EXHIBIT
4.04


 




 





KANEB PIPE LINE OPERATING
PARTNERSHIP, L.P.


 


ISSUER


 


AND


 


JPMORGAN CHASE BANK


 


TRUSTEE


 


FIRST SUPPLEMENTAL INDENTURE


 


DATED AS OF FEBRUARY 21,
2002


 


7.750% SENIOR UNSECURED NOTES
DUE 2012




 





 


First Supplemental Indenture


 





















 


TABLE OF CONTENTS


 


	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 1

  	
   

  	
  Relation to
  Indenture; Definitions

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 1.01.

  	
   

  	
  Relation to Indenture

  	
   

  	
   

  
	
  Section 1.02.

  	
   

  	
  Definitions and References

  	
   

  	
   

  
	
  Section 1.03.

  	
   

  	
  General References

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 2

  	
   

  	
  The Series of
  Securities

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 2.01.

  	
   

  	
  The Form and Title of the Debt
  Securities

  	
   

  	
   

  
	
  Section 2.02.

  	
   

  	
  Limitation on Aggregate Principal Amount

  	
   

  	
   

  
	
  Section 2.03.

  	
   

  	
  Stated Maturity

  	
   

  	
   

  
	
  Section 2.04.

  	
   

  	
  Interest and Interest Rates

  	
   

  	
   

  
	
  Section 2.05.

  	
   

  	
  Place of Payment

  	
   

  	
   

  
	
  Section 2.06.

  	
   

  	
  Optional Redemption

  	
   

  	
   

  
	
  Section 2.07.

  	
   

  	
  Sinking Fund Obligations

  	
   

  	
   

  
	
  Section 2.08.

  	
   

  	
  Defeasance and Discharge; Covenant
  Defeasance

  	
   

  	
   

  
	
  Section 2.09.

  	
   

  	
  Global Securities

  	
   

  	
   

  
	
  Section 2.10.

  	
   

  	
  Registrar

  	
   

  	
   

  
	
  Section 2.11.

  	
   

  	
  Applicability of Additional Covenants and
  Definitions to the Notes

  	
   

  	
   

  
	
  Section 2.12.

  	
   

  	
  Other Terms: Percentage of Principal Amount

  	
   

  	
   

  
	
  Section 2.13.

  	
   

  	
  Cusip Number

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 3

  	
   

  	
  covenants

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 3.01.

  	
   

  	
  Limitations on Liens

  	
   

  	
   

  
	
  Section 3.02.

  	
   

  	
  Restriction of Sale-Leaseback Transaction

  	
   

  	
   

  
	
  Section 3.03.

  	
   

  	
  Transactions with Affiliates

  	
   

  	
   

  
	
  Section 3.04.

  	
   

  	
  Restricted Payments

  	
   

  	
   

  
	
  Section 3.05.

  	
   

  	
  Sale of Assets

  	
   

  	
   

  
	
  Section 3.06.

  	
   

  	
  Fundamental Changes

  	
   

  	
   

  
	
  Section 3.07.

  	
   

  	
  Waiver of Certain Covenants

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 4

  	
   

  	
  Events of
  Default

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 4.01.

  	
   

  	
  Modified Event of Default

  	
   

  	
   

  
	
  Section 4.02.

  	
   

  	
  Additional Event of Default

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 5

  	
   

  	
  Miscellaneous

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 5.01.

  	
   

  	
  Certain Trustee Matters

  	
   

  	
   

  
	
  Section 5.02.

  	
   

  	
  Continued Effect

  	
   

  	
   

  
	
  Section 5.03.

  	
   

  	
  Governing Law

  	
   

  	
   

  
	
  Section 5.04.

  	
   

  	
  Counterparts

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EXHIBITS

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit A:

  	
   

  	
  Form of Note

  	
   

  	
   

  



 





















 


FIRST SUPPLEMENTAL INDENTURE, dated as of February 21,
2002 (the “SUPPLEMENTAL INDENTURE”), between KANEB PIPE LINE OPERATING
PARTNERSHIP, L.P., a Delaware limited partnership (the “COMPANY”), having its
principal office at 2435 North Central Expressway, Richardson, Texas, and
JPMORGAN CHASE BANK, a New York banking corporation (“JPMORGAN”), as trustee
under the Indenture referred to below (in such capacity, the “TRUSTEE”).


 


RECITALS OF THE COMPANY


 


WHEREAS, the Company has heretofore entered
into an Indenture, dated as of February 21, 2002 (the “ORIGINAL INDENTURE”),
with JPMorgan, as trustee;


 


WHEREAS, the Original Indenture is
incorporated herein by this reference and the Original Indenture, as
supplemented by this Supplemental Indenture, is herein called the “INDENTURE”;


 


WHEREAS, under the Original Indenture, a new
series of Debt Securities may at any time be established by the Board of
Directors in accordance with the provisions of the Original Indenture, and the
terms of such series may be established by a supplemental Indenture executed by
the Company and the Trustee;


 


WHEREAS, the Company proposes to create under
the Indenture a new series of Debt Securities;


 


WHEREAS, additional Debt Securities of other
series hereafter established, except as may be limited in the Original
Indenture as at the time supplemented and modified, may be issued from time to
time pursuant to the Indenture as at the time supplemented and modified; and


 


WHEREAS, all acts and things necessary to
make the Notes (as herein defined), when executed by the Company and
authenticated and delivered by the Trustee as provided in the Original
Indenture and this Supplemental Indenture, the valid and binding obligations of
the Company and to make this Supplemental Indenture a valid and binding
agreement in accordance with the Original Indenture have been done or
performed;


 


NOW, THEREFORE, in consideration of the
premises, agreements and obligations set forth herein and for other good and
valuable consideration, the sufficiency of which is hereby acknowledged, the
parties hereto hereby agree, for the equal and proportionate benefit of all
Holders of the Notes, as follows:


 


ARTICLE 1

RELATION TO INDENTURE; DEFINITIONS


 


SECTION 1.01. RELATION TO INDENTURE.


 


With respect to the Notes, this Supplemental
Indenture constitutes an integral part of the Indenture.


 





















 


 


SECTION 1.02. DEFINITIONS AND REFERENCES.


 


For all purposes of this Supplemental
Indenture, capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned in the Original Indenture. The following are
definitions used in this Supplemental Indenture:


 


“AFFILIATE” of
any specified Person means any other Person, directly or indirectly,
controlling or controlled by, or under direct or indirect common control with,
such specified Person. For purposes of this definition, “control,” as used with
respect to any Person, shall mean the possession, directly or indirectly, of
the power to direct or cause the direction of the management or policies of
such Person, whether through the ownership of voting securities, by agreement
or otherwise. For purposes of this definition, the terms “controlling,” “controlled
by” and “under common control with” shall have correlative meanings.
Notwithstanding the foregoing, the term “Affiliate” shall not include a
Subsidiary of any specified Person.


 


“COMPARABLE
TREASURY ISSUE” means the United States Treasury security or securities
selected by the Independent Investment Banker as having an actual or
interpolated maturity comparable to the remaining term of the Notes to be
redeemed that would be utilized, at the time of selection and in accordance
with customary financial practice, in pricing new issues of corporate debt
securities of a comparable maturity to the remaining term of the Notes.


 


“COMPARABLE TREASURY
PRICE” means, for any redemption date relating to the Notes, (i) the
average of four Reference Treasury Dealer Quotations for such redemption date,
after excluding the highest and lowest such Reference Treasury Dealer
Quotations, or (ii) if the Independent Investment Banker obtains fewer
than four such Reference Treasury Dealer Quotations, the average of all such
quotations.


 


“CONSOLIDATED
NET TANGIBLE ASSETS” means, at any date of determination, the aggregate amount
of total assets after deducting therefrom (i) all current liabilities
(excluding (A) any current liabilities that by their terms are extendable
or renewable at the option of the obligor thereon to a time more than 12 months
after the time as of which the amount thereof is being computed, and (B) current
maturities of long-term debt), and (ii) the value (net of any applicable
reserves) of all goodwill, trade names, trademarks, patents and other like
intangible assets, all as set forth on the consolidated balance sheet of the
Company and its consolidated Subsidiaries for the Company’s most recently
completed fiscal quarter, prepared in accordance with GAAP.


 


“DEBT” means
any obligation created or assumed for the repayment of money borrowed or
indebtedness for the repayment of money borrowed and, without duplication, any
guarantee therefor.


 


“DISQUALIFIED
EQUITY” means, with respect to any Person, any Equity Interests to the extent
that by their terms (or by the terms of any security into which they are
convertible or for which they are exchangeable) or upon the happening of any
event, they mature or are mandatorily redeemable pursuant to a sinking fund
obligation or otherwise, or are redeemable at the option of the holder thereof,
in whole or in part, on or prior to the date that the Notes mature, except such
Equity Interests that are solely redeemable with, or solely exchangeable for,
any Equity Interests of such Person that are not a Disqualified Equity.


 


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“DISTRIBUTION”
shall mean, with respect to any Equity Interests issued by a Person (i) the
retirement, redemption, purchase or other acquisition for value of those Equity
Interests by such Person, (ii) the declaration or payment of any dividend
or distribution on or with respect to those Equity Interests by such Person, (iii) any
Investment by that Person in the holder of any of those Equity Interests, and (iv) any
other payment by that Person with respect to those Equity Interests.


 


“EQUITY
INTERESTS” shall mean, (i) with respect to a corporation, shares of
capital stock of such corporation or any other interest convertible or
exchangeable into any such interest, (ii) with respect to a limited
liability company, membership interests in such limited liability company, (iii) with
respect to a partnership, partnership interests in such partnership, and (iv) with
respect to any other Person, interests in such Person analogous to interests
described in clauses (i) through (iii).


 


“EXCLUDED
SUBSIDIARY” shall mean any Subsidiary (i) that has no Debt other than
Permitted Non-Recourse Debt and (ii) the sole purpose of which is to
engage in the acquisition, construction, development and/or operation
activities financed or refinanced with such Permitted Non-Recourse Debt.


 


“FUNDED DEBT”
means, as applied to the Company or any of its Subsidiaries, Debt maturing one
year or more from the date of the incurrence, creation or assumption thereof by
the Company or any of its Subsidiaries, Debt directly or indirectly renewable
or extendible, at the option of the obligor, by its terms or by the terms of
any instrument or agreement relating thereto, to a date one year or more from
the date of the incurrence, creation or assumption thereof by the Company or
any of its Subsidiaries, and Debt under a revolving credit or similar agreement
obligating the lender or lenders to extend credit over a period of one year or
more.


 


“INDEPENDENT
INVESTMENT BANKER” means either Banc of America Securities LLC or Salomon Smith
Barney Inc., as specified by the Company, or any successor firm, or if such
firm is unwilling or unable to select the Comparable Treasury Issue, an
independent investment banking institution of national standing appointed by
the Trustee after consultation with the Company.


 


“INTEREST
PAYMENT DATE” has the meaning assigned in Section 2.04 hereof.


 


“INVESTMENT”
shall mean, in respect of any Person, any loan, advance, extension of credit or
capital contribution to that Person, any other investment in that Person, or
any purchase or commitment to purchase any Equity Interests or Debt issued by
that Person or substantially all of the assets or a division or other business
unit of that Person.


 


“LIEN” means,
at to any Person, any mortgage, lien, pledge, security interest or other
similar charge or encumbrance.


 


“NOTES” has
the meaning assigned in Section 2.01 hereof.


 


“PARI PASSU
DEBT” means any Funded Debt or Debt of the Company or any of its Subsidiaries,
whether outstanding on the date of original issuance of the Notes or thereafter
created, incurred or assumed, unless, in the case of any particular Funded Debt
or Debt, as the case may be, the instrument creating or evidencing the same or
pursuant to which the same is outstanding expressly provides that such Funded
Debt or Debt, as the case may be, shall be subordinated in right of payment to
the Notes.


 


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“PERMITTED
LIENS” means:


 


(1) Liens upon rights-of-way for
pipeline purposes;


 


(2) any statutory or governmental Liens
or Liens arising by operation of law, or mechanics’, repairmen’s, materialmen’s,
suppliers’, carriers’, landlords’, warehousemen’s or similar Liens incurred in
the ordinary course of business which are not yet due or which are being
contested in good faith by appropriate proceedings;


 


(3) rights reserved to, or vested in,
any municipality or governmental, statutory or public authority by the terms of
any right, power, franchise, grant, license, lease, permit, or by any provision
of law, to control or regulate, to use, to purchase or recapture, to designate
a purchaser of, to terminate any franchise, grant, license, lease or permit, or
to condemn or expropriate, any property, or zoning laws, ordinances or
municipal regulations;


 


(4) Liens of taxes and assessments which
are (i) for the then current year, (ii) not at the time delinquent,
or (iii) delinquent but the validity of which are being contested at the
time by the Company or any of its Subsidiaries in good faith by appropriate
proceedings;


 


(5) Liens of, or to secure the payment
or performance of, leases, other than capital leases;


 


(6) Liens upon, or deposits of, any
assets in favor of any surety company or clerk of court for the purpose of
obtaining indemnity or stay of, or appeal from, judicial proceedings;


 


(7) any Lien for any judgment,
attachment, decree or order of any governmental or court authority which when
combined with other similar Liens are not in excess of $10,000,000 in the
aggregate or any Lien arising by reason of any attachment, judgment, decree or
order of any governmental or court authority, so long as any proceeding
initiated to review such attachment, judgment, decree or order shall not have
been terminated or the period within which such proceeding may be initiated
shall not expire, or such attachment, judgment, decree or order shall otherwise
be effectively stayed;


 


(8) Liens upon property or assets
acquired or sold by the Company or any of its Subsidiaries resulting from the
exercise of any rights arising out of defaults on receivables or other sums
owed to the Company or any of its Subsidiaries;


 


(9) Liens incurred or deposits made in
the ordinary course of business in connection with workmen’s compensation,
unemployment insurance, temporary disability, social security, retiree health
or similar laws or regulations or to secure obligations imposed by statute or
governmental regulations;


 


(10) Liens in favor of the Company or
any of its Subsidiaries;


 


(11) Liens in favor of the United States of
America or any other country or of any State, province, territory or any
political subdivision thereof, or any department, agency or instrumentality or
political subdivision of any of the foregoing, (i) in order to permit the
Company or any of its Subsidiaries to perform any contract or subcontract made
with or at the request of such governmental entity, securing any partial,
progress, advance or other payments pursuant to any contract or statute, or (ii) to
secure any Debt incurred by the Company or any of its Subsidiaries for the
purpose of financing all or any part of the purchase price of, or the cost of
constructing, developing, repairing or improving, the property or assets
subject to such Lien;


 


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(12) Liens securing industrial development,
pollution control or similar revenue bonds, or Liens created or assumed by the
Company or any Restricted Subsidiary in connection with the issuance of Debt
the interest on which is excludable from gross income of the holder of such
Debt pursuant to the Code for the purpose of financing, in whole or in part,
the acquisition, development or construction of, or repair or improvement on,
property or assets to be used by the Company or any of its Subsidiaries;


 


(13) Liens in favor of any Person to secure
obligations under the provisions of any letters of credit, bank guarantees,
bonds or surety obligations required or requested, in the ordinary course of
business by any governmental authority in connection with any contract or
statute;


 


(14) Liens upon property or assets to secure
performance of tenders, bids, trade or government contracts, leases, statutory
obligations, performance bonds or other similar obligations or to secure
obligations arising under statutory, regulatory, contractual or warranty
requirements;


 


(15) easements, rights-of-way, restrictions,
exceptions, reservations, defects and irregularities in title and other similar
charges, claims and encumbrances in any property or assets which do not,
individually or in the aggregate, materially interfere with the ordinary
conduct of the business or businesses of the Company and its Subsidiaries,
taken as a whole; or


 


(16) Liens arising under joint venture
agreements, transportation or exchange agreements, preferential rights to
purchase, and other agreements arising in the ordinary course of the Company’s
or any of its Subsidiaries’ business.


 


“PERMITTED
NON-RECOURSE DEBT” shall mean Debt of any Person that is non-recourse to the
Company or any of its Subsidiaries (other than an Excluded Subsidiary) and is
used by such Person to acquire, construct, develop and/or operate assets not
owned by the Company or any of its Subsidiaries (other than an Excluded
Subsidiary) as of the date hereof or to refinance Permitted Non-Recourse Debt.


 


“PREDECESSOR
SECURITY” of any particular Debt Security means every previous Debt Security
evidencing all or part of the same Debt as that evidenced by such particular
Debt Security; and for the purpose of this definition, any Debt Security
authenticated and delivered under the Indenture in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Debt Security shall be deemed to evidence
the same Debt as the mutilated, destroyed, lost or stolen Debt Security.


 


“PRINCIPAL
PROPERTY” means, whether owned or leased on the date of original issuance of
the Notes or thereafter acquired, (i) pipeline assets of the Company or
any of its Subsidiaries, including any related facilities employed in the
transportation, distribution, terminalling, storage or marketing of refined
petroleum products, petroleum products and specialty liquids which are located
in the United States of America or any territory or political subdivision
thereof, and (ii) any processing or manufacturing plant or terminal owned
or leased by the Company or any of its Subsidiaries which is located within the
United States of America or any territory or political subdivision thereof,
except, in the case of either clause (i) or (ii), (y) any assets
consisting of inventories, office fixtures and equipment (including data
processing equipment), vehicles and equipment used on, or useful with,
vehicles, and (z) any such assets, plant or terminal which, in the opinion of
the Board of Directors, is not material in relation to the activities of the
Company and its Subsidiaries, taken as a whole.


 


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“REFERENCE
TREASURY DEALER” means each of Banc of America Securities LLC and Salomon Smith
Barney Inc., plus two additional dealers selected by the Trustee that are at
the time primary U.S. Government securities dealers in New York City, and their
respective successors; provided, if Banc of America Securities LLC or Salomon
Smith Barney Inc. or any primary U.S. Government securities dealer selected by
the Trustee shall cease to be a primary U.S. Government securities dealer, then
such other primary U.S. Government securities dealers as may be substituted by
the Trustee.


 


“REFERENCE
TREASURY DEALER QUOTATIONS” means, for each Reference Treasury Dealer and any
redemption date relating to the Notes, as determined by the Trustee, of the bid
and asked prices for the Comparable Treasury Issue (expressed in each case as a
percentage of its principal amount) quoted in writing to the Trustee by such
Reference Treasury Dealer at 5:00 p.m., New York City time, on the third
Business Day preceding such redemption date.


 


“REGULAR
RECORD DATE” has the meaning assigned in Section 2.04 hereof.


 


“RESTRICTED
PAYMENT” has the meaning assigned in Section 3.04 hereof.


 


“RESTRICTED
SUBSIDIARY” means any Subsidiary of the Company which owns or, as a lessee,
leases any Principal Property.


 


“RIGHT” has
the meaning assigned in Section 3.04 hereof.


 


“SALE-LEASEBACK
TRANSACTION” means the sale or transfer by the Company or any Restricted
Subsidiary of any Principal Property to a Person (other than the Company or any
of its Subsidiaries) and the taking back by the Company or any such Restricted
Subsidiary, as the case may be, of a lease of such Principal Property.


 


“TREASURY RATE”
means, with respect to any redemption date relating to the Notes, (i) the
yield, under the heading which represents the average for the immediately
preceding week, appearing in the most recently published statistical release
designated “H.15(519)” or any successor publication which is published weekly
by the Board of Governors of the Federal Reserve System and which establishes
yields on actively traded United States Treasury securities adjusted to
constant maturity under the caption “Treasury Constant Maturities,” for the
maturity corresponding to the Comparable Treasury Issue (if no maturity is within
three months before or after the remaining term of the Notes to be redeemed,
yields for the two published maturities most closely corresponding to the
Comparable Treasury Issue shall be determined and the Treasury Rate shall be
interpolated or extrapolated from such yields on a straight line basis,
rounding to the nearest month) or (ii) if such release (or any successor
release) is not published during the week preceding the calculation date or
does not contain such yields, the rate per annum equal to the semiannual
equivalent yield to maturity of the Comparable Treasury Issue, calculated using
a price for the Comparable Treasury Issue (expressed as a percentage of its
principal amount) equal to the Comparable Treasury Price for such redemption
date. The Treasury Rate shall be calculated on the third Business Day preceding
the redemption date. Any weekly average yields calculated by interpolation or
extrapolation will be ranked to the nearest 1/100th of 1% with any figure of
1/200th of 1% or above being rounded upward.


 


SECTION 1.03. GENERAL REFERENCES.


 


All references in this Supplemental Indenture
to Articles and Sections, unless otherwise specified, refer to the
corresponding Articles and Sections of this Supplemental Indenture; and the


 


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term “HEREIN”, “HEREOF”, “HEREUNDER” and any other word of similar
import refers to this Supplemental Indenture.


 


ARTICLE 2

THE SERIES OF SECURITIES


 


SECTION 2.01. THE FORM AND TITLE OF THE DEBT SECURITIES.


 


There is hereby established a new series of
Debt Securities to be issued under the Indenture and to be designated as the
Company’s 7.750% Senior Unsecured Notes due 2012 (the “NOTES”). The Notes shall
be executed, authenticated and delivered in accordance with the provisions of,
and shall in all respects be subject to, the terms, conditions and covenants of
the Original Indenture and this Supplemental Indenture (including the form of
Note set forth as Exhibit A hereto (the terms of which are incorporated in
and made a part of the Supplemental Indenture for all intents and purposes) and
the additional covenants set forth in Article 3 hereof).


 


The Notes shall be substantially in the form
attached as Exhibit A hereto. The Notes shall be registered in such names,
shall be in such amounts and shall have such other specific terms contemplated
in the form of Note attached hereto as Exhibit A, as shall be communicated
by the Company to the Trustee in accordance with the administrative procedures,
as in effect from time to time, established to provide for the issuance of the
Notes.


 


SECTION 2.02. LIMITATION ON AGGREGATE PRINCIPAL AMOUNT.


 


The aggregate principal amount of the Notes
shall be limited to $250,000,000.


 


SECTION 2.03. STATED MATURITY.


 


The Notes may be issued on any Business Day
on or after February 21, 2002, and the Stated Maturity of the Notes shall
be February 15, 2012.


 


SECTION 2.04. INTEREST AND INTEREST RATES.


 


The rate of interest on each Note shall be
7.750% per annum, accruing from February 21, 2002 and interest shall be
payable, semi-annually in arrears, on February 15 and August 15, of
each year (each such date, an “INTEREST PAYMENT DATE”), commencing August 15,
2002, to the Persons in whose names the Notes are registered at the close of
business on the immediately preceding February 1 and August 1,
respectively, whether or not such day is a Business Day (each such date, a “REGULAR
RECORD DATE”). The amount of interest payable for any period shall be computed
on the basis of twelve 30-day months and a 360-day year. The amount of interest
payable for any partial period shall be computed on the basis of a 360-day year
of twelve 30-day months and the days elapsed in any partial month. In the event
that any date on which interest is payable on a Note is not a Business Day,
then a payment of the interest payable on such date will be made on the next
succeeding day which is a Business Day (and without any interest or other
payment in respect of any such delay) with the same force and effect as if made
on the date the payment was originally payable. The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date will be paid
to the Person in whose name such Note (or one or more Predecessor Securities)
is registered at the close of business on the Regular Record Date for such
interest. Any such interest not so punctually paid or duly provided for shall
forthwith cease to be payable to the Holder on such Regular Record Date and
shall either (i) be paid to the Person in whose name such Note (or one or more
Predecessor Securities) is registered at the close of business on the special
record date for the payment of such Defaulted Interest to be fixed by the


 


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Trustee, notice of which shall be given to Holders of the Notes not
less than 10 days prior to such special record date, or (ii) be paid at
such time in any other lawful manner not inconsistent with the requirements of
any securities exchange or automated quotation system on which the Notes may be
listed or traded, and upon such notice as may be required by such exchange or
automated quotation system, all as more fully provided in the Indenture.


 


SECTION 2.05. PLACE OF PAYMENT.


 


The Place of Payment where the Notes may be
presented or surrendered for payment shall initially be the Corporate Trust
Office of the Trustee in the City and State of New York.


 


SECTION 2.06. OPTIONAL REDEMPTION.


 


At its option, the Company may choose to
redeem the Notes, as a whole or in part, in principal amounts of $1,000 or any
integral multiple thereof, at any time or from time to time upon notification
to the Holders of the Notes given at least 30 and not more than 60 days prior
to the date fixed for such redemption, at a redemption price equal to the
greater of (i) 100% of the principal amount of the Notes to be redeemed
and (ii) the sum of the present values of the remaining scheduled payments
of principal and interest on such Notes, exclusive of interest accrued to the
redemption date therefor, discounted to such redemption date on a semiannual
basis, assuming a 360-day year consisting of twelve 30-day months, at the
Treasury Rate plus 30 basis points, plus, in either case, accrued and unpaid
interest on the principal amount of the Notes being redeemed to such redemption
date; provided that installments of interest on Notes that are due and payable
on any date on or prior to a redemption date shall be payable to the registered
Holders of such Notes (or one or more Predecessor Securities), registered as
such as of the close of business on the relevant Regular Record Dates. The
redemption price shall be calculated and certified to the Trustee by the
Independent Investment Banker; provided that if the institution so appointed
has notified the Trustee in writing at least 15 days prior to the redemption
date that it is unwilling or unable to make such calculation, such calculation
shall be made by another Independent Investment Banker appointed by the Trustee
at the cost and expense of the Company. The notice to the Holders shall state
that the redemption price shall be calculated in accordance with this Section 2.06.


 


SECTION 2.07. SINKING FUND OBLIGATIONS.


 


The Company has no obligation to redeem or
purchase any Notes pursuant to any sinking fund or analogous requirement or
upon the happening of a specified event or at the option of a Holder thereof.


 


SECTION 2.08. DEFEASANCE AND DISCHARGE; COVENANT DEFEASANCE.


 


Article 11 of the Original Indenture,
including without limitation, Section 11.02(b) thereof, shall apply
to the additional covenants set forth in Article 3 hereof and the Notes,
and such additional covenants set forth in Article 3 hereof shall be
subject to the covenant defeasance option pursuant to Section 11.02(b) of
the Original Indenture.


 


SECTION 2.09. GLOBAL SECURITIES.


 


The Notes shall initially be issuable in the
form of one or more Global Securities. Such Global Securities (i) shall be
deposited with, or on behalf of, The Depository Trust Company, New York, New
York, which shall act as Depositary with respect to the Notes, (ii) shall
bear the legends set forth in the form of Note attached as Exhibit A
hereto, (iii) may be exchanged in


 


8





















 


whole or in part for Debt Securities in definitive form upon the terms
and subject to the conditions provided in Section 2.15 of the Original
Indenture and (iv) shall otherwise be subject to the applicable provisions
of the Indenture.


 


SECTION 2.10. REGISTRAR.


 


The Trustee shall serve as the initial
Registrar.


 


SECTION 2.11. APPLICABILITY OF ADDITIONAL COVENANTS AND
DEFINITIONS TO THE NOTES.


 


In addition to the covenants and definitions
set forth in the Original Indenture, the definitions set forth in Section 1.02
hereof and the covenants set forth in Article 3 hereof are applicable to
the Notes. The additional covenants set forth in Article 3 hereof are
solely for the benefit of the Notes and its Holders, and shall not be
applicable, in whole or part, to any other series of Debt Securities unless the
instruments establishing any of them shall so expressly provide, and each such
case, as therein expressly provided.


 


SECTION 2.12. OTHER TERMS: PERCENTAGE OF PRINCIPAL AMOUNT.


 


The Notes shall be issued at 100% of their
principal amount.


 


SECTION 2.13. CUSIP NUMBER.


 


The Cusip Number for the Notes is 484168 AA
7.


 


ARTICLE 3


COVENANTS


 


SECTION 3.01. LIMITATIONS ON LIENS.


 


So long as the Notes are Outstanding, the
Company will not, nor will it permit any Restricted Subsidiary to, create,
assume or incur, except in favor of the Company or any of its Subsidiaries, any
Lien upon any Principal Property or upon any shares of capital stock or other
equity interests of any Restricted Subsidiary at any time owned by them, to
secure any Debt of the Company or any other Person (other than the Notes issued
hereunder), without effectively providing that all of the Notes Outstanding
(together with, if the Company shall so determine, any other indebtedness or
obligation of the Company which is similarly entitled to be equally and ratably
secured) shall be secured equally and ratably with, or prior to, such Debt so
long as such Debt shall be so secured. The foregoing restriction shall not
apply to, or prevent the creation or existence of, any of the following:


 


(1) Permitted Liens;


 


(2) Liens upon any property or assets
created at the time of acquisition of such property or assets by the Company or
any of its Restricted Subsidiaries or within one year after such time, to
secure all or part of the purchase price for such property or assets or Debt
incurred to finance such purchase price, whether such Debt was incurred prior
to, at the time of, or within one year of, such acquisition;


 


(3) Liens upon any property or assets to
secure all or part of the cost of construction, development, repair or
improvements thereon or to secure Debt incurred prior to, at the time of, or
within one year after, completion of such construction, development, repair or


 


9





















 


improvements or the commencement of full operations thereof (whichever
is later), to provide funds for any such purpose;


 


(4) Liens upon any property or assets
existing thereon at the time of the acquisition thereof by the Company or any
of its Restricted Subsidiaries (whether or not the obligations secured thereby
are assumed by the Company or any of its Restricted Subsidiaries), or the
assumption by the Company or any Restricted Subsidiary of obligations secured
by any Lien that exists at the time of acquisition by the Company or any of its
Restricted Subsidiaries of the property or assets subject to such Lien or at
the time of the acquisition of the Person that owns such property or assets;
provided, however, that any such Lien only encumbers the property or assets so
acquired;


 


(5) Liens upon any property or assets of
a Person existing thereon at the time (i) such Person becomes a Restricted
Subsidiary of the Company, (ii) such Person is merged with or into, or
consolidated with, the Company or any of its Restricted Subsidiaries or (iii) of
a sale, lease or other disposition of the properties of a Person (or division
thereof) as an entirety or substantially as an entirety to the Company or any
of its Restricted Subsidiaries; provided, however, than any such Lien only
encumbers the property or assets of such Person at the time such Person becomes
a Restricted Subsidiary;


 


(6) Liens upon any property or assets of
the Company or any of its Restricted Subsidiaries in existence on the date of
original issuance of the Notes or provided for or created pursuant to an “after-acquired
property” clause or similar term in existence on the date of original issuance
of the Notes or any mortgage, pledge agreement, security agreement or other
similar instrument in existence on the date of original issuance of the Notes;


 


(7) Liens imposed by law or order as a
result of any proceeding before any court or regulatory body that is being
contested in good faith by appropriate proceedings, and Liens which secure a
judgment or other court-ordered award or settlement as to which the Company or
any of its applicable Restricted Subsidiaries has not exhausted its applicable
rights;


 


(8) Liens upon any additions,
improvements, replacements, repairs, fixtures, appurtenances or component parts
thereof attaching to or required to be attached to property or assets pursuant
to the terms of any mortgage, pledge agreement, security agreement or other
similar instrument, creating a Lien upon such property or assets permitted by
clauses (1) through (7) inclusive, of this Section;


 


(9) Liens securing Debt of the Company
or any of its Restricted Subsidiaries, all or a portion of the net proceeds of
which are used substantially concurrent with the funding thereof (and for
purposes of determining such “substantial concurrence,” taking into
consideration, among other things, required notices to be given to holders of
Outstanding Notes in connection with such refunding, refinancing or repurchase,
and the required corresponding durations thereof), to refinance, refund or
repurchase all Outstanding Notes, including the amount of all accrued interest
thereon and reasonable fees and expenses and premium, if any, incurred by the
Company or any of its Subsidiaries in connection therewith;


 


(10) Liens resulting from the deposit of
moneys, U.S. Government Obligations or evidence of indebtedness in trust for
the purpose of defeasing Debt of the Company or any of its Restricted
Subsidiaries;


 


(11) any Lien upon any property or assets to
secure Debt incurred by the Company or any of its Restricted Subsidiaries, the
proceeds of which, in whole or part, were used


 


10





















 


to defease, in a defeasance or a covenant defeasance, or obligations on
any series of the Debt Securities; or


 


(12) any extension, renewal, refinancing,
refunding or replacement (or successive extensions, renewals, refinancing,
refunding or replacements) of any Lien, in whole or in part, that is referred
to in clause (1) through (11), inclusive, of this Section, or of any Debt
secured thereby; provided, however, than any such extension, renewal,
refinancing, refunding or replacement Lien shall be limited to the property or
assets covered by the Lien extended, renewed, refinanced, refunded or replaced
and that the principal amount secured by any such extension, renewal, refinancing,
refunding or replacement Lien shall be in an amount not greater than the
principal amount of (plus accrued interest on) the obligations secured by the
Lien extended, renewed, refinanced, refunded or replaced plus any expenses of
the Company and its Restricted Subsidiaries (including any premium) incurred in
connection with such extension, renewal, refinancing, refunding or replacement.


 


Notwithstanding the foregoing provisions of
this Section 3.01, the Company may, and may permit any Restricted
Subsidiary to, create, assume or incur any Lien upon any Principal Property to
secure any Debt of the Company or any other Person (other than the Notes) that
is not excepted by clauses (1) through (12), inclusive, of this Section 3.01
without securing the Outstanding Notes, provided that after giving effect to
the creation, assumption or incurrence of such Lien and Debt, and the
application of the proceeds of such Debt, if any, received as a result thereof,
the aggregate principal amount of all Debt then outstanding secured by such
Lien and all similar Liens (not including Debt permitted to be secured under
clauses (1) through (12) inclusive, of this Section 3.01), together
with all net sale proceeds received by the Company or any of its Subsidiaries
from Sale-Leaseback Transactions (excluding Sale-Leaseback Transactions
permitted by clauses (1) through (4), inclusive, of the first paragraph of
Section 3.02), would not exceed 10% of Consolidated Net Tangible Assets.


 


SECTION 3.02. RESTRICTION OF SALE-LEASEBACK TRANSACTION.


 


The Company will not, nor will it permit any
Restricted Subsidiary to, engage in a Sale-Leaseback Transaction, unless:


 


(1) such Sale-Leaseback Transaction
occurs within one year from the date of completion of the acquisition of the
Principal Property subject thereto or the date of the completion of
construction, development of, or substantial repair or improvement on, or
commencement of full operations of, such Principal Property, whichever is
later;


 


(2) the Sale-Leaseback Transaction involves
a lease for a period, including renewals, of not more than three years;


 


(3) the Company or such Restricted
Subsidiary would be entitled to incur Debt secured by a Lien on Principal
Property subject thereto in a principal amount equal to or exceeding the net
proceeds received by the Company or such Restricted Subsidiary from such
Sale-Leaseback Transaction without equally and ratably securing the Notes
pursuant to Section 3.01; or


 


(4) the Company or such Restricted
Subsidiary, within a one-year period after such Sale-Leaseback Transaction,
applies or causes to be applied an amount not less than the net sale proceeds
from such Sale-Leaseback Transaction to (i) the prepayment, repayment,
reduction, redemption or retirement of Pari Passu Debt of the Company or any of
its Subsidiaries, or (ii) the expenditure or expenditures for (y) the
acquisition, development or construction of, or repair or


 


11





















 


improvement on, Principal Property or (z) capital stock or other equity
interests in a Person that is or with such expenditure becomes a Restricted Subsidiary
of the Company or in a joint venture, and in each case, whose principal assets
consists of Principal Property.


 


Notwithstanding the foregoing provisions of
this Section 3.02, the Company may, and may permit any Restricted
Subsidiary to, effect any Sale-Leaseback Transaction that is not excepted by
clauses (1) through (4), inclusive, of this Section 3.02, provided
that after giving effect thereto and the application of the proceeds, if any,
received as a result thereof, the net sales proceeds received by the Company or
any of its Restricted Subsidiaries from such Sale-Leaseback Transaction,
together with the aggregate principal amount of then outstanding Debt (other
than the Notes) secured by Liens upon Principal Property not excepted by
clauses (1) through (12), inclusive, of Section 3.01, would not
exceed 10% of the Consolidated Net Tangible Assets.


 


SECTION 3.03. TRANSACTIONS WITH AFFILIATES.


 


The Company will not, and will not permit any
of its Subsidiaries to, sell, lease or otherwise transfer any Principal
Property to, or purchase, lease or otherwise acquire any Principal Property
from, any of its Affiliates, except (i) on terms and conditions not less
favorable to the Company or such Subsidiary than could be obtained on an arm’s-length
basis from unrelated third parties, (ii) transactions between or among the
Company and its wholly-owned Subsidiaries not involving any other Affiliates
and (iii) any Restricted Payment permitted by Section 3.04.


 


SECTION 3.04. RESTRICTED PAYMENTS.


 


The Company will not, and will not permit its
Subsidiaries to, make or agree to make, directly or indirectly, any
Distribution, or make any payment on account of, or set apart assets for a
sinking or other analogous fund for, the purchase, redemption, retirement,
defeasance or other acquisition of, any Equity Interests or Debt subordinated
to the Notes, or any options, warrants, or other rights (each, a “RIGHT”) to
purchase Equity Interests or such Debt, whether now or hereafter outstanding
(each, a “RESTRICTED PAYMENT”), unless, at the time and after giving effect to
such Restricted Payment, the aggregate amount of the Restricted Payment
together with the aggregate amount of all other Restricted Payments made by the
Company or any of its Subsidiaries after the date of original issuance of the
Notes (excluding Restricted Payments permitted by clauses (i), (ii), (v), (vi),
(vii), (viii) or (ix) of the next succeeding paragraph), is less than
the sum of the aggregate net cash proceeds and the fair market value of any
assets or rights used or useful in a business activity not prohibited by Section 3.06
which are received by the Company or any of its Subsidiaries in connection with
(i) a capital contribution to the Company from any Person (other than any
of its Subsidiaries) made after the date of the original issuance of the Notes
or a capital contribution to a Subsidiary of the Company from any Person (other
than the Company or another Subsidiary of the Company) made after the date of
the original issuance of the Notes, or (ii) an issuance and sale made
after the issuance date of Equity Interests (other than Disqualified Equity) of
the Company or from the issuance or sale made after the issuance date of
convertible or exchangeable Disqualified Equity or convertible or exchangeable
debt securities of the Company which have been converted into or exchanged for
such Equity Interests (other than Disqualified Equity).


 


The foregoing provisions shall not prohibit:


 


(i) Distributions
payable by the Company solely in its Equity Interests;


 


12





















 


(ii) Restricted
Payments made by any Subsidiary of the Company to the Company or to another
Subsidiary of the Company;


 


(iii) cash
Distributions paid on, and cash redemptions of, the Equity Interests of the
Company made within 60 days after the declaration thereof; provided that no
Default has occurred and is continuing at the time of such declaration;


 


(iv) Restricted
Payments on, or of, Debt subordinated to the Notes, or Rights related thereto,
provided that no Default has occurred and is continuing at the time such
Restricted Payment is made;


 


(v) the
redemption, repurchase, retirement, defeasance or other acquisition of any
Equity Interests of the Company or any of its Subsidiaries, or Rights related
thereto, in exchange for, or out of the net cash proceeds of the substantially
concurrent sale or issuance (a sale or issuance will be deemed substantially
concurrent if such redemption, repurchase, retirement or acquisition occurs not
more than 90 days after such sale or issuance) (other than to a Subsidiary of
the Company) of, Equity Interests of the Company (other than any Disqualified
Equity), provided that the amount of any such net cash proceeds that are
utilized for any such redemption, repurchase, retirement, defeasance or other
acquisition, or payments, shall be excluded from clause (ii) of the
preceding paragraph;


 


(vi) (A) the
purchase or other acquisition of one or more Equity Interests in the Company
from former employees or directors of the Company or any of its Subsidiaries
(or any of its or their general partners), provided that the aggregate price
paid for all such purchased or acquired Equity Interests shall not exceed
$2,000,000 in any 12-month period; and (B) the repurchase, redemption or
other acquisition or retirement for value of any Equity Interests of the Company
or any of its Subsidiaries held by any current or former officer, employee or
director of the Company or any of its Subsidiaries (or any of its or their
general partners) pursuant to the terms of any agreements (including employment
agreements) and plans approved by the Board of Directors, including any
management equity plan or stock option plan or any other management or employee
benefit plan, agreement or trust, provided, however, that the aggregate price
paid for all such repurchased, redeemed, acquired or retired Equity Interests
pursuant to this clause (vi) shall not exceed the sum of (y) $5,000,000 in
any twelve-month period and (z) the aggregate net proceeds received by the Company
during such 12-month period from issuance of such Equity Interests pursuant to
such agreements or plans, provided, however, if the amount so paid in any calendar
year is less than $5,000,000, such shortfall may be used to repurchase, redeem,
acquire or retire such Equity Interests in either of the next two 12-month
periods in addition to the $5,000,000 that may otherwise be paid in each such 12-month


periods;


 


(vii) repurchases
of Equity Interests deemed to occur upon the cashless exercise of stock
options;


 


(viii) reasonable
and customary directors’ fees to the members of the Board of Directors,
provided that such fees are consistent with past practice or current
requirements;


 


(ix) other
Restricted Payments in an aggregate principal amount since the date of original
issuance of the Notes not to exceed $50,000,000;


 


13





















 


provided, further, that, with respect to clauses (v), (vi), (vii), (viii) and
(ix) above, no Default or Event of Default shall have occurred and be continuing.


 


In determining whether any Restricted Payment
is permitted by the foregoing covenant, the Company may allocate or reallocate
all or any portion of such Restricted Payment among the clauses (i) through
(ix) of the preceding paragraph or among such clauses and the first
paragraph of this Section 3.04, provided that at the time of such
allocation or reallocation, all such Restricted Payments, or allocated portions
thereof, would be permitted under the various provisions of the foregoing
covenant.


 


The amount of all Restricted Payments (other
than cash) shall be the fair market value (as determined by the Board of
Directors and as evidenced by a resolution of the Board of Directors set forth
in an Officers’ Certificate delivered to the Trustee) on the date of the
transfer, incurrence or issuance of such non-cash Restricted Payment.


 


SECTION 3.05. SALE OF ASSETS.


 


The Company will not, and will not permit any
of its Subsidiaries (other than any Excluded Subsidiary) to, convey, sell,
lease, assign, transfer or otherwise dispose of, any of its Principal
Properties (each, a “DISPOSITION”), other than as follows: (i) dispositions
of assets in the ordinary course of business having a fair market value of not
more than the greater of (A) $25,000,000 and (B) 5% of Consolidated
Net Tangible Assets in the aggregate during any fiscal year of the Company; (ii) dispositions
of assets, the proceeds of which are (A) reinvested in other assets (or
Persons owning other assets) used by or useful to the Company or such
Subsidiary in conducting its business that is not prohibited by Section 3.06,
(B) used to repay, repurchase, redeem or defease, in whole or part, Debt,
or (C) used to make capital expenditures; (iii) leases permitted by Section 3.02;
(iv) leases of such assets entered into in the ordinary course of business
and with respect to which the Company or any of its Subsidiaries is the lessor
and the lessee has no option to purchase such assets for less than fair market
value at any time the right to acquire such asset occurs; (v) dispositions
between and among the Company and its Subsidiaries, (vi) any Restricted
Payment permitted by Section 3.04; (vii) abandonment or
relinquishment of such assets in the ordinary course of business; and (viii) dispositions
of such assets received in settlement of debts accrued in the ordinary course
of business.


 


SECTION 3.06. FUNDAMENTAL CHANGES.


 


The Company will not, and will not permit any
of its Subsidiaries to, engage in any business other than businesses of the
type (i) conducted by the Company and its Subsidiaries on the date hereof;
(ii) conducted by Statia Terminals Group N.V. and its Subsidiaries on the
date hereof; and (iii) businesses reasonably related thereto.


 


SECTION 3.07. WAIVER OF CERTAIN COVENANTS.


 


The Company may, with respect to the Notes,
omit in any particular instance to comply with any term, provision or condition
set forth in any covenant provided pursuant to Section 3.01, 3.02, 3.03,
3.04, 3.05 or 3.06, if before the time for such compliance the Holders of at
least a majority in aggregate principal amount of the of all Outstanding Notes
(voting as one class) shall, by Act of such Holders, either waive such
compliance in such instance or generally waive compliance with such term,
provision or condition, but no such waiver shall extend to or affect such term,
provision or condition except to the extent so expressly waived, and, until
such waiver shall become effective, the obligations of the Company and the
duties of the Trustee in respect of any such term, provision or condition shall
remain in full force and effect.


 


14





















 


A waiver which changes or eliminates any
term, provision or condition of this Indenture which has expressly been
included solely for the benefit of one or more particular series of Debt
Securities, or which modifies the rights of the Holders of Debt Securities of
such series with respect to such term, provision or condition, shall be deemed
not to affect the rights under this Indenture of the Holders of Securities of
any other series.


 


ARTICLE 4


EVENTS OF DEFAULT


 


SECTION 4.01. MODIFIED EVENT OF DEFAULT


 


With respect to the Notes, the following
provision in this Section 4.01 shall preempt, in its entirety, the
provision and application of clause (a) of Section 6.01 of the
Original Indenture in relation to the Notes and shall, in relation to the
Notes, replace such clause (a); and for reference to the Indenture in relation
to the Notes, the following clause shall be referred to as being set forth in Section 6.01(a-1)
thereof:


 


(a-1) the
Company defaults for a period of 30 days in the payment when due of interest on
any of the Notes.


 


SECTION 4.02. ADDITIONAL EVENT OF DEFAULT


 


With respect to the Notes, the occurrence of
any of the following events shall, in addition to the other events or
circumstances described as Events of Default at clauses (a) through (g) of
Section 6.01 of the Original Indenture, constitute an Event of Default,
and for reference to the Indenture in relation to the Notes, such events shall
be referred to as being set forth in Section 6.01(h-1) thereof:


 


(h-1) default
under any mortgage, indenture or instrument under which there may be issued or
by which there may be secured or evidenced any Debt for money borrowed by the
Company or any of its Restricted Subsidiaries, or the payment of which is
guaranteed by the Company or any of its Restricted Subsidiaries, whether such
Debt or guarantee now exists, or is created after the date of the Supplemental Indenture,
which default results in the acceleration of such Debt prior to its express
maturity, and the principal amount of any such Debt, together with the
principal amount of any other such Debt the maturity of which has been so
accelerated, aggregates, without duplication, $5,000,000 or more, and such
acceleration shall not have been rescinded, or such Debt is repaid or otherwise
discharged, within a period of 30 days from the occurrence of such
acceleration; provided, that if any such acceleration is rescinded, or such
Debt is repaid or otherwise discharged, within such period of 30 days, then
such Event of Default and any consequential acceleration of the Notes shall be automatically
rescinded, so long as such rescission does not conflict with any related
judgment or decree;


 


ARTICLE 5


MISCELLANEOUS


 


SECTION 5.01. CERTAIN TRUSTEE MATTERS.


 


The recitals contained herein shall be taken
as the statements of the Company, and the Trustee assumes no responsibility for
their correctness.


 


15





















 


The Trustee makes no representations as to
the validity or sufficiency of this Supplemental Indenture or the Notes or the
proper authorization or the due execution hereof or thereof by the Company.


 


SECTION 5.02. CONTINUED EFFECT.


 


Except as expressly supplemented and amended
hereby, the Original Indenture shall continue in full force and effect in
accordance with the provisions thereof, and the Original Indenture, as
supplemented and amended hereby, is in all respects hereby ratified and
confirmed. This Supplemental Indenture and all its provisions shall be deemed a
part of the Original Indenture in the manner and to the extent herein and
therein provided.


 


SECTION 5.03. GOVERNING LAW.


 


This Supplemental Indenture and the Notes
shall be governed by and construed in accordance with the laws of the State of
New York.


 


SECTION 5.04. COUNTERPARTS.


 


This instrument may be executed in any number
of counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.


 


[REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK]


 


16





















 


IN WITNESS WHEREOF, the parties hereto have
caused this Supplemental Indenture to be duly executed and delivered, all as of
the day and year first above written.


 


	
   

  	
   

  	
  KANEB PIPE LINE OPERATING

  
	
   

  	
   

  	
  PARTNERSHIP, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Kaneb Pipe Line Company LLC,

  
	
   

  	
   

  	
   

  	
  Its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  /s/ HOWARD C. WADSWORTH

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Howard C. Wadsworth

  
	
   

  	
   

  	
   

  	
  Title: Vice
  President, Treasurer

  and Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  JPMORGAN CHASE BANK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  /s/ MAURI J. COWEN

  	
   

  
	
   

  	
   

  	
  Name: Mauri J. Cowen

  
	
   

  	
   

  	
  Title: Authorized Officer

  
							



 


17





















 


EXHIBIT A


 


[FORM OF FACE OF NOTE]


 


[If the Note is a Global Security, insert -
THIS NOTE IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF, AND HELD BY, THE DEPOSITARY (AS DEFINED
IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT
OF THE BENEFICIAL OWNERS HEREOF. THIS NOTE IS NOT TRANSFERABLE TO ANY PERSON
UNDER ANY CIRCUMSTANCES EXCEPT THAT (i) THE TRUSTEE MAY MAKE SUCH
NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.08 OF THE
ORIGINAL INDENTURE, (ii) THIS GLOBAL SECURITY MAY BE EXCHANGED IN
WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.15 OF THE ORIGINAL
INDENTURE, (iii) THIS GLOBAL SECURITY MAY BE DELIVERED TO THE TRUSTEE
FOR CANCELLATION PURSUANT TO SECTION 2.10 OF THE ORIGINAL INDENTURE AND (iv) THIS
GLOBAL SECURITY MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR
WRITTEN CONSENT OF THE COMPANY.


 


UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION (“DTC”), TO ISSUER OR ITS AGENT FOR REGISTRATION IN THE NAME OF
CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE &
CO., HAS AN INTEREST HEREIN.


 


KANEB PIPE LINE OPERATING
PARTNERSHIP, L.P.


 


        %
SENIOR UNSECURED NOTES DUE 2012


 


	
  NO.

  	
  U.S.$

  	
   

  
	
  CUSIP No.

  	
   

  



 


KANEB PIPE LINE OPERATING PARTNERSHIP, L.P.,
a Delaware limited partnership (herein called the “COMPANY”, which term
includes any successor Person under the Indenture hereinafter referred to), for
value received, hereby promises to pay to                           ,
or registered assigns, the principal sum of $                          
United States Dollars on                                     ,
2012, and to pay interest thereon from                           ,
2002, or from the most recent Interest Payment Date to which interest has been
paid or duly provided for, semi-annually on                           
and                           
          in each year, commencing
                          ,
2002, at the rate of           %
per annum, until the principal hereof is paid or made available for payment,
and at a rate of           %
per annum on any overdue principal or redemption price, as applicable, and on
any overdue installment of interest. The amount of interest payable for any
period shall be computed on the basis of twelve 30-day months and a 360-day
year. The amount of interest payable for any partial period shall be computed
on the basis of a 360-day year of twelve 30-day months and the days elapsed in
any partial month. In the event that any date on which interest is payable on
this Note is not a Business Day, then a


 


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payment of the interest payable on such date will be made on the next
succeeding day which is a Business Day (and without any interest or other
payment in respect of any such delay) with the same force and effect as if made
on the date the payment was originally payable. The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date will, as
provided in such Indenture, be paid to the Person in whose name this Note (or
one or more Predecessor Securities) is registered at the close of business on
the Regular Record Date for such interest, which shall be                                     
or                                     
(whether or not a Business Day), as the case may be, next preceding such
Interest Payment Date. Any such interest not so punctually paid or duly
provided for shall forthwith cease to be payable to the Holder on such Regular
Record Date and shall either (i) be paid to the Person in whose name this
Note (or one or more Predecessor Securities) is registered at the close of business
on a special record date for the payment of such Defaulted Interest to be fixed
by the Trustee, notice of which shall be given to Holders of Notes not less
than 10 days prior to such special record date, or (ii) be paid at such time
in any other lawful manner not inconsistent with the requirements of any securities
exchange or automated quotation system on which the Notes may be listed or
traded, and upon such notice as may be required by such exchange or automated
quotation system, all as more fully provided in such Indenture.


 


[If the Note is a Global Security, insert -
Payment of the principal or redemption price (as applicable) of and interest on
this Note will be made by transfer of immediately available funds to a bank
account in the City and State of New York designated by the Holder in such coin
or currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts.]


 


[If the Note is a Definitive Security, insert
- Payment of the principal or redemption price (as applicable) and interest on
this Note will be made at the office or agency of the Company maintained for
that purpose in the City and State of New York or at such other offices or
agencies as the Company may designate, in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts, or subject to any laws or regulations applicable
thereto, at the option of the Company, by United States Dollar check drawn on,
or transfer to a United States Dollar account maintained by the payee with, a
bank in the City and State of New York (so long as the applicable paying agent
has received proper transfer instructions in writing by the Regular Record Date
or special record date, as applicable, prior to the applicable payment date);
provided, however, that payment at maturity will only be made against
presentation and surrender of this Note; and provided, further, that any Holder
of this Note who is the Holder of at least $1.0 million aggregate principal
amount of Notes may request to have any payment of interest on this Note be
made by transfer to a United States Dollar account maintained by the payee with
a bank in the United States (so long as the applicable paying agent has
received proper transfer instructions in writing by the Regular Record Date or
special record date, as applicable, prior to the applicable Interest Payment
Date).]


 


Reference is hereby made to the further
provisions of this Note set forth on the reverse hereof, which further
provisions shall for all purposes have the same effect as if set forth at this
place.


 


Unless the certificate of authentication
hereon has been executed by the Trustee referred to on the reverse hereof by
manual signature, this Note shall not be entitled to any benefit under the
Indenture or be valid or obligatory for any purpose.


 


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IN WITNESS WHEREOF, the Company has caused
this instrument to be duly executed and delivered.


 


	
  Dated:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  KANEB PIPE LINE OPERATING

  
	
   

  	
   

  	
  PARTNERSHIP, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: Kaneb Pipe Line Company LLC,

  
	
   

  	
   

  	
  Its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


TRUSTEE’S CERTIFICATE AND
AUTHORIZATION


 


This is one of the Notes referred to in the
within-mentioned Indenture.


 


	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  As Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Authorized
  Officer

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  	
  , 20   

  	
   

  
							



 


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[FORM OF REVERSE OF NOTE]


 


This Note is one of a duly authorized series
of Debt Securities of the Company (the “NOTES”) issued under an Indenture dated
as of                                 ,
200     (the “ORIGINAL INDENTURE”), as supplemented by the
First Supplemental Indenture dated as of                                 ,
20     (the “SUPPLEMENTAL INDENTURE”, and together with the
Original Indenture, the “INDENTURE”), between the Company and                                 ,
as Trustee (the “TRUSTEE”, which term includes any successor trustee under the
Indenture), to which Indenture and all applicable indentures supplemental
thereto reference is hereby made for a statement of the respective rights,
limitations of rights, obligations, duties and immunities thereunder of the
Company, the Trustee and the Holders of the Notes and of the terms upon which
the Notes are, and are to be, authenticated and delivered. As provided in the
Indenture, the Debt Securities may be issued in one or more series, which
different series may be issued in various aggregate principal amounts, may
mature at different times, may bear interest, if any, at different rates, may
be subject to different redemption provisions, if any, may be subject to
different sinking, purchase or analogous funds, if any, may be subject to different
covenants and Events of Default and may otherwise vary as in the Indenture
provided or permitted. This Note is one of a series of Debt Securities designated
on the face hereof limited in aggregate principal amount to U.S. $                                .


 


At its option, the Company may choose to
redeem the Notes, as a whole or in part, in principal amounts of $1,000 or any
integral multiple thereof, at any time or from time to time upon notification
to the Holders of the Notes given at least 30 and not more than 60 days prior
to the date fixed for such redemption, at a redemption price equal to the
greater of (i) 100% of the principal amount of the Notes to be redeemed
and (ii) the sum of the present values of the remaining scheduled payments
of principal and interest on such Notes, exclusive of interest accrued to the
redemption date therefor, discounted to such redemption date on a semiannual
basis, assuming a 360-day year consisting of twelve 30-day months, at the
Treasury Rate plus                  
basis points, plus, in either case, accrued and unpaid interest on the principal
amount of the Notes being redeemed to such redemption date; provided, that installments
of interest on Notes that are due and payable on any date on or prior to a
redemption date shall be payable to the registered Holders of such Notes (or
one or more Predecessor Securities), registered as such as of the close of
business on the relevant Regular Record Dates referred to on the face hereof,
all as provided in the Indenture.


 


Capitalized terms used herein shall have the
meanings specified herein or in the Indenture, as the case may be.


 


“COMPARABLE
TREASURY ISSUE” means the United States Treasury security or securities
selected by the Independent Investment Banker as having an actual or
interpolated maturity comparable to the remaining term of the Notes to be
redeemed that would be utilized, at the time of selection and in accordance
with customary financial practice, in pricing new issues of corporate debt
securities of a comparable maturity to the remaining term of the Notes.


 


“COMPARABLE
TREASURY PRICE” means, for any redemption date relating to the Notes, (i) the
average of four Reference Treasury Dealer Quotations for such redemption date,
after excluding the highest and lowest such Reference Treasury Dealer
Quotations, or (ii) if the Independent Investment Banker obtains fewer
than four such Reference Treasury Dealer Quotations, the average of all such
quotations.


 


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“INDEPENDENT
INVESTMENT BANKER” means either Banc of America Securities LLC or Salomon Smith
Barney Inc., as specified by the Company, or any successor firm, or if such
firm is unwilling or unable to select the Comparable Treasury Issue, an
independent investment banking institution of national standing appointed by
the Trustee after consultation with the Company.


 


“REFERENCE
TREASURY DEALER” means each of Banc of America Securities LLC and Salomon Smith
Barney Inc., plus two additional dealers selected by the Trustee that are at
the time primary U.S. Government securities dealers in New York City, and their
respective successors; provided, if Banc of America Securities LLC or Salomon
Smith Barney Inc. or any primary U.S. Government securities dealer selected by
the Trustee shall cease to be a primary U.S. Government securities dealer, then
such other primary U.S. Government securities dealers as may be substituted by
the Trustee.


 


“REFERENCE
TREASURY DEALER QUOTATIONS” means, for each Reference Treasury Dealer and any
redemption date relating to the Notes, as determined by the Trustee, of the bid
and asked prices for the Comparable Treasury Issue (expressed in each case as a
percentage of its principal amount) quoted in writing to the Trustee by such
Reference Treasury Dealers at 5:00 p.m., New York City time, on the third
Business Day preceding such redemption date.


 


“TREASURY RATE”
means with respect to any redemption date relating to the Notes, (i) the
yield, under the heading which represents the average for the immediately
preceding week, appearing in the most recently published statistical release
designated “H.15(519)” or any successor publication which is published weekly
by the Board of Governors of the Federal Reserve System and which establishes
yields on actively traded United States Treasury securities adjusted to
constant maturity under the caption “Treasury Constant Maturities,” for the
maturity corresponding to the Comparable Treasury Issue (if no maturity is
within three months before or after the remaining term of the Notes to be redeemed,
yields for the two published maturities most closely corresponding to the
Comparable Treasury Issue shall be determined and the Treasury Rate shall be
interpolated or extrapolated from such yields on a straight line basis,
rounding to the nearest month) or (ii) if such release (or any successor
release) is not published during the week preceding the calculation date or
does not contain such yields, the rate per annum equal to the semiannual
equivalent yield to maturity of the Comparable Treasury Issue, calculated using
a price for the Comparable Treasury Issue (expressed as a percentage of its
principal amount) equal to the Comparable Treasury Price for such redemption
date. The Treasury Rate shall be calculated on the third Business Day preceding
the redemption date. Any weekly average yields calculated by interpolation or
extrapolation will be ranked to the nearest 1/100th of 1% with any figure of
1/200th of 1% or above being rounded upward.


 


In the event of redemption of this Note in
part only, a new Note or Notes of like tenor for the unredeemed portion hereof
will be issued in the name of the Holder hereof upon the cancellation hereof.


 


If an Event of Default with respect to the
Notes shall occur and be continuing, the principal of the Notes may be declared
due and payable in the manner and with the effect provided in the Indenture.


 


The Indenture permits, with certain
exceptions as therein provided, the amendment thereof and the modification of
the rights and obligations of the Company and the rights of the Holders of the
Notes to be affected under the Indenture at any time by the Company and the
Trustee with the consent of not less than the Holders of a majority in
aggregate principal amount of the Outstanding Debt Securities of all series to
be affected (voting as one class). The Indenture also contains provisions
permitting the Holders of a majority in aggregate principal amount


 


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of the Outstanding Debt Securities of all affected series (voting as
one class), on behalf of the Holders of all Securities of such series, to waive
compliance by the Company with certain provisions of the Indenture. The
Indenture permits, with certain exceptions as therein provided, the Holders of
a majority in principal amount of Notes then Outstanding to waive past defaults
under the Indenture with respect to the Notes and their consequences. Any such
consent or waiver by the Holder of this Note shall be conclusive and binding
upon such Holder and upon all future Holders of this Note and of any Note
issued upon the registration of transfer hereof or in exchange herefor or in
lieu hereof, whether or not notation of such consent or waiver is made upon
this Note.


 


As provided in and subject to the provisions
of the Indenture, the Holder of this Note shall not have the right to institute
any proceeding with respect to the Indenture or for the appointment of a
receiver or trustee or for any other remedy thereunder, unless such Holder
shall have previously given the Trustee written notice of a continuing Event of
Default with respect to the Notes, the Holders of not less than 25% in
principal amount of the Notes at the time Outstanding shall have made written
request to the Trustee to institute proceedings in respect of such Event of
Default as Trustee and offered the Trustee reasonable indemnity and the Trustee
shall not have received from the Holders of a majority in principal amount of
the Notes at the time Outstanding a direction inconsistent with such request,
and shall have failed to institute any such proceeding, for 60 days after
receipt of such notice, request and offer of indemnity. The foregoing shall not
apply to any suit instituted by the Holder of this Note for the enforcement of
any payment of principal, premium, if any, or interest hereon on or after the
respective due dates expressed herein.


 


No reference herein to the Indenture and no
provision of this Note or of the Indenture shall alter or impair the obligation
of the Company, which is absolute and unconditional, to pay the principal of,
premium, if any, and interest on this Note at the times, place(s) and rate, and
in the coin or currency, herein prescribed.


 


[If the Note is a Global Security, insert -
This Global Security or portion hereof may not be exchanged for Definitive
Securities except in the limited circumstances provided in the Indenture.


 


The holders of beneficial interests in this
Global Security will not be entitled to receive physical delivery of Definitive
Securities except as described in the Indenture and will not be considered the
Holders thereof for any purpose under the Indenture.]


 


[If the Note is a Definitive Security, insert
- As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Note is registrable in the Debt Security Register,
upon surrender of this Note for registration of transfer at the office or
agency of the Company in the City and State of New York or at such other
offices or agencies as the Company may designate, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Debt Security Registrar duly executed by, the Holder hereof or
his attorney duly authorized in writing, and thereupon one or more new Notes
and of like tenor, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.]


 


The Notes are issuable only in registered
form, without coupons, in denominations of U.S. $1,000 and any integral
multiple thereof. As provided in the Indenture and subject to certain
limitations therein set forth, the Notes are transferable and exchangeable at
the office of the


 


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Registrar and any co-registrar for a like aggregate principal amount of
Notes and of like tenor of a different authorized denomination, as requested by
the Holder surrendering the same.


 


No service charge shall be made for any such
registration of transfer or exchange, but the Company may require payment of a
sum sufficient to cover any transfer tax or other similar government charge
payable in connection with certain transfers and exchanges.


 


Prior to due presentment of this Note for
registration of transfer, the Company, the Trustee and any agent of the Company
or the Trustee may treat the Person in whose name this Note is registered as
the owner hereof for all purposes, whether or not this Note be overdue, and
neither the Company, the Trustee nor any such agent shall be affected by notice
to the contrary.


 


Obligations of the Company under the Indenture
and the Securities thereunder, including this Note, are non-recourse to Kaneb
Pipe Line Company LLC, a Delaware limited liability company (the “GENERAL
PARTNER”), and Kaneb Pipe Line Partners, L.P., a Delaware limited partnership (“MLP”),
and their respective Affiliates (other than the Company), and payable only out
of cash flow and assets of the Company. The Trustee, and each Holder of a Note
by its acceptance hereof, will be deemed to have agreed in the Indenture that (i) neither
the General Partner nor its assets nor the MLP nor its assets (nor any of their
respective Affiliates other than the Company, nor their respective assets)
shall be liable for any of the obligations of the Company under the Indenture
or such Securities, including this Note, and (ii) no past, present or future
director, officer, partner, employee, incorporator, stockholder, member or
manager or unitholder, as such, of the Company, the Trustee, the General Partner,
the MLP or any Affiliate of any of the foregoing entities or any other Person
an obligor on the Notes, as such, shall have any liability in respect of any
obligations of the Company under the Indenture or such Debt Securities or for
any claim based on, in respect of, or by reason of, such obligation or their creation.
The foregoing agreements by the Trustee and each Holder are part of the
consideration for the issuance of the Notes.


 


The Indenture contains provisions that
relieve the Company from the obligation to comply with certain restrictive
covenants in the Indenture and for satisfaction and discharge at any time of
the entire indebtedness upon compliance by the Company with certain conditions
set forth in the Indenture.


 


This Note shall be governed by and construed
in accordance with the laws of the State of New York.


 


All terms used in this Note which are defined
in the Indenture shall have the meanings assigned to them in the Indenture.


 


[If the Note is a Definitive Security, insert
as a separate page -


 


A-7





















 


FOR VALUE RECEIVED, the undersigned hereby
sell(s), assign(s) and transfer(s) unto                                            
(Please Print or Typewrite Name and Address of Assignee) the within instrument
of KANEB PIPE LINE OPERATING PARTNERSHIP, L.P., and does hereby irrevocably
constitute and appoint                                            
Attorney to transfer said instrument on the books of the within-named Company,
with full power of substitution in the premises.


 


Please Insert Social Security or

Other Identifying Number of Assignee:


 


 


	
  Dated:

  	
   

  	
   

  	
   

  	
  (Signature)

  	
   

  	
   

  



 


NOTICE: The signature to this assignment must correspond with the name
as written upon the face of the within instrument in every particular, without alteration
or enlargement or any change whatever.]


 


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