Exhibit 10.2

 

 

 

PURCHASE AND SALE AGREEMENT

(JAVELINA)

 

 

By and Between

Kerr-McGee Corporation

KM Investment Corporation

Javelina Holdings Corporation

(Seller)

and

 

MarkWest Energy Partners, L.P.

(Buyer)

 

 

Covering the Acquisition of

 

The following Equity Interests in

 

(Acquired Company Equity Interests)

100% of Javelina Gas Processing LLC

100% of K-M Javelina LP

40% of Javelina Company

40% of Javelina Pipeline Company

 

(the Acquired Companies)

September 16, 2005

 

 

 

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

 

TABLE OF CONTENTS

 

1.

DEFINITIONS

 

 

 

 

 

2.

THE TRANSACTION

 

 

(a)

Sale of Acquired Company Equity Interests

 

 

(b)

Consideration

 

 

(c)

The Closing

 

 

(d)

Deliveries at the Closing

 

 

(e)

Interim Closing Statement and Post-Closing Adjustment

 

 

(f)

Retained Assets

 

 

 

 

 

3.

REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION

 

 

(a)

Representations and Warranties of the Seller

 

 

(b)

Representations and Warranties of the Buyer

 

 

 

 

 

4.

REPRESENTATIONS AND WARRANTIES CONCERNING THE ACQUIRED COMPANY EQUITY INTERESTS,
ACQUIRED COMPANIES AND ACQUIRED COMPANY ASSETS

 

 

(a)

Organization, Qualification, and Company Power

 

 

(b)

Capitalization

 

 

(c)

Authorization of Transaction. Noncontravention

 

 

(d)

Changes

 

 

(e)

Legal Compliance; Permits

 

 

(f)

Tax Matters

 

 

(g)

Contracts and Commitments

 

 

(h)

Litigation

 

 

(i)

Environmental Matters

 

 

(j)

Title to the Acquired Company Assets

 

 

(k)

Potential Preferential Purchase Rights

 

 

(l)

Financial Information

 

 

(m)

Employee Matters

 

 

(n)

Regulatory Matters

 

 

(o)

No Unrecorded Obligations

 

 

(p) [a05-16464_2ex10d2.htm#pIntellectualProperty_Schedule4pS_001700]

Intellectual Property
[a05-16464_2ex10d2.htm#pIntellectualProperty_Schedule4pS_001700]

 

 

(q) [a05-16464_2ex10d2.htm#qSufficiencyOfTheAcquiredCompanyA_001702]

Sufficiency of the Acquired Company Assets
[a05-16464_2ex10d2.htm#qSufficiencyOfTheAcquiredCompanyA_001702]

 

 

(r) [a05-16464_2ex10d2.htm#rBankAccounts_OtherThanTheJavelin_001703]

Bank Accounts [a05-16464_2ex10d2.htm#rBankAccounts_OtherThanTheJavelin_001703]

 

 

(s) [a05-16464_2ex10d2.htm#sBondsGuarantees_ExceptAsListedOn_002102]

Bonds; Guarantees
[a05-16464_2ex10d2.htm#sBondsGuarantees_ExceptAsListedOn_002102]

 

 

 

 

 

5. [a05-16464_2ex10d2.htm#a5_PreclosingCovenants_TheParties_002107]

PRE-CLOSING COVENANTS
[a05-16464_2ex10d2.htm#a5_PreclosingCovenants_TheParties_002107]

 

 

(a) [a05-16464_2ex10d2.htm#aGeneral_TheBuyerShallUseItsComme_002110]

General [a05-16464_2ex10d2.htm#aGeneral_TheBuyerShallUseItsComme_002110]

 

 

(b) [a05-16464_2ex10d2.htm#bNoticesConsentsAndAuditedFinanci_002111]

Notices, Consents and Audited Financial Statements
[a05-16464_2ex10d2.htm#bNoticesConsentsAndAuditedFinanci_002111]

 

 

(c) [a05-16464_2ex10d2.htm#cOperationOfBusiness_FromTheDateO_002116]

Operation of Business
[a05-16464_2ex10d2.htm#cOperationOfBusiness_FromTheDateO_002116]

 

 

i

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

 

 

(d) [a05-16464_2ex10d2.htm#dAffirmativeCovenants_ExceptAsExp_002124]

Affirmative Covenants
[a05-16464_2ex10d2.htm#dAffirmativeCovenants_ExceptAsExp_002124]

 

 

(e) [a05-16464_2ex10d2.htm#eDamageOrCondemnation_IfBeforeClo_002130]

Damage or Condemnation
[a05-16464_2ex10d2.htm#eDamageOrCondemnation_IfBeforeClo_002130]

 

 

(f) [a05-16464_2ex10d2.htm#fAccess__002133]

Access [a05-16464_2ex10d2.htm#fAccess__002133]

 

 

(g) [a05-16464_2ex10d2.htm#gHsrAct_ThePartiesShallPrepareAsS_002142]

HSR Act [a05-16464_2ex10d2.htm#gHsrAct_ThePartiesShallPrepareAsS_002142]

 

 

(h) [a05-16464_2ex10d2.htm#hIntercompanyTransactions_ThoseAg_002143]

Intercompany Transactions
[a05-16464_2ex10d2.htm#hIntercompanyTransactions_ThoseAg_002143]

 

 

(i) [a05-16464_2ex10d2.htm#iNoticesAndEffectOfSupplementsToS_002145]

Notices and Effect of Supplements to Schedules
[a05-16464_2ex10d2.htm#iNoticesAndEffectOfSupplementsToS_002145]

 

 

(j) [a05-16464_2ex10d2.htm#jReorganizationTransactions_ToThe_002146]

Reorganization Transactions
[a05-16464_2ex10d2.htm#jReorganizationTransactions_ToThe_002146]

 

 

(k) [a05-16464_2ex10d2.htm#kSuretyBondsGuarantees_TheBuyerAg_002147]

Surety Bonds; Guarantees
[a05-16464_2ex10d2.htm#kSuretyBondsGuarantees_TheBuyerAg_002147]

 

 

(l) [a05-16464_2ex10d2.htm#lNoShop_TheSellerShallNotAndShall_002148]

No Shop [a05-16464_2ex10d2.htm#lNoShop_TheSellerShallNotAndShall_002148]

 

 

 

 

 

6. [a05-16464_2ex10d2.htm#a6_PostclosingCovenants_ThePartie_002152]

POST-CLOSING COVENANTS
[a05-16464_2ex10d2.htm#a6_PostclosingCovenants_ThePartie_002152]

 

 

(a) [a05-16464_2ex10d2.htm#aGeneral_InCaseAtAnyTimeAfterTheC_002157]

General [a05-16464_2ex10d2.htm#aGeneral_InCaseAtAnyTimeAfterTheC_002157]

 

 

(b) [a05-16464_2ex10d2.htm#bLitigationSupport_InTheEventAndF_002158]

Litigation Support
[a05-16464_2ex10d2.htm#bLitigationSupport_InTheEventAndF_002158]

 

 

(c) [a05-16464_2ex10d2.htm#cDeliveryAndRetentionOfRecords_Wi_002201]

Delivery and Retention of Records
[a05-16464_2ex10d2.htm#cDeliveryAndRetentionOfRecords_Wi_002201]

 

 

(d) [a05-16464_2ex10d2.htm#dPipelineMarkersAndKerrMarks_TheB_002207]

Pipeline Markers and Kerr Marks
[a05-16464_2ex10d2.htm#dPipelineMarkersAndKerrMarks_TheB_002207]

 

 

(e) [a05-16464_2ex10d2.htm#ePayments_TheSellerWillPromptlyAf_002208]

Payments [a05-16464_2ex10d2.htm#ePayments_TheSellerWillPromptlyAf_002208]

 

 

(f) [a05-16464_2ex10d2.htm#fAccountsReceivable_ToTheExtentAn_002209]

Accounts Receivable
[a05-16464_2ex10d2.htm#fAccountsReceivable_ToTheExtentAn_002209]

 

 

(g) [a05-16464_2ex10d2.htm#gPostclosingEnvironmentalFilings__002210]

Post-Closing Environmental Filings
[a05-16464_2ex10d2.htm#gPostclosingEnvironmentalFilings__002210]

 

 

(h) [a05-16464_2ex10d2.htm#hMutualMistake_IfThePartiesDeterm_002211]

Mutual Mistake [a05-16464_2ex10d2.htm#hMutualMistake_IfThePartiesDeterm_002211]

 

 

(i) [a05-16464_2ex10d2.htm#iRealPropertyMatters_ExceptAsRepr_002212]

Real Property Matters
[a05-16464_2ex10d2.htm#iRealPropertyMatters_ExceptAsRepr_002212]

 

 

(j) [a05-16464_2ex10d2.htm#jOperatorshipAndRofrMatters_TheBu_002215]

Operatorship and ROFR Matters
[a05-16464_2ex10d2.htm#jOperatorshipAndRofrMatters_TheBu_002215]

 

 

 

 

 

7. [a05-16464_2ex10d2.htm#a7_ConditionsToObligationToClose__002215]

CONDITIONS TO OBLIGATION TO CLOSE
[a05-16464_2ex10d2.htm#a7_ConditionsToObligationToClose__002215]

 

 

(a) [a05-16464_2ex10d2.htm#aConditionsToObligationOfTheBuyer_002220]

Conditions to Obligation of the Buyer
[a05-16464_2ex10d2.htm#aConditionsToObligationOfTheBuyer_002220]

 

 

(b) [a05-16464_2ex10d2.htm#bConditionsToObligationOfTheSelle_002225]

Conditions to Obligation of the Seller
[a05-16464_2ex10d2.htm#bConditionsToObligationOfTheSelle_002225]

 

 

 

 

 

8. [a05-16464_2ex10d2.htm#a8_ObligationsSurvivalAndIndemnif_002231]

OBLIGATIONS, SURVIVAL AND INDEMNIFICATION
[a05-16464_2ex10d2.htm#a8_ObligationsSurvivalAndIndemnif_002231]

 

 

(a) [a05-16464_2ex10d2.htm#aSurvivalOfRepresentationsWarrant_002233]

Survival of Representations, Warranties and Covenants
[a05-16464_2ex10d2.htm#aSurvivalOfRepresentationsWarrant_002233]

 

 

(b) [a05-16464_2ex10d2.htm#bIndemnificationProvisionsForBene_002234]

Indemnification Provisions for Benefit of the Buyer
[a05-16464_2ex10d2.htm#bIndemnificationProvisionsForBene_002234]

 

 

(c) [a05-16464_2ex10d2.htm#cIndemnificationProvisionsForBene_002240]

Indemnification Provisions for Benefit of the Seller
[a05-16464_2ex10d2.htm#cIndemnificationProvisionsForBene_002240]

 

 

(d) [a05-16464_2ex10d2.htm#dMattersInvolvingThirdParties__002242]

Matters Involving Third Parties
[a05-16464_2ex10d2.htm#dMattersInvolvingThirdParties__002242]

 

 

(e) [a05-16464_2ex10d2.htm#eDeterminationOfAmountOfAdverseCo_002245]

Determination of Amount of Adverse Consequences
[a05-16464_2ex10d2.htm#eDeterminationOfAmountOfAdverseCo_002245]

 

 

(f) [a05-16464_2ex10d2.htm#fTaxTreatmentOfIndemnityPayments__002247]

Tax Treatment of Indemnity Payments
[a05-16464_2ex10d2.htm#fTaxTreatmentOfIndemnityPayments__002247]

 

 

(g) [a05-16464_2ex10d2.htm#gExclusiveRemedy_TheIndemnitiesPr_002248]

Exclusive Remedy
[a05-16464_2ex10d2.htm#gExclusiveRemedy_TheIndemnitiesPr_002248]

 

 

(h) [a05-16464_2ex10d2.htm#hDisclaimerOfRepresentationsAndWa_002248]

Disclaimer of Representations and Warranties
[a05-16464_2ex10d2.htm#hDisclaimerOfRepresentationsAndWa_002248]

 

 

 

 

 

9. [a05-16464_2ex10d2.htm#a9_TaxMatters__002251]

TAX MATTERS [a05-16464_2ex10d2.htm#a9_TaxMatters__002251]

 

 

(a) [a05-16464_2ex10d2.htm#aPostclosingTaxReturns_TheBuyerSh_002254]

Post-Closing Tax Returns
[a05-16464_2ex10d2.htm#aPostclosingTaxReturns_TheBuyerSh_002254]

 

 

(b) [a05-16464_2ex10d2.htm#bPreclosingTaxReturns_TheSellerSh_002256]

Pre-Closing Tax Returns
[a05-16464_2ex10d2.htm#bPreclosingTaxReturns_TheSellerSh_002256]

 

 

(c) [a05-16464_2ex10d2.htm#cStraddlePeriods_TheBuyerShallBeR_002257]

Straddle Periods
[a05-16464_2ex10d2.htm#cStraddlePeriods_TheBuyerShallBeR_002257]

 

 

(d) [a05-16464_2ex10d2.htm#dStraddleReturns_TheBuyerShallPre_002258]

Straddle Returns
[a05-16464_2ex10d2.htm#dStraddleReturns_TheBuyerShallPre_002258]

 

 

(e) [a05-16464_2ex10d2.htm#eClaimsForRefund_TheBuyerShallNot_002300]

Claims for Refund
[a05-16464_2ex10d2.htm#eClaimsForRefund_TheBuyerShallNot_002300]

 

 

(f) [a05-16464_2ex10d2.htm#fIndemnification_TheBuyerAgreesTo_002301]

Indemnification [a05-16464_2ex10d2.htm#fIndemnification_TheBuyerAgreesTo_002301]

 

 

(g) [a05-16464_2ex10d2.htm#gCooperationOnTaxMatters__002302]

Cooperation on Tax Matters
[a05-16464_2ex10d2.htm#gCooperationOnTaxMatters__002302]

 

 

(h) [a05-16464_2ex10d2.htm#hCertainTaxes_TheSellerShallFileA_002307]

Certain Taxes [a05-16464_2ex10d2.htm#hCertainTaxes_TheSellerShallFileA_002307]

 

 

(i) [a05-16464_2ex10d2.htm#iConfidentiality_AnyInformationSh_002308]

Confidentiality [a05-16464_2ex10d2.htm#iConfidentiality_AnyInformationSh_002308]

 

 

(j) [a05-16464_2ex10d2.htm#jAudits_TheSellerOrTheBuyerAsAppl_002309]

Audits [a05-16464_2ex10d2.htm#jAudits_TheSellerOrTheBuyerAsAppl_002309]

 

 

ii

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

 

 

(k) [a05-16464_2ex10d2.htm#kControlOfProceedings_ThePartyRes_002311]

Control of Proceedings
[a05-16464_2ex10d2.htm#kControlOfProceedings_ThePartyRes_002311]

 

 

(l) [a05-16464_2ex10d2.htm#lPowersOfAttorney_ToTheExtentTheB_002311]

Powers of Attorney
[a05-16464_2ex10d2.htm#lPowersOfAttorney_ToTheExtentTheB_002311]

 

 

(m) [a05-16464_2ex10d2.htm#mRemittanceOfRefunds_IfTheBuyerOr_002313]

Remittance of Refunds
[a05-16464_2ex10d2.htm#mRemittanceOfRefunds_IfTheBuyerOr_002313]

 

 

(n) [a05-16464_2ex10d2.htm#nPurchasePriceAllocation_TheSelle_002314]

Purchase Price Allocation
[a05-16464_2ex10d2.htm#nPurchasePriceAllocation_TheSelle_002314]

 

 

(o) [a05-16464_2ex10d2.htm#oClosingTaxCertificate_AtTheClosi_002315]

Closing Tax Certificate
[a05-16464_2ex10d2.htm#oClosingTaxCertificate_AtTheClosi_002315]

 

 

(p) [a05-16464_2ex10d2.htm#pReportingOfPostclosingTransactio_002316]

Reporting of Post-Closing Transactions
[a05-16464_2ex10d2.htm#pReportingOfPostclosingTransactio_002316]

 

 

(q) [a05-16464_2ex10d2.htm#qSettlements_NotwithstandingAnyth_002318]

Settlements [a05-16464_2ex10d2.htm#qSettlements_NotwithstandingAnyth_002318]

 

 

(r) [a05-16464_2ex10d2.htm#rSection754Elections_ToTheExtentI_002318]

Section 754 Elections
[a05-16464_2ex10d2.htm#rSection754Elections_ToTheExtentI_002318]

 

 

 

 

 

10. [a05-16464_2ex10d2.htm#a10_Termination__002321]

TERMINATION [a05-16464_2ex10d2.htm#a10_Termination__002321]

 

 

(a) [a05-16464_2ex10d2.htm#aTerminationOfAgreement_ThePartie_002327]

Termination of Agreement
[a05-16464_2ex10d2.htm#aTerminationOfAgreement_ThePartie_002327]

 

 

(b) [a05-16464_2ex10d2.htm#bEffectOfTermination_ExceptForThe_002332]

Effect of Termination
[a05-16464_2ex10d2.htm#bEffectOfTermination_ExceptForThe_002332]

 

 

 

 

 

11. [a05-16464_2ex10d2.htm#a11_Miscellaneous__002334]

MISCELLANEOUS [a05-16464_2ex10d2.htm#a11_Miscellaneous__002334]

 

 

(a) [a05-16464_2ex10d2.htm#aConfidentiality_IfTheClosingOccu_002336]

Confidentiality [a05-16464_2ex10d2.htm#aConfidentiality_IfTheClosingOccu_002336]

 

 

(b) [a05-16464_2ex10d2.htm#bPublicAnnouncements_NeitherParty_002337]

Public Announcements
[a05-16464_2ex10d2.htm#bPublicAnnouncements_NeitherParty_002337]

 

 

(c) [a05-16464_2ex10d2.htm#cInsurance_ToTheExtentTheSellerHa_002338]

Insurance [a05-16464_2ex10d2.htm#cInsurance_ToTheExtentTheSellerHa_002338]

 

 

(d) [a05-16464_2ex10d2.htm#dNoThirdPartyBeneficiaries_Except_002340]

No Third Party Beneficiaries
[a05-16464_2ex10d2.htm#dNoThirdPartyBeneficiaries_Except_002340]

 

 

(e) [a05-16464_2ex10d2.htm#eSuccessionAndAssignment_ThisAgre_002340]

Succession and Assignment
[a05-16464_2ex10d2.htm#eSuccessionAndAssignment_ThisAgre_002340]

 

 

(f) [a05-16464_2ex10d2.htm#fCounterparts_ThisAgreementMayBeE_002342]

Counterparts [a05-16464_2ex10d2.htm#fCounterparts_ThisAgreementMayBeE_002342]

 

 

(g) [a05-16464_2ex10d2.htm#gHeadings_TheSectionheadingsConta_002343]

Headings [a05-16464_2ex10d2.htm#gHeadings_TheSectionheadingsConta_002343]

 

 

(h) [a05-16464_2ex10d2.htm#hNotices_AllNoticesRequestsDemand_002344]

Notices [a05-16464_2ex10d2.htm#hNotices_AllNoticesRequestsDemand_002344]

 

 

(i) [a05-16464_2ex10d2.htm#iGoverningLaw_ThisAgreementShallB_002353]

Governing Law [a05-16464_2ex10d2.htm#iGoverningLaw_ThisAgreementShallB_002353]

 

 

(j) [a05-16464_2ex10d2.htm#jAmendmentsAndWaivers_NoAmendment_002354]

Amendments and Waivers
[a05-16464_2ex10d2.htm#jAmendmentsAndWaivers_NoAmendment_002354]

 

 

(k) [a05-16464_2ex10d2.htm#kSeverability_AnyTermOrProvisionO_002355]

Severability [a05-16464_2ex10d2.htm#kSeverability_AnyTermOrProvisionO_002355]

 

 

(l) [a05-16464_2ex10d2.htm#lTransactionExpenses_ExceptToTheE_002356]

Transaction Expenses
[a05-16464_2ex10d2.htm#lTransactionExpenses_ExceptToTheE_002356]

 

 

(m) [a05-16464_2ex10d2.htm#mConstruction_ThePartiesHaveParti_002358]

Construction [a05-16464_2ex10d2.htm#mConstruction_ThePartiesHaveParti_002358]

 

 

(n) [a05-16464_2ex10d2.htm#nExhibitsAndSchedules__002359]

Exhibits and Schedules [a05-16464_2ex10d2.htm#nExhibitsAndSchedules__002359]

 

 

(o) [a05-16464_2ex10d2.htm#oEntireAgreement_ThisAgreementinc_002404]

Entire Agreement
[a05-16464_2ex10d2.htm#oEntireAgreement_ThisAgreementinc_002404]

 

 

iii

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

 

EXHIBITS AND SCHEDULES

 

 

 

 

 

Exhibit A

 

Facilities

 

Exhibit B

 

Form of Acquired Company Equity Interests Assignment

 

Exhibit C

 

Form of Retained Assets Assignment

 

Exhibit D-1

 

Form of Certification of Non-Foreign Status (Kerr-McGee Corporation)

 

Exhibit D-2

 

Form of Certification of Non-Foreign Status (KM Investment Corporation)

 

Exhibit D-3

 

Form of Certification of Non-Foreign Status (Javelina Holdings Corporation)

 

Exhibit E

 

Form of Javelina Indemnity Agreement

 

Exhibit F-1

 

Form of Gas Processing Agreement (West Refinery)

 

Exhibit F-2

 

Form of Gas Processing Agreement (East Refinery)

 

Exhibit F-3

 

Form of Agreement for Sale and Purchase of Hydrogen

 

 

 

Schedule 1(a)

 

Seller’s Knowledge Individuals

 

Schedule 1(b)

 

Product Inventory Value Amount and Pricing Schedule Example

 

Schedule 1(c)

 

Working Capital Schedule Example

 

Schedule 2(e)

 

Interim Closing Statement Example

 

Schedule 3(a)(ii)

 

Consents (Seller Parties)

 

Schedule 3(a)(iii)

 

Noncontravention (Seller Parties)

 

Schedule 3(b)(ii)

 

Consents (Buyer)

 

Schedule 3(b)(iii)

 

Noncontravention (Buyer)

 

Schedule 4(c)

 

Noncontravention (Acquired Companies)

 

Schedule 4(d)

 

Changes

 

Schedule 4(f)

 

Tax Matters

 

Schedule 4(g)(i)

 

Acquired Company Contracts

 

Schedule 4(g)(ii)

 

Material Contract Defaults

 

Schedule 4(g)(vi)

 

Affiliate Contracts

 

Schedule 4(h)

 

Litigation

 

Schedule 4(i)

 

Environmental Matters

 

Schedule 4(j)

 

Exceptions to Title to the Acquired Company Assets

 

Schedule 4(k)

 

Potential Preferential Purchase Rights

 

Schedule 4(l)(i)

 

Audited Financial Information

 

Schedule 4(l)(ii)

 

Unaudited Financial Information

 

Schedule 4(p)

 

Intellectual Property

 

Schedule 4(r)

 

Bank Accounts

 

Schedule 4(s)

 

Bonds; Guarantees

 

Schedule 5(c)

 

Operation of Business

 

Schedule 5(c)(ix)

 

Capital Expenditures

 

Schedule 5(f)(ii)

 

Site Access Insurance

 

Schedule 5(h)(i)

 

Affiliate Contracts to be Terminated

 

Schedule 5(k)

 

Surety Bonds

 

 

iv

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

 

PURCHASE AND SALE AGREEMENT

(JAVELINA)

 

THIS PURCHASE AND SALE AGREEMENT, dated as of September 16, 2005, is by and
between Kerr-McGee Corporation, a Delaware corporation (“Kerr.”), KM Investment
Corporation, a Nevada corporation (“Kerr Investment”) and Javelina Holdings
Corporation, a Delaware corporation (together with Kerr and Kerr Investment,
individually and collectively, the “Seller”), and MarkWest Energy Partners,
L.P., a Delaware limited partnership (the “Buyer”).

 

INTRODUCTION

 

1.                                       The Acquired Companies (defined below)
own certain rights, title and interests in and to certain natural gas processing
plants, fractionation plants, pipelines and related facilities and other assets.

 

2.                                       The Seller owns (indirectly) equity
interests in the Acquired Companies.

 

3.                                       Subject to the terms and conditions set
forth in this agreement, the Seller will sell to the Buyer, and the Buyer will
purchase and acquire from the Seller, such equity interests in the Acquired
Companies, and the Buyer will pay to the Seller the consideration described in
this agreement.

 

In consideration of the premises and the mutual promises herein made, and in
consideration of the representations, warranties, and covenants herein
contained, the Parties hereto agree as follows:

 

AGREEMENT

 

1.                                       Definitions.

 

“Access Right” has the meaning set forth in Section 5(f)(ii)(A).

 

“Acquired Companies” means Javelina GP, Javelina Holding and the Javelina
Partnerships.

 

“Acquired Company Assets” means, excluding the Retained Assets and the Acquired
Company Equity Interests, all rights, title and interests of each Acquired
Company in and to its assets and properties, including its interest in the
Facilities, and, as of the date transferred into any Acquired Company, any
rights, title or interests transferred to any Acquired Company in connection
with any Reorganization Transaction.

 

“Acquired Company Contract” means a written contract, lease or other agreement
(other than any contract or agreement to the extent it constitutes a Retained
Asset) existing on the date of this Agreement or entered into after the date of
this Agreement in accordance with Section 5(c), in each case to which an
Acquired Company is a party that will be binding on such Acquired Company or any
of the Acquired Company Assets.

 

1

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“Acquired Company Equity Interests” means the Javelina GP Interest, the Javelina
Holding 99% Interest, the Javelina Plant Interest and the Javelina Pipeline
Interest.

 

“Acquired Company Equity Interests Assignment” means the Assignment of Equity
Interests substantially in the form of Exhibit B, pursuant to which the Seller
will convey to the Buyer (or its permitted designee) all of the Acquired Company
Equity Interests (other than those Acquired Company Equity Interests that are
owned by any Acquired Company, being the Javelina Plant Interest and the
Javelina Pipeline Interest).

 

“Adverse Consequences” means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, liabilities, obligations, Taxes, liens, losses, expenses, and
fees, including court costs and reasonable attorneys’ fees and expenses, but
excluding (except to the extent paid to an unrelated third party pursuant to a
Third Party Claim) punitive, exemplary, special or consequential damages.

 

“Affiliate” means, with respect to a specified Person, any Person that, directly
or indirectly, through one or more intermediaries, controls or is controlled by
or is under common control with such specified Person; provided, however, that
(i) the Acquired Companies (other than the Javelina Partnerships) shall be
deemed to be Affiliates (x) prior to the Closing, of the Seller and (y) on and
after the Closing, of the Buyer; and (ii) the Javelina Partnerships shall be
deemed (x) not to be Affiliates of the Seller and (y) to be Affiliates of the
Buyer on and after the Closing.  For purposes of this definition, “control” (and
its derivatives) means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting Equity Interests, by contract or
otherwise.

 

“Agreement” means this Purchase and Sale Agreement (including any exhibits,
schedules, annexes, or other attachments hereto) as amended, restated,
supplemented or otherwise modified from time to time.

 

“Buyer” has the meaning set forth in the Preface.

 

“Buyer Diligence Representatives” means, collectively, the agents, consultants,
contractors, employees or other representatives of or retained by the Buyer that
assist or will assist the Buyer in conducting or performing the Diligence
Activities and any employee, agent, contractor or subcontractor thereof.

 

“Buyer Indemnitees” means, collectively, the Buyer and its Affiliates and each
of their respective officers (or natural persons performing similar functions),
directors (or natural persons performing similar functions), employees, agents
and representatives to the extent acting in such capacity.

 

“Buyer Party” means each of (i) the Buyer and (ii) each Affiliate of the Buyer
that is a party to a Transaction Agreement.

 

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“Capital Expenditures” means, without duplication, amounts capitalized in
accordance with GAAP by any Acquired Company (in the case of the Javelina
Partnerships, as prorated based on the Javelina Percentage Interest).

 

“Closing” has the meaning set forth in Section 2(c).

 

“Closing Date” has the meaning set forth in Section 2(c).

 

“Closing Statement” has the meaning set forth in Section 2(e)(i).

 

“Code” means the Internal Revenue Code of 1986, as amended, or any successor
Law.

 

“Commercial Agreements” means, collectively, (i) Gas Processing Agreement by and
between Javelina Plant and Valero Refining-Texas L.P. West Refinery in the form
of Exhibit F-1, (ii) Gas Processing Agreement by and between Javelina Plant and
Valero Refining-Texas L.P. East Refinery in the form of Exhibit F-2, and
(iii) Agreement for Sale and Purchase of Hydrogen by and between Javelina Plant
and Valero Refining-Texas L.P. in the form of Exhibit F-3, in each case (x)
including any annexes, exhibits, schedules and other attachments thereto and (y)
as amended, restated, supplemented or otherwise modified through the date of
this Agreement.

 

“Commitment” means (a) options, warrants, convertible securities, exchangeable
securities, subscription rights, call rights, conversion rights, exchange rights
or other contracts that could require a Person to issue any of its Equity
Interests or to sell any Equity Interest it owns in another Person; (b) any
other securities convertible into, exchangeable or exercisable for, or
representing the right to subscribe for any Equity Interest of a Person or owned
by a Person; (c) statutory pre-emptive rights or pre-emptive rights granted
under a Person’s Organizational Documents; and (d) stock appreciation rights,
phantom stock, profit participation, or other similar rights with respect to a
Person.

 

“Diligence Activities” has the meaning set forth in Section 5(f)(ii)(A).

 

“Effective Time” means 12:01 a.m. on the Closing Date.

 

“Electronic Data” means all electronic documents, data and other computer based
communications and information stored on any electronic, digital, or other
storage or back up media and retained in the Ordinary Course of Business by the
Seller, any Acquired Company or any Affiliate of any such Person, including,
without limitation, operating, accounting, financial, environmental, measurement
(including SCADA), regulatory data and the information and data contained in the
electronic data room, but excluding the Retained Electronic Data.

 

“Encumbrance” means any Lien, encumbrance, option, right of first refusal,
Commitment, voting right, easement, servitude, transfer restriction  or title
defect.

 

“Environmental Laws” means all applicable federal, state and local laws,
statutes, regulations and ordinances in effect as of the date of this Agreement
relating to the protection of the public health, welfare and the environment,
including those laws relating to the storage, handling and use of Hazardous
Substances and those relating to the generation, processing, fractionation,
treatment, storage, transportation, disposal or other management thereof, as to

 

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each, as amended.  The term “Environmental Laws” does not include operating
practices or standards that may be employed or adopted by other industry
participants or recommended by a Governmental Authority.

 

“Environmental Permits” has the meaning set forth in Section 4(i).

 

“Equity Interest” means (a) with respect to a corporation, any and all shares of
capital stock, (b) with respect to a partnership, limited liability company,
trust or similar Person, any and all units, interests or other partnership,
limited liability company, trust or similar interests, and (c) any other direct
equity ownership or participation in a Person.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

“Facilities” means the rights, title and interests of each Acquired Company in
and to the facilities commonly known as the Javelina Plant and the Javelina
Pipeline, each of which are more particularly described on Exhibit A.

 

“FCC Regulations” means those Laws promulgated by the Federal Communications
Commission.

 

“FTC” means the Federal Trade Commission.

 

“Fundamental Representations” means those representations and warranties
contained in Sections 3(a)(i) (Seller Organization and Good Standing),
3(a)(ii) (Seller Authorization of Transaction), 3(a)(iv) (Seller Brokers),
3(b)(i) (Buyer Organization and Good Standing), 3(b)(ii) (Buyer Authorization of
Transaction), 3(b)(iv) (Buyer Brokers), 4(a) (Acquired Company Organization,
Qualification and Company Power), 4(b) (Acquired Company Capitalization),
4(f) (Acquired Company Tax Matters), and 4(m) (Employee Matters).

 

“GAAP” means accounting principles generally accepted in the United States
consistently applied.

 

“Governmental Authority” means the United States or any agency thereof and any
state, county, city or other political subdivision, agency, court or
instrumentality.

 

“Hazardous Substances” means any pollutants, contaminants, toxics or hazardous
or extremely hazardous substances, materials, wastes, constituents, compounds or
chemicals that are regulated by, or may form the basis of liability under, any
Environmental Laws.

 

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the regulations thereunder.

 

“Indemnified Party” has the meaning set forth in Section 8(d).

 

“Indemnifying Party” has the meaning set forth in Section 8(d).

 

“Intellectual Property” means all intellectual property rights used by the
Acquired Companies that do not constitute Retained Assets and that arise from or
in respect of the

 

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following: (i) patents and applications therefor, including continuations,
divisionals, continuations-in-part, or reissues of patent applications and
patents issuing thereon, (ii) trademarks, service marks, trade names, service
names, brand names, trade dress rights, logos, Internet domain names and
corporate names, and all applications, registrations and renewals thereof, (iii)
copyrights and registrations and applications therefor, works of authorship and
mask work rights, (iv) Software and (v) Technology; provided, however, that
Intellectual Property does not include Software of a general nature that is
licensed by the Seller and its Affiliates and not unique to the Acquired
Companies, such as accounting, tax and similar Software.

 

“Interim Agreement” means the Interim Agreement effective as of September 1,
2005 by and between Javelina Plant and Valero Refining-Texas, L.P.

 

“Interim Closing Statement” has the meaning set forth in Section 2(e)(i).

 

“Javelina GP” means Javelina Gas Processing LLC, a Delaware limited liability
company.

 

“Javelina GP Interest” means all of the Equity Interests in Javelina GP.

 

“Javelina Holding” means K-M Javelina LP, an Oklahoma limited partnership.

 

“Javelina Holding Company” means Javelina Holding Company, L.P., a Delaware
limited partnership.

 

“Javelina Holding Interest” means all of the Equity Interests in Javelina
Holding, which consist of the Javelina Holding 99% Interest and the Javelina
Holding 1% Interest.

 

“Javelina Holding 99% Interest” means a 99% limited partner interest in Javelina
Holding.

 

“Javelina Holding 1% Interest” means a 1% general partner interest in Javelina
Holding.

 

“Javelina Indemnity Agreement” means the Indemnity and Release Agreement
substantially in the form of Exhibit E, in which each of the Seller, on the one
hand,  and the Javelina Partnerships, on the other hand, release and indemnify
each other with respect to certain potential claims.

 

“Javelina Insurance Policies” has the meaning set forth in Section 11(c).

 

“Javelina LP” means Javelina Holdings Corporation, a Delaware corporation.

 

“Javelina Operating Agreements” means, collectively, (i) the Construction and
Operating Agreement for the Javelina Plant – Nueces County, Texas dated
November 4, 1988 by and between Javelina Holding Company (as
successor-in-interest to El Paso Field Operations Company and Coastal
Javelina, Inc.) and Javelina Plant, and (ii) the System Operating Agrement dated
as of September 30, 1990 by and between Javelina Holding Company (as
successor-in-interest to El Paso Field Operations Company and Coastal
Javelina, Inc.) and Javelina Plant,

 

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each, in the case of (i) or (ii) (including any exhibits, schedules, annexes or
other attachments thereto), as amended, restated, supplemented or otherwise
modified from time to time.

 

“Javelina Partnerships” means Javelina Pipeline and Javelina Plant.

 

“Javelina Percentage Interest” means, with respect to Javelina Pipeline or
Javelina Plant, 40%.

 

“Javelina Pipeline” means Javelina Pipeline Company, a Texas general
partnership, created pursuant to that certain Javelina Pipeline Company
Partnership Agreement dated as of September 30, 1990 by and among Javelina
Holding Company (as successor-in-interest to El Paso Field Operations Company
and Coastal Javelina, Inc.), Javelina Holding (as successor-in-interest to K-M
Javelina, Inc.) and Valero Javelina, L.P. (as successor in interest to Valero
Javelina Company) (including any exhibits, schedules, annexes or other
attachments thereto), as amended, restated, supplemented or otherwise modified
from time to time.

 

“Javelina Pipeline Interest” means a 40% general partner interest in Javelina
Pipeline.

 

“Javelina Plant” means Javelina Company, a Texas general partnership, created
pursuant to that certain Javelina Company Partnership Agreement dated as of
November 4, 1988 by and among Javelina Holding Company (as successor-in-interest
to El Paso Field Operations Company and Coastal Javelina, Inc.), Javelina
Holding (as successor-in-interest to K-M Javelina, Inc.) and Valero Javelina,
L.P. (as successor in interest to Valero Refining Off-Gas Processing) (including
any exhibits, schedules, annexes or other attachments thereto), as amended and
restated by that certain Amended and Restated Javelina Company Partnership
Agreement dated as of September 30, 1990 by and among Javelina Holding Company
(as successor-in-interest to El Paso Field Operations Company and Coastal
Javelina, Inc.), Javelina Holding (as successor-in-interest to K-M
Javelina, Inc.) and Valero Javelina, L.P. (as successor in interest to Valero
Javelina Company) (including any exhibits, schedules, annexes or other
attachments thereto), as further amended, restated, supplemented or otherwise
modified from time to time.

 

“Javelina Plant Interest” means a 40% general partner interest in Javelina
Plant.

 

“Kerr” has the meaning set forth in the Preface.

 

“Kerr Investment” has the meaning set forth in the Preface.

 

“Kerr Marks” means all trademarks, service marks, and trade names owned by Kerr
and its respective Affiliates.

 

“Law” or “Laws” means any statute, code, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any applicable
Governmental Authority.

 

“Legal Right” means, to the extent arising from, related to or in any way
related to the Javelina Partnerships (including the assets and operations
associated with each), the legal authority and right (without risk of liability,
criminal, civil or otherwise), such that the contemplated conduct would not
constitute a violation, termination or breach of, or require any

 

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payment under, or permit any termination under, any contract or agreement;
arrangement; applicable Law; fiduciary, quasi-fiduciary or similar duty; or any
other obligation.

 

“Lien” means any deed of trust, mortgage, pledge, lien, or other security
interest.

 

“Material Adverse Effect” means any change, effect, event or occurrence with
respect to the financial condition, properties, assets or operations of the
Acquired Companies (excluding the Javelina Partnerships, but including their
proportional interests therein) that is material and adverse to the Acquired
Companies (excluding the Javelina Partnerships, but including their proportional
interests therein), taken as a whole, provided that in determining whether a
Material Adverse Effect has occurred, the following shall not be considered: 
changes, effects, events and occurrences relating to (i) the natural gas
pipeline, treating and processing industry generally (including the price of
natural gas and the costs associated with the drilling and/or production of
natural gas), (ii) any general market, economic, financial or political
conditions, or outbreak or hostilities or war, in the United States, or
(iii) the transactions contemplated by this Agreement; provided, however, that
to be excluded under subsection (ii) above, such condition may not
disproportionately affect, as compared to others in such industry, any of the
Acquired Companies, or their respective businesses, assets, properties, results
of operation or condition (financial or otherwise).

 

“Material Contracts” has the meaning set forth in Section 4(g).

 

“New Contract” means any Acquired Company Contract for which the Buyer’s consent
is required pursuant to Section 5(c).

 

“Notice and Consent Requirements” means giving any notices to, making any
filings with, and obtaining, any authorizations, consents, waivers, releases,
approvals (including as required under the HSR Act), licenses or other rights of
Governmental Authorities and other Persons either Party is required to obtain
(1) in connection with the matters referred to in this Agreement, including
matters described in Sections 3(a)(ii), 3(a)(iii), 3(b)(ii), 3(b)(iii), 4(c),
4(i) and 4(k), the corresponding Schedules, and the Reorganization Transactions,
or (2) under each of the Technology Licenses, in the case of (1) and (2) so as
to permit the Closing to occur as soon as reasonably practicable, and thereafter
with respect to the Seller’s post-Closing Notice and Consent Requirements
obligations under Section 5(b)(i).

 

“Obligations” means duties, liabilities and obligations, whether vested,
absolute or contingent, known or unknown, asserted or unasserted, accrued or
unaccrued, liquidated or unliquidated, due or to become due, and whether
contractual, statutory or otherwise.

 

“Ordinary Course of Business” means the ordinary course of business consistent
with the applicable Person’s past custom and practice.

 

“Organizational Documents” means the articles of incorporation, certificate of
incorporation, charter, bylaws, articles or certificate of formation,
regulations, operating agreement, certificate of limited partnership,
partnership agreement, and all other similar documents, instruments or
certificates executed, adopted, or filed in connection with the creation,
formation, or organization of a Person, including any exhibits, schedules,
annexes or other

 

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attachments thereto, each as amended, restated, supplemented or otherwise
modified from time to time.

 

“Other Purchase Agreements” means, collectively, (i) the Purchase and Sale
Agreement dated as of even date herewith by and between the Buyer and Valero
Energy Corporation (and certain of its Affiliates) and (ii) the Purchase and
Sale Agreement dated as of even date herewith by and between the Buyer and El
Paso Corporation, whereby the Buyer, directly or indirectly, has agreed to
acquire all of the Equity Interest in the Javelina Partnerships (other than that
portion of such Equity Interest constituting any portion of the Acquired Company
Equity Interest).

 

“Parties” means, collectively, the Buyer and the Seller.

 

“Party” means, individually, the Buyer or the Seller.

 

“Permits” means any approvals, authorizations, consents, licenses, permits or
certificates issued by a Governmental Authority.

 

“Permitted Encumbrances” means any Encumbrance relating to any of the following:
(i) any Taxes not yet delinquent or, if delinquent, that are being contested in
good faith in the Ordinary Course of Business; (ii) any obligations or duties
reserved to or vested in any municipality or other Governmental Authority to
regulate any Acquired Company Assets in any manner, including any applicable
Laws; (iii) any inchoate, mechanic’s, materialmen’s, and similar liens arising
or incurred in the Ordinary Course of Business; (iv) any inchoate liens or other
Encumbrances created pursuant to any operating, construction, operation and
maintenance, co-owners, cotenancy, lease or other operating agreements for which
amounts are not due; (v) the Organizational Documents of any Acquired Company;
(vi) any purchase money liens and liens securing rental payments under capital
lease arrangements; (vii) all matters of public record; (viii) any easements,
rights-of-way, restrictions and other similar arrangements incurred in the
Ordinary Course of Business which, in the aggregate, are not substantial in
amount, character or extent and which do not in any case materially interfere
with the ordinary conduct of the business of any of the Acquired Companies,
taken as a whole; and (ix) the pledge by Kerr of its respective equity interests
in Javelina GP and Javelina Holding as collateral under and pursuant to the
terms of the Credit Agreement between Kerr (as Borrower) and JPMorgan Chase
Bank, NA (as Administrative Agent and Collateral Agent) et al dated May 18,
2005, and the Guarantee and Collateral and Collateral Trust Agreement dated
May 24, 2005, ancillary to the Credit Agreement.  Pursuant to the terms of the
said agreements, the pledge of these equity interests will be automatically
released upon Closing under this Purchase and Sale Agreement, without the
necessity of any notice to or consent by any Person.

 

“Person” means an individual or entity, including any partnership, corporation,
association, joint stock company, trust, joint venture, limited liability
company, unincorporated organization, or Governmental Authority (or any
department, agency or political subdivision thereof).

 

“Post-Closing Tax Period” means any Tax period beginning on or after the
Effective Time.

 

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“Post-Closing Tax Return” means any Tax Return that is required to be filed for
any of the Acquired Companies, the Seller or any of its Affiliates with respect
to a Post-Closing Tax Period.

 

“Pre-Closing Tax Period” means any Tax periods or portions thereof ending on or
before the Effective Time.

 

“Pre-Closing Tax Return” means any Tax Return that is required to be filed for
any Acquired Companies, the Seller or any of its Affiliates with respect to a
Pre-Closing Tax Period.

 

“Prime Rate” means the prime rate reported in The Wall Street Journal at the
time such rate must be determined under the terms of this Agreement.

 

“Product Inventory” means, collectively, the quantity of natural gas, natural
gas liquids and other products that are owned by the Acquired Companies (other
than the Javelina Partnerships) and, to the extent of the Javelina Percentage
Interest, the Javelina Partnerships as of the Effective Time, whether held in
storage facilities, pipelines, fractionators or other facilities, including
imbalances; but excluding line fill, tank bottoms, and cushion, pad and
retainage products.

 

“Product Inventory Value Amount” means the Product Inventory quantity segregated
as between all liquids and all gas, with each to be valued as set forth on
Part I of Schedule 1(b).  An example of the schedule of Product Inventory
valuation using pricing and quantity information as of March 31, 2005 is set
forth on Part II of Schedule 1(b).

 

“Project Manager” shall have the meaning ascribed to such term in the
partnership agreements of the Javelina Partnerships.

 

“Purchase Price” means One Hundred Forty Two Million U.S. Dollars
($142,000,000.00) plus (i) the amount, if any, by which the total of the
Purchase Price Increases exceeds the total of the Purchase Price Decreases, or
minus (ii) the amount, if any, by which the total of the Purchase Price
Decreases exceeds the total of the Purchase Price Increases.

 

“Purchase Price Decreases” means, without duplication, (i) 100% of the amount,
if any, of negative Working Capital of the Acquired Companies (other than the
Javelina Partnerships), as of the Effective Time, (ii) the Javelina Percentage
Interest of the amount, if any, of negative Working Capital of each Javelina
Partnership as of the Effective Time, (iii) to the extent the Product Inventory
Value Amount is negative, the Product Inventory Value Amount, (iv) any reduction
of the Purchase Price pursuant to Section 5(e) (Damage or Condemnation),
(v) long-term Unrecorded Obligations and indebtedness for borrowed money of the
Acquired Companies (other than the Javelina Partnerships), excluding any such
items otherwise specifically allocated in this Agreement and (vi) the Javelina
Percentage Interest of long-term Unrecorded Obligations and indebtedness for
borrowed money of the Javelina Partnerships, excluding any such items otherwise
specifically allocated in this Agreement.

 

“Purchase Price Increases” means, without duplication, (i) 100% of the amount,
if any, of positive Working Capital of the Acquired Companies (other than the
Javelina Partnerships) as of the Effective Time, (ii) the Javelina Percentage
Interest of the amount, if any, of positive

 

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Working Capital of each Javelina Partnership as of the Effective Time, (iii) to
the extent the Product Inventory Value Amount is positive, the Product Inventory
Value Amount and (iv) the Reimbursable Capital Expenditures.

 

“Records” has the meaning set forth in Section 6(c).

 

“Reimbursable Capital Expenditures” means the aggregate amount of Capital
Expenditures paid or payable by the Seller or its Affiliates (including the
Acquired Companies) or the Javelina Partnerships (as prorated based on the
Javelina Percentage Interest) that have been consented to in writing by the
Buyer (in its sole discretion).

 

“Reorganization Transactions” means the transactions contemplated by the
Transaction Agreements and the Interim Agreement.

 

“Retained Assets” has the meaning set forth in Section 2(f).

 

“Retained Assets Assignment” means the assignment and assumption agreement
substantially in the form of Exhibit C, by which all of the Retained Assets are
assigned by the Acquired Companies (other than the Javelina Partnerships) to the
Seller (or its designee), and by which the transferee assumes certain
obligations, effective as of a date prior to the Effective Time.

 

“Retained Electronic Data” means all electronic mail stored on any electronic,
digital, or other storage or back up media and retained in the Ordinary Course
of Business by the Seller or any Affiliate of the Seller (other than the
Acquired Companies).

 

“Rights of Way” means any and all rights-of-way, easements, permits, licenses,
franchises or other rights of ingress and egress associated with, arising out
of, or related to the ownership or operation of the Acquired Company Assets.

 

“ROFR Waiver Agreement” means the ROFR Waiver and Side Agreement as of even date
herewith among the partners of the Javelina Partnerships and certain of their
respective Affiliates (including any exhibits, schedules, annexes or other
attachments thereto), as amended, restated or otherwise modified from time to
time, which agreement addresses, among other things, certain possible
preferential purchase rights relating to the Javelina Pipeline Interest and the
Javelina Plant Interest, as well as operatorship of, and access to, the Javelina
Partnerships.

 

“SEC” means the Securities and Exchange Commission.

 

“Securities Act” means the Securities Act of 1933, as amended from time to time.

 

“Seller” has the meaning set forth in the Preface.

 

“Seller Indemnitees” means, collectively, the Seller and its Affiliates and each
of their respective officers (or Persons performing similar functions),
directors (or Persons performing similar functions), employees, agents, and
representatives.

 

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“Seller’s Knowledge” means the actual conscious awareness of each individual
listed on Schedule 1(a) with respect to a particular fact or other matter at the
time of determination (i.e. at signing or Closing, or both) without
investigation or inquiry.

 

“Seller Party” means each of (i) the Seller and (ii) each Affiliate of the
Seller that is a party to any Transaction Agreement.

 

“Software” means any and all of the following that are used by the Acquired
Companies: (i) computer programs, including any and all software implementations
of algorithms, models and methodologies, whether in source code or object code,
(ii) databases and compilations, including any and all data and collections of
data, whether machine readable or otherwise, (iii) descriptions, flow-charts and
other work product used to design, plan, organize and develop any of the
foregoing, screens, user interfaces, report formats, firmware, development
tools, templates, menus, buttons and icons, and (iv) documentation including
user manuals and other training documentation related to any of the foregoing.

 

“Straddle Period” means a Tax period or Tax year commencing before and ending
after the Effective Time.

 

“Straddle Return” means a Tax Return for a Straddle Period.

 

“Tax” or “Taxes” means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code
Section 59A), custom duties, capital stock, franchise, profits, withholding,
social security (or similar excises), unemployment, disability, ad valorem, real
property, personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated, or other tax, levy tax or similar
tax-based fee or imposition of any kind whatsoever, whether imposed on any
Acquired Company or Acquired Company Assets by any Governmental Authority,
pursuant to Treasury Regulation Section 1.1502-6 or any analogous provision of
Law, as a transferee, successor or custodian, or by contract or otherwise,
together with any interest, penalty or addition thereto, whether disputed or
not.

 

“Tax Records” means all Tax Returns and Tax-related work papers relating to any
Acquired Company or Acquired Company Asset.

 

“Tax Return” means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.

 

“Technology” means, collectively, all designs, formulae, algorithms, procedures,
methods, techniques, ideas, know-how, research and development, technical data,
programs, subroutines, tools, materials, specifications, processes, inventions
(whether patentable and whether or not reduced to practice), apparatus,
creations, improvements, works of authorship and other similar materials that
are used by the Acquired Companies.

 

“Technology Licenses” means any and all intellectual property licenses and other
similar arrangements (including, without limitation, computer software,
telephone and radio licenses, and scientific processes) relating to any of the
Acquired Company Assets.

 

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“Third Party Claim” has the meaning set forth in Section 8(d).

 

“Transaction Agreements” means this Agreement, the Acquired Company Equity
Interests Assignments, the Retained Assets Assignment, each of the Commercial
Agreements, the Javelina Indemnity Agreement and the ROFR Waiver Agreement.

 

“Unrecorded Obligations” means, with respect to a Person, all liabilities
incurred and payable by such Person that relate to any deferred payment(s) on
account of the provision of goods or services to such Person and that would be
required to be recorded in accordance with GAAP in such Person’s financial
statements as a liability.

 

“Working Capital” means current assets minus current liabilities as of the
Effective Time as determined in accordance with GAAP; provided, however, that
the term “Working Capital” shall not include (without duplication) the value of
any (i) Product Inventory, (ii) current assets or liabilities relating to Taxes,
(iii) current assets or liabilities relating to purchase accounting reserves,
(iv) current liabilities or current assets otherwise included in Working Capital
and for which this Agreement allocates the ultimate economic costs or benefits
to the Seller or the Buyer (e.g., specified Straddle Period Taxes) and (v) any
accounts receivable with a Person that has any account receivable balance 90 or
more days past due.  Schedule 1(c) is the schedule of Working Capital for the
Acquired Companies as of March 31, 2005.

 

2.                                       The Transaction.

 

(a)                                  Sale of Acquired Company Equity Interests. 
Subject to the terms and conditions of this Agreement, the Seller agrees to sell
to the Buyer the Acquired Company Equity Interests (which includes beneficial
and indirect record ownership of the Javelina Plant Interest and the Javelina
Pipeline Interest), and the Buyer agrees to purchase such Acquired Company
Equity Interests.

 

(b)                                 Consideration.  In consideration for the
assignment of such Acquired Company Equity Interests, the Buyer agrees to pay
the Seller the Purchase Price set forth in the Closing Statement in cash by wire
transfer of immediately available federal funds.

 

(c)                                  The Closing.  The closing of the
transactions contemplated by this Agreement (the “Closing”) shall take place at
the offices of the Seller or its counsel, commencing at 10:00 a.m., local time,
on the earlier to occur of (i) the first day of the calendar month after which
all conditions to the obligations of the Parties to consummate the transactions
contemplated hereby (other than conditions with respect to actions each Party
shall take at the Closing itself) are and have been for a period of at least
three (3) business days satisfied or waived or (ii) such other date as the
Parties may mutually determine (the “Closing Date”); provided that, if such date
is not a business day, the Parties will close into escrow on the preceding
business day with the Closing to be effective for all purposes on the first day
of the month.

 

(d)                                 Deliveries at the Closing.  At the Closing,

 

(I)                                     THE SELLER SHALL DELIVER TO THE BUYER
THE CERTIFICATE REFERRED TO IN SECTION 9(O);

 

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(II)                                  THE SELLER WILL, AND WILL CAUSE EACH
APPLICABLE SELLER PARTY AND, TO THE EXTENT IT HAS THE LEGAL RIGHT, EACH JAVELINA
PARTNERSHIP, TO EXECUTE AND DELIVER EACH TRANSACTION AGREEMENT (OTHER THAN ANY
TRANSACTION AGREEMENT THAT IS EXECUTED BEFORE THE CLOSING) TO WHICH SUCH SELLER
PARTY IS A PARTY;

 

(III)                               THE BUYER WILL, AND WILL CAUSE THE
APPLICABLE BUYER PARTY TO, EXECUTE AND DELIVER EACH TRANSACTION AGREEMENT TO
WHICH SUCH BUYER PARTY IS A PARTY;

 

(IV)                              THE SELLER SHALL DELIVER TO THE BUYER THE
INTERIM CLOSING STATEMENT;

 

(V)                                 THE SELLER SHALL DELIVER, OR CAUSE TO BE
DELIVERED, TO THE BUYER EVIDENCE OF THE RESIGNATION OR REMOVAL OF ANY OFFICERS,
DIRECTORS, REPRESENTATIVES (AS DEFINED IN THE PARTNERSHIP AGREEMENTS OF THE
JAVELINA PARTNERSHIPS) OR MANAGERS OF (X) EACH ACQUIRED COMPANY (OTHER THAN ANY
JAVELINA PARTNERSHIP) AND (Y) OF THE JAVELINA PARTNERSHIPS THAT THE SELLER HAS
THE LEGAL RIGHT TO SO REMOVE OR TO CAUSE TO SO RESIGN, IN EACH CASE THAT THE
BUYER HAS NOT IDENTIFIED TO THE SELLER WITHIN A REASONABLE PERIOD OF TIME BEFORE
CLOSING AS A PERSON THAT WILL BE CONTINUING WITH SUCH ACQUIRED COMPANY IN THAT
CAPACITY AFTER THE CLOSING;

 

(VI)                              THE SELLER SHALL DELIVER TO THE BUYER AN
OFFICER’S CERTIFICATE VERIFYING THAT THE CONDITIONS OF THE BUYER SET FORTH IN
SECTION 7(A)(I) HAVE BEEN SATISFIED;

 

(VII)                           THE BUYER SHALL DELIVER TO THE SELLER AN
OFFICER’S CERTIFICATE VERIFYING THAT THE CONDITIONS OF THE SELLER SET FORTH IN
SECTION 7(B)(I) HAVE BEEN SATISFIED; AND

 

(VIII)                        AT ANY TIME ON OR BEFORE THE CLOSING, THE SELLER
SHALL DELIVER TO THE BUYER SUCH APPLICABLE ORGANIZATIONAL DOCUMENTS, RESOLUTIONS
AND CERTIFICATES OF GOOD STANDING, IN SUCH FORM AS IS REASONABLY ACCEPTABLE TO
THE BUYER.

 

(e)                                  Interim Closing Statement and Post-Closing
Adjustment.

 

(I)                                     AT LEAST FIVE (5) BUSINESS DAYS PRIOR TO
THE CLOSING DATE, THE SELLER SHALL CAUSE TO BE PREPARED AND DELIVERED TO THE
BUYER A STATEMENT (THE “INTERIM CLOSING STATEMENT”) SETTING FORTH THE SELLER’S
GOOD FAITH ESTIMATE OF THE PURCHASE PRICE, INCLUDING A SCHEDULE OF PRODUCT
INVENTORY VALUATION, WORKING CAPITAL, PURCHASE PRICE INCREASES AND PURCHASE
PRICE DECREASES, IN EACH CASE OF THE ACQUIRED COMPANIES, AND ANY OTHER
REASONABLE DETAIL.  AS SOON AS PRACTICABLE, BUT IN ANY EVENT NO LATER THAN ONE
HUNDRED TWENTY (120) DAYS FOLLOWING THE CLOSING DATE, THE BUYER SHALL CAUSE TO
BE PREPARED AND DELIVERED TO THE SELLER (I) A GOOD FAITH STATEMENT, INCLUDING
REASONABLE DETAIL, OF THE ACTUAL PURCHASE PRICE (SUCH STATEMENT, AS IT MAY BE
ADJUSTED PURSUANT TO SECTION 2(E)(II), THE “CLOSING STATEMENT”), INCLUDING A
SCHEDULE OF PRODUCT INVENTORY VALUATION, WORKING CAPITAL, PURCHASE PRICE
INCREASES AND PURCHASE PRICE DECREASES, IN EACH CASE OF THE ACQUIRED COMPANIES,
AND ANY OTHER REASONABLE DETAIL.  IN CONNECTION WITH THE PREPARATION OF THE
CLOSING STATEMENT, THE SELLER SHALL MEASURE THE PRODUCT INVENTORY QUANTITIES IN
ITS CONTROL AS OF THE EFFECTIVE TIME, AND THE BUYER’S REPRESENTATIVES SHALL BE
GIVEN REASONABLE ADVANCE NOTICE OF, AND SHALL BE PERMITTED TO ATTEND AND
OBSERVE, SUCH MEASUREMENT AND TO HAVE REASONABLE ACCESS TO DOCUMENTATION OF
PRODUCT INVENTORY POSITIONS PREPARED BY THE SELLER AND OTHER PERSONS (TO THE
EXTENT THE SELLER HAS THE LEGAL RIGHT OR OTHER LEGAL AUTHORITY AND RIGHT TO
ACCESS SUCH PERSON’S DOCUMENTATION).  IN THE EVENT THAT ALL ACTUAL PRODUCT
INVENTORY QUANTITIES ARE NOT KNOWN PRIOR TO CLOSING, THE SELLER SHALL MAKE A
GOOD FAITH ESTIMATE OF THE PRODUCT INVENTORY QUANTITIES

 

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AND THE RELATED PRODUCT INVENTORY VALUE AMOUNT, WHICH INFORMATION SHALL BE
ATTACHED TO THE INTERIM CLOSING STATEMENT.  BY WAY OF EXAMPLE, SCHEDULE 2(E) IS
A HYPOTHETICAL INTERIM CLOSING STATEMENT THAT ASSUMES THE CLOSING OCCURRED ON
MARCH 31, 2005.

 

(II)                                  UPON RECEIPT OF THE CLOSING STATEMENT, THE
SELLER AND THE SELLER’S INDEPENDENT ACCOUNTANTS SHALL BE PERMITTED DURING THE
SUCCEEDING SIXTY (60)-DAY PERIOD TO EXAMINE THE WORK PAPERS USED OR GENERATED IN
CONNECTION WITH THE PREPARATION OF THE CLOSING STATEMENT AND SUCH OTHER
DOCUMENTS AS THE SELLER MAY REASONABLY REQUEST IN CONNECTION WITH ITS REVIEW OF
THE CLOSING STATEMENT, INCLUDING THE INCOME STATEMENTS FOR THE ACQUIRED
COMPANIES.  WITHIN SIXTY (60) DAYS OF RECEIPT OF THE CLOSING STATEMENT, THE
SELLER SHALL DELIVER TO THE BUYER A WRITTEN STATEMENT DESCRIBING IN REASONABLE
DETAIL ITS OBJECTIONS (IF ANY) TO ANY AMOUNTS OR ITEMS SET FORTH ON THE CLOSING
STATEMENT.  ADDITIONALLY, IF THE BUYER RECEIVES A TIMELY OBJECTION TO THE
PROPOSED CLOSING STATEMENT PURSUANT TO THE COMPARABLE PROVISION OF THE OTHER
PURCHASE AGREEMENTS, THE BUYER SHALL PROVIDE NOTICE TO THE SELLER OF OBJECTION
NOTICE AND, IF THEN ELECTED BY THE SELLER, THE SELLER SHALL BE DEEMED TO HAVE
TIMELY MADE THE SAME OBJECTION TO THE CLOSING STATEMENT MADE UNDER THE OTHER
PURCHASE AGREEMENTS.  IF THE BUYER DOES NOT RECEIVE, WITHIN SIXTY (60) DAYS OF
THE SELLER’S RECEIPT OF THE CLOSING STATEMENT, THE SELLER’S WRITTEN STATEMENT
DESCRIBING IN REASONABLE DETAIL THE SELLER’S OBJECTIONS (AND THE SELLER IS NOT
DEEMED TO HAVE TIMELY OBJECTED PURSUANT TO THE PRECEDING SENTENCE), THE CLOSING
STATEMENT SHALL BECOME FINAL AND BINDING.  IF THE SELLER RAISES WRITTEN
OBJECTIONS WITHIN THE 60-DAY PERIOD (OR THE SELLER IS DEEMED TO HAVE TIMELY
OBJECTED PURSUANT TO THE PRECEDING SENTENCE), THE PARTIES SHALL NEGOTIATE IN
GOOD FAITH TO RESOLVE ANY SUCH OBJECTIONS.  IF THE PARTIES ARE UNABLE TO RESOLVE
ANY DISPUTED ITEM, OTHER THAN MATTERS INVOLVING THE APPLICATION OR
INTERPRETATION OF THE LAW OR OTHER PROVISIONS OF THIS AGREEMENT, WITHIN THIRTY
(30) DAYS AFTER THE BUYER’S RECEIPT OF THE SELLER’S WRITTEN OBJECTIONS, ANY SUCH
DISPUTED ITEMS SHALL BE SUBMITTED TO A NATIONALLY RECOGNIZED INDEPENDENT
ACCOUNTING FIRM MUTUALLY AGREEABLE TO THE PARTIES WHO SHALL BE INSTRUCTED TO
RESOLVE SUCH DISPUTED ITEM IN ACCORDANCE WITH GAAP WITHIN THIRTY (30) DAYS.  THE
RESOLUTION OF SUCH DISPUTES (AS LIMITED IN THE PRECEDING SENTENCE) SHALL BE SET
FORTH IN WRITING AND SHALL BE CONCLUSIVE, BINDING AND NON-APPEALABLE UPON THE
PARTIES AND THE CLOSING STATEMENT SHALL BECOME FINAL AND BINDING UPON THE DATE
OF SUCH RESOLUTION.  THE FEES AND EXPENSES OF SUCH ACCOUNTING FIRM SHALL BE PAID
ONE-HALF BY THE BUYER AND ONE-HALF BY THE SELLER.  THE PARTIES AGREE THAT ANY
DISPUTED ITEM RELATED TO THE APPLICATION OR INTERPRETATION OF THE LAW OR OTHER
PROVISIONS OF THIS AGREEMENT SHALL NOT BE RESOLVED BY THE DESIGNATED ACCOUNTING
FIRM.

 

(III)                               IF THE PURCHASE PRICE AS SET FORTH ON THE
CLOSING STATEMENT EXCEEDS THE ESTIMATED PURCHASE PRICE AS SET FORTH ON THE
INTERIM CLOSING STATEMENT, THE BUYER SHALL PAY THE SELLER, WITHOUT OFFSET OR
DEDUCTION, IN CASH THE AMOUNT OF SUCH EXCESS. IF THE ESTIMATED PURCHASE PRICE AS
SET FORTH ON THE INTERIM CLOSING STATEMENT EXCEEDS THE PURCHASE PRICE AS SET
FORTH ON THE CLOSING STATEMENT, THE SELLER SHALL PAY TO THE BUYER, WITHOUT
OFFSET OR DEDUCTION, IN CASH THE AMOUNT OF SUCH EXCESS. AFTER GIVING EFFECT TO
THE FOREGOING ADJUSTMENTS, ANY AMOUNT TO BE PAID BY THE BUYER TO THE SELLER, OR
TO BE PAID BY THE SELLER TO THE BUYER, AS THE CASE MAY BE, SHALL BE PAID IN THE
MANNER AND WITH INTEREST AS PROVIDED IN SECTION 2(E)(IV) AT A MUTUALLY
CONVENIENT TIME AND PLACE WITHIN FIVE (5) BUSINESS DAYS AFTER THE LATER OF
ACCEPTANCE OF THE CLOSING STATEMENT OR THE RESOLUTION OF THE SELLER’S OBJECTIONS
THERETO PURSUANT TO SECTION 2(E)(II)).

 

(IV)                              ANY PAYMENTS PURSUANT TO THIS
SECTION 2(E) SHALL BE MADE BY CAUSING SUCH PAYMENTS TO BE CREDITED IN
IMMEDIATELY AVAILABLE FUNDS TO SUCH ACCOUNT OR ACCOUNTS OF THE BUYER

 

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OR THE SELLER, AS THE CASE MAY BE, AS MAY BE DESIGNATED BY THE BUYER OR THE
SELLER, AS THE CASE MAY BE.  THE AMOUNT OF THE PAYMENT TO BE MADE PURSUANT TO
THIS SECTION 2(E) SHALL BEAR INTEREST FROM AND INCLUDING THE CLOSING DATE TO,
BUT EXCLUDING, THE DATE OF PAYMENT AT A RATE PER ANNUM EQUAL TO THE PRIME RATE
PLUS TWO (2) PERCENT (NOT TO EXCEED THE MAXIMUM RATE PERMITTED BY APPLICABLE
LAW).  SUCH INTEREST SHALL BE PAYABLE AT THE SAME TIME AS THE PAYMENT TO WHICH
IT RELATES AND SHALL BE CALCULATED ON THE BASIS OF A YEAR OF THREE HUNDRED SIXTY
FIVE (365) DAYS AND THE ACTUAL NUMBER OF DAYS FOR WHICH DUE.

 

(V)                                 EXCEPT AS SET FORTH IN SECTION 2(E)(II),
EACH PARTY SHALL BEAR ITS OWN EXPENSES INCURRED IN CONNECTION WITH THE
PREPARATION AND REVIEW OF THE CLOSING STATEMENT.

 

(f)                                    Retained Assets.  Notwithstanding any
other provision of this Agreement, the transactions contemplated by this
Agreement exclude each and every right, title, interest or other asset in any
way relating to the matters described below to the extent in any way owned by,
or that in any way accrued to the benefit of, any Acquired Company (other than
those actually owned by the Javelina Partnerships) (including their respective
successors) prior to the Closing Date (all of which are referred to as the
“Retained Assets”):

 

(I)                                     RETAINED ELECTRONIC DATA;

 

(II)                                  THE KERR MARKS;

 

(III)                               ANY REFUNDS FROM TAXING AUTHORITIES
ATTRIBUTABLE TO ANY PERIOD BEFORE THE EFFECTIVE TIME;

 

(IV)                              ALL BOOKS, RECORDS, WORK PAPERS, TAX RETURNS,
ETC., RELATING TO TAXES;

 

(V)                                 ALL INSURANCE POLICIES OR OTHER AGREEMENTS
OF INSURANCE THAT RELATE TO THE ASSETS OR BUSINESSES OF ANY OF SUCH ACQUIRED
COMPANY, EXCEPT WITH RESPECT TO ANY CLAIMS MADE PRIOR TO THE EFFECTIVE TIME; AND

 

(VI)                              ANY FILES, RECORDS, CONTRACTS OR OTHER
DOCUMENTS OF THE SELLER OR ANY OF ITS AFFILIATES RELATING TO ANY ANALYSIS OF THE
BUYER’S BID OR OFFER AND ANY ANALYSIS OF ANY OTHER BIDS OR OFFERS WITH RESPECT
TO ANY SUCH ACQUIRED COMPANY OR ALL OR ANY PART OF SUCH ACQUIRED COMPANY ASSETS,
INCLUDING THOSE IN COMPETITION WITH THE BUYER’S BID OR OFFER.

 

Prior to the Closing Date, the Seller shall cause any such Acquired Company to
transfer, for or without consideration, the Retained Assets to the Seller, any
of its Affiliates or any designee.  Notwithstanding anything to the contrary
provided elsewhere in this Agreement, the term Acquired Company Assets does not
include (and similar terms or phrases contained in the Transaction Agreements
shall not include) the Retained Assets, and, accordingly, the Seller’s
representations, warranties and covenants shall not apply to the Retained
Assets.  For the avoidance of doubt, but without limiting the generality of the
foregoing, neither the Seller nor any of its Affiliates is assuming or otherwise
becoming responsible for any Obligation pursuant to this Section 2(f); provided,
however, that the Seller is providing the indemnification specified in Section
8(b)(vii)(B) relating to the Retained Assets.

 

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3.                                       Representations and Warranties
Concerning the Transaction.

 

(a)                                  Representations and Warranties of the
Seller.  The Seller hereby represents and warrants to the Buyer as follows:

 

(I)                                     ORGANIZATION AND GOOD STANDING.  EACH
SELLER PARTY (OTHER THAN KM INVESTMENT AND THE ACQUIRED COMPANIES) IS A LIMITED
LIABILITY COMPANY, LIMITED PARTNERSHIP OR CORPORATION DULY ORGANIZED, VALIDLY
EXISTING, AND IN GOOD STANDING UNDER THE LAWS OF THE STATE OF DELAWARE.  KM
INVESTMENT IS A CORPORATION DULY ORGANIZED, VALIDLY EXISTING AND IN GOOD
STANDING UNDER THE LAWS OF THE STATE OF NEVADA.  EACH SELLER PARTY (OTHER THAN
THE ACQUIRED COMPANIES) IS DULY QUALIFIED OR AUTHORIZED TO DO BUSINESS AND IS IN
GOOD STANDING UNDER THE LAWS OF EACH STATE IN WHICH THE CONDUCT OF ITS BUSINESS
OR THE OWNERSHIP OF ITS ASSETS OR PROPERTIES REQUIRES SUCH QUALIFICATION OR
AUTHORIZATION, EXCEPT WHERE THE LACK OF SUCH QUALIFICATION WOULD NOT HAVE AN
ADVERSE EFFECT IN ANY MATERIAL RESPECT ON THE ABILITY OF ANY SUCH SELLER PARTY
TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED HEREBY.  EACH SUCH SELLER PARTY
(OTHER THAN THE ACQUIRED COMPANIES) HAS FULL POWER AND AUTHORITY TO CARRY ON THE
BUSINESSES IN WHICH IT IS ENGAGED (AS SUCH BUSINESSES ARE PRESENTLY CONDUCTED)
AND TO OWN, LEASE AND USE THE PROPERTIES AND ASSETS OWNED, LEASED AND USED BY
IT, EXCEPT WHERE THE LACK OF SUCH POWER AND AUTHORITY WOULD NOT HAVE AN ADVERSE
EFFECT IN ANY MATERIAL RESPECT ON THE ABILITY OF ANY SUCH SELLER PARTY TO
CONSUMMATE THE TRANSACTIONS CONTEMPLATED HEREBY.

 

(II)                                  AUTHORIZATION OF TRANSACTION.  EACH SELLER
PARTY HAS FULL POWER AND AUTHORITY (INCLUDING FULL ENTITY POWER AND AUTHORITY)
TO EXECUTE AND DELIVER EACH TRANSACTION AGREEMENT TO WHICH SUCH SELLER PARTY IS
A PARTY AND TO PERFORM ITS OBLIGATIONS THEREUNDER.  THE EXECUTION AND DELIVERY
OF EACH OF THE TRANSACTION AGREEMENTS TO WHICH ANY SELLER PARTY IS A PARTY AND
THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED THEREBY HAVE BEEN DULY
AUTHORIZED BY ALL REQUIRED ENTITY ACTION ON THE PART OF EACH SUCH SELLER PARTY. 
THIS AGREEMENT HAS BEEN, AND EACH OF THE OTHER TRANSACTION AGREEMENTS TO WHICH
ANY SELLER PARTY IS A PARTY WILL BE AT OR PRIOR TO THE CLOSING, DULY AND VALIDLY
EXECUTED AND DELIVERED BY SUCH SELLER PARTY, AND EACH TRANSACTION AGREEMENT TO
WHICH ANY SELLER PARTY IS A PARTY CONSTITUTES THE VALID AND LEGALLY BINDING
OBLIGATION OF SUCH SELLER PARTY, ENFORCEABLE AGAINST SUCH SELLER PARTY IN
ACCORDANCE WITH ITS TERMS AND CONDITIONS, SUBJECT, HOWEVER, TO THE EFFECTS OF
BANKRUPTCY, INSOLVENCY, REORGANIZATION, MORATORIUM OR SIMILAR LAWS AFFECTING
CREDITORS’ RIGHTS GENERALLY, AND TO GENERAL PRINCIPLES OF EQUITY (REGARDLESS OF
WHETHER SUCH ENFORCEABILITY IS CONSIDERED IN A PROCEEDING IN EQUITY OR AT LAW). 
EXCEPT AS CONTEMPLATED BY SECTION 5(G) AND AS SET FORTH ON SCHEDULE 3(A)(II), NO
SELLER PARTY (OTHER THAN THE JAVELINA PARTNERSHIPS) NEED GIVE ANY NOTICE TO,
MAKE ANY FILING WITH, OR OBTAIN ANY WAIVER, PERMIT, ORDER, AUTHORIZATION,
CONSENT, OR APPROVAL OF ANY GOVERNMENTAL AUTHORITY OR ANY OTHER PERSON IN ORDER
TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY OTHER
TRANSACTION AGREEMENT TO WHICH SUCH SELLER PARTY IS A PARTY, EXCEPT FOR THE
PRIOR APPROVAL OF THE FTC AND EXCEPT FOR SUCH NOTICES, FILINGS, AUTHORIZATIONS,
CONSENTS OR APPROVALS AS WOULD NOT HAVE AN ADVERSE EFFECT IN ANY MATERIAL
RESPECT ON THE ABILITY OF ANY SELLER PARTY TO CONSUMMATE THE TRANSACTIONS
CONTEMPLATED HEREBY.

 

(III)                               NONCONTRAVENTION.  EXCEPT FOR PRIOR APPROVAL
OF THE FTC, IF APPLICABLE, OR AS CONTEMPLATED BY SECTION 5(G) AND FOR FILINGS
SPECIFIED IN SCHEDULE 3(A)(II) OR AS SET FORTH IN SCHEDULE 3(A)(III), NEITHER
THE EXECUTION AND DELIVERY OF ANY TRANSACTION AGREEMENT TO WHICH ANY SELLER
PARTY (OTHER THAN THE ACQUIRED COMPANIES) IS A PARTY, THE COMPLIANCE BY ANY SUCH
SELLER

 

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PARTY WITH ANY OF THE PROVISIONS THEREOF, NOR THE CONSUMMATION OF ANY OF THE
TRANSACTIONS CONTEMPLATED THEREBY, SHALL RESULT IN ANY VIOLATION OF OR DEFAULT
(WITH OR WITHOUT NOTICE OR LAPSE OF TIME, OR BOTH) UNDER, OR GIVE RISE TO A
RIGHT OF TERMINATION OR CANCELLATION UNDER, ANY PROVISION OF (A) ANY LAW TO
WHICH ANY SUCH SELLER PARTY IS SUBJECT OR ANY PROVISION OF ITS ORGANIZATIONAL
DOCUMENTS, OR (B) ANY AGREEMENT OR PERMIT TO WHICH ANY SUCH SELLER PARTY IS A
PARTY OR BY WHICH IT IS BOUND OR TO WHICH ANY OF ITS ASSETS OR PROPERTIES ARE
SUBJECT, OR (C) ANY ORDER OF ANY GOVERNMENTAL AUTHORITY APPLICABLE TO ANY SUCH
SELLER PARTY OR BY WHICH ANY OF THE PROPERTIES OR ASSETS OF SUCH SELLER PARTY
ARE BOUND, EXCEPT FOR ANY SUCH VIOLATION, DEFAULT OR RIGHT OF TERMINATION OR
CANCELLATION AS WOULD NOT HAVE AN ADVERSE EFFECT IN ANY MATERIAL RESPECT ON THE
ABILITY OF ANY SELLER PARTY TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED HEREBY.

 

(IV)                              BROKERS’ FEES.  NO SELLER PARTY HAS ANY
LIABILITY OR OBLIGATION TO PAY ANY FEES OR COMMISSIONS TO ANY BROKER, FINDER, OR
AGENT WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT FOR WHICH
THE BUYER OR ANY ACQUIRED COMPANY COULD BECOME LIABLE OR OBLIGATED.

 

(b)                                 Representations and Warranties of the
Buyer.  The Buyer hereby represents and warrants to the Seller as follows:

 

(I)                                     ORGANIZATION OF THE BUYER.  EACH BUYER
PARTY IS A LIMITED PARTNERSHIP DULY ORGANIZED, VALIDLY EXISTING, AND IN GOOD
STANDING UNDER THE LAWS OF THE STATE OF DELAWARE.  EACH BUYER PARTY IS DULY
QUALIFIED OR AUTHORIZED TO DO BUSINESS AND IS IN GOOD STANDING UNDER THE LAWS OF
EACH STATE WHICH REQUIRES SUCH QUALIFICATION, EXCEPT WHERE THE LACK OF SUCH
QUALIFICATION WOULD NOT HAVE AN ADVERSE EFFECT IN ANY MATERIAL RESPECT ON THE
ABILITY OF ANY SUCH BUYER PARTY TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED
HEREBY.  EACH BUYER PARTY HAS FULL POWER AND AUTHORITY TO CARRY ON THE
BUSINESSES IN WHICH IT IS ENGAGED (AS SUCH BUSINESSES ARE PRESENTLY CONDUCTED)
AND TO OWN, LEASE AND USE THE PROPERTIES AND ASSETS OWNED, LEASED AND USED BY
IT, EXCEPT WHERE THE LACK OF SUCH POWER AND AUTHORITY WOULD NOT HAVE AN ADVERSE
EFFECT IN ANY MATERIAL RESPECT ON THE ABILITY OF ANY SUCH BUYER PARTY TO
CONSUMMATE THE TRANSACTIONS CONTEMPLATED HEREBY.

 

(II)                                  AUTHORIZATION OF TRANSACTION.  EACH BUYER
PARTY HAS FULL POWER AND AUTHORITY (INCLUDING FULL ENTITY POWER AND AUTHORITY)
TO EXECUTE AND DELIVER EACH TRANSACTION AGREEMENT TO WHICH SUCH BUYER PARTY IS A
PARTY AND TO PERFORM ITS OBLIGATIONS THEREUNDER.  THE EXECUTION AND DELIVERY OF
EACH OF THE TRANSACTION AGREEMENTS TO WHICH ANY BUYER PARTY IS A PARTY AND THE
CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED THEREBY HAVE BEEN DULY AUTHORIZED
BY ALL REQUIRED ENTITY ACTION ON THE PART OF EACH SUCH BUYER PARTY.  THIS
AGREEMENT HAS BEEN, AND EACH OF THE OTHER TRANSACTION AGREEMENTS TO WHICH ANY
BUYER PARTY IS A PARTY WILL BE AT OR PRIOR TO THE CLOSING, DULY AND VALIDLY
EXECUTED AND DELIVERED BY SUCH BUYER PARTY, AND EACH TRANSACTION AGREEMENT TO
WHICH ANY BUYER PARTY IS A PARTY CONSTITUTES THE VALID AND LEGALLY BINDING
OBLIGATION OF SUCH BUYER PARTY, ENFORCEABLE AGAINST SUCH BUYER PARTY IN
ACCORDANCE WITH ITS TERMS AND CONDITIONS, SUBJECT, HOWEVER, TO THE EFFECTS OF
BANKRUPTCY, INSOLVENCY, REORGANIZATION, MORATORIUM OR SIMILAR LAWS AFFECTING
CREDITORS’ RIGHTS GENERALLY, AND TO GENERAL PRINCIPLES OF EQUITY (REGARDLESS OF
WHETHER SUCH ENFORCEABILITY IS CONSIDERED IN A PROCEEDING IN EQUITY OR AT LAW). 
EXCEPT AS CONTEMPLATED BY SECTION 5(G) AND AS SET FORTH ON SCHEDULE 3(B)(II), NO
BUYER PARTY NEED GIVE ANY NOTICE TO, MAKE ANY FILING WITH, OR OBTAIN ANY WAIVER,
PERMIT, ORDER, AUTHORIZATION, CONSENT, OR APPROVAL OF ANY GOVERNMENTAL AUTHORITY
OR ANY OTHER PERSON IN

 

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ORDER TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY OTHER
TRANSACTION AGREEMENT TO WHICH SUCH BUYER PARTY IS A PARTY, EXCEPT FOR THE PRIOR
APPROVAL OF THE FTC AND EXCEPT FOR SUCH NOTICES, FILINGS, AUTHORIZATIONS,
CONSENTS OR APPROVALS AS WOULD NOT HAVE AN ADVERSE EFFECT IN ANY MATERIAL
RESPECT ON THE ABILITY OF ANY BUYER PARTY TO CONSUMMATE THE TRANSACTIONS
CONTEMPLATED HEREBY.

 

(III)                               NONCONTRAVENTION.  EXCEPT FOR THE PRIOR
APPROVAL OF THE FTC OR AS CONTEMPLATED BY SECTION 5(G) AND FOR FILINGS SPECIFIED
IN SCHEDULE 3(B)(II) OR AS SET FORTH IN SCHEDULE 3(B)(III), NEITHER THE
EXECUTION AND DELIVERY OF ANY TRANSACTION AGREEMENT TO WHICH ANY BUYER PARTY IS
A PARTY, THE COMPLIANCE BY ANY SUCH BUYER PARTY WITH ANY OF THE PROVISIONS
THEREOF, NOR THE CONSUMMATION OF ANY OF THE TRANSACTIONS CONTEMPLATED THEREBY,
SHALL RESULT IN ANY VIOLATION OR DEFAULT (WITH OR WITHOUT NOTICE OR LAPSE OF
TIME, OR BOTH) UNDER, OR GIVE RISE TO A RIGHT OF TERMINATION OR CANCELLATION
UNDER, ANY PROVISION OF (A) ANY LAW TO WHICH SUCH BUYER PARTY IS SUBJECT OR ANY
PROVISION OF ITS ORGANIZATIONAL DOCUMENTS, OR (B) ANY AGREEMENT OR PERMIT TO
WHICH ANY SUCH BUYER PARTY IS A PARTY OR BY WHICH IT IS BOUND OR TO WHICH ANY OF
ITS ASSETS OR PROPERTIES ARE SUBJECT, OR (C) ANY ORDER OF ANY GOVERNMENTAL
AUTHORITY APPLICABLE TO ANY SUCH BUYER PARTY OR BY WHICH ANY OF THE PROPERTIES
OR ASSETS OF SUCH BUYER PARTY ARE BOUND, EXCEPT FOR ANY SUCH VIOLATION, DEFAULT
OR RIGHT OF TERMINATION OR CANCELLATION AS WOULD NOT HAVE AN ADVERSE EFFECT IN
ANY MATERIAL RESPECT ON THE ABILITY OF ANY BUYER PARTY TO CONSUMMATE THE
TRANSACTIONS CONTEMPLATED HEREBY.

 

(IV)                              BROKERS’ FEES.  NO BUYER PARTY HAS ANY
LIABILITY OR OBLIGATION TO PAY ANY FEES OR COMMISSIONS TO ANY BROKER, FINDER, OR
AGENT WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT FOR WHICH
THE SELLER COULD BECOME LIABLE OR OBLIGATED.

 

(V)                                 INVESTMENT.  THE BUYER IS NOT ACQUIRING THE
ACQUIRED COMPANY EQUITY INTERESTS WITH A VIEW TO OR FOR SALE IN CONNECTION WITH
ANY DISTRIBUTION THEREOF OR ANY OTHER SECURITY RELATED THERETO WITHIN THE
MEANING OF THE SECURITIES ACT.  THE BUYER IS FAMILIAR WITH INVESTMENTS OF THE
NATURE OF THE ACQUIRED COMPANY EQUITY INTERESTS, UNDERSTANDS THAT THIS
INVESTMENT INVOLVES SUBSTANTIAL RISKS, HAS SUBSTANTIAL KNOWLEDGE AND EXPERIENCE
IN FINANCIAL AND BUSINESS MATTERS SUCH THAT IT IS CAPABLE OF EVALUATING, AND HAS
EVALUATED, THE MERITS AND RISKS INHERENT IN PURCHASING THE ACQUIRED COMPANY
EQUITY INTERESTS, AND IS ABLE TO BEAR SUCH RISKS.  THE BUYER HAS HAD THE
OPPORTUNITY TO VISIT WITH THE SELLER AND ITS APPLICABLE AFFILIATES AND MEET WITH
THEIR REPRESENTATIVE OFFICERS AND OTHER REPRESENTATIVES TO DISCUSS THE BUSINESS,
ASSETS, LIABILITIES, FINANCIAL CONDITION, AND OPERATIONS OF THE ACQUIRED
COMPANIES, HAS RECEIVED (TO THE BUYER’S KNOWLEDGE) ALL MATERIALS, DOCUMENTS AND
OTHER INFORMATION IN THE POSSESSION OF THE SELLER AND ITS AFFILIATES THAT THE
BUYER DEEMS NECESSARY OR ADVISABLE TO EVALUATE THE ACQUIRED COMPANIES, AND HAS
MADE ITS OWN INDEPENDENT EXAMINATION, INVESTIGATION, ANALYSIS AND EVALUATION OF
THE ACQUIRED COMPANIES, INCLUDING ITS OWN ESTIMATE OF THE VALUE OF THE ACQUIRED
COMPANIES.

 

(VI)                              AVAILABILITY OF FUNDS.  THE BUYER HAS, OR WILL
HAVE AS OF THE CLOSING DATE, SUFFICIENT FUNDS WITH WHICH TO PAY THE PURCHASE
PRICE AND CONSUMMATE THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.  THE
ABILITY OF THE BUYER TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT IS NOT SUBJECT TO ANY CONDITION OR CONTINGENCY WITH RESPECT TO
FINANCING.

 

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4.                                       Representations and Warranties
Concerning the Acquired Company Equity Interests, Acquired Companies and
Acquired Company Assets.  The Seller represents and warrants to the Buyer as
follows; provided, however, that, except with respect to Section 4(b), any
representation or warranty given in this Section 4 with respect to the Javelina
Partnerships or the assets, properties, obligations, activities and other
matters relating to the Javelina Partnerships shall be deemed to be made to the
Seller’s Knowledge):

 

(a)                                  Organization, Qualification, and Company
Power.  Javelina GP is a limited liability company duly organized, validly
existing and is in good standing under the laws of the State of Delaware. 
Javelina Holding is a limited partnership duly organized, validly existing and
is in good standing under the laws of the State of Oklahoma.  Each Javelina
Partnership is a general partnership duly organized and validly existing under
the laws of the State of Texas.  Each of Javelina GP and Javelina Holding is
duly qualified or authorized to do business and is in good standing under the
Laws of the State of Texas.  Each Acquired Company has full power and authority
to carry on the businesses in which it is engaged (as such businesses are
presently conducted) and to own, lease and use the properties and assets owned,
leased and used by it in the State of Texas.  The Seller has provided the Buyer
with complete copies (including all amendments, restatements and other
modifications) of the Organizational Documents of each Acquired Company as in
effect on the date of this Agreement.

 

(b)                                 Capitalization.

 

(I)                                     THE CAPITALIZATION OF THE ACQUIRED
COMPANIES ON THE CLOSING DATE WILL BE AS FOLLOWS:

 

(A)                              KERR INVESTMENT WILL OWN (BENEFICIALLY AND OF
RECORD) THE JAVELINA GP INTEREST.

 

(B)                                JAVELINA GP WILL OWN (BENEFICIALLY AND OF
RECORD) THE JAVELINA HOLDING 1% INTEREST.

 

(C)                                JAVELINA LP WILL OWN (BENEFICIALLY AND OF
RECORD) THE JAVELINA HOLDING 99% INTEREST.

 

(D)                               JAVELINA HOLDING WILL OWN (BENEFICIALLY AND OF
RECORD) THE JAVELINA PLANT INTEREST AND THE JAVELINA PIPELINE INTEREST.

 

(II)                                  THE ACQUIRED COMPANY EQUITY INTERESTS HAVE
BEEN DULY AUTHORIZED, AND ARE VALIDLY ISSUED AND FULLY PAID AND (EXCEPT WITH
RESPECT TO THE GENERAL PARTNER INTERESTS OR AS SET FORTH TO THE CONTRARY IN THE
APPLICABLE GOVERNING DOCUMENTS) NON-ASSESSABLE.  EXCEPT TO THE EXTENT CREATED
UNDER THE SECURITIES ACT, STATE SECURITIES LAWS, LIMITED LIABILITY COMPANY LAWS,
PARTNERSHIP LAWS AND GENERAL CORPORATION LAWS OF THE ACQUIRED COMPANIES’ STATE
OF FORMATION, AND AS CREATED BY THE ORGANIZATIONAL DOCUMENTS OF THE ACQUIRED
COMPANIES, (X) THE ACQUIRED COMPANY EQUITY INTERESTS ARE EACH HELD AS SET FORTH
ABOVE, FREE AND CLEAR OF ANY ENCUMBRANCES AND (Y) THERE ARE NO COMMITMENTS WITH
RESPECT TO ANY EQUITY INTEREST (1) OF ANY OF THE ACQUIRED COMPANIES (OTHER THAN
THE JAVELINA PARTNERSHIPS), (2) CONSTITUTING THE JAVELINA PLANT INTEREST OR 
(3) CONSTITUTING THE JAVELINA PIPELINE INTEREST.  EXCEPT AS PROVIDED IN THE
ORGANIZATIONAL DOCUMENTS OF ANY ACQUIRED COMPANY, NO SELLER PARTY IS PARTY TO
ANY VOTING TRUSTS, PROXIES, OR

 

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OTHER AGREEMENTS OR UNDERSTANDINGS WITH RESPECT TO THE VOTING, REDEMPTION, SALE,
TRANSFER OR OTHER DISPOSITION OF ANY EQUITY INTEREST OF ANY OF THE ACQUIRED
COMPANIES.

 

(III)                               NO EQUITY INTERESTS.  OTHER THAN ANY
ACQUIRED COMPANY EQUITY INTEREST, NONE OF THE ACQUIRED COMPANIES OWN, DIRECTLY
OR INDIRECTLY (AND THE ACQUIRED COMPANY ASSETS DO NOT INCLUDE), ANY EQUITY
INTEREST IN ANY OTHER PERSON.

 

(IV)                              THE SELLER HAS PROVIDED THE BUYER WITH A TRUE
AND COMPLETE COPY OF THE ORGANIZATIONAL DOCUMENTS (INCLUDING EACH AND EVERY
AMENDMENT THEREOF) OF EACH OF THE ACQUIRED COMPANIES.

 

(V)                                 THE ACQUIRED COMPANY EQUITY INTEREST
ASSIGNMENT WILL TRANSFER TO THE BUYER GOOD AND INDEFEASIBLE TITLE TO THE
ACQUIRED COMPANY EQUITY INTERESTS (OTHER THAN THOSE ACQUIRED COMPANY EQUITY
INTERESTS THAT ARE OWNED BY ANY ACQUIRED COMPANY, BEING THE JAVELINA PLANT
INTEREST AND THE JAVELINA PIPELINE INTEREST), FREE AND CLEAR OF ANY AND ALL
ENCUMBRANCES.

 

(c)                                  Authorization of Transaction. 
Noncontravention.  Except as contemplated by Section 5(g) and as set forth on
Schedule 4(c), neither of the Javelina Partnerships need give any notice to,
make any filing with, or obtain any waiver, Permit, order, authorization,
consent, or approval of any Governmental Authority or any other Person in order
to consummate the transactions contemplated by this Agreement or any other
Transaction Agreement to which any Javelina Partnership is a party, except for
the prior approval of the FTC and except for such notices, filings,
authorizations, consents or approvals as would not have an adverse effect in any
material respect on the ability of the Seller to consummate the transactions
contemplated hereby. Except for the approval of the FTC, if applicable, or as
contemplated by Section 5(g) or as set forth in Schedule 4(c), neither the
execution and delivery of any Transaction Agreement, the compliance with any of
the provisions thereof, nor the consummation of any of the transactions
contemplated thereby, shall result in the imposition of any Encumbrance (except
any created by any Transaction Document) on any of the Acquired Company Equity
Interests or any of the Acquired Company Assets, result in any violation of or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination or cancellation under, any provision of:  (i) any
material Law to which any of the Acquired Companies or any of the Acquired
Company Assets is subject or any provision of the Organizational Documents of
any of the Acquired Companies, or (ii) any material agreement (excluding Rights
of Way) or permit to which any of the Acquired Companies, any of the Acquired
Company Equity Interests or any of the Acquired Company Assets is subject, or
(iii) any order of any Governmental Authority applicable to any Acquired
Company, any of the Acquired Company Equity Interests or any of the Acquired
Company Assets.

 

(d)                                 Changes.  Except (i) as set forth in
Schedules 4(d), 4(l)(i) and 4(l)(ii), (ii) with respect to the Reorganization
Transactions and (iii) as otherwise permitted by this Agreement, from May 31,
2005 to the date of this Agreement:

 

(I)                                     THE ACQUIRED COMPANY ASSETS, TAKEN AS A
WHOLE, HAVE BEEN OPERATED AND MAINTAINED IN THE ORDINARY COURSE OF BUSINESS;

 

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(II)                                  THE ACQUIRED COMPANIES, TAKEN AS A WHOLE,
HAVE CONDUCTED THEIR RESPECTIVE BUSINESSES ONLY IN THE ORDINARY COURSE OF
BUSINESS;

 

(III)                               THERE HAS BEEN NO PURCHASE, SALE, EXCHANGE
OR LEASE OF ANY PROPERTY, PLANT OR EQUIPMENT OF ANY ACQUIRED COMPANY, OTHER THAN
THOSE NOT EXCEEDING NET PROCEEDS OF ONE MILLION DOLLARS ($1,000,000) IN THE
AGGREGATE;

 

(IV)                              THERE HAS NOT BEEN ANY CHANGE, EVENT OR LOSS
AFFECTING ANY ACQUIRED COMPANY THAT HAS RESULTED, OR WOULD REASONABLY BE
EXPECTED TO RESULT, IN A MATERIAL ADVERSE EFFECT; AND

 

(V)                                 THERE HAS BEEN NO CONTRACT, COMMITMENT OR
AGREEMENT TO DO ANY OF THE FOREGOING, EXCEPT AS EXPRESSLY PERMITTED BY THIS
AGREEMENT.

 

(e)                                  Legal Compliance; Permits.  To the Seller’s
Knowledge, currently and since December 31, 2002, each Acquired Company has
complied and is in compliance with all applicable Laws of all Governmental
Authorities.  Neither Seller nor any Acquired Company has received any written
notice of or has been charged with the violation of any material Laws applicable
to the Acquired Company Assets.  To the Seller’s Knowledge, the Acquired
Companies currently have all material Permits that are necessary to operate the
Acquired Company Assets and the operations related thereto in the Ordinary
Course of Business, all such Permits are in full force and effect, and no
Acquired Company is in material default or violation (and no event has occurred
which, with notice or the lapse of time or both, would constitute a material
default or violation) of any term, condition or provision of any such Permits. 
Notwithstanding the previous sentences, the Seller makes no representations or
warranties in this Section 4(e) with respect to Taxes or Environmental Laws, for
which the sole representations and warranties of the Seller are set forth in
Sections 4(f) and 4(i), respectively.

 

(f)                                    Tax Matters.  Except as set forth in
Schedule 4(f):

 

(I)                                     TO THE SELLER’S KNOWLEDGE, THE ACQUIRED
COMPANIES HAVE TIMELY FILED ALL TAX RETURNS WITH RESPECT TO THE ACQUIRED
COMPANIES AND THE ACQUIRED COMPANY ASSETS THAT THEY WERE REQUIRED TO FILE AND
SUCH TAX RETURNS ARE ACCURATE IN ALL MATERIAL RESPECTS.  ALL TAXES (WHETHER OR
NOT SHOWN ON ANY TAX RETURN) REQUIRED TO BE PAID BY ANY OF THE ACQUIRED
COMPANIES OR WITH RESPECT TO THE ACQUIRED COMPANY ASSETS HAVE BEEN PAID.

 

(II)                                  THE ACQUIRED COMPANIES HAVE DULY COMPLIED
WITH ALL WITHHOLDING TAX AND TAX DEPOSIT REQUIREMENTS;

 

(III)                               NONE OF THE ACQUIRED COMPANIES ARE UNDER
INVESTIGATION, AUDIT OR EXAMINATION BY ANY GOVERNMENTAL AUTHORITY, AND THERE ARE
NO CLAIMS OR PROCEEDINGS NOW PENDING OR THREATENED AGAINST THE ACQUIRED
COMPANIES WITH RESPECT TO ANY TAX OR ANY MATTERS UNDER DISCUSSION WITH ANY
GOVERNMENTAL AUTHORITY RELATING TO ANY TAX;

 

(IV)                              THERE ARE NO LIENS ON ANY OF THE ACQUIRED
COMPANY ASSETS RELATED WITH ANY FAILURE (OR ALLEGED FAILURE) TO PAY ANY TAX;

 

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(V)                                 THERE ARE NO OUTSTANDING AGREEMENTS OR
WAIVERS EXTENDING THE STATUTORY PERIOD OF LIMITATIONS APPLICABLE TO ANY FEDERAL,
STATE, LOCAL OR FOREIGN INCOME OR OTHER MATERIAL TAX RETURNS REQUIRED TO BE
FILED BY OR WITH RESPECT TO ANY OF THE ACQUIRED COMPANIES;

 

(VI)                              TO THE SELLER’S KNOWLEDGE, ALL MATERIAL
ACQUIRED COMPANY ASSETS HAVE BEEN INCLUDED ON THE PROPERTY TAX ROLLS OF THE TAX
JURISDICTIONS IN WHICH THE PROPERTY IS LOCATED AND THERE IS NO OMITTED PROPERTY
IN SUCH JURISDICTIONS; AND

 

(VII)                           NONE OF THE ACQUIRED COMPANIES HAVE ELECTED TO
BE TAXED OR ARE SUBJECT TO BEING TAXED AS A CORPORATION FOR FEDERAL INCOME TAX
PURPOSES.

 

(g)                                 Contracts and Commitments.  Included in
Schedule 4(g)(i) is a description of each Acquired Company Contract (excluding
Rights of Way) existing on the date of this Agreement that fits into the
categories described in (i) – (xii) below (such Acquired Company Contracts are,
collectively, the “Material Contracts”):

 

(I)                                     (A) ANY THAT RESULTED IN AGGREGATE
PAYMENTS BY AN ACQUIRED COMPANY OF MORE THAN TWO MILLION FIVE HUNDRED THOUSAND
($2,500,000) DOLLARS DURING THE TWELVE MONTHS ENDING DECEMBER 31, 2004 (IN EACH
CASE, BASED SOLELY ON THE TERMS THEREOF AND WITHOUT REGARD TO ANY EXPECTED
INCREASE IN VOLUMES OR REVENUES), OR (B) ARE REASONABLY EXPECTED (REGARDLESS OF
THE TERM) TO RESULT IN AGGREGATE PAYMENTS BY AN ACQUIRED COMPANY OF $2,500,000
OR MORE IN EITHER CALENDAR YEARS 2005 OR 2006;

 

(II)                                  (A) ANY THAT RESULTED IN AGGREGATE
REVENUES TO AN ACQUIRED COMPANY OF MORE THAN:  (1) TWO MILLION FIVE HUNDRED
THOUSAND ($2,500,000) DOLLARS DURING THE TWELVE MONTHS ENDING DECEMBER 31, 2004
(IN EACH CASE, BASED SOLELY ON THE TERMS THEREOF AND WITHOUT REGARD TO ANY
EXPECTED INCREASE IN VOLUMES OR REVENUES), OR (B) ARE REASONABLY EXPECTED
(REGARDLESS OF THE TERM) TO RESULT IN AGGREGATE REVENUES BY AN ACQUIRED COMPANY
OF $2,500,000 OR MORE IN EITHER CALENDAR YEARS 2005 OR 2006;

 

(III)                               ANY HYDROCARBON PURCHASE AND SALE,
TRANSPORTATION, PROCESSING OR SIMILAR AGREEMENT OF AN ACQUIRED COMPANY THAT IS
NOT TERMINABLE ON ONE HUNDRED EIGHTY (180) DAYS OR LESS NOTICE OR THAT HAS A
REMAINING TERM OF MORE THAN ONE HUNDRED EIGHTY (180) DAYS;

 

(IV)                              ANY THAT IS AN INDENTURE, MORTGAGE, LOAN,
CREDIT OR SALE-LEASEBACK OR SIMILAR FINANCIAL AGREEMENT OR ANY OTHER AGREEMENT
REPRESENTING INDEBTEDNESS FOR BORROWED MONIES WHERE AN ACQUIRED COMPANY IS A
BORROWER OR A GUARANTOR;

 

(V)                                 ANY THAT CONSTITUTES A LEASE UNDER WHICH AN
ACQUIRED COMPANY IS THE LESSOR OR THE LESSEE OF REAL OR PERSONAL PROPERTY, WHICH
LEASE (A) CANNOT BE TERMINATED BY SUCH ACQUIRED COMPANY WITHOUT PENALTY UPON ONE
HUNDRED EIGHTY (180) DAYS OR LESS NOTICE AND (B) INVOLVES AN ANNUAL BASE RENTAL
OF MORE THAN FIVE HUNDRED THOUSAND ($500,000) DOLLARS;

 

(VI)                              ANY BETWEEN AN ACQUIRED COMPANY (OTHER THAN
THE JAVELINA PARTNERSHIPS), ON THE ONE HAND, AND THE SELLER AND ITS AFFILIATES
(OTHER THAN THE ACQUIRED COMPANIES OR ANY CURRENT OFFICER OR DIRECTOR OF ANY
ACQUIRED COMPANY), ON THE OTHER HAND, ALL OF WHICH ARE LISTED ON
SCHEDULE 4(G)(VI);

 

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(VII)                           ANY WITH RESPECT TO ANY SWAP, FORWARD, FUTURE OR
DERIVATIVE TRANSACTION OR OPTION OR SIMILAR AGREEMENT, INVOLVING, OR SETTLED BY
REFERENCE TO, ONE OR MORE RATES, CURRENCIES, COMMODITIES, EQUITY OR DEBT
INSTRUMENTS OR SECURITIES, OR ECONOMIC, FINANCIAL OR PRICING INDICES OR MEASURES
OF ECONOMIC, FINANCIAL OR PRICING RISK OR VALUE OR ANY SIMILAR TRANSACTION;

 

(VIII)                        ANY ENTERED INTO ON OR AFTER DECEMBER 31, 2004 FOR
THE SALE OF ANY OF THE ASSETS OF ANY ACQUIRED COMPANY (OTHER THAN PRODUCT
INVENTORY SOLD IN THE ORDINARY COURSE OF BUSINESS), FOR CONSIDERATION IN EXCESS
OF FIVE MILLION DOLLARS ($5,000,000);

 

(IX)                                EACH AGREEMENT THAT LIMITS OR PURPORTS TO
LIMIT THE ABILITY OF AN ACQUIRED COMPANY TO COMPETE IN ANY LINE OF BUSINESS OR
WITH ANY PERSON OR IN ANY GEOGRAPHIC AREA OR DURING ANY PERIOD OF TIME THAT WILL
NOT EXPIRE UPON CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT
AND THAT IS NOT CANCELABLE WITHOUT PENALTY OR FURTHER PAYMENT AND WITHOUT MORE
THAN 30 DAYS’ NOTICE; AND

 

(X)                                   ANY UNDER WHICH AN ACQUIRED COMPANY
PROVIDES A GUARANTY OR AN INDEMNITY WITH RESPECT TO ANY OBLIGATION OF ANY PERSON
OTHER THAN AN ACQUIRED COMPANY.

 

Except as set forth on Schedule 4(g)(ii) and except for any such matters that
would not be material, there exists no breach or default under any Material
Contract or New Contract by any Acquired Company or, to the Seller’s Knowledge,
by any other Person that is a party to such contract.  Except as set forth on
Schedule 4(g)(ii) and except for any matter that would not be material, to the
Seller’s Knowledge no event has occurred that with notice or lapse of time or
both would reasonably be expected to constitute a default under any Material
Contract or New Contract by any Acquired Company or, by any other Person who is
a party to such contract.  No Acquired Company has received any written notice
of any material default under any Material Contract or New Contract, and no
Acquired Company has received from any other party to any Material Contract or
New Contract any written notice of such party’s intent to terminate any such
Material Contract.  The Seller has furnished or made available to the Buyer a
true and correct copy of each Material Contract and New Contract, and each
written amendment thereto.  To the Seller’s Knowledge, each Material Contract
and New Contract is in full force and effect and is valid, in each case
according to its terms.

 

(h)                                 Litigation.  Schedule 4(h) sets forth each
instance in which any of the Acquired Companies or any of the Acquired Company
Assets (A) is subject to any outstanding injunction, judgment, order, decree,
ruling, or charge or (B) is the subject of any judicial, administrative or
arbitral action, suit, or hearing pending before any Governmental Authority or
(C) to the Seller’s Knowledge, threatened material claim, demand, or notice of
violation or liability from any Person or any investigation or similar
proceeding by any Governmental Authority.

 

(i)                                     Environmental Matters.  To the Seller’s
Knowledge, except as set forth in Schedule 4(i):  (a) since December 31, 2002,
the Acquired Companies and their respective businesses, operations, and
properties have been and are in material compliance with all Environmental Laws
and all permits, registrations, licenses, approvals, exemptions, variances, and
other authorizations required of the Acquired Companies under material
Environmental Laws (the “Environmental Permits”); (b) since December 31, 2003,
the Acquired Companies have obtained or filed for all material Environmental
Permits for their respective businesses,

 

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operations, and properties as they currently exist and all such Environmental
Permits are currently in full force and effect; (c) the Acquired Companies and
their respective businesses, operations, and properties are not subject to any
pending or material threatened claims, actions, suits, investigations, inquiries
or proceedings under Environmental Laws; (d) there have been no material
releases or threatened releases of Hazardous Substances on, under or from the
properties of the Acquired Companies; and (e) the Acquired Companies have not
received any written notice asserting an alleged liability or obligation under
any Environmental Laws against the Acquired Companies with respect to the actual
or alleged Hazardous Substance contamination of any property offsite of the
properties of the Acquired Companies.  To the Seller’s Knowledge, the Seller has
made available to the Buyer complete copies of each report, study, assessment or
similar document (including any drafts that were prepared by consultants and
presented but not finalized) prepared with respect to any property or asset
(owned now) of any Acquired Company.  To the Seller’s Knowledge, except for
those made available, no other such reports have been prepared for any Acquired
Company or any of their properties during the last four years.

 

The Seller does not make any representation or warranty regarding any compliance
or failure to comply with, or any actual or contingent liability under, any
Environmental Law, except as expressly set forth in this Section 4(i).

 

(j)                                     Title to the Acquired Company Assets. 
Each Acquired Company has good and marketable title to all of its respective
Acquired Company Assets, in each case free and clear of all Encumbrances, except
(w) for Permitted Encumbrances, (x) for Encumbrances disclosed on Schedule 4(j),
(y) with respect to claims that are not by, through or under such Acquired
Company, the Seller or any Seller Affiliate, and (z) with respect to Rights of
Way.  To the Seller’s Knowledge, each Acquired Company has good and marketable
title to all of its respective Acquired Company Assets constituting Rights of
Way, in each case, free and clear of all Encumbrances, except (1) for Permitted
Encumbrances, (2) for Encumbrances disclosed on Schedule 4(j), and (3) with
respect to claims that are not by, through or under such Acquired Company, the
Seller or any Seller Affiliate.

 

(k)                                  Potential Preferential Purchase Rights. 
Except as set forth on Schedule 4(k), there are no preferential purchase rights,
rights of first refusal, options or other rights held by any Person not a party
to this Agreement to purchase or acquire any or all of the Acquired Company
Equity Interests, or any of the assets or properties of the Acquired Companies,
in whole or in part, that would be triggered or otherwise affected as a result
of the transactions contemplated by this Agreement.

 

(l)                                     Financial Information.

 

(I)                                     SCHEDULE 4(L)(I) SETS FORTH (W) THE
AUDITED BALANCE SHEETS AS OF DECEMBER 31, 2004 AND 2003 AND RELATED STATEMENTS
OF OPERATIONS, CASH FLOWS AND PARTNERS’ CAPITAL FOR THE YEARS ENDED DECEMBER 31,
2004 AND 2003 OF JAVELINA PLANT, (X) THE AUDITED BALANCE SHEETS AS OF
DECEMBER 31, 2003 AND 2002 AND RELATED STATEMENTS OF OPERATIONS, CASH FLOWS AND
PARTNERS’ CAPITAL FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002 OF JAVELINA
PLANT, (Y) THE AUDITED BALANCE SHEETS AS OF DECEMBER 31, 2004 AND 2003 AND
RELATED STATEMENTS OF OPERATIONS, CASH FLOWS AND PARTNERS’ CAPITAL FOR THE YEARS
ENDED DECEMBER 31, 2004 AND 2003 OF JAVELINA PIPELINE

 

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AND (Z) THE AUDITED BALANCE SHEETS AND RELATED STATEMENTS OF OPERATIONS, CASH
FLOWS AND PARTNERS’ CAPITAL OF JAVELINA PIPELINE AS OF DECEMBER 31, 2003 AND
2002 AND FOR THE YEARS THEN ENDED.  TO THE SELLER’S KNOWLEDGE, EACH SET OF THE
AUDITED FINANCIAL STATEMENTS CONTAINED IN SCHEDULE 4(L)(I) WAS PREPARED IN
ACCORDANCE WITH GAAP AND FAIRLY PRESENTS, IN ALL MATERIAL RESPECTS, THE
FINANCIAL POSITION AND RESULTS OF OPERATION, CASH FLOWS AND PARTNERS’ CAPITAL
ASSOCIATED WITH THE OWNERSHIP AND OPERATION OF SUCH PERSONS REFERENCED THEREIN
AS OF THE DATES AND FOR THE PERIODS INDICATED.

 

(II)                                  SCHEDULE 4(L)(II) SETS FORTH (X) THE
UNAUDITED BALANCE SHEET AND RELATED STATEMENTS OF OPERATIONS AND CASH FLOWS OF
JAVELINA PLANT AS OF MAY 31, 2005 AND FOR THE FIVE MONTHS THEN ENDED AND (Y) THE
UNAUDITED BALANCE SHEET AND RELATED STATEMENTS OF OPERATIONS AND CASH FLOWS OF
JAVELINA PIPELINE AS OF MAY 31, 2005 AND FOR THE FIVE MONTHS THEN ENDED.  TO THE
SELLER’S KNOWLEDGE, EACH SET OF UNAUDITED FINANCIAL INFORMATION CONTAINED IN
SCHEDULE 4(L)(II) (1) WAS EXTRACTED FROM THE CORPORATE FINANCIAL RECORDS OF THE
JAVELINA PARTNERSHIPS, WHICH RECORDS ARE MAINTAINED ON THE SAME BASIS ON WHICH
THE PROJECT MANAGER MAINTAINS ITS CORPORATE FINANCIAL RECORDS FOR SIMILARLY
SIZED AND SITUATED PERSONS, (2) WAS GENERALLY MAINTAINED AND PREPARED IN
ACCORDANCE WITH GAAP CONCEPTS (EXCEPT AS SET FORTH THEREIN AND EXCEPT FOR THE
ABSENCE OF FOOTNOTES, YEAR-END ADJUSTMENTS, PERIODIC ACCRUAL ADJUSTMENTS,
TRANSACTIONS AND ENTRIES TYPICALLY ELIMINATED IN CONSOLIDATION, THE ALLOCATION
OF OVERHEAD AND THE EFFECTS OF THE REORGANIZATION TRANSACTIONS), (3) REASONABLY
PRESENTS, IN ALL MATERIAL RESPECTS, THE FINANCIAL INFORMATION DEPICTED THEREIN
AS OF THE DATES AND FOR THE PERIODS INDICATED AND (4) CONTAINS THE PRIMARY
INFORMATION USED BY THE MANAGEMENT OF THE SELLER AND ITS AFFILIATES TO EVALUATE
THE FINANCIAL PERFORMANCE OF THE ACQUIRED COMPANIES.

 

(m)                               Employee Matters.  None of the Acquired
Companies has any employees.  No Acquired Company has ever been a party to any
labor or collective bargaining agreement.  No Acquired Company has at any time
maintained, contributed to or been an adopting employer of any “employee benefit
plan” (as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended), or any other plan, program or policy of deferred
compensation, fringe benefits or other compensatory arrangements (written or
unwritten) for any employees.  No Acquired Company is liable for any
contributions, withdrawal liability, premiums or other obligations under ERISA
pertaining to any employee benefit plan of the Seller or any of its Affiliates.

 

(n)                                 Regulatory Matters.  No Seller Party or
Acquired Company is subject to regulation as (i) a “holding company,” a
“subsidiary company” of a “holding company,” an “affiliate” of a “holding
company,” or a “public utility,” as each such term is defined in the Public
Utility Holding Company Act of 1935, as amended, or (ii) an “investment company”
or a company “controlled” by an “investment company,” within the meaning of the
Investment Company Act of 1940, as amended, and the rules and regulations
promulgated thereunder; or (iii) a “natural gas company,” as defined in the
Natural Gas Act of 1938, as amended.

 

(o)                                 No Unrecorded Obligations.  Except for
Unrecorded Obligations:  (i) disclosed, reflected or reserved against on the
face of the balance sheet for the five months ended May 31, 2005 that are
included in the financial information contained in Schedule 4(l)(ii);
(ii) incurred in the Ordinary Course of Business after May 31, 2005;
(iii) arising from the execution, delivery or performance of this Agreement or
any other agreement contemplated hereby; or (iv) disclosed on

 

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any Schedule to this Agreement, to the Seller’s Knowledge, none of the Acquired
Companies has any material Unrecorded Obligations.

 

(p)           Intellectual Property.  Schedule 4(p) sets forth all Intellectual
Property used by any Acquired Company in the conduct of its business.  Except as
set forth on Schedule 4(p), the Acquired Companies own or have valid licenses to
use all such Intellectual Property.  Except as set forth on Schedule 4(p), no
Intellectual Property used by any of the Acquired Companies is the subject of
any challenge received by any of the Acquired Companies in writing, and to the
Seller’s Knowledge, no such challenge has been threatened.

 

(q)           Sufficiency of the Acquired Company Assets.  Except as otherwise
set forth in this Agreement (including the Reorganization Transactions), to the
Seller’s Knowledge, the Acquired Company Assets constitute all of the assets
(excluding Rights of Way), taken as a whole, that generated the financial
results reflected in the financial information contained in Schedules
4(l)(i) and 4(l)(ii) and attributable to the twelve months ending December 31,
2004 and the five months ending May 31, 2005.

 

(r)            Bank Accounts.  Other than the Javelina Partnerships, none of the
Acquired Companies maintains any bank accounts.  Schedule 4(r) contains a list,
as of the date of this Agreement, of each bank account of each Javelina
Partnership.

 

(s)           Bonds; Guarantees.  Except as listed on Schedule 4(s), there are
no bonds, guarantees or other forms of credit support or similar arrangements
provided by the Seller or its Affiliates (other than the Acquired Companies) for
the benefit of the Acquired Companies.

 

5.             Pre-Closing Covenants.  The Parties agree as follows with respect
to the period between the date of this Agreement and the Closing:

 

(a)           General.  The Buyer shall use its commercially reasonable efforts
to satisfy the Seller’s conditions to closing in Section 7(b).  The Seller shall
use its commercially reasonable efforts to satisfy the Buyer’s conditions to
closing in Section 7(a).

 

(b)           Notices, Consents and Audited Financial Statements.

 

(i)            The Seller shall use commercially reasonable efforts to obtain
the satisfaction of all Notice and Consent Requirements (other than with respect
to those set forth on Schedules 3(b)(ii) or 3(b)(iii) or required under the HSR
Act or FCC Regulations) on or prior to the Closing Date.  Each Party agrees that
the ROFR Waiver Agreement, when duly executed and delivered by the parties
thereto, shall constitute procurement of the Notice and Consent Requirements
with respect to those matters set forth on Schedule 4(k).  The Buyer shall use
commercially reasonable efforts to obtain all Notice and Consent Requirements
with respect to those set forth on Schedules 3(b)(ii) and 3(b)(iii) (other than
with respect to those required under the HSR Act or FCC Regulations).  Each
Party agrees to use commercially reasonable efforts to cooperate with and assist
the other Party in satisfying the Notice and Consent Requirements for which the
other Party is responsible.  The Seller’s obligations under the immediately
preceding sentence shall survive for 90 days after the Closing.  Each Party
hereby acknowledges and agrees that the failure to obtain the satisfaction of
any Notice and Consent Requirement, except for those under the HSR Act, shall
not delay or otherwise prohibit the occurrence of the Closing or

 

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the consummation of the transactions contemplated by this Agreement.  The Seller
shall pay all Adverse Consequences arising from or attributable to the failure
to obtain the satisfaction of any Notice and Consent Requirements required under
FCC Regulations, and the Buyer shall pay for all other Adverse Consequences
arising from or attributable to the failure to obtain the satisfaction of any
other Notice and Consent Requirements.

 

(ii)           In addition to the audited financial statements provided in
Schedule 4(l)(i), the Seller will provide unaudited financial statements
relating to the Javelina Partnerships as of and for the period ending in 2005
through June 30, 2005.  The Seller will: (A) cause the Javelina Partnerships’
auditors to review such unaudited financial statements, (B) direct such auditors
to provide the Buyer’s auditors access to the auditors’ work papers, and (C) use
commercially reasonable efforts to provide other financial information
reasonably requested by the Buyer.  The Buyer shall pay and/or reimburse the
Seller for all reasonable costs incurred in connection with the preparation of
financial information referenced in this Section 5(b)(ii), if the Closing occurs
or if the Closing does not occur for any reason other than the default under
this Agreement by the Seller.

 

(c)           Operation of Business.  From the date of this Agreement to the
Closing Date, the Seller shall not, without the consent of the Buyer (which
consent shall not be unreasonably withheld or delayed), except as expressly
contemplated by this Agreement, including Section 5(j), or as contemplated by
Schedule 5(c), cause or (to the extent any Seller Party or its Affiliate has the
Legal Right) permit any of the Acquired Companies to engage in any practice,
take any action, or enter into any transaction outside the Ordinary Course of
Business or, with respect to the assets and operations of the Acquired Companies
(with respect to the Javelina Partnerships, to the extent any Seller Party or
any of its Affiliates has the Legal Right), engage in any practice, take any
action, or enter into any transaction outside the Ordinary Course of Business. 
Without limiting the generality of the foregoing, without the consent of the
Buyer (which consent shall not be unreasonably withheld or delayed), except as
expressly contemplated by this Agreement, including Section 5(j) or as
contemplated by Schedule 5(c), or contemplated by the Other Purchase Agreements
(including exhibits and schedules attached thereto), to the extent the Seller
has the Legal Right, the Seller shall cause the Acquired Companies not to do or
agree to do any of the following from the date of this Agreement to the Closing
Date:

 

(i)            issue, sell, pledge, dispose of, transfer, grant, encumber, or
authorize the issuance, sale, pledge, disposition, transfer or grant of its
Equity Interests or any Commitments with respect to its Equity Interests, or
grant (other than the terms currently provided in the Organizational Documents
of any Acquired Company), any Encumbrance upon its Equity Interests;

 

(ii)           cause or allow any Acquired Company Asset to become subject to a
Lien, except for Permitted Encumbrances;

 

(iii)          execute, amend or terminate (other than the expiration thereof in
accordance with its terms) any material Acquired Company Contract, except to the
extent that any such amendment occurs in the Ordinary Course of Business and
does not materially affect such contract, or enter into any agreement that, if
in effect on the date of this Agreement, would have constituted a Material
Contract;

 

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(iv)          (A) acquire (including by merger, consolidation or acquisition, in
whole or in part, of Equity Interests or assets) any corporation, partnership,
limited liability company or other Person or any division thereof or any
material amount of assets on behalf of the Acquired Companies; (B) enter into
any material joint venture, partnership or similar arrangement; (C) incur any
Obligations for borrowed money or any guarantee of indebtedness of any Person or
make any loans or advances, except for intercompany borrowing in the Ordinary
Course of Business among the Acquired Companies and/or the Seller and its
Affiliates; or (D) except for the Retained Assets, sell, lease or otherwise
dispose of any of its material property or assets other than sales of goods or
services in the Ordinary Course of Business;

 

(v)           declare, set aside, make or pay any dividend or other distribution
(other than cash) in respect of the Equity Interests in the Acquired Companies
(other than the Javelina Partnerships), or repurchase, redeem or otherwise
acquire any outstanding units of membership interest, stock, partnership
interests or other ownership interests in any of the Acquired Companies;

 

(vi)          effect any liquidation (complete or partial), dissolution,
restructuring (other than as contemplated in Section 5(j)), recapitalization,
reclassification or like change in the capitalization of any of the Acquired
Companies;

 

(vii)         amend in any material respect the Organizational Documents of any
Acquired Company;

 

(viii)        cancel or compromise any material debt or claim of any of the
Acquired Companies, or settle or agree to settle any action to which any of the
Acquired Companies is a party where the terms of such settlement or agreement
adversely impact the Acquired Companies or the operation of their assets or
business after such settlement or agreement;

 

(ix)           enter into any commitment for capital expenditures of any of the
Acquired Companies in excess of $2,000,000 for all commitments in the aggregate
that will not be paid before Closing, except for reasonable capital expenditures
made in connection with any emergency or force majeure events affecting any of
the Acquired Companies;

 

(x)            enter into any labor or collective bargaining agreement or,
through negotiations or otherwise, make any commitment or incur any liability to
any labor organizations; and

 

(xi)           change any tax elections or, except to the extent done in the
Ordinary Course of Business, change any accounting principles or practices used
by the Acquired Companies except as:  (1) required by Law or GAAP, and (2) with
prior written notice to the Buyer;

 

(xii)          allow any material Permits held by any of the Acquired Companies
to terminate or lapse; or

 

provided, that notwithstanding any provision of this Section 5(c), each Acquired
Company shall be entitled to make or incur capital expenditures in accordance
with the terms of the

 

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Organizational Documents relating to the Javelina Partnerships and the capital
expenditures budget set forth on Schedule 5(c)(ix).

 

(d)           Affirmative Covenants.  Except as expressly contemplated by this
Agreement, including Section 5(j) or as contemplated by Schedule 5(c), or
contemplated by the Other Purchase Agreements (including exhibits and schedules
thereto), to the extent the Seller has the Legal Right, the Seller shall cause
the Acquired Companies to do the following from the date of this Agreement to
the Closing Date:

 

(i)            use its commercially reasonable efforts to (1) preserve in all
material respects the Acquired Companies’ present business, operations,
organization and goodwill and (2) preserve its present relationships with
customers and suppliers;

 

(ii)           maintain and repair in the Ordinary Course of Business the
operating assets of the Acquired Companies, normal wear and tear excepted; and

 

(iii)          provide the Buyer with copies of any amendments of Organizational
Documents of any Acquired Company that are not otherwise prohibited by
Section 5(c)(vii).

 

(e)           Damage or Condemnation.  If, before Closing, any part of the
Acquired Company Assets are damaged or destroyed, or are condemned, or if
proceedings are filed for condemnation or under the right of eminent domain that
results in damage, destruction or condemnation of property with (A) in the case
of the Acquired Companies (other than the Javelina Partnerships), a fair market
value (as determined by the Parties), or (B) in the case of the Javelina
Partnerships, the Javelina Percentage Interest of a fair market value (as
determined by the Parties), in the aggregate of (i) 10% or less of the Purchase
Price, the Purchase Price shall be reduced by (x) in the case of the Acquired
Companies (other than the Javelina Partnerships) such amount, or (y) in the case
of the Javelina Partnerships, the Javelina Percentage Interest of such amount,
the Parties shall be obligated to proceed with the Closing, and the Seller shall
retain, or to the extent received by any Acquired Company or the Buyer following
the Closing, the Buyer or such Acquired Company shall pay to the Seller, all
property casualty insurance proceeds payable to the Seller or its Affiliates
relating to such damage, destruction or condemnation, and (ii) more than 10% of
the Purchase Price, the Buyer shall not be obligated to consummate the Closing,
provided that, in lieu of electing not to close, the Buyer may elect: (x) to
offer to extend the date for Closing to allow the Seller the opportunity (in the
Seller’s sole discretion) to repair or replace, or to cause the repair or
replacement of, any such damaged or destroyed assets; or (y) accept the Acquired
Company Equity Interests, notwithstanding any such destruction, taking, or
pending or threatened taking (without reduction of the Purchase Price therefor),
in which case the Seller shall pay to the Buyer all property casualty insurance
proceeds actually received by the Seller or any of its Affiliates that are not
required to be paid by any of them as a reimbursement to any property casualty
insurance providers of the Seller and its Affiliates by reason of the
destruction, or taking of such assets, to the extent such sums are not
committed, used or applied by the Seller or any of its Affiliates or the
Javelina Partnerships prior to the Closing Date to repair, restore or replace
such damaged or taken assets, and shall assign and transfer to the Buyer, or
subrogate the Buyer to, all of the right, title and interest of the Seller and
its Affiliates in and to any such unpaid awards or other payments arising out of
the destruction, taking, or pending or threatened taking that are actually
received by the Seller or any of its Affiliates and

 

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that are not required to be paid by any of them as a reimbursement to any
property casualty insurance providers of the Seller and its Affiliates and the
Javelina Partnerships.  If any such payments payable to the Buyer under this
Section 5(e) are not assignable, the Seller will collect such payments at the
Buyer’s expense and remit all such amounts, less any related expenses, to the
Buyer as such are collected.  Prior to the Closing, to the extent it has the
Legal Right, the Seller shall not compromise, settle or adjust any amounts
payable to the Buyer under clause (y) above, without first obtaining the written
consent of the Buyer, which consent shall not be unreasonably withheld or
delayed.  The Buyer’s election under this Section 5(e) shall expire twenty (20)
days after the earlier to occur of the date this Agreement terminates or the
date on which the Buyer receives written notice from the Seller describing in
reasonable detail the nature and amount becomes aware of such damage,
destruction or proposed condemnation.

 

(f)            Access.

 

(i)            Books and Records.  To the extent they have the Legal Right, the
Seller shall permit, and shall cause its Affiliates to permit, representatives
of the Buyer to have full access at all reasonable times and upon reasonable
notice, and in a manner so as not to interfere with the normal business
operations of the Seller and its Affiliates and the Javelina Partnerships, to
all personnel, books, records (including Tax Records), contracts, and documents
of or pertaining to any of the Acquired Companies, excluding such files, books,
records, information and data constituting Retained Assets.  All investigations
and due diligence conducted by the Buyer or any of its representatives shall be
conducted at the Buyer’s sole cost, risk and expense.  To the extent they have
the Legal Right, the Seller shall, and shall cause the Acquired Companies and
their respective officers, employees, consultants, agents, accountants,
attorneys and other representatives to, use commercially reasonable efforts to
cooperate with the Buyer and the Buyer’s representatives in connection with such
investigation and examination.

 

(ii)           Site Access.

 

(A)          Subject to the terms and conditions of this Agreement, the Seller
(with respect to each Javelina Partnership, to the extent it has the Legal
Right) hereby grants to the Buyer and the Buyer Diligence Representatives the
right to enter upon the Acquired Company Assets for the purpose of making, and
hereby grants to the Buyer and the Buyer Diligence Representatives, the right to
make, a reasonable examination and inspection of the Acquired Company Assets,
together with any activities incidental thereto (the “Access Right”); provided,
however, that the Access Right and any environmental examination conducted in
connection therewith shall not permit the Buyer to conduct any invasive
procedures (collectively, such examination, inspection and incidental
activities, as so qualified, are the “Diligence Activities”).  Neither the Buyer
nor any Buyer Diligence Representative shall engage in any activities on the
Acquired Company Assets other than the Diligence Activities.

 

(B)           The Buyer shall provide the Seller reasonable written notice of
the date and time on which the Diligence Activities are expected to be
conducted.

 

(C)           During all periods that the Buyer and/or the Buyer Diligence
Representatives are on the Acquired Company Assets to conduct the Diligence
Activities, and for a one-year period thereafter, the Buyer and the Buyer
Diligence Representatives shall

 

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maintain policies of insurance, at its sole cost and expense and with insurers
reasonably satisfactory to the Seller as provided in Schedule 5(f)(ii). 
Coverage under all insurance required to be carried by the Buyer hereunder shall
(w) be primary insurance, (x) list the Seller as a “loss payee” or “additional
insured” (as applicable), (y) waive subrogation against the Seller and
(z) provide for thirty (30) days prior notice to the Seller in the event of
cancellation or modification of the policy or reduction in coverage.  The Buyer
and the Buyer Diligence Representatives shall provide evidence of such insurance
to the Seller prior to exercising their Access Rights.

 

(D)          The Diligence Activities shall occur at reasonable times, in a
manner so as not to unreasonably interfere with the normal business operations
of the Seller, its Affiliates, any of the Javelina Partnerships or any other
Person.  The Seller shall have the right to accompany the Buyer and/or the Buyer
Diligence Representatives whenever they are on site on the Acquired Company
Assets.  Buyer and/or the Buyer Diligence Representatives shall coordinate any
inspection or assessment so as to minimize any inconvenience to or interruption
of the conduct of business of the Acquired Companies and their Affiliates.  The
Buyer and/or the Buyer Diligence Representatives shall abide by any relevant
Person’s safety rules, regulations and operating policies while conducting any
Activities.

 

(E)           Except insofar as reasonably necessary to carry out the Diligence
Activities, all vehicles brought by the Buyer and the Buyer Diligence
Representatives onto the Acquired Company Assets will be restricted to existing
roadways, if any, on the Acquired Company Assets.

 

(F)           All Diligence Activities conducted or performed by the Buyer and
the Buyer Diligence Representatives on the Acquired Company Assets shall be
conducted and performed in material compliance with all applicable Laws,
including Environmental Laws.

 

(G)           The Diligence Activities shall be conducted at the Buyer’s sole
cost, risk and expense.  Upon completion of the Diligence Activities, the Buyer
shall at its sole cost and expense and without any cost or expense to the Seller
or its Affiliates or the Javelina Partnerships, (w) repair all damage done to
the Acquired Company Assets in connection with the performance of the Diligence
Activities by the Buyer and the Buyer Diligence Representatives, (x) restore the
Acquired Company Assets to the approximately same or better condition than they
were prior to commencement of the Diligence Activities, (y) remove all
equipment, tools or other property brought onto the Acquired Company Assets by
the Buyer and the Buyer Diligence Representatives in connection with the
Diligence Activities and (z) return all documents and copies of documents
pertaining to the Acquired Company Assets.

 

(H)          The Access Right shall remain in full force and effect until the
earlier to occur of (w) the date on which the Buyer notifies the Seller in
writing that the Buyer or any Buyer Diligence Representative is not continuing
to perform with reasonable diligence any Diligence Activities on the Acquired
Company Assets, (x) the date on which the Buyer materially breaches or violates
any of the covenants or agreements contained in this Section 5(f)(ii); provided
that such Access Rights will resume when the Buyer provides reasonable assurance
that such breach or violation will not occur again and any continuing breach or

 

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violation is cured, (y) the date this Agreement is terminated pursuant to
Section 10 or (z) the Closing Date.

 

(g)           HSR Act.  The Parties shall prepare, as soon as is practicable,
but in any event within ten (10) business days following the execution of this
Agreement, all necessary filings in connection with the transactions
contemplated by this Agreement that may be required under the HSR Act.  The
Parties shall submit such filings to the appropriate Governmental Authority as
soon as practicable after the execution hereof for filings under the HSR Act. 
The Parties shall request early termination of the waiting period under the HSR
Act for the HSR Act filing, shall promptly make any appropriate or necessary
subsequent or supplemental filings and shall cooperate in the preparation of
such filings as is reasonably necessary and appropriate.  The Parties shall use
their respective commercially reasonable efforts to resolve such objections, if
any, as may be asserted with respect to the transactions contemplated hereby
under any antitrust or trade regulatory laws of any Governmental Authority.  The
Buyer and the Seller agree to take all actions that may be required by the FTC
in order to consummate the transactions contemplated hereby as soon as
reasonably practicable, except agreeing to sell, hold separate or otherwise
dispose of any business or assets so required to be sold, held separate or
disposed of by the FTC.  The Buyer shall pay 100% of all filing fees in
connection with all filings under the HSR Act.

 

(h)           Intercompany Transactions.  Those agreements listed on
Schedule 4(g)(vi) that are also listed on Schedule 5(h)(i) shall be terminated
as of the Closing, in such manner as the Seller or its applicable Affiliates
shall specify, without imposing liabilities or expenses upon the Buyer, and none
of the parties to such agreements shall have any further liability or obligation
in respect of any such transaction or arrangement.  The Seller shall have the
right to settle any and all intercompany balances at any time (and from time to
time) up to and at the Closing in any manner as it so chooses, including
payment, offset, capitalization or otherwise; provided that, such settlements
shall be appropriately reflected in the calculation of Working Capital.

 

(i)            Notices and Effect of Supplements to Schedules.  Each Party will,
promptly upon becoming aware of any fact, matter, circumstance or event, which
fact, matter, circumstance or event arose either (x) on or prior to the date
hereof or (y) after the date hereof but prior to the Closing, in any case,
(i) causing or that reasonably could cause either Party to be in breach or
violation of any of its representations, warranties, covenants or agreements
under this Agreement, give notice to such other Party with respect to such fact,
matter, circumstance or event, or (ii) requiring supplementation or amendment of
the schedules provided by the Parties attached hereto, supplement or amend such
schedules to this Agreement to reflect any fact, matter, circumstance or event,
which, if existing, occurring or known on the date of this Agreement, would have
been required to be set forth or described in such schedules which were or have
been rendered inaccurate thereby.  Each Party will notify the other Party
promptly after the discovery by such Party that any representation or warranty
of the other Party contained in this Agreement is, becomes or will be untrue in
any material respect on or before the Closing Date.  No such supplement or
amendment will amend or modify this Agreement or the Schedules in any way for
any purpose.

 

(j)            Reorganization Transactions.  To the extent not completed prior
to the date of this Agreement, the Seller shall, or shall cause its applicable
Affiliates and, to the extent it has the

 

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Legal Right, each of the Javelina Partnerships to, perform each of the
Reorganization Transactions.

 

(k)           Surety Bonds; Guarantees.  The Buyer agrees to replace on or
before the Closing Date each of the surety bonds or guarantees issued by the
Seller or any of its Affiliates with respect to the Acquired Companies that are
listed on Schedule 5(k).

 

(l)            No Shop.  The Seller shall not, and shall cause (to the extent it
has the Legal Right) its Affiliates and its and their directors, officers and
similar agents not to, (i) solicit, initiate or encourage the submission of any
proposal or offer from any Person relating to the acquisition of any of the
Acquired Company Equity Interests or any substantial portion of the Acquired
Company Assets (including any acquisition structured as a merger, consolidation
or share exchange) or (ii) participate in any discussions or negotiations
regarding, furnish any information with respect to, assist or participate in, or
facilitate in any other manner any effort or attempt by any Person to do or seek
any of the foregoing.  The Seller will use commercially reasonable efforts to
cause its financial advisors and other representatives not to do any of the
foregoing.

 

6.             Post-Closing Covenants.  The Parties agree as follows:

 

(a)           General.  In case at any time after the Closing any further action
is necessary to carry out the purposes of this Agreement, each Party shall take
such further action (including the execution and delivery of such further
instruments and documents) as the other Party reasonably may request, all at the
sole cost and expense of the requesting Party (unless the requesting Party is
entitled to indemnification therefor under Section 8).

 

(b)           Litigation Support.  In the event and for so long as either Party
actively is pursuing, contesting or defending against any third party action,
suit, proceeding, hearing, investigation, charge, complaint, claim, or demand in
connection with (i) any transaction contemplated under this Agreement, (ii) any
Retained Assets or (iii) any fact, situation, circumstance, status, condition,
activity, practice, plan, occurrence, event, incident, action, failure to act,
or transaction on or before the Closing Date relating to the Acquired Companies,
the other Party shall cooperate with the pursuing, contesting or defending Party
and its counsel in such pursuit, defense or contest, make available its
personnel, and provide such testimony and access to its books and records (other
than books and records which are subject to privilege or to confidentiality
restrictions) as shall be necessary in connection with such pursuit, defense or
contest, all at the sole cost and expense of the pursuing, contesting or
defending Party (unless the pursuing, contesting or defending Party is entitled
to indemnification therefor under Section 8).

 

(c)           Delivery and Retention of Records.  Within forty-five (45) days
after the Closing Date, the Seller shall (with respect to each of the Javelina
Partnerships, to the extent the Seller or its Affiliate have the Legal Right)
deliver or cause to be delivered to the Buyer, copies of Tax Records which are
relevant to Post-Closing Tax Periods and all other files, books, records,
information and data relating to the Acquired Companies, including the
Electronic Data and a CD containing all the information and data contained in
the electronic data room (other than Tax Records) that are in the possession or
control of the Seller or any of its Affiliates (excluding such files, books,
records, information and data constituting Retained Assets, the “Records”).  The

 

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Buyer agrees to (i) hold the Records and not to destroy or dispose of any
thereof for a period of five (5) years from the Closing Date or such longer time
as may be required by Law, provided that, if it desires to destroy or dispose of
such Records during such period, it shall first offer in writing at least sixty
(60) days before such destruction or disposition to surrender them to the Seller
and if the Seller does not accept such offer within thirty (30) days after
receipt of such offer, the Buyer may take such action and (ii) following the
Closing Date to afford the Seller, its accountants, and counsel, during normal
business hours, upon reasonable request, full access to the Records and to the
Buyer’s employees to the extent that such access may be requested for any
legitimate purpose at no cost to the Seller (other than for reasonable
out-of-pocket expenses); provided that such access shall not be construed to
require the disclosure of Records that would cause the waiver of any
attorney-client, work product, or like privilege or cause the breach of any
confidentiality agreement; provided, further that in the event of any litigation
nothing herein shall limit either Party’s rights of discovery under applicable
Law.  All post-Closing access to the Records and to the Buyer’s employees will
be subject to confidentiality obligations under Section 11(a).

 

(d)           Pipeline Markers and Kerr Marks.  The Buyer acknowledges and
agrees that it obtains no right, title, interest, license or any other right
whatsoever to use the Kerr Marks and that the Seller and its Affiliates do not
have any Obligation to the Buyer with respect to the establishment, registration
or maintenance, whether prior to, on or after the Closing, of any of the Kerr
Marks, including any rights, title, interest or license to use any Kerr Marks. 
The Buyer will not do any business or offer any goods or services under the Kerr
Marks.  The Buyer will not send, or cause to be sent, any correspondence or
other materials to any Person on any stationery that contains any Kerr Marks or
otherwise operate any Acquired Company in any manner which would or might
confuse any Person into believing that the Buyer has any right, title, interest,
or license to use the Kerr Marks.  Within one hundred eighty (180) days after
the Closing Date, the Buyer shall remove the Kerr Marks from the pipeline and
facility markers, decals, logos and other signage on the real and personal
property of each Acquired Company referring to the Seller or any of its
Affiliates.  As promptly as practicable after the Closing, the Buyer shall post
the Buyer’s emergency contact telephone numbers in place of any of the Seller’s
or its Affiliates’ emergency contact telephone numbers.

 

(e)           Payments.  The Seller will promptly, after receipt thereof, pay to
the Buyer or the appropriate Acquired Company, any amounts received by the
Seller and its Affiliates after Closing that relate to the business or
operations of any Acquired Company (whether before or after the Effective
Time).  The Buyer will promptly, after receipt thereof, pay, or cause the
Acquired Companies to pay, to the Seller any amounts (or, in the case of the
Javelina Partnerships, the Javelina Percentage Interest of any amounts) received
by the Buyer and its Affiliates and the Javelina Partnerships after Closing that
should have been paid to the Seller or its Affiliates.

 

(f)            Accounts Receivable.  To the extent any Acquired Company receives
cash payments with respect to its accounts receivable that were excluded from
Working Capital, the Buyer shall, or shall cause the applicable Acquired Company
to, promptly remit such payments (or, in the case of the Javelina Partnerships,
the Javelina Percentage Interest of such payments) to the Seller.  Towards this
end, the Seller shall have the right for two (2) years after the Closing

 

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Date to inspect and examine the Records of the applicable Acquired Companies to
determine compliance by the Buyer with the provisions of this Section 6(f).

 

(g)           Post-Closing Environmental Filings.  The Buyer shall prepare (or
cause to be prepared) and file (or cause to be filed) any environmental reports,
filings or certifications to any Governmental Authority (including such filings
involving periods that straddle the Effective Time) with respect to the Acquired
Company Assets or the Acquired Companies.  The Seller shall cooperate fully
(with respect to the Javelina Partnerships, to the extent it has the Legal
Right), as and to the extent reasonably requested by the Buyer, in connection
with such reports, filings, or certifications to be made by the Buyer.

 

(h)           Mutual Mistake.  If the Parties determine that the Seller and its
Affiliates did not transfer to one of the Acquired Companies any material asset
that the Parties mutually agree they both intended to be included as an Acquired
Company Asset, the Parties will cooperate to effect such transfer as promptly as
practical.

 

(i)            Real Property Matters.  Except as represented and warranted under
Section 4(j), with respect to any and all real property interests owned by any
Acquired Company on the Effective Time, the Buyer shall, and shall cause its
applicable Affiliates to (i) waive any and all rights of substitution and
subrogation in and to any covenants and warranties (whether arising under title
documents, contracts, laws or otherwise) providing title claims against the
Seller and any of its Affiliates that is a predecessor in title of any Acquired
Company and (ii) release, forgive and otherwise discharge and otherwise not
pursue any claim, right or other cause of action in favor of it or its
Affiliates against the Seller or any of its Affiliates to the extent same
relates to title to any such real property interests.

 

(j)            Operatorship and ROFR Matters.  The Buyer and the Seller
acknowledge that (i) Javelina Holding Company is the Project Manager of the
Javelina Partnerships pursuant to the partnership agreements of the Javelina
Partnerships and the Javelina Operating Agreements, and (ii) as of even date
herewith, the partners of the Javelina Partnerships executed and delivered the
ROFR Waiver Agreement, which provides (among other things) that Javelina Holding
Company will remain the Project Manager after the Closing pursuant to the terms
of the Javelina Operating Agreements and that those partners waive certain
preferential purchase rights provisions, which may or may not apply to the
transactions contemplated by this Agreement.

 

7.             Conditions to Obligation to Close.  All proceedings to be taken
and all documents to be exchanged and delivered by all parties at the Closing
shall be deemed to have been taken and executed simultaneously unless otherwise
provided in this Agreement, and no proceedings shall be deemed taken nor any
documents executed or delivered until all have been taken, executed, and
delivered.

 

(a)           Conditions to Obligation of the Buyer.  The obligation of the
Buyer to consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction of the following conditions:

 

(i)            (A) the representations and warranties of the Seller contained in
Sections 3(a) and 4 shall be true and correct (without giving effect to any
qualification as to materiality or

 

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any supplements or amendments to the Schedules made pursuant to Section 5(i)) as
of the date of this Agreement and at Closing (except for those that refer to a
specific date, which must be true and correct (without giving effect to any
qualification as to materiality or any supplements to the Schedules made
pursuant to Section 5(i)) as of such date, except where all inaccuracies of such
representations and warranties would (or could reasonably be expected to) result
in Adverse Consequences constituting (in the aggregate) less than a Material
Adverse Effect, and (B) the Seller shall have performed in all material respects
with all of its covenants and agreements hereunder;

 

(ii)           there must not be any injunction, judgment, order, decree,
ruling, or charge in effect preventing consummation of any of the transactions
contemplated by this Agreement or any suit or action pending by a Governmental
Authority to enjoin the consummation of any of the transactions, contemplated by
this Agreement;

 

(iii)          any required waiting period under the HSR Act shall have expired
or early termination shall have been granted with respect to such period;

 

(iv)          if there has been damage, destruction or condemnation of the type
described in the first sentence of Section 5(e), the Buyer’s election to close
must have been exercised and, in the case of Section 5(e)(ii)(x), agreed to by
the Seller;

 

(v)           the Seller shall have delivered, or caused to be delivered, to the
Buyer the unaudited financial statements of the Javelina Partnerships reviewed
by the auditors of the Javelina Partnerships for the period ending June 30,
2005, and if Closing is after October 31, 2005, the unaudited financial
statements of the Javelina Partnerships reviewed by the auditors of the Javelina
Partnerships for the calendar quarter ending September 30, 2005, all in
conformance with the requirements set forth in Section 5(b)(ii);

 

(vi)          the Seller shall have delivered, or caused to be delivered, to the
Buyer each Transaction Agreement to which any Seller Party is a party and, to
the extent the Seller has the Legal Right, any Javelina Partnership is a party;

 

(vii)         the Seller shall have delivered, or caused to be delivered, to the
Buyer evidence of the resignation or removal of any officers (x) of the Acquired
Companies (other than the Javelina Partnerships) and (y) of the Javelina
Partnerships that the Seller has the Legal Right to so remove or to cause to so
resign, in each case that the Buyer has not identified to the Seller within a
reasonable period of time before Closing as an officer that will be continuing
with the applicable Acquired Company in that capacity after the Closing;

 

(viii)        each of the Commercial Agreements shall have been executed and
delivered by each of the parties thereto; and

 

(ix)           with respect to each Other Purchase Agreement, the Closing (as
defined in such Other Purchase Agreement) under such Other Purchase Agreement
shall have occurred simultaneously with the Closing.

 

The Buyer may waive any condition specified in this Section 7(a) if it executes
a writing so stating at or before the Closing.

 

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(b)           Conditions to Obligation of the Seller.  The obligation of the
Seller to consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction of the following conditions:

 

(i)            (A) the representations and warranties of the Buyer contained in
Section 3(b) shall be true and correct (without giving effect to any
qualification as to materiality or any supplements or amendments to the
Schedules made pursuant to Section 5(i)) as of the date of this Agreement and at
Closing (except for those that refer to a specific date, which must be true and
correct (without giving effect to any qualification as to materiality or any
supplements to the Schedules made pursuant to Section 5(i)) as of such date),
except where all inaccuracies of such representations and warranties would (or
could reasonably be expected to) not adversely affect the ability of the Buyer
to consummate the transactions contemplated by this Agreement, and (B) the Buyer
shall have performed in all material respects with all of its covenants and
agreements hereunder;

 

(ii)           there must not be any injunction, judgment, order, decree,
ruling, or charge in effect preventing consummation of any of the transactions
contemplated by this Agreement or any suit or action pending by a Governmental
Authority to enjoin the consummation of any of the transactions, contemplated by
this Agreement;

 

(iii)          any required waiting period under the HSR Act shall have expired
or early termination shall have been granted with respect to such period;

 

(iv)          if there has been damage, destruction or condemnation of the type
described in the first sentence of Section 5(e), the Buyer’s election to close
must have been exercised and, in the case of Section 5(e)(ii)(x), agreed to by
the Seller;

 

(v)           taken together, the effect of all inaccuracies of representations
and warranties of the Seller as described in Section 7(a)(i)(A) is less than
three million dollars ($3,000,000);

 

(vi)          the Buyer shall have delivered to the Seller the estimated
Purchase Price set forth in the Interim Closing Statement in cash by wire
transfer of immediately available federal funds;

 

(vii)         each of the Commercial Agreements shall have been executed and
delivered by each of the parties thereto;

 

(viii)        with respect to each Other Purchase Agreement, the Closing (as
defined in such Other Purchase Agreement) under such Other Purchase Agreement
shall have occurred simultaneously with the Closing; and

 

(ix)           the Buyer shall have delivered, or caused to be delivered, to the
Seller each Transaction Agreement to which any Buyer Party is a party.

 

The Seller may waive any condition specified in this Section 7(b) if it executes
a writing so stating at or before the Closing.

 

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8.             Obligations, Survival and Indemnification.

 

(a)           Survival of Representations, Warranties and Covenants.  (i) All of
the representations contained in Sections 3(a) and 4 (other than the Fundamental
Representations) shall survive the Closing until April 1, 2007; and (ii) the
Fundamental Representations shall survive the Closing until ninety (90) days
after the expiration of the applicable statute of limitations.  The covenants
and obligations contained in Sections 2 and 6 and all other covenants and
obligations contained in this Agreement shall survive the Closing indefinitely.

 

(b)           Indemnification Provisions for Benefit of the Buyer.

 

(i)            Representations and Warranties - General.  In the event: (x) the
Seller breaches (without giving effect to any qualification as to materiality
(including Material Adverse Effect)) any of its representations or warranties
contained herein (other than those contained in Section 4(b) (Capitalization)
and Section 4(f) (Tax Matters)); and (y) the Buyer makes a written claim for
indemnification against the Seller pursuant to Section 11(h) within the
applicable survival period specified in Section 8(a), then the Seller agrees to
RELEASE, INDEMNIFY AND HOLD HARMLESS the Buyer Indemnitees from and against the
entirety of any Adverse Consequences that are individually in excess of
twenty-five thousand dollars ($25,000) and that are suffered by the Buyer
Indemnitees by reason of each such breach; provided, that the Seller shall not
have any obligation to indemnify the Buyer Indemnitees from and against (A) the
entirety of any such Adverse Consequences by reason of such breaches until the
Buyer Indemnitees, in the aggregate, have suffered Adverse Consequences by
reason of all such breaches in excess of an initial aggregate deductible amount
equal to 1.0% of the Purchase Price, (B) after which point, 50% of any such
further Adverse Consequences by reason of such breaches until the Buyer
Indemnitees, in the aggregate (above such amounts described in (A) above), have
suffered Adverse Consequences by reason of all such breaches in excess of a
second deductible aggregate amount equal to 1.0% of the Purchase Price (after
which point the Seller shall be obligated only to indemnify the Buyer
Indemnitees from and against any further such Adverse Consequences), or (C) to
the extent all Adverse Consequences the Buyer Indemnitees, in the aggregate,
have suffered by reason of all such breaches exceeds an aggregate ceiling amount
equal to Twenty Eight Million Four Hundred Thousand U.S. Dollars
($28,400,000.00) (after which point the Seller shall have no obligation to
indemnify the Buyer Indemnitees from and against any further such Adverse
Consequences).

 

(ii)           Representations and Warranties - Special.  In the event: (x) the
Seller breaches (without giving effect to any qualification as to materiality
(including Material Adverse Effect)) any of its representations or warranties
contained in Sections 4(b) or 4(f); and (y) the Buyer makes a written claim for
indemnification against the Seller pursuant to Section 11(h) within the
applicable survival period specified in Section 8(a), then the Seller agrees to
RELEASE, INDEMNIFY AND HOLD HARMLESS the Buyer Indemnitees from and against the
entirety of any Adverse Consequences that are suffered by the Buyer Indemnitees
by reason of each such breach.

 

(iii)          Covenants and Obligations.  In the event:  (x) the Seller
breaches any of its covenants or obligations in Sections 2 or 6 or any other
covenants or obligations of the Seller in this Agreement is breached; and
(y) the Buyer makes a written claim for indemnification

 

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against the Seller pursuant to Section 11(h) within the applicable survival
period specified in Section 8(a), then the Seller agrees to RELEASE, INDEMNIFY
AND HOLD HARMLESS the Buyer Indemnitees from and against the entirety of any
Adverse Consequences that, except with respect to the covenants provided in
Section 9 (in which case there are no thresholds), are individually in excess of
twenty-five thousand dollars ($25,000) and that are suffered by the Buyer
Indemnitees by reason of such breaches.

 

(iv)          ERISA.  The Seller shall RELEASE, INDEMNIFY AND HOLD HARMLESS the
Buyer Indemnitees from and against the entirety of any Adverse Consequences that
are suffered by the Buyer Indemnitees by reason of any of the Buyer Indemnitees
having been aggregated with the Seller or any Affiliate of the Seller under
Section 414(o) of the Code, or having been under “common control” with the
Seller or such Affiliate within the meaning of Section 4001(a)(14) of ERISA.

 

(v)           Taxes.  The Seller shall RELEASE, INDEMNIFY AND HOLD HARMLESS the
Buyer Indemnitees from and against the entirety of (x) any Adverse Consequences
that are suffered by the Buyer Indemnitees with respect to Taxes, if any,
imposed on any of the Acquired Companies (other than the Javelina Partnerships)
by reason of Treasury Regulation Section 1.1502-6 (a) (or any similar provision
of the state or local Law) by reason of being a member of an Affiliated Group
that includes the regarded parent of the Seller at or before the Effective Time
and (y) the Javelina Percentage Interest of any Adverse Consequences that are
suffered by the Buyer Indemnitees with respect to Taxes, if any, imposed on any
of the Javelina Partnerships by reason of Treasury Regulation Section 1.1502-6
(a) (or any similar provision of the state or local Law) by reason of being a
member of an Affiliated Group that includes the regarded parent of the Seller at
or before the Effective Time.

 

(vi)          Retained Indebtedness Obligations.  The Seller shall RELEASE,
INDEMNIFY AND HOLD HARMLESS the Buyer Indemnitees from and against the entirety
of (x) any Adverse Consequences that are suffered by the Buyer Indemnitees with
respect to any indebtedness for borrowed money of any Acquired Company (other
than the Javelina Partnerships) represented by a credit agreement, note,
indenture or similar lending instrument to the extent such amount is not
included in the Working Capital calculation, or (y) the Javelina Percentage
Interest of any Adverse Consequences that are suffered by the Buyer Indemnitees
with respect to any indebtedness for borrowed money of any Javelina Partnership
represented by a credit agreement, note, indenture or similar lending instrument
to the extent such amount is not included in the Working Capital calculation.

 

(vii)         Retained Seller Obligations.  The Seller shall RELEASE, INDEMNIFY
AND HOLD HARMLESS the Buyer Indemnitees from and against the entirety of any:
(A) Adverse Consequences that are suffered by the Buyer Indemnitees to the
extent resulting from any claims by any third party relating to any asset or
property owned by the Seller or its Affiliates prior to Closing that has never
been owned or operated by, or the subject of any contract or other agreement
with or for the benefit of, any Acquired Company; (B) Adverse Consequences
relating to any Obligations directly related to the Retained Assets described in
Section 2(f), but, with respect to the insurance matters retained in
Section 2(f)(v), the Seller shall not have an obligation under this
Section 8(b)(vii)(B) to release, indemnify or hold harmless the Buyer
Indemnitees with respect to Adverse Consequences relating to any litigation,

 

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environmental or other claims under such policies, which claims (including the
related deductible, self insured retention and reimbursable amounts) shall be
the responsibility of the Buyer; (C) Adverse Consequences resulting from
violations of Environmental Laws to the extent relating to any real property
interest owned as of the Effective Time by any Acquired Company (other than the
Javelina Partnerships) to the extent such real property interest is not
generally associated with the Facilities described on Exhibit A; and (D) the
Javelina Percentage Interest of any Adverse Consequences resulting from
violations of Environmental Laws to the extent relating to any real property
interest owned as of the Effective Time by any Javelina Partnership to the
extent such real property interest is not generally associated with the
Facilities described on Exhibit A.

 

(viii)        Divested Acquired Company Assets.  The Seller shall RELEASE,
INDEMNIFY AND HOLD HARMLESS the Buyer Indemnitees from and against the entirety
of (x) any Adverse Consequences that are suffered by the Buyer Indemnitees to
the extent relating to any business (including any plant or other substantial
tangible asset) that both was owned and divested or otherwise disposed of by any
Acquired Company (other than the Javelina Partnerships) at any time prior to the
Closing Date and (y) the Javelina Percentage Interest of any Adverse
Consequences that are suffered by the Buyer Indemnitees to the extent relating
to any business (including any plant or other substantial tangible asset) that
both was owned and divested or otherwise disposed of by either of the Javelina
Partnerships at any time prior to the Closing Date.

 

(ix)           Seller and Affiliate Claims.  The Seller shall RELEASE, INDEMNIFY
AND HOLD HARMLESS the Buyer Indemnitees from and against the entirety of any
Adverse Consequences that are suffered by the Buyer Indemnitees for claims by
the Seller and its Affiliates against the Acquired Companies and attributable to
the period prior to the Closing, except for claims arising out of this Agreement
or any Transaction Agreement, claims with respect to any Acquired Company
Contract or intercompany arrangements that will not be terminated as of the
Closing in accordance with Section 5(h) and claims of the type for which the
Buyer is providing indemnity pursuant to Section 8(c).

 

(x)            Limitations. Notwithstanding any representation, warranty,
covenant or other agreement contained in this Agreement, including the rights of
indemnification provided in this Section 8, the Seller shall have no obligation
to release, indemnify and hold harmless any Buyer Indemnitee with respect to any
Adverse Consequence (A) associated with, attributable to or resulting from any
environmental condition or circumstance (including the non-compliance with any
Environmental Law and the presence of any Hazardous Substance) except to the
extent the relevant condition or circumstance constitutes a breach of the
representation and warranty set forth in Section 4(i) or is subject to indemnity
in accordance with Sections 8(b)(vii)-(ix) or (B) to the extent relating to the
Javelina Partnerships or the assets, properties, obligations, activities and
other matters relating to the Javelina Partnerships, that portion of such
Adverse Consequence in excess of the product derived by multiplying the Javelina
Percentage Interest by the amount of such Adverse Consequence.  By way of
clarification, the Parties acknowledge and agree (1) that the Buyer has entered
into a separate purchase agreement with each partner of the Javelina
Partnerships covering such partner’s interest in such Javelina Partnerships, and
(2) each such purchase agreement is separate and independent from the others and
is not intended to increase the Seller’s exposure for Adverse Consequences, if
any.  For example, if it should happen that

 

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one of the Javelina Partnerships has an Unrecorded Obligation of $100 that would
constitute a breach of the representation and warranty contained in
Section 4(l), the Seller’s maximum exposure with respect thereto (subject to any
deductibles, caps or other limitations) would be determined by multiplying $100
by the Javelina Percentage Interest.

 

(c)           Indemnification Provisions for Benefit of the Seller.

 

(i)            Representation, Warranties and Covenants.  In the event: (x) the
Buyer breaches any of its representations, warranties, covenants or other
obligations contained herein; and (y) the Seller makes a written claim for
indemnification against the Buyer pursuant to Section 11(h) within the
applicable survival period specified in Section 8(a), then the Buyer agrees to
RELEASE, INDEMNIFY AND HOLD HARMLESS the Seller Indemnitees from and against the
entirety of any Adverse Consequences that are individually in excess of
twenty-five thousand dollars ($25,000) and suffered by the Seller Indemnitees by
reason of such breaches.

 

(ii)           General.  Except to the extent the Seller is obligated to
indemnify the Buyer pursuant to Section 8(b), the Buyer agrees to RELEASE,
INDEMNIFY AND HOLD HARMLESS the Seller Indemnitees from and against the entirety
of any Adverse Consequences relating in any way to the Acquired Companies,
Acquired Company Equity Interests, the Acquired Company Assets or the ownership,
operation or Obligations of any of them, in each such case, whether or not
arising during, related to or otherwise attributable to the period prior to, on
or after the Closing Date, including, without limitation, any Adverse
Consequences incurred or suffered by such Seller Indemnitees resulting or
arising from any such Person serving as a general partner of either of the
Javelina Partnerships.  Except as otherwise expressly provided for in this
Agreement, the Buyer’s Obligations under this Section 8(c)(ii) include and cover
matters whether or not they are set forth in the Schedules to this Agreement,
including such Obligations relating to litigation to which the Seller or any of
its Affiliates is a party.

 

(iii)          Acquired Company Claims.  The Buyer shall RELEASE, INDEMNIFY AND
HOLD HARMLESS the Seller Indemnitees from and against the entirety of any
Adverse Consequences that are suffered by the Seller Indemnitees for claims by
the Acquired Companies against the Seller and its Affiliates attributable to the
period prior to the Closing, except for claims arising out of this Agreement or
any Transaction Agreement, and claims with respect to any intercompany
arrangements that will not be terminated as of the Closing in accordance with
Section 5(h).

 

(iv)          Site Access.  The Buyer agrees to RELEASE, INDEMNIFY AND HOLD
HARMLESS the Seller Indemnitees from and against the entirety of any Adverse
Consequences that are suffered by the Seller Indemnitees arising out of,
resulting from or relating to any field visit or other due diligence activities
relating to any performance of the Diligence Activities to the extent caused by
acts or omissions of any Buyer Party or Buyer Diligence Representative, even if
such Adverse Consequences arise out of or result from, solely or in part, the
sole, active, passive, concurrent or comparative negligence, strict liability or
other fault or violation of Law of or by the Seller Indemnitees, except Adverse
Consequences to the extent resulting from the gross negligence or willful
misconduct of the Seller Indemnitees.

 

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(d)           Matters Involving Third Parties.

 

(i)            If any third party shall notify either Party (the “Indemnified
Party”) with respect to any matter (a “Third Party Claim”) that is reasonably
expected to give rise to a claim for indemnification against the other Party
(the “Indemnifying Party”) under this Section 8, then the Indemnified Party
shall promptly (and in any event within five (5) business days after receiving
notice of the Third Party Claim) notify the Indemnifying Party thereof in
writing.  Failure to notify the Indemnifying Party shall not relieve the
Indemnifying Party of any liability that it may have to the Indemnified Party,
except to the extent the defense of such claim is materially prejudiced by the
Indemnified Party’s failure to give such notice, including having the effect of
tolling or suspending the statute of limitations applicable to such claim.

 

(ii)           The Indemnifying Party shall have the right to assume and
thereafter conduct the defense of the Third Party Claim with counsel of its
choice reasonably satisfactory to the Indemnified Party and the Indemnifying
Party shall have full control of such defense and proceedings, including any
compromise or settlement thereof; provided, however, that the Indemnifying Party
shall not consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim which provides for or results in any payment by
or Obligation of the Indemnified Party of or for any damages or other amount,
any Encumbrance on any property of the Indemnified Party, any finding of
responsibility or liability on the part of the Indemnified Party or any sanction
or injunction of, restriction upon the conduct of any business by, or other
equitable relief upon the Indemnified Party without the prior written consent of
the Indemnified Party (not to be withheld unreasonably).

 

(iii)          Unless and until the Indemnifying Party assumes the defense of
the Third Party Claim as provided in Section 8(d)(ii), the Indemnified Party may
defend against the Third Party Claim in any manner it reasonably may deem
appropriate.

 

(iv)          In no event shall the Indemnified Party consent to the entry of
any judgment or enter into any settlement with respect to the Third Party Claim
without the prior written consent of the Indemnifying Party which consent shall
not be withheld unreasonably.

 

(e)           Determination of Amount of Adverse Consequences.  The Adverse
Consequences giving rise to any indemnification obligation hereunder shall be
limited to the actual loss suffered by the Indemnified Party (i.e. reduced by
any insurance proceeds or other payment or recoupment received, realized or
retained by the Indemnified Party as a result of the events giving rise to the
claim for indemnification net of any expenses related to the receipt of such
proceeds, payment or recoupment, including retrospective premium adjustments, if
any), but not any reduction in Taxes of the Indemnified Party (or the affiliated
group of which it is a member) occasioned by such loss or damage.  The amount of
the actual loss and the amount of the indemnity payment shall be computed by
taking into account the timing of the loss or payment, as applicable, using a
Prime Rate plus two percent interest or discount rate, as appropriate (not to
exceed the maximum rate permitted by applicable Law).  Upon the request of the
Indemnifying Party, the Indemnified Party shall provide the Indemnifying Party
with information sufficient to allow the Indemnifying Party to calculate the
amount of the indemnity payment in accordance with this Section 8(e).  An
Indemnified Party shall take all reasonable steps to mitigate damages in respect
of any claim for which it is seeking indemnification and shall use commercially

 

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reasonable efforts to avoid any costs or expenses associated with such claim
and, if such costs and expenses cannot be avoided, to minimize the amount
thereof.  Nothing in this Section 8 is intended to allow an indemnified Person
to receive duplicative payments in connection with a Party’s Obligations to
release, indemnify and hold harmless.  Without in any way limiting the
generality of the preceding sentence, although an indemnified Person may seek
recovery for an Adverse Consequence under any Section under which such Adverse
Consequence may be recoverable, to the extent an indemnified Person has been
paid for an Adverse Consequence under one Section of this Agreement, that Person
shall not be permitted to seek payment for that Adverse Consequence under
another Section of this Agreement, even though that Adverse Consequence is of a
type which would be covered by each such Section.

 

(f)            Tax Treatment of Indemnity Payments.  All indemnification
payments made under this Agreement, including any payment made under Section 9,
shall be made in cash and treated as purchase price adjustments for Tax
purposes.

 

(g)           Exclusive Remedy.  The indemnities provided for in this Section 8
shall be the sole and exclusive remedy of the Indemnified Party against the
Indemnifying Party by contract, statute or otherwise, at law or equity, for any
claim, cause of action or other matter arising from any breach by the Buyer or
the Seller, as applicable, of any of its representations, warranties, covenants
or other agreements under this Agreement or the transactions contemplated
hereby. Each Party acknowledges that the payment of money, as limited by the
terms of this Agreement, shall be adequate compensation for breach of any
representation, warranty, covenant or agreement contained herein or for any
other claim arising in connection with or with respect to the transactions
contemplated by this Agreement.  As the payment of money shall be adequate
compensation, each Party hereby waives any right to rescind this Agreement or
any of the transactions contemplated hereby.

 

(h)           Disclaimer of Representations and Warranties.  The Buyer
acknowledges that (i) it has had and pursuant to this Agreement shall have
before Closing access to the Acquired Companies and the Acquired Company Assets
and the officers or other representatives of the Seller and (ii) in making the
decision to enter into this Agreement and consummate the transactions
contemplated hereby, the Buyer has relied solely on the basis of its own
independent investigation, including environmental and other inspections, and
upon the express representations, warranties, covenants, and agreements set
forth in this Agreement, and the Seller expressly disclaims all liability and
responsibility for any representation, warranty, statement or communication made
or communicated (orally or in writing) to the Buyer or any of its Affiliates,
employees, agents, consultants or representatives other than as expressly set
forth in this Agreement or any Transaction Agreement (including, without
limitation, any opinion, information, projection or advice that may have been
provided to the Buyer by any officer, director, employee, agent, consultant,
representative or advisor of the Seller or any of its Affiliates).  Toward this
end, except as expressly set forth in this Agreement, no Seller Indemnitee shall
have liability to the Buyer or any other Person resulting from the distribution
to the Buyer, or the Buyer’s use of, any such information relating to any Seller
Indemnitee, or prepared by or on behalf of any Seller Indemnitee, and supplied
to the Buyer before the date of this Agreement, or any information, documents or
materials made available to the Buyer in any data rooms, any presentation or in
any other form relating to the business of the Acquired Companies in connection
with the transactions contemplated hereby.  Accordingly, the Buyer

 

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acknowledges that, except as expressly set forth in this Agreement, the Seller
has not made, and THE SELLER MAKES NO AND DISCLAIMS ANY, REPRESENTATIONS OR
WARRANTIES, WHETHER EXPRESS OR IMPLIED, AND WHETHER BY COMMON LAW, STATUTE, OR
OTHERWISE, REGARDING (i) TITLE TO ANY OF THE ACQUIRED COMPANY ASSETS (INCLUDING
ANY RIGHTS OF WAY) (WHETHER RELATING TO DEFECTIVE TITLE OR GAPS IN TITLE),
(ii) THE QUALITY, CONDITION, OR OPERABILITY OF ANY REAL OR PERSONAL PROPERTY,
EQUIPMENT, OR FIXTURES, INCLUDING FREEDOM FROM LATENT OR PATENT VICES OR
DEFECTS, (iii) THEIR MERCHANTABILITY, (iv) THEIR FITNESS FOR ANY PARTICULAR
PURPOSE, (v) THEIR CONFORMITY TO MODELS, SAMPLES OF MATERIALS OR MANUFACTURER
DESIGN, (vi) THE CONTENTS, CHARACTER OR NATURE OF ANY REPORT OF ANY PETROLEUM
ENGINEERING CONSULTANTS, OR ANY ENGINEERING, GEOLOGICAL OR SEISMIC DATA OR
INTERPRETATION RELATING TO ANY ACQUIRED COMPANY ASSETS, (vii) THE QUANTITY,
QUALITY, PRODUCTION OR RECOVERABILITY OF HYDROCARBONS, (viii) ANY ESTIMATES OF
THE VALUE OF THE ACQUIRED COMPANY EQUITY INTERESTS OR RELATED ACQUIRED COMPANY
ASSETS OR FUTURE REVENUES GENERATED THEREFROM, (ix) THE MAINTENANCE, REPAIR,
CONDITION, QUALITY SUITABILITY, DESIGN OR MARKETABILITY OF THE ACQUIRED COMPANY
ASSETS, (x) THE CONTENT, CHARACTER OR NATURE OF ANY INFORMATION MEMORANDUM,
REPORTS, BROCHURES, CHARTS OR STATEMENTS PREPARED BY ANY PERSON WITH RESPECT TO
THE ACQUIRED COMPANY EQUITY INTERESTS OR ACQUIRED COMPANY ASSETS, (xi) ANY OTHER
MATERIALS OR INFORMATION MADE AVAILABLE TO THE BUYER OR ITS AFFILIATES, OR ITS
OR THEIR EMPLOYEES, AGENTS, CONSULTANTS, REPRESENTATIVES OR ADVISORS IN
CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, OR ANY
DISCUSSION OR PRESENTATION RELATED THERETO, (xii) ANY EXPRESS OR IMPLIED
WARRANTY OF FREEDOM FROM INTELLECTUAL PROPERTY INFRINGEMENT, (xiii) ANY RIGHTS
OF A PURCHASER UNDER APPROPRIATE STATUTES TO CLAIM DIMINUTION OF CONSIDERATION
OR RETURN OF THE PURCHASE PRICE, (xiv) ANY MATTER OR CIRCUMSTANCE RELATING TO
ENVIRONMENTAL LAWS, THE RELEASE OF MATERIALS INTO THE ENVIRONMENT OR THE
PROTECTION OF HUMAN HEALTH, SAFETY, NATURAL RESOURCES OR THE ENVIRONMENT, OR ANY
OTHER ENVIRONMENTAL CONDITION OF THE ACQUIRED COMPANY ASSETS, AND, EXCEPT AS
EXPRESSLY SET FORTH IN THIS AGREEMENT, ALL OF THE ACQUIRED COMPANY ASSETS ARE
DELIVERED IN THEIR PRESENT STATUS, CONDITION AND STATE OF REPAIR, “AS IS, WHERE
IS” WITH ALL FAULTS OR DEFECTS (KNOWN OR UNKNOWN, LATENT, DISCOVERABLE OR
UNDISCOVERABLE), INCLUDING FOR PURPOSES OF THEIR ENVIRONMENTAL CONDITION.  THE
INCLUSION BY ANY SELLER PARTY OF ANY OF THE REPRESENTATIONS, WARRANTIES AND
COVENANTS CONTAINED IN THIS AGREEMENT DOES NOT CONSTITUTE AN ADMISSION OR
ACKNOWLEDGEMENT, EXPRESSED OR IMPLIED, OF FAULT, RESPONSIBILITY OR LIABILITY OF
ANY KIND BY ANY SELLER PARTY UNDER ANY LAW (INCLUDING ANY ENVIRONMENTAL LAW) FOR
ACTS, OMISSIONS, OBLIGATIONS OR EVENTS INVOLVING THE PRESENCE, IF ANY, OF ANY
POLLUTANTS, CONTAMINANTS, TOXIN OR

 

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HAZARDOUS OR EXTREMELY HAZARDOUS SUBSTANCES, MATERIALS, WASTES, CONSTITUENTS,
COMPOUNDS OR CHEMICALS THAT ARE REGULATED BY, OR MAY FORM THE BASIS OF LIABILITY
UNDER, ANY ENVIRONMENTAL LAWS ON OR ADJACENT TO THE ACQUIRED COMPANY ASSETS. 
The Parties agree that, to the extent required by Law to be effective, the
disclosures contained in this Section 8(h) are “conspicuous” for purposes of any
such Laws.

 

9.             Tax Matters.

 

(a)           Post-Closing Tax Returns.  The Buyer shall prepare or cause to be
prepared and file or cause to be filed any Post-Closing Tax Returns with respect
to the Acquired Company Assets or the Acquired Companies.  The Buyer shall pay
(or cause to be paid) any Taxes due with respect to such Tax Returns.

 

(b)           Pre-Closing Tax Returns.  The Seller shall prepare or cause to be
prepared and file or cause to be filed all Pre-Closing Tax Returns (x) with
respect to the Acquired Company Assets (other than those of the Javelina
Partnerships) or Acquired Companies (other than the Javelina Partnerships) and
(y) to the extent it has the Legal Right, with respect to the Javelina
Partnerships or the Acquired Company Assets thereof.  The Seller shall pay or
cause to be paid (A) any Taxes due with respect to those Tax Returns described
in Section 9(b)(x) and (B) the Javelina Percentage Interest of any Taxes due
with respect to those Tax Returns described in Section 9(b)(y).

 

(c)           Straddle Periods.  The Buyer shall be responsible for Taxes of the
Acquired Company Assets and the Acquired Companies related to the portion of any
Straddle Period occurring on or after the Effective Time.  The Seller shall be
responsible for Taxes of the Acquired Company Assets and the Acquired Companies
(in each case, with respect to Taxes of the Javelina Partnerships, solely to the
extent of the Javelina Percentage Interest of such Taxes) relating to the
portion of any Straddle Period occurring before and on the Effective Time.  With
respect to any such Straddle Period, to the extent permitted by applicable Law,
the Seller or the Buyer shall elect to treat the close of the day ending
immediately prior to the Effective Time as the last day of the Tax period.  If
applicable Law shall not permit such date to be the last day of a period, then
(i) real or personal property Taxes with respect to the Acquired Company Assets
and the Acquired Companies shall be allocated based on the number of days in the
partial period before and after such date, (ii) in the case of all other Taxes
based on or in respect of income, the Tax computed on the basis of the taxable
income or loss attributable to the Acquired Company Assets and the Acquired
Companies for each partial period as determined from their books and records,
and (iii) in the case of all other Taxes, on the basis of the actual activities
or attributes of the Acquired Company Assets and the Acquired Companies for each
partial period as determined from their books and records.

 

(d)           Straddle Returns.  The Buyer shall prepare any such Straddle
Returns. The Buyer shall deliver, at least forty-five (45) days prior to the due
date for filing such Straddle Return (including any extension) to the Seller a
statement setting forth the amount of Tax that the Seller owes, including the
allocation of taxable income and Taxes under Section 9(c), and copies of such
Straddle Return.  The Seller shall have the right to review such Straddle
Returns and the allocation of taxable income and liability for Taxes and to
suggest to the Buyer any reasonable

 

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changes to such Straddle Returns no later than fifteen (15) days prior to the
date for the filing of such Straddle Returns.  The Seller and the Buyer agree to
consult and to attempt to resolve in good faith any issue arising as a result of
the review of such Straddle Returns and allocation of taxable income and
liability for Taxes and mutually to consent to the filing as promptly as
possible of such Straddle Returns.  Not later than five (5) days before the due
date for the payment of Taxes with respect to such Straddle Returns, the Seller
shall pay or cause to be paid to the Buyer an amount equal to the Taxes as
agreed to by the Buyer and the Seller as being owed by the Seller.  If the Buyer
and the Seller cannot agree on the amount of Taxes owed by the Seller with
respect to a Straddle Return, the Seller shall pay or cause to be paid to the
Buyer the amount of Taxes reasonably determined by the Seller to be owed by the
Seller.  Within ten (10) days after such payment, the Seller and the Buyer shall
refer the matter to an independent nationally recognized accounting firm agreed
to by the Buyer and the Seller to arbitrate the dispute. The Seller and the
Buyer shall equally share the fees and expenses of such accounting firm and its
determination as to the amount owing by the Seller with respect to a Straddle
Return shall be binding on the Seller and the Buyer.  Within five (5) days after
the determination by such accounting firm, if necessary, the appropriate Party
shall pay the other Party any amount which is determined by such accounting firm
to be owed.  The Seller shall be entitled to reduce its obligation to pay Taxes
with respect to a Straddle Return by the amount of any estimated Taxes paid with
respect to such Taxes on or before the Effective Time.

 

(e)           Claims for Refund.  The Buyer shall not, and, to the extent the
Buyer has the Legal Right, shall cause the Acquired Companies and any of their
Affiliates not to, file any claim for refund of Taxes with respect to the
Acquired Company Assets and the Acquired Companies for whole or partial taxable
periods on or before the Effective Time.

 

(f)            Indemnification.  The Buyer agrees to indemnify the Seller
against all Taxes of or with respect to the Acquired Company Assets and the
Acquired Companies for any Post-Closing Tax Period and the portion of any
Straddle Period occurring after the Effective Time.  The Seller agrees to
indemnify the Buyer against all Taxes of or with respect to the Acquired Company
Assets and the Acquired Companies (in each case, with respect to Taxes of the
Javelina Partnerships, solely to the extent of the Javelina Percentage Interest
of such Taxes) for any Pre-Closing Tax Period and the portion of any Straddle
Period occurring on or before the Effective Time (including any Tax liability
associated with any matter listed on Schedules 4(f) and 4(h)), and the Buyer
Parties against all Taxes of or with respect to the Retained Assets.

 

(g)           Cooperation on Tax Matters.

 

(i)            The Buyer and the Seller shall cooperate fully, as and to the
extent reasonably requested by the other Party, in connection with the filing of
Tax Returns pursuant to this Section 9(g) and any audit, litigation or other
proceeding and making employees available on a mutually convenient basis to
provide additional information and explanation of any material provided
hereunder.  The Buyer and the Seller shall (A) retain all books and records in
their possession with respect to Tax matters pertinent to each Acquired Company
relating to any whole or partial taxable period beginning before the Closing
Date until the expiration of the statute of limitations (and, to the extent
notified by the Buyer or the Seller, any extensions thereof) of the respective
taxable periods, and to abide by all record retention agreements entered into
with any taxing authority, and (B) give the other Party reasonable written
notice prior to

 

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transferring, destroying or discarding any such books and records and, if the
other Party so requests, the Buyer or the Seller, as the case may be, shall
allow the other Party to take possession of such books and records.

 

(ii)           The Buyer and the Seller further agree, upon request, to use
commercially reasonable efforts to obtain any certificate or other document from
any Governmental Authority or any other Person as may be necessary to mitigate,
reduce or eliminate any Tax that could be imposed (including with respect to the
transactions contemplated hereby).

 

(iii)          The Buyer and the Seller agree, upon request, to provide the
other Parties with all information that such other Parties may be required to
report pursuant to Section 6043 of the Code and all Treasury Department
Regulations promulgated thereunder.

 

(h)           Certain Taxes.  The Seller shall file all necessary Tax Returns
and other documentation with respect to all transfer, documentary, sales, use,
stamp, registration and other similar Taxes and fees, pay the related Tax, and,
if required by applicable Law, the Buyer shall, and shall cause its Affiliates
to, join in the execution of any such Tax Returns and other documentation. 
Notwithstanding anything set forth in this Agreement to the contrary, the Buyer
shall pay to the Seller, on or before the date such payments are due from the
Seller to a Governmental Authority, any transfer, documentary, sales, use,
stamp, registration and other Taxes and fees incurred in connection with this
Agreement and the transactions contemplated hereby.

 

(i)            Confidentiality.  Any information shared in connection with Taxes
shall be kept confidential, except as may otherwise be necessary in connection
with the filing of Tax Returns or reports, refund claims, tax audits, tax claims
and tax litigation, or as required by Law.

 

(j)            Audits.  The Seller or the Buyer, as applicable, shall provide
prompt written notice to the other Parties of any pending or threatened tax
audit, assessment or proceeding that it becomes aware of related to the Acquired
Company Assets or the Acquired Companies for whole or partial periods for which
it is indemnified by the other Party hereunder.  Such notice shall contain
factual information (to the extent known) describing the asserted tax liability
in reasonable detail and shall be accompanied by copies of any notice or other
document received from or with any tax authority in respect of any such
matters.  If an Indemnified Party has knowledge of an asserted tax liability
with respect to a matter for which it is to be indemnified hereunder and such
Party fails to give the Indemnifying Party prompt notice of such asserted tax
liability, then (I) if the Indemnifying Party is precluded by the failure to
give prompt notice from contesting the asserted tax liability in any forum, the
Indemnifying Party shall have no obligation to indemnify the Indemnified Party
for any Taxes arising out of such asserted tax liability, and (II) if the
Indemnifying Party is not so precluded from contesting, but such failure to give
prompt notice results in a detriment to the Indemnifying Party, then any amount
which the Indemnifying Party is otherwise required to pay the Indemnified Party
pursuant to this Section 9(j) shall be reduced by the amount of such detriment,
provided, the Indemnified Party shall nevertheless be entitled to full
indemnification hereunder to the extent, and only to the extent, that such Party
can establish that the Indemnifying Party was not prejudiced by such failure. 
This Section 9(j) shall control the procedure for Tax indemnification matters to
the extent it is inconsistent with any other provision of this Agreement.

 

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(k)           Control of Proceedings.  The Party responsible for the Tax under
this Agreement shall control audits and disputes related to such Taxes
(including action taken to pay, compromise or settle such Taxes).  The Seller
and the Buyer shall jointly control, in good faith with each other, audits and
disputes relating to Straddle Periods.  Reasonable out-of-pocket expenses with
respect to such contests shall be borne by the Seller and the Buyer in
proportion to their responsibility for such Taxes as set forth in this
Agreement.  Except as otherwise provided by this Agreement, the noncontrolling
Party shall be afforded a reasonable opportunity to participate in such
proceedings at its own expense.

 

(l)            Powers of Attorney.  To the extent the Buyer has the Legal Right,
the Buyer, the Acquired Companies and their respective Affiliates shall provide
the Seller and its Affiliates with such powers of attorney or other authorizing
documentation as are reasonably necessary to empower them to execute and file
returns they are responsible for hereunder, file refund and equivalent claims
for Taxes they are responsible for, and contest, settle, and resolve any audits
and disputes that they have control over under Section 9(k) (including any
refund claims which turn into audits or disputes).

 

(m)          Remittance of Refunds.  If the Buyer or any Affiliate of the Buyer
receives a refund of any Taxes that the Seller is responsible for hereunder, or
if the Seller or any Affiliate of the Seller receives a refund of any Taxes that
the Buyer is responsible for hereunder, the Party receiving such refund shall,
within thirty (30) days after receipt of such refund, remit it to the Party who
has responsibility for such Taxes hereunder.  For the purpose of this
Section 9(m), the term “refund” shall include a reduction in Tax and the use of
an overpayment as a credit or other Tax offset, and receipt of a refund shall
occur upon the filing of a Tax Return or an adjustment thereto using such
reduction, overpayment or offset or upon the receipt of cash.

 

(n)           Purchase Price Allocation.  The Seller and the Buyer agree that
the actual Purchase Price allocable to the Acquired Company Assets shall be
allocated to the Acquired Company Assets for all purposes (including Tax and
financial accounting purposes) as jointly agreed between the Buyer and the
Seller within 90 days after the Closing Date.  The Seller and the Buyer agree
(i) to report the federal, state and local income and other Tax consequences of
the transactions contemplated herein, and in particular to report the
information required by Section 1060(b) of the Code, and to jointly prepare
Form 8594 (Asset Acquisition Statement under Section 1060) in a manner
consistent with such allocation and (ii) without the consent of the other Party,
not to take any position inconsistent therewith upon examination of any Tax
return, in any refund claim, in any litigation, investigation or otherwise.  The
Seller and the Buyer agree that each will furnish the other a copy of Form 8594
(Asset Acquisition Statement under Section 1060) proposed to be filed with the
Internal Revenue Service by such Party or any Affiliate thereof within ten days
prior to the filing of such form with the Internal Revenue Service.  The Buyer,
the Seller and their applicable Affiliates will file all Tax Returns (including
amended Tax Returns and claims for refund) and information reports in a manner
consistent with such allocation.

 

(o)           Closing Tax Certificate.  At the Closing, the Seller shall deliver
to the Buyer a certificate, in the form of Exhibits D-1, D-2 and D-3, signed
under penalties of perjury (i) stating it is not a foreign corporation, foreign
partnership, foreign trust or foreign estate, (ii) providing

 

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its U.S. Employer Identification Number, and (iii) providing its address, all
pursuant to Section 1445 of the Code.

 

(p)           Reporting of Post-Closing Transactions.  The Buyer and the Seller
agree to report all transactions not in the Ordinary Course of Business
occurring on the Closing Date after the Closing on the Buyer’s federal income
Tax Return to the extent permitted by Treasury Regulation
Section 1.1502-76(b)(1)(ii)(B).

 

(q)           Settlements.  Notwithstanding anything to the contrary contained
in this Agreement, the Seller shall not be entitled to settle or concede, either
administratively or after the commencement of litigation, any proceeding related
to Taxes in a manner that could increase the amount of Taxes of the Buyer or any
of the Acquired Companies for any Post-Closing Tax Periods, unless (i) the Buyer
consents to such settlement or concession or (ii) the Seller agrees to indemnify
the Buyer for any such increase in the amount of Taxes of the Buyer or any of
the Acquired Companies for Post-Closing Tax Periods.

 

(r)            Section 754 Elections.  To the extent it has the Legal Right, the
Seller shall take or cause to be taken such actions as are requested by the
Buyer in order to cause any Acquired Company that is treated as a partnership
for federal tax purposes to make a timely election under Section 754 of the Code
with respect to the Seller’s sale of interests in any such entity to the Buyer
hereunder.

 

10.           Termination.

 

(a)           Termination of Agreement.  The Parties may terminate this
Agreement, as provided below:

 

(i)            the Parties may terminate this Agreement by mutual written
consent at any time before the Closing;

 

(ii)           (A) by either Party in writing, without liability to the other
Party on account of such termination (provided the terminating Party is not in
default or breach of any of representations, warranties, covenants and
agreements contained in this Agreement), if the Closing shall not have occurred
on or before 5:00 p.m. Houston, Texas time on December 1, 2005;

 

(iii)          the Buyer may terminate this Agreement by giving written notice
to the Seller at any time before Closing in the event the Seller has materially
breached any representation or warranty set forth in Section 3(a) or Section 4
or any covenant contained in this Agreement, the Buyer has notified the Seller
of the breach, the breach is not curable, or, if curable, has continued without
cure for a period of twenty-five (25) days after the written notice of breach
and such breach would result in a failure to satisfy a condition to the Buyer’s
obligation to consummate the transactions contemplated hereby; provided, that
the right to terminate this Agreement pursuant to this Section 10(a)(iii) shall
not be available to the Buyer if, at such time, the Buyer is in breach of any
representation or warranty set forth in Section 3(b) or any covenant contained
in this Agreement and such breach would result in a failure to satisfy a
condition to the Seller’s obligation to consummate the transactions contemplated
hereby;

 

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(iv)          the Seller may terminate this Agreement by giving written notice
to the Buyer at any time before the Closing in the event the Buyer has
materially breached any representation or warranties set forth in
Section 3(b) or any covenant contained in this Agreement, the Seller has
notified the Buyer of the breach, the breach is not curable, or, if curable, has
continued without cure for a period of twenty-five (25) days after the written
notice of breach and such breach would result in a failure to satisfy a
condition to the Seller’s obligation to consummate the transactions contemplated
hereby; provided that the right to terminate this Agreement pursuant to this
Section 10(a)(iv) shall not be available to the Seller if, at such time, the
Seller is in breach of any representation or warranties set forth in
Section 3(a) or Section 4 or any covenant contained in this Agreement and such
breach would result in a failure to satisfy a condition to the Buyer’s
obligation to consummate the transactions contemplated hereby;

 

(v)           the Parties may terminate this Agreement if any Governmental
Authority shall have issued an order, decree or ruling or shall have taken any
other action permanently enjoining, restraining or otherwise prohibiting the
transactions contemplated hereby and such order, decree, ruling or other action
shall have become final and nonappealable; provided that the Party seeking to
terminate this Agreement pursuant to this Section 10(a)(v) shall have complied
with Section 5(a), Section 5(b) and Section 5(g), it being agreed that the
Parties shall promptly appeal any adverse determination that is not
nonappealable (and pursue such appeal with reasonable diligence); and

 

(vi)          either Party may terminate this Agreement by giving written notice
to the other Party at any time before Closing if, prior to the time of such
notice, any of the Other Purchase Agreements had been duly terminated pursuant
to the provisions of such Other Purchase Agreement.

 

(b)           Effect of Termination.  Except for the obligations under Sections
5(f)(ii)(C), 5(f)(ii)(G), 8, 10 and 11, if either Party terminates this
Agreement pursuant to Section 10(a), all rights and obligations of the Parties
hereunder shall terminate without any liability of either Party to the other
Party (except for any liability of either such Party then in breach); provided,
that the provisions contained in Sections 5(f)(ii)(C), 5(f)(ii)(G) and
8(c)(iv) shall survive termination.

 

11.           Miscellaneous.

 

(a)           Confidentiality.  If the Closing occurs, the Buyer shall not be
limited by the terms thereof with respect to information, assets and operations
of the Acquired Companies.  The Seller shall, and shall cause its Affiliates to,
not make disclosure of any confidential or proprietary information relating to
any Acquired Company to any Person other than (i) to its owners, directors,
officers, employees, consultants or other representatives to whom such
disclosure is necessary or convenient for the completion of the transactions
contemplated by this Agreement; (ii) as required to convey title to any of the
Acquired Company Assets; (iii) as required by Law or any securities exchange or
market rule; (iv) as may be requested or required by any Governmental Authority
(provided that the Seller first notifies the Buyer and gives the Buyer the
opportunity to contest such request or requirement), or (v) except with prior
notice of such request for disclosure to, and consent of, the Buyer (which
consent may be withheld in the Buyer’s sole discretion).

 

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(b)           Public Announcements.  Neither Party shall issue any press release
or make any public announcement or otherwise publicly disseminate information
relating to the subject matter of this Agreement before or after the Closing
without the prior written approval of the other Party (which approval will not
be withheld or delayed unreasonably); provided that either Party may make any
public disclosure it believes in good faith is required by applicable Law or any
listing or trading agreement concerning its publicly traded securities (in which
case the disclosing Party will advise the other Party before making the
disclosure and will provide the other Party, to the extent practicable, with a
reasonable opportunity to comment on such proposed disclosures).

 

(c)           Insurance.  To the extent the Seller has the Legal Right, (i) the
Seller shall cause any insurance policies covering the Acquired Company Assets
(except those stand-alone insurance policies that are in the name of any of the
Javelina Partnerships and that are obtained solely to cover the assets,
facilities and/or operations of the Javelina Partnerships (collectively, such
policies are the “Javelina Insurance Policies”)) to remain in full force and
effect or to be renewed and maintained in full force and effect through (but not
after) the Closing Date; provided, however, that the Seller shall maintain the
Acquired Companies (other than the Javelina Partnerships) or the Acquired
Company Assets (other than those of the Javelina Partnerships) (as applicable)
as divested entities or assets on such insurance policies and any subsequent
renewals thereof; (ii) the Seller shall not take any action to release any
insurer with respect to any claim made under any such insurance policy before
the Closing Date; provided, however, that the Seller may release any such
insurer (A) that is an Affiliate of the Seller or (B) if such claim may be filed
under a Javelina Insurance Policy; and (iii) the Seller will file all insured
claims (both before and after Closing) that may be filed under any such
insurance policy for any Adverse Consequences occurring before Closing and will
thereafter coordinate with the Buyer to resolve all such claims after Closing;
provided, however, that (x) the Seller will not be required to file such claims
to the extent (A) the insurer of such claims is an Affiliate of the Seller or
(B) that such claims may be filed under a Javelina Insurance Policy and (y)
neither the Seller nor any of its Affiliates shall be obligated or otherwise
liable for any deductible, self insured retention amount or reimbursable amount
payable by any of them with respect to any such claim.  The Buyer acknowledges
and agrees that, following the Closing, any insurance policies maintained by the
Seller and its Affiliates (including the applicable Acquired Companies) and the
Javelina Partnerships shall be terminated or modified to exclude coverage of all
or any portion of the assets, facilities and/or operations of the Acquired
Companies (except for the Javelina Insurance Policies), and, as a result, the
Buyer shall be obligated at or before Closing to obtain at its sole cost and
expense replacement insurance, including insurance required by any Person to be
maintained for or by the Acquired Companies.  The Buyer further acknowledges and
agrees that the Buyer may need to provide to certain Governmental Authorities
and other Persons evidence of such replacement or substitute insurance coverage
for the continued operations or businesses of the Acquired Companies.

 

(d)           No Third Party Beneficiaries.  Except for the indemnification
provisions, this Agreement shall not confer any rights or remedies upon any
Person other than the Parties and their respective successors and permitted
assigns.

 

(e)           Succession and Assignment.  This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns.

 

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Neither Party may assign, alienate, delegate or otherwise transfer all or any
portion of its rights, interests or obligations under this Agreement without the
prior written approval of the other Party (which approval may not be
unreasonably withheld); provided, however, without the prior approval of the
Seller, the Buyer and its permitted successors and assigns may transfer any or
all of its rights or interests under this Agreement to a wholly owned subsidiary
of the Buyer for so long as such Person remains a wholly owned subsidiary of the
Buyer, including designating one or more such Persons to be the assignee of some
or any portion of the Acquired Company Equity Interests; and provided further
that no transfer shall result in the release of the requesting Party from any of
its obligations under this Agreement, and such Party shall remain a primary
obligor (as opposed to a surety) thereof.

 

(f)            Counterparts.  This Agreement may be executed in counterparts,
each of which shall be deemed an original but which together shall constitute
one and the same instrument.

 

(g)           Headings.  The Section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.

 

(h)           Notices.  All notices, requests, demands, claims, and other
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given two business
days after it is sent by registered or certified mail, return receipt requested,
postage prepaid, and addressed to the intended recipient as set forth below:

 

If to the Seller:

 

Kerr-McGee Corporation

 

 

KM Investment Corporation

 

 

Javelina Holdings Corporation

 

 

c/o Kerr-McGee Corporation

 

 

Attn: Samuel A. Hewes

 

 

Kerr-McGee Center

 

 

123 Robert S. Kerr Avenue

 

 

Oklahoma City, Oklahoma 73125

 

 

 

If to the Buyer:

 

MarkWest Energy Partners, L.P.

 

 

Attn: General Counsel

 

 

155 Inverness Drive West, Suite 200

 

 

Englewood, CO 80112

 

 

Tel No.: (303) 290-8700

 

 

Fax No.: (303) 290-8769

 

Either Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the addresses set forth above using any
other means other than electronic mail (including personal delivery, expedited
courier, messenger service, telecopy or ordinary mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient;
provided, if notice is sent by telecopy and such telecopy is received during non
business hours of

 

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the addressee, then such notice shall be deemed received on the next business
day of the addressee.  Either Party may change the address to which notices,
requests, demands, claims, and other communications hereunder are to be
delivered by giving the other Party notice in the manner herein set forth.

 

(i)            Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF TEXAS WITHOUT GIVING EFFECT
TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF
TEXAS OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF
ANY JURISDICTION OTHER THAN THE STATE OF TEXAS.  VENUE FOR ANY ACTION ARISING
UNDER THIS AGREEMENT SHALL LIE EXCLUSIVELY IN ANY STATE OR FEDERAL COURT IN
TEXAS.

 

(j)            Amendments and Waivers.  No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Buyer and the Seller.  No waiver by either Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.  All waivers must be in writing.

 

(k)           Severability.  Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.

 

(l)            Transaction Expenses.  Except to the extent otherwise provided
for in this Agreement, each of the Buyer, on the one hand, and the Seller, on
the other hand, shall bear its and its Affiliates own costs and expenses
(including legal fees and expenses) incurred in connection with this Agreement
and the transactions contemplated hereby.  Except to the extent otherwise
provided for in this Agreement, for the avoidance of doubt, it is agreed that
the Seller will bear (i) any and all expenses of the Acquired Companies (other
than the Javelina Partnerships) and (ii) the Javelina Percentage Interest of any
and all expenses of the Javelina Partnerships, in each case in connection with
this Agreement and the transactions contemplated hereby.

 

(m)          Construction.  The Parties have participated jointly in the
negotiation and drafting of this Agreement.  In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring either Party by virtue of the authorship of any of
the provisions of this Agreement.  Any reference to any federal, state, local,
or foreign statute or Law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise.  The
word “including” shall mean including without limitation. All personal pronouns
used in this Agreement, whether used in the masculine, feminine or neuter
gender, shall include all other genders; the singular shall include the plural,
and vice versa.  All references herein to Exhibits, Schedules, Articles,
Sections or subdivisions thereof shall refer to

 

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the corresponding Exhibits, Schedules, Article, Section or subdivision thereof
of this Agreement unless specific reference is made to such exhibits, articles,
sections or subdivisions of another document or instrument. The terms “herein,”
“hereby,” “hereunder,” “hereof,” “hereinafter,” and other equivalent words refer
to this Agreement in its entirety and not solely to the particular portion of
the Agreement in which such word is used.

 

(n)           Exhibits and Schedules.

 

(i)            The Exhibits and Schedules identified in this Agreement are
incorporated herein by reference and made a part hereof.  Any fact or item which
is disclosed in any part of the Transaction Agreements (including any schedule,
exhibit or other attachment thereto) will be deemed to have been disclosed for
all purposes of this Agreement (if reasonably apparent that such disclosure
relates to another portion of the Agreement), notwithstanding the omission of a
reference or cross-reference thereto.

 

(ii)           Matters reflected in the Exhibits and Schedules are not
necessarily limited to matters required by the Agreement to be reflected
therein.  Such additional matters are set forth for informational purposes and
do not necessarily include other matters of a similar nature.  In no event shall
the listing of such matters therein be deemed or interpreted to broaden or
otherwise amplify the applicable Party’s representations, warranties, covenants
or agreements contained in this Agreement.  The fact that any item of
information is contained in the Exhibits and Schedules shall not (i) be
construed as an admission of liability under any Law, (ii) mean that such
information is required by this Agreement to be disclosed in the Exhibits and
Schedules, (iii) mean that such information is material or (iv) be used as a
basis for interpreting the term “material” or “Material Adverse Effect” or any
similar qualification in this Agreement.

 

(iii)          If there is any conflict or other inconsistency between this
Agreement and the Exhibits and Schedules, the terms of this Agreement shall
prevail.  For the avoidance of doubt, the Buyer hereby acknowledges and agrees
that (A) nothing contained in any of the Exhibits and Schedules shall constitute
a representation, warranty or other assurance (x) as to the quality, condition
or capability of any of the facilities, components or other assets contained
therein or (y) as to the ownership interest of the Seller or any other Person as
to any such asset and (B) with respect to such matters, the terms of this
Agreement shall govern, meaning that the Buyer is exclusively relying on its own
due diligence and independent investigation, as contemplated by
Section 3(b)(v) and the representations, warranties and covenants contained in
this Agreement.  Except as set forth in this Agreement, the Seller hereby
disclaims any and all representations, warranties or other assurances with
respect to any and all such assets, as contemplated by Sections 8(b)(x) and
8(h).

 

(o)           Entire Agreement.  THIS AGREEMENT (INCLUDING THE DOCUMENTS
REFERRED TO HEREIN) CONSTITUTE THE ENTIRE AGREEMENT BETWEEN THE PARTIES AND
SUPERSEDES ANY PRIOR UNDERSTANDINGS, AGREEMENTS, OR REPRESENTATIONS BY OR AMONG
THE PARTIES, WRITTEN OR ORAL, TO THE EXTENT THEY HAVE RELATED IN ANY WAY TO THE
SUBJECT MATTER HEREOF.

 

[Signature Pages follow]

 

54

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first set forth in the preamble.

 

 

SELLER:

 

 

 

KERR-MCGEE CORPORATION

 

 

 

BY:

 

 

PRINTED NAME:

 

 

TITLE:

 

 

 

 

KM INVESTMENT CORPORATION

 

 

 

BY:

 

 

PRINTED NAME:

 

 

TITLE:

 

 

 

 

JAVELINA HOLDINGS CORPORATION

 

 

 

 

BY:

 

 

PRINTED NAME:

 

 

TITLE:

 

 

 

 

 

 

BUYER:

 

 

 

MARKWEST ENERGY PARTNERS, L.P.

 

 

 

By: MarkWest Energy GP, L.L.C.,

 

its general partner

 

 

 

BY:

 

 

PRINTED NAME:

 

 

TITLE:

 

 

 

Javelina Purchase and Sale Agreement Signature Page

 

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