SUBSIDIARY GUARANTEE AGREEMENT


     This SUBSIDIARY GUARANTEE AGREEMENT (the "Agreement"), dated as of November
1, 2002, 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.

                           [SIGNATURE PAGE TO FOLLOW]



<PAGE>


               [SIGNATURE PAGE TO SUBSIDIARY GUARANTEE AGREEMENT]

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


                                 STANTRANS, INC.

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


                                   SUPPORT TERMINALS OPERATING PARTNERSHIP, L.P.
                                   By: Support Terminal Services, Inc., its
                                       General Partner

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


                                   SUPPORT TERMINAL SERVICES, INC.

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


                                   SHORE TERMINALS, LLC


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



<PAGE>



                                   SUNTRUST BANK, as Administrative Agent


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


<PAGE>
                                SCHEDULE I TO THE
                         SUBSIDIARY GUARANTEE AGREEMENT



           Guarantor(s)                     Notice Address for all Guarantors:
StanTrans, Inc.                             2435 North Central Expwy., Suite 700
Support Terminals Operating Partnership L.P.Richardson, Texas  75080
Support Terminal Services, Inc.
Shore Terminals LLC