs of this Section or (ii) in the
case of any other amount, 2% plus the rate applicable to ABR Loans as provided
in paragraph (a) of this Section.


 


(d)                                 Accrued
interest on each Loan shall be payable in arrears on each Interest Payment Date
for such Loan; provided that (i) interest accrued pursuant to
paragraph (c) of this Section shall be payable on demand, (ii) in
the event of any repayment or prepayment of any Loan, accrued interest on the
principal amount repaid or prepaid shall be payable on the date of such
repayment or prepayment and (iii) in the event of any conversion of any
Eurodollar Loan prior to the end of the current Interest Period therefor,
accrued interest on such Loan shall be payable on the effective date of such
conversion.


 


(e)                                  All
interest hereunder shall be computed on the basis of a year of 360 days, except
that interest computed by reference to the Alternate Base Rate at times when
the Alternate Base Rate is based on the Prime Rate shall be computed on the
basis of a year of 365 days (or 366 days in a leap year), and in each case
shall be payable for the actual number of days elapsed (including the first day
but excluding the last day).  The
applicable Alternate Base Rate,


 


22





















 


Adjusted LIBO Rate or LIBO Rate shall be
determined by the Administrative Agent, and such determination shall be
conclusive absent manifest error.


 


Section 2.11.                             Alternate Rate of
Interest.  If prior to the
commencement of any Interest Period for a Eurodollar Borrowing:


 


(a)                                  the
Administrative Agent determines (which determination shall be conclusive absent
manifest error) that adequate and reasonable means do not exist for
ascertaining the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such
Interest Period; or


 


(b)                                 the
Administrative Agent is advised by the Required Lenders that the Adjusted LIBO
Rate or the LIBO Rate, as applicable, for such Interest Period will not
adequately and fairly reflect the cost to such Lenders (or Lender) of making or
maintaining their Loans (or its Loan) included in such Borrowing for such
Interest Period;


 


then the Administrative Agent shall give notice thereof to the Borrower
and the Lenders by telephone or telecopy as promptly as practicable thereafter
and, until the Administrative Agent notifies the Borrower and the Lenders that
the circumstances giving rise to such notice no longer exist, (i) any
Interest Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective
and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing.


 


Section 2.12.                             Increased Costs.  (a) If any Change in Law shall:


 


(i)                                     impose,
modify or deem applicable any reserve, special deposit or similar requirement
against assets of, deposits with or for the account of, or credit extended by,
any Lender (except any such reserve requirement reflected in the Adjusted LIBO
Rate); or


 


(ii)                                  impose
on any Lender or the London interbank market any other condition affecting this
Agreement or Eurodollar Loans made by such Lender;


 


and the result of any of the foregoing shall be to increase the cost to
such Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to reduce the amount of any sum received
or receivable by such Lender hereunder (whether of principal, interest or
otherwise), then the Borrower will pay to such Lender such additional amount or
amounts as will compensate such Lender for such additional costs incurred or
reduction suffered.


 


(b)                                 If
any Lender determines that any Change in Law regarding capital requirements has
or would have the effect of reducing the rate of return on such Lender’s
capital or on the capital of such Lender’s holding company, if any, as a
consequence of this Agreement or the Loans made by such Lender to a level below
that which such Lender or such Lender’s holding company could have achieved but
for such Change in Law (taking into consideration such Lender’s policies and
the policies of such Lender’s holding company with respect to capital
adequacy), then from time to time the Borrower will pay to such Lender such
additional amount or amounts as will compensate such Lender or such Lender’s
holding company for any such reduction suffered.


 


23





















 


(c)                                  A
certificate of a Lender setting forth the amount or amounts necessary to
compensate such Lender or its holding company, as the case may be, as specified
in paragraph (a) or (b) of this Section shall be delivered
to the Borrower and shall be conclusive absent manifest error.  The Borrower shall pay such Lender the amount
shown as due on any such certificate within 10 days after receipt thereof.


 


(d)                                 Failure
or delay on the part of any Lender to demand compensation pursuant to this Section shall
not constitute a waiver of such Lender’s right to demand such compensation; provided
that the Borrower shall not be required to compensate a Lender pursuant to this
Section for any increased costs or reductions incurred more than 270 days
prior to the date that such Lender notifies the Borrower of the Change in Law
giving rise to such increased costs or reductions and of such Lender’s
intention to claim compensation therefor; provided  further that,
if the Change in Law giving rise to such increased costs or reductions is
retroactive, then the 270-day period referred to above shall be extended to
include the period of retroactive effect thereof.


 


Section 2.13.                             Break Funding Payments.  In the event of (a) the payment of any
principal of any Eurodollar Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default), (b) the
conversion of any Eurodollar Loan other than on the last day of the Interest
Period applicable thereto, (c) the failure to borrow, convert, continue or
prepay any Eurodollar Loan on the date specified in any notice delivered
pursuant hereto or (d) the assignment of any Eurodollar Loan other than on
the last day of the Interest Period applicable thereto as a result of a request
by the Borrower pursuant to Section 2.16, then, in any such event, the
Borrower shall compensate each Lender for the loss, cost and expense
attributable to such event.  In the case
of a Eurodollar Loan, such loss, cost or expense to any Lender shall be deemed
to include an amount determined by such Lender to be the excess, if any, of (i) the
amount of interest which would have accrued on the principal amount of such
Loan had such event not occurred, at the Adjusted LIBO Rate that would have
been applicable to such Loan, for the period from the date of such event to the
last day of the then current Interest Period therefor (or, in the case of a
failure to borrow, convert or continue, for the period that would have been the
Interest Period for such Loan), over (ii) the amount of interest which
would accrue on such principal amount for such period at the interest rate
which such Lender would bid were it to bid, at the commencement of such period,
for dollar deposits of a comparable amount and period from other banks in the
Eurodollar market.  A certificate of any
Lender setting forth any amount or amounts that such Lender is entitled to
receive pursuant to this Section shall be delivered to the Borrower and
shall be conclusive absent manifest error. 
The Borrower shall pay such Lender the amount shown as due on any such
certificate within 10 days after receipt thereof.


 


Section 2.14.                             Taxes.  (a) Any and all payments by or on
account of any obligation of the Borrower hereunder shall be made free and
clear of and without deduction for any Indemnified Taxes or Other Taxes; provided
that if the Borrower shall be required to deduct any Indemnified Taxes or Other
Taxes from such payments, then (i) the sum payable shall be increased as
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section) the Administrative
Agent or Lender (as the case may be) receives an amount equal to the sum it
would have received had no such deductions been made, (ii) the Borrower
shall make such deductions and (iii) the Borrower shall pay the full
amount deducted to the relevant Governmental Authority in accordance with
applicable law.


 


24





















 


(b)                                 In
addition, the Borrower shall pay any Other Taxes to the relevant Governmental
Authority in accordance with applicable law.


 


(c)                                  The
Borrower shall indemnify the Administrative Agent and each Lender, within 10
days after written demand therefor, for the full amount of any Indemnified
Taxes or Other Taxes paid by the Administrative Agent or such Lender, as the
case may be, on or with respect to any payment by or on account of any
obligation of the Borrower hereunder (including Indemnified Taxes or Other
Taxes imposed or asserted on or attributable to amounts payable under this
Section) and any penalties, interest and reasonable expenses arising therefrom
or with respect thereto, whether or not such Indemnified Taxes or Other Taxes
were correctly or legally imposed or asserted by the relevant Governmental
Authority.  A certificate as to the
amount of such payment or liability delivered to the Borrower by a Lender, or
by the Administrative Agent on its own behalf or on behalf of a Lender, shall
be conclusive absent manifest error.


 


(d)                                 As
soon as practicable after any payment of Indemnified Taxes or Other Taxes by
the Borrower to a Governmental Authority, the Borrower shall deliver to the
Administrative Agent the original or a certified copy of a receipt issued by
such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.


 


(e)                                  Any
Foreign Lender that is entitled to an exemption from or reduction of
withholding tax under the law of the jurisdiction in which the Borrower is
located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to the Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law, such
properly completed and executed documentation prescribed by applicable law or
reasonably requested by the Borrower as will permit such payments to be made
without withholding or at a reduced rate.


 


Section 2.15.                             Payments Generally; Pro
Rata Treatment; Sharing of Set-offs. 
(a) The Borrower shall make each payment required to be made by it
hereunder (whether of principal, interest, fees or of amounts payable under Section 2.12,
2.13 or 2.14, or otherwise) prior to 12:00 noon, New York City time, on the
date when due, in immediately available funds, without set-off or
counterclaim.  Any amounts received after
such time on any date may, in the discretion of the Administrative Agent, be
deemed to have been received on the next succeeding Business Day for purposes
of calculating interest thereon.  All
such payments shall be made to the Administrative Agent at its offices at 270
Park Avenue, New York, New York, except that payments pursuant to Sections 2.12,
2.13, 2.14 and 10.03 shall be made directly to the Persons entitled
thereto.  The Administrative Agent shall
distribute any such payments received by it for the account of any other Person
to the appropriate recipient promptly following receipt thereof.  If any payment hereunder shall be due on a
day that is not a Business Day, the date for payment shall be extended to the
next succeeding Business Day, and, in the case of any payment accruing
interest, interest thereon shall be payable for the period of such extension.  All payments hereunder shall be made in
dollars.


 


(b)                                 If
at any time insufficient funds are received by and available to the
Administrative Agent to pay fully all amounts of principal, interest and fees
then due hereunder, such funds shall be applied (i) first, towards payment
of interest and fees then due hereunder,


 


25





















 


ratably among the parties entitled thereto in
accordance with the amounts of interest and fees then due to such parties, and (ii) second,
towards payment of principal in accordance with the amounts of principal then
due to such parties.


 


(c)                                  If
any Lender shall, by exercising any right of set-off or counterclaim or
otherwise, obtain payment in respect of any principal of or interest on any of
its Loans resulting in such Lender receiving payment of a greater proportion of
the aggregate amount of its Loans and accrued interest thereon than the
proportion received by any other Lender, then the Lender receiving such greater
proportion shall purchase (for cash at face value) participations in the Loans
of other Lenders to the extent necessary so that the benefit of all such
payments shall be shared by the Lenders ratably in accordance with the
aggregate amount of principal of and accrued interest on their respective Loans;
provided that (i) if any such participations are purchased and all
or any portion of the payment giving rise thereto is recovered, such
participations shall be rescinded and the purchase price restored to the extent
of such recovery, without interest, and (ii) the provisions of this
paragraph shall not be construed to apply to any payment made by the Borrower
pursuant to and in accordance with the express terms of this Agreement or any
payment obtained by a Lender as consideration for the assignment of or sale of
a participation in any of its Loans to any assignee or participant, other than
to the Borrower or any Subsidiary or Affiliate thereof (as to which the
provisions of this paragraph shall apply). 
The Borrower consents to the foregoing and agrees, to the extent it may
effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against the
Borrower rights of set-off and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of the Borrower in the amount
of such participation.


 


(d)                                 Unless
the Administrative Agent shall have received notice from the Borrower prior to
the date on which any payment is due to the Administrative Agent for the
account of the Lenders hereunder that the Borrower will not make such payment,
the Administrative Agent may assume that the Borrower has made such payment on
such date in accordance herewith and may, in reliance upon such assumption,
distribute to the Lenders the amount due. 
In such event, if the Borrower has not in fact made such payment, then
each of the Lenders severally agrees to repay to the Administrative Agent
forthwith on demand the amount so distributed to such Lender with interest
thereon, for each day from and including the date such amount is distributed to
it to but excluding the date of payment to the Administrative Agent, at the
greater of the Federal Funds Effective Rate and a rate determined by the
Administrative Agent in accordance with banking industry rules on
interbank compensation.


 


(e)                                  If
any Lender shall fail to make any payment required to be made by it pursuant to
Sections 2.04(b) or 2.15(d), then the Administrative Agent may, in
its discretion (notwithstanding any contrary provision hereof), apply any
amounts thereafter received by the Administrative Agent for the account of such
Lender to satisfy such Lender’s obligations under such Sections until all such
unsatisfied obligations are fully paid.


 


Section 2.16.                             Mitigation Obligations;
Replacement of Lenders.  (a) If
any Lender requests compensation under Section 2.12, or if the Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.14, then such
Lender shall use reasonable efforts to designate a different lending office


 


26





















 


for funding or booking its Loans hereunder or
to assign its rights and obligations hereunder to another of its offices, branches
or affiliates, if, in the judgment of such Lender, such designation or
assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.12
or 2.14, as the case may be, in the future and (ii) would not subject such
Lender to any unreimbursed cost or expense and would not otherwise be
disadvantageous to such Lender.  The
Borrower hereby agrees to pay all reasonable costs and expenses incurred by any
Lender in connection with any such designation or assignment.


 


(b)                                 If
any Lender requests compensation under Section 2.12, or if the Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.14, or if
any Lender defaults in its obligation to fund Loans hereunder, then the
Borrower may, at its sole expense and effort, upon notice to such Lender and
the Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in Section 10.04),
all its interests, rights and obligations under this Agreement to an assignee
that shall assume such obligations (which assignee may be another Lender, if a
Lender accepts such assignment); provided that (i) the Borrower
shall have received the prior written consent of the Administrative Agent,
which consent shall not unreasonably be withheld, (ii) such Lender shall
have received payment of an amount equal to the outstanding principal of its
Loans, accrued interest thereon, accrued fees and all other amounts payable to
it hereunder, from the assignee (to the extent of such outstanding principal
and accrued interest and fees) or the Borrower (in the case of all other
amounts) and (iii) in the case of any such assignment resulting from a
claim for compensation under Section 2.12 or payments required to be made
pursuant to Section 2.14, such assignment will result in a reduction in
such compensation or payments.  A Lender
shall not be required to make any such assignment and delegation if, prior
thereto, as a result of a waiver by such Lender or otherwise, the circumstances
entitling the Borrower to require such 
assignment and delegation cease to apply.


 


ARTICLE III

Representations and Warranties


 


The MLP and the Borrower,
in each case with respect to itself and its subsidiaries, each represents and
warrants to the Lenders that:


 


Section 3.01.                             Organization; Powers.  It and its subsidiaries is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization, has all requisite power and authority to carry on its business as
now conducted and, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect, is qualified to do business in, and is in good standing in, every
jurisdiction where such qualification is required.


 


Section 3.02.                             Authorization;
Enforceability.  The Transactions are
within its and its subsidiaries corporate, limited liability company or
partnership powers and have been duly authorized by all necessary corporate,
limited liability company or partnership and, if required, stockholder, member
or limited partner action.  This
Agreement has been duly executed and delivered by it and constitutes a legal,
valid and binding obligation of it, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization,


 


27





















 


moratorium or other laws affecting creditors’
rights generally and subject to general principles of equity, regardless of
whether considered in a proceeding in equity or at law.


 


Section 3.03.                             Governmental Approvals;
No Conflicts.  The Transactions (a) do
not require any material consent or approval of, registration or filing with,
or any other action by, any Governmental Authority, except such as have been
obtained or made and are in full force and effect, (b) will not violate
any applicable material law or regulation or the charter, by-laws or other
organizational documents of it or any of its subsidiaries or any order of any
Governmental Authority, (c) will not violate or result in a default under
any indenture, agreement or other instrument relating to Material Indebtedness
binding upon it or any of its subsidiaries or its assets, or give rise to a
right thereunder to require any payment to be made by it or any of its
subsidiaries, and (d) will not result in the creation or imposition of any
Lien on any asset of it or any of its subsidiaries.


 


Section 3.04.                             Financial Condition; No
Material Adverse Change.  (a) It
has heretofore furnished to the Lenders (i) the consolidated balance sheet
and statements of income, partners equity and cash flows of the MLP (A) as
of and for the fiscal year ended December 31, 2004, reported on by KPMG
LLP, and (B) as of and for the fiscal quarter and the portion of the
fiscal year ended March 31, 2005, certified by its chief financial
officer; (ii) the consolidated balance sheet and statements of income,
partners equity and cash flows of the Borrower (A) as of and for the
fiscal year ended December 31, 2004, certified by its chief financial
officer, and (B) as of and for the fiscal quarter and the portion of the
fiscal year ended March 31, 2005, certified by its chief financial
officer; (iii) the consolidated balance sheet and statements of income,
partners equity and cash flows of KPP (A) as of and for the fiscal year
ended December 31, 2004, reported on by KPMG LLP, and (B) as of and
for the fiscal quarter and the portion of the fiscal year ended March 31,
2005, certified by its chief financial officer; and (iv) the selected
unaudited pro forma condensed combined financial data set forth in the joint
proxy statement/prospectus included in the Registration Statement on Form S-4
dated November 23, 2004 filed with the SEC in connection with the
Acquisition.  Such financial statements
present fairly, in all material respects, the financial position and results of
operations and cash flows of (x) the MLP and its consolidated subsidiaries, the
Borrower and its consolidated Subsidiaries, and KPP and its consolidated
subsidiaries and (y) the pro forma consolidated
financial condition of the MLP, as of such dates and for such periods in
accordance with GAAP, subject to year-end audit adjustments and the absence of
footnotes in the case of the statements referred to in clauses (B) above.


 


(b)                                 Since
December 31, 2004, there has been no material adverse change in the
business, assets, operations or condition (financial or otherwise) of it and
its subsidiaries, taken as a whole.


 


Section 3.05.                             Properties.  (a) It and its subsidiaries has good
title to, or valid leasehold interests in, all its real and personal property
material to its business, free and clear of all Liens except Permitted
Encumbrances and Liens otherwise permitted or contemplated by this Agreement,
except where the failure to have such title or leasehold interest could not
reasonably be expected to result in a Material Adverse Effect.


 


28





















 


(b)                                 It
and its subsidiaries owns, or is licensed to use, or has made all required
federal filings (and has not been notified of any contest) with respect to, all
trademarks, tradenames, copyrights, patents and other intellectual property
material to its business, and the use thereof by it and its subsidiaries does
not infringe upon the rights of any other Person, except for any such
infringements that, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.


 


Section 3.06.                             Litigation and
Environmental Matters.  (a) There
are no actions, suits or proceedings by or before any arbitrator or
Governmental Authority pending against or, to the knowledge of it, threatened
against or affecting it or any of its subsidiaries (i) as to which there
is a reasonable possibility of an adverse determination and that, if adversely
determined, could reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect (other than the Disclosed Matters) or (ii) that
involve this Agreement or the Transactions.


 


(b)                                 Except
for the Disclosed Matters and except with respect to any other matters that,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect, neither it nor any of its subsidiaries (i) has
failed to comply with any Environmental Law or to obtain, maintain or comply
with any permit, license or other approval required under any Environmental
Law, (ii) has become subject to any Environmental Liability, (iii) has
received notice of any claim with respect to any Environmental Liability or (iv) knows
of any basis for any Environmental Liability.


 


(c)                                  Since
the Effective Date, there has been no change in the status of the Disclosed
Matters that, individually or in the aggregate, has resulted in, or materially
increased the likelihood of, a Material Adverse Effect.


 


Section 3.07.                             Compliance with Laws
and Agreements.  It and its
subsidiaries is in compliance with all laws, regulations and orders of any
Governmental Authority applicable to it or its property and all indentures,
agreements and other instruments binding upon it or its property, except where
the failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.  No Default has occurred and is continuing.


 


Section 3.08.                             Investment and Holding
Company Status.  Neither it nor any
of its subsidiaries is (a) an “investment company” as defined in, or
subject to regulation under, the Investment Company Act of 1940 or (b) a “holding
company” as defined in, or subject to regulation under, the Public Utility
Holding Company Act of 1935.  The
Borrower is not subject to regulation under any Federal or State statute or
regulation which limits its ability to incur Indebtedness.


 


Section 3.09.                             Taxes.  It and its subsidiaries has each timely filed
or caused to be filed all Tax returns and reports required to have been filed
and has paid or caused to be paid all Taxes required to have been paid by it,
except (a) Taxes that are being contested in good faith by appropriate
proceedings and for which it or such subsidiary, as applicable, has set aside
on its books adequate reserves or (b) to the extent that the failure to do
so could not reasonably be expected to result in a Material Adverse Effect.


 


29





















 


Section 3.10.                             ERISA.  Except as could not reasonably be expected to
result in a Material Adverse Effect, each ERISA Affiliate has fulfilled its
obligations under the minimum funding standards of ERISA and the Code with
respect to each Plan and is in compliance in all material respects with the
presently applicable provisions of ERISA and the Code with respect to each
Plan.  Except as could not reasonably be
expected to result in a Material Adverse Effect, no ERISA Affiliate has (i) sought
a waiver of the minimum funding standard under Section 412 of the Code in
respect of any Plan, (ii) failed to make any contribution or payment to
any Plan or Multiemployer Plan or in respect of any Benefit Arrangement or made
any amendment to any Plan or Benefit Arrangement, which has resulted or could
reasonably be expected to result in the imposition of a Lien or the posting of
a bond or other security under ERISA or the Code or (iii) incurred any
liability under Title IV of ERISA other than a liability to the PBGC for
premiums under Section 4007 of ERISA.


 


Section 3.11.                             Disclosure.  It has disclosed to the Lenders all
agreements, instruments and corporate or other restrictions to which it or any
of its subsidiaries is subject, and all other matters known to it, that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect.  Neither the
Information Memorandum nor any of the other reports, financial statements,
certificates or other information furnished by or on behalf of it to the
Administrative Agent or any Lender in connection with the negotiation of this
Agreement or delivered hereunder (as modified or supplemented by other
information so furnished) contains any material misstatement of fact or omits
to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading; provided
that, with respect to projected financial information, it represents only that
such information was prepared in good faith based upon assumptions believed to
be reasonable at the time.


 


Section 3.12.                             Investments and
Guarantees.  Neither it nor any of
its subsidiaries has any Investments or has outstanding any Guarantees, except
as permitted by this Agreement or reflected in the financial statements
described in Section 3.04(a).


 


Section 3.13.                             Casualties; Taking of
Property.  Neither the business nor
the assets taken as a whole of it or any of its subsidiaries (after giving
effect to the payment or anticipated payment of any proceeds of insurance) have
been materially and adversely affected as a result of any fire, explosion,
earthquake, flood, drought, windstorm, accident, strike or other labor
disturbance, embargo, requisition or taking of any assets or cancellation of
contracts, permits or concessions by any domestic or foreign government or any
agency thereof, riot, activities of armed forces or acts of God or of any
public enemy.


 


ARTICLE IV

Conditions


 


Section 4.01.                             Effective Date.  The obligations of the Lenders to make Loans
hereunder shall not become effective until the date on which each of the
following conditions is satisfied (or waived in accordance with Section 10.02):


 


(a)                                  The
Administrative Agent (or its counsel) shall have received (i) this
Agreement, executed and delivered by a duly authorized officer of the Borrower
and the MLP,


 


30





















 


and by the Lenders and the Administrative
Agent and (ii) the Subsidiary Guaranty, executed and delivered by a duly
authorized officer of each Guarantor (other than the MLP) and satisfactory in
form and substance to the Administrative Agent.


 


(b)                                 The
Administrative Agent shall have received a favorable written opinion (addressed
to the Administrative Agent and the Lenders and dated the Effective Date) of (i) Andrews
Kurth LLP, counsel for the Borrower and the MLP and (ii) Bradley C.
Barron, in-house counsel of Valero Energy, collectively providing the opinions
set forth in Exhibit B, and each such opinion covering such other matters
relating to the Borrower, the General Partner, the MLP, the Guarantors, this
Agreement or the Transactions as the Lenders shall reasonably request.  The Borrower hereby requests each such
counsel to deliver its applicable opinion to the Administrative Agent and the
Lenders.


 


(c)                                  The
Administrative Agent shall have received such documents and certificates as the
Administrative Agent or its counsel may reasonably request relating to the
organization, existence and good standing of the Borrower, the General Partner,
the MLP, the Guarantors, the authorization of the Transactions, and any other
legal matters relating to the Borrower, the General Partner, the MLP, the
Guarantors, the Agreement, the Transactions or the Acquisition, all in form and
substance satisfactory to the Administrative Agent and its counsel.


 


(d)                                 The
Administrative Agent shall have received a certificate, dated the Effective
Date and signed by the President, Vice President or a Financial Officer of each
of the Borrower and the MLP, confirming compliance with the conditions set
forth in paragraphs (a) and (b) of Section 4.02.


 


(e)                                  The
Administrative Agent shall have received (i) counterpart originals of the
Partnership Agreement (MLP) substantially in the form listed as Exhibit 3.4
to the MLP’s annual report on Form 10-K for the fiscal year ended December 31,
2004, the Indenture and the Partnership Agreement (Borrower) in form and
substance acceptable to the Lenders, in each case duly executed by each of the
parties thereto and (ii) evidence satisfactory to the Lenders that the
Partnership Agreement (Borrower), the Indenture and the Partnership Agreement
(MLP) are in full force and effect and have not been amended or modified except
to the extent such amendments or modifications have been delivered to the
Administrative Agent, which evidence may be in the form of a certificate of the
President or a Vice President (or equivalent officer) of each of the Borrower
and the MLP.


 


(f)                                    The
Administrative Agent shall have received the financial statements referred to
in Section 3.04(a).


 


(g)                                 The
Administrative Agent shall have received evidence satisfactory to it that the
Acquisition has been or is being concurrently consummated substantially in
accordance with the Acquisition Documents (with all of the material conditions
precedent thereto having been satisfied in all material respects by the parties
thereto other than as consented to by the Lenders).


 


(h)                                 The
Administrative Agent shall have received (i) a certificate of the
President or a Vice President (or equivalent officer) of each of the Borrower
and the MLP


 


31





















 


certifying: 
(A) that the Acquisition has been or is concurrently being
consummated substantially in accordance with the terms of the Acquisition
Documents (with all of the material conditions precedent thereto having been
satisfied in all material respects by the parties thereto other than as
consented to by the Lenders); (B) that attached thereto is a true and
complete executed copy of each of the Acquisition Documents (including all
exhibits, schedules and supplements) and that no Acquisition Document has been
amended since October 31, 2004 in any material respect except as otherwise
consented to by the Administrative Agent and the Lenders (which consent will
not be unreasonably withheld); (C) that attached thereto is a true and
complete copy of each Certificate of Merger issued by the Delaware Secretary of
State in connection with the consummation of the Acquisition; and (ii) such
other related documents and information as the Administrative Agent shall have
reasonably requested.


 


(i)                                     The
Administrative Agent shall have received, and shall be satisfied with the
selected unaudited pro forma condensed combined financial data set forth in the
joint proxy statement/prospectus included in the Registration Statement on Form S-4
dated November 23, 2004 filed with the SEC in connection with the
Acquisition.


 


(j)                                     The
Administrative Agent shall have received evidence satisfactory to it of any
necessary shareholder, corporate, limited liability company, and partnership
approvals as to authority, enforceability and compliance with law in connection
with the Transactions and the consummation of the Acquisition.


 


(k)                                  The
Administrative Agent shall have received evidence satisfactory to it that all
loans, letters of credit and other obligations owing pursuant to each of (i) the
Existing Agreement, (ii) the $400,000,000 Revolving Credit Agreement dated
as of April 24, 2003 among Kaneb Pipe Line Operating Partnership, L.P., as
borrower, KPP, SunTrust Bank, as administrative agent, and the lenders party
thereto, as amended, (iii) the Loan Agreement, dated as of July 13,
2001, among KSL, KPP and Bank of Scotland, as amended, (iv) the Credit
Agreement, dated as of March 25, 1998, between Martin Oil LLC (successor
to Martin Oil Corporation) and Harris Trust and Savings Bank, as amended, and (v) the
Facility Agreement, dated as of April 16, 2003, among ST Australia Pty
Ltd, Terminals Pty Ltd, Kaneb Pipe Line Operating Partnership, L.P., and
National Australia Bank Limited, as amended, shall have been paid in full and
all commitments thereunder shall have been terminated.


 


(l)                                     The
5-Year Revolving Credit Agreement dated as of December 20, 2004 among the
Borrower, the MLP, JPMorgan Chase Bank, N.A., as administrative agent, and the
lenders and other agents from time to time party thereto, as amended, shall
have become “effective” pursuant to Section 4.01 thereof.


 


(m)                               The
Administrative Agent shall have received all fees and other amounts due and
payable on or prior to the Effective Date, including, to the extent invoiced,
reimbursement or payment of all out-of-pocket expenses required to be
reimbursed or paid by the Borrower hereunder.


 


(n)                                 The
Administrative Agent shall have received satisfactory evidence regarding the
scope and materiality of any environmental risks affecting the properties of
the MLP and its Subsidiaries (including the Acquired Companies).


 


32





















 


The Administrative Agent shall notify the Borrower and the Lenders of
the Effective Date, and such notice shall be conclusive and binding.  Notwithstanding the foregoing, the
obligations of the Lenders to make Loans under this Agreement shall not become
effective unless each of the foregoing conditions is satisfied (or waived
pursuant to Section 10.02) at or prior to 3:00 p.m., New York City
time, on September 30, 2005 (and, in the event such conditions are not so
satisfied or waived, the Commitments shall terminate at such time).


 


Section 4.02.                             Each Credit Event.  The obligation of each Lender to make a Loan
on the occasion of any Borrowing is subject to the satisfaction of the
following conditions:


 


(a)                                  The
representations and warranties of the Borrower and the MLP set forth in this
Agreement shall be true and correct on and as of the date of such Borrowing
(unless such representations and warranties are stated to relate to a specific
earlier date, in which case such representations and warranties shall be true
and correct as of such earlier date).


 


(b)                                 At
the time of and immediately after giving effect to such Borrowing no Default
shall have occurred and be continuing.


 


(c)                                  The
Administrative Agent shall have received each additional document, instrument,
legal opinion or item of information reasonably requested by the Administrative
Agent, including, without limitation, a copy of any debt instrument, security
agreement or other material contract to which the MLP or any Subsidiary may be
a party.


 


Each Borrowing shall be deemed to constitute a representation and
warranty by the Borrower and the MLP on the date thereof as to the matters
specified in paragraphs (a) and (b) of this Section 4.02.


 


ARTICLE V

Affirmative Covenants


 


Commencing on the
Effective Date, until the Commitments have expired or been terminated and the
principal of and interest on each Loan and all fees payable hereunder shall
have been paid in full, the MLP and the Borrower each covenants and agrees with
the Lenders that:


 


Section 5.01.                             Financial Statements
and Other Information.  It will
furnish to the Administrative Agent and each Lender:


 


(a)                                  no
later than 15 days following the date required by applicable SEC rules (without
giving effect to any extensions available thereunder) for the filing of such
financial statements after the end of each fiscal year of the MLP:


 


(i)                                     the
audited consolidated balance sheet and related statements of income, partners
equity and cash flows of the MLP as of the end of and for such year, setting
forth in each case in comparative form the figures for the previous fiscal
year, all reported on by Ernst & Young LLP or other independent public
accountants of recognized national standing (without a “going concern” or like
qualification or exception and without any qualification or exception as to the
scope of such audit) to the effect that such consolidated financial statements


 


33





















 


present fairly in all material respects the
financial condition, results of operations and cash flows of the MLP and its
consolidated Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied; and


 


(ii)                                  the
consolidated balance sheet and related statements of income, partners equity
and cash flows of the Borrower as of the end of and for such year, setting
forth in each case in comparative form the figures from the previous fiscal
year, all certified by one of its Financial Officers as presenting fairly in
all material respects the financial condition and results of operations of the
Borrower and its consolidated subsidiaries on a consolidated basis in
accordance with GAAP consistently applied, subject to the absence of footnotes.


 


(b)                                 no
later than 15 days following the date required by applicable SEC rules (without
giving effect to any extensions available thereunder) for the filing of such
financial statements after the end of each of the first three fiscal quarters
of each fiscal year of the MLP:


 


(i)                                     the
consolidated balance sheet and related statements of income, partners equity
and cash flows of the MLP as of the end of and for such fiscal quarter and the
then elapsed portion of the fiscal year, setting forth in each case in
comparative form the figures for the corresponding period or periods of (or, in
the case of the balance sheet, as of the end of) the previous fiscal year, all
certified by one of its Financial Officers as presenting fairly in all material
respects the financial condition and results of operations of the MLP and its consolidated
Subsidiaries on a consolidated basis in accordance with GAAP consistently
applied, subject to normal year-end audit adjustments and the absence of
footnotes; and


 


(ii)                                  the
consolidated balance sheet and related statements of income, partners equity
and cash flows of the Borrower as of the end of and for such fiscal quarter and
the then elapsed portion of the fiscal year, setting forth in each case in
comparative form the figures for the corresponding period or periods of (or, in
the case of the balance sheet, as of the end of) the previous fiscal year, all
certified by one of its Financial Officers as presenting fairly in all material
respects the financial condition and results of operations of the Borrower and
its consolidated subsidiaries on a consolidated basis in accordance with GAAP
consistently applied, subject to normal year-end audit adjustments and the
absence of footnotes.


 


(c)                                  concurrently
with any delivery of financial statements under clause (a) or (b) above,
a certificate of a Financial Officer of each of the Borrower and the MLP (i) certifying
as to whether a Default has occurred and, if a Default has occurred, specifying
the details thereof and any action taken or proposed to be taken with respect
thereto, (ii) setting forth reasonably detailed calculations demonstrating
compliance with Section 6.11 and (iii) stating whether any change in
GAAP or in the application thereof has occurred since the date of the audited
financial statements referred to in Section 3.04 and, if any such change
has occurred, specifying the effect of such change on the financial statements
accompanying such certificate;


 


(d)                                 promptly
after Moody’s or S&P shall have announced a change in the rating
established or deemed to have been established for the Index Debt, written
notice of such rating change; and


 


34





















 


(e)                                  promptly
following any request therefor, such other information regarding the
operations, business affairs and financial condition of the Borrower, the MLP
or any of their subsidiaries, or compliance with the terms of this Agreement,
as the Administrative Agent or any Lender may reasonably request.


 


Section 5.02.                             Notices of Material
Events.  The MLP and the Borrower
will furnish to the Administrative Agent and each Lender prompt written notice
of the following:


 


(a)                                  the
occurrence of any Default;


 


(b)                                 the
filing or commencement of any action, suit or proceeding by or before any
arbitrator or Governmental Authority against or affecting the MLP, the Borrower
or any Affiliate thereof that, if adversely determined, could reasonably be
expected to result in a Material Adverse Effect;


 


(c)                                  if
and when any ERISA Affiliate (i) gives or is required to give notice to
the PBGC of any “reportable event” (as defined in Section 4043 of ERISA)
with respect to any Plan which could reasonably be expected to constitute
grounds for a termination of such Plan under Title IV of ERISA, or knows that
the plan administrator of any Plan has given or is required to give notice of
any such reportable event, a copy of the notice of such reportable event given
or required to be given to the PBGC; (ii) receives notice of complete or
partial withdrawal liability under Title IV of ERISA or notice that any
Multiemployer Plan is in reorganization, is insolvent or has been terminated, a
copy of such notice; (iii) receives notice from the PBGC under Title IV of
ERISA of an intent to terminate, impose liability (other than for premiums
under Section 4007 of ERISA) in respect of, or appoint a trustee to
administer any Plan, a copy of such notice; (iv) applies for a waiver of
the minimum funding standard under Section 412 of the Code, a copy of such
application; (v) gives notice of intent to terminate any Plan under Section 4041(c) of
ERISA, a copy of such notice and other information filed with the PBGC; (vi) gives
notice of withdrawal from any Plan pursuant to Section 4063 of ERISA, a
copy of such notice; or (vii) fails to make any payment or contribution to
any Plan or Multi-Employer Plan or in respect of any Benefit Arrangement or
makes any amendment to any Plan or Benefit Arrangement which has resulted or
could reasonably be expected to result in the imposition of a Lien or the
posting of a bond or other security, a certificate of a Financial Officer of
each of the Borrower and the MLP setting forth details as to such occurrence
and action, if any, which the Borrower, the MLP or applicable ERISA Affiliate
is required or proposes to take, but only to the extent that any occurrence
described in the preceding clauses (i) through (vii) could reasonably
be expected to result in a Material Adverse Effect;


 


(d)                                 any
other development that results in, or could reasonably be expected to result
in, a Material Adverse Effect;


 


(e)                                  any
material amendment to the Partnership Agreement (MLP), the Partnership
Agreement (Borrower) or any Material Agreement, together with a certified
copy  of such amendment; and


 


(f)                                    any
of the following events, in each case if the occurrence of such event could
reasonably be expected to have a Material Adverse Effect:


 


35





















 


(i)                                     the
receipt by the MLP (or its general partner(s)), the Borrower or the General
Partner of any notice of any claim with respect to any Environmental Liability;


 


(ii)                                  if
the President or a Vice President (or equivalent officer) of the MLP or the
Borrower, or the officer of the MLP or the Borrower primarily responsible for
monitoring compliance by the MLP or the Borrower and its subsidiaries with
Environmental Laws, shall obtain actual knowledge that there exists any
Environmental Liability pending or threatened against the MLP, the Borrower or
any of their subsidiaries; or


 


(iii)                               any
release, emission, discharge or disposal of any Hazardous Materials that could
reasonably be expected to form the basis of any Environmental Liability with
respect to the MLP, the Borrower or any of their subsidiaries.


 


Each notice delivered under this Section shall be accompanied by a
statement of a Financial Officer or President or any Vice President (or
equivalent officer) of each of the Borrower and the MLP setting forth a
description of the event or development requiring such notice and any action
taken or proposed to be taken with respect thereto.


 


Section 5.03.                             Existence; Conduct of
Business.  It will, and will cause
each of its subsidiaries to, do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its legal existence and the
rights, licenses, permits, privileges and franchises material to the conduct of
its business; provided that the foregoing shall not prohibit any merger,
consolidation, liquidation or dissolution permitted under Section 6.03.


 


Section 5.04.                             Payment of Obligations.  It will, and will cause each of its
subsidiaries to, pay its obligations, including Tax liabilities, that, if not
paid, could result in a Material Adverse Effect before the same shall become
delinquent or in default, except where (a) the validity or amount thereof
is being contested in good faith by appropriate proceedings, (b) it or
such subsidiary has set aside on its books adequate reserves with respect
thereto in accordance with GAAP and (c) the failure to make payment
pending such contest could not reasonably be expected to result in a Material
Adverse Effect.


 


Section 5.05.                             Maintenance of
Properties; Insurance.  It will, and
will cause each of its subsidiaries to, (a) keep and maintain all property
material to the conduct of its business in good working order and condition,
ordinary wear and tear excepted, and (b) maintain, with financially sound
and reputable insurance companies, insurance in such amounts and against such
risks as are customarily maintained by companies engaged in the same or similar
businesses operating in the same or similar locations.


 


Section 5.06.                             Books and Records;
Inspection Rights.  It will, and will
cause each of its subsidiaries to, keep proper books of record and account in
which full, true and correct entries are made of all dealings and transactions
in relation to its business and activities. 
It will, and will cause each of its subsidiaries to, permit any
representatives designated by the Administrative Agent or any Lender, upon
reasonable prior notice, to visit and inspect its properties, to examine and
make extracts from its books and records, and to discuss its affairs, finances
and condition with its officers and independent accountants, all at such
reasonable times and as often as reasonably requested.


 


36





















 


Section 5.07.                             Compliance with Laws.  It will, and will cause each of its
subsidiaries to, comply with all laws, rules, regulations and orders of any
Governmental Authority applicable to it or its property and the terms and
provisions of the Material Agreements, except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect.


 


Section 5.08.                             Use of Proceeds.  The proceeds of the Loans will be used to
fund the Acquisition.  No part of the
proceeds of any Loan will be used, whether directly or indirectly, for any
purpose that entails a violation of any of the Regulations of the Board,
including Regulations T, U and X.


 


Section 5.09.                             Environmental Laws.  It will, and will cause each of its
subsidiaries to:


 


(a)                                  comply
with all applicable Environmental Laws and obtain and comply with and maintain
any and all licenses, approvals, notifications, registrations or permits
required by applicable Environmental Laws except to the extent that failure to
do so could not reasonably be expected to have a Material Adverse Effect; and


 


(b)                                 conduct
and complete all investigations, studies, sampling and testing, and all
remedial, removal and other actions required under Environmental Laws and
promptly comply with all lawful orders and directives of all Governmental
Authorities regarding Environmental Laws except to the extent that the same are
being contested in good faith by appropriate proceedings and the pendency of
such proceedings could not reasonably be expected to have a Material Adverse
Effect.


 


Section 5.10.                             Subsidiaries.  It will, substantially contemporaneously with
its formation or acquisition (or event or circumstance that qualifies it as a
Material Domestic Subsidiary), cause each subsidiary of it that is a Material
Domestic Subsidiary to become a Guarantor with respect to, and jointly and
severally liable with all other Guarantors for, all obligations of the Borrower
under this Agreement by executing and delivering to the Administrative Agent,
for the benefit of the Lenders, a Subsidiary Guaranty, substantially in the
form of Exhibit C (or a supplement thereto as may be requested by the
Administrative Agent).  In addition, the
MLP and the Borrower shall at all times cause (i) the MLP’s and its
Subsidiaries’ equity in the income from continuing operations before interest
expense and all income taxes of the Borrower and all Domestic Subsidiaries that
are then parties to a Subsidiary Guaranty to be at least 80% of such income of
the MLP’s Domestic Subsidiaries consolidated for the most recently completed
fiscal year and (ii) the MLP’s and its Subsidiaries’ proportionate share
of the total assets (after intercompany eliminations) of the Borrower and all
Domestic Subsidiaries that are then parties to a Subsidiary Guaranty to be at
least 80% of the total assets of the MLP’s Domestic Subsidiaries consolidated
as of the end of the most recently completed fiscal year.  The MLP and the Borrower shall, promptly, but
in any event no later than 10 days after becoming aware of their non-compliance
with the requirements of the immediately preceding sentence, cause one or more
of their Domestic Subsidiaries that are not then parties to a Subsidiary
Guaranty to become parties to a Subsidiary Guaranty (even if such subsidiary
does not constitute a Material Domestic Subsidiary) so as to comply with the
requirements of the immediately preceding sentence.  The MLP and the Borrower shall, or shall
cause its subsidiaries to, further deliver any and all


 


37





















 


instruments, documents, approvals, consents
or opinions of counsel reasonably requested by the Administrative Agent or the
Required Lenders in connection with any Subsidiary Guaranty.


 


ARTICLE VI

Negative Covenants


 


Commencing on the
Effective Date, until the Commitments have expired or terminated and the
principal of and interest on each Loan and all fees payable hereunder have been
paid in full, each of the MLP and the Borrower covenants and agrees with the
Lenders that:


 


Section 6.01.                             Indebtedness.  It will not, and will not permit any of its
subsidiaries to, create, incur, assume or permit to exist any Indebtedness,
except:


 


(a)                                  Indebtedness
created under this Agreement;


 


(b)                                 Indebtedness
created under the Revolving Credit Agreement, the principal amount of which
does not exceed $600,000,000 in the aggregate at any time;


 


(c)                                  Indebtedness
created under the UK Credit Agreement, the principal amount of which does not
exceed £21,000,000 in the aggregate at any time;


 


(d)                                 Indebtedness
of the MLP to any Subsidiary and of any Subsidiary to the MLP or any other
Subsidiary to the extent permitted by Section 6.04, so long as the MLP and
the Borrower are in compliance with Section 5.10;


 


(e)                                  Guarantees
by the MLP of Indebtedness of any Subsidiary and by any Guarantor of
Indebtedness of the MLP or any other Subsidiary and by any Subsidiary that is
not a Guarantor of Indebtedness of any other Subsidiary that is not a
Guarantor; and


 


(f)                                    other
Indebtedness of the MLP and any Subsidiary; provided that, both before
and after such Indebtedness is created, incurred or assumed, no Event of
Default shall have occurred and be continuing under this Agreement, including,
without limitation, an Event of Default with respect to (i) the
Consolidated Interest Coverage Ratio set forth in Section 6.11(a) and
(ii) the Consolidated Debt Coverage Ratio set forth in Section 6.11(b).


 


Notwithstanding
the foregoing or anything to the contrary contained herein, the MLP and the
Borrower will not permit the aggregate principal amount of Indebtedness of
Subsidiaries that are not Guarantors (other than Indebtedness described on Schedule 6.01)
at any time to exceed 5% of Consolidated Net Worth.


 


Section 6.02.                             Liens.  It will not, and will not permit any of its
subsidiaries to, create, incur, assume or permit to exist any Lien on any
property or asset now owned or hereafter acquired by it, or assign or sell any
income or revenues (including accounts receivable) or rights in respect of any
thereof, except:


 


(a)                                  Permitted
Encumbrances;


 


38





















 


(b)                                 any
Lien existing on any property or asset prior to the acquisition thereof by the
MLP or any Subsidiary or existing on any property or asset of any Person that
becomes a Subsidiary after the date hereof prior to the time such Person
becomes a Subsidiary; provided that (i) such Lien is not created in
contemplation of or in connection with such acquisition or such Person becoming
a Subsidiary, as the case may be, (ii) such Lien shall not apply to any
other property or assets of the MLP or any Subsidiary and (iii) such Lien
shall secure only those obligations which it secures on the date of such
acquisition or the date such Person becomes a Subsidiary, as the case may be;


 


(c)                                  Liens
on fixed or capital assets acquired, constructed or improved by the MLP or any
Subsidiary; provided that (i) such security interest secures
Indebtedness permitted by clause (f) of Section 6.01, (ii) such
security interests and the Indebtedness secured thereby are incurred prior to
or within 90 days after such acquisition or the completion of such construction
or improvement, (iii) the Indebtedness secured thereby does not exceed the
cost of acquiring, constructing or improving such fixed or capital assets and (iv) such
security interests shall not apply to any other property or assets of the MLP
or any Subsidiary;


 


(d)                                 other
Liens securing Indebtedness in an amount that does not at any time exceed 10%
of Consolidated Net Worth; and


 


(e)                                  extensions,
renewals, modifications or replacements of any of the Liens and other matters
referred to in clauses (a) through (d) of this Section, provided that
such Lien is otherwise permitted by the terms hereof and, with respect to Liens
securing Indebtedness, no extension or renewal Lien shall (i) secure more
than the amount of the Indebtedness or other obligations secured by the Lien
being so extended or renewed or (ii) extend to any property or assets not
subject to the Lien being so extended or renewed.


 


Section 6.03.                             Fundamental Changes.  (a) Other than in connection with the
Acquisition, it will not, and will not permit any of its subsidiaries to, merge
into or consolidate with any other Person, or permit any other Person to merge
into or consolidate with it, or sell, transfer, lease or otherwise dispose of
(in one transaction or in a series of transactions) all or substantially all of
its assets (it being understood that “substantially all of its assets” shall
mean more than 50% of the aggregate total assets of the MLP and its
Subsidiaries, taken as a whole), or all or substantially all of the stock (it
being understood that “substantially all of the stock” shall mean stock
representing ownership interests in more than 50% of the aggregate total assets
of the MLP and its Subsidiaries, taken as a whole) of any of its subsidiaries
(in each case whether now owned or hereafter acquired), or liquidate or
dissolve, except that, if at the time thereof and immediately after giving
effect thereto no Default shall have occurred and be continuing (i) any
Subsidiary may merge into the Borrower in a transaction in which the Borrower
is the surviving entity or the Borrower may merge with another Person so long
as (A) the surviving entity or purchaser, if other than the Borrower,
assumes, pursuant to the terms of such transaction, each of the obligations of
the Borrower hereunder and under any other documents entered into in connection
with the Loans and (B) each such assumption is expressly evidenced by an
agreement executed and delivered to the Lenders in a form reasonably
satisfactory to the Administrative Agent, (ii) any Subsidiary (other than
the Borrower) may merge into any Subsidiary (other than the Borrower) in a
transaction in which the surviving entity is a Subsidiary (other than the
Borrower), and (iii) any Subsidiary (other than the Borrower) may
liquidate or dissolve if the


 


39





















 


MLP determines in good faith that such
liquidation or dissolution is in the best interests of the MLP and is not
materially disadvantageous to the Lenders; provided that any such merger
involving a Person that is not a Wholly-Owned Subsidiary immediately prior to
such merger shall not be permitted unless also permitted by Section 6.04.


 


(b)                                 It
will not, and will not permit any of its Subsidiaries to, engage to any
material extent in any business other than businesses of the type conducted by
it, its Subsidiaries or KPP, KSL and their subsidiaries on the date of this
Agreement and businesses reasonably related thereto.


 


Section 6.04.                             Investments, Loans,
Advances, Guarantees and Acquisitions. 
It will not, and will not permit any of its subsidiaries to, purchase,
hold or acquire (including pursuant to any merger with any Person that was not
a Wholly-Owned Subsidiary prior to such merger) any Investment in or Guarantee
any obligations of, any other Person, or purchase or otherwise acquire (in one
transaction or a series of transactions) any assets of any other Person
constituting a business unit, except:


 


(a)                                  Permitted
Investments;


 


(b)                                 Investments
by it in the Equity Interest of Wholly-Owned Subsidiaries of the MLP, so long
as the MLP and the Borrower are in compliance with Section 5.10;


 


(c)                                  loans
or advances made by the MLP to any Wholly-Owned Subsidiary of the MLP and made
by any Subsidiary to the MLP or any other Wholly-Owned Subsidiary of the MLP,
so long as the MLP and the Borrower are in compliance with Section 5.10;


 


(d)                                 Guarantees
constituting Indebtedness permitted by Section 6.01;


 


(e)                                  the
Borrower’s interest in the Skelly-Belvieu Pipeline Company, L.L.C.;


 


(f)                                    the
purchase or other acquisition by a Wholly-Owned Subsidiary of the MLP of the
assets of another Person constituting a business unit; provided, that,
both before and after giving effect to any such Investment, no Default shall
exist, including, without limitation, a Default with respect to (i) use of
proceeds set forth in Section 5.08, (ii) the Consolidated Interest
Coverage Ratio set forth in Section 6.11(a), or (iii) the
Consolidated Debt Coverage Ratio set forth in Section 6.11(b);


 


(g)                                 Investments
in Joint Venture Interests and the purchase or other acquisition by a
Subsidiary that is not a Wholly-Owned Subsidiary of the MLP of the assets of
another Person constituting a business unit; provided, that, both before
and after giving effect to any such Investment, no Default shall exist,
including, without limitation, a Default with respect to (i) use of
proceeds set forth in Section 5.08, (ii) the Consolidated Interest
Coverage Ratio set forth in Section 6.11(a), or (iii) the
Consolidated Debt Coverage Ratio set forth in Section 6.11(b); provided
that the aggregate amount of Investments and other acquisitions made pursuant
to this clause (g) (other than Investments described in Schedule 6.04)
shall not exceed $100,000,000 in the aggregate at any time; and


 


40





















 


(h)                                 Guarantees
of obligations not constituting Indebtedness of Wholly-Owned Subsidiaries of
the MLP incurred in the ordinary course of business.


 


Section 6.05.                             Swap Agreements.  It will not, and will not permit any of its
subsidiaries to, enter into any Swap Agreement, other than Swap Agreements
entered into in the ordinary course of business to hedge or mitigate risks to
which it or any of its subsidiaries is exposed in the conduct of its business
or the management of its liabilities.


 


Section 6.06.                             Restricted Payments.  It will not, and will not permit any of its
subsidiaries to, declare or make, or agree to pay or make, directly or
indirectly, any Restricted Payment, except (a) any Subsidiary may declare
and pay Restricted Payments to its parent and (b) as long as no Default
has occurred and is continuing or would result therefrom, the MLP may make
Restricted Payments in accordance with the terms of the Partnership Agreement
(MLP).


 


Section 6.07.                             Transactions with
Affiliates.  It will not, and will
not permit any of its subsidiaries to, sell, lease or otherwise transfer any
property or assets to, or purchase, lease or otherwise acquire any property or
assets from, or otherwise engage in any other transactions with, any of its
Affiliates, except (a) at prices and on terms and conditions not less
favorable to it or such subsidiary than could be obtained on an arm’s-length
basis from unrelated third parties, (b) transactions between or among it
and its Wholly-Owned Subsidiaries not involving any other Affiliate, (c) any
Restricted Payment permitted by Section 6.06, and (d) pursuant to the
agreements listed on Schedule 6.07, which agreements are at prices and on
terms and conditions not less favorable to it than could be obtained on an arm’s-length
basis from unrelated third parties.


 


Section 6.08.                             Restrictive Agreements.  It will not, and will not permit any of its
subsidiaries to, directly or indirectly, enter into, incur or permit to exist
any agreement or other arrangement that prohibits, restricts or imposes any
condition upon (a) the ability of it or any of its subsidiaries to create,
incur or permit to exist any Lien upon any of its property or assets, or (b) the
ability of any Subsidiary to pay dividends or other distributions with respect
to any shares of its capital stock or to make or repay loans or advances to the
MLP or any other Subsidiary or to Guarantee Indebtedness of the Borrower or any
other Subsidiary; provided that (i) the foregoing shall not apply
to restrictions and conditions imposed by law, by this Agreement, by the
Revolving Credit Agreement or by the UK Credit Agreement, (ii) the
foregoing shall not apply to restrictions and conditions (x) existing on the date
of this Agreement identified on Schedule 6.08 (but shall apply to any
extension or renewal of, or any amendment or modification expanding the scope
of, any such restriction or condition so as to cause such restriction or
condition to be more restrictive than the restriction or condition in existence
on the date of this Agreement) or (y) arising or agreed to after the date of
this Agreement; provided that such restrictions or conditions are not
more restrictive than the restrictions and conditions existing on the date of
this Agreement, (iii) the foregoing shall not apply to customary
restrictions and conditions contained in agreements relating to the sale of a
Subsidiary pending such sale, provided such restrictions and conditions apply
only to the Subsidiary that is to be sold and such sale is permitted hereunder,
(iv) clause (a) of the foregoing shall not apply to restrictions
or conditions imposed by any agreement relating to secured Indebtedness
permitted by this Agreement if such restrictions or conditions apply only to
the property or assets securing such


 


41





















 


Indebtedness and (v) clause (a) of
the foregoing shall not apply to customary provisions in leases and other
contracts restricting the assignment thereof.


 


Section 6.09.                             Limitation on
Modifications of Other Agreements. 
It will not, and will not permit any of its subsidiaries to, amend,
modify or change, or consent to any amendment, modification or change to, any
of the terms of, the Material Agreements, except to the extent the same could
not reasonably be expected to have a Material Adverse Effect.


 


Section 6.10.                             Creation of
Subsidiaries.  It will not at any
time create or acquire any subsidiary unless it has caused such subsidiary to
comply with the requirements of Section 5.10.


 


Section 6.11.                             Financial Condition
Covenants.  The MLP will not permit
at any time (a) its Consolidated Interest Coverage Ratio to be less than
3.00 to 1.00 or (b) its Consolidated Debt Coverage Ratio to be in excess
of (i) 5.00 to 1.00 for any Rolling Period ending on or before June 30,
2006 and (ii) 4.75 to 1.00 for any Rolling Period ending on or subsequent
to September 30, 2006; provided that if at any time the MLP or any of its
Subsidiaries consummates an acquisition (including the Acquisition) for which
the MLP or any of its Subsidiaries has paid aggregate net consideration of at
least $100,000,000, then, for the two Rolling Periods the last day of which
immediately follow the date on which such acquisition is consummated, the
numerator of the maximum Consolidated Debt Coverage Ratio otherwise permitted
above shall be increased by 0.5; thereafter, compliance shall be determined by
reverting back to clause (i) or (ii) above, as applicable.


 


ARTICLE VII

Events of Default


 


From (and including) the
Effective Date, if any of the following events (“Events of Default”)
shall occur:


 


(a)                                  the
Borrower shall fail to pay any principal of any Loan when and as the same shall
become due and payable, whether at the due date thereof or at a date fixed for
prepayment thereof or otherwise;


 


(b)                                 the
Borrower shall fail to pay any interest on any Loan or any fee or any other
amount (other than an amount referred to in clause (a) of this
Article) payable under this Agreement, when and as the same shall become due
and payable, and such failure shall continue unremedied for a period of five
Business Days;


 


(c)                                  any
representation or warranty made or deemed made by or on behalf of the Borrower,
the MLP or any of their subsidiaries in or in connection with any Loan Document
or any amendment or modification thereof or waiver thereunder, or in any
report, certificate, financial statement or other document furnished pursuant
to or in connection with the Loan Documents or any amendment or modification hereof
or waiver hereunder, shall prove to have been incorrect in any material respect
when made or deemed made;


 


(d)                                 the
MLP or the Borrower shall fail to observe or perform any covenant, condition or
agreement contained in Section 5.02(a), (c) or (e), Section 5.03
(with respect to the MLP’s or the Borrower’s existence), Section 5.08 or
in Article VI;


 


42





















 


(e)                                  the
Borrower or any Guarantor shall fail to observe or perform any covenant,
condition or agreement contained in the Loan Documents (other than those
specified in clause (a), (b) or (d) of this Article), and such
failure shall continue unremedied for a period of 30 days after notice thereof
from the Administrative Agent to the Borrower (which notice will be given at
the request of any Lender);


 


(f)                                    the
MLP or any Subsidiary shall fail to make any payment (whether of principal or
interest and regardless of amount) in respect of any Material Indebtedness,
when and as the same shall become due and payable (subject to any applicable
grace period), whether by acceleration or otherwise, of any Material
Indebtedness; or a default shall occur in the performance or observance of any
obligation or condition with respect to any Material Indebtedness if the effect
of such default is to accelerate the maturity of any such Indebtedness or such
default shall continue unremedied for any applicable period of time sufficient
to permit the holder or holders of such Indebtedness, or any trustee or agent
for such holders, to cause such Indebtedness to become due and payable prior to
its expressed maturity;


 


(g)                                 an
involuntary proceeding shall be commenced or an involuntary petition shall be
filed seeking (i) liquidation, reorganization or other relief in respect
of the General Partner, the MLP (or its general partner(s)), the Borrower, any
Guarantor or any Material Subsidiary or its debts, or of a substantial part of
its assets, under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect or (ii) the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the General Partner, the MLP (or its general partner(s)),
the Borrower, any Guarantor or any Material Subsidiary or for a substantial part
of its assets, and, in any such case, such proceeding or petition shall
continue undismissed for 60 days or an order or decree approving or ordering
any of the foregoing shall be entered;


 


(h)                                 the
General Partner, the MLP (or its general partner(s)), the Borrower, any
Guarantor or any Material Subsidiary shall (i) voluntarily commence any
proceeding or file any petition seeking liquidation, reorganization or other
relief under any Federal, state or foreign bankruptcy, insolvency, receivership
or similar law now or hereafter in effect, (ii) consent to the institution
of, or fail to contest in a timely and appropriate manner, any proceeding or
petition described in clause (g) of this Article, (iii) apply
for or consent to the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for the General Partner, the MLP
(or its general partner(s)), the Borrower, any Guarantor or any Material
Subsidiary or for a substantial part of its assets, (iv) file an answer
admitting the material allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of creditors or (vi) take
any action for the purpose of effecting any of the foregoing;


 


(i)                                     the
General Partner, the MLP (or its general partner(s)), the Borrower, any
Guarantor or any Material Subsidiary shall become unable, admit in writing its
inability or fail generally to pay its debts as they become due;


 


(j)                                     one
or more judgments for the payment of money in an aggregate amount in excess of
$35,000,000 and that are not covered by insurance shall be rendered against the
MLP, any Subsidiary, or any combination thereof and the same shall remain
undischarged for a period of 30 consecutive days during which execution shall
not be effectively stayed, or any


 


43





















 


action shall be legally taken by a judgment
creditor to attach or levy upon any assets of the MLP or any Subsidiary to
enforce any such judgment;


 


(k)                                  an
ERISA Event shall have occurred that, in the opinion of the Required Lenders,
when taken together with all other ERISA Events that have occurred, could
reasonably be expected to result in liability of the MLP and its Subsidiaries
in an aggregate amount exceeding $35,000,000;


 


(l)                                     the
MLP or any Subsidiary shall incur an Environmental Liability requiring payment
in any Rolling Period in excess of $35,000,000 that is not covered by insurance
or that remains undischarged for a period of 30 days;


 


(m)                               the
MLP shall (i) conduct, transact or otherwise engage in, or commit to
conduct, transact or otherwise engage in, any business or operations other than
(X) those incidental to its ownership of the limited partner interests in the
Borrower or of Equity Interests in other Wholly-Owned Subsidiaries and (Y) the
incurrence and maintenance of Indebtedness or (ii) own, lease, manage or
otherwise operate any properties or assets (including cash and cash
equivalents), other than (A) the limited partner interests in the
Borrower, (B) ownership interests of a Subsidiary, (C) ownership
interests in other subsidiaries not Subsidiaries of the Borrower, (D) cash
received in connection with dividends made by the Borrower in accordance with Section 6.06(b) pending
application to the holders of the Units and the General Partner Interest, (E) cash
received in connection with the incurrence of Indebtedness and (F) cash
received in connection with dividends made by other subsidiaries;


 


(n)                                 this
Agreement or the Subsidiary Guaranty after delivery thereof shall for any
reason, except to the extent permitted by the terms hereof or thereof (or as
waived by the Lenders in accordance with Section 10.02), ceases to be
valid, binding and enforceable in accordance with its terms against the
Borrower, the MLP or a Guarantor party thereto or shall be repudiated by any of
them, or the Borrower, the MLP or any Guarantor shall so state in writing;


 


(o)                                 a
Change in Control shall occur; or


 


(p)                                 Section 11.2
of the Partnership Agreement (MLP) (or the definition of the term “Outstanding”
as defined therein) shall be amended, modified or changed in any respect.


 


then, and in every such event (other than an event with respect to the
Borrower described in clause (g) or (h) of this Article), and at
any time thereafter during the continuance of such event, the Administrative
Agent may, and at the request of the Required Lenders shall, by notice to the
Borrower, take either or both of the following actions, at the same or
different times: (i) terminate the Commitments, and thereupon the Commitments
shall terminate immediately, and (ii) declare the Loans then outstanding
to be due and payable in whole (or in part, in which case any principal not so
declared to be due and payable may thereafter be declared to be due and
payable), and thereupon the principal of the Loans so declared to be due and
payable, together with accrued interest thereon and all fees and other
obligations of the Borrower accrued hereunder, shall become  due and payable immediately, without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower; and in case of any event with respect to the
Borrower described in clause (g) or (h) of this Article, the


 


44





















 


Commitments shall automatically terminate and the principal of the
Loans then outstanding, together with accrued interest thereon and all fees and
other obligations of the Borrower accrued hereunder, shall automatically become
due and payable, without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Borrower.


 


ARTICLE VIII

MLP Guarantee


 


Section 8.01.                             MLP Guarantee.


 


(a)                                  The
MLP, to the maximum extent permitted by applicable law, (i) absolutely,
unconditionally and irrevocably, guarantees to the Administrative Agent for the
ratable benefit of the Guaranteed Creditors and their respective successors,
endorsees, transferees and assigns, the prompt and complete payment and
performance by the Borrower when due (whether at the stated maturity, by
acceleration or otherwise) of the Borrower Obligations and (ii) indemnifies
and holds harmless each Guaranteed Creditor from, and agrees to pay to such
Guaranteed Creditor, all reasonable costs and expenses (including reasonable
counsel fees and expenses) incurred by such Guaranteed Creditor in enforcing
any of its rights under the guarantee contained in this Section 8.01.  The MLP agrees that notwithstanding any stay,
injunction or other prohibition preventing the payment by the Borrower of all
or any portion of the Borrower Obligations and notwithstanding that all or any
portion of the Borrower Obligations may be unenforceable or not allowable due
to the existence of a bankruptcy, reorganization or similar proceeding
involving the Borrower, to the maximum extent permitted by applicable law, such
Borrower Obligations shall nevertheless be due and payable by the MLP for the
purposes of this guarantee at the time such Borrower Obligations would by
payable by the Borrower under the provisions of this Agreement.  Notwithstanding the foregoing, any
enforcement of this guarantee with respect to the rights of any Guaranteed
Creditor shall be accomplished by the Administrative Agent acting on behalf of
such Guaranteed Creditor.  The guarantee
contained in this Section 8.01 is a guarantee of payment and not
collection, and the liability of the MLP is primary and not secondary.


 


(b)                                 The
MLP agrees that if the maturity of the Borrower Obligations is accelerated by
bankruptcy or otherwise, such maturity shall also be deemed accelerated for the
purpose of this guarantee without demand or notice to the MLP.  The guarantee contained in this Section 8.01
is a continuing guarantee and shall remain in full force and effect until all
the Borrower Obligations and the obligations of the MLP under the guarantee
contained in this Section 8.01 shall have been satisfied by payment in
full in cash and the Commitments shall be terminated, notwithstanding that from
time to time during the term of this Agreement the Borrower may be free from
any Borrower Obligations.


 


(c)                                  No
payment made by the Borrower, the MLP, any other guarantor or any other Person
or received or collected by any Guaranteed Creditor from the Borrower, the MLP,
any other guarantor or any other Person by virtue of any action or proceeding
or any set-off or appropriation or application at any time or from time to time
in reduction of or in payment of the Borrower Obligations shall be deemed to
modify, reduce, release or otherwise affect the liability of the MLP hereunder
which shall, notwithstanding any such payment (other than any payment made by
the Borrower or MLP in respect of the Borrower Obligations or any payment
received


 


45





















 


or collected from the Borrower or MLP in
respect of the Borrower Obligations), remain liable for the Borrower
Obligations until, subject to Section 8.05, the Borrower Obligations are
paid in full in cash and the Commitments are terminated.


 


Section 8.02.                             Subrogation.  The MLP shall be subrogated to all the rights
of any Guaranteed Creditor against the Borrower in respect of any amounts paid
by the MLP pursuant to the provisions of the guarantee contained in Section 8.01;
provided, however, that the MLP shall not be entitled to enforce or to receive
any payments arising out of, or based upon, such right of subrogation with
respect to any of the Borrower Obligations until all of the Borrower
Obligations and the Guarantees thereof shall have been indefeasibly paid in
full in cash or discharged.  A director,
officer, employee or stockholder, as such, of the MLP shall not have any
liability for any obligations of the Guarantor under the guarantee contained in
Section 8.01 or any claim based on, in respect of or by reason of such
obligations or their creation.


 


Section 8.03.                             Amendments, etc. with
respect to the Borrower Obligations. 
The MLP shall remain obligated hereunder notwithstanding that, without
any reservation of rights against the MLP and without notice to or further
assent by the MLP, any demand for payment of any of the Borrower Obligations
made by any Guaranteed Creditor may be rescinded by such Guaranteed Creditor
and any of the Borrower Obligations continued, and the Borrower Obligations, or
the liability of any other Person upon or for any part thereof, or any
collateral security or guarantee therefor or right of offset with respect
thereto, may, from time to time, in whole or in part, be renewed, extended,
amended, modified, accelerated, compromised, waived, surrendered or released by
any Guaranteed Creditor, and any Guaranteed Document and any other document
executed and delivered in connection therewith may be amended, modified,
supplemented or terminated, in whole or in part, as the Administrative Agent
(or the Required Lenders or all Lenders, as the case may be) may deem advisable
from time to time, and any collateral security, guarantee or right of offset at
any time held by any Guaranteed Creditor for the payment of the Borrower
Obligations may be sold, exchanged, waived, surrendered or released.  Except as required by applicable law, no
Guaranteed Creditor shall have any obligation to protect, secure, perfect or
insure any Lien at any time held by it as security for the Borrower Obligations
or for the guarantee contained in Section 8.01 or any property subject
thereto.


 


Section 8.04.                             Guarantee Absolute and
Unconditional.  To the fullest extent
permitted by applicable law, the MLP hereby (i) waives diligence,
presentment, demand of payment, notice of intent to accelerate, notice of
acceleration, notice of acceptance, filing of claims with a court in the event
of the merger, insolvency or bankruptcy of the Borrower or the MLP, and all
demands and notices whatsoever, (ii) acknowledges that any agreement,
instrument or document evidencing the MLP Obligations may be transferred and
that the benefit of its obligations hereunder shall extend to each holder of
any agreement, instrument or document evidencing the MLP Obligations without
notice to them and (iii) covenants that the MLP Obligations will not be
discharged except by complete performance thereof.  The MLP further agrees that to the fullest
extent permitted by applicable law, if at any time all or any part of any
payment theretofore applied by any Person to any of the MLP Obligations is, or
must be, rescinded or returned for any reason whatsoever, including without
limitation, the insolvency, bankruptcy or reorganization of the MLP, such MLP
Obligations shall, to the extent that such payment is or must be rescinded or
returned, be deemed to have continued in existence notwithstanding such


 


46





















 


application, and the MLP Obligations shall
continue to be effective or be reinstated, as the case may be, as though such
application had not been made.


 


To the fullest extent
permitted by applicable law, the obligations of the MLP under this guarantee
shall be as aforesaid full, irrevocable, unconditional and absolute and shall
not be impaired, modified, discharged, released or limited by any occurrence or
condition whatsoever, including, without limitation, (i) any compromise,
settlement, release, waiver, renewal, extension, indulgence or modification of,
or any change in, any of the obligations and liabilities of the Borrower or the
MLP contained in any of the Borrower Obligations or this Agreement, (ii) any
impairment, modification, release or limitation of the liability of the
Borrower, the MLP or any of their estates in bankruptcy, or any remedy for the
enforcement thereof, resulting from the operation of any present or future
provision of any applicable bankruptcy law, as amended, or other statute or
from the decision of any court, (iii) the assertion or exercise by the
Borrower or the MLP of any rights or remedies under any of the Borrower
Obligations or this Agreement or their delay in or failure to assert or
exercise any such rights or remedies, (iv) the assignment or the purported
assignment of any property as security for any of the Borrower Obligations,
including all or any part of the rights of the Borrower or the MLP under this
Agreement, (v) the extension of the time for payment by the Borrower or
the MLP of any payments or other sums or any part thereof owing or payable
under any of the terms and provisions of any of the Borrower Obligations or this
Agreement or of the time for performance by the Borrower or the MLP of any
other obligations under or arising out of any such terms and provisions or the
extension or the renewal of any thereof, (vi) the modification or
amendment (whether material or otherwise) of any duty, agreement or obligation
of the Borrower or the MLP set forth in this Agreement, (vii) the
voluntary or involuntary liquidation, dissolution, sale or other disposition of
all or substantially all of the assets, marshaling of assets and liabilities,
receivership, insolvency, bankruptcy, assignment for the benefit of creditors,
reorganization, arrangement, composition or readjustment of, or other similar
proceeding affecting, the Borrower or any of the MLP or any of their respective
assets, or the disaffirmance of any of the Borrower Obligations, or this
Agreement in any such proceeding, (viii) the release or discharge of the
Borrower or the MLP from the performance or observance of any agreement,
covenant, term or condition contained in any of such instruments by operation
of law, (ix) the unenforceability of any of the Borrower Obligations or
this Agreement, (x) any change in the name, business, capital structure,
corporate existence, or ownership of the Borrower or the MLP, or (xi) any other
circumstance which might otherwise constitute a defense available to, or a
legal or equitable discharge of, a surety or the MLP.


 


Section 8.05.                             Reinstatement.  To the maximum extent permitted by applicable
law, the guarantee contained in Section 8.01 shall continue to be
effective, or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any of the Borrower Obligations is rescinded or must otherwise
be restored or returned by any Guaranteed Creditor upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Borrower or the MLP, or upon
or as a result of the appointment of a receiver, intervenor or conservator of,
or trustee or similar officer for, the Borrower or the MLP or any substantial
part of its property, or otherwise, all as though such payments had not been
made.


 


Section 8.06.                             Payments.  The MLP hereby guarantees that payments
hereunder will be paid to the Administrative Agent without set-off or
counterclaim and without deduction for any


 


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taxes and in immediately available funds and
in dollars at the Administrative Agent’s payment office at the address provided
in Section 10.01 of this Agreement.


 


ARTICLE IX

The Administrative Agent


 


Each of the Lenders
hereby irrevocably appoints the Administrative Agent as its agent and
authorizes the Administrative Agent to take such actions on its behalf and to
exercise such powers as are delegated to the Administrative Agent by the terms
hereof, together with such actions and powers as are reasonably incidental
thereto.


 


The bank serving as the
Administrative Agent hereunder shall have the same rights and powers in its
capacity as a Lender as any other Lender and may exercise the same as though it
were not the Administrative Agent, and such bank and its Affiliates may accept
deposits from, lend money to and generally engage in any kind of business with
the Borrower or any Subsidiary or other Affiliate thereof as if it were not the
Administrative Agent hereunder.


 


The Administrative Agent
shall not have any duties or obligations except those expressly set forth
herein.  Without limiting the generality
of the foregoing, (a) the Administrative Agent shall not be subject to any
fiduciary or other implied duties, regardless of whether a Default has occurred
and is continuing, (b) the Administrative Agent shall not have any duty to
take any discretionary action or exercise any discretionary powers, except
discretionary rights and powers expressly contemplated hereby that the
Administrative Agent is required to exercise in writing as directed by the
Required Lenders (or such other number or percentage of the Lenders as shall be
necessary under the circumstances as provided in Section 10.02), and (c) except
as expressly set forth herein, the Administrative Agent shall not have any duty
to disclose, and shall not be liable for the failure to disclose, any
information relating to the Borrower or any of its Subsidiaries that is
communicated to or obtained by the bank serving as Administrative Agent or any
of its Affiliates in any capacity.  The
Administrative Agent shall not be liable for any action taken or not taken by
it with the consent or at the request of the Required Lenders (or such other
number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 10.02) or in the absence of its own
gross negligence or wilful misconduct. 
The Administrative Agent shall be deemed not to have knowledge of any
Default unless and until written notice thereof is given to the Administrative
Agent by the Borrower or a Lender, and the Administrative Agent shall not be
responsible for or have any duty to ascertain or inquire into (i) any
statement, warranty or representation made in or in connection with this
Agreement, (ii) the contents of any certificate, report or other document
delivered hereunder or in connection herewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth herein, (iv) the validity, enforceability, effectiveness or
genuineness of this Agreement or any other agreement, instrument or document,
or (v) the satisfaction of any condition set forth in Article IV or
elsewhere herein, other than to confirm receipt of items expressly required to
be delivered to the Administrative Agent.


 


The Administrative Agent
shall be entitled to rely upon, and shall not incur any liability for relying
upon, any notice, request, certificate, consent, statement, instrument,
document or other writing believed by it to be genuine and to have been signed
or sent by the proper Person.  The
Administrative Agent also may rely upon any statement made to it orally or by
telephone


 


48





















 


and believed by it
to be made by the proper Person, and shall not incur any liability for relying
thereon.  The Administrative Agent may
consult with legal counsel (who may be counsel for the Borrower), independent
accountants and other experts selected by it, and shall not be liable for any
action taken or not taken by it in accordance with the advice of any such
counsel, accountants or experts.


 


The Administrative Agent
may perform any and all its duties and exercise its rights and powers by or
through any one or more sub-agents appointed by the Administrative Agent.  The Administrative Agent and any such
sub-agent may perform any and all its duties and exercise its rights and powers
through their respective Related Parties. 
The exculpatory provisions of the preceding paragraphs shall apply to
any such sub-agent and to the Related Parties of the Administrative Agent and
any such sub-agent, and shall apply to their respective activities in
connection with the syndication of the credit facilities provided for herein as
well as activities as Administrative Agent.


 


Subject to the
appointment and acceptance of a successor Administrative Agent as provided in
this paragraph, the Administrative Agent may resign at any time by notifying
the Lenders and the Borrower.  Upon any
such resignation, the Required Lenders shall have the right, in consultation
with the Borrower, to appoint a successor. 
If no successor shall have been so appointed by the Required Lenders and
shall have accepted such appointment within 30 days after the retiring Administrative
Agent gives notice of its resignation, then the retiring Administrative Agent
may, on behalf of the Lenders, appoint a successor Administrative Agent which
shall be a Lender and a commercial bank with an office in New York, New York
and having a combined capital and surplus of at least $500,000,000, or an
Affiliate of any such bank.  Upon the
acceptance of its appointment as Administrative Agent hereunder by a successor,
such successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder.  The fees payable by the
Borrower to a successor Administrative Agent shall be the same as those payable
to its predecessor unless otherwise agreed between the Borrower and such
successor.  After the Administrative
Agent’s resignation hereunder, the provisions of this Article and Section 10.03
shall continue in effect for the benefit of such retiring Administrative Agent,
its sub-agents and their respective Related Parties in respect of any actions
taken or omitted to be taken by any of them while it was acting as
Administrative Agent.


 


Each Lender acknowledges
that it has, independently and without reliance upon the Administrative Agent
or any other Lender and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into
this Agreement.  Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it shall from time to time deem appropriate, continue to make
its own decisions in taking or not taking action under or based upon this
Agreement, any related agreement or any document furnished hereunder or
thereunder.


 


None of the Syndication
Agent, the Co-Documentation Agents or the Co-Managing Agents shall have any
duties, responsibilities or liabilities under this Agreement or the other


 


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Loan Documents
other than their duties, responsibilities and liabilities in their capacity as
Lenders hereunder.


 


ARTICLE X

Miscellaneous


 


Section 10.01.                       Notices.


 


(a)                                  Except
in the case of notices and other communications expressly permitted to be given
by telephone (and subject to paragraph (b) below), all notices and other
communications provided for herein shall be in writing and shall be delivered
by hand or overnight courier service, mailed by certified or registered mail or
sent by telecopy, as follows:


 


(i)                                     if
to the Borrower or the MLP, to it at One Valero Way, San Antonio, Texas 78249-1112,
Attention of Senior Vice President and Chief Financial Officer (Telecopy No. (210)
345-3629);


 


(ii)                                  if
to the Administrative Agent, to JPMorgan Chase Bank, N.A., Loan and Agency
Services Group, 1111 Fannin, 8th Floor, Houston, Texas 77002, Attention of
Maria Arreola (Telecopy No. (713) 750-2228); and


 


(iii)                               if
to any other Lender, to it at its address (or telecopy number) set forth in its
Administrative Questionnaire.


 


(b)                                 Notices
and other communications to the Lenders hereunder may be delivered or furnished
by electronic communications pursuant to procedures approved by the
Administrative Agent; provided that the foregoing shall not apply to notices
pursuant to Article II unless otherwise agreed by the Administrative Agent
and the applicable Lender.  The
Administrative Agent or the Borrower may, in its discretion, agree to accept
notices and other communications to it hereunder by electronic communications
pursuant to procedures approved by it; provided that approval of such
procedures may be limited to particular notices or communications.


 


(c)                                  Any
party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto.  All notices and other communications given to
any party hereto in accordance with the provisions of this Agreement shall be
deemed to have been given on the date of receipt.


 


Section 10.02.                       Waivers; Amendments.  (a) No failure or delay by the
Administrative Agent or any Lender in exercising any right or power hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof
or the exercise of any other right or power. 
The rights and remedies of the Administrative Agent and the Lenders
hereunder are cumulative and are not exclusive of any rights or remedies that
they would otherwise have.  No waiver of
any provision of this Agreement or consent to any departure by the Borrower
therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) of this Section, and then such waiver or consent shall
be effective only in the specific instance and for the purpose for which given.


 


50





















 


Without limiting the generality of the
foregoing, the making of a Loan shall not be construed as a waiver of any
Default, regardless of whether the Administrative Agent or any Lender may have
had notice or knowledge of such Default at the time.


 


(b)                                 Neither
this Agreement nor the Subsidiary Guaranty nor any provision hereof or thereof
may be waived, amended or modified (except as expressly set forth herein or
therein) except pursuant to an agreement or agreements in writing entered into
by the Borrower, the MLP and the Required Lenders or by the Borrower, the MLP
and the Administrative Agent with the consent of the Required Lenders; provided
that no such agreement shall (i) increase the Commitment of any Lender
without the written consent of such Lender, (ii) reduce the principal
amount of any Loan or reduce the rate of interest thereon, or reduce any fees
payable hereunder, without the written consent of each Lender affected thereby,
(iii) postpone the scheduled date of payment of the principal amount of
any Loan, or any interest thereon, or any fees payable hereunder, or reduce the
amount of, waive or excuse any such payment, or postpone the scheduled date of
expiration of any Commitment, without the written consent of each Lender
affected thereby, (iv) change Section 2.15(b) or (c) in a
manner that would alter the pro rata sharing of payments required thereby, without
the written consent of each Lender, (v) waive or amend Section 4.01
or release any Guarantor (except as set forth in the Subsidiary Guaranty),
without the written consent of each Lender or (vi) change any of the
provisions of this Section or the definition of “Required Lenders” or any
other provision hereof specifying the number or percentage of Lenders required
to waive, amend or modify any rights hereunder or make any determination or
grant any consent hereunder, without the 
written consent of each Lender; provided further that no such
agreement shall amend, modify or otherwise affect the rights or duties of the
Administrative Agent hereunder without the prior written consent of the
Administrative Agent.


 


Section 10.03.                       Expenses; Indemnity; Damage
Waiver.  (a) The Borrower shall
pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent and its Affiliates, including the reasonable fees, charges
and disbursements of counsel for the Administrative Agent, in connection with
the syndication of the credit facilities provided for herein, the preparation
and administration of this Agreement or any amendments, modifications or
waivers of the provisions hereof (whether or not the transactions contemplated
hereby or thereby shall be consummated) and (ii) all out-of-pocket
expenses incurred by the Administrative Agent or any Lender, including the
fees, charges and disbursements of any counsel for the Administrative Agent or
any Lender, in connection with the enforcement or protection of its rights in
connection with this Agreement, including its rights under this Section, or in
connection with the Loans made hereunder, including all such out-of-pocket
expenses incurred during any workout, restructuring or negotiations in respect
of such Loans.


 


(b)                                 The
Borrower shall indemnify the Administrative Agent and each Lender, and each
Related Party of any of the foregoing Persons (each such Person being called an
“Indemnitee”) against, and hold each Indemnitee harmless from, any and
all losses, claims, damages, liabilities and related expenses, including the
fees, charges and disbursements of any counsel for any Indemnitee, incurred by
or asserted against any Indemnitee arising out of, in connection with, or as a
result of (i) the execution or delivery of this Agreement, any other Loan
Document or any agreement or instrument contemplated hereby or thereby, the
performance by the parties hereto of their respective obligations hereunder or
the consummation of the


 


51





















 


Transactions or any other transactions
contemplated hereby, (ii) any Loan or the use of the proceeds therefrom, (iii) any
actual or alleged presence or release of Hazardous Materials on or from any
property owned or operated by the Borrower or any of its Subsidiaries, or any
Environmental Liability related in any way to the Borrower or any of its
Subsidiaries, or (iv) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory and regardless of whether any Indemnitee is
a party thereto; provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the
gross negligence or wilful misconduct of such Indemnitee.


 


(c)                                  To
the extent that the Borrower fails to pay any amount required to be paid by it
to the Administrative Agent under paragraph (a) or (b) of this
Section, each Lender severally agrees to pay to the Administrative Agent such
Lender’s Applicable Percentage (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided
that the unreimbursed expense or indemnified loss, claim, damage, liability or
related expense, as the case may be, was incurred by or asserted against the
Administrative Agent in its capacity as such.


 


(d)                                 To
the extent permitted by applicable law, the Borrower shall not assert, and
hereby waives, any claim against any Indemnitee, on any theory of liability,
for special, indirect, consequential or punitive damages (as opposed to direct
or actual damages) arising out of, in connection with, or as a result of, this
Agreement or any agreement or instrument contemplated hereby, the Transactions,
any Loan or the use of the proceeds thereof.


 


(e)                                  All
amounts due under this Section shall be payable not later than 5 Business
Days after written demand therefor.


 


Section 10.04.                       Successors and Assigns.


 


(a)                                  The
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns permitted
hereby, except that (i) the Borrower may not assign or otherwise transfer
any of its rights or obligations hereunder without the prior written consent of
each Lender (and any attempted assignment or transfer by the Borrower without
such consent shall be null and void) and (ii) no Lender may assign or
otherwise transfer its rights or obligations hereunder except in accordance
with this Section.  Nothing in this
Agreement, expressed or implied, shall be construed to confer upon any Person
(other than the parties hereto, their respective successors and assigns
permitted hereby, Participants (to the extent provided in paragraph (c) of
this Section) and, to the extent expressly contemplated hereby, the Related
Parties of each of the Administrative Agent and the Lenders) any legal or
equitable right, remedy or claim under or by reason of this Agreement.


 


(b)                                 (i)                                     Subject
to the conditions set forth in paragraph (b)(ii) below, any Lender may
assign to one or more assignees all or a portion of its rights and obligations
under this Agreement (including all or a portion of its Commitment and the
Loans at the time owing to it) with the prior written consent (such consent not
to be unreasonably withheld) of:


 


52





















 


(A)                              the
Borrower, provided that no consent of the Borrower shall be required for an
assignment to a Lender, an Affiliate of a Lender, an Approved Fund or, if an
Event of Default has occurred and is continuing, any other assignee; and


 


(B)                                the
Administrative Agent, provided that no consent of the Administrative Agent
shall be required for an assignment of any Commitment to an assignee that is a
Lender with a Commitment immediately prior to giving effect to such assignment.


 


(ii)                                  Assignments
shall be subject to the following additional conditions:


 


(A)                              except
in the case of an assignment to a Lender or an Affiliate of a Lender or an
assignment of the entire remaining amount of the assigning Lender’s Commitment
or Loans, the amount of the Commitment or Loans of the assigning Lender subject
to each such assignment (determined as of the date the Assignment and
Assumption with respect to such assignment is delivered to the Administrative
Agent) shall not be less than $5,000,000 unless each of the Borrower and the
Administrative Agent otherwise consent, provided that no such consent of the
Borrower shall be required if an Event of Default has occurred and is
continuing;


 


(B)                                each
partial assignment shall be made as an assignment of a proportionate part of
all the assigning Lender’s rights and obligations under this Agreement;


 


(C)                                the
parties to each assignment shall execute and deliver to the Administrative
Agent an Assignment and Assumption, together with a processing and recordation
fee of $3,500; and


 


(D)                               the
assignee, if it shall not be a Lender, shall deliver to the Administrative
Agent an Administrative Questionnaire.


 


For the purposes of this Section 10.04(b),
the term “Approved Fund” has the following meaning:


 


“Approved Fund” means any Person (other than
a natural person) that is engaged in making, purchasing, holding or investing
in bank loans and similar extensions of credit in the ordinary course of its
business and that is administered or managed by (a) a Lender, (b) an
Affiliate of a Lender or (c) an entity or an Affiliate of an entity that
administers or manages a Lender.


 


(iii)                               Subject
to acceptance and recording thereof pursuant to paragraph (b)(iv) of this
Section, from and after the effective date specified in each Assignment and
Assumption the assignee thereunder shall be a party hereto and, to the extent
of the interest assigned by such Assignment and Assumption, have the rights and
obligations of a Lender under this Agreement, and the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Assumption, be released from its obligations under this Agreement (and, in the
case of an Assignment and Assumption covering all of the assigning Lender’s
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto but shall continue to be entitled to the benefits of Sections
2.12, 2.13, 2.14 and 10.03).  Any
assignment or


 


53





















 


transfer by a Lender of rights or obligations
under this Agreement that does not comply with this Section 10.04 shall be
treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with paragraph (c) of
this Section.


 


(iv)                              The
Administrative Agent, acting for this purpose as an agent of the Borrower,
shall maintain at one of its offices a copy of each Assignment and Assumption
delivered to it and a register for the recordation of the names and addresses
of the Lenders, and the Commitment of, and principal amount of the Loans owing
to, each Lender pursuant to the terms hereof from time to time (the “Register”).  The entries in the Register shall be
conclusive, and the Borrower, the Administrative Agent and the Lenders may
treat each Person whose name is recorded in the Register pursuant to the terms
hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. 
The Register shall be available for inspection by the Borrower and any
Lender, at any reasonable time and from time to time upon reasonable prior
notice.


 


(v)                                 Upon
its receipt of a duly completed Assignment and Assumption executed by an
assigning Lender and an assignee, the assignee’s completed Administrative
Questionnaire (unless the assignee shall already be a Lender hereunder), the
processing and recordation fee referred to in paragraph (b) of this Section and
any written consent to such assignment required by paragraph (b) of this
Section, the Administrative Agent shall accept such Assignment and Assumption
and record the information contained therein in the Register; provided that if
either the assigning Lender or the assignee shall have failed to make any
payment required to be made by it pursuant to Section 2.04(b), 2.15(d) or
10.03(c), the Administrative Agent shall have no obligation to accept such
Assignment and Assumption and record the information therein in the Register
unless and until such payment shall have been made in full, together with all
accrued interest thereon.  No assignment
shall be effective for purposes of this Agreement unless it has been recorded
in the Register as provided in this paragraph.


 


(c)                                  (i)                                     Any
Lender may, without the consent of the Borrower or the Administrative Agent,
sell participations to one or more banks or other entities (a “Participant”) in
all or a portion of such Lender’s rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans owing to it);
provided that (A) such Lender’s obligations under this Agreement shall
remain unchanged, (B) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations and (C) the
Borrower, the Administrative Agent and the other Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender’s rights
and obligations under this Agreement. 
Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant,
agree to any amendment, modification or waiver described in the first proviso
to Section 10.02(b) that affects such Participant.  Subject to paragraph (c)(ii) of this
Section, the Borrower agrees that each Participant shall be entitled to the
benefits of Sections 2.12, 2.13 and 2.14 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to paragraph (b) of
this Section.  To the extent permitted by
law, each Participant also


 


54





















 


shall be entitled to the benefits of Section 10.08
as though it were a Lender, provided such Participant agrees to be subject to Section 2.15(c) as
though it were a Lender.


 


(ii)                                  A
Participant shall not be entitled to receive any greater payment under Section 2.12
or Section 2.14 than the applicable Lender would have been entitled to
receive with respect to the participation sold to such Participant, unless the
sale of the participation to such Participant is made with the Borrower’s prior
written consent.  A Participant that
would be a Foreign Lender if it were a Lender shall not be entitled to the
benefits of Section 2.14 unless the Borrower is notified of the
participation sold to such Participant and such Participant agrees, for the
benefit of the Borrower, to comply with Section 2.14(e) as though it
were a Lender.


 


(d)                                 Any
Lender may at any time pledge or assign a security interest in all or any
portion of its rights under this Agreement to secure obligations of such
Lender, including without limitation any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section shall not apply to
any such pledge or assignment of a security interest; provided that no such
pledge or assignment of a security interest shall release a Lender from any of
its obligations hereunder or substitute any such pledgee or assignee for such
Lender as a party hereto.


 


Section 10.05.                       Survival.  All covenants, agreements, representations
and warranties made by the Borrower herein and in the certificates or other
instruments  delivered in connection with
or pursuant to this Agreement shall be considered to have been relied upon by
the other parties hereto and shall survive the execution and delivery of this
Agreement and the making of any Loans, regardless of any investigation made by
any such other party or on its behalf and notwithstanding that the
Administrative Agent or any Lender may have had notice or knowledge of any
Default or incorrect representation or warranty at the time any credit is
extended hereunder, and shall continue in full force and effect as long as the
principal of or any accrued interest on any Loan or any fee or any other amount
payable under this Agreement is outstanding and unpaid.  The provisions of Sections 2.12, 2.13, 2.14
and 10.03 and Article IX shall survive and remain in full force and effect
regardless of the consummation of the transactions contemplated hereby, the
repayment of the Loans, the expiration and termination of the Commitments or
the termination of this Agreement or any provision hereof.


 


Section 10.06.                       Counterparts; Integration;
Effectiveness.  This Agreement may be
executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which
when taken together shall constitute a single contract.  This Agreement and any separate letter
agreements with respect to fees payable to the Administrative Agent constitute
the entire contract among the parties relating to the subject matter hereof and
supersede any and all previous agreements and understandings, oral or written,
relating to the subject matter hereof. 
Except as provided in Section 4.01, this Agreement shall become
effective when it shall have been executed by the Administrative Agent and when
the Administrative Agent shall have received counterparts hereof which, when
taken together, bear the signatures of each of the other required parties
hereto, and thereafter shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.  Delivery of an executed counterpart of a
signature page of this Agreement by telecopy shall be effective as
delivery of a manually executed counterpart of this Agreement.


 


55





















 


Section 10.07.                       Severability.  Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.


 


Section 10.08.                       Right of Setoff.  If an Event of Default shall have occurred
and be continuing, each Lender and each of its Affiliates is hereby authorized
at any time and from time to time, to the fullest extent permitted by law, to
set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other obligations at any time owing
by such Lender or Affiliate to or for the credit or the account of the Borrower
or the MLP against any of and all the obligations of the Borrower or the MLP
now or hereafter existing under this Agreement held by such Lender,
irrespective of whether or not such Lender shall have made any demand under
this Agreement and although such obligations may be unmatured.  The rights of each Lender under this Section are
in addition to other rights and remedies (including other rights of setoff)
which such Lender may have.


 


Section 10.09.                       Governing Law; Jurisdiction;
Consent to Service of Process.  (a) This
Agreement shall be construed in accordance with and governed by the law of the
State of New York.


 


(b)                                 The
Borrower and the MLP each hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of the Supreme Court
of the State of New York sitting in New York County and of the United States
District Court of the Southern District of New York, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to
this Agreement, or for recognition or enforcement of any judgment, and each of
the parties hereto hereby irrevocably and unconditionally agrees that all
claims in respect of any such action or proceeding may be heard and determined
in such New York State or, to the extent permitted by law, in such Federal
court.  Each of the parties hereto agrees
that a final judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law.  Nothing in this
Agreement shall affect any right that the Administrative Agent or any Lender
may otherwise have to bring any action or proceeding relating to this Agreement
against the Borrower or its properties in the courts of any jurisdiction.


 


(c)                                  The
Borrower and the MLP each hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement in any court referred to in
paragraph (b) of this Section. 
Each of the parties hereto hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.


 


(d)                                 Each
party to this Agreement irrevocably consents to service of process in the
manner provided for notices in Section 10.01.  Nothing in this Agreement will affect the
right of any party to this Agreement to serve process in any other manner
permitted by law.


 


56





















 


Section 10.10.                       WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). 
EACH PARTY HERETO (a) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (b) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION.


 


Section 10.11.                       Headings.  Article and Section headings and
the Table of Contents used herein are for convenience of reference only, are
not part of this Agreement and shall not affect the construction of, or be
taken into consideration in interpreting, this Agreement.


 


Section 10.12.                       Confidentiality.  Each of the Administrative Agent and the
Lenders agrees to maintain the confidentiality of the Information (as defined
below), except that Information may be disclosed (a) to its and its
Affiliates’ directors, officers, employees and agents, including accountants, legal
counsel and other advisors (it being understood that the Persons to whom such
disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to
the extent requested by any regulatory authority, (c) to the extent
required by applicable laws or regulations or by any subpoena or similar legal
process, (d) to any other party to this Agreement, (e) in connection
with the exercise of any remedies hereunder or any suit, action or proceeding
relating to this Agreement or the enforcement of rights hereunder, (f) subject
to an agreement containing provisions substantially the same as those of this
Section, to (i) any assignee of or Participant in, or any prospective
assignee of or Participant in, any of its rights or obligations under this
Agreement or (ii) any actual or prospective counterparty (or its advisors)
to any swap or derivative transaction relating to the Borrower and its
obligations, (g) with the consent of the Borrower or (h) to the
extent such Information (i) becomes publicly available other than as a
result of a breach of this Section or (ii) becomes available to the
Administrative Agent or any Lender on a nonconfidential basis from a source
other than the Borrower.  For the
purposes of this Section, “Information” means all information received from the
Borrower relating to the Borrower or its business, other than any such
information that is available to the Administrative Agent or any Lender on a
nonconfidential basis prior to disclosure by the Borrower; provided
that, in the case of information received from the Borrower after the date
hereof, such information is clearly identified at the time of delivery as
confidential.  Any Person required to
maintain the confidentiality of Information as provided in this Section shall
be considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.


 


Section 10.13.                       Interest Rate Limitation.  Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to any Loan, together
with all fees, charges and other amounts which are treated as interest on such
Loan under applicable law (collectively the


 


57





















 


“Charges”), shall exceed the maximum
lawful rate (the “Maximum Rate”) which may be contracted for, charged,
taken, received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would
have been payable in respect of such Loan but were not payable as a result of
the operation of this Section shall be cumulated and the interest and
Charges payable to such Lender in respect of other Loans or periods shall be
increased (but not above the Maximum Rate therefor) until such cumulated
amount, together with interest thereon at the Federal Funds Effective Rate to
the date of repayment, shall have been received by such Lender.


 


Section 10.14.                       Limitation of Liability.  Neither the General Partner nor the general
partner(s) of the MLP shall be liable for (a) the obligations of the
Borrower under this Agreement or (b) the obligations of the MLP under this
Agreement, including in each case, without limitation, by reason of any payment
obligation imposed by governing state partnership statutes and any provision of
the applicable limited partnership agreement of the Borrower or the MLP that
requires such General Partner or general partner(s), as the case may be, to
restore a capital account deficit.


 


Section 10.15.                       USA PATRIOT Act.  Each Lender that is subject to the
requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into
law October 26, 2001)) (the “Act”) hereby notifies the Borrower that
pursuant to the requirements of the Act, it is required to obtain, verify and
record information that identifies the Borrower, which information includes the
name and address of the Borrower and other information that will allow such
Lender to identify the Borrower in accordance with the Act.


 


58





















 


IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be duly executed by their
respective authorized officers as of the day and year first above written.


 


	
   

  	
  VALERO
  LOGISTICS OPERATIONS, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Valero GP, Inc.,
  its General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Steven A. Blank

  
	
   

  	
   

  	
  Steven A.
  Blank

  
	
   

  	
   

  	
  Senior Vice
  President and

  
	
   

  	
   

  	
  Chief
  Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  VALERO L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Riverwalk
  Logistics, L.P., its General

  
	
   

  	
   

  	
  Partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Valero GP,
  LLC, its General Partner

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Steven A. Blank

  
	
   

  	
   

  	
  Steven A.
  Blank

  
	
   

  	
   

  	
  Senior Vice
  President and

  
	
   

  	
   

  	
  Chief
  Financial Officer

  
							



 





















 


	
   

  	
  JPMORGAN
  CHASE BANK, N.A., individually

  and as Administrative Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Robert Traband

  
	
   

  	
   

  	
  Name: Robert
  Traband

  
	
   

  	
   

  	
  Title:  Vice President

  



 





















 


	
   

  	
  BARCLAYS
  BANK PLC, individually and as

  Syndication Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/Gary B. Wenslow

  
	
   

  	
   

  	
  Name: Gary
  B. Wenslow

  
	
   

  	
   

  	
  Title:  Associate Director

  



 





















 


	
   

  	
  MIZUHO
  CORPORATE BANK (USA),

  individually and as Co-Documentation Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Takahiko Ueda

  
	
   

  	
   

  	
  Name:
  Takahiko Ueda

  
	
   

  	
   

  	
  Title:  Deputy General Manager

  



 





















 


	
   

  	
  ROYAL BANK
  OF CANADA, individually and as

  
	
   

  	
  Co-Documentation
  Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Linda M. Stephens

  
	
   

  	
   

  	
  Name: Linda
  M. Stephens

  
	
   

  	
   

  	
  Title:  Authorized Signatory

  



 





















 


	
   

  	
  THE ROYAL
  BANK OF SCOTLAND plc

  
	
   

  	
  individually
  and as Co-Documentation Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Patty Dundee

  
	
   

  	
   

  	
  Name: Patty
  Dundee

  
	
   

  	
   

  	
  Title:  Senior Vice President

  



 





















 


	
   

  	
  SCOTIABANC
  INC., individually and as Co-

  Documentation Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ William E. Zarrett

  
	
   

  	
   

  	
  Name:
  William E. Zarrett

  
	
   

  	
   

  	
  Title:  Managing Director

  



 





















 


	
   

  	
  SUNTRUST
  BANK, individually and as Co-

  Documentation Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ David Edge

  
	
   

  	
   

  	
  Name: David
  Edge

  
	
   

  	
   

  	
  Title:  Managing Director

  



 





















 


	
   

  	
  THE BANK OF TOKYO-MITSUBISHI, LTD.,

  individually and as Managing Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Kelton Glasscock

  
	
   

  	
   

  	
  Name: Kelton
  Glasscock

  
	
   

  	
   

  	
  Title:  Vice-President &
  Manager

  



 





















 


	
   

  	
  BAYERISCHE
  HYPO-UND VEREINSBANK

  
	
   

  	
  AG, NEW YORK
  BRANCH, individually and as

  
	
   

  	
  Managing
  Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Yoram Dankner

  
	
   

  	
   

  	
  Name: Yoram
  Dankner

  
	
   

  	
   

  	
  Title:  Managing Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Shannon Batchman

  
	
   

  	
   

  	
  Name:
  Shannon Batchman

  
	
   

  	
   

  	
  Title:  Director

  



 





















 


	
   

  	
  SUMITOMO MITSUI
  BANKING CORPORATION,

  
	
   

  	
  individually
  and as Managing Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   By

  	
  /s/ David A. Buck

  
	
   

  	
   

  	
  Name: David
  A. Buck

  
	
   

  	
   

  	
  Title:  Senior Vice President

  
	
   

  	
   

  



 





















 


	
   

  	
  BANK OF
  AMERICA, N.A., individually and as

  
	
   

  	
  Co-Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Claire Liu

  
	
   

  	
   

  	
  Name: Claire
  Liu

  
	
   

  	
   

  	
  Title:  Senior Vice President

  



 





















 


	
   

  	
  BNP PARIBAS,
  individually and as

  
	
   

  	
  Co-Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Mark A. Cox

  
	
   

  	
   

  	
  Name: Mark
  A. Cox

  
	
   

  	
   

  	
  Title:  Director

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Larry Robinson

  
	
   

  	
   

  	
  Name: Larry
  Robinson

  
	
   

  	
   

  	
  Title:  Director

  



 





















 


	
   

  	
  CALYON NEW
  YORK BRANCH, individually

  
	
   

  	
  and as
  Co-Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Phillipe Soustra

  
	
   

  	
   

  	
  Name:
  Phillipe Soustra

  
	
   

  	
   

  	
  Title:  Executive Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Olivier Andenaro

  
	
   

  	
   

  	
  Name:
  Olivier Andenaro

  
	
   

  	
   

  	
  Title:  Managing Director

  



 





















 


	
   

  	
  CITIBANK,
  N.A., individually and as

  
	
   

  	
  Co-Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Simon D. Walker

  
	
   

  	
   

  	
  Name: Simon
  D. Walker

  
	
   

  	
   

  	
  Title:  Attorney-In-Fact

  



 





















 


	
   

  	
  WELLS FARGO
  BANK, NATIONAL

  ASSOCIATION, individually and as

  Co-Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ M. A. Tribolet

  
	
   

  	
   

  	
  Name: M. A.
  Tribolet

  
	
   

  	
   

  	
  Title:  Vice President

  



 





















 


	
   

  	
  LEHMAN
  BROTHERS BANK, FSB

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Janine M. Shugan

  
	
   

  	
   

  	
  Name: Janine
  M. Shugan

  
	
   

  	
   

  	
  Title:  Authorized Signatory

  



 





















 


	
   

  	
  UBS LOAN
  FINANCE LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Witfred V. Saint

  
	
   

  	
   

  	
  Name:
  Witfred V. Saint

  
	
   

  	
   

  	
  Title:  Director, Banking Product Services, US

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Richard L. Tavrow

  
	
   

  	
   

  	
  Name:
  Richard L. Tavrow

  
	
   

  	
   

  	
  Title:  Director, Banking Product Services US

  
	
   

  	
   

  



 





















 


	
   

  	
  BANK HAPOALIM
  B.M.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Lenroy Hackett

  
	
   

  	
   

  	
  Name: Lenroy
  Hackett

  
	
   

  	
   

  	
  Title:  First Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Marc Bosc

  
	
   

  	
   

  	
  Name: Marc
  Bosc

  
	
   

  	
   

  	
  Title:  Vice President

  



 





















 


	
   

  	
  COMPASS BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ D. G. Mills

  
	
   

  	
   

  	
  Name: D. G.
  Mills

  
	
   

  	
   

  	
  Title:  Senior Vice President