BRIDGE LOAN AGREEMENT

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BRIDGE LOAN AGREEMENT

dated as of December __, 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

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TABLE OF CONTENTS

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Article I DEFINITIONS; CONSTRUCTION

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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................................................................................31

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...............................................................................................32

Section 4.9. Margin Regulations................................................................................33

Section 4.10. ERISA..............................................................................................33

Section 4.11. Ownership of Property..............................................................................33

Section 4.12. Disclosure.........................................................................................33

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..........................................................34

Section 5.2. Notices of Material Events..........................................................................36

Section 5.3. Existence; Conduct of Business......................................................................36

Section 5.4. Compliance with Laws, Etc...........................................................................36

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.....................................................................................37

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..............................................................................38

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........................................................................41

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....................................................................42

Section 7.12. Accounting Changes.................................................................................42

Article VIII KPP GUARANTEe

Section 8.1. Guarantee...........................................................................................43

Section 8.2. Guaranteed Obligations Not Waived...................................................................43

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.........................................................................................45

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...........................................................48

Section 10.3. Lack of Reliance on the Administrative Agent.......................................................49

Section 10.4. Certain Rights of the Administrative Agent.........................................................49

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............................................................................................51

Section 11.2. Waiver; Amendments.................................................................................52

Section 11.3. Expenses; Indemnification..........................................................................53

Section 11.4. Successors and Assigns.............................................................................54

Section 11.5. Governing Law; Jurisdiction; Consent to Service of Process.........................................57

Section 11.6. WAIVER OF JURY TRIAL...............................................................................57

Section 11.7. Right of Setoff....................................................................................58

Section 11.8. Counterparts; Integration..........................................................................58

Section 11.9. Survival...........................................................................................58

Section 11.10. Severability......................................................................................59

Section 11.11. Confidentiality...................................................................................59

Section 11.12. Interest Rate Limitation..........................................................................59

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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

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BRIDGE LOAN AGREEMENT

THIS BRIDGE LOAN AGREEMENT (this Agreement") is made and entered into as of

December __, 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, ("SunTrust")

as Administrative Agent for the Lenders (in such capacity, together with its

successors in such capacity, 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 $175,000,000; 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 Seller's Northern

Great Plains Pipeline System and associated product terminals.

"Acquisition Agreement" shall mean the Asset Purchase Agreement dated

as of November 12, 2002, between the Borrower and the Seller.

"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 $175,000,000.

"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.

"Fee Letter" shall mean that certain letter agreement from SunTrust

Robinson Humphrey and SunTrust to the Borrower, dated November 15, 2002, as

the same may be amended or replaced from time to time, concerning certain

fees in connection with this Agreement and any agreements or instruments

executed in connection herewith.

"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 Fee Letter, the funds

disbursement instructions for the Bridge Loan, all Notices of

Conversion/Continuation and all other agreements, documents and

certificates executed in connection with this Agreement or the Obligations.

"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) December 28, 2003, 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 Bridge Loan" shall mean that certain bridge loan to the

Borrower pursuant to the Prior Bridge Loan Agreement.

"Prior Bridge Loan Agreement " shall mean that certain Bridge Loan

Agreement dated as of November 1, 2002 among the Borrower, KPP, the lenders

signatory thereto, and SunTrust Bank, as administrative agent for the

lenders, and all other documents and agreements executed in connection

therewith.

"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 October 31,

2002, 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.

"Seller" shall mean Tesoro Refining and Marketing Company, a Delaware

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.

"SunTrust Robinson Humphrey" shall mean SunTrust Robinson Humphrey

Capital Markets, a division of SunTrust Capital Markets, Inc.

"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 through and including the 180th day

after the Closing Date and (iii) an additional 0.25% per annum for every 90

days 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.

The Borrower shall pay SunTrust and SunTrust Robinson Humphrey for their

respective accounts such fees as are set forth in the Fee Letter on the dates

specified therein.

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, June 30,

2003, September 30, 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]