Exhibit 10.4


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                              BRIDGE LOAN AGREEMENT

                          dated as of November 1, 2002

                                      among

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


                         KANEB PIPE LINE PARTNERS, L.P.
                                     as KPP


                   THE LENDERS FROM TIME TO TIME PARTY HERETO


                                       and


                                  SUNTRUST BANK
                             as Administrative Agent


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                           SUNTRUST ROBINSON HUMPHREY,
                  a division of SUNTRUST CAPITAL MARKETS, INC.
                        as Lead Arranger and Book Manager

                                       and

                         BANC ONE CAPITAL MARKETS, INC.
                     as Co-Lead Arranger and Co-Book Manager




<PAGE>
<TABLE>
<CAPTION>
                                TABLE OF CONTENTS
                                                                                                               Page


                       Article I DEFINITIONS; CONSTRUCTION

<S>          <C>                                                                                               <C>
Section 1.1. Definitions..........................................................................................1
Section 1.2. Classifications of Loans............................................................................18
Section 1.3. Accounting Terms and Determination..................................................................18
Section 1.4. Terms Generally.....................................................................................19

                 Article II AMOUNT AND TERMS OF THE COMMITMENTS

Section 2.1. [Intentionally Omitted].............................................................................19
Section 2.2. The Bridge Loan.....................................................................................19
Section 2.3. Fees................................................................................................20
Section 2.4. Funding of the Bridge Loan..........................................................................20
Section 2.5. Interest Elections..................................................................................20
Section 2.6. [Intentionally Omitted].............................................................................21
Section 2.7. Repayment of the Bridge Loan........................................................................21
Section 2.8. Evidence of Indebtedness............................................................................21
Section 2.9. Prepayments.........................................................................................22
Section 2.10. Interest on Loans..................................................................................22
Section 2.11. [Intentionally Omitted]............................................................................23
Section 2.12. Computation of Interest............................................................................23
Section 2.13. Inability to Determine Interest Rates..............................................................23
Section 2.14. Illegality.........................................................................................24
Section 2.15. Increased Costs....................................................................................24
Section 2.16. Funding Indemnity..................................................................................25
Section 2.17. Taxes..............................................................................................25
Section 2.18. Payments Generally; Pro Rata Treatment; Sharing of Set-offs........................................27
Section 2.19. Mitigation of Obligations; Replacement of Lenders..................................................28

                    Article III CONDITIONS PRECEDENT TO LOANS

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

                    Article IV REPRESENTATIONS AND WARRANTIES

Section 4.1. Existence; Power....................................................................................31
Section 4.2. Organizational Power; Authorization; Enforceability.................................................31
Section 4.3. Governmental Approvals; No Conflicts................................................................31
Section 4.4. Financial Statements................................................................................32
Section 4.5. Litigation and Environmental Matters................................................................32
Section 4.6. Compliance with Laws and Agreements.................................................................32
Section 4.7. Investment Company Act, Etc.........................................................................32
Section 4.8. Taxes...............................................................................................33
Section 4.9. Margin Regulations..................................................................................33
Section 4.10. ERISA..............................................................................................33
Section 4.11. Ownership of Property..............................................................................33
Section 4.12. Disclosure.........................................................................................34
Section 4.13. Labor Relations....................................................................................34
Section 4.14. Acquisition Agreement..............................................................................34
Section 4.15. Subsidiaries, Significant Affiliates and Guarantors................................................34
Section 4.16. Liens..............................................................................................34

                         Article V AFFIRMATIVE COVENANTS

Section 5.1. Financial Statements and Other Information..........................................................35
Section 5.2. Notices of Material Events..........................................................................36
Section 5.3. Existence; Conduct of Business......................................................................37
Section 5.4. Compliance with Laws, Etc...........................................................................37
Section 5.5. Payment of Obligations..............................................................................37
Section 5.6. Books and Records...................................................................................37
Section 5.7. Visitation, Inspection, Etc.........................................................................37
Section 5.8. Maintenance of Properties; Insurance................................................................37
Section 5.9. Use of Proceeds.....................................................................................38
Section 5.10. Additional Subsidiaries............................................................................38

                         Article VI FINANCIAL COVENANTS

Section 6.1. Funded Debt to EBITDA...............................................................................38
Section 6.2. Consolidated EBITDA to Consolidated Interest Expense................................................38
Section 6.3. Consolidated Net Worth..............................................................................39

                         Article VII NEGATIVE COVENANTS

Section 7.1. Indebtedness........................................................................................39
Section 7.2. Negative Pledge.....................................................................................39
Section 7.3. Fundamental Changes.................................................................................40
Section 7.4. Investments, Loans, Etc.............................................................................40
Section 7.5. Restricted Payments.................................................................................41
Section 7.6. Sale of Assets......................................................................................41
Section 7.7. Transactions with Affiliates........................................................................42
Section 7.8. Restrictive Agreements..............................................................................42
Section 7.9. Sale and Leaseback Transactions.....................................................................42
Section 7.10. Hedging Agreements.................................................................................42
Section 7.11. Amendment to Material Documents....................................................................43
Section 7.12. Accounting Changes.................................................................................43

                           Article VIII KPP GUARANTEE

Section 8.1. Guarantee...........................................................................................43
Section 8.2. Guaranteed Obligations Not Waived...................................................................44
Section 8.3. Guarantee of Payment................................................................................44
Section 8.4. No Discharge or Diminishment of Guarantee...........................................................44
Section 8.5. Defenses of Borrower Waived.........................................................................44
Section 8.6. Agreement to Pay; Subordination.....................................................................45
Section 8.7. Information.........................................................................................45
Section 8.8. Representations and Warranties......................................................................45
Section 8.9. Termination.........................................................................................46

                          Article IX EVENTS OF DEFAULT

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

                       Article X THE ADMINISTRATIVE AGENT

Section 10.1. Appointment of Administrative Agent................................................................48
Section 10.2. Nature of Duties of Administrative Agent...........................................................49
Section 10.3. Lack of Reliance on the Administrative Agent.......................................................49
Section 10.4. Certain Rights of the Administrative Agent.........................................................50
Section 10.5. Reliance by Administrative Agent...................................................................50
Section 10.6. The Administrative Agent in its Individual Capacity................................................50
Section 10.7. Successor Administrative Agent.....................................................................50
Section 10.8. Authorization to Execute other Loan Documents......................................................51

                            Article XI MISCELLANEOUS

Section 11.1. Notices............................................................................................52
Section 11.2. Waiver; Amendments.................................................................................53
Section 11.3. Expenses; Indemnification..........................................................................54
Section 11.4. Successors and Assigns.............................................................................55
Section 11.5. Governing Law; Jurisdiction; Consent to Service of Process.........................................57
Section 11.6. WAIVER OF JURY TRIAL...............................................................................58
Section 11.7. Right of Setoff....................................................................................58
Section 11.8. Counterparts; Integration..........................................................................59
Section 11.9. Survival...........................................................................................59
Section 11.10. Severability......................................................................................59
Section 11.11. Confidentiality...................................................................................59
Section 11.12. Interest Rate Limitation..........................................................................60

</TABLE>


<PAGE>
Schedules

       Schedule I           -       Applicable Margin
       Schedule II          -       Existing Indebtedness
       Schedule 4.5         -       Environmental Matters
       Schedule 4.15        -       Subsidiaries
       Schedule 7.2         -       Existing Liens


Exhibits

       Exhibit A            -       Form of Note
       Exhibit B            -       Form of Assignment and Acceptance
       Exhibit C            -       Form of Subsidiary Guarantee Agreement
       Exhibit E            -       Form of Continuation/Conversion
       Exhibit F            -       Form of Opinion




<PAGE>



                              BRIDGE LOAN AGREEMENT


     THIS BRIDGE LOAN AGREEMENT (this Agreement") is made and entered into as of
November 1, 2002, by and among KANEB PIPE LINE  OPERATING  PARTNERSHIP,  L.P., a
Delaware limited partnership (the "Borrower"), KANEB PIPE LINE PARTNERS, L.P., a
Delaware limited partnership ("KPP"), the banks and other financial institutions
from time to time  party  hereto  (the  "Lenders")  and  SUNTRUST  BANK,  in its
capacity as Administrative Agent for the Lenders (the "Administrative Agent").


                              W I T N E S S E T H:

     WHEREAS,  the  Borrower  has  requested  that  the  Lenders  make  to it an
unsecured bridge term loan in the initial principal amount of $150,000,000; and

     WHEREAS,  subject to the terms and conditions of this Agreement (including,
without limitation,  the guaranty and other agreements of KPP set forth herein),
the Lenders to the extent of their respective Commitments as defined herein, are
willing severally to make such bridge term loan.

     NOW,  THEREFORE,  in consideration of the premises and the mutual covenants
herein contained,  the Borrower,  KPP, the Lenders and the Administrative  Agent
agree as follows:

                      Article I DEFINITIONS; CONSTRUCTION

Section 1.1. Definitions.

     In addition to the other terms defined  herein,  the  following  terms used
herein shall have the meanings  herein  specified  (to be equally  applicable to
both the singular and plural forms of the terms defined):

          "Acquisition"  shall  mean the  acquisition  of the  Sellers'  ammonia
     pipeline.

          "Acquisition  Agreement"  shall  mean  the  Asset  Purchase  and  Sale
     Agreement  dated as of  September  17,  2002,  between the Borrower and the
     Sellers.

          "Acquisition  Documents"  shall mean,  collectively,  the  Acquisition
     Agreement  and  all  other  documents,   instruments,   agreements,  notes,
     guarantees, opinions, and certificates executed in connection therewith.

          "Additional Debt" shall mean  Indebtedness  issued or incurred by KPP,
     Borrower or any  Significant  Affiliate  after the date hereof,  other than
     Indebtedness under this Agreement or under the Revolving Credit Agreement.

          "Adjusted LIBO Rate" shall mean,  with respect to each Interest Period
     for a Eurodollar  Loan,  the rate per annum  obtained by dividing (i) LIBOR
     for such  Interest  Period  by (ii) a  percentage  equal to 1.00  minus the
     Eurodollar Reserve Percentage.

          "Administrative Agent" shall have the meaning set forth in the opening
     paragraph hereof.

          "Administrative  Questionnaire"  shall  mean,  with  respect  to  each
     Lender,  an  administrative  questionnaire  in  the  form  prepared  by the
     Administrative  Agent  and  submitted  to  the  Administrative  Agent  duly
     completed by such Lender.

          "Affiliate"  shall  mean,  as to any  Person,  any other  Person  that
     directly,  or indirectly through one or more intermediaries,  Controls,  is
     Controlled by, or is under common Control with, such Person.

          "Aggregate Commitments" shall mean,  collectively,  all Commitments of
     all Lenders hereunder which is $150,000,000.

          "Applicable  Lending  Office" shall mean, for each Lender and for each
     Type of Loan, the "Lending  Office" of such Lender (or an Affiliate of such
     Lender)   designated   for  such   Type  of  Loan  in  the   Administrative
     Questionnaire  submitted by such Lender or such other office of such Lender
     (or an  Affiliate  of such  Lender)  as such  Lender  may from time to time
     specify to the Administrative Agent and the Borrower as the office by which
     its Loans of such Type are to be made and maintained.

          "Applicable  Margin" shall mean a percentage  per annum  determined by
     reference to the Reference  Ratings then in effect as set forth on Schedule
     I plus the  Ticking  Margin;  provided,  that any change in the  Applicable
     Margin  resulting from a change in any Reference  Rating shall be effective
     on the day on which the  applicable  rating  agency  changes its rating and
     shall continue until the day prior to the day that a further change becomes
     effective. The Applicable Margin shall initially be set at Level I.

          "Asset Disposition" shall mean, with respect to KPP or any Significant
     Affiliate,  any  sale,  transfer,  conveyance,  lease or other  disposition
     (including by way of merger,  consolidation  or  sale-leaseback)  by KPP or
     such Significant Affiliate to any other Person (other than by any Person to
     KPP or a Guarantor or by a Significant  Affiliate to any other  Significant
     Affiliate) of any assets of KPP or such Significant  Affiliate  (including,
     without  limitation,  any Equity Interests owned by KPP or such Significant
     Affiliate). The term "Asset Disposition" shall not include (i) dispositions
     of inventory in the ordinary course of business, (ii) dispositions of other
     assets in the  ordinary  course of business  having a Diluted  Value of not
     more than  $15,000,000 in the aggregate  during the Term of this Agreement,
     (iii) the grant of a Lien by KPP or any Significant Affiliate in any assets
     securing a borrowing by, or contractual  performance  obligation of, KPP or
     such Significant  Affiliate otherwise  permitted under this Agreement,  and
     (iv)  dispositions  of  Equity  Interests  in  connection  with  directors'
     qualifying shares or comparable Equity Interests.

          "Assignment  and  Acceptance"  shall mean an assignment and acceptance
     entered into by a Lender and an assignee (with the consent of any party the
     consent  of which is  required  by Section  11.4(b))  and  accepted  by the
     Administrative Agent, in the form of Exhibit B attached hereto or any other
     form approved by the Administrative Agent.

          "Base  Rate" shall mean the higher of (i) the per annum rate which the
     Administrative  Agent publicly  announces from time to time to be its prime
     lending  rate,  as in effect from time to time,  and (ii) the Federal Funds
     Rate as in effect from time to time plus  one-half of one percent  (0.50%).
     The Administrative  Agent's prime lending rate is a reference rate and does
     not necessarily represent the lowest or best rate charged to customers. The
     Administrative  Agent may make commercial  loans or other loans at rates of
     interest at, above or below the Administrative  Agent's prime lending rate.
     Each  change in the  Administrative  Agent's  prime  lending  rate shall be
     effective from and including the date such change is publicly  announced as
     being effective.

          "Borrower"  shall  have  the  meaning  in the  introductory  paragraph
     hereof.

          "Bridge Loan," "Loan," or "Loans" shall have the meanings set forth in
     Section 2.2 hereof.

          "Business Day" shall mean (i) any day other than a Saturday, Sunday or
     other day on which commercial  banks in Atlanta,  Georgia and New York, New
     York  are  authorized  or  required  by law to  close  and (ii) if such day
     relates to a Loan of, a payment or  prepayment of principal or interest on,
     a conversion of or into, or an Interest  Period for, a Eurodollar Loan or a
     notice with respect to any of the  foregoing,  any day on which dealings in
     Dollars are carried on in the London interbank market.

          "Capital Lease  Obligations"  of any Person shall mean all obligations
     of such  Person  to pay rent or other  amounts  under  any  lease (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"  shall mean the  occurrence  of one or more of the
     following  events:  (i) any sale,  lease,  exchange or other transfer (in a
     single  transaction  or  a  series  of  related  transactions)  of  all  or
     substantially  all of the assets of KPP or the General Partner to any other
     Person or "group"  (within the meaning of the  Securities  Exchange  Act of
     1934 and the rules of the Securities and Exchange Commission  thereunder in
     effect on the date hereof), (ii) the acquisition of ownership,  directly or
     indirectly, beneficially or of record, by any Person or "group" (within the
     meaning  of the  Securities  Exchange  Act of  1934  and the  rules  of the
     Securities  and  Exchange  Commission  thereunder  as in effect on the date
     hereof)  (other than, in the case of the General  Partner,  by the Investor
     Group) of  sufficient  Equity  Interests  in KPP or the General  Partner to
     Control KPP or the General Partner, as the case may be; or (iii) occupation
     of a  majority  of the  seats  (other  than  vacant  seats) on the board of
     directors of the General  Partner by Persons who were neither (A) nominated
     by the  current  board  of  directors  or (B)  appointed  by  directors  so
     nominated.

          "Change in Law" shall mean (i) the  adoption  of any  applicable  law,
     rule or regulation after the date of this Agreement, (ii) any change in any
     applicable law, rule or regulation,  or any change in the interpretation or
     application  thereof, by any Governmental  Authority after the date of this
     Agreement,  or (iii)  compliance by any Lender (or its  Applicable  Lending
     Office) by such Lender's holding company,  if applicable) 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.

          "Charges" shall have the meaning set forth in Section 11.12.

          "Closing Date" shall mean the date on which the  conditions  precedent
     set forth in Section 3.1 have been  satisfied or waived in accordance  with
     Section 11.2.

          "Code" shall mean the Internal Revenue Code of 1986, as amended and in
     effect from time to time.

          "Commitment"  shall mean, with respect to each Lender,  the obligation
     of such  Lender to make a Loan to the  Borrower  on the  Closing  Date in a
     principal  amount not  exceeding  the amount set forth with respect to such
     Lender on the signature pages to this Agreement.

          "Consolidated EBITDA" shall mean, for KPP and its Subsidiaries for any
     period,  an amount equal to the sum of (i) Consolidated Net Income for such
     period plus (ii) to the extent  deducted in  determining  Consolidated  Net
     Income for such period, (A) Consolidated  Interest Expense,  (B) income tax
     expense,  (C)  depreciation  and  amortization  and (D) all other  non-cash
     charges, determined on a consolidated basis in accordance with GAAP in each
     case for such period.

          "Consolidated  Funded  Debt"  shall  mean  Funded  Debt of KPP and its
     consolidated Subsidiaries, other than Permitted Non-Recourse Debt.

          "Consolidated   Interest   Expense"   shall  mean,  for  KPP  and  its
     Subsidiaries  for  any  period  determined  on  a  consolidated   basis  in
     accordance  with GAAP, the sum of (i) total cash interest  expense,  (other
     than  in  respect  of  Permitted   Non-Recourse   Debt)  including  without
     limitation  the  interest  component  of any payments in respect of Capital
     Lease  Obligations  capitalized or expensed  during such period (whether or
     not actually paid during such period) plus (ii) the net amount  payable (or
     minus the net amount  receivable)  under  Hedging  Agreements  during  such
     period (whether or not actually paid or received during such period).

          "Consolidated  Net Income" shall mean, for any period,  the sum of (i)
     the net  income  (or  loss) of KPP and its  Subsidiaries  for  such  period
     determined  on a  consolidated  basis  in  accordance  with  GAAP,  but (A)
     excluding  therefrom  (to the extent  otherwise  included  therein) (1) any
     extraordinary  gains or losses,  (2) any gains attributable to write-ups of
     assets,  (3) any equity  interest  of KPP or any  Subsidiary  of KPP in the
     unremitted  earnings of any Person that is not a  Subsidiary  other than ST
     Linden, L.L.C., (4) any income of any Person other than KPP or the Borrower
     for  such  period  if  (x)  such  Person  has  any  Permitted  Non-Recourse
     Indebtedness   outstanding  owing  to  any  Person  other  than  KPP  or  a
     wholly-owned  subsidiary of KPP and (y) such income is not received in cash
     by KPP or the  Borrower,  as the case may be,  during such period,  and (B)
     including therein (to the extent not otherwise included therein) any income
     (or  loss) of any  Person or  attributable  to any  assets  if such  income
     accrued  prior to the date that (x) such Person  became a Subsidiary or was
     merged into or  consolidated  with KPP or any Subsidiary of KPP or (y) such
     assets  were  acquired by KPP or any  Subsidiary,  as the case may be, plus
     (ii)  the net  income  (or  loss) of the  General  Partner  in such  period
     attributable to the General Partner's interest in the Borrower,  determined
     in accordance  with GAAP, and (5) any gains or losses  attributable  to the
     termination of Hedging Agreements or the retirement of Indebtedness.

          "Consolidated  Net  Worth"  means as at any date the sum of (x)  total
     partners' capital of KPP and its consolidated Subsidiaries as at such date,
     excluding  the effects of any write-ups  after  December 31, 1999 of assets
     owned  by KPP  and its  consolidated  subsidiaries  as of the  date of this
     Agreement  plus  (y)  minority  interests  of the  General  Partner  in the
     Borrower, in each case determined in accordance with GAAP.

          "Constituent  Documents" shall mean, for any Person, the documents for
     its formation and organization,  which, for example,  (i) for a corporation
     are its  corporate  charter  and  bylaws,  (ii)  for a  partnership  is its
     partnership  agreement,  (iii)  for a  limited  liability  company  are its
     certificate of organization  and  regulations,  and (iv) for a trust is the
     trust agreement or indenture under which it is created.

          "Control" shall mean the power, directly or indirectly,  either to (i)
     vote  15% or  more of  securities  having  ordinary  voting  power  for the
     election of directors (or persons performing similar functions) of a Person
     or (ii) direct or cause the direction of the  management  and policies of a
     Person,  whether  through the ability to exercise voting power, by contract
     or otherwise.  The terms  "Controlled  by" and "under common  Control with"
     have meanings correlative thereto.

          "Credit  Exposure"  shall mean with  respect to any Lender at any time
     the outstanding principal amount of its Loan to Borrower.

          "Credit  Rating" of any Person shall mean any rating  published by S&P
     or Moody's for such Person's  senior,  unsecured  long-term debt securities
     without  third-party  credit  enhancement,  whether  or not any  such  debt
     securities are actually  outstanding,  and any rating assigned to any other
     debt security of such Person shall be disregarded.

          "Default"  shall mean any condition or event that,  with the giving of
     notice or the lapse of time or both, would constitute an Event of Default.

          "Default  Interest"  shall  have the  meaning  set  forth  in  Section
     2.10(b).

          "Diluted  Value"  shall mean,  with  respect to any assets of KPP, the
     Fair Market  Value of such assets,  and,  with respect to any assets of any
     other  Person,  the Fair  Market  Value of such  assets  multiplied  by the
     percentage  of the Equity  Interests  held directly or indirectly by KPP in
     such Person.

          "Disbursement"  shall  mean the  disbursement  by each  Lender  of the
     amount of its Commitment for the Bridge Loan on the Closing Date.

          "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, (ii) the declaration or payment of any
     dividend or  distribution  on or with  respect to those  Equity  Interests,
     (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.

          "Dollar(s)"  and the sign "$" shall  mean  lawful  money of the United
     States of America.

          "Environmental  Liability"  shall mean any  liability,  contingent  or
     otherwise  (including  any  liability for damages,  costs of  environmental
     investigation and remediation,  costs of administrative  oversight,  fines,
     natural  resource  damages,  penalties  or  indemnities),  of  KPP  or  any
     Subsidiary  directly  or  indirectly  resulting  from or based upon (i) any
     actual or alleged violation of any Environmental  Law, (ii) the generation,
     use,  handling,  transportation,  storage,  treatment  or  disposal  of any
     Hazardous Materials,  (iii) any actual or alleged exposure to any Hazardous
     Materials,  (iv)  the  Release  or  threatened  Release  of  any  Hazardous
     Materials or (v) any contract,  agreement or other  consensual  arrangement
     pursuant to which  liability  is assumed or imposed  with respect to any of
     the foregoing.

          "Equity Event" shall mean (i) the  contribution  in cash of capital to
     KPP or any Subsidiary of KPP by any Person other than KPP or a Wholly-Owned
     Subsidiary of KPP or any  Subsidiary of KPP, or (ii) any issuance of Equity
     Interests by KPP or any  Subsidiary  of KPP to any Person other than KPP or
     any Subsidiary of KPP or a Wholly-Owned Subsidiary of KPP.

          "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,  a membership  interest in such company,  (iii)
     with respect to a partnership,  a partnership interest in such partnership,
     and (iv) with  respect to any other  Person,  an  interest  in such  Person
     analogous to interests described in clauses (i) through (iii).

          "ERISA"  shall mean the  Employee  Retirement  Income  Security Act of
     1974, as amended from time to time, and any successor statute.

          "ERISA  Affiliate"  shall mean any trade or  business  (whether or not
     incorporated),  which,  together with KPP, is treated as a single  employer
     under  Section  414(b) or (c) of the Code or,  solely for the  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" shall mean (i) 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);
     (ii) 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; (iii) 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; (iv) the incurrence
     by KPP or any of its ERISA  Affiliates of any  liability  under Title IV of
     ERISA with respect to the  termination  of any Plan; (v) the receipt by KPP
     or any ERISA Affiliate from the PBGC or a plan  administrator  appointed by
     the PBGC of any notice  relating to an intention  to terminate  any Plan or
     Plans or to appoint a trustee to administer  any Plan;  (vi) the incurrence
     by KPP or any of its ERISA  Affiliates of any liability with respect to the
     withdrawal or partial  withdrawal from any Plan or  Multiemployer  Plan; or
     (vii) the  receipt  by KPP or any ERISA  Affiliate  of any  notice,  or the
     receipt by any  Multiemployer  Plan from KPP 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  refers to the fact
     that such Loan bears  interest at a rate  determined  by  reference  to the
     Adjusted LIBO Rate.

          "Eurodollar  Reserve  Percentage"  shall  mean  the  aggregate  of the
     maximum reserve percentages (including,  without limitation, any emergency,
     supplemental,  special or other marginal  reserves)  expressed as a decimal
     (rounded  upwards to the next  1/100th of 1%) in effect on any day to which
     the Administrative  Agent is subject with respect to the Adjusted LIBO Rate
     pursuant to  regulations  issued by the Board of  Governors  of the Federal
     Reserve  System (or any  Governmental  Authority  succeeding  to any of its
     principal  functions)  with  respect  to  eurocurrency  funding  (currently
     referred to as "eurocurrency  liabilities"  under 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  Regulation D. The Eurodollar  Reserve  Percentage  shall be adjusted
     automatically  on and as of the effective date of any change in any reserve
     percentage.

          "Event of Default" shall have the meaning set forth in Article IX.

          "Excluded  Affiliate" shall mean, for any Person (the "first Person"),
     any other  Person  (the  "second  Person")  in which the first  Person owns
     Equity Interests and where the second Person (i) has no Indebtedness  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.

          "Excluded  Subsidiary"  shall  mean any  Subsidiary  of KPP that is an
     Excluded Affiliate.

          "Excluded Taxes" shall mean 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,  (i)  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,
     (ii) any branch  profits  taxes  imposed by the United States of America or
     any similar tax  imposed by any other  jurisdiction  in which any Lender is
     located and (iii) in the case of a Foreign Lender, any withholding tax that
     (A) is imposed on amounts  payable to such Foreign  Lender at the time such
     Foreign Lender becomes a party to this Agreement, (B) is imposed on amounts
     payable  to such  Foreign  Lender  at any time  that  such  Foreign  Lender
     designates a new lending  office,  other than taxes that have accrued prior
     to the  designation  of such lending office that are otherwise not Excluded
     Taxes,  and (C) is attributable to such Foreign  Lender's failure to comply
     with Section 2.17(e).

          "Existing  Indebtedness"  shall  mean the  Indebtedness  described  on
     Schedule II of this Agreement.

          "Fair Market Value" shall mean, with respect to any Equity Interest or
     other property or asset,  the price  obtainable for such Equity Interest or
     other  property or asset in an  arm's-length  sale  between an informed and
     willing  purchaser  under no  compulsion  to purchase  and an informed  and
     willing seller under no compulsion to sell.

          "Federal  Funds  Rate"  shall  mean,  for any day,  the rate per annum
     (rounded  upwards,  if  necessary,  to the next 1/100th of 1%) equal to the
     weighted average of the rates on overnight Federal funds  transactions with
     member  banks of the  Federal  Reserve  System  arranged  by Federal  funds
     brokers,  as published by the Federal  Reserve Bank of New York on the next
     succeeding  Business  Day or if  such  rate  is not so  published  for  any
     Business  Day,  the  Federal  Funds Rate for such day shall be the  average
     rounded upwards, if necessary,  to the next 1/100th of 1% of the quotations
     for such day on such transactions received by the Administrative Agent from
     three  Federal  funds  brokers  of  recognized  standing  selected  by  the
     Administrative Agent.

          "Foreign  Lender"  shall mean any Lender  that is not a United  States
     person under Section 7701(a)(3) of the Code.

          "Foreign  Subsidiary"  shall  mean any  Subsidiary  of KPP that is not
     organized  under the law of the  United  States of  America or any state or
     territory thereof.

          "Funded  Debt" of any Person shall mean (i) all  Indebtedness  of such
     Person of the types  described in clauses (i) though (v) of the  definition
     of  "Indebtedness",  (ii) all  Guarantees  of such  Person  of the types of
     Indebtedness  described in clause (i) above and (iii) all obligations  that
     are secured (or for which the holder of any such obligation has an existing
     right,  contingent or otherwise,  to be so secured) by any Lien on property
     owned or acquired by such Person, in an amount limited to the lesser of (x)
     the unpaid amount of all of such  obligations from time to time outstanding
     and  (y)  the  Fair  Market  Value  of the  property  securing  all of such
     obligations,   liabilities  secured  (or  for  which  the  holder  of  such
     obligations  has an  existing  right,  contingent  or  otherwise,  to be so
     secured) by any Lien existing on property owned or acquired by such Person.

          "GAAP" shall mean  generally  accepted  accounting  principles  in the
     United  States  applied on a  consistent  basis and subject to the terms of
     Section 1.3.

          "General  Partner"  shall mean Kaneb Pipe Line Company LLC, a Delaware
     limited liability company.

          "Governmental  Authority"  shall  mean 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.

          "Granting Lender" shall have the meaning set forth in Section 11.4(e).

          "Guarantee"  of or by any  Person  (the  "guarantor")  shall  mean any
     obligation,  contingent or  otherwise,  of the  guarantor  guaranteeing  or
     having the economic  effect of guaranteeing  any  Indebtedness of any other
     Person  (the  "primary  obligor")  in  any  manner,   whether  directly  or
     indirectly,  and  including  any  obligation,  direct or  indirect,  of the
     guarantor  (i) to  purchase  or pay (or  advance  or  supply  funds for the
     purchase  or  payment  of)  such  Indebtedness  or other  obligation  or to
     purchase  (or to advance or supply  funds for the purchase of) any security
     for the payment thereof, (ii) 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, (iii) 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 (iv) as an account party in respect of
     any  letter  of credit or letter  of  guaranty  issued in  support  of such
     Indebtedness or obligation;  provided,  that the term "Guarantee" shall not
     include  endorsements  for collection or deposits in the ordinary course of
     business. The amount of any Guarantee shall be deemed to be an amount equal
     to the stated or determinable  amount of the primary  obligation in respect
     of which  Guarantee  is made or,  if not so  stated  or  determinable,  the
     maximum reasonably  anticipated liability in respect thereof (assuming such
     Person is required to perform  thereunder)  as determined by such Person in
     good  faith.  The  term  "Guarantee"  used  as a verb  has a  corresponding
     meaning.

          "Guaranteed  Obligations"  shall have the meaning set forth in Section
     8.01.

          "Guarantor" shall mean KPP and each party to the Subsidiary  Guarantee
     Agreement.

          "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.

          "Hedging  Agreements"  shall mean  interest  rate swap,  cap or collar
     agreements,  interest  rate  future  or  option  contracts,  currency  swap
     agreements,  currency future or option contracts,  commodity agreements and
     other  similar  agreements  or  arrangements  designed  to protect  against
     fluctuations in interest rates,  currency  values or commodity  values,  in
     each case to which KPP or any Subsidiary of KPP is a party.

          "Indebtedness" of any Person shall mean,  without  duplication (i) all
     obligations of such Person for borrowed money, (ii) all obligations of such
     Person evidenced by bonds, debentures,  notes or other similar instruments,
     (iii) all  obligations  of such Person in respect of the deferred  purchase
     price of property or services  (other than trade  payables  incurred in the
     ordinary course of business; provided, that for purposes of Section 9.1(f),
     trade  payables  overdue  by more than 120 days shall be  included  in this
     definition  except to the extent that any of such trade  payables are being
     disputed in good faith and by appropriate  measures),  (iv) all obligations
     of such  Person  under  any  conditional  sale  or  other  title  retention
     agreement(s)  relating to property acquired by such Person, (v) all Capital
     Lease  Obligations  of such  Person and all  obligations  in respect of the
     unpaid  principal  amount or component of all  obligations  under synthetic
     leases,  (vi) all obligations,  contingent or otherwise,  of such Person in
     respect of letters of credit,  acceptances or similar extensions of credit,
     (vii) all Guarantees of such Person of the type of  Indebtedness  described
     in clauses (i) through (vi) above, (viii) all Indebtedness of a third party
     secured by any Lien on property  owned by such Person,  whether or not such
     Indebtedness has been assumed by such Person,  (ix) all obligations of such
     Person,  contingent or otherwise, to purchase,  redeem, retire or otherwise
     acquire  for value any common  stock of such  Person,  and (x)  Off-Balance
     Sheet  Liabilities.  The  Indebtedness  of any  Person  shall  include  the
     Indebtedness  of any partnership or joint venture in which such Person is a
     general partner or a joint venturer, except to the extent that the terms of
     such Indebtedness provide that such Person is not liable therefor.

          "Indemnified Taxes" shall mean Taxes other than Excluded Taxes.

          "Indemnitee" shall have the meaning set forth in Section 11.3(b).

          "Interest   Coverage   Ratio"  shall  mean  for  any  period  of  four
     consecutive  fiscal quarters of KPP, the ratio of (i)  Consolidated  EBITDA
     for such period to (ii) Consolidated Interest Expense for such period.

          "Interest  Period" shall mean with respect to any  Eurodollar  Loan, a
     period of one, two, or three months; provided, that:

          (i)  the initial  Interest  Period for such Loan shall commence on the
               date of such  Loan or the date of any  conversion  from a Loan of
               another Type, and each Interest  Period  occurring  thereafter in
               respect of such Loan shall  commence on the day on which the next
               preceding Interest Period expires;

          (ii) if any Interest  Period would otherwise end on a day other than a
               Business Day, such Interest  Period shall be extended to the next
               succeeding  Business  Day,  unless  such  Business  Day  falls in
               another  calendar month, in which case such Interest Period would
               end on the next preceding Business Day;

          (iii)any  Interest  Period that begins on the last  Business  Day of a
               calendar  month or on a day for  which  there  is no  numerically
               corresponding  day in the  calendar  month  at  the  end of  such
               Interest  Period  shall  end on the  last  Business  Day of  such
               calendar month;

          (iv) no Interest Period may extend beyond the Maturity Date.

          "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 Interest or Indebtedness  issued by that Person or substantially all
     of the assets or a division or other business unit of that Person.

          "Investor Group" shall mean Kaneb Services, LLC and its Subsidiaries.

          "Lenders" shall have the meaning  assigned to such term in the opening
     paragraph of this Agreement.

          "LIBOR" shall mean, for any applicable Interest Period with respect to
     any  Eurodollar  Loan,  the rate per annum for  deposits  in Dollars  for a
     period equal to such Interest Period appearing on the display designated as
     Page 3750 on the Dow Jones  Markets  Service  (or such  other  page on that
     service  or  such  other  service   designated  by  the  British   Banker's
     Association for the display of such Association's Interest Settlement Rates
     for Dollar  deposits) as of 11:00 a.m.  (London,  England  time) on the day
     that is two Business Days prior to the first day of the Interest  Period or
     if such Page 3750 is  unavailable  for any  reason at such  time,  the rate
     which  appears  on the  Reuters  Screen  ISDA Page as of such date and such
     time;  provided,  that if the  Administrative  Agent  determines  that  the
     relevant  foregoing  sources  are  unavailable  for the  relevant  Interest
     Period,   LIBOR  shall  mean  the  rate  of  interest   determined  by  the
     Administrative  Agent to be the average (rounded upward,  if necessary,  to
     the  nearest  1/100th  of 1%) of the rates per annum at which  deposits  in
     Dollars are offered to the Administrative Agent two Business Days preceding
     the  first  day of such  Interest  Period by  leading  banks in the  London
     interbank  market as of 10:00 a.m.  for  delivery  on the first day of such
     Interest Period,  for the number of days comprised therein and in an amount
     comparable  to the  amount  of the  Eurodollar  Loan of the  Administrative
     Agent.

          "Lien" shall mean any mortgage,  pledge, security interest,  financing
     statement,   lien   (statutory   or   otherwise),    charge,   encumbrance,
     hypothecation, assignment, deposit arrangement, or other arrangement having
     the practical effect of the foregoing or any preference,  priority or other
     security  agreement  or  preferential  arrangement  of any  kind or  nature
     whatsoever  (including  any  conditional  sale  or  other  title  retention
     agreement and any capital  lease having the same economic  effect as any of
     the foregoing).

          "Loan" or "Loans" shall mean, individually and collectively,  the term
     loans, or portions  thereof,  made by the Lenders to the Borrower under the
     Commitments,  which may either be Base Rate Loans or Eurodollar Loans, or a
     combination thereof, and all of which, collectively, in the aggregate shall
     constitute the Bridge Loan.

          "Loan Documents" shall mean,  collectively,  this Agreement, the Notes
     (if any),  the  Subsidiary  Guarantee  Agreement,  the  funds  disbursement
     instructions    for    the    Bridge    Loan    and    all    Notices    of
     Conversion/Continuation.

          "Loan  Parties" shall mean the General  Partner,  the Borrower and the
     Guarantors.

          "Material  Adverse Effect" shall mean, with respect to any event, act,
     condition  or  occurrence  of  whatever   nature   (including  any  adverse
     determination in any litigation, arbitration, or governmental investigation
     or proceeding),  whether  singularly or in conjunction with any other event
     or events, act or acts, condition or conditions,  occurrence or occurrences
     whether or not related, a material adverse change in, or a material adverse
     effect on, (i) the business,  results of operations,  financial  condition,
     assets,  liabilities  or  prospects  of  the  Borrower  or of KPP  and  its
     Subsidiaries  taken  as a  whole,  (ii) the  ability  of any Loan  Party to
     perform any of its obligations  under the Loan Documents,  (iii) the rights
     and remedies of the  Administrative  Agent and the Lenders under any of the
     Loan Documents or (iv) the legality,  validity or  enforceability of any of
     the Loan Documents.

          "Material Indebtedness" shall mean Indebtedness (other than the Loans)
     or obligations  in respect of one or more Hedging  Agreements of any one or
     more of KPP and its Subsidiaries in an aggregate principal amount exceeding
     $5,000,000,  including without limitation  Indebtedness  incurred under the
     Revolving   Credit   Agreement.   For  purposes  of  determining   Material
     Indebtedness,  the  "principal  amount"  of the  obligations  of KPP or any
     Subsidiary of KPP in respect to any Hedging  Agreement at any time shall be
     the maximum aggregate amount (giving effect to any netting agreements) that
     KPP or such Subsidiary  would be required to pay if such Hedging  Agreement
     were terminated at such time.

          "Maturity  Date"  shall mean the  earliest  of (i) the date six months
     from the date of this  Agreement,  and (ii) the date on which  all  amounts
     outstanding  under this Agreement have been declared or have  automatically
     become due and payable (whether by acceleration or otherwise).

          "Maximum Rate" shall have the meaning set forth in Section 11.12.

          "Moody's" shall mean Moody's Investors Service, Inc.

          "Multiemployer  Plan"  shall  have the  meaning  set forth in  Section
     4001(a)(3) of ERISA.

          "Net Cash Proceeds" shall mean, with respect to any Asset Disposition,
     Recovery Event, Additional Debt or Equity Event (each, for purposes of this
     definition, a "transaction"), the aggregate amount of cash received, as the
     case may be, by (x) KPP or the  Borrower or (y) any  Significant  Affiliate
     and legally  available to be distributed to KPP or the Borrower in the form
     of dividends or distributions in connection with such transaction after, in
     each  case,  deducting  therefrom  (i)  payments  made  in  respect  of any
     Indebtedness  to the extent  that such  payments  are  required  to be made
     (other than under the Loan  Documents) as a result of or in connection with
     such  transaction  by  applicable  law or  the  terms  of  any  contractual
     agreement  relating to such  Indebtedness,  (ii)  reasonable  and customary
     transaction  costs  (which in the case of any  Recovery  Event may  include
     litigation  costs and expenses  and other costs and expenses of  collecting
     payments and  settlements  therefrom) that are paid or reserved for payment
     (A)  to a  Person  that  is  not  an  Affiliate  of KPP or (B) to KPP or an
     Affiliate of KPP to reimburse  such Person for payments made by such Person
     to another Person that is not KPP or an Affiliate of KPP in respect of such
     transaction  costs,  (iii) the amount of taxes paid or reserved for payment
     by KPP or such  Significant  Affiliate in connection with or as a result of
     such transaction and (iv) any Reinvestment Amount.

          "Non-Recourse"  shall mean,  with  respect to any Person as applied to
     any Indebtedness (i) that such Person is not directly or indirectly  liable
     to make any  payments  with  respect to such  Indebtedness,  (ii) that such
     Indebtedness (or portion thereof) does not constitute  Indebtedness of such
     Person  other  than to the  extent  of  recourse  to such  Person's  Equity
     Interests in the Person primarily  incurring such Debt (or any shareholder,
     partner,  member  or  participant  of such  Person)  and  that  (iii)  such
     Indebtedness  (or portion thereof) is not secured by a Lien on any asset of
     such  Person  other  than such  Person's  Equity  Interests  in the  Person
     primarily incurring such Indebtedness or any shareholder,  partner, member,
     participant or other owner,  directly or indirectly,  of such Person or the
     Person the obligations of which were guaranteed.

          "Note"  shall mean a promissory  note of the  Borrower  payable to the
     order of a  requesting  Lender in the  principal  amount  of such  Lender's
     Commitment, in substantially the form of Exhibit A.

          "Notice of Conversion/Continuation" shall mean the notice given by the
     Borrower  to the  Administrative  Agent in  respect  of the  conversion  or
     continuation of an outstanding Loan as provided in Section 2.5(b) hereof.

          "Obligations"  shall mean all  amounts  owing by the  Borrower  to the
     Administrative  Agent or any Lender  pursuant to or in connection with this
     Agreement or any other Loan Document,  including  without  limitation,  all
     principal,  interest  (including any interest  accruing 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), all reimbursement obligations, fees, expenses, indemnification
     and  reimbursement  payments,  costs and expenses  (including  all fees and
     expenses  of counsel to the  Administrative  Agent and any Lender  incurred
     pursuant to this Agreement or any other Loan  Document),  whether direct or
     indirect, absolute or contingent,  liquidated or unliquidated, now existing
     or hereafter arising hereunder or thereunder,  and all obligations  arising
     under Hedging Agreements  relating to the foregoing to the extent permitted
     hereunder,  and all obligations and liabilities incurred in connection with
     collecting  and  enforcing  the  foregoing,  together  with  all  renewals,
     extensions, modifications or refinancings thereof.

          "Off-Balance  Sheet  Liabilities"  of any  Person  shall  mean (i) any
     repurchase  obligation or liability of such Person with respect to accounts
     or notes receivable sold by such Person,  (ii) any liability of such Person
     under any sale and leaseback transactions that do not create a liability on
     the balance  sheet of such  Person,  or (iii) any  obligation  arising with
     respect to any other transaction  which is the functional  equivalent of or
     takes the place of  borrowing  but that does not  constitute a liability on
     the balance sheet of such Person.

          "Other  Taxes"  shall  mean 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 or
     any other Loan Document.

          "Participant" shall have the meaning set forth in Section 11.4(c).

          "Payment  Office"  shall mean the office of the  Administrative  Agent
     located at 303 Peachtree  Street,  Atlanta,  Georgia  30308,  or such other
     location  as to which the  Administrative  Agent  shall have given  written
     notice to the Borrower and the other Lenders.

          "PBGC" shall mean the Pension Benefit Guaranty Corporation referred to
     and  defined  in  ERISA,  and  any  successor  entity  performing   similar
     functions.

          "Permitted Encumbrances" shall mean

          (i)  Liens  imposed  by law for  taxes  not yet due or which are being
               contested  in good  faith  by  appropriate  proceedings  and with
               respect  to which  adequate  reserves  are  being  maintained  in
               accordance with GAAP;

          (ii) statutory Liens of landlords and Liens of carriers, warehousemen,
               mechanics,  materialmen and other Liens imposed by law created in
               the ordinary  course of business for amounts not yet due or which
               are being contested in good faith by appropriate  proceedings and
               with respect to which adequate  reserves are being  maintained in
               accordance with GAAP;

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

          (iv) 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;

          (v)  easements,   zoning   restrictions,   rights-of-way  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  materially  interfere  with the  ordinary
               conduct of business of the Borrower and its Subsidiaries taken as
               a whole; and

          (vi) Liens  granted  in  favor  of the  Administrative  Agent  for the
               benefit of the Lenders.

     "Permitted Investments" shall mean:

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

          (ii) commercial  paper  having  the  highest  rating,  at the  time of
               acquisition  thereof,  of  S&P or  Moody's  and  in  either  case
               maturing within six months from the date of acquisition thereof;

          (iii)certificates of deposit,  bankers'  acceptances and time deposits
               maturing  within  180  days of 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 or
               any state  thereof  which has a combined  capital and surplus and
               undivided profits of not less than $500,000,000;

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

          (v)  mutual funds investing solely in any one or more of the Permitted
               Investments described in clauses (i) through (iv) above.

          "Permitted  Non-Recourse  Debt" shall mean  Indebtedness of any Person
     (other than any Loan Party) that is  Non-Recourse  to any Loan Party and is
     used by such Person to acquire,  construct,  develop  and/or operate assets
     not owned by KPP or any  Significant  Affiliate as of the date hereof or to
     refinance Permitted Non-Recourse Debt.

          "Person" shall mean any individual,  partnership,  firm,  corporation,
     association,  joint  venture,  limited  liability  company,  trust or other
     entity, or any Governmental Authority.

          "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
     KPP or any ERISA  Affiliate  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.

          "Prior  Acquisition"  shall mean the  acquisition  of Burns  Philp and
     Co.'s Australian and New Zealand terminals.

          "Prior Acquisition  Documents" shall mean the asset purchase agreement
     executed by the  Borrower  and Burns Philp and Co. in  connection  with the
     Prior Acquisition.

          "Pro Rata Share"  shall mean with respect to any Lender at any time, a
     percentage,  the numerator of which shall be such Lender's  Credit Exposure
     and the  denominator  of which shall be the sum of the Credit  Exposures of
     all Lenders.

          "Recovery Event" shall mean any settlement of or payment in respect of
     any property or casualty  insurance  claim or any  condemnation  proceeding
     relating to any property or asset of KPP or any Significant Affiliate,  the
     Diluted  Value of which  settlement  or payment,  when added to the Diluted
     Value  of all  such  settlements  and  payments  during  the  Term  of this
     Agreement, exceeds $10,000,000.

          "Reference Ratings" shall mean the Credit Ratings of the Borrower.

          "Regulation  D" shall mean  Regulation  D of the Board of Governors of
     the Federal Reserve System, as the same may be in effect from time to time,
     and any successor regulations.

          "Reinvestment  Amount" means,  with respect to any Recovery Event, the
     amount  of cash  received  by KPP or any  Significant  Affiliate  that  the
     Borrower,  by written notice  delivered to the  Administrative  Agent on or
     prior to the date 10 Business Days following receipt of such cash by KPP or
     such Significant  Affiliate,  certifies will be reinvested,  and within 180
     days of receipt of such cash is in fact  reinvested,  in assets to replace,
     restore or  refurbish  the assets  that were the  subject of such  Recovery
     Event.

          "Related  Parties" shall mean,  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.

          "Release"  means  any  release,  spill,  emission,  leaking,  dumping,
     injection,  pouring, deposit, disposal,  discharge,  dispersal, leaching or
     migration  into the  environment  (including  ambient air,  surface  water,
     groundwater,  land surface or  subsurface  strata) or within any  building,
     structure, facility or fixture.

          "Required  Lenders" shall mean, at any time, Lenders holding more than
     51% of the aggregate outstanding Loans.

          "Responsible  Officer" shall mean, with respect to any Person,  any of
     the president,  the chief executive  officer,  the chief operating officer,
     the chief  financial  officer,  the  treasurer or a vice  president of such
     Person or such other  representative of such Person as may be designated in
     writing by any one of the foregoing with the consent of the  Administrative
     Agent.

          "Restricted Payment" shall have the meaning set forth in Section 7.5.

          "Revolving  Borrowings"  shall have the  meaning  assigned to the term
     "Borrowings" under the Revolving Credit Agreement.

          "Revolving  Credit Agreement" shall mean that certain Revolving Credit
     Agreement,  dated as of  December  28,  2000,  as amended  by that  certain
     Amendment No. 1 to Revolving  Credit  Agreement,  dated as of July 31, 2002
     and Amendment  No. 2 to Revolving  Credit  Agreement,  dated as of the date
     hereof, by and among the Borrower,  KPP, the lenders party thereto, and the
     Administrative Agent.

          "Revolving  Credit  Facility" shall mean the revolving credit facility
     provided under the Revolving Credit Agreement.

          "S&P" shall mean Standard & Poor's  Ratings  Group,  a division of The
     McGraw-Hill Companies, Inc.

          "Sellers" shall mean Koch Pipeline  Company,  L.P., a Delaware limited
     partnership,  and Koch Fertilizer  Storage and Terminal Company, a Nebraska
     corporation.

          "Senior Notes Indenture" shall mean that certain  Indenture,  dated on
     or about  February 21, 2002,  between the Borrower and JPMorgan Chase Bank,
     as trustee,  with respect to the issuance of the  Borrower's  7.750% Senior
     Unsecured Notes due 2012.

          "Significant  Affiliate"  shall mean each  Person  (i) in which  KPP's
     direct and indirect  Investments in such Person constitute more than 10% of
     the total assets of KPP and its  consolidated  Subsidiaries,  (ii) in which
     KPP's and its Subsidiaries'  share of the total assets (after  intercompany
     eliminations)  of such Person exceed 10% of the total assets of KPP and its
     consolidated  Subsidiaries,  or (iii) in which  the  equity  of KPP and its
     Subsidiaries in the income from continuing operations of such Person before
     income  taxes,  extraordinary  items and  cumulative  effects of changes in
     accounting   principles   exceeds  10%  of  such  income  of  KPP  and  its
     consolidated Subsidiaries.

          "Significant  Subsidiary"  means  any  Subsidiary  of  KPP  that  is a
     Significant Affiliate.

          "SPV" shall have the meaning set forth in Section 11.4(e).

          "Subsidiary"  shall mean,  with respect to any Person (the  "parent"),
     any corporation,  partnership,  joint venture,  limited liability  company,
     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,  partnership,  joint venture,
     limited  liability  company,  association  or  other  entity  (i) 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 (ii) 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  Guarantee  Agreement" shall mean the Subsidiary Guarantee
     Agreement,  substantially  in the form of Exhibit C, made by the Guarantors
     (other  than KPP) in favor of the  Administrative  Agent for the benefit of
     the Lenders.

          "Taxes"  shall  mean any and all  present  or  future  taxes,  levies,
     imposts,  duties,  deductions,  charges  or  withholdings  imposed  by  any
     Governmental Authority.

          "Term"  shall mean the period  from the Closing  Date to the  Maturity
     Date.

          "Ticking Margin" shall mean (i) 0% per annum for the period commencing
     on the Closing  Date through and  including  the 90th day after the Closing
     Date,  and (ii) 0.25% per annum for the period  commencing  on the 91st day
     after the Closing Date and continuing thereafter.

          "Type",  when used in reference to a Loan,  shall refer to whether the
     rate of interest on such Loan is  determined  by  reference to the Adjusted
     LIBO Rate or the Base Rate.

          "UK Facility" shall mean the Credit Agreement, dated as of January 29,
     1999, among the Borrower and ST Services,  Ltd., as borrowers, and SunTrust
     Bank, as lender, as amended, modified and supplemented from time to time.

          "Wholly-Owned  Subsidiary" shall mean any Subsidiary of a Person,  all
     of the issued and  outstanding  Equity  Interests  of which are directly or
     indirectly  owned  by  such  Person,  excluding  (i)  any  general  partner
     interests  owned by the General  Partner in any such  Subsidiary  that is a
     partnership  and (ii) any directors'  qualifying  shares or similar type of
     Equity Interests, as applicable.

          "Withdrawal Liability" shall mean 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 1.2. Classifications of Loans.

     For purposes of this Agreement,  Loans may be classified and referred to by
Type (e.g., a "Eurodollar Loan" or "Base Rate Loan").

Section 1.3. Accounting Terms and Determination.

     Unless  otherwise  defined or specified  herein,  all accounting terms used
herein shall be interpreted,  all accounting  determinations  hereunder shall be
made, and all financial  statements  required to be delivered hereunder shall be
prepared,  in accordance with GAAP as in effect from time to time,  applied on a
basis consistent  (except for such changes approved by KPP's independent  public
accountants) with the most recent audited  consolidated  financial  statement of
KPP delivered  pursuant to Section  5.1(a);  provided,  that if KPP notifies the
Administrative  Agent  that KPP  wishes to amend any  covenant  in Article VI to
eliminate the effect of any change in GAAP on the operation of such covenant (or
if the Administrative Agent notifies KPP that the Required Lenders wish to amend
Article VI for such purpose),  then KPP's compliance with such covenant shall be
determined on the basis of GAAP in effect immediately before the relevant change
in GAAP became effective, until either such notice is withdrawn or such covenant
is amended in a manner satisfactory to KPP and the Required Lenders.

Section 1.4. 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".  In the  computation  of periods of time
from a specified date to a later specified date, the word "from" means "from and
including"  and the word  "to"  means "to but  excluding".  Unless  the  context
requires  otherwise  (i)  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 it was originally  executed or as it
may from time to time be amended, supplemented or otherwise modified (subject to
any  restrictions on such  amendments,  supplements or  modifications  set forth
herein),  (ii) any reference  herein to any Person shall be construed to include
such  Person's  successors  and  permitted  assigns,  (iii) the words  "hereof",
"herein" and "hereunder" and words of similar import shall be construed to refer
to this Agreement as a whole and not to any particular  provision  hereof,  (iv)
all references to Articles,  Sections, Exhibits and Schedules shall be construed
to refer to Articles, Sections, Exhibits and Schedules to this Agreement and (v)
all references to a specific time shall be construed to refer to the time in the
city and state of the Administrative  Agent's principal office, unless otherwise
indicated.

                 Article II AMOUNT AND TERMS OF THE COMMITMENTS

Section 2.1. [Intentionally Omitted]

Section 2.2. The Bridge Loan.

     Subject to the terms and conditions set forth herein, each Lender severally
agrees to make a single Loan to the  Borrower  (each a "Loan" and  collectively,
the "Loans" or the "Bridge Loan") on the Closing Date in a principal  amount not
to exceed each such  Lender's  Commitment;  provided,  however,  that if for any
reason (other than the failure of a Lender to make such Loan) the amount of such
Lender's  Commitment  is not drawn on the  Closing  Date,  the  undrawn  portion
thereof shall be cancelled.  The execution and delivery of this Agreement by the
Borrower and the  satisfaction of all conditions  precedent set forth in Section
3.1  hereof  shall be deemed to  constitute  the  Borrower's  request  to borrow
hereunder on the Closing Date.

Section 2.3. Fees.

          (a)  The  Borrower  shall  pay to the  Administrative  Agent,  for the
     ratable benefit of each Lender,  a takeout fee in the amount of $1,170,000,
     which such  takeout fee shall be fully  earned on the Closing  Date and due
     and  payable in full on the earlier of (i) the  Maturity  Date and (ii) the
     date on which the Bridge Loan is repaid in full.

          (b)  The  Borrower  shall  pay to the  Administrative  Agent,  for the
     ratable  benefit of each Lender,  a  "no-equity  fee" in an amount equal to
     $375,000,  which  such  no-equity  fee shall be fully  earned,  and due and
     payable on November 14, 2002 if KPP does not raise at least  $50,000,000 of
     equity  through  the  issuance  of  Equity   Interests  during  the  period
     commencing on November 4, 2002 and ending November 14, 2002.

Section 2.4. Funding of the Bridge Loan.

          (a)  Each  Lender  will  make  available  each  Loan  to be made by it
     hereunder on the Closing  Date by wire  transfer in  immediately  available
     funds by 11:00 a.m. to the Administrative  Agent at the Payment Office. The
     Administrative  Agent will make such Loans  available  to the  Borrower  by
     promptly crediting the amounts that it receives, in like funds by the close
     of business on the Closing Date,  to an account  maintained by the Borrower
     with the  Administrative  Agent or at the Borrower's option, by effecting a
     wire  transfer of such amounts to an account  designated by the Borrower to
     the Administrative Agent.

          (b) All  Loans  shall  be made by the  Lenders  on the  basis of their
     respective  Commitment.  No Lender shall be responsible  for any default by
     any other  Lender in its  obligations  hereunder,  and each Lender shall be
     obligated to make its Loans provided to be made by it hereunder, regardless
     of the failure of any other Lender to make its Loans hereunder.

Section 2.5. Interest Elections.

          (a) The Bridge Loan initially  shall be a Base Rate Loan.  Thereafter,
     the Borrower may elect to convert the Bridge Loan, or any portion  thereof,
     into a  different  Type or to  continue  such  Loan,  and in the  case of a
     Eurodollar  Loan, may elect Interest Periods  therefor,  all as provided in
     this  Section.  The  Borrower may elect  different  options with respect to
     different  portions  of the Bridge  Loan,  in which case each such  portion
     shall be allocated ratably among the Lenders according to each Lender's Pro
     Rata  Share;  provided,  however,  that  there  shall be no more than three
     Eurodollar Loans outstanding at any given time.

          (b) To make an election  pursuant to this Section,  the Borrower shall
     give the  Administrative  Agent prior written notice (or telephonic  notice
     promptly   confirmed   in   writing)   of   each   Loan   (a   "Notice   of
     Conversion/Continuation") that is to be converted or continued, as the case
     may be, (x) prior to 10:00 a.m.  one  Business  Day prior to the  requested
     date of a  conversion  into a Base Rate  Loan and (y)  prior to 11:00  a.m.
     three  Business  Days  prior  to a  continuation  of or  conversion  into a
     Eurodollar  Loan.  Each  such  Notice of  Conversion/Continuation  shall be
     irrevocable  and shall  specify (i) the amount of the portion of the Bridge
     Loan to which  such  Notice  of  Continuation/Conversion  applies  and,  if
     different  options are being  elected with  respect to  different  portions
     thereof,  the amount of the  portions  thereof  that are to be allocated to
     each  Loan (in which  case the  information  to be  specified  pursuant  to
     clauses  (iii)  and  (iv)  shall be  specified  for  each  Loan);  (ii) the
     effective   date  of  the  election   made   pursuant  to  such  Notice  of
     Continuation/Conversion,  which shall be a Business Day,  (iii) whether the
     Loan is to be a Base Rate Loan or a Eurodollar  Loan;  and (iv) if the Loan
     is to be a Eurodollar  Loan, the Interest Period  applicable  thereto after
     giving effect to such election, which shall be a period contemplated by the
     definition    of    "Interest    Period".    If   any   such    Notice   of
     Continuation/Conversion  requests a Eurodollar Loan but does not specify an
     Interest Period,  the Borrower shall be deemed to have selected an Interest
     Period of one month.

          (c) If, on the  expiration  of any  Interest  Period in respect of any
     Eurodollar  Loan,  the  Borrower  shall have  failed to deliver a Notice of
     Conversion/  Continuation,  then,  unless  such Loan is repaid as  provided
     herein,  the Borrower  shall be deemed to have elected to convert such Loan
     to a Base Rate Loan.  No Loan may be converted  into,  or  continued  as, a
     Eurodollar  Loan if a Default or an Event of Default  has  occurred  and is
     continuing,  unless the Administrative  Agent and each of the Lenders shall
     have otherwise  consented in writing. No conversion of any Eurodollar Loans
     shall be permitted except on the last day of the Interest Period in respect
     thereof.

          (d)  Upon  receipt  of  any  Notice  of  Conversion/Continuation,  the
     Administrative  Agent  shall  promptly  notify  each  Lender of the details
     thereof and of such Lender's portion of each such Loan.

Section 2.6. [Intentionally Omitted]

Section 2.7. Repayment of the Bridge Loan.

     The  outstanding  principal  amount  of the  Bridge  Loan  shall be due and
payable in full  (together  with  accrued  and unpaid  interest  thereon) on the
Maturity Date.

Section 2.8. Evidence of Indebtedness.

          (a) Each Lender shall  maintain in accordance  with its usual practice
     appropriate  records  evidencing the  indebtedness  of the Borrower to such
     Lender  resulting  from each Loan  made by such  Lender  from time to time,
     including the amounts of principal and interest payable thereon and paid to
     such  Lender  from time to time under this  Agreement.  The  Administrative
     Agent shall maintain appropriate records in which shall be recorded (i) the
     Commitment of each Lender,  (ii) the amount of each Loan made  hereunder by
     each Lender,  the Type thereof and the Interest Period applicable  thereto,
     (iii) the date of each  continuation  thereof pursuant to Section 2.5, (iv)
     the date of each  conversion  of all or a portion  thereof to another  Type
     pursuant  to  Section  2.5,  (v) the date and  amount of any  principal  or
     interest  due and payable or to become due and payable from the Borrower to
     each Lender  hereunder  in respect of such Loans and (vi) both the date and
     amount of any sum received by the  Administrative  Agent hereunder from the
     Borrower in respect of the Loans and each Lender's Pro Rata Share  thereof.
     The  entries  made in such  records  shall be prima  facie  evidence of the
     existence and amounts of the obligations of the Borrower therein  recorded;
     provided,  that the  failure or delay of any  Lender or the  Administrative
     Agent in  maintaining  or making  entries into any such record or any error
     therein  shall not in any manner  affect the  obligation of the Borrower to
     repay the Loans (both principal and unpaid accrued interest) of such Lender
     in accordance with the terms of this Agreement.

          (b) At the request of any Lender at any time, the Borrower agrees that
     it will execute and deliver to such Lender a Note,  payable to the order of
     such Lender.

Section 2.9. Prepayments.

          (a) The  Borrower  shall  have the  right at any time and from time to
     time to prepay the Bridge  Loan,  in whole or in part,  without  premium or
     penalty,  by  giving  irrevocable  written  notice  (or  telephonic  notice
     promptly  confirmed in writing) to the  Administrative  Agent no later than
     (i) in the case of prepayment of any Eurodollar  Loan,  11:00 a.m. not less
     than three Business Days prior to any such prepayment, and (ii) in the case
     of any  prepayment  of any Base Rate Loan,  not less than one  Business Day
     prior to the date of such prepayment. Each such notice shall be irrevocable
     and shall  specify the proposed date of such  prepayment  and the principal
     amount of each Loan or portion  thereof to be prepaid.  Upon receipt of any
     such notice, the  Administrative  Agent shall promptly notify each affected
     Lender of the contents  thereof and of such  Lender's Pro Rata Share of any
     such prepayment. If such notice is given, the aggregate amount specified in
     such notice shall be due and payable on the date designated in such notice,
     together  with  accrued  interest  to such date on the amount so prepaid in
     accordance  with Section  2.10(c);  provided,  that if a Eurodollar Loan is
     prepaid on a date other than the last day of an Interest Period  applicable
     thereto,  the  Borrower  shall also pay all  amounts  required  pursuant to
     Section 2.16.  Prepayments  shall be in minimum  amounts of $10,000,000 and
     integral multiples of $1,000,000.

          (b) The Borrower shall promptly notify the  Administrative  Agent upon
     the receipt of any Net Cash  Proceeds  from the issuance of any  Additional
     Debt by KPP, the Borrower or any Significant Affiliate or the occurrence of
     any Equity Event,  and no later than the Business Day following the date of
     receipt thereof,  the Borrower shall prepay the Bridge Loan,  together with
     payment of all  accrued and unpaid  interest,  fees,  expenses  and amounts
     required pursuant to Section 2.16 of this Agreement, in an aggregate amount
     equal  to 100%  (without  duplication)  of such  Net  Cash  Proceeds,  such
     payments  to be  applied  (i) first,  to the  payment  of  interest,  fees,
     expenses  and such  other  amounts,  pro rata to the  Lenders  based on the
     amount of such interest,  fees,  expenses and other amounts  outstanding at
     such time and (ii) second to the payment of  principal  on the Bridge Loan,
     pro rata to the Lenders based on their respective Pro Rata Shares.

Section 2.10. Interest on Loans.

          (a) The Borrower shall pay interest on each Base Rate Loan at the Base
     Rate  in  effect  from  time to time  and on  each  Eurodollar  Loan at the
     Adjusted LIBO Rate for the  applicable  Interest  Period in effect for such
     Loan,  plus,  in each case,  the  Applicable  Margin in effect from time to
     time.

          (b) If an Event of Default  has  occurred  and is  continuing,  at the
     option of the Required Lenders,  the Borrower shall pay interest  ("Default
     Interest")  with  respect  to all  Eurodollar  Loans at the rate  otherwise
     applicable for the  then-current  Interest Period plus an additional 2% per
     annum until the last day of such Interest Period, and thereafter,  and with
     respect to all Base Rate Loans and all other  Obligations  hereunder (other
     than Loans),  at the rate in effect for Base Rate Loans, plus an additional
     2% per annum.  If the Bridge Loan is not paid in full on the Maturity Date,
     interest  shall accrue on the  outstanding  balance of the Bridge Loan from
     and after  such date at a per annum  interest  rate  equal to the Base Rate
     plus the Applicable Margin plus 4% per annum.

          (c)  Interest on the  principal  amount of all Loans shall accrue from
     and including the date such Loans are made to but excluding the date of any
     repayment  thereof.  Interest on all  outstanding  Base Rate Loans shall be
     payable  quarterly in arrears on December 31, 2002,  March 31, 2003, and on
     the Maturity Date.  Interest on all outstanding  Eurodollar  Loans shall be
     payable on the last day of each Interest Period applicable thereto, and, in
     the case of any  Eurodollar  Loans  having an Interest  Period in excess of
     three months, on each day that occurs every three months, after the initial
     date of such Interest  Period,  and on the Maturity  Date.  Interest on any
     Loan that is  converted  into a Loan of  another  Type or that is repaid or
     prepaid  shall be payable on the date of such  conversion or on the date of
     any such repayment or prepayment (on the amount repaid or prepaid) thereof.
     All Default Interest shall be payable on demand.

          (d) The  Administrative  Agent  shall  determine  each  interest  rate
     applicable to the Loans  hereunder and shall  promptly  notify the Borrower
     and  the  Lenders  of such  rate  in  writing  (or by  telephone,  promptly
     confirmed in  writing).  Any such  determination  shall be  conclusive  and
     binding for all purposes, absent manifest error.

Section 2.11. [Intentionally Omitted]

Section 2.12. Computation of Interest.

     Interest based on the Administrative  Agent's prime rate pursuant to clause
(i) of the definition of "Base Rate" shall be computed on the basis of a year of
365 days (or 366 days in a leap  year)  and paid for the  actual  number of days
elapsed (including the first day but excluding the last day). All other interest
shall be  computed  on the  basis of a year of 360 days and paid for the  actual
number of days elapsed (including the first day but excluding the last day).

Section 2.13. Inability to Determine Interest Rates.

     If prior to the  commencement  of any  Interest  Period for any  Eurodollar
Loan, (i) the  Administrative  Agent shall have determined (which  determination
shall  be  conclusive  and  binding  upon  the  Borrower)  that,  by  reason  of
circumstances  affecting the relevant  interbank  market,  adequate means do not
exist  for   ascertaining   LIBOR  for  such  Interest   Period,   or  (ii)  the
Administrative  Agent shall have received notice from the Required  Lenders that
the Adjusted LIBO Rate does not  adequately  and fairly reflect the cost to such
Lenders (or Lender, as the case may be) of making,  funding or maintaining their
Eurodollar Loans for such Interest Period, the  Administrative  Agent shall give
written  notice (or  telephonic  notice,  promptly  confirmed in writing) to the
Borrower  and to the  Lenders  as  soon as  practicable  thereafter.  Until  the
Administrative  Agent  shall  notify  the  Borrower  and the  Lenders  that  the
circumstances giving rise to such notice no longer exist, (i) the obligations of
the Lenders to make Eurodollar Loans or to continue or convert outstanding Loans
as or into Eurodollar  Loans shall be suspended and (ii) all such affected Loans
shall be  converted  into  Base Rate  Loans on the last day of the then  current
Interest  Period  applicable  thereto unless the Borrower  prepays such Loans in
accordance with this Agreement.

Section 2.14. Illegality.

     If any Change in Law shall make it unlawful or impossible for any Lender to
make,  maintain or fund any Eurodollar  Loan and such Lender shall so notify the
Administrative  Agent,  the  Administrative  Agent  shall  promptly  give notice
thereof to the  Borrower  and the other  Lenders,  whereupon  until such  Lender
notifies the Administrative Agent and the Borrower that the circumstances giving
rise to such  suspension  no longer  exist,  the  obligation  of such  Lender to
continue or convert  outstanding  Loans as or into  Eurodollar  Loans,  shall be
suspended, and any outstanding Eurodollar Loan shall be converted to a Base Rate
Loan either (i) on the last day of the then current  Interest Period  applicable
to such  Eurodollar  Loan if such Lender may lawfully  continue to maintain such
Loan to such date or (ii) immediately if such Lender shall determine that it may
not  lawfully   continue  to  maintain  such   Eurodollar  Loan  to  such  date.
Notwithstanding  the foregoing,  the affected Lender shall, prior to giving such
notice to the  Administrative  Agent,  designate a different  Applicable Lending
Office if such  designation  would  avoid the need for giving such notice and if
such designation  would not otherwise be  disadvantageous  to such Lender in the
good faith exercise of its discretion.

Section 2.15. Increased Costs.

          (a) If any Change in Law shall (i) impose,  modify or deem  applicable
     any reserve,  special deposit or similar  requirement that is not otherwise
     included in the  determination of the Adjusted LIBO Rate hereunder  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 Eurodollar  interbank market any
     other  condition  affecting this Agreement or any Eurodollar  Loans made by
     such  Lender,  and the result of the  foregoing  is to increase the cost to
     such Lender of converting into, continuing or maintaining a Eurodollar Loan
     or to reduce the amount  received or  receivable  by such Lender  hereunder
     (whether of  principal,  interest or any other  amount),  then the Borrower
     shall  promptly pay, upon written  notice from and demand by such Lender on
     the Borrower  (with a copy of such notice and demand to the  Administrative
     Agent), to the Administrative Agent for the account of such Lender,  within
     five  Business  Days after the date of such notice and  demand,  additional
     amount or amounts  sufficient to compensate such Lender for such additional
     costs incurred or reduction suffered.

          (b) If any Lender or the Issuing Bank shall have determined that on or
     after  the date of this  Agreement  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  parent
     corporation) as a consequence of its obligations hereunder to a level below
     that which  such  Lender or such  Lender's  parent  corporation  could have
     achieved  but for  such  Change  in Law  (taking  into  consideration  such
     Lender's policies or the policies of such Lender's parent  corporation with
     respect to capital  adequacy) then, from time to time, within five Business
     Days after receipt by the Borrower of written demand by such Lender (with a
     copy thereof to the  Administrative  Agent), the Borrower shall pay to such
     Lender  such  additional  amounts as will  compensate  such  Lender or such
     Lender's parent corporation for any such reduction suffered.

          (c) A  certificate  of a Lender  setting  forth the  amount or amounts
     necessary to compensate such Lender or such Lender's parent  corporation as
     specified in  subsection  (a) or (b) of this Section  shall be delivered to
     the  Borrower  (with a copy  to the  Administrative  Agent)  and  shall  be
     conclusive,  absent manifest error.  The Borrower shall pay any such Lender
     such amount or amounts 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.

Section 2.16. Funding Indemnity.

     In the event of (i) the payment of any principal of a Eurodollar Loan other
than on the last day of the Interest Period applicable  thereto  (including as a
result  of an Event  of  Default),  (ii) the  conversion  or  continuation  of a
Eurodollar  Loan other than on the last day of the  Interest  Period  applicable
thereto,  or (iii) the  failure by the  Borrower to borrow,  prepay,  convert or
continue any  Eurodollar  Loan on the date  specified in any  applicable  notice
(regardless  of whether such notice is withdrawn or revoked),  then, in any such
event,  the Borrower  shall  compensate  each Lender,  within five Business Days
after  written  demand  from  such  Lender,   for  any  loss,  cost  or  expense
attributable to such event. In the case of a Eurodollar Loan, such loss, cost or
expense shall be deemed to include an amount determined by such Lender to be the
excess,  if any,  of (A) the amount of interest  that would have  accrued on the
principal  amount of such  Eurodollar Loan if such event had not occurred at the
Adjusted LIBO Rate  applicable to such  Eurodollar  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  Eurodollar  Loan) over (B) the
amount of interest that would accrue on the principal  amount of such Eurodollar
Loan for the same  period  if the  Adjusted  LIBO Rate were set on the date such
Eurodollar  Loan were  prepaid or  converted  or the date on which the  Borrower
failed to borrow,  convert or continue such Eurodollar Loan. A certificate as to
any additional  amount payable under this Section 2.16 submitted to the Borrower
by any Lender (with a copy to the  Administrative  Agent)  shall be  conclusive,
absent manifest error.

Section 2.17. 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, any
     Lender shall  receive 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.

          (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 five Business 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) Each Foreign Lender represents and warrants to the  Administrative
     Agent and the Borrower  that, as of the date such Lender becomes a party to
     this  Agreement,  such Lender is entitled to an exemption from  withholding
     tax under the Code or any treaty to which the United States is a party with
     respect to payments  under this  Agreement,  and each Foreign  Lender 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. Without limiting the generality of the foregoing, each Foreign
     Lender  agrees  that it will  deliver to the  Administrative  Agent and the
     Borrower  (or in the case of a  Participant,  to the Lender  from which the
     related participation shall have been purchased), as appropriate,  two duly
     completed  copies of (i)  Internal  Revenue  Service  Form W-8 ECI,  or any
     successor  form  thereto,  certifying  that the payments  received from the
     Borrower  hereunder are  effectively  connected with such Foreign  Lender's
     conduct of a trade or  business  in the  United  States;  or (ii)  Internal
     Revenue  Service Form W-8 BEN, or any successor  form  thereto,  certifying
     that such Foreign Lender is entitled to benefits under an income tax treaty
     to which the United  States is a party that exempts  from U.S.  withholding
     tax payments of interest hereunder;  or (iii) Internal Revenue Service Form
     W-8 BEN, or any successor form prescribed by the Internal  Revenue Service,
     together  with a  certificate  (A)  establishing  that the  payment  to the
     foreign  lender   qualifies  as  "portfolio   interest"  exempt  from  U.S.
     withholding  tax under Code section 871(h) or 881(c),  and (B) stating that
     (1)  the  Foreign  Lender  is not a  bank  for  purposes  of  Code  section
     881(c)(3)(A),  or the  obligation  of the Borrower  hereunder is not,  with
     respect  to such  Foreign  Lender,  a loan  agreement  entered  into in the
     ordinary  course of its  trade or  business,  within  the  meaning  of that
     section;  (2) the Foreign  Lender is not a 10%  shareholder of the Borrower
     within the meaning of Code section  871(h)(3) or 881(c)(3)(B);  and (3) the
     Foreign Lender is not a controlled  foreign  corporation that is related to
     the Borrower within the meaning of Code section 881(c)(3)(C);  or (iv) such
     other  Internal  Revenue  Service forms as may be applicable to the Foreign
     Lender,  including Forms W-8 IMY or W-8 EXP. Each such Foreign Lender shall
     deliver  to the  Borrower  and the  Administrative  Agent  such forms on or
     before the date that it becomes a party to this  Agreement  (or in the case
     of a  Participant,  on or before the date such  Participant  purchases  the
     related participation). In addition, each such Foreign Lender shall deliver
     such  forms  promptly  upon  the  obsolescence  or  invalidity  of any form
     previously delivered by such Foreign Lender. Each such Foreign Lender shall
     promptly notify the Borrower and the Administrative  Agent at any time that
     it determines  that it is no longer in a position to provide any previously
     delivered  certificate to the Borrower (or any other form of  certification
     adopted by the Internal Revenue Service for such purpose).

Section 2.18. 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 or interest,  or of amounts  payable under
     Section 2.15,  2.16 or 2.17,  or otherwise)  prior to 12:00 noon (New York,
     New York time) on the date when due in immediately available funds, without
     set-off,  counterclaims,  or  withholdings  or  deductions  for taxes.  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 the  Payment
     Office,  except that payments  pursuant to Sections 2.15, 2.16 and 2.17 and
     11.3  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 made  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 and interest
     then due hereunder,  such funds shall be applied (i) first, towards payment
     of interest then due hereunder,  ratably among the parties entitled thereto
     in accordance  with the amounts of interest  then due to such parties,  and
     (ii) second, towards payment of principal then due hereunder, ratably among
     the parties  entitled  thereto 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 that would  result 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
     participation  is  purchased  and all or any portion of the payment  giving
     rise thereto is recovered,  such  participation  shall be rescinded and the
     purchase price restored to the extent of such recovery,  without  interest,
     and (ii) the provisions of this subsection  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
     subsection 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 or amounts due. In such event,  if the Borrower has not in fact made
     such  payment,   then  each  Lender   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 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 Section 2.4(a) or 11.3(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 2.19. Mitigation of Obligations; Replacement of Lenders.

          (a) If any Lender requests  compensation under Section 2.15, 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
     2.17,  then such  Lender  shall  use  reasonable  efforts  to  designate  a
     different  lending office 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 sole  judgment of such  Lender,  such
     designation  or assignment (i) would  eliminate or reduce  amounts  payable
     under  Section 2.15 or Section  2.17, 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 costs and expenses  incurred by any Lender in  connection
     with such designation or assignment.

          (b) If any Lender requests  compensation under Section 2.15, or if the
     Borrower  is  required  to pay any  additional  amount to any Lender or any
     Governmental  Authority  of the  account of any Lender  pursuant to Section
     2.17, 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  set forth in Section  11.4(b) all its  interests,  rights and
     obligations  under this  Agreement  to an assignee  that shall  assume such
     obligations (which assignee may be another Lender);  provided, that (i) the
     Borrower   shall  have   received   the  prior   written   consent  of  the
     Administrative  Agent,  which consent shall not be  unreasonably  withheld,
     (ii) such  Lender  shall have  received  payment of an amount  equal to the
     outstanding  principal  amount of all Loans  owed to it,  accrued  interest
     thereon and all other amounts  payable to it  hereunder,  from the assignee
     (in the case of such outstanding  principal and accrued  interest) and from
     the Borrower (in the case of all other  amounts) and (iii) in the case of a
     claim for compensation  under Section 2.15 or payments  required to be made
     pursuant to Section  2.17,  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 CONDITIONS PRECEDENT TO LOANS

Section 3.1. Conditions To Effectiveness.

     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 11.2).

          (a) The  Administrative  Agent shall have received all amounts due and
     payable under the Loan Documents on or prior to the Closing Date, including
     reimbursement  or  payment  of  all   out-of-pocket   expenses   (including
     reasonable fees, charges and disbursements of counsel to the Administrative
     Agent)  required to be reimbursed  or paid by the Borrower,  under any Loan
     Document.

          (b) The Administrative  Agent (or its counsel) shall have received the
     following,  each in the form specified or, if no form is specified, in form
     and substance satisfactory to the Administrative Agent:

               (i) a  counterpart  of this  Agreement  signed by or on behalf of
          each  party   thereto  or  written   evidence   satisfactory   to  the
          Administrative  Agent (which may include  telecopy  transmission  of a
          signed  signature page of this Agreement) that such party has signed a
          counterpart of this Agreement;

               (ii) if requested  by any Lender,  a Note payable to such Lender,
          duly executed by the Borrower;

               (iii) a counterpart of the Subsidiary Guarantee  Agreement,  duly
          executed by each Guarantor;

               (iv) a  certificate  of the  Secretary or Assistant  Secretary of
          each Loan Party,  attaching and certifying  copies of its  Constituent
          Documents and of the  resolutions  of its board of directors (or other
          comparable  authorizations),  authorizing the execution,  delivery and
          performance  of  the  Loan  Documents  to  which  it  is a  party  and
          certifying the name,  title and true signature of each officer of such
          Loan Party executing the Loan Documents to which it is a party;

               (v)  certificates of good standing or existence,  as the case may
          be, from the Secretary of State of the jurisdiction of organization of
          each Loan Party and each other jurisdiction where each such Loan Party
          is  (x)  required  to  be  qualified  to  do  business  as  a  foreign
          corporation and (y) owns,  leases or operates common carrier  pipeline
          assets;

               (vi) a favorable written opinion of Fulbright & Jaworski, L.L.P.,
          counsel to the Loan Parties, addressed to the Administrative Agent and
          each of the Lenders, substantially in the form of Exhibit F;

               (vii) a  certificate,  dated  the  Closing  Date and  signed by a
          Responsible Officer of the Borrower,  confirming that before and after
          giving   effect  to  the  issuance  of  the  Bridge   Loan,   (A)  the
          representations  and  warranties  set forth in Article IV are true and
          correct  and (B) no Default or Event of Default  has  occurred  and is
          continuing,  together with  disbursement  instructions  for the Bridge
          Loan;

               (viii)  copies  of  the  Acquisition   Agreement  and  the  other
          Acquisition  Documents,  each of which shall be in form and  substance
          reasonably  satisfactory  to Agent and its  counsel and  certified  as
          true,  correct and  complete  by an  authorized  officer of  Borrower,
          together with evidence that (i) the aggregate  purchase  price for the
          Acquisition,  together with the aggregate purchase price for the Prior
          Acquisition,  is not  less  than  $150,000,000,  (ii)  all  conditions
          precedent to the  Acquisition  have been  satisfied or waived with the
          consent of the Agent  (other  than the  payment  of the cash  purchase
          price  payable  on  the  Closing  Date  pursuant  to  the  Acquisition
          Agreement),  and  (iii)  upon the  funding  of the  Bridge  Loan,  the
          Acquisition  shall  immediately be consummated in accordance  with the
          terms  of  the  Acquisition   Agreement  and  the  other   Acquisition
          Documents;

               (ix) copies of each of the Prior Acquisition  Documents,  each of
          which shall be in form and substance reasonably  satisfactory to Agent
          and its  counsel and  certified  as true,  correct and  complete by an
          authorized officer of Borrower, together with evidence satisfactory to
          the  Agent  that  the  Prior   Acquisition  has  been  consummated  in
          accordance with the terms thereof; and

               (x) a certificate of the Secretary or Assistant  Secretary of the
          Borrower, attaching and certifying copies of all consents,  approvals,
          authorizations,  registrations  and  filings  and orders  required  or
          advisable to be made or obtained  under any  Requirement of Law, or by
          any contractual or legal  obligation of each Loan Party, in connection
          with the execution, delivery, performance, validity and enforceability
          of the Loan Documents or any of the transactions contemplated thereby,
          and of the  Acquisition  Documents and the  transactions  contemplated
          thereby, and such consents, approvals, authorizations,  registrations,
          filings  and  orders  shall  be in  full  force  and  effect  and  all
          applicable waiting periods shall have expired.

     All Loan  Documents,  certificates,  legal  opinions  and  other  documents
referred to in this Article III shall, unless otherwise specified,  be delivered
to the  Administrative  Agent for the account of each Lender and, except for the
Notes, in sufficient counterparts or copies for each Lender.


                   Article IV REPRESENTATIONS AND WARRANTIES

     The Borrower  represents and warrants to the Administrative  Agent and each
Lender as follows:

Section 4.1. Existence; Power.

     Each Loan Party and each of its Subsidiaries (i) is duly organized, validly
existing  and in  good  standing  under  the  laws  of the  jurisdiction  of its
organization,  (ii)  has all  requisite  power  and  authority  to  carry on its
business as now conducted,  and (iii) is duly qualified to do business and is in
good standing in each jurisdiction where such qualification is required,  except
where a failure to be so qualified could not reasonably be expected to result in
a Material Adverse Effect.

Section 4.2. Organizational Power; Authorization; Enforceability.

     The  execution,  delivery  and  performance  by each Loan Party of the Loan
Documents,  the Acquisition  Documents,  and the Prior Acquisition  Documents to
which it is a party are within such Loan Party's  organizational powers and have
been  duly  authorized  by  all  necessary  organizational,   and  if  required,
stockholder, member or partner (as applicable),  action. This Agreement has been
duly  executed by KPP and the  Borrower,  and  constitutes,  and each other Loan
Document,  each of the Acquisition Documents,  and each of the Prior Acquisition
Documents,  to which any Loan Party is a party,  when  executed and delivered by
each Loan Party,  will constitute,  the legal,  valid and binding  obligation of
each  Loan  Party  which is a party  thereto  (as the case may be),  enforceable
against KPP, the Borrower or such Loan Party (as the case may be) in  accordance
with its respective terms.

Section 4.3. Governmental Approvals; No Conflicts.

     The  execution,  delivery and  performance  by each Loan Party of each Loan
Document,  each Acquisition  Document,  and each Prior  Acquisition  Document to
which it is a party (i) do not and will not require any consent or approval  of,
registration  or filing  with,  or any action by,  any  Governmental  Authority,
except  those as have been  obtained  or made and are in full force and  effect,
(ii) do not and  will  not  violate  any  applicable  law or  regulation  or the
Constituent  Documents  of such  Loan  Party or any of its  Subsidiaries  or any
judgment  or  order  of any  Governmental  Authority,  (iii) do not and will not
violate or result in a default under any indenture,  material agreement or other
material instrument binding on such Loan Party or any of its Subsidiaries or any
of its assets or give rise to a right  thereunder  to require  any payment to be
made by such Loan Party or any of its  Subsidiaries and (iv) do not and will not
result in the creation or imposition of any Lien on any asset of such Loan Party
or any of its  Subsidiaries,  except  Liens  (if  any)  created  under  the Loan
Documents.

Section 4.4. Financial Statements.

     The  Borrower  has  furnished  to each Lender (i) the audited  consolidated
balance  sheet  of KPP and its  Subsidiaries  as of  December  31,  2001 and the
related consolidated  statements of income,  shareholders' equity and cash flows
for the  fiscal  year then  ended  prepared  by KPMG LLP and (ii) the  unaudited
consolidated balance sheet of KPP and its Subsidiaries as at the end of June 30,
2002, and the related unaudited consolidated statements of income and cash flows
for the fiscal  quarter and  year-to-date  period then  ending,  certified  by a
Responsible  Officer  of KPP.  Such  financial  statements  fairly  present  the
consolidated  financial  condition of KPP and its  Subsidiaries as of such dates
and the  consolidated  results of operations for such periods in conformity with
GAAP consistently applied, subject to year end audit adjustments and the absence
of footnotes  in the case of the  statements  referred to in clause (ii).  Since
December  31,  2001,  there  have been no  changes  with  respect to KPP and its
Subsidiaries  or the Borrower which have had or could  reasonably be expected to
have, singly or in the aggregate, a Material Adverse Effect.

Section 4.5. Litigation and Environmental Matters.

          (a) No  litigation,  investigation  or  proceeding  of or  before  any
     arbitrators  or  Governmental  Authorities  is pending  against  or, to the
     knowledge of the Borrower,  threatened  against or affecting any Loan Party
     or any of its  Subsidiaries  (i) that could reasonably be expected to have,
     either individually or in the aggregate,  a Material Adverse Effect or (ii)
     that in any manner draws into  question the validity or  enforceability  of
     this Agreement or any other Loan Document, any Acquisition Document, or any
     Prior Acquisition Document.

          (b) Except for the matters  set forth on  Schedule  4.5, no Loan Party
     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,  where any such event or circumstance described in
     clauses (i) through (iv)  above(A)  could  reasonably  be expected to have,
     either  individually or in the aggregate,  a Material Adverse Effect or (B)
     in any manner draws into  question the validity or  enforceability  of this
     Agreement or any other Loan Document.

Section 4.6. Compliance with Laws and Agreements.

     Each Loan Party and each of its  Subsidiaries is in compliance with (i) all
applicable laws,  rules,  regulations and orders of any Governmental  Authority,
and (ii) all indentures,  agreements or other instruments binding upon it or its
properties,  except where  non-compliance,  either  singly or in the  aggregate,
could not reasonably be expected to result in a Material Adverse Effect.

Section 4.7. Investment Company Act, Etc.

     Neither KPP nor any of its Subsidiaries is (i) an "investment  company", as
defined in, or subject to regulation under, the Investment  Company Act of 1940,
as amended,  (ii) a "holding  company"  as defined in, or subject to  regulation
under,  the Public  Utility  Holding  Company  Act of 1935,  as amended or (iii)
otherwise  subject to any other regulatory  scheme limiting its ability to incur
debt.

Section 4.8. Taxes.

     KPP and its  Subsidiaries  and each other  Person the taxes of which KPP or
any  Subsidiary  of KPP could  become  liable have timely  filed or caused to be
filed all Federal income tax returns and all other material tax returns that are
required  to be filed  by them,  and  have  paid all  taxes  shown to be due and
payable on such  returns or on any  assessments  made against it or its property
and all other taxes,  fees or other charges imposed on it or any of its property
by any  Governmental  Authority,  except (i) to the extent the  failure to do so
would not have a Material  Adverse  Effect or (ii) where the same are  currently
being  contested in good faith by appropriate  proceedings  and for which KPP or
such  Subsidiary,  as the  case may be,  has set  aside  on its  books  adequate
reserves.  The  charges,  accruals  and  reserves  on the  books  of KPP and its
Subsidiaries in respect of such taxes are adequate,  and no tax liabilities that
could be materially in excess of the amount so provided are anticipated.

Section 4.9. Margin Regulations.

     None of the proceeds of any of the Loans will be used for  "purchasing"  or
"carrying" any "margin stock" with the respective  meanings of each of such term
under Regulation U or for any purpose that violates the Margin Regulations.

Section 4.10. ERISA.

     No ERISA Event has occurred or is reasonably  expected to occur that,  when
taken together with all other such ERISA Events, could reasonably be expected to
result in a  Material  Adverse  Effect.  The  present  value of all  accumulated
benefit  obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial  Standards No. 87) did not, as of the date of the most
recent  financial  statements  reflecting  such  amounts,  exceed  by more  than
$5,000,000  the fair  market  value of the assets of such Plan,  and the present
value of all accumulated  benefit obligations of all underfunded Plans (based on
the  assumptions  used for purposes of Statement of Financial  Standards No. 87)
did not, as of the date of the most recent financial statements  reflecting such
amounts,  exceed by more than  $5,000,000 the fair market value of the assets of
all such underfunded Plans.

Section 4.11. Ownership of Property.

          (a) Each of the Loan Party and its  Subsidiaries has good title to, or
     valid  leasehold  interests  in,  all of its  real  and  personal  property
     material to the operation of its business.

          (b) Each of the Loan Party and its Subsidiaries  owns, or is licensed,
     or otherwise has the right, to use, all patents, trademarks, service marks,
     tradenames,  copyrights  and other  intellectual  property  material to its
     business,  and the use thereof by such Loan Party and its Subsidiaries does
     not  infringe  on the  rights  of any  other  Person,  except  for any such
     infringements  that,  individually  or in the  aggregate,  would not have a
     Material Adverse Effect.

Section 4.12. Disclosure.

     The Borrower has disclosed to the Lenders all  agreements,  instruments and
corporate  or  other  restrictions  to  which  each  Loan  Party  or  any of its
Subsidiaries  is  subject,  and all other  matters  known to any of them,  that,
individually  or in the aggregate,  could  reasonably be expected to result in a
Material Adverse Effect.  None of the reports  (including without limitation all
reports that the Borrower is required to file with the  Securities  and Exchange
Commission),  financial statements,  certificates or other information furnished
by or on behalf of any Loan Party to the  Administrative  Agent or any Lender in
connection  with the  negotiation  or syndication of this Agreement or any other
Loan Document or delivered  hereunder or thereunder (as modified or supplemented
by any other  information so furnished)  contains any material  misstatement  of
fact or  omits to state  any  material  fact  necessary  to make the  statements
therein,  taken as a whole, in light of the circumstances  under which they were
made,  not  misleading;  provided,  that with  respect  to  projected  financial
information,  the Borrower represents only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time.

Section 4.13. Labor Relations.

     There  are no  strikes,  lockouts  or  other  material  labor  disputes  or
grievances  against  any  Loan  Party  or any of its  Subsidiaries,  or,  to the
Borrower's  knowledge,  threatened against or affecting any Loan Party or any of
its  Subsidiaries,   and  no  significant  unfair  labor  practice,  charges  or
grievances are pending  against the Borrower or any of its  Subsidiaries,  or to
the Borrower's knowledge, threatened against any of them before any Governmental
Authority.  All  payments  due from any  Loan  Party or any of its  Subsidiaries
pursuant to the provisions of any collective bargaining agreement have been paid
or accrued as a liability on the books of such Loan Party or such Subsidiary (as
applicable),  except where the failure to do so could not reasonably be expected
to have a Material Adverse Effect.

Section 4.14. Acquisition Documents.

     The Acquisition  Agreement,  each of the other Acquisition  Documents,  and
each  of the  Prior  Acquisition  Documents  is the  legal,  valid  and  binding
obligation  of each  party  thereto,  enforceable  against  each  such  party in
accordance with its terms.

Section 4.15. Subsidiaries, Significant Affiliates and Guarantors.

     Schedule 4.15 sets forth the name of, the ownership interest of KPP in, the
jurisdiction  of  incorporation  of, and the type of, each Subsidiary of KPP and
each  Significant  Affiliate  and  identifies  each  Subsidiary  of KPP and each
Significant Affiliate that is a Guarantor, in each case, as of the date hereof.

Section 4.16. Liens.

     Schedule  7.2 sets  forth  all  Liens  existing  on the date  hereof on any
property or asset of KPP or any Subsidiary of KPP.


                        Article V AFFIRMATIVE COVENANTS

     KPP and the Borrower (as applicable) covenant and agree that so long as any
Lender has a Commitment  hereunder or the  principal of and interest on any Loan
or any other amount payable hereunder remains unpaid:

Section 5.1. Financial Statements and Other Information.

     The Borrower will deliver to the Administrative Agent and each Lender:

          (a) as soon as available and in any event within 95 days after the end
     of each  fiscal year of KPP, a copy of the annual  audited  report for such
     fiscal year for KPP and its Subsidiaries, containing a consolidated balance
     sheet of KPP and its Subsidiaries as of the end of such fiscal year and the
     related  consolidated  statements of income,  stockholders' equity and cash
     flows (together with all footnotes thereto) of KPP and its Subsidiaries for
     such  fiscal  year,  setting  forth in each  case in  comparative  form the
     figures for the previous fiscal year, all in reasonable detail and reported
     on by KPMG  LLP or  other  independent  public  accountants  of  nationally
     recognized  standing  (without  a "going  concern"  or like  qualification,
     exception or explanation and without any  qualification  or exception as to
     scope of such audit) to the effect that such financial  statements  present
     fairly in all material respects the financial  condition and the results of
     operations  of  KPP  and  its  Subsidiaries  for  such  fiscal  year  on  a
     consolidated basis in accordance with GAAP and that the examination by such
     accountants in connection with such consolidated  financial  statements has
     been made in accordance with generally accepted auditing standards;

          (b) as soon as available and in any event within 50 days after the end
     of each of the first three  fiscal  quarters of each fiscal year of KPP, an
     unaudited  consolidated balance sheet of KPP and its Subsidiaries as of the
     end  of  such  fiscal  quarter  and  the  related  unaudited   consolidated
     statements  of income and cash flows of KPP and its  Subsidiaries  for such
     fiscal  quarter and the then elapsed  portion of such fiscal year,  setting
     forth in each case in  comparative  form the figures for the  corresponding
     quarter and the  corresponding  portion of KPP's previous  fiscal year, all
     certified  by a  Responsible  Officer  of KPP as  presenting  fairly in all
     material respects the financial  condition and results of operations of KPP
     and its  Subsidiaries  on a  consolidated  basis in  accordance  with GAAP,
     subject to normal year-end audit adjustments and the absence of footnotes;

          (c)  concurrently  with  the  delivery  of  the  financial  statements
     referred  to  in  subsections  (a)  and  (b)  above,  a  certificate  of  a
     Responsible Officer of the Borrower, (i) certifying as to whether a Default
     or Event of Default  has  occurred  and is  continuing  on the date of such
     certificate,  and if a Default or an Event of Default then has occurred and
     is  continuing,  specifying  the  details  thereof  and the action that the
     Borrower has taken or proposes to take with respect  thereto,  (ii) setting
     forth in  reasonable  detail  calculations  demonstrating  compliance  with
     Article VI and (iii) stating  whether any change in GAAP or the application
     thereof  affecting  the  calculations  described  in clause  (ii) above has
     occurred since the date of the audited financial statements of KPP referred
     to in Section 4.4 and, if any change has occurred, specifying the effect of
     such change on the financial statements accompanying such certificate;

          (d)  concurrently  with  the  delivery  of  the  financial  statements
     referred to in subsection (a) above,  a certificate of the accounting  firm
     that reported on such financial  statements stating whether it obtained any
     knowledge during the course of its examination of such financial statements
     of any Default or Event of Default (which certificate may be limited to the
     extent required by accounting rules or guidelines);

          (e) promptly after the same become publicly  available,  copies of all
     periodic and other reports, proxy statements and other materials filed with
     the  Securities  and Exchange  Commission,  or any  Governmental  Authority
     succeeding to any or all functions of said Commission, or with any national
     securities exchange,  or distributed by KPP or the Borrower to its security
     holders generally; and

          (f) promptly  following any request  therefor,  such other information
     regarding  the  results  of  operations,  business  affairs  and  financial
     condition of KPP, the Borrower or of their  respective  Subsidiaries as the
     Administrative Agent or any Lender may reasonably request.

Section 5.2. Notices of Material Events.

     The  Borrower  will  furnish to the  Administrative  Agent and each  Lender
prompt written notice of the following,  in each case,  accompanied by a written
statement of a Responsible  Officer of the Borrower setting forth the details of
the event or development  requiring such notice and any action taken or proposed
to be taken with respect thereto:

          (a) the occurrence of any Default or Event of Default;

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

          (c) the occurrence of any event or any other  development by which any
     Loan Party or any Subsidiary of any Loan Party (i) fails 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)  becomes
     subject to any Environmental Liability,  (iii) receives notice of any claim
     with respect to any Environmental  Liability,  or (iv) becomes aware of any
     basis for any Environmental Liability and in each of the preceding clauses,
     which  individually  or in the aggregate,  could  reasonably be expected to
     result in a Material Adverse Effect;

          (d) the occurrence of any ERISA Event that alone, or together with any
     other ERISA  Events that have  occurred,  could  reasonably  be expected to
     result in liability  of KPP and its  Subsidiaries  in an  aggregate  amount
     exceeding $5,000,000; and

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

Section 5.3. Existence; Conduct of Business.

     KPP will,  and will  cause each of its  Subsidiaries  to, do or cause to be
done all things  necessary  to  preserve,  renew and  maintain in full force and
effect  its  legal  existence  and its  respective  rights,  licenses,  permits,
privileges, franchises, patents, copyrights, trademarks and trade names material
to the conduct of its business and will  continue to engage in the same business
as presently  conducted or such other  businesses  that are  reasonably  related
thereto;  provided,  that  nothing in this  Section  shall  prohibit any merger,
consolidation, liquidation or dissolution permitted under Section 7.3.

Section 5.4. Compliance with Laws, Etc.

     KPP will, and will cause each of its Subsidiaries to, comply with all laws,
rules,  regulations and requirements of any Governmental Authority applicable to
its properties, except where the failure to do so, either individually or in the
aggregate,  could not  reasonably  be expected  to result in a Material  Adverse
Effect.

Section 5.5. Payment of Obligations.

     KPP will, and will cause each of its  Subsidiaries to, pay and discharge at
or before maturity,  all of its obligations and liabilities  (including  without
limitation all tax liabilities and claims that could result in a statutory Lien)
before the same shall  become  delinquent  or in default,  except  where (i) the
validity  or amount  thereof is being  contested  in good  faith by  appropriate
proceedings,  (ii) KPP or such  Subsidiary  has set aside on its books  adequate
reserves with respect  thereto in accordance  with GAAP and (iii) the failure to
make payment  pending such contest could not reasonably be expected to result in
a Material Adverse Effect.

Section 5.6. Books and Records.

     KPP will, and will cause each of its  Subsidiaries to, keep proper books of
record and account in which full,  true and correct entries shall be made of all
dealings and  transactions  in relation to its business  and  activities  to the
extent necessary to prepare the consolidated financial statements of Borrower in
conformity with GAAP.

Section 5.7. Visitation, Inspection, Etc.

     KPP  will,  and  will  cause  each  of  its  Subsidiaries  to,  permit  any
representative of the  Administrative  Agent or any Lender, to visit and inspect
its  properties,  to examine  its books and  records and to make copies and take
extracts therefrom,  and to discuss its affairs,  finances and accounts with any
of its officers and with its independent  certified public  accountants,  all at
such reasonable times and as often as the Administrative Agent or any Lender may
reasonably request after reasonable prior notice to KPP; provided,  however,  if
an Event of Default has  occurred  and is  continuing,  no prior notice shall be
required.

Section 5.8. Maintenance of Properties; Insurance.

     KPP will, and will cause each of its Subsidiaries to, (i) keep and maintain
all property  material to the conduct of its business in good working  order and
condition,  except for ordinary wear and tear and except where the failure to do
so, either individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect and (ii) maintain with financially sound and
reputable  insurance  companies,  insurance  with respect to its  properties and
business,  and the properties and business of its Subsidiaries,  against loss or
damage of the kinds  customarily  insured  against by  companies  in the same or
similar businesses operating in the same or similar locations.

Section 5.9. Use of Proceeds.

     The Borrower will use the proceeds of all Loans to finance the  Acquisition
and up to  $10,000,000 of the proceeds for other general  corporate  purposes of
the Borrower and its Subsidiaries, including without limitation replenishment of
cash used to finance the Prior Acquisition.  No part of the proceeds of any Loan
will be used, whether directly or indirectly, for any purpose that would violate
any rule or regulation of the Board of Governors of the Federal  Reserve System,
including Regulation T, U or X.

Section 5.10. Additional Subsidiaries.

     If  any  additional   Significant   Subsidiary  (other  than  any  Excluded
Subsidiary  and any Foreign  Subsidiary)  is  acquired or formed  after the date
hereof, KPP will, within ten business days after such Significant  Subsidiary is
acquired or formed,  notify the Administrative Agent and the Lenders thereof and
will  cause such  Significant  Subsidiary  to become a  Guarantor  by  executing
agreements  in the form of Annex I to Exhibit C and will cause such  Significant
Subsidiary to deliver  simultaneously  therewith such  certificates,  documents,
opinions of counsel  and other  information  regarding  such  Guarantor  and the
enforceability  against such Guarantor of the Subsidiary  Guarantee Agreement as
the Administrative Agent may reasonably request.


                         Article VI FINANCIAL COVENANTS

     KPP and the Borrower (as applicable) covenant and agree that so long as any
principal of or interest on the Bridge Loan  remains  unpaid or any other amount
payable hereunder remains unpaid:

Section 6.1. Funded Debt to EBITDA.

     KPP and  its  Subsidiaries  will  maintain,  as of the  end of each  fiscal
quarter of KPP, a ratio of Consolidated  Funded Debt to  Consolidated  EBITDA of
not more than 4.25 to 1.00, measured,  in each case, for the four-fiscal quarter
period  ending on each date of such  determination.  Section  6.2.  Consolidated
EBITDA to Consolidated Interest Expense.

     KPP and  its  Subsidiaries  will  maintain,  as of the  end of each  fiscal
quarter of KPP, a ratio of Consolidated EBITDA to Consolidated  Interest Expense
of not less than  3.00 to 1.00,  measured,  in each  case,  for the  four-fiscal
quarter period ending on each date of such determination.

Section 6.3. Consolidated Net Worth.

     KPP will not permit its  Consolidated Net Worth at any time to be less than
an amount  equal to 80% of the  Consolidated  Net Worth as at December 31, 1999,
plus  80% of the Net  Cash  Proceeds  of any  Equity  Event by KPP or any of its
Subsidiaries.


                         Article VII NEGATIVE COVENANTS

     KPP and the Borrower (as applicable) covenant and agree that so long as any
principal of or interest on the Bridge Loan  remains  unpaid or any other amount
payable hereunder remains unpaid:

Section 7.1. Indebtedness.

     KPP will not,  and will not  permit  any of its  Subsidiaries  to,  create,
incur, assume or suffer to exist any Indebtedness, except:

          (a) Indebtedness created pursuant to the Loan Documents;

          (b)  Indebtedness  created  pursuant to the Revolving Credit Agreement
     and any Guarantees of such Indebtedness by any Guarantors; and

          (c) other  Indebtedness  of KPP and the  Borrower,  the  incurrence of
     which does not otherwise  result in the occurrence of a Default or an Event
     of Default.


Section 7.2. Negative Pledge.

     KPP will not,  and will not  permit  any of its  Subsidiaries  to,  create,
incur,  assume or suffer to exist any Lien on any of its assets or property  now
owned or hereafter acquired, except:

          (a) Permitted Encumbrances;

          (b) any Liens on any property or asset of KPP or any Subsidiary of KPP
     existing on the date hereof set forth on Schedule 7.2; provided,  that such
     Lien  shall  not apply to any  other  property  or asset of KPP or any such
     Subsidiary;

          (c)  purchase  money  Liens upon or in any fixed or capital  assets to
     secure the purchase  price or the cost of  construction  or  improvement of
     such fixed or capital assets or to secure Indebtedness  incurred solely for
     the purpose of financing the  acquisition,  construction  or improvement of
     such  fixed or capital  assets  (including  Liens  securing  Capital  Lease
     Obligations);   provided,  that  (i)  such  Lien  attaches  to  such  asset
     concurrently  or  within  90 days  after the  acquisition,  improvement  or
     completion of the construction  thereof;  (ii) such Lien does not extend to
     any other asset; and (iii) the Indebtedness secured thereby does not exceed
     the cost of  acquiring,  constructing  or  improving  such fixed or capital
     assets;

          (d) any Lien (i)  existing on any asset of any Person at the time such
     Person  becomes a  Subsidiary  of KPP,  (ii)  existing  on any asset of any
     Person at the time such Person is merged with or into KPP or any Subsidiary
     of KPP or (iii) existing on any asset prior to the  acquisition  thereof by
     KPP or any Subsidiary of KPP; provided,  that any such Lien was not created
     in the contemplation of any of the foregoing and any such Lien secures only
     those  obligations  which it secures on the date that such Person becomes a
     Subsidiary or the date of such merger or the date of such acquisition; and

          (e) extensions,  renewals,  or replacements of any Lien referred to in
     subsections (a) through (d) of this Section;  provided,  that the principal
     amount of the  Indebtedness  secured  thereby is not increased and that any
     such extension,  renewal or replacement is limited to the assets originally
     encumbered thereby.

Section 7.3. Fundamental Changes.

          (a) KPP will not, and will not permit any Subsidiary to, merge into or
     consolidate into any other Person, or permit any other Person to merge into
     or consolidate with it, or sell,  lease,  transfer or otherwise  dispose of
     (in a single  transaction or a series of transactions) all or substantially
     all of its assets (in each case,  whether now owned or hereafter  acquired)
     or all or  substantially  all of the stock of any of its  Subsidiaries  (in
     each  case,  whether  now owned or  hereafter  acquired)  or  liquidate  or
     dissolve;  provided,  that if at the time  thereof  and  immediately  after
     giving effect  thereto,  no Default or Event of Default shall have occurred
     and be  continuing  (i) any  Subsidiary  of the  Borrower  may merge with a
     Person if such Subsidiary is the surviving Person,  (ii) any Subsidiary may
     merge into another Subsidiary;  provided,  that if any party to such merger
     is a Guarantor,  the  Guarantor  shall be the surviving  Person,  (iii) any
     Subsidiary of the Borrower may sell,  transfer,  lease or otherwise dispose
     of all or substantially all of its assets to the Borrower or to a Guarantor
     and (iv) any Subsidiary  (other than a Guarantor) may liquidate or dissolve
     if  the  Borrower  determines  in  good  faith  that  such  liquidation  or
     dissolution  is in the best interests of the Borrower and is not materially
     disadvantageous to the Lenders.

          (b) KPP will not,  and will not  permit  any of its  Subsidiaries  to,
     engage in any business  other than  businesses of the type conducted by KPP
     and its Subsidiaries on the date hereof and businesses  reasonably  related
     thereto.

Section 7.4. Investments, Loans, Etc.

     KPP 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 common stock,  evidence of
indebtedness or other securities (including any option,  warrant, or other right
to  acquire  any of the  foregoing)  of,  make or  permit  to exist any loans or
advances  to,  Guarantee  any  obligations  of,  or make or  permit to exist any
investment  or any other  interest in, any other Person or purchase or otherwise
acquire (in one transaction or a series of transactions) any assets of any other
Person (all of the foregoing being collectively called "Investments"), except:

          (a)  Investments  (other than Permitted  Investments)  existing on the
     date hereof (including Investments in Subsidiaries);

          (b)  Permitted  Investments  and the  Investment  contemplated  by the
     Acquisition Agreement;

          (c)  Guarantees  constituting  Indebtedness  permitted by Section 7.1;
     provided,   that  the  aggregate   principal   amount  of  Indebtedness  of
     Subsidiaries  that are not Guarantors that are Guaranteed by any Loan Party
     shall be subject to the limitation set forth in subsection (d) hereof;

          (d) the Acquisition,  to the extent that the aggregate  purchase price
     paid does not exceed $150,000,000;

          (e)  Investments  made by KPP or any  Subsidiary of KPP (in each case,
     whether directly or indirectly,  through one or more subsidiaries of KPP or
     one or more Excluded Affiliates), provided, that for any such Investment of
     at least $50,000,000 individually, and for each such Investment of at least
     $10,000,000  individually if the aggregate of all such  Investments  during
     any fiscal  year of KPP shall have  exceeded  $75,000,000,  KPP shall first
     have provided to the Administrative  Agent financial  statements of KPP and
     its consolidated Subsidiaries demonstrating, to the reasonable satisfaction
     of the  Administrative  Agent,  that after  giving pro forma effect to such
     Investment, KPP shall continue to be in compliance with Article VI hereof;

          (f) loans or advances to  employees,  officers or  directors of KPP or
     any  Subsidiary  of KPP in the  ordinary  course of  business  for  travel,
     relocation  and related  expenses;  provided,  however,  that the aggregate
     amount of all such loans and  advances  does not exceed  $1,000,000  at any
     time; and

          (g) pursuant to Hedging Agreements permitted by Section 7.10.

Section 7.5. Restricted Payments.

     KPP 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 Indebtedness  subordinated to the Obligations of the Borrower or any options,
warrants,  or other rights to purchase  Equity  Interests or such  Indebtedness,
whether now or hereafter outstanding (each, a "Restricted Payment"),  except for
(i) Distributions payable by KPP solely in its Equity Interests, (ii) Restricted
Payments made by any  Subsidiary  of KPP to KPP or to another  Subsidiary of KPP
and (iii)  cash  Distributions  paid on,  and cash  redemptions  of,  the Equity
Interests of KPP or the Borrower;  provided, that no Default or Event of Default
has  occurred  and is  continuing  at the  time  such  Distribution  is  paid or
redemption is made.

Section 7.6. Sale of Assets.

     KPP 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  assets,  business  or  property,  whether  now owned or
hereafter  acquired,  other than in compliance with Section  2.9(b),  and in any
event, KPP will not, and will not permit any of its Subsidiaries (other than any
Excluded  Subsidiary),  to consummate  any Asset  Disposition  without the prior
written consent of the Required Lenders.

Section 7.7. Transactions with Affiliates.

     KPP 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 (i) in the ordinary course of
business at prices and on terms and conditions not less favorable to KPP or such
Subsidiary than could be obtained on an arm's-length  basis from unrelated third
parties,   (ii)   transactions   between  or  among  KPP  and  its  wholly-owned
Subsidiaries  not  involving  any other  Affiliates,  and  (iii) any  Restricted
Payment permitted by Section 7.5.

Section 7.8. Restrictive Agreements.

     KPP will not,  and will not permit any  Subsidiary  of KPP (other  than any
Excluded Subsidiary) to, directly or indirectly,  enter into, incur or permit to
exist any agreement (i) that prohibits,  restricts or imposes any condition upon
the ability of any Subsidiary of KPP to make  Distributions  with respect to its
Equity  Interests,  to make or  repay  loans  or  advances  to  Borrower  or any
Guarantor, to guarantee Indebtedness of Borrower or any Guarantor or to transfer
any of its  property  or  assets  to  Borrower  or any  Guarantor,  or (ii) that
contains any  prohibitions  or  restrictions  on KPP or such Subsidiary that are
more restrictive than the covenants contained in this Agreement;  provided, that
(A) the foregoing shall not apply to  restrictions or conditions  imposed by law
or by this Agreement, any other Loan Document, the Revolving Credit Agreement or
the Senior Notes  Indenture,  and (B) the foregoing shall not apply to customary
restrictions and conditions  contained in agreements relating to the sale of any
Subsidiary of KPP pending such sale,  provided such  restrictions and conditions
apply only to the Subsidiary that is sold and such sale is permitted hereunder.

Section 7.9. Sale and Leaseback Transactions.

     KPP will not, and will not permit any of its  Subsidiaries  (other than any
Excluded  Subsidiary)  to, enter into any  arrangement,  directly or indirectly,
whereby it shall sell or transfer any property, real or personal, used or useful
in its business,  whether now owned or hereinafter acquired, and thereafter rent
or  lease  such  property  or  other   property  that  it  intends  to  use  for
substantially the same purpose or purposes as the property sold or transferred.

Section 7.10. Hedging Agreements.

     KPP will not,  and will not permit any of the  Subsidiaries  to, enter into
any  Hedging  Agreement,  other  than  Hedging  Agreements  entered  into in the
ordinary  course of business to hedge or mitigate risks to which KPP or any such
Subsidiary  is exposed in the conduct of its business or the  management  of its
liabilities.  Solely for the avoidance of doubt, KPP acknowledges that a Hedging
Agreement  entered  into for  speculative  purposes or of a  speculative  nature
(which shall be deemed to include any Hedging  Agreement  under which KPP or any
Subsidiary of KPP is or may become obliged to make any payment (A) in connection
with the purchase by any third party of any common stock or any  Indebtedness or
(B) as a result  of  changes  in the  market  value of any  common  stock or any
Indebtedness) is not a Hedging  Agreement entered into in the ordinary course of
business to hedge or mitigate risks.

Section 7.11. Amendment to Material Documents.

     KPP will not, and will not permit any  Subsidiary of KPP to, amend,  modify
or waive any of its rights in a manner  materially  adverse to the Lenders under
(i) its  Constituent  Documents or (ii) the  Acquisition  Agreement or the other
Acquisition Documents.

Section 7.12. Accounting Changes.

     KPP will  not,  and will not  permit  any  Subsidiary  of KPP to,  make any
significant  change in accounting  treatment or reporting  practices,  except as
required by GAAP,  or change the fiscal  year of KPP or of any such  Subsidiary,
except to change the fiscal  year of any such  Subsidiary  to conform its fiscal
year to that of KPP.


                           Article VIII KPP GUARANTEE

     The Borrower is a direct and  wholly-owned  subsidiary of KPP, and KPP will
derive  substantial  benefit  from the  making of the Loans by the  Lenders.  As
consideration  therefor  and in order to induce the Lenders to make  Loans,  KPP
agrees as follows:

Section 8.1. Guarantee.

     KPP  unconditionally  guarantees,  jointly  with the other  Guarantors  and
severally,  as a primary  obligor  and not  merely as a surety,  (i) the due and
punctual  payment of (A) the  principal  of and  premium,  if any,  and interest
(including interest accruing during the pendency of any bankruptcy,  insolvency,
receivership  or other  similar  proceeding,  regardless  of whether  allowed or
allowable  in  such  proceeding)  on the  Loans,  when  and as due,  whether  at
maturity,  by  acceleration,  upon  one or  more  dates  set for  prepayment  or
otherwise,  and (B) all  other  monetary  obligations,  including  fees,  costs,
expenses and indemnities,  whether primary, secondary, direct, contingent, fixed
or otherwise (including monetary obligations incurred during the pendency of any
bankruptcy, insolvency,  receivership or other similar proceeding, regardless of
whether  allowed or  allowable in such  proceeding),  of the Loan Parties to the
Administrative  Agent and the Lenders  under this  Agreement  and the other Loan
Documents,  (ii) the due and punctual performance of all covenants,  agreements,
obligations  and liabilities of the other Loan Parties under or pursuant to this
Agreement and the other Loan Documents;  and (iii) the due and punctual  payment
and performance of all obligations of the Borrower, monetary or otherwise, under
each Hedging  Agreement entered into with a counterparty that was a Lender or an
Affiliate of a Lender at the time such Hedging  Agreement  was entered into (all
the  monetary and other  obligations  referred to in the  preceding  clauses (i)
through  (iii) being  collectively  called the  "Guaranteed  Obligations").  KPP
further agrees that the Guaranteed  Obligations  may be extended or renewed,  in
whole or in part,  without notice to or further assent from it, and that it will
remain bound upon its guarantee  notwithstanding any extension or renewal of any
Guaranteed Obligation.

Section 8.2. Guaranteed Obligations Not Waived.

     To the fullest extent  permitted by applicable law, KPP waives  presentment
to,  demand of payment  from and protest to the other Loan Parties of any of the
Guaranteed  Obligations,  and also waives  notice of acceptance of its guarantee
and notice of  protest  for  nonpayment.  To the  fullest  extent  permitted  by
applicable  law, the  obligations of KPP hereunder  shall not be affected by (i)
the  failure  of the  Administrative  Agent or any Lender to assert any claim or
demand or to enforce or exercise any right or remedy against the Borrower or any
other Guarantor under the provisions of this Agreement,  any other Loan Document
or otherwise, (ii) any rescission,  waiver, amendment or modification of, or any
release from any of the terms or provisions of, this  Agreement,  any other Loan
Document or any other  agreement,  including with respect to any other Guarantor
under the Subsidiary  Guarantee  Agreement,  or (iii) the failure to perfect any
security  interest  in, or the  release  of, any of the  security  held by or on
behalf of the Administrative Agent or any Lender.

Section 8.3. Guarantee of Payment.

     KPP further  agrees that its  guarantee  constitutes a guarantee of payment
when due and not of collection,  and waives any right to require that any resort
be had by the Administrative Agent or any Lender to any of the security held for
payment of the Guaranteed  Obligations or to any balance of any deposit  account
or credit on the books of the Administrative Agent or any Lender in favor of the
Borrower or any other Person.

Section 8.4. No Discharge or Diminishment of Guarantee.

     The  obligations  of KPP hereunder  shall not be subject to any  reduction,
limitation,   impairment  or   termination   for  any  reason  (other  than  the
indefeasible payment in full in cash of the Guaranteed  Obligations),  including
any claim of waiver, release, surrender,  alteration or compromise of any of the
Guaranteed  Obligations,  and shall not be  subject  to any  defense  or setoff,
counterclaim,  recoupment or termination whatsoever by reason of the invalidity,
illegality  or  unenforceability  of the  Guaranteed  Obligations  or otherwise.
Without  limiting  the  generality  of the  foregoing,  the  obligations  of KPP
hereunder  shall not be  discharged  or  impaired or  otherwise  affected by the
failure of the Administrative  Agent or any Lender to assert any claim or demand
or to enforce any remedy under this  Agreement,  any other Loan  Document or any
other agreement,  by any waiver or modification of any provision of any thereof,
by any default,  failure or delay,  willful or otherwise,  in the performance of
the Guaranteed Obligations, or by any other act or omission that may or might in
any manner or to any extent vary the risk of KPP or that would otherwise operate
as a  discharge  of a  guarantor  as a matter of law or equity  (other  than the
indefeasible payment in full in cash of all the Guaranteed Obligations).

Section 8.5. Defenses of Borrower Waived.

     To the fullest extent  permitted by applicable  law, KPP waives any defense
based on or arising out of any defense of any Loan Party or the unenforceability
of the  Guaranteed  Obligations  or any  part  thereof  from any  cause,  or the
cessation  from any cause of the  liability  of any Loan  Party,  other than the
final and  indefeasible  payment in full in cash of the Guaranteed  Obligations.
The  Administrative  Agent and the Lenders may, at their election,  foreclose on
any security held by one or more of them by one or more judicial or  nonjudicial
sales,  accept  an  assignment  of any  such  security  in lieu of  foreclosure,
compromise  or adjust  any part of the  Guaranteed  Obligations,  make any other
accommodation  with the  other  Loan  Parties  or any other  guarantor,  without
affecting or impairing in any way the liability of KPP  hereunder  except to the
extent the Guaranteed Obligations have been fully, finally and indefeasibly paid
in cash.  Pursuant to applicable  law, KPP waives any defense arising out of any
such election even though such election operates, pursuant to applicable law, to
impair or to extinguish any right of reimbursement or subrogation or other right
or remedy of KPP against the Borrower or any other  Guarantor or  guarantor,  as
the case may be, or any security.

Section 8.6. Agreement to Pay; Subordination.

     In  furtherance  of the  foregoing and not in limitation of any other right
that the Administrative  Agent or any Lender has at law or in equity against KPP
by virtue  hereof,  upon the failure of the  Borrower or any other Loan Party to
pay any Guaranteed  Obligation when and as the same shall become due, whether at
maturity, by acceleration,  after notice of prepayment or otherwise,  KPP hereby
promises to and will forthwith  pay, or cause to be paid, to the  Administrative
Agent  for  the  benefit  of the  Lenders  in cash  the  amount  of such  unpaid
Guaranteed  Obligations.  Upon payment by KPP of any sums to the  Administrative
Agent,  all rights of KPP against any Loan Party arising as a result  thereof by
way of right of subrogation, contribution, reimbursement, indemnity or otherwise
shall in all respects be subordinate and junior in right of payment to the prior
indefeasible  payment  in full in cash  of all the  Guaranteed  Obligations.  In
addition,  any indebtedness of any other Loan Party now or hereafter held by KPP
is hereby  subordinated in right of payment to the prior payment in full in cash
of the Guaranteed Obligations. If any amount shall erroneously be paid to KPP on
account  of (i) such  subrogation,  contribution,  reimbursement,  indemnity  or
similar  right or (ii) any such  indebtedness  of such Loan  Party,  such amount
shall be held in trust  for the  benefit  of the  Administrative  Agent  and the
Lenders and shall forthwith be paid to the  Administrative  Agent to be credited
against the payment of the Guaranteed Obligations, whether matured or unmatured,
in accordance with the terms of the Loan Documents.

Section 8.7. Information.

     KPP assumes all responsibility for being and keeping itself informed of the
other  Loan  Parties'   financial   condition  and  assets,  and  of  all  other
circumstances bearing upon the risk of nonpayment of the Guaranteed  Obligations
and the  nature,  scope and  extent of the risks  that KPP  assumes  and  incurs
hereunder,  and agrees that none of the Administrative Agent or the Lenders will
have any duty to advise KPP of information  known to it or any of them regarding
such circumstances or risks.

Section 8.8. Representations and Warranties.

     KPP  represents  and  warrants  as to itself that all  representations  and
warranties relating to it contained in this Agreement are true and correct.

Section 8.9. Termination.

     The guarantees  made hereunder (i) shall  terminate when all the Guaranteed
Obligations  have  been  paid in full in cash,  and (ii)  shall  continue  to be
effective or be reinstated,  as the case may be, if at any time payment,  or any
part thereof,  of any  Guaranteed  Obligation is rescinded or must  otherwise be
restored by any Lender or any Guarantor upon the bankruptcy or reorganization of
the Borrower, any Guarantor or otherwise. In connection with the foregoing,  the
Administrative  Agent shall  execute and  deliver to KPP or KPP's  designee,  at
KPP's expense,  any documents or instruments that KPP shall  reasonably  request
from time to time to evidence such termination and release.


                          Article IX EVENTS OF DEFAULT

Section 9.1. Events of Default.

     If any of the following events (each an "Event of Default") shall occur:

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

          (b) the Borrower  shall fail to pay any interest on the Bridge Loan or
     any other amount (other than an amount payable under subsection (a) of this
     Article) payable under this Agreement or any other Loan Document,  when and
     as the same shall become due and payable,  and such failure shall  continue
     unremedied for a period of 3 Business Days; or

          (c) any representation or warranty made or deemed made by or on behalf
     of any Loan Party in or in connection with this Agreement or any other Loan
     Document  (including the Schedules  attached thereto) and any amendments or
     modifications hereof or waivers hereunder,  or in any certificate,  report,
     financial statement or other document submitted to the Administrative Agent
     or the  Lenders by any Loan Party or any  representative  of any Loan Party
     pursuant to or in connection with this Agreement or any other Loan Document
     shall prove to be  incorrect  in any  material  respect when made or deemed
     made or submitted; or

          (d) the  Borrower  or KPP,  as  applicable,  shall  fail to observe or
     perform any covenant or agreement  contained in Section 5.2(a) or 5.3 (with
     respect to KPP's or the Borrower's existence) or Article VI or VII; or

          (e) any Loan Party  shall fail to observe or perform  any  covenant or
     agreement  contained in any Loan Document  (other than those referred to in
     subsections  (a),  (b)  and (d)  above),  and  such  failure  shall  remain
     unremedied for 30 days after the earlier of (i) any officer of the Borrower
     becomes aware of such failure, or (ii) notice thereof shall have been given
     to the Borrower by the Administrative Agent or any Lender; or

          (f) the Borrower, KPP or any Significant Affiliate (whether as primary
     obligor or as guarantor or other surety) shall fail to pay any principal of
     or premium or interest on any Material  Indebtedness  that is  outstanding,
     when and as the same shall  become due and payable  (whether  at  scheduled
     maturity, required prepayment, acceleration, demand or otherwise), and such
     failure shall continue after the applicable grace period, if any, specified
     in the agreement or instrument  evidencing such Indebtedness;  or any other
     event  shall  occur  or  condition  shall  exist  under  any  agreement  or
     instrument  relating  to such  Indebtedness  and shall  continue  after the
     applicable grace period, if any, specified in such agreement or instrument,
     if the effect of such event or  condition is to  accelerate,  or permit the
     acceleration   of,  the  maturity  of  such   Indebtedness;   or  any  such
     Indebtedness  shall be  declared to be due and  payable;  or required to be
     prepaid  or  redeemed  (other  than  by  a  regularly   scheduled  required
     prepayment or redemption),  purchased or defeased,  or any offer to prepay,
     redeem, purchase or defease such Indebtedness shall be required to be made,
     in each case prior to the stated maturity thereof; or

          (g) the Borrower,  KPP or any Significant Affiliate shall (i) commence
     a  voluntary  case  or  other  proceeding  or  file  any  petition  seeking
     liquidation,  reorganization  or other relief  under any federal,  state or
     foreign  bankruptcy,  insolvency  or other  similar law now or hereafter in
     effect or  seeking  the  appointment  of a  custodian,  trustee,  receiver,
     liquidator or other similar  official of it or any substantial  part of its
     property,  (ii)  consent  to the  institution  of, or fail to  contest in a
     timely and  appropriate  manner,  any  proceeding or petition  described in
     subsection  (i)  of  this  Section,  (iii)  apply  for  or  consent  to the
     appointment of a custodian,  trustee, receiver, liquidator or other similar
     official for the Borrower,  KPP or any such Significant  Affiliate 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; or

          (h) an  involuntary  proceeding  shall be commenced or an  involuntary
     petition shall be filed seeking (i)  liquidation,  reorganization  or other
     relief in respect of the Borrower,  KPP or any Significant Affiliate or its
     debts, or any substantial part of its assets,  under any federal,  state or
     foreign  bankruptcy,  insolvency  or other  similar law now or hereafter in
     effect  or  (ii)  the  appointment  of  a  custodian,   trustee,  receiver,
     liquidator  or  other  similar  official  for  the  Borrower,  KPP  or  any
     Significant  Affiliate or for a substantial part of its assets,  and in any
     such case,  such  proceeding  or petition  shall remain  undismissed  for a
     period of 60 days or an order or decree  approving  or ordering  any of the
     foregoing shall be entered; or

          (i) the  Borrower,  KPP or any  Significant  Subsidiary  shall  become
     unable to pay,  shall admit in writing its  inability to pay, or shall fail
     to pay, its debts as they become due; or

          (j) an ERISA Event  shall have  occurred  that,  in the opinion of the
     Required  Lenders,  when taken  together  with other ERISA Events that have
     occurred,  could  reasonably  be  expected  to result in  liability  to the
     Borrower and the Subsidiaries in an aggregate amount exceeding  $5,000,000;
     or

          (k) any  judgment  or order  for the  payment  of money in  excess  of
     $5,000,000 in the aggregate shall be rendered against the Borrower,  KPP or
     any Significant  Affiliate,  and either (i) enforcement  proceedings  shall
     have been  commenced  by any creditor  upon such  judgment or order or (ii)
     there  shall be a period  of 30  consecutive  days  during  which a stay of
     enforcement  of such  judgment or order,  by reason of a pending  appeal or
     otherwise, shall not be in effect; or

          (l) any  non-monetary  judgment or order shall be rendered against the
     Borrower,  KPP  or any  Significant  Affiliate  that  could  reasonably  be
     expected to have a Material Adverse Effect,  and there shall be a period of
     30 consecutive  days during which a stay of enforcement of such judgment or
     order, by reason of a pending appeal or otherwise,  shall not be in effect;
     or

          (m) a Change in Control shall occur or exist; or

          (n) any provision of the Subsidiary  Guarantee Agreement shall for any
     reason  cease to be valid and  binding  on,  or  enforceable  against,  any
     Guarantor, or any Guarantor shall so state in writing, or (a) any provision
     of Article  VIII shall for any reason  cease to be valid and binding on, or
     enforceable against KPP, or KPP shall so state in writing;  Guarantor shall
     seek to terminate its obligations under the Loan Documents; or

          (o) an event,  act,  or  condition  shall  occur  which has,  or could
     reasonably be expected to have,  singly or in the aggregate with other such
     occurrences, a Material Adverse Effect;

then,  and in every such event  (other than an event with  respect to KPP or the
Borrower  described in  subsection  (g) or (h) of this  Section) and at any time
thereafter during the continuance of such event, the  Administrative  Agent may,
and upon the written  request of the Required  Lenders  shall,  by notice to the
Borrower,  take any or all of the  following  actions,  at the same or different
times:  (i) terminate the  Commitments,  whereupon the Commitment of each Lender
shall  terminate  immediately;  (ii)  declare the  principal  of and any accrued
interest  on the  Loans,  and all  other  Obligations  owing  hereunder,  to be,
whereupon   the  same  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 (iii)  exercise all remedies  contained in any
other  Loan  Document;  and that,  if an Event of  Default  specified  in either
subsection (g) or (h) shall occur, the Commitments shall automatically terminate
and the principal of the Loans then outstanding,  together with accrued interest
thereon,  and all other Obligations 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 X THE ADMINISTRATIVE AGENT

Section 10.1. Appointment of Administrative Agent.

     Each Lender irrevocably  appoints SunTrust Bank as the Administrative Agent
and authorizes it to take such actions on its behalf and to exercise such powers
as are delegated to the Administrative  Agent under this Agreement and the other
Loan  Documents,  together with all such actions and powers that are  reasonably
incidental  thereto.  The  Administrative  Agent may  perform  any of its duties
hereunder  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 of its duties and  exercise  its rights and powers  through
their respective Related Parties.  The exculpatory  provisions set forth in this
Article  shall  apply to any  such  sub-agent  and 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  facility  provided
for herein as well as activities as Administrative Agent.

Section 10.2. Nature of Duties of Administrative Agent.

     The  Administrative  Agent shall not have any duties or obligations  except
those  expressly  set  forth in this  Agreement  and the other  Loan  Documents.
Without limiting the generality of the foregoing,  (i) the Administrative  Agent
shall not be subject to any  fiduciary or other  implied  duties,  regardless of
whether a Default or an Event of Default has  occurred and is  continuing,  (ii)
the  Administrative  Agent  shall  not have  any duty to take any  discretionary
action or exercise any discretionary  powers,  except those discretionary rights
and powers expressly  contemplated by the Loan Documents that the Administrative
Agent is required to exercise in writing by the Required  Lenders (or such other
number  or  percentage   of  the  Lenders  as  shall  be  necessary   under  the
circumstances  as provided in Section  11.2),  and (iii) except as expressly set
forth in the Loan Documents, 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  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  11.2) or in the absence of its own gross
negligence or willful misconduct.  The Administrative  Agent shall not be deemed
to have  knowledge of any Default or Event of Default  unless and until  written
notice  thereof  is given to the  Administrative  Agent by the  Borrower  or any
Lender,  and the  Administrative  Agent shall not be responsible for or have any
duty to ascertain or inquire into (A) any statement,  warranty or representation
made in or in  connection  with  any  Loan  Document,  (B) the  contents  of any
certificate,  report or other document  delivered  hereunder or thereunder or in
connection  herewith or therewith,  (C) the  performance or observance of any of
the covenants,  agreements,  or other terms and conditions set forth in any Loan
Document, (D) the validity, enforceability,  effectiveness or genuineness of any
Loan  Document  or any  other  agreement,  instrument  or  document,  or (E) the
satisfaction  of any condition set forth in Article III or elsewhere in any Loan
Document,  other  than to  confirm  receipt of items  expressly  required  to be
delivered to the Administrative Agent.

Section 10.3. Lack of Reliance on the Administrative Agent.

     Each of the Lenders  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 of the Lenders 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 has deemed appropriate,  continue to make its own decisions in
taking or not taking of any action under or based on this Agreement, any related
agreement or any document furnished hereunder or thereunder.

Section 10.4. Certain Rights of the Administrative Agent.

     If the  Administrative  Agent shall request  instructions from the Required
Lenders with respect to any action or actions  (including the failure to act) in
connection with this Agreement,  the  Administrative  Agent shall be entitled to
refrain  from  such act or  taking  such act,  unless  and  until it shall  have
received  instructions from such Lenders; and the Administrative Agent shall not
incur liability to any Person by reason of so refraining.  Without  limiting the
foregoing,  no Lender  shall  have any right of action  whatsoever  against  the
Administrative  Agent  as  a  result  of  the  Administrative  Agent  acting  or
refraining  from acting  hereunder in accordance  with the  instructions  of the
Required Lenders where required by the terms of this Agreement.

Section 10.5. Reliance by 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,  sent or made by the proper Person.  The Administrative
Agent may also rely upon any  statement  made to it orally or by  telephone  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
(including  counsel for the Borrower),  independent public 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 such counsel, accountants or experts.

Section 10.6. The Administrative Agent in its Individual Capacity.

     The bank serving as the Administrative Agent shall have the same rights and
powers  under this  Agreement  and any other Loan  Document in its capacity as a
Lender as any other Lender and may exercise or refrain from  exercising the same
as  though  it were  not the  Administrative  Agent;  and the  terms  "Lenders",
"Required  Lenders",  "holders of Notes", or any similar terms shall, unless the
context clearly otherwise  indicates,  include the  Administrative  Agent in its
individual  capacity.  The  bank  acting  as the  Administrative  Agent  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  Affiliate  of the
Borrower as if it were not the Administrative Agent hereunder.

Section 10.7. Successor Administrative Agent.

          (a) The  Administrative  Agent may resign at any time by giving notice
     thereof to the Lenders and the Borrower and may be removed at any time with
     or without  cause by the Required  Lenders.  Upon any such  resignation  or
     removal,  the Required  Lenders shall have the right to appoint a successor
     Administrative Agent, subject to the approval by the Borrower provided that
     no Default or Event of Default  shall have  occurred and be  continuing  at
     such  time.  If no  successor  Administrative  Agent  shall  have  been  so
     appointed,  and shall have accepted such  appointment  within 30 days after
     the  retiring  Administrative  Agent  gives  notice of  resignation  or the
     Required  Lenders' removal of the Agent,  then the retiring  Administrative
     Agent may, on behalf of the  Lenders,  appoint a  successor  Administrative
     Agent,  which shall be a commercial  bank  organized  under the laws of the
     United States of America or any state thereof or a bank which  maintains an
     office in the United  States,  having a combined  capital and surplus of at
     least $500,000,000.

          (b) Upon the acceptance of its appointment as the Administrative Agent
     hereunder  by  a  successor,  such  successor  Administrative  Agent  shall
     thereupon  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 under this Agreement and the other Loan Documents. If within 45
     days after written notice is given of the retiring  Administrative  Agent's
     resignation or removal under this Section 10.7 no successor  Administrative
     Agent shall have been  appointed and shall have accepted such  appointment,
     then on such 45th day (i) the retiring  Administrative  Agent's resignation
     or removal shall become effective,  (ii) the retiring  Administrative Agent
     shall  thereupon be discharged  from its duties and  obligations  under the
     Loan Documents and (iii) the Required Lenders shall thereafter  perform all
     duties of the retiring  Administrative Agent under the Loan Documents until
     such time as the Required Lenders appoint a successor  Administrative Agent
     as provided above. After any retiring  Administrative  Agent's  resignation
     hereunder,  the  provisions of this Article IX shall continue in effect for
     the benefit of such retiring  Administrative  Agent and its representatives
     and  agents in  respect  of any  actions  taken or not taken by any of them
     while it was serving as the Administrative Agent.

Section 10.8. Authorization to Execute other Loan Documents.

     Each Lender hereby authorizes the Administrative Agent to execute on behalf
of all Lenders all Loan Documents other than this Agreement.


                            Article XI MISCELLANEOUS

Section 11.1. Notices.

          (a) Except in the case of notices and other  communications  expressly
     permitted to be given by telephone, all notices and other communications to
     any party herein to be effective 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:

        To the Borrower:                        2435 North Central Expressway
                                                Suite 700
                                                Richardson, Texas  75080-2731
                                                Attention:  Ed Doherty
                                                            Mark Jones
                                                Telecopy Number:  (972) 699-1894

        To KPP:                                 2435 North Central Expressway
                                                Suite 700
                                                Richardson, Texas  75080-2731
                                                Attention:  Ed Doherty
                                                Mark Jones
                                                Telecopy Number:  (972) 699-1894

        To the Administrative Agent:            SunTrust Bank
                                                303 Peachtree Street, N. E.
                                                Atlanta, Georgia 30308
                                                Attention: Mr. Justin Wilde
                                                Telecopy Number: ____________

        To any other Lender:                    the address set forth in the
                                                Administrative Questionnaire


     Any party hereto may change its address or telecopy  number for notices and
     other  communications  hereunder by notice to the other parties hereto. All
     such notices and other communications  shall, when transmitted by overnight
     delivery,  or faxed,  be effective when delivered for overnight  (next-day)
     delivery,   or   transmitted   in  legible  form  by   facsimile   machine,
     respectively,  or if  mailed,  upon the third  Business  Day after the date
     deposited  into the mails or if delivered,  upon delivery;  provided,  that
     notices delivered to the Administrative  Agent shall not be effective until
     actually  received by such Person at its address  specified in this Section
     11.1.

          (b) Any agreement of the  Administrative  Agent and the Lenders herein
     to receive  certain  notices by  telephone  or  facsimile is solely for the
     convenience and at the request of the Borrower.  The  Administrative  Agent
     and the Lenders  shall be entitled to rely on the  authority  of any Person
     purporting  to be a Person  authorized  by the Borrower to give such notice
     and the  Administrative  Agent and Lenders  shall not have any liability to
     the Borrower or other Person on account of any action taken or not taken by
     the Administrative Agent or the Lenders in reliance upon such telephonic or
     facsimile notice. The obligation of the Borrower to repay the Loans and all
     other  Obligations  hereunder  shall not be  affected  in any way or to any
     extent  by any  failure  of the  Administrative  Agent and the  Lenders  to
     receive written  confirmation of any telephonic or facsimile  notice or the
     receipt by the Administrative Agent and the Lenders of a confirmation which
     is at variance with the terms  understood by the  Administrative  Agent and
     the Lenders to be contained in any such telephonic or facsimile notice.

Section 11.2. Waiver; Amendments.

          (a) No failure or delay by the  Administrative  Agent or any Lender in
     exercising any right or power hereunder or any other Loan Document,  and no
     course of dealing between the Borrower and the Administrative  Agent or any
     Lender,  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  right or  power,  preclude  any  other or  further
     exercise  thereof or the exercise of any other right or power  hereunder or
     thereunder.  The rights and  remedies of the  Administrative  Agent and the
     Lenders hereunder and under the other Loan Documents are cumulative and are
     not  exclusive of any rights or remedies  provided by law. No waiver of any
     provision of this  Agreement  or any other Loan  Document or consent to any
     departure by the Borrower  therefrom shall in any event be effective unless
     the same shall be permitted by  subsection  (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.  Without  limiting the  generality  of the
     foregoing,  Disbursement  of the Bridge  Loan shall not be  construed  as a
     waiver of any  Default  or Event of  Default,  regardless  of  whether  the
     Administrative Agent or any Lender may have had notice or knowledge of such
     Default or Event of Default at the time.

          (b) No amendment or waiver of any  provision of this  Agreement or the
     other  Loan  Documents,  nor  consent  to any  departure  by any Loan Party
     therefrom,  shall in any event be  effective  unless  the same  shall be in
     writing and signed by the Borrower and the Required Lenders or the Borrower
     and the  Administrative  Agent with the consent of the Required Lenders and
     then  such  waiver  or  consent  shall be  effective  only in the  specific
     instance and for the specific  purpose for which given;  provided,  that no
     amendment  or waiver  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,  without  the
     written  consent of each Lender affected  thereby,  (iii) postpone the date
     fixed for any  payment  of any  principal  of,  or  interest  on,  any Loan
     hereunder  or reduce the amount of,  waive or excuse any such  payment,  or
     postpone  the  scheduled  date  for the  termination  or  reduction  of any
     Commitment,  without the written consent of each Lender  affected  thereby,
     (iv)  change  Section  2.18(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)  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 which are required to waive,  amend or
     modify any rights hereunder or make any  determination or grant any consent
     hereunder,  without the consent of each Lender;  (vi) release any guarantor
     or limit the liability of any such guarantor under any guaranty  agreement,
     without  the  written  consent  of  each  Lender;   (vii)  release  all  or
     substantially  all  collateral  (if any)  securing any of the  Obligations,
     without the written consent of each Lender;  provided further, that no such
     agreement  shall amend,  modify or otherwise  affect the rights,  duties or
     obligations of the  Administrative  Agent without the prior written consent
     of the Administrative Agent.  Notwithstanding the foregoing,  any provision
     of this Agreement may be amended by an agreement in writing entered into by
     the Borrower,  the Required Lenders and the Administrative  Agent if (i) by
     the terms of such agreement the Commitment of each Lender not consenting to
     the amendment  provided for therein shall  terminate (but such Lender shall
     continue to be entitled to the benefits of Sections  2.15,  2.16,  and 2.17
     and 11.3) upon the  effectiveness  of such  amendment  and (ii) at the time
     such  amendment  becomes  effective,  each  Lender not  consenting  thereto
     receives payment in full principal of and interest accrued on the Loan made
     by it and all other  amounts  owing to it or accrued for its account  under
     this Agreement and is released from its obligations hereunder.

Section 11.3. Expenses; Indemnification.

          (a) The Borrower shall pay (i) all reasonable, out-of-pocket costs and
     expenses of the  Administrative  Agent and its  Affiliates,  including  the
     reasonable   fees,   charges   and   disbursements   of  counsel   for  the
     Administrative Agent and its Affiliates, in connection with the syndication
     of  the  credit  facilities   provided  for  herein,  the  preparation  and
     administration  of the Loan Documents and any amendments,  modifications or
     waivers  thereof  (whether  or not the  transactions  contemplated  in this
     Agreement or any other Loan Document  shall be  consummated),  and (ii) all
     out-of-pocket  costs  and  expenses  (including,  without  limitation,  the
     reasonable  fees,  charges  and  disbursements  of outside  counsel and the
     allocated cost of inside counsel) incurred by the  Administrative  Agent or
     any Lender in connection  with the  enforcement or protection of its rights
     in  connection  with the Loan  Documents,  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, each Lender
     and each Related  Party of any of the  foregoing  (each,  an  "Indemnitee")
     against,  and hold each of them harmless from,  any and all costs,  losses,
     liabilities,  claims,  damages and related  expenses,  including  the fees,
     charges and  disbursements of any counsel for any Indemnitee,  which may be
     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  or  any  other  agreement  or  instrument  contemplated  hereby,
     including,   without  limitation,   the  Loan  Documents,  the  Acquisition
     Documents  and the Prior  Acquisition  Documents,  the  performance  by the
     parties hereto of their respective  obligations  hereunder or thereunder or
     the consummation of any of the transactions contemplated hereby or thereby,
     including,  without limitation,  the Acquisition and the Prior Acquisition,
     (ii) any Loan, (iii) any actual or alleged presence or release of Hazardous
     Materials on or from any property  owned by the Borrower or any  Subsidiary
     or any  Environmental  Liability  related in any way to the Borrower or any
     Subsidiary   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 the Borrower  shall not be
     obligated to indemnify any Indemnitee for any of the foregoing  arising out
     of such Indemnitee's  gross negligence or willful  misconduct as determined
     by a court of competent jurisdiction in a final and nonappealable judgment.

          (c) The Borrower shall pay, and hold the Administrative Agent and each
     of the Lenders  harmless  from and against,  any and all present and future
     stamp, documentary,  and other similar taxes with respect to this Agreement
     and any other Loan  Documents,  any collateral  described  therein,  or any
     payments due thereunder,  and save the Administrative Agent and each Lender
     harmless  from and  against  any and all  liabilities  with  respect  to or
     resulting from any delay or omission to pay such taxes.

          (d) To the extent that the Borrower  fails to pay any amount  required
     to be paid to the  Administrative  Agent under  subsection  (a), (b) or (c)
     above, each Lender severally agrees to pay to the Administrative Agent such
     Lender's Pro Rata Share  (determined  as of the time that the  unreimbursed
     expense or indemnity  payment is sought) of such unpaid  amount;  provided,
     that the  unreimbursed  expense  or  indemnified  payment,  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.

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

          (f) All amounts due under this Section shall be payable promptly after
     written demand therefor.

Section 11.4. 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,  except that the  Borrower  may not assign or transfer  any of its
     rights 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).

          (b) Any Lender may at any time assign to one or more  assignees all or
     a portion of its rights and obligations  under this Agreement and the other
     Loan  Documents  (including all or a portion of the Loans at the time owing
     to it); provided,  that (i) except in the case of an assignment to a Lender
     or an  Affiliate of a Lender,  each of the Borrower and the  Administrative
     Agent must give their prior  written  consent  (which  consent shall not be
     unreasonably withheld or delayed), (ii) except in the case of an assignment
     to a Lender or an Affiliate of a Lender or an assignment  while an Event of
     Default  has  occurred  and is  continuing,  the  amount of the Loan of the
     assigning Lender subject to each such assignment (determined as of the date
     the Assignment and Acceptance  with respect to such assignment is delivered
     to the Administrative  Agent) shall not be less than $1,000,000 (unless the
     Borrower and the Administrative Agent shall otherwise consent),  (iii) each
     partial  assignment shall be made as an assignment of a proportionate  part
     of all the assigning  Lender's rights and  obligations  with respect to the
     Loans related  thereto under this  Agreement and the other Loan  Documents,
     (iv) the assigning Lender and the assignee shall execute and deliver to the
     Administrative  Agent  an  Assignment  and  Acceptance,   together  with  a
     processing  and  recordation  fee  payable by the  assigning  Lender or the
     assignee (as determined  between such Persons) in an amount equal to $1,000
     and  (v)  such  assignee,  if it is  not a  Lender,  shall  deliver  a duly
     completed   Administrative   Questionnaire  to  the  Administrative  Agent;
     provided,  that any consent of the Borrower  otherwise  required  hereunder
     shall  not  be  required  if an  Event  of  Default  has  occurred  and  is
     continuing.   Upon  the  execution  and  delivery  of  the  Assignment  and
     Acceptance  and  payment by such  assignee  to the  assigning  Lender of an
     amount  equal to the  purchase  price agreed  between  such  Persons,  such
     assignee  shall  become  a party  to this  Agreement  and  any  other  Loan
     Documents to which such  assigning  Lender is a party and, to the extent of
     such interest  assigned by such Assignment and  Acceptance,  shall have the
     rights and obligations of a Lender under this Agreement,  and the assigning
     Lender shall be released from its obligations  hereunder to a corresponding
     extent (and, in the case of an Assignment  and  Acceptance  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  2.15,  2.16  and 2.17  and  11.3.  Upon the
     consummation of any such assignment  hereunder,  the assigning Lender,  the
     Administrative  Agent and the Borrower shall make appropriate  arrangements
     to have new Notes issued if so  requested  by either or both the  assigning
     Lender or the assignee.  Any  assignment or other transfer by a Lender that
     does not  fully  comply  with the  terms of this  subsection  (b)  shall be
     treated  for  purposes  of  this  Agreement  as a sale  of a  participation
     pursuant to subsection (c) below.

          (c) Any Lender may at any time, 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 (i) such  Lender's
     obligations under this Agreement shall remain  unchanged,  (ii) such Lender
     shall  remain  solely  responsible  to the  other  parties  hereto  for the
     performance  of its  obligations  hereunder,  and (iii) 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  and  the  other  Loan  Documents.  Any
     agreement  between  such Lender and the  Participant  with  respect to such
     participation  shall  provide  that such Lender shall retain the sole right
     and  responsibility  to enforce this Agreement and the other Loan Documents
     and the right to  approve  any  amendment,  modification  or waiver of this
     Agreement and the other Loan Documents;  provided,  that such participation
     agreement may provide that such Lender will not, without the consent of the
     Participant,  agree  to any  amendment,  modification  or  waiver  of  this
     Agreement  described in the first  proviso of Section  11.2(b) that affects
     the  Participant.  The  Borrower  agrees  that  each  Participant  shall be
     entitled to the benefits of Sections 2.15, 2.16 and 2.17 to the same extent
     as if it  were  a  Lender  hereunder  and  had  acquired  its  interest  by
     assignment pursuant to subsection (b); provided,  that no Participant shall
     be entitled to receive any greater  payment under Section 2.15 or 2.17 than
     the  applicable  Lender would have been entitled to receive with respect to
     the  participation  sold  to  such  Participant  unless  the  sale  of such
     participation  is made with the Borrower's  prior written  consent.  To the
     extent permitted by law, the Borrower agrees that each Participant shall be
     entitled  to the  benefits  of  Section  2.18 as  though  it were a Lender,
     provided,  that such  Participant  agrees  to share  with the  Lenders  the
     proceeds  thereof in accordance  with Section 2.18 as fully as if it were a
     Lender hereunder. A Participant that would be a Foreign Lender if it were a
     Lender  shall not be  entitled to the  benefits of Section  2.17 unless the
     Borrower is notified of such  participation  sold to such  Participant  and
     such Participant  agrees,  for the benefit of the Borrower,  to comply with
     Section 2.17(e) as though it were a Lender hereunder.

          (d) Any Lender may at any time pledge or assign a security interest in
     all or any  portion of its rights  under this  Agreement  and its Notes (if
     any) to secure its obligations to a Federal Reserve Bank without  complying
     with  this  Section;  provided,  that no such  pledge or  assignment  shall
     release a Lender from any of its  obligations  hereunder or substitute  any
     such pledgee or assignee for such Lender as a party hereto.

          (e)  Notwithstanding  anything to the contrary  contained herein,  any
     Lender (a "Granting Lender") may grant to a special purpose funding vehicle
     (an "SPV"), identified as such in writing from time to time by the Granting
     Lender to the Administrative Agent and the Borrower,  the option to provide
     to the  Borrower  all or any part of the  Bridge  Loan that  such  Granting
     Lender would  otherwise  be  obligated to make to the Borrower  pursuant to
     this  Agreement;  provided,  that (i) nothing  herein  shall  constitute  a
     commitment by any SPV to make the Bridge Loan or any portion  thereof,  and
     (ii) if an SPV elects not to  exercise  such option or  otherwise  fails to
     provide all or any part of any Loan, the Granting Lender shall be obligated
     to make its portion of the Bridge Loan on the Closing Date. The making of a
     Loan by an SPV  hereunder  shall  utilize the  Commitment  of the  Granting
     Lender to the same extent,  and as if such Loan were made by such  Granting
     Lender. Each party hereto hereby agrees that no SPV shall be liable for any
     indemnity or similar payment obligation under this Agreement (all liability
     for which shall remain with the Granting  Lender).  In  furtherance  of the
     foregoing,  each party hereto hereby agrees (which  agreement shall survive
     the termination of this Agreement) that, prior to the date that is one year
     and one day after the payment in full of all outstanding  commercial  paper
     or other senior  indebtedness of any SPV, it will not institute against, or
     join any other  person in  instituting  against,  such SPV any  bankruptcy,
     reorganization,  arrangement,  insolvency or liquidation  proceedings under
     the laws of the United States or any State. Notwithstanding anything to the
     contrary in this Section 11.4,  any SPV may (i) with notice to, but without
     the prior written consent of, the Borrower and the Administrative Agent and
     without paying any processing fee therefor,  assign all or a portion of its
     interests  in  any  Loans  to  the  Granting  Lender  or to  any  financial
     institutions  (consented to by the Borrower and the  Administrative  Agent)
     providing liquidity and/or credit support to or for the account of such SPV
     to support  the  funding or  maintenance  of Loans and (ii)  disclose  on a
     confidential basis any non-public  information relating to its Loans to any
     rating agency, commercial paper dealer or provider of any surety, guarantee
     or credit or liquidity  enhancement  to such SPV. As this  Section  11.4(e)
     applies to any particular  SPV, this Section may not be amended without the
     written consent of such SPV.

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

          (a) This Agreement and the other Loan Documents  shall be construed in
     accordance  with and be governed by the law (without  giving  effect to the
     conflict of law principles thereof) of the State of New York.

          (b)   Each  of  the   Borrower   and  KPP   hereby   irrevocably   and
     unconditionally  submits, for itself and its property, to the non-exclusive
     jurisdiction of the United States  District Court of the Southern  District
     of New York,  and of the Supreme  Court of the State of New York sitting in
     New York County and any appellate court from any thereof,  in any action or
     proceeding  arising out of or relating to this  Agreement or any other Loan
     Document  or  the  transactions  contemplated  hereby  or  thereby,  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 court or, to the extent  permitted by  applicable  law,  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 or any other Loan Document shall affect any
     right that the  Administrative  Agent or any Lender may  otherwise  have to
     bring any action or proceeding relating to this Agreement or any other Loan
     Document  against  the  Borrower  or its  properties  in the  courts of any
     jurisdiction.

          (c)  Each of the  Borrower  and KPP  irrevocably  and  unconditionally
     waives any  objection  which it may now or hereafter  have to the laying of
     venue of any such suit, action or proceeding described in subsection (b) of
     this Section and brought in any court referred to in subsection (b) of this
     Section.  Each of the parties  hereto  irrevocably  waives,  to the fullest
     extent permitted by applicable 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 the service
     of process in the manner  provided for notices in Section 11.1.  Nothing in
     this  Agreement or in any other Loan  Document will affect the right of any
     party hereto to serve process in any other manner permitted by law.

Section 11.6. WAIVER OF JURY TRIAL.

     EACH PARTY HERETO  IRREVOCABLY  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 THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
OR THE TRANSACTIONS  CONTEMPLATED  HEREBY OR THEREBY (WHETHER BASED ON CONTRACT,
TORT  OR  ANY  OTHER   THEORY).   EACH  PARTY  HERETO  (i)  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 (ii)  ACKNOWLEDGES  THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS BY, AMONG OTHER THINGS,  THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.

Section 11.7. Right of Setoff.

     In addition to any rights now or hereafter granted under applicable law and
not by way of limitation  of any such rights,  each Lender shall have the right,
at any time or from time to time upon the occurrence and during the  continuance
of an Event of Default,  without  prior  notice to the Borrower or KPP, any such
notice being expressly waived by the Borrower and KPP to the extent permitted by
applicable  law, to set off and apply against all deposits  (general or special,
time or demand, provisional or final) of the Borrower or KPP at any time held or
other  obligations  at any time owing by such Lender to or for the credit or the
account of the  Borrower  or KPP against  any and all  Obligations  held by such
Lender, irrespective of whether such Lender shall have made demand hereunder and
although  such  Obligations  may be unmatured.  Each Lender  agrees  promptly to
notify the Administrative  Agent and the Borrower after any such set-off and any
application made by such Lender;  provided, that the failure to give such notice
shall not affect the validity of such set-off and application.

Section 11.8. Counterparts; Integration.

     This  Agreement  may be  executed  by one or  more of the  parties  to this
Agreement on any number of separate  counterparts  (including by telecopy),  and
all of said  counterparts  taken  together shall be deemed to constitute one and
the same instrument.  This Agreement and the other Loan Documents constitute the
entire  agreement  among the parties  hereto and thereto  regarding  the subject
matters   hereof  and   thereof  and   supersede   all  prior   agreements   and
understandings, oral or written, regarding such subject matters.

Section 11.9. Survival.

     All  covenants,  agreements,  representations  and  warranties  made by the
Borrower and KPP 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 other  amount  payable
under this  Agreement is outstanding  and unpaid and so long as the  Commitments
have not expired or terminated. The provisions of Sections 2.3, 2.15, 2.16, 2.17
and 11.3 and  Article  X 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 or termination of the Commitments or the
termination of this Agreement or any provision hereof. All  representations  and
warranties  made  herein,  in the  certificates,  reports,  notices,  and  other
documents  delivered  pursuant to this Agreement shall survive the execution and
delivery of this Agreement and the other Loan  Documents,  and the making of the
Loans.

Section 11.10. Severability.

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

Section 11.11. Confidentiality.

     Each of the Administrative  Agent and each Lender agrees to take normal and
reasonable  precautions  to  maintain  the  confidentiality  of any  information
designated  in  writing  as  confidential  and  provided  to it by  KPP  or  any
Subsidiary  of KPP,  except that such  information  may be disclosed  (i) to any
Related Party of the Administrative Agent or any such Lender,  including without
limitation  accountants,  legal counsel and other  advisors,  (ii) to the extent
required by applicable  laws or  regulations or by any subpoena or similar legal
process,  (iii) to the extent  requested by any regulatory  agency or authority,
(iv) to the extent that such information  becomes publicly  available other than
as a result of a breach of this Section 11.11, or which becomes available to the
Administrative  Agent  or  any  Related  Party  of any  of  the  foregoing  on a
nonconfidential basis from a source other than KPP or any Subsidiary of KPP, (v)
in connection with the exercise of any remedy  hereunder or any suit,  action or
proceeding  relating to this Agreement or the  enforcement of rights  hereunder,
and (vi) subject to provisions  substantially  similar to this Section 11.11, to
any actual or prospective assignee or Participant,  or (vii) with the consent of
the  Borrower.  Any Person  required  to  maintain  the  confidentiality  of any
information  as provided for in this Section  11.11 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 its own confidential information.

Section 11.12. Syndication; Market Flex.

     Until  completion of the syndication of the  Commitments,  as determined by
SunTrust in its sole discretion,  SunTrust shall be entitled,  after the Closing
Date and in consultation  with the Borrower,  to change the structure,  terms or
pricing of this Agreement and the other Loan Documents if SunTrust determines in
its reasonable  discretion that such changes are necessary or advisable in order
to  complete  syndication,  so long as any  such  change  to the  terms  of this
Agreement  or any other  Loan  Document  does not  adversely  affect  any Lender
(unless such Lender otherwise consents to such change).

Section 11.13. 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 may be treated as  interest  on such Loan  under  applicable  law
(collectively,  the "Charges"), shall exceed the maximum lawful rate of interest
(the "Maximum Rate") that may be contracted  for,  charged,  taken,  received or
reserved by a 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  11.12 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 Rate to the date of  repayment,  shall have been
received by such Lender.



<PAGE>

     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.
                                 KANEB PIPE LINE OPERATING
                                 PARTNERSHIP, L.P.

                                 By:      KANEB PIPE LINE COMPANY,
                                          General Partner


                                         By:
                                              ----------------------------------
                                              Name:
                                              Title:

                                 KANEB PIPE LINE PARTNERS, L.P.

                                 By:  KANEB PIPE LINE COMPANY,
                                      General Partner


                                      By:
                                          --------------------------------------
                                          Name:
                                          Title:

                                 SUNTRUST BANK,
                                 as Administrative Agent and as a Lender


                                 By:
                                      ------------------------------------------
                                      Name:
                                      Title:

                                Commitment: $75,000,000


                                 BANK OF AMERICA, N.A.,
                                 as a Lender


                                 By:
                                      ------------------------------------------
                                      Name:
                                      Title:

                                 Commitment: $25,000,000


                                 BANK ONE, N.A.,
                                 as a Lender


                                 By:  ------------------------------------------
                                      Name:
                                      Title:

                                 Commitment: $50,000,000

<PAGE>

                                   Schedule I


<TABLE>
<CAPTION>
                                APPLICABLE MARGIN

<S>                             <C>                       <C>                            <C>
------------------------------- ------------------------- ------------------------------ -----------------------------
------------------------------         Reference              Applicable Margin for       Applicable Margin for Base
           Pricing                      Ratings                 Eurodollar Loans                  Rate Loans
            Level
------------------------------- ------------------------- ------------------------------ -----------------------------
------------------------------- ------------------------- ------------------------------ -----------------------------

              I                 BBB- or higher and Baa3               1.25%                           0%
                                       or higher                    per annum                     per annum
------------------------------- ------------------------- ------------------------------ -----------------------------
------------------------------- ------------------------- ------------------------------ -----------------------------

              II                   Lower than BBB- or                 1.75%                           0%
                                   lower than Baa3 or               per annum                     per annum
                                        unrated
------------------------------- ------------------------- ------------------------------ -----------------------------

</TABLE>

     If (i) the Applicable Margin is to be determined by the Reference  Ratings,
(ii) more than one Reference Rating is in effect,  (iii) such Reference  Ratings
are "split ratings" and (iv) the ratings differential is one category, the lower
of the two  Reference  Ratings  will apply (e.g.,  BBB+/Ba1  results in Level II
status.) If the Borrower does not have a Credit  Rating,  then the rate shall be
established by reference to Level II.

     If the rating system of S&P or Moody's  shall  change,  or if either rating
agency shall cease to be in the business of rating  corporate debt  obligations,
the Borrower,  the Lenders and the Administrative  Agent shall negotiate in good
faith to amend  this  Schedule  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 Margin shall be determined by reference to
the  Reference  Ratings  most  recently  in effect  prior to any such  change or
cessation.  If after a  reasonable  time the parties  cannot agree to a mutually
acceptable amendment,  the Applicable Margin shall be determined by reference to
Level II.



<PAGE>

                                   Schedule II

                              EXISTING INDEBTEDNESS


$250,000,000 7.75% Senior Notes due 2012

The UK Facility


<PAGE>
                                                                    SCHEDULE 4.5


                              ENVIRONMENTAL MATTERS

None.




<PAGE>

                                                                   SCHEDULE 4.15

                     SUBSIDIARIES, SIGNIFICANT SUBSIDIARIES,
                      SIGNIFICANT AFFILIATES AND GUARANTORS

                          [To be Provided by Borrower]


Subsidiary or Affiliate  State of Incorp.    Entity Type       KPP's ownership





<PAGE>
                                                                   SCHEDULE 7.2


                               EXISTING LIENS




                                      None.






<PAGE>

                               FORM OF BRIDGE NOTE


[$___________]                                                           [Date]



     FOR VALUE RECEIVED, the undersigned, KANEB PIPE LINE OPERATING PARTNERSHIP,
L.P., a Delaware limited partnership (the "Borrower"), hereby promises to pay to
[name of Lender] (the  "Lender")  or its  registered  assigns,  at the office of
SunTrust Bank  ("SunTrust")  at 303 Peachtree  Street,  N.E.,  Atlanta,  Georgia
30308, on the Maturity Date (as defined in the Bridge Loan  Agreement,  dated as
of  November  1, 2002 (as the same may be  amended,  supplemented  or  otherwise
modified from time to time,  the "Loan  Agreement"),  among the Borrower,  Kaneb
Pipe Line  Partners,  L.P.,  the  lenders  from time to time party  thereto  and
SunTrust,  as administrative  agent for the lenders, the lesser of the principal
sum of [AMOUNT OF SUCH LENDER'S  COMMITMENT] and the aggregate  unpaid principal
amount  of the Loan  made by the  Lender to the  Borrower  pursuant  to the Loan
Agreement.  in lawful  money of the  United  States of  America  in  immediately
available  funds,  and to pay  interest  from the date  hereof on the  principal
amount thereof from time to time outstanding,  in like funds, at said office, at
the rate or rates per annum and  payable on such dates as  provided  in the Loan
Agreement. In addition, should legal action or an attorney-at-law be utilized to
collect any amount due hereunder, the Borrower further promises to pay all costs
of collection, including the reasonable attorneys' fees of the Lender.

     The Borrower promises to pay interest,  on demand, on any overdue principal
and, to the extent  permitted by law, overdue interest from their due dates at a
rate or rates provided in the Loan Agreement.

     The Loan  evidenced by this Note and all payments  and  prepayments  of the
principal  hereof and the date thereof shall be endorsed by the holder hereof on
the schedule attached hereto and made a part hereof or on a continuation thereof
which shall be attached hereto and made a part hereof, or otherwise  recorded by
such holder in its internal  records;  provided,  that the failure of the holder
hereof to make such a notation  or any error in such  notation  shall not affect
the  obligations  of the Borrower to make the payments of principal and interest
in accordance with the terms of this Note and the Loan Agreement.

     This Note is issued in connection with, and is entitled to the benefits of,
the Loan  Agreement  which,  among other  things,  contains  provisions  for the
acceleration of the maturity  hereof upon the happening of certain  events,  for
prepayment  of the  principal  hereof prior to the  maturity  hereof and for the
amendment or waiver of certain  provisions of the Loan  Agreement,  all upon the
terms  and  conditions  therein  specified.  THIS  NOTE  SHALL BE  CONSTRUED  IN
ACCORDANCE  WITH  AND  GOVERNED  BY THE  LAWS OF THE  STATE  OF NEW YORK AND ANY
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.


                                 KANEB PIPE LINE OPERATING
                                 PARTNERSHIP, L.P.

                                 By:      KANEB PIPE LINE COMPANY,
                                          General Partner


                                         By:
                                              ----------------------------------
                                              Name:
                                              Title:





<PAGE>
                               LOANS AND PAYMENTS

<TABLE>
<CAPTION>

---------------- ------------------------- --------------------- -------------------------- --------------------------
<S>                     <C>                    <C>                   <C>                         <C>
     Date               Amount and             Payments of           Unpaid Principal            Name of Person
                                                                        Balance of                   Making
                       Type of Loan              Principal                 Note                     Notation
---------------- ------------------------- --------------------- -------------------------- --------------------------
---------------- ------------------------- --------------------- -------------------------- --------------------------


---------------- ------------------------- --------------------- -------------------------- --------------------------
---------------- ------------------------- --------------------- -------------------------- --------------------------


---------------- ------------------------- --------------------- -------------------------- --------------------------
---------------- ------------------------- --------------------- -------------------------- --------------------------


---------------- ------------------------- --------------------- -------------------------- --------------------------
---------------- ------------------------- --------------------- -------------------------- --------------------------


---------------- ------------------------- --------------------- -------------------------- --------------------------
---------------- ------------------------- --------------------- -------------------------- --------------------------


---------------- ------------------------- --------------------- -------------------------- --------------------------
---------------- ------------------------- --------------------- -------------------------- --------------------------


---------------- ------------------------- --------------------- -------------------------- --------------------------
---------------- ------------------------- --------------------- -------------------------- --------------------------


---------------- ------------------------- --------------------- -------------------------- --------------------------
---------------- ------------------------- --------------------- -------------------------- --------------------------


---------------- ------------------------- --------------------- -------------------------- --------------------------
---------------- ------------------------- --------------------- -------------------------- --------------------------


---------------- ------------------------- --------------------- -------------------------- --------------------------
---------------- ------------------------- --------------------- -------------------------- --------------------------


---------------- ------------------------- --------------------- -------------------------- --------------------------
---------------- ------------------------- --------------------- -------------------------- --------------------------


---------------- ------------------------- --------------------- -------------------------- --------------------------
---------------- ------------------------- --------------------- -------------------------- --------------------------


---------------- ------------------------- --------------------- -------------------------- --------------------------
---------------- ------------------------- --------------------- -------------------------- --------------------------


---------------- ------------------------- --------------------- -------------------------- --------------------------
---------------- ------------------------- --------------------- -------------------------- --------------------------


---------------- ------------------------- --------------------- -------------------------- --------------------------
---------------- ------------------------- --------------------- -------------------------- --------------------------


---------------- ------------------------- --------------------- -------------------------- --------------------------


---------------- ------------------------- --------------------- -------------------------- --------------------------

</TABLE>



<PAGE>

                                     FORM OF

                            ASSIGNMENT AND ACCEPTANCE


     Reference  is made to the Bridge  Loan  Agreement,  dated as of November 1,
2002 (as amended and in effect on the date hereof, the "Loan Agreement"),  among
Kaneb Pipe Line Operating  Partnership,  L.P., a Delaware  limited  partnership,
Kaneb Pipe Line Partners, L.P., a Delaware limited partnership, the Lenders from
time to time party hereto and SunTrust  Bank,  as  Administrative  Agent for the
Lenders.  Terms  defined in the Loan  Agreement  are used  herein  with the same
meanings.

     The Assignor hereby sells and assigns,  without  recourse,  to the Assignee
designated  below,  and the  Assignee  hereby  purchases  and  assumes,  without
recourse,  from the  Assignor,  effective  as of the  Assignment  Date set forth
below, the interests set forth below (the "Assigned Interest") in the Assignor's
rights and obligations under the Loan Agreement,  including, without limitation,
the  interests  set  forth  below  in  the  Commitment  of the  Assignor  on the
Assignment  Date and Loans owing to the  Assignor  that are  outstanding  on the
Assignment Date, but excluding  accrued interest to and excluding the Assignment
Date. The Assignee hereby acknowledges  receipt of a copy of the Loan Agreement.
From and after the  Assignment  Date (i) the Assignee shall be a party to and be
bound by the provisions of the Loan Agreement and, to the extent of the Assigned
Interest,  have the rights and  obligations of a Lender  thereunder and (ii) the
Assignor  shall, to the extent of the Assigned  Interest,  relinquish its rights
and be released from its obligations under the Loan Agreement.

     This  Assignment  and Acceptance is being  delivered to the  Administrative
Agent together with (i) if the Assignee is a Foreign Lender,  any  documentation
required to be delivered by the Assignee pursuant to Section 2.17(e) of the Loan
Agreement, duly completed and executed by the Assignee, and (ii) if the Assignee
is  not  already  a  Lender  under  the  Loan   Agreement,   an   Administrative
Questionnaire in the form supplied by the  Administrative  Agent, duly completed
by the Assignee.  The Assignee  shall pay the fee payable to the  Administrative
Agent pursuant to Section 11.4(b) of the Loan Agreement.

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


Date of Assignment:

Legal Name of Assignor:

Legal Name of Assignee:

Assignee's Address for Notices:

Effective Date of Assignment:
("Assignment Date"):
<TABLE>
<CAPTION>



<S>        <C>                   <C>                            <C>
           Facility                 Principal Amount                        Percentage Assigned of
                                                                Commitment (set forth, to at least 8 decimals,
                                                                       as a percentage of the aggregate
                                        Assigned                   Commitments of all Lenders thereunder)

Loans:                           $                                                          %

</TABLE>

The terms set forth above are hereby agreed to:

                         [Name of Assignor], as Assignor


                         By
                         -------------------------------------------------------
                         Name:
                         Title:

                         [Name of Assignee], as Assignee


                         By
                         -------------------------------------------------------
                         Name:
                         Title:

The undersigned hereby consents to the within assignment:1/ -

Kaneb Pipe Line Operating Partnership, L.P.      SunTrust Bank, as
                                                 Administrative Agent:
By Kaneb Pipe Line Company, LLC
     General Partner
                                                 By
By                                               Name:
    Name:                                       Title:
    Title:


---------------------------
1/ Consents to be included to the extent required by Section 11.4(b) of the Loan
Agreement. --


<PAGE>

                                     FORM OF

                         SUBSIDIARY GUARANTEE AGREEMENT


This SUBSIDIARY  GUARANTEE  AGREEMENT (the "Agreement"),  dated as of [ ], among
each of the  Subsidiaries  listed on  Schedule I hereto  (each  such  subsidiary
individually,  a "Guarantor" and  collectively,  the "Guarantors") of KANEB PIPE
LINE  OPERATING   PARTNERSHIP,   L.P.,  a  Delaware  limited   partnership  (the
"Borrower"),  and SUNTRUST BANK, a Georgia banking corporation as administrative
agent (the  "Administrative  Agent")  for the  Lenders  (as  defined in the Loan
Agreement referred to below).

     Reference  is made to the Bridge  Loan  Agreement,  dated as of November 1,
2002 (as amended,  supplemented  or otherwise  modified  from time to time,  the
"Loan  Agreement"),  among the Borrower,  Kaneb Pipe Line  Partners,  L.P.,  the
lenders from time to time party thereto (the  "Lenders")  and SunTrust  Bank, as
administrative  agent for the Lenders  (in such  capacity,  the  "Administrative
Agent").  Capitalized  terms used herein and not defined  herein  shall have the
meanings assigned to such terms in the Loan Agreement.

     The Lenders have agreed to make Loans to the Borrower pursuant to, and upon
the terms and subject to the conditions  specified in, the Loan Agreement.  Each
of the  Guarantors  is a direct  or  indirect  Subsidiary  of the  Borrower  and
acknowledges  that it will  derive  substantial  benefit  from the making of the
Loans  by the  Lenders.  The  obligations  of the  Lenders  to  make  Loans  are
conditioned on, among other things, the execution and delivery by the Guarantors
of a  Subsidiary  Guarantee  Agreement  in the  form  hereof.  As  consideration
therefor and in order to induce the Lenders to make Loans,  the  Guarantors  are
willing to execute this Subsidiary Guarantee Agreement.

     Accordingly, the parties hereto agree as follows:

SECTION 1. Guarantee.

     Each Guarantor unconditionally  guarantees,  jointly with KPP and the other
Guarantors and severally,  as a primary obligor and not merely as a surety,  (i)
the due and punctual  payment of (A) the  principal of and premium,  if any, and
interest  (including  interest  accruing  during the pendency of any bankruptcy,
insolvency,  receivership  or other  similar  proceeding,  regardless of whether
allowed or allowable in such proceeding) on the Loans,  when and as due, whether
at  maturity,  by  acceleration,  upon one or more dates set for  prepayment  or
otherwise,  and (B) all  other  monetary  obligations,  including  fees,  costs,
expenses and indemnities,  whether primary, secondary, direct, contingent, fixed
or otherwise (including monetary obligations incurred during the pendency of any
bankruptcy, insolvency,  receivership or other similar proceeding, regardless of
whether  allowed or  allowable in such  proceeding),  of the Loan Parties to the
Administrative Agent and the Lenders under the Loan Agreement and the other Loan
Documents,  (ii) the due and punctual performance of all covenants,  agreements,
obligations  and  liabilities  of the Loan Parties under or pursuant to the Loan
Agreement and the other Loan Documents;  and (iii) the due and punctual  payment
and performance of all obligations of the Borrower, monetary or otherwise, under
each Hedging  Agreement entered into with a counterparty that was a Lender or an
Affiliate of a Lender at the time such Hedging  Agreement  was entered into (all
the  monetary and other  obligations  referred to in the  preceding  clauses (i)
through  (iii) being  collectively  called the  "Obligations").  Each  Guarantor
further agrees that the Obligations  may be extended or renewed,  in whole or in
part, without notice to or further assent from it, and that it will remain bound
upon its guarantee notwithstanding any extension or renewal of any Obligation.

SECTION 2. Obligations Not Waived.

     To the fullest extent  permitted by applicable  law, each Guarantor  waives
presentment  to, demand of payment from and protest to the other Loan Parties of
any of the  Obligations,  and also waives  notice of acceptance of its guarantee
and notice of  protest  for  nonpayment.  To the  fullest  extent  permitted  by
applicable  law,  the  obligations  of each  Guarantor  hereunder  shall  not be
affected by (i) the failure of the Administrative  Agent or any Lender to assert
any claim or demand or to enforce or  exercise  any right or remedy  against the
Borrower or any other Guarantor under the provisions of the Loan Agreement,  any
other Loan  Document or otherwise,  (ii) any  rescission,  waiver,  amendment or
modification  of, or any release  from any of the terms or  provisions  of, this
Agreement,  any other  Loan  Document  or any other  agreement,  including  with
respect to any other  Guarantor  under this  Agreement,  or (iii) the failure to
perfect any security interest in, or the release of, any of the security held by
or on behalf of the Administrative Agent or any Lender.

SECTION 3. Guarantee of Payment.

     Each Guarantor further agrees that its guarantee constitutes a guarantee of
payment when due and not of collection, and waives any right to require that any
resort be had by the  Administrative  Agent or any Lender to any of the security
held for payment of the  Obligations or to any balance of any deposit account or
credit on the books of the  Administrative  Agent or any  Lender in favor of the
Borrower or any other Person.

SECTION 4. No Discharge or Diminishment of Guarantee.

     The  obligations  of each Guarantor  hereunder  shall not be subject to any
reduction, limitation,  impairment or termination for any reason (other than the
indefeasible payment in full in cash of the Obligations), including any claim of
waiver, release, surrender,  alteration or compromise of any of the Obligations,
and shall not be subject to any defense or setoff,  counterclaim,  recoupment or
termination   whatsoever   by   reason   of  the   invalidity,   illegality   or
unenforceability   of  the  Obligations  or  otherwise.   Without  limiting  the
generality of the foregoing,  the obligations of each Guarantor  hereunder shall
not be  discharged  or  impaired  or  otherwise  affected  by the failure of the
Administrative  Agent or any  Lender to assert any claim or demand or to enforce
any  remedy  under the Loan  Agreement,  any other  Loan  Document  or any other
agreement, by any waiver or modification of any provision of any thereof, by any
default,  failure or delay,  willful or  otherwise,  in the  performance  of the
Obligations,  or by any other act or omission that may or might in any manner or
to the extent vary the risk of any Guarantor or that would otherwise  operate as
a  discharge  of each  Guarantor  as a matter of law or equity  (other  than the
indefeasible payment in full in cash of all the Obligations).

SECTION 5. Defenses of Borrower Waived.

     To the fullest extent  permitted by applicable  law, each Guarantor  waives
any  defense  based on or  arising  out of any  defense of any Loan Party or the
unenforceability  of the  Obligations or any part thereof from any cause, or the
cessation  from any cause of the  liability  of any Loan  Party,  other than the
final  and  indefeasible  payment  in  full  in  cash  of the  Obligations.  The
Administrative  Agent and the Lenders may, at their  election,  foreclose on any
security  held by one or more of  them by one or more  judicial  or  nonjudicial
sales,  accept  an  assignment  of any  such  security  in lieu of  foreclosure,
compromise or adjust any part of the Obligations,  make any other  accommodation
with any other Loan Party or any other guarantor, without affecting or impairing
in any way the  liability of any  Guarantor  hereunder  except to the extent the
Obligations have been fully,  finally and indefeasibly paid in cash. Pursuant to
applicable  law,  each  Guarantor  waives any  defense  arising  out of any such
election even though such  election  operates,  pursuant to  applicable  law, to
impair or to extinguish any right of reimbursement or subrogation or other right
or remedy of such  Guarantor  against  the  Borrower or any other  Guarantor  or
guarantor, as the case may be, or any security.

SECTION 6. Agreement to Pay; Subordination.

     In  furtherance  of the  foregoing and not in limitation of any other right
that the Administrative  Agent or any Lender has at law or in equity against any
Guarantor by virtue  hereof,  upon the failure of the Borrower or any other Loan
Party to pay any  Obligation  when and as the same shall become due,  whether at
maturity,  by  acceleration,  after  notice of  prepayment  or  otherwise,  each
Guarantor hereby promises to and will forthwith pay, or cause to be paid, to the
Administrative  Agent for the  benefit of the Lenders in cash the amount of such
unpaid  Obligations.   Upon  payment  by  any  Guarantor  of  any  sums  to  the
Administrative  Agent,  all  rights of such  Guarantor  against  any Loan  Party
arising  as a  result  thereof  by way of right  of  subrogation,  contribution,
reimbursement,  indemnity or otherwise  shall in all respects be subordinate and
junior in right of payment to the prior indefeasible  payment in full in cash of
all the  Obligations.  In addition,  any  indebtedness  of any Loan Party now or
hereafter  held by any Guarantor is hereby  subordinated  in right of payment to
the  prior  payment  in full in cash of the  Obligations.  If any  amount  shall
erroneously  be  paid to any  Guarantor  on  account  of (i)  such  subrogation,
contribution,  reimbursement,  indemnity  or  similar  right  or (ii)  any  such
indebtedness  of any Loan  Party,  such  amount  shall be held in trust  for the
benefit of the Administrative  Agent and the Lenders and shall forthwith be paid
to  the  Administrative  Agent  to  be  credited  against  the  payment  of  the
Obligations,  whether matured or unmatured,  in accordance with the terms of the
Loan Documents.

SECTION 7. Information.

     Each  Guarantor  assumes all  responsibility  for being and keeping  itself
informed of other Loan Parties' financial condition and assets, and of all other
circumstances  bearing upon the risk of  nonpayment of the  Obligations  and the
nature,  scope and extent of the risks that such  Guarantor  assumes  and incurs
hereunder,  and agrees that none of the Administrative Agent or the Lenders will
have any duty to advise any of the Guarantors of information  known to it or any
of them regarding such circumstances or risks.

SECTION 8. Representations and Warranties.

     Each   Guarantor   represents   and   warrants   as  to  itself   that  all
representations and warranties relating to it (as a Subsidiary of KPP) contained
in the Loan Agreement are true and correct.

SECTION 9. Termination.

     The guarantees  made hereunder (i) shall terminate when all the Obligations
have been paid in full in cash and the  Lenders  have no further  commitment  to
lend under the Loan  Agreement  and (ii) shall  continue to be  effective  or be
reinstated,  as the case may be, if at any time payment, or any part thereof, of
any  Obligation is rescinded or must  otherwise be restored by any Lender or any
Guarantor upon the bankruptcy or reorganization  of the Borrower,  any Guarantor
or otherwise.  In connection with the foregoing,  the Administrative Agent shall
execute  and  deliver  to  such  Guarantor  or  Guarantor's  designee,  at  such
Guarantor's  expense,  any documents or instruments  which such Guarantor  shall
reasonably request from time to time to evidence such termination and release.

SECTION 10. Binding Effect; Several Agreement; Assignments.

     Whenever in this  Agreement any of the parties  hereto is referred to, such
reference  shall be deemed to include the  successors and assigns of such party;
and all  covenants,  promises and  agreements by or on behalf of the  Guarantors
that are contained in this Agreement shall bind and inure to the benefit of each
party hereto and their respective  successors and assigns.  This Agreement shall
become  effective as to any  Guarantor  when a  counterpart  hereof  executed on
behalf of such Guarantor shall have been delivered to the Administrative  Agent,
and  a   counterpart   hereof  shall  have  been   executed  on  behalf  of  the
Administrative  Agent,  and thereafter  shall be binding upon such Guarantor and
the Administrative Agent and their respective  successors and assigns, and shall
inure  to the  benefit  of such  Guarantor,  the  Administrative  Agent  and the
Lenders, and their respective  successors and assigns,  except that no Guarantor
shall  have the  right to assign  its  rights or  obligations  hereunder  or any
interest herein (and any such attempted assignment shall be void). If all of the
capital  stock of a Guarantor  is sold,  transferred  or  otherwise  disposed of
pursuant to a transaction permitted by the Loan Agreement,  such Guarantor shall
be released from its  obligations  under this Agreement  without further action.
This Agreement  shall be construed as a separate  agreement with respect to each
Guarantor and may be amended,  modified,  supplemented,  waived or released with
respect to any Guarantor without the approval of any other Guarantor and without
affecting the obligations of any other Guarantor hereunder.

SECTION 11. Waivers; Amendment.

          (a)  No  failure  or  delay  of  the  Administrative  Agent  of any in
     exercising any power or right  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 of the Administrative Agent hereunder and of
     the  Lenders  under the other Loan  Documents  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
     any  Guarantor  therefrom  shall in any event be effective  unless the same
     shall be  permitted  by  subsection  (b)  below,  and then such  waiver and
     consent  shall  be  effective  only in the  specific  instance  and for the
     purpose for which given.  No notice or demand on any  Guarantor in any case
     shall entitle such  Guarantor to any other or further  notice in similar or
     other circumstances.

          (b) Neither this  Agreement  nor any  provision  hereof may be waived,
     amended or modified  except  pursuant to a written  agreement  entered into
     between the  Guarantors  with  respect to which such  waiver,  amendment or
     modification  relates and the Administrative  Agent, with the prior written
     consent of the Required  Lenders (except as otherwise  provided in the Loan
     Agreement).

SECTION 12. Governing Law.

     THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE  WITH, THE
LAWS OF THE STATE OF NEW YORK.

SECTION 13. Notices.

     All  communications  and notices hereunder shall be in writing and given as
provided in Section 11.01 of the Loan Agreement.  All communications and notices
hereunder  to each  Guarantor  shall be given to it at its  address set forth on
Schedule I attached hereto.

SECTION 14. Survival of Agreement; Severability.

          (a) All covenants,  agreements  representations and warranties made by
     the Guarantors herein and in the certificates or other instruments prepared
     or delivered in connection  with or pursuant to this Agreement or the other
     Loan  Document  shall  be  considered  to  have  been  relied  upon  by the
     Administrative  Agent and the Lenders  and shall  survive the making by the
     Lenders of the Loans regardless of any investigation made by any of them or
     on their behalf, and shall continue in full force and effect as long as the
     principal  of or any  accrued  interest  on any  Loan or any  other  amount
     payable under this Agreement or any other Loan Document is outstanding  and
     unpaid and as long as the Commitments have not been terminated.

          (b) In the  event  one or more  of the  provisions  contained  in this
     Agreement or in any other Loan Document should be held invalid,  illegal or
     unenforceable in any respect, the validity,  legality and enforceability of
     the remaining  provisions contained herein and therein shall not in any way
     be affected or impaired thereby (it being understood that the invalidity of
     a particular  provision in a  particular  jurisdiction  shall not in and of
     itself  affect the validity of such  provision in any other  jurisdiction).
     The  parties  shall  endeavor  in  good-faith  negotiations  to replace the
     invalid,  illegal or  unenforceable  provisions  with valid  provisions the
     economic effect of which comes as close as possible to that of the invalid,
     illegal or unenforceable provisions.

SECTION 15. Counterparts.

     This  Agreement  may be  executed  in  counterparts,  each of  which  shall
constitute an original,  but all of which when taken together shall constitute a
single contract  (subject to Section 10), and shall become effective as provided
in Section 10.  Delivery  of an executed  signature  page to this  Agreement  by
facsimile  transmission shall be as effective as delivery of a manually executed
counterpart of this Agreement.

SECTION 16. Rules of Interpretation.

     The rules of interpretation specified in Section 1.03 of the Loan Agreement
shall be applicable to this Agreement.

SECTION 17. Jurisdiction; Consent to Service of Process.

          (a) Each Guarantor hereby irrevocably and unconditionally submits, for
     itself and its property,  to the  non-exclusive  jurisdiction of the United
     States  District  Court of the  Southern  District of New York,  and of the
     Supreme  Court of the State of New York  sitting in New York County and any
     appellate court from any thereof,  in any action or proceeding  arising out
     of or  relating  to this  Agreement  or the  other  Loan  Documents  or the
     transactions   contemplated  hereby  or  thereby,  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 court or, to the extent  permitted by applicable 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  or the other  Loan  Documents
     against any Guarantor or its properties in the courts of any jurisdiction.

          (b)  Each  Guarantor   irrevocably  and  unconditionally   waives  any
     objection  which it may now or hereafter have to the laying of venue of any
     such suit, action or proceeding described in subsection (a) of this Section
     and brought in any court  referred to in  subsection  (a) of this  Section.
     Each of the  parties  hereto  irrevocably  waives,  to the  fullest  extent
     permitted by applicable  law, the defense of an  inconvenient  forum to the
     maintenance of such action or proceeding in any such court.

          (c) Each party to this Agreement  irrevocably  consents to the service
     of process in the manner  provided  for notices in Section  13.  Nothing in
     this  Agreement  will affect the right of any party hereto to serve process
     in any other manner permitted by law.

SECTION 18. Waiver of Jury Trial.

     EACH PARTY HERETO  IRREVOCABLY  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 THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
OR THE TRANSACTIONS  CONTEMPLATED  HEREBY OR THEREBY (WHETHER BASED ON CONTRACT,
TORT  OR  ANY  OTHER   THEORY).   EACH  PARTY  HERETO  (i)  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 (ii)  ACKNOWLEDGES  THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS BY, AMONG OTHER THINGS,  THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.

SECTION 19. Additional Guarantors.

     Pursuant to Section 5.10 of the Loan Agreement, each Significant Subsidiary
(other than any Foreign Subsidiary and any Excluded  Subsidiary) that was not in
existence  on the date of the Loan  Agreement  is  required  to enter  into this
Agreement as a Guarantor.  Upon  execution and delivery after the date hereof by
the  Administrative  Agent and such  Subsidiary  of an instrument in the form of
Annex 1, such Subsidiary shall become a Guarantor  hereunder with the same force
and effect as if  originally  named as a Guarantor  herein.  The  execution  and
delivery of any  instrument  adding an  additional  Guarantor as a party to this
Agreement  shall not require the consent of any other Guarantor  hereunder.  The
rights and  obligations of each Guarantor  hereunder  shall remain in full force
and effect  notwithstanding the addition of any new Guarantor as a party to this
Agreement.

SECTION 20. Right of Setoff.

     If an Event of Default shall have occurred and be  continuing,  each Lender
are 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 Indebtedness at
any  time  owing by such  Lender  to or for the  credit  or the  account  of any
Guarantor  against any or all the obligations of such Guarantor now or hereafter
existing  under this Agreement and the other Loan Documents held by such Lender,
irrespective of whether or not such Person shall have made any demand under this
Agreement  or any other Loan  Document  and  although  such  obligations  may be
unmatured.  The rights of each Lender  under this  Section 20 are in addition to
other  rights and remedies  (including  other rights of setoff) that such Lender
may have.





<PAGE>


     IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.


                                         EACH OF THE SUBSIDIARIES LISTED
                                         ON SCHEDULE I HERETO


                                         By
                                            ------------------------------------
                                            Name:
                                            Title:


                                          SUNTRUST BANK, as
                                          Administrative Agent


                                          By
                                            ------------------------------------
                                            Name:
                                            Title:



<PAGE>
                                SCHEDULE I TO THE
                         SUBSIDIARY GUARANTEE AGREEMENT



     Guarantor(s)                                                Address







<PAGE>
                                 ANNEX 1 TO THE
                         SUBSIDIARY GUARANTEE AGREEMENT


     SUPPLEMENT NO. [ ] dated as of [ ], to the Subsidiary  Guarantee Agreement,
dated as of [ ] (the  "Guarantee  Agreement"),  among  each of the  subsidiaries
listed on Schedule I thereto (each such Subsidiary  individually,  a "Guarantor"
and collectively,  the  "Guarantors") of KANEB PIPE LINE OPERATING  PARTNERSHIP,
L.P., a Delaware  limited  partnership  (the  "Borrower"),  and SUNTRUST BANK, a
Georgia  banking  corporation,  as  Administrative  Agent  (the  "Administrative
Agent") for the Lenders (as defined in the Loan Agreement referred to below).

A.   Reference  is made to the  Loan  Agreement,  dated  as of [ ] (as  amended,
     supplemented   or  otherwise   modified  from  time  to  time,   the  "Loan
     Agreement"),  among the  Borrower,  the  lenders  from  time to time  party
     thereto (the "Lenders") and SunTrust Bank, as Administrative Agent.

B.   Capitalized  terms used herein and not otherwise  defined herein shall have
     the meanings assigned to such terms in the Guarantee Agreement and the Loan
     Agreement.

C.   The Guarantors have entered into the Guarantee Agreement in order to induce
     the Lenders to make Loans.  Pursuant to Section 5.10 of the Loan Agreement,
     each  Significant  Subsidiary  (other than any Foreign  Subsidiary  and any
     Excluded  Subsidiary)  that was not in  existence or not a Guarantor on the
     date of the  Loan  Agreement  is  required  to  enter  into  the  Guarantee
     Agreement as a Guarantor.  Section 19 of the Guarantee  Agreement  provides
     that additional  Subsidiaries of the Borrower may become  Guarantors  under
     the  Guarantee  Agreement by execution and delivery of an instrument in the
     form of this  Supplement.  The undersigned  Subsidiary of the Borrower (the
     "New  Guarantor")  is executing  this  Supplement  in  accordance  with the
     requirements  of the  Loan  Agreement  to  become  a  Guarantor  under  the
     Guarantee Agreement as consideration for Loans.

     Accordingly,  the  Administrative  Agent  and the New  Guarantor  agree  as
follows:

     SECTION 1. In accordance  with Section 19 of the Guarantee  Agreement,  the
New  Guarantor by its signature  below  becomes a Guarantor  under the Guarantee
Agreement  with the same force and effect as if  originally  named  therein as a
Guarantor  and the  New  Guarantor  hereby  (i)  agrees  to all  the  terms  and
provisions of the Guarantee Agreement  applicable to it as Guarantor  thereunder
and (ii) represents and warrants that the representations and warranties made by
it as a Guarantor  thereunder are true and correct on and as of the date hereof.
Each  reference to a Guarantor  in the  Guarantee  Agreement  shall be deemed to
include the New Guarantor. The Guarantee Agreement is hereby incorporated herein
by reference.

     SECTION 2. The New Guarantor  represents and warrants to the Administrative
Agent and the Lenders that this  Supplement has been duly  authorized,  executed
and delivered by it and that each of this Supplement and the Guarantee Agreement
constitutes its legal, valid and binding  obligation,  enforceable against it in
accordance with its terms.

     SECTION 3. This  Supplement may be executed in  counterparts  each of which
shall  constitute  an  original,  but all of which  when  taken  together  shall
constitute a single  contract.  This Supplement  shall become effective when the
Administrative  Agent shall have received  counterparts of this Supplement that,
when  taken  together,  bear  the  signatures  of  the  New  Guarantor  and  the
Administrative  Agent. Delivery of an executed signature page to this Supplement
by facsimile transmission shall be as effective as delivery of a manually signed
counterpart of this Supplement.

     SECTION 4. Except as expressly supplemented hereby, the Guarantee Agreement
shall remain in full force and effect.

     SECTION  5.  THIS  SUPPLEMENT  SHALL  BE  GOVERNED  BY,  AND  CONSTRUED  IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

     SECTION  6. In case  any one or more of the  provisions  contained  in this
Supplement should be held invalid,  illegal or unenforceable in any respect, the
validity,  legality and  enforceability  of the remaining  provisions  contained
herein  and in the  Guarantee  Agreement  shall  not in any way be  affected  or
impaired  thereby  (it being  understood  that the  invalidity  of a  particular
provision hereof in a particular  jurisdiction shall not in and of itself affect
the validity of such  provision in any other  jurisdiction).  The parties hereto
shall  endeavor in good-faith  negotiations  to replace the invalid,  illegal or
unenforceable  provisions  with valid  provisions  the economic  effect of which
comes as close as  possible  to that of the  invalid,  illegal or  unenforceable
provisions.

     SECTION 7. All communications and notices hereunder shall be in writing and
given as provided in Section 13 of the Guarantee  Agreement.  All communications
and notices  hereunder to the New Guarantor  shall be given to it at the address
set forth under its signature below, with a copy to the Borrower.

     SECTION 8. The New Guarantor agrees to reimburse the  Administrative  Agent
for its out-of-pocket expenses in connection with this Supplement, including the
fees, disbursements and other charges of counsel for the Administrative Agent.



<PAGE>
     IN WITNESS  WHEREOF,  the New Guarantor and the  Administrative  Agent have
duly executed this Supplement to the Guarantee  Agreement as of the day and year
first above written.


                                              [Name of New Guarantor]


                                               By
                                                 -------------------------------
                                                 Name:
                                                 Title:
                                                 Address:


                                              SUNTRUST BANK, as
                                              Administrative Agent


                                               By
                                                 -------------------------------
                                                 Name:
                                                 Title:
                                                 Address:


<PAGE>
                         FORM OF CONTINUATION/CONVERSION


                                     [Date]



SunTrust Bank,
  as Administrative Agent
for the Lenders referred to below
303 Peachtree Street, N.E.
Atlanta, GA  30308

Attention:

Ladies and Gentlemen:

     Reference  is made to the Bridge  Loan  Agreement,  dated as of November 1,
2002 (as amended and in effect on the date hereof, the "Loan Agreement"),  among
the undersigned,  as Borrower,  the Lenders named therein, and SunTrust Bank, as
Administrative  Agent.  Terms defined in the Loan Agreement are used herein with
the same meanings.  This notice  constitutes a  Continuation/Conversion  and the
Borrower hereby requests the conversion or continuation of a Loan under the Loan
Agreement,   and  in  that  connection  the  Borrower  specifies  the  following
information  with  respect to the Loan to be converted or continued as requested
hereby:
<TABLE>
<CAPTION>

<S>     <C>        <C>                                                                 <C>
         (A)       Loan to which this request applies:                                 __________________
         (B)       Principal amount of Loan to be converted/continued:                 __________________
         (C)       Effective date of election (which is a Business Day):               __________________
         (D)       Interest rate basis:                                                __________________
         (E)       Interest Period:                                                    __________________

</TABLE>
                                 Very truly yours,

                                 KANEB PIPE LINE OPERATING
                                 PARTNERSHIP, L.P.

                                 By:      KANEB PIPE LINE COMPANY,
                                          General Partner


                                         By:
                                              ----------------------------------
                                              Name:
                                              Title:

<PAGE>
                 FORM OF OPINION OF COUNSEL FOR THE LOAN PARTIES





                                                     [Closing Date]



To each of the  Lenders  party to the Loan  Agreement  referred  to below and to
SunTrust Bank, as Administrative Agent thereunder

Ladies and Gentlemen:

     This  opinion is furnished  to you  pursuant to Section  3.1(b)(vi)  of the
Bridge Loan Agreement,  dated as of November 1, 2002 (such agreement,  excluding
the schedules and exhibits thereto, the "Loan Agreement"), among Kaneb Pipe Line
Operating Partnership,  L.P., (the "Borrower"),  Kaneb Pipe Line Partners,  L.P.
("KPP"),  the Lenders parties thereto and SunTrust Bank, as Administrative Agent
for said Lenders.  Unless  otherwise  defined herein,  terms defined in the Loan
Agreement  are used herein as therein  defined.  We have acted as counsel to the
Loan Parties (as defined below) in connection  with the  preparation,  execution
and delivery of the Loan  Agreement.  In connection  with this opinion,  we have
examined:

     (1)  A counterpart of the Loan Agreement, executed by the Borrower and KPP;

     (2)  the Notes, executed by the Borrower;

     (3)  a  counterpart  of the  Subsidiary  Guarantee  Agreement,  executed by
          Support  Terminal   Services,   Inc.,   Support  Terminals   Operating
          Partnership, L.P. and StanTrans, Inc. (collectively, the "Guarantors",
          and, together with the Borrower and KPP, the "Loan Parties");

     (4)  The other documents  furnished by the Loan Parties pursuant to Section
          3.1 of the Loan Agreement;

     (5)  The  Constituent  Documents  of each  Loan  Party  and all  amendments
          thereto; and

     (6)  A  certificate  of the  Secretary of State of each State in which each
          Loan Party is formed,  organized or incorporated,  as the case may be,
          attesting to the  continued  existence  and good  standing of the Loan
          Parties in the applicable States.

     The Loan Agreement and the other agreements and instruments  referred to in
clauses  (1),  (2)  and (3)  above  are  hereinafter  referred  to as the  "Loan
Documents".  In  addition to the Loan  Documents,  we have  examined  such other
documents  and  corporate  and  partnership  records  (collectively,  the "Other
Documents")  and questions of law as we deem  necessary for the purposes of this
opinion. We have also examined such certificates of public officials,  corporate
officers of the Loan  Parties and other  Persons as we have deemed  relevant and
appropriate as a basis for the opinions  expressed  herein,  and we have made no
effort  to  independently  verify  the  facts  set  forth in such  certificates.
Further, in making the foregoing  examinations,  we have assumed the genuineness
of all signatures (other than signatures of the Loan Parties with respect to the
Loan  Documents),  the legal  capacity  of each person  signatory  to any of the
documents  reviewed by us, the authenticity of all documents  submitted to us as
originals and the  conformity to authentic  original  documents of all documents
submitted to us as copies. In making the foregoing examinations, we have assumed
that, as to factual  matters,  all  representations  and warranties  made in the
aforesaid  documents  (other  than  those  which  are  expressed  herein  as our
opinions) were and are true, correct and complete in all material respects.

     In rendering the opinions expressed herein, we have assumed that:

          (a)  each  of the  documents  examined  by us  (other  than  the  Loan
     Documents) has been duly authorized,  executed and delivered by each of the
     parties thereto and constitutes the legal,  valid and binding obligation of
     each such party thereto enforceable in accordance with its terms;

          (b) the  Loan  Documents  have  been  duly  authorized,  executed  and
     delivered  by or on behalf of each of the  parties  thereto  other than the
     Loan  Parties,  that each such party  other than the Loan  Parties  has the
     requisite  power  and  authority  to  execute,  deliver  and  perform  such
     documents to which it is a party,  and that the Loan  Documents  constitute
     the legal,  valid and binding  obligations of each such other party thereto
     enforceable in accordance with its terms;

          (c) no order, consent, approval, license, authorization, or validation
     of, or filing,  recording or registration with, or exemption by, any court,
     governmental body or authority,  or any subdivision thereof, is required to
     authorize or is required in connection  with, the execution and delivery by
     any  Person  identified  in any Loan  Document  as a party  thereto,  or in
     connection  with  the  performance  of its  obligations  thereunder  or the
     consummation of the  transactions  contemplated  thereby,  other than those
     that have been obtained or made and are in full force and effect (provided,
     that we make no such assumption with respect to consents, approvals and the
     like  applicable  to Loan Parties to the extent that we express our opinion
     rendered in paragraph 4 below);

          (d) the Administrative  Agent has been and is the duly appointed agent
     of each of the other Lenders pursuant to the Loan Agreement; and

          (e) there are no  extrinsic  agreements  or  understandings  among the
     parties  to  the  Loan   Documents   that   would   modify  or  affect  the
     interpretation  of the terms of the Loan Documents or the respective rights
     or obligations of the parties thereunder.

     In rendering this opinion, we have made no independent investigation of the
facts  referred  to herein and have  relied for the  purpose of  rendering  this
opinion  exclusively  on the facts set forth in the Loan Documents and the Other
Documents  and the  certificates  referred to above,  which facts we assume have
been  and will  continue  to be  true,  accurate  and  correct  in all  material
respects.

     Based upon the foregoing,  and upon an examination of such questions of law
as we have considered necessary or appropriate,  and subject to the assumptions,
exceptions, qualifications and limitations set forth herein, we advise you that,
in our opinion:

          1. Each Loan Party (a) has been duly formed and is validly existing in
     good  standing  under  the  laws of its  state  of  formation,  (b) has the
     corporate  or  partnership  power  and  authority  to own and  operate  its
     property,  to lease the property which it operates as lessee and to conduct
     the business in which it is  currently  engaged and in which it proposes to
     be engaged after the date hereof, in each case as described in the periodic
     reports filed by KPP under the Securities  Exchange Act of 1934, as amended
     (the "Exchange  Act"), and (c) is duly qualified as a foreign entity and is
     in good standing under the laws of each  jurisdiction  listed on Schedule I
     hereto.

          2.  Each  Loan  Party  has the  corporate  or  partnership  power  and
     authority to execute and  deliver,  and to perform its  obligations  under,
     each Loan Document to which such Loan Party is a party.  The Loan Agreement
     has been duly  executed and  delivered by KPP and the  Borrower,  the Notes
     have been duly executed and delivered by the Borrower,  and the  Subsidiary
     Guarantee Agreement has been duly executed and delivered by each Guarantor.

          3. Assuming the proceeds of the Loans are used solely for the purposes
     set forth in the Loan  Agreement,  neither the  execution and delivery of a
     Loan  Document  by a Loan  Party,  nor  performance  by a Loan Party of its
     obligations  under a Loan  Document,  will (a)  result  in a breach  of, or
     constitute a default under,  any agreement to which any of the Loan Parties
     is a party or by which any of them or any of their respective properties is
     bound that has been filed  under the  Exchange  Act by KPP as an exhibit to
     its annual report on Form 10-K for the year ended  December 31, 1999, or as
     an exhibit to a quarterly report on Form 10-Q filed during the year 2000 or
     (b)  violate (i) the  Constituent  Documents  of any Loan  Party,  (ii) any
     statutory  law or  regulation  or (iii) any  decree or order of any  court,
     governmental  agency or arbitrator  that is known by us to be applicable to
     any of the Loan Parties or any of their respective properties.

          4. No consent,  approval,  authorization or waiver of, or notice to or
     filing with, or other action by, any governmental  authority is required by
     any statutory law, regulation or ruling as a condition to the execution and
     delivery by the Loan Parties of the Loan  Documents,  or the performance by
     the Loan Parties of their obligations under the Loan Documents.

          5. To our  knowledge,  other than as disclosed in KPP's  filings under
     the Exchange Act, there are no legal or governmental proceedings pending to
     which any of the Loan Parties is a party or  threatened  against any of the
     Loan Parties which is required to be disclosed in such filings.

          6. None of the Loan  Parties is an  "investment  company" or a company
     "controlled"  by an  "investment  company" as such terms are defined in the
     Investment  Company Act of 1940, as amended,  or a "public utility company"
     or a "holding  company," or a "subsidiary  company" of a "holding company,"
     or an "affiliate" of a "holding company" or of a "subsidiary  company" of a
     "holding  company," as such terms are defined in the Public Utility Holding
     Company  Act of 1935,  as amended.  None of the Loan  Parties is subject to
     regulation  under  the  Public  Utility  Holding  Company  Act of 1935,  as
     amended.

          7.  Under  the  laws of the  State of New  York,  each  Loan  Document
     constitutes the legal, valid and binding obligation of each Loan Party that
     is a party thereto,  enforceable against each such Loan Party in accordance
     with its terms.

          8. The foregoing  opinions are subject to the  following  assumptions,
     exceptions, qualifications and limitations.

               (i) The foregoing opinions are expressly limited to matters under
          and  governed by the  internal  substantive  laws of the States of New
          York and Texas, the General  Corporation Law of the State of Delaware,
          the Revised Uniform Limited  Partnership Act of the State of Delaware,
          and applicable  Federal laws of the United States of America,  in each
          case in effect on the date hereof and which,  in our  experience,  are
          normally  applicable  to the  transactions  provided  for in the  Loan
          Documents, in each case, however, exclusive of, and without regard to,
          any Excluded Laws.  The term "Excluded  Laws" means all (i) municipal,
          political  subdivision (whether created or enabled through legislative
          action at the  federal,  state,  regional or local  level),  local and
          county ordinances, statutes, administrative decisions, laws, rules and
          regulations,   (ii)  conflict  of  law  principles  and  choice-of-law
          statutes and rules,  and (iii) statutes,  laws,  rules and regulations
          relating  to (a)  pollution  or  protection  of the  environment,  (b)
          zoning, land use, building or construction, (c) operation of any asset
          or property, (d) labor,  employment,  employee rights and benefits, or
          occupational  safety and health,  (e) utility regulation or regulation
          of   matters   pertaining   to   the   acquisition,    transportation,
          transmission,  storage  or use of energy  sources  used in  connection
          therewith or generated  thereby,  (f) antitrust,  (g) taxation and (h)
          securities  laws, in each case with respect to each of the  foregoing,
          (x) as  interpreted,  construed or enforced  pursuant to any judicial,
          arbitral  or  other  decision  or   pronouncement,   (y)  as  enacted,
          promulgated  or issued  by, or  otherwise  existing  in effect in, any
          jurisdiction,  including,  without limitation, any State of the United
          States of America and the United States of America, and (z) including,
          without  limitation,  any and all authorizations,  permits,  consents,
          applications,    licenses,    approvals,    filings,    registrations,
          publications, exemptions and the like required by any of them.

          (ii) The foregoing  opinions  regarding the enforceability of the Loan
     Documents are subject to the following:

               (A) The  enforceability  of the Loan  Documents may be limited or
          affected by (a) bankruptcy,  insolvency,  reorganization,  moratorium,
          liquidation,   rearrangement,  probate,  conservatorship,   fraudulent
          transfer,  fraudulent  conveyance  and other  similar laws  (including
          court  decisions)  now or hereafter in effect and affecting the rights
          and  remedies of creditors  generally  or providing  for the relief of
          debtors generally,  (b) the refusal of a particular court to grant (i)
          equitable remedies,  including, without limiting the generality of the
          foregoing,  specific  performance  and  injunctive  relief,  or (ii) a
          particular remedy sought under any Loan Document as opposed to another
          remedy  provided for therein or another remedy  available at law or in
          equity, (c) general principles of equity, including without limitation
          requirements of good faith, fair dealing and  reasonableness,  and the
          possible  unavailability of specific  performance or injunctive relief
          (regardless  of whether such  remedies  are sought in a proceeding  in
          equity or at law), and (d) judicial discretion.

               (B) In rendering the foregoing opinions, we express no opinion as
          to (1)(a)  provisions in the Loan  Documents  that purport to restrict
          access to legal or equitable remedies,  that purport to affect service
          of  process,  that  purport  to  permit  any  party  to  increase  the
          obligations of any person or entity without the consent of such person
          or  entity,  that  purport  to  require  any party to waive any notice
          which,  as a  matter  of law or  equity,  may not be  waived,  or that
          purport to reinstate any obligation  after payment or otherwise,  that
          purport  to  establish  property   classifications,   presumptions  or
          evidentiary  standards or to waive either  illegality  as a defense to
          the performance of contract  obligations or any other defense for such
          performance that cannot,  as a matter of law or equity, be effectively
          waived,  (b)  provisions  in the Loan  Documents  relating  to  future
          subordination,  receivership,  delay or  omission  of  enforcement  of
          rights and  remedies,  covenants  not to sue or assert  valid  claims,
          marshalling   of  assets,   waiver  of  rights  of   redemption,   and
          severability clauses or rights of third parties, (c) provisions of the
          Loan Documents purporting to waive,  eliminate,  prejudice or restrict
          claims  for  damages  or  other  remedies  for  trespass,  conversion,
          negligence,  failure to comply with requirements  concerning  notices,
          disposition of collateral or otherwise waiving,  affecting or altering
          rights or defenses of any party  which,  in each case,  as a matter of
          law or equity, may not be waived,  affected or altered or the Lenders'
          obligations  under  applicable  law or  (d)  other  provisions  having
          substantially   similar   effect,   (2)   the   legality,    validity,
          enforceability  or binding  effect of provisions of the Loan Documents
          relating  to  indemnities  and  rights of  contribution  to the extent
          prohibited by public policy or which might require indemnification for
          losses or expenses  caused by negligence,  gross  negligence,  willful
          misconduct,  fraud or  illegality  of an  indemnified  party,  (3) the
          effect of any  provision  of the Loan  Documents  which is intended to
          permit  modification  thereof only by means of an agreement  signed in
          writing by the parties thereto,  or (4) the effect of any provision of
          the Loan Documents insofar as it provides that any person purchasing a
          participation  from a Lender or other Person may  exercise  set-off or
          similar rights with respect to such  participation  or that any Lender
          or other Person may exercise  set-off or similar  rights other than in
          accordance with applicable law.

               (C) We note that the enforceability of specific provisions of the
          Loan Documents may be subject to standards of reasonableness, care and
          diligence and "good faith"  limitations and obligations  such as those
          provided in Sections  1-102(3),  1-203, 1-208 and 5-109 of the Uniform
          Commercial  Code as currently in effect in the State of New York,  and
          the related  provisions of the Uniform Commercial Code as currently in
          effect in the State of Texas, and applicable  principles of common law
          and judicial decisions.

               (D) We have  assumed  that the  Lenders  will  enforce  each Loan
          Document  in   compliance   with  the   provisions   thereof  and  all
          requirements of applicable law.

               (E) In  connection  with the  provisions  of the  Loan  Documents
          whereby the Credit  Parties submit to the  jurisdiction  of the United
          States  District Court for the Southern  District of New York, we note
          the  limitations  of 28 U.S.C.  ss.ss.  1331 and 1332 on Federal court
          jurisdiction,  and we also note that such submissions cannot supersede
          such court's  discretion in determining  whether to transfer an action
          from one Federal court to another under 28 U.S.C. ss. 1404(a).

          (iii)  In  rendering  the  opinion  expressed  in  paragraph  1  above
     regarding   existence  and  good   standing,   we  have  relied  solely  on
     certificates  of public  officials of a recent date,  and have conducted no
     further investigation. Our opinion expressed in paragraph 6 with respect to
     each Loan Party is based solely upon our  understanding of their respective
     businesses  as  described in the  periodic  reports  filed by KPP under the
     Exchange Act.

          (iv) We do not express any opinion  with respect to any exhibit to, or
     other agreement referred to in, any of the Loan Documents.

          (v) In rendering the foregoing opinions,  we have not, pursuant to our
     engagement, endeavored to express any opinions, and we express no opinions,
     and none are intended to be implied hereby nor shall be inferred  herefrom,
     as to (a) the  various  state  and  federal  laws,  statutes,  regulations,
     interpretations,  opinions,  directives,  orders,  rulings,  authorities or
     similar  matters  regulating or governing the  Administrative  Agent or any
     Lender  (collectively,  the "Rules")  and/or  their entry into,  execution,
     delivery or performance of the Loan Documents, or the transactions provided
     for therein,  or the conduct of its business  related  thereto,  or (b) the
     Administrative  Agent's or any Lender's compliance with any of the Rules in
     connection  with  any  Loan  Document,  or the  transactions  provided  for
     therein.

          (vi) As used herein, the phrase "to our knowledge" or words of similar
     import  means  conscious  awareness  of facts or other  information  by the
     lawyers in our firm who,  based on our  records as of 3:00 p.m. on December
     27, 2000, have devoted substantive  attention to legal matters on behalf of
     the Loan Parties since January 1, 2000.

     The opinions expressed herein are furnished to you for your sole benefit in
connection  with  the  transactions  contemplated  by the  Loan  Agreement.  The
opinions  expressed  herein may not be relied upon by you for any other  purpose
and may not be relied upon for any purpose by any other person without our prior
written consent,  except that any Person that may become a Lender after the date
hereof may rely upon this opinion in  connection  with those  transactions.  The
opinions  expressed  herein are as of the date  hereof  (and not as of any other
date) or, to the extent a reference to a certificate  or other  document is made
herein,  to such date, and we make no  undertaking  to amend or supplement  such
opinions as facts and circumstances  come to our attention or changes in the law
occur which could affect such opinions.

                                Very truly yours,




<PAGE>
                                   SCHEDULE I

                   [To Be Revised by Counsel to the Borrower]

                          JURISDICTIONS OF LOAN PARTIES


KANEB PIPE LINE COMPANY LLC

Delaware*
Colorado
Iowa
Kansas
Nebraska
North Dakota
South Dakota
Wyoming

KANEB PIPE LINE PARTNERS, L.P.

Delaware*

KANEB PIPE LINE OPERATING PARTNERSHIP, L.P.

Delaware*
Colorado
Iowa
Kansas
Nebraska
North Dakota
South Dakota
Wyoming

* State of incorporation or formation.

SUPPORT TERMINAL SERVICES, INC.

Delaware*
Alabama
Arizona
California
Washington D.C.
Florida
Georgia
Illinois
Indiana
Kansas
Louisiana
Maryland
Minnesota
New Mexico
Oklahoma
Texas
Virginia
Washington
Wisconsin

SUPPORT TERMINALS OPERATING PARTNERSHIP, L.P.

Delaware*
Alabama
California
Washington D.C.
Florida
Georgia
Illinois
Indiana
Kansas
Louisiana
Maryland
Minnesota
New Mexico
Oklahoma
Pennsylvania
Texas
Virginia
Washington
Wisconsin

STANTRANS, INC.

Delaware*
Texas


* State of incorporation or formation.