<SUBMISSION>
<ACCESSION-NUMBER>0001137154-04-000020
<TYPE>8-K
<PUBLIC-DOCUMENT-COUNT>4
<PERIOD>20041031
<ITEMS>1.01
<ITEMS>9.01
<FILING-DATE>20041103
<DATE-OF-FILING-DATE-CHANGE>20041103
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>KANEB SERVICES LLC
<CIK>0001137154
<ASSIGNED-SIC>5172
<IRS-NUMBER>752931295
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>8-K
<ACT>34
<FILE-NUMBER>001-16405
<FILM-NUMBER>041116938
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>2435 N CENTRAL EXPWY SUITE 700
<CITY>RICHARDSON
<STATE>TX
<ZIP>75080
<PHONE>9726994019
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>2435 N CENTRAL EXPWY SUITE 700
<CITY>RICHARDSON
<STATE>TX
<ZIP>75080
</MAIL-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>ksl8kcocagmt.txt
<DESCRIPTION>FORM 8-K CHANGE OF CONTROL AGMTS
<TEXT>
--------------------------------------------------------------------------------


                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 8-K

                                 CURRENT REPORT

     Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

       Date of Report (Date of earliest event reported): October 31, 2004

                               KANEB SERVICES LLC
               (Exact name of registrant as specified in charter)

     Delaware                       001-16405                   75-2931295
(State of Incorporation)       (Commission File No.)          (I.R.S. Employer
                                                             Identification No.)

                          2435 North Central Expressway
                             Richardson, Texas 75080
               (Address of Principal Executive Offices) (Zip Code)

Registrant's telephone number, including area code: (972) 699-4062


--------------------------------------------------------------------------------
         (Former name or former address, if changed since last report.)

Check  the  appropriate  box  below  if the  Form  8-K  filing  is  intended  to
simultaneously  satisfy the filing obligation of the registrant under any of the
following provisions:


|_|  Written  communications  pursuant to Rule 425 under the  Securities Act (17
     CFR 230.425)

|_|  Soliciting  material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
     240.14a-12)

|_|  Pre-commencement   communications  pursuant  to  Rule  14d-2(b)  under  the
     Exchange Act (17 CFR 240.14d-2(b))

|_|  Pre-commencement   communications  pursuant  to  Rule  13e-4(c)  under  the
     Exchange Act (17 CFR 240.13e-4(c))



<PAGE>
Item 1.01 Entry into Material Definitive Agreements.

On October 31, 2004, Kaneb Services LLC (the "Registrant") entered into a change
of control agreement with Mr. Edward D. Doherty, Chairman of the Board and Chief
Executive  Officer of Kaneb Pipe Line Company LLC, a wholly owned  subsidiary of
the Registrant and the sole general  partner of Kaneb Pipe Line Partners,  L.P.,
to supercede a change of control  agreement that was in place with a predecessor
of the Registrant.  On October 31, 2004, the Registrant entered into amended and
restated change of control agreements with each of Mr. John R. Barnes,  Chairman
of the Board,  President and Chief Executive Officer of the Registrant,  and Mr.
Howard C. Wadsworth,  Vice President,  Treasurer and Secretary of the Registrant
to clarify that  average  annual base salary  includes  cash bonuses paid to the
individual  and any amounts  deferred by the  individual  pursuant to a deferred
compensation plan of the Registrant or any of its subsidiaries.

Each change of control agreements provides that the
Registrant  will pay  certain  amounts  into an escrow  account if a third party
takes  certain  steps  which  could  result  in a  change-of-control.  Under the
agreements,   a   "change-of-control"   occurs  if,  under   certain   specified
circumstances:  (i) a third  person,  including  a "group" as defined in Section
13(d)(3) of the  Exchange  Act,  becomes the  beneficial  owner of shares of the
Registrant  having 20% or more of the total number of votes that may be cast for
the  election  of  Directors  of the  Registrant;  (ii) as a  result  of,  or in
connection  with,  any cash tender or exchange  offer,  merger or other business
combination,  restructuring  or proceeding  under the bankruptcy  laws,  sale of
assets or contested election, or any combination of the foregoing  transactions,
the persons who are directors of the Registrant  before the transaction cease to
constitute  a  majority  of the  board of  directors  of the  Registrant  or any
successor to the  Registrant;  or (iii) as a consequence of a tender or exchange
offer or a proxy contest of third party consent solicitation,  a majority of the
fair  market  value of the  assets  of the  Registrant  are  distributed  to the
Registrant's   securities  holders.  In  the  event  that  their  employment  is
terminated as a consequence of a change-of-control, the Registrant will pay each
individual an amount equal to 299% of their  average  annual base salary for the
five years prior to the change-of-control.

     The above description of the change of control agreements do not purport to
be a complete  statement  of the  parties'  rights and  obligations  under those
agreements and the transactions  contemplated by them. The above  description is
qualified in its entirety by reference to the definitive  agreements,  copies of
which are attached as exhibits to this current report.

Item 9.01 Financial Statements and Exhibits.

     (c)  Exhibits

          10.1 Change  of  Control  Agreement,  dated as of  October  31,  2004,
               between the Registrant and Edward D. Doherty.

          10.2 Change  of  Control  Agreement,  dated as of  October  31,  2004,
               between the Registrant and John R. Barnes.

          10.3 Change  of  Control  Agreement,  dated as of  October  31,  2004,
               between the Registrant and Howard C. Wadsworth.



<PAGE>
                                   SIGNATURES

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned hereunto duly authorized.

                                       KANEB SERVICES LLC



                                          //s// HOWARD C. WADSWORTH
                                       -----------------------------------------
                                       Howard C. Wadsworth
                                       Vice President, Treasurer and Secretary


Dated November 3, 2004




</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>2
<FILENAME>kslexh101edd.txt
<DESCRIPTION>EXHIBIT 10.1 EDWARD D. DOHERTY
<TEXT>
                                                                    Exhibit 10.1


                               Kaneb Services LLC


October 31, 2004

Mr. Edward D. Doherty
c/o Kaneb Services LLC 2435 N. Central Expressway
Suite 700
Richardson, Texas 75080

Dear Mr. Doherty:

     You are and have been a valuable  and key  employee of Kaneb  Services  LLC
(the "Company") and/or one or more of its Subsidiaries (as hereinafter defined).
The Company  recognizes  that an attempt to effect a major change in the control
of the Company could have a disturbing  and  disruptive  adverse effect upon you
and your employment  relationship.  You and Xanser  Corporation,  formerly Kaneb
Services,  Inc. ("Xanser"),  entered into a letter agreement dated March 7, 1990
(the "Original  Agreement") with terms and provisions  substantially  similar to
the terms and  provisions  of this  letter  agreement.  In June of 2001,  Xanser
distributed  all of the Company's  common shares to the  shareholders of Xanser,
resulting in the Company  becoming an  independent,  publicly owned company (the
"Distribution").  From and after the date of the Distribution,  you continued to
be an employee of the Company and/or one or more of its Subsidiaries.  As of the
date of the  Distribution,  you  ceased  to be an  employee  of  Xanser  and the
Original  Agreement  terminated  in accordance  with its terms.  In writing this
letter to you, management of the Company desires to enter into an agreement with
you that is substantially  similar to the Original  Agreement and is endeavoring
to foster and encourage your continued attention and dedication to your assigned
duties in the face of potentially  disturbing  circumstances.  Accordingly,  the
Company agrees, in consideration of your continued service, as follows:

     In the event a third party begins a tender or exchange  offer,  initiates a
proxy contest or takes other steps to effect a Change of Control (as hereinafter
defined) of the Company,  the Company will pay to an escrow account  established
at any appropriate banking or trust institution selected by the Company ("Bank")
an amount equal to 299% of your Annual Base Salary.  The escrow  account will be
governed by a standard form of escrow agreement, an actual copy of which will be
furnished to you upon its execution and funding.  In addition,  the Company will
pay into escrow any incentive  compensation  amounts  accrued or earned to which
you are then entitled  otherwise  than as a result of Change of Control.  Annual
Base Salary shall mean your average  annual base salary,  including  annual cash
bonuses  paid to you or  payable  to you  pursuant  to the  2004  KPP  Executive
Group-Annual  Incentive  Program,  whether  or not any such  amounts  have  been
deferred  pursuant to a deferred  compensation plan of the Company or any of its
subsidiaries, for the most recent five taxable years ending before the Change of
Control,  or for such  shorter  period in the  event  your  employment  with the
Company  is less  than  five  years.  The  amounts  so  deposited  with Bank are
collectively referred to as Escrowed Funds.

     Thereafter, you agree that you will not voluntarily leave the employ of the
Company and all of its Subsidiaries and will perform the services of your office
until the third party has abandoned or terminated  efforts to effect a Change of
Control  or until a Change of  Control  has  occurred.  In the event a Change of
Control occurs,  and your employment by the Company and all of its  Subsidiaries
terminates,  voluntarily or involuntarily, for any reason, you shall be paid the
Escrowed Funds upon your written demand.  In the event such Change of Control is
supported  and endorsed by management  of the Company,  you agree,  upon written
request of the Board of  Directors of the  Company,  to assist,  for a period of
ninety (90) days from the date of Change of Control,  in the orderly  transition
of  management  of the Company,  provided the Company shall pay any expenses you
incur in connection with such assistance.

     For the purposes of this letter,  a "Change of Control"  shall be deemed to
have  taken  place if:  (i) a third  person,  including  a "group" as defined in
Section 13(d)(3) of the Securities  Exchange Act of 1934, becomes the beneficial
owner of Member Interests (as defined in the Limited Liability Company Agreement
of Kaneb  Services LLC) of the Company having 20% or more of the total number of
votes that may be cast for the election of directors of the Company;  or (ii) as
a result of, or in connection with, any cash tender or exchange offer, merger or
other business combination, restructure or proceeding under the bankruptcy laws,
sale or  assets or  contested  election,  or any  combination  of the  foregoing
transactions,   the  persons  who  are  directors  of  the  Company  before  the
transaction  cease to  constitute  a majority of the Board of  Directors  of the
Company or any successor to the Company;  or (iii) as a consequence  of a tender
or exchange  offer or a proxy  contest or third party  consent  solicitation,  a
majority of the fair market  value of the assets of the Company are  distributed
to the Company's securities holders.

     For the purposes of this letter, a "Subsidiary"  means, with respect to the
Company,  (i) a  corporation  a majority of whose  voting  stock is at the time,
directly  or  indirectly,  owned by the  Company,  by one or more  wholly  owned
subsidiaries  of the  Company or by the  Company  and one or more  wholly  owned
subsidiaries of the Company, (ii) a partnership in which the Company or a wholly
owned subsidiary of the Company is, at the date of  determination,  a general or
limited partner of such partnership, but only if the Company or its wholly owned
subsidiary  is entitled to receive more than fifty percent of the assets of such
partnership  upon its  dissolution  or (iii)  any  other  entity  (other  than a
corporation or partnership) in which the Company,  a wholly owned  subsidiary of
the  Company or the Company and one or more  wholly  owned  subsidiaries  of the
Company,  directly or indirectly,  at the date of determination thereof, has (x)
at least a majority  ownership  interest or (y) the power to elect or direct the
election of a majority of the directors or other governing body of such entity.

     The Company may withdraw the Escrowed  Funds held in the escrow  account if
one year elapses from the date of deposit by the Company of said Escrowed  Funds
into the escrow  account  and if no written  demand for payment has been made by
you during said one year period.  If, prior to the  expiration  of said one year
period,  there shall occur  another event of the type set forth in the preceding
paragraph,  the Company  will not be required to make an  additional  deposit of
Escrowed  Funds,  but the one year period  described  herein  shall be deemed to
commence on the date of the occurrence of the last such event; provided however,
if a period of six (6) months has expired  from the date of the initial  deposit
of Escrowed Funds, any incentive compensation to which you are entitled shall be
recomputed pursuant to the terms of the applicable  incentive  compensation plan
and an appropriate  deposit or withdrawal  adjustment based upon such recomputed
incentive compensation shall be made.

     The  Company  shall  pay the usual and  customary  charges  of the Bank for
acting as escrow  agent.  The Company will be entitled to the payment of any and
all interest and other income  earned by the Bank through the  investment of the
Escrowed Funds.

     The obligations of the Company  contained  herein shall be binding upon the
Company and upon its successors and assigns. Your rights to receive Escrow Funds
are personal to you and may not be assigned.

     If your  employment  with the  Company and all of its  Subsidiaries  should
terminate for any reason prior to the occurrence of the Change of Control events
described  above,  this agreement  shall  terminate and the Company will have no
further obligation to you hereunder.

     All  amounts  payable  to you under this  Agreement  or  otherwise  will be
subject to applicable  withholding of income, wage and other taxes to the extent
required by applicable law.

     If you are in agreement with the foregoing, please indicate your acceptance
by executing and  returning a copy of this letter to my  attention.  A duplicate
original is enclosed for your files.

                                       Very truly yours,

                                       KANEB SERVICES LLC


                                       By:  //s//  HOWARD C. WADSWORTH
                                          --------------------------------------
                                       Name:  Howard C. Wadsworth
                                       Title: Vice President, Treasurer and
                                                 Secretary

AGREED and ACCEPTED this 31st day of October, 2004:




   //s//  EDWARD D. DOHERTY
----------------------------------
Edward D. Doherty



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>3
<FILENAME>kslexh102jrb.txt
<DESCRIPTION>EXHIBIT 10.2 JOHN R. BARNES
<TEXT>
                                                                    Exhibit 10.2

                               Kaneb Services LLC


October 31, 2004

Mr. John R. Barnes
c/o Kaneb Services LLC 2435 N. Central Expressway
Suite 700
Richardson, Texas 75080

Dear Mr. Barnes:

     You are and have been a valuable  and key  employee of Kaneb  Services  LLC
(the "Company") and/or one or more of its Subsidiaries (as hereinafter defined).
The Company  recognizes  that an attempt to effect a major change in the control
of the Company could have a disturbing  and  disruptive  adverse effect upon you
and your employment  relationship.  In writing this letter to you, management of
the Company is endeavoring to foster and encourage your continued  attention and
dedication  to  your  assigned  duties  in the  face of  potentially  disturbing
circumstances.  This letter  agreement  amends and restates that certain  letter
agreement dated June 29, 2001 in its entirety.  Accordingly, the Company agrees,
in consideration of your continued service, as follows:

     In the event a third party begins a tender or exchange  offer,  initiates a
proxy contest or takes other steps to effect a Change of Control (as hereinafter
defined) of the Company,  the Company will pay to an escrow account  established
at any appropriate banking or trust institution selected by the Company ("Bank")
an amount equal to 299% of your Annual Base Salary.  The escrow  account will be
governed by a standard form of escrow agreement, an actual copy of which will be
furnished to you upon its execution and funding.  In addition,  the Company will
pay into escrow any incentive  compensation  amounts  accrued or earned to which
you are then entitled  otherwise  than as a result of Change of Control.  Annual
Base Salary shall mean your average annual base salary,  whether or not any such
amounts  have been  deferred  pursuant  to a deferred  compensation  plan of the
Company or any of its  Subsidiaries,  for the most  recent  five  taxable  years
ending  before the Change of Control,  or for such  shorter  period in the event
your  employment  with the  Company  is less than five  years.  The  amounts  so
deposited with Bank are collectively referred to as Escrowed Funds.

     Thereafter, you agree that you will not voluntarily leave the employ of the
Company and all of its Subsidiaries and will perform the services of your office
until the third party has abandoned or terminated  efforts to effect a Change of
Control  or until a Change of  Control  has  occurred.  In the event a Change of
Control occurs,  and your employment by the Company and all of its  Subsidiaries
terminates,  voluntarily or involuntarily, for any reason, you shall be paid the
Escrowed Funds upon your written demand.  In the event such Change of Control is
supported  and endorsed by management  of the Company,  you agree,  upon written
request of the Board of  Directors of the  Company,  to assist,  for a period of
ninety (90) days from the date of Change of Control,  in the orderly  transition
of  management  of the Company,  provided the Company shall pay any expenses you
incur in connection with such assistance.

     For the purposes of this letter,  a "Change of Control"  shall be deemed to
have  taken  place if:  (i) a third  person,  including  a "group" as defined in
Section 13(d)(3) of the Securities  Exchange Act of 1934, becomes the beneficial
owner of Member Interests (as defined in the Limited Liability Company Agreement
of Kaneb  Services LLC) of the Company having 20% or more of the total number of
votes that may be cast for the election of directors of the Company;  or (ii) as
a result of, or in connection with, any cash tender or exchange offer, merger or
other business combination, restructure or proceeding under the bankruptcy laws,
sale or  assets or  contested  election,  or any  combination  of the  foregoing
transactions,   the  persons  who  are  directors  of  the  Company  before  the
transaction  cease to  constitute  a majority of the Board of  Directors  of the
Company or any successor to the Company;  or (iii) as a consequence  of a tender
or exchange  offer or a proxy  contest or third party  consent  solicitation,  a
majority of the fair market  value of the assets of the Company are  distributed
to the Company's securities holders.

     For the purposes of this letter, a "Subsidiary"  means, with respect to the
Company,  (i) a  corporation  a majority of whose  voting  stock is at the time,
directly  or  indirectly,  owned by the  Company,  by one or more  wholly  owned
subsidiaries  of the  Company or by the  Company  and one or more  wholly  owned
subsidiaries of the Company, (ii) a partnership in which the Company or a wholly
owned subsidiary of the Company is, at the date of  determination,  a general or
limited partner of such partnership, but only if the Company or its wholly owned
subsidiary  is entitled to receive more than fifty percent of the assets of such
partnership  upon its  dissolution  or (iii)  any  other  entity  (other  than a
corporation or partnership) in which the Company,  a wholly owned  subsidiary of
the  Company or the Company and one or more  wholly  owned  subsidiaries  of the
Company,  directly or indirectly,  at the date of determination thereof, has (x)
at least a majority  ownership  interest or (y) the power to elect or direct the
election of a majority of the directors or other governing body of such entity.

     The Company may withdraw the Escrowed  Funds held in the escrow  account if
one year elapses from the date of deposit by the Company of said Escrowed  Funds
into the escrow  account  and if no written  demand for payment has been made by
you during said one year period.  If, prior to the  expiration  of said one year
period,  there shall occur  another event of the type set forth in the preceding
paragraph,  the Company  will not be required to make an  additional  deposit of
Escrowed  Funds,  but the one year period  described  herein  shall be deemed to
commence on the date of the occurrence of the last such event; provided however,
if a period of six (6) months has expired  from the date of the initial  deposit
of Escrowed Funds, any incentive compensation to which you are entitled shall be
recomputed pursuant to the terms of the applicable  incentive  compensation plan
and an appropriate  deposit or withdrawal  adjustment based upon such recomputed
incentive compensation shall be made.

     The  Company  shall  pay the usual and  customary  charges  of the Bank for
acting as escrow  agent.  The Company will be entitled to the payment of any and
all interest and other income  earned by the Bank through the  investment of the
Escrowed Funds.

     The obligations of the Company  contained  herein shall be binding upon the
Company and upon its successors and assigns. Your rights to receive Escrow Funds
are personal to you and may not be assigned.

     If your  employment  with the  Company and all of its  Subsidiaries  should
terminate for any reason prior to the occurrence of the Change of Control events
described  above,  this agreement  shall  terminate and the Company will have no
further obligation to you hereunder.

     All  amounts  payable  to you under this  Agreement  or  otherwise  will be
subject to applicable  withholding of income, wage and other taxes to the extent
required by applicable law.

     If you are in agreement with the foregoing, please indicate your acceptance
by executing and  returning a copy of this letter to my  attention.  A duplicate
original is enclosed for your files.

                                       Very truly yours,

                                       KANEB SERVICES LLC


                                       By:  //s//  HOWARD C. WADSWORTH
                                          --------------------------------------
                                       Name:  Howard C. Wadsworth
                                       Title: Vice President, Treasurer and
                                                 Secretary

AGREED and ACCEPTED this 31st day of October, 2004:




   //s//  JOHN R. BARNES
----------------------------------
John R. Barnes



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>4
<FILENAME>kslexh103hcw.txt
<DESCRIPTION>EXHIBIT 10.3 HOWARD C. WADSWORTH
<TEXT>
                                                                    Exhibit 10.3

                               Kaneb Services LLC


October 31, 2004

Mr. Howard C. Wadsworth
c/o Kaneb Services LLC 2435 N. Central Expressway
Suite 700
Richardson, Texas 75080

Dear Mr. Wadsworth:

     You are and have been a valuable  and key  employee of Kaneb  Services  LLC
(the "Company") and/or one or more of its Subsidiaries (as hereinafter defined).
The Company  recognizes  that an attempt to effect a major change in the control
of the Company could have a disturbing  and  disruptive  adverse effect upon you
and your employment  relationship.  In writing this letter to you, management of
the Company is endeavoring to foster and encourage your continued  attention and
dedication  to  your  assigned  duties  in the  face of  potentially  disturbing
circumstances.  This letter  agreement  amends and restates that certain  letter
agreement dated June 29, 2001 in its entirety.  Accordingly, the Company agrees,
in consideration of your continued service, as follows:

     In the event a third party begins a tender or exchange  offer,  initiates a
proxy contest or takes other steps to effect a Change of Control (as hereinafter
defined) of the Company,  the Company will pay to an escrow account  established
at any appropriate banking or trust institution selected by the Company ("Bank")
an amount equal to 299% of your Annual Base Salary.  The escrow  account will be
governed by a standard form of escrow agreement, an actual copy of which will be
furnished to you upon its execution and funding.  In addition,  the Company will
pay into escrow any incentive  compensation  amounts  accrued or earned to which
you are then entitled  otherwise  than as a result of Change of Control.  Annual
Base Salary shall mean your average  annual base salary,  including  annual cash
bonuses paid to you, whether or not any such amounts have been deferred pursuant
to a deferred  compensation plan of the Company or any of its Subsidiaries,  for
the most recent five taxable years ending  before the Change of Control,  or for
such shorter period in the event your  employment  with the Company is less than
five years. The amounts so deposited with Bank are  collectively  referred to as
Escrowed Funds.

     Thereafter, you agree that you will not voluntarily leave the employ of the
Company and all of its Subsidiaries and will perform the services of your office
until the third party has abandoned or terminated  efforts to effect a Change of
Control  or until a Change of  Control  has  occurred.  In the event a Change of
Control occurs,  and your employment by the Company and all of its  Subsidiaries
terminates,  voluntarily or involuntarily, for any reason, you shall be paid the
Escrowed Funds upon your written demand.  In the event such Change of Control is
supported  and endorsed by management  of the Company,  you agree,  upon written
request of the Board of  Directors of the  Company,  to assist,  for a period of
ninety (90) days from the date of Change of Control,  in the orderly  transition
of  management  of the Company,  provided the Company shall pay any expenses you
incur in connection with such assistance.

     For the purposes of this letter,  a "Change of Control"  shall be deemed to
have  taken  place if:  (i) a third  person,  including  a "group" as defined in
Section 13(d)(3) of the Securities  Exchange Act of 1934, becomes the beneficial
owner of Member Interests (as defined in the Limited Liability Company Agreement
of Kaneb  Services LLC) of the Company having 20% or more of the total number of
votes that may be cast for the election of directors of the Company;  or (ii) as
a result of, or in connection with, any cash tender or exchange offer, merger or
other business combination, restructure or proceeding under the bankruptcy laws,
sale or  assets or  contested  election,  or any  combination  of the  foregoing
transactions,   the  persons  who  are  directors  of  the  Company  before  the
transaction  cease to  constitute  a majority of the Board of  Directors  of the
Company or any successor to the Company;  or (iii) as a consequence  of a tender
or exchange  offer or a proxy  contest or third party  consent  solicitation,  a
majority of the fair market  value of the assets of the Company are  distributed
to the Company's securities holders.

     For the purposes of this letter, a "Subsidiary"  means, with respect to the
Company,  (i) a  corporation  a majority of whose  voting  stock is at the time,
directly  or  indirectly,  owned by the  Company,  by one or more  wholly  owned
subsidiaries  of the  Company or by the  Company  and one or more  wholly  owned
subsidiaries of the Company, (ii) a partnership in which the Company or a wholly
owned subsidiary of the Company is, at the date of  determination,  a general or
limited partner of such partnership, but only if the Company or its wholly owned
subsidiary  is entitled to receive more than fifty percent of the assets of such
partnership  upon its  dissolution  or (iii)  any  other  entity  (other  than a
corporation or partnership) in which the Company,  a wholly owned  subsidiary of
the  Company or the Company and one or more  wholly  owned  subsidiaries  of the
Company,  directly or indirectly,  at the date of determination thereof, has (x)
at least a majority  ownership  interest or (y) the power to elect or direct the
election of a majority of the directors or other governing body of such entity.

     The Company may withdraw the Escrowed  Funds held in the escrow  account if
one year elapses from the date of deposit by the Company of said Escrowed  Funds
into the escrow  account  and if no written  demand for payment has been made by
you during said one year period.  If, prior to the  expiration  of said one year
period,  there shall occur  another event of the type set forth in the preceding
paragraph,  the Company  will not be required to make an  additional  deposit of
Escrowed  Funds,  but the one year period  described  herein  shall be deemed to
commence on the date of the occurrence of the last such event; provided however,
if a period of six (6) months has expired  from the date of the initial  deposit
of Escrowed Funds, any incentive compensation to which you are entitled shall be
recomputed pursuant to the terms of the applicable  incentive  compensation plan
and an appropriate  deposit or withdrawal  adjustment based upon such recomputed
incentive compensation shall be made.

     The  Company  shall  pay the usual and  customary  charges  of the Bank for
acting as escrow  agent.  The Company will be entitled to the payment of any and
all interest and other income  earned by the Bank through the  investment of the
Escrowed Funds.

     The obligations of the Company  contained  herein shall be binding upon the
Company and upon its successors and assigns. Your rights to receive Escrow Funds
are personal to you and may not be assigned.

     If your  employment  with the  Company and all of its  Subsidiaries  should
terminate for any reason prior to the occurrence of the Change of Control events
described  above,  this agreement  shall  terminate and the Company will have no
further obligation to you hereunder.

     All  amounts  payable  to you under this  Agreement  or  otherwise  will be
subject to applicable  withholding of income, wage and other taxes to the extent
required by applicable law.

     If you are in agreement with the foregoing, please indicate your acceptance
by executing and  returning a copy of this letter to my  attention.  A duplicate
original is enclosed for your files.

                                       KANEB SERVICES LLC


                                       By:  //s//  JOHN R. BARNES
                                          --------------------------------------
                                       Name:  John R. Barnes
                                       Title: President

AGREED and ACCEPTED this 31st day of October, 2004:




   //s//  HOWARD C. WADSWORTH
----------------------------------
Howard C. Wadsworth



</TEXT>
</DOCUMENT>
</SUBMISSION>
