EXHIBIT 10.1
EXECUTION COPY
PARAMOUNT PETROLEUM CORPORATION
STOCK PURCHASE AGREEMENT
AMONG
THE STOCKHOLDERS OF
PARAMOUNT PETROLEUM CORPORATION
AND
ALON USA ENERGY, INC.
DATED AS OF April 28, 2006

 

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TABLE OF CONTENTS
Page

         
ARTICLE I DEFINITIONS
    1  
 
       
ARTICLE II STOCK PURCHASE
    10  
2.1 Deposit
    10  
2.2 Sale and Delivery
    11  
2.3 Purchase Price
    11  
2.4 Adjustment to the Closing Payment
    13  
2.5 Dispute Resolution of Calculation of Purchase Price
    15  
2.6 Closing
    16  
 
       
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLERS
    17  
3.1 Ownership of the Shares and Options
    17  
3.2 Authorization, Validity, and Effect of Agreements
    18  
3.3 No Violations
    18  
3.4 Trusts
    19  
 
       
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SELLERS AS TO THE COMPANY AND
ITS SUBSIDIARIES
    19  
4.1 Existence; Good Standing
    19  
4.2 Capitalization
    19  
4.3 Acquired Subsidiaries and Other Interests
    20  
4.4 Material Contracts; No Violation
    21  
4.5 Financial Statements; No Undisclosed Liabilities
    24  
4.6 No Violations; Consents
    25  
4.7 Compliance; Permits; Litigation
    25  
4.8 Absence of Certain Changes
    26  
4.9 Taxes
    27  
4.10 Certain Employee Plans
    28  
4.11 Labor Matters
    29  
4.12 Environmental Matters
    30  
4.13 Related Party Transactions
    31  
4.14 Business Activities
    31  
4.15 Real Property
    32  
4.16 Intellectual Property
    34  
4.17 Inventories
    34  
4.18 Accounts Receivable
    34  
4.19 Other Assets
    35  
4.20 Insurance
    35  
4.21 Bank Accounts
    36  
4.22 No Brokers
    36  
4.23 Customers and Suppliers
    36  
4.24 Limitations on Representations and Warranties
    36  

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    Page  
ARTICLE V REPRESENTATIONS AND WARRANTIES OF ALON
    37  
5.1 Existence; Good Standing; Corporate Authority
    37  
5.2 Authorization, Validity, and Effect of Agreements
    37  
5.3 No Violation; Litigation
    38  
5.4 No Brokers
    38  
5.5 Funds
    38  
5.6 Investment Purpose
    38  
5.7 Access to Information
    38  
 
       
ARTICLE VI COVENANTS
    40  
6.1 Conduct of Business
    40  
6.2 Further Action
    42  
6.3 Access to Information; Confidentiality
    43  
6.4 Publicity
    44  
6.5 Expenses; Law Firms
    45  
6.6 Employee Matters
    45  
6.7 Third Party Acquisition
    47  
6.8 Restrictive Covenants
    47  
6.9 Directors; Indemnification
    48  
6.10 Employee Cash Bonuses
    48  
6.11 Termination of the Stockholder Agreement
    48  
6.12 Sellers’ Representative
    49  
6.13 Release
    50  
6.14 Distribution of Excluded Company
    51  
6.15 Subordinated Debt
    51  
6.16 Holdback Escrow Agreement
    51  
6.17 Casualty; Condemnation
    51  
6.18 Title Commitments
    51  
6.19 Bank Facilities
    52  
 
       
ARTICLE VII SURVIVAL; INDEMNIFICATION
    53  
7.1 Survival of Representations and Warranties; Effect of Materiality Qualifiers
    53  
7.2 Indemnification
    53  
7.3 Other Limitations
    54  
7.4 Procedures Relating to Indemnification Involving Third Party Claims
    56  
7.5 Other Claims
    58  
7.6 Mitigation of Damages
    58  
7.7 Sole and Exclusive Remedy
    58  
 
       
ARTICLE VIII TAX MATTERS
    59  
8.1 Indemnification Obligations With Respect to Taxes
    59  
8.2 Tax Returns
    60  
8.3 Contest Provisions
    61  
8.4 Assistance and Cooperation
    62  
8.5 Retention of Records
    62  
8.6 Refunds and Tax Benefit
    62  
8.7 Other Provisions
    63  

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    Page  
ARTICLE IX CONDITIONS
    63  
9.1 Conditions to Each Party’s Obligation to Effect the Stock Purchase
    63  
9.2 Conditions to Obligations of Alon
    63  
9.3 Conditions to Obligations of the Sellers
    65  
9.4 Remedies in the Event of Certain Material Adverse Effects on the Company
    65  
 
       
ARTICLE X TERMINATION
    68  
10.1 Termination by Mutual Consent
    68  
10.2 Termination by Either Alon or the Sellers
    68  
10.3 Termination by the Sellers
    69  
10.4 Termination by Alon
    69  
10.5 Effect of Termination
    70  
 
       
ARTICLE XI MISCELLANEOUS
    70  
11.1 Entire Agreement; Assignment
    70  
11.2 Validity
    70  
11.3 Notices
    70  
11.4 Governing Law
    72  
11.5 Specific Performance
    72  
11.6 Construction
    72  
11.7 Counterparts
    72  
11.8 Parties In Interest
    72  
11.9 Waiver
    73  
11.10 Amendments
    73  
11.11 Further Assurances; Post Closing Cooperation
    73  
11.12 Cumulative Remedies
    73  
11.13 Disclosure
    73  

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EXHIBITS
       
 
        Exhibit A   Deposit Escrow Agreement Exhibit B   Holdback Escrow
Agreement
 
       
SCHEDULES
       
 
        Schedule 1(a)   Sellers’ Knowledge Schedule 1(b)   Alon’s Knowledge
Schedule 2.3(a)   December Adjusted Book Value
 
      1. December 31, 2005 Inventory Value by Acquired Company Schedule 2.3(b)  
Hypothetical Example
 
      1. Hypothetical Calculation of Cash Payment
 
      2. Assumptions for Hypothetical Closing Date Cash Payment
 
      3. Hypothetical Closing Date Inventory Valuation Worksheet
 
      4. Hypothetical Closing Date Inventory Value by Acquired Company
Schedule 2.3(c)   Consideration Per Seller Schedule 2.3(d)   1031 Potential
Properties Schedule 2.4(b)(i)   Inventory Valuation
 
      1. Quality and Measurement Protocol Schedule 2.4(b)(ii)   Calculation
Schedule 2.4(b)(iii)   Example Calculation Schedule 6.5   Seller Law Firms
Schedule 6.7   Current Negotiations With Respect to Portions of the Business or
Assets of the Acquired Companies
 
        Sellers’ Disclosure Schedule

         
 
  Section 3.1(a)   Ownership of Shares
 
  Section 3.1(b)   Option Agreements
 
  Section 3.4   Trusts
 
  Section 4.2(c)   Obligations to Repurchase or Redeem
 
  Section 4.3(a)   Subsidiaries
 
  Section 4.3(c)   Interests in Subsidiaries Capital Stock
 
  Section 4.3(d)   Rights to Redeem or Make an Investment
 
  Section 4.4(a)   Material Contracts
 
  Section 4.4(b)   Exceptions to Material Contracts
 
  Section 4.4(d)   Consents and Approvals
 
  Section 4.5(a)   Financial Statements
 
  Section 4.5(d)   Undisclosed Liabilities
 
  Section 4.7(c)   Litigation
 
  Section 4.7(d)   Acquired Companies Litigation
 
  Section 4.8   Absence of Certain Changes
 
  Section 4.10(a)   Company Benefit Plans

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  Section 4.10(b)   Qualification; Multi-Employer Plans
 
  Section 4.10(c)   Benefits to Former Employees
 
  Section 4.10(e)   Change in Control Arrangements
 
  Section 4.10(f)   New or Modifications to Company Benefit Plans
 
  Section 4.11(a)   Employees
 
  Section 4.11(b)   Collective Bargaining and Other Labor Agreements
 
  Section 4.11(d)   Employment Disputes
 
  Section 4.12   Environmental Matters
 
  Section 4.13   Related Party Transactions  
 
  Section 4.15(a)   Owned Real Property
 
  Section 4.15(b)   Leased Real Property
 
  Section 4.15(e)   Condemnation and Eminent Domain Proceedings
 
  Section 4.15(f)   Exceptions to Permits and Rights of Ways for Access
 
  Section 4.15(i)   Easements, Rights of Way, Licenses, Permits, and Other
Similar Rights
 
  Section 4.15(i)(B)   Material Default of Material Easements, Rights of Way,
Licenses, Permits and Other Similar Rights
 
  Section 4.16(a)   Intellectual Property of the Acquired Companies
 
  Section 4.16(b)   Liens on Intellectual Property
 
  Section 4.16(c)   Rights to the Intellectual Property
 
  Section 4.18   Accounts Receivable
 
  Section 4.19   Other Assets; Liens
 
  Section 4.20(a)   Insurance Policies
 
  Section 4.20(b)   Potential Premium Increases
 
  Section 4.20(c)   Material Open Insurance Claims
 
  Section 4.21   Bank Accounts
 
  Section 4.22   Brokers
 
  Section 4.23(a)   Customers and Suppliers
 
  Section 4.23(b)   Business Relationships

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STOCK PURCHASE AGREEMENT
     This STOCK PURCHASE AGREEMENT (this “Agreement”), is dated as of April 28,
2006, by and among Alon USA Energy, Inc., a Delaware corporation (“Alon”), and
the stockholders of Paramount Petroleum Corporation, a Delaware corporation (the
“Company”), named on the signature page hereto (collectively, the “Sellers”).
     WHEREAS, the Sellers collectively own all of the issued and outstanding
shares of Capital Stock of the Company (the “Shares”).
     WHEREAS, Lovejoy and Milano together own options to purchase 20,000 shares
each of Senior Preferred Stock of the Company (the “Options”).
     WHEREAS, subject to the terms and conditions of this Agreement, the Sellers
have agreed to sell the Shares to Alon, and Alon has agreed to purchase the
Shares from the Sellers (the “Stock Purchase”), in exchange for the
consideration set forth in this Agreement.
     WHEREAS, concurrent with the Stock Purchase and subject to the terms and
conditions of this Agreement, Lovejoy and Milano have agreed to sell the Options
to the Craig Barto Trust and the Jerrel Barto Trust, and the Craig Barto Trust
and the Jerrel Barto Trust have agreed to purchase the Options issued by such
trusts (the “Option Purchase”) and thereafter immediately cancel the Options.
     WHEREAS, the parties desire to make certain representations, warranties,
covenants and agreements in connection with the Stock Purchase, the Option
Purchase and the Option cancellation, and also to prescribe various conditions
to such transactions.
     NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, and for
other good and valuable consideration, intending to be legally bound, the
Sellers and Alon hereby agree as follows:
ARTICLE I
DEFINITIONS
     As used in this Agreement:
     “1031 Asset” means each asset identified in Schedule 2.3(d).
     “2005 Annual Statements” is defined in Section 4.5(a).
     “Acquired Companies” means the Company and each of its Subsidiaries (other
than the Excluded Company).
     “Acquired Subsidiaries” means the Acquired Companies other than the
Company.
     “Adjusted Book Value Acceptance Notice” is defined in Section 2.4(c).

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     “Adjusted Book Value Objection Notice” is defined in Section 2.4(c).
     “Affiliate”, as applied to any Person, shall mean any other Person directly
or indirectly controlling, controlled by, or under common control with, the
first Person. For the purposes of this definition, “control” (including, with
correlative meanings, the terms “controlling,” “controlled by” and “under common
control with”), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities, by
Contract or otherwise.
     “Agreement” is defined in the introductory paragraph of this Agreement.
     “Alon” is defined in the introductory paragraph of this Agreement.
     “Alon Indemnified Parties” is defined in Section 7.2(a).
     “Annual Statements” is defined in Section 4.5(a).
     “Antitrust Division” is defined in Section 6.2(a).
     “Asset Purchase Date” is defined in Section 2.3(d)(ii).
     “Bank Pledge” means collectively, the pledge by the Sellers of the Shares
and the Options to Wells Fargo Bank Northwest, National Association, acting in
its capacity as administrative agent for certain financial institutions in
connection with the Term Loan Agreement; and the pledge by the Sellers of the
Shares and the Options to Bank of America, N.A., acting in its capacity as
administrative agent for itself and certain financial institutions in connection
with the Revolving Credit Agreement.
     “Business” means the business of the Acquired Companies as currently
conducted, including the business of (i) refining crude oil into motor gasoline
and /or California compliant reformulated gasoline blendstock for oxygenate
blending (CARBOB), jet fuel, diesel fuel, vacuum gas oil, naphtha, liquefied
petroleum gas (LPG), paving asphalts and roofing asphalts, for delivery and sale
in the States of California, Arizona, Oregon and Washington, and (ii) purchasing
for resale, transporting, terminalling, processing or marketing of various
asphalt products, in the above states and Nevada, Utah, Oklahoma and Texas.
     “Business Day” means any day other than a Saturday, Sunday or United States
federal holiday.
     “Capital Stock” means common stock, preferred stock, partnership interests,
limited liability company interests or other equity ownership interests, whether
or not entitling the holder thereof to vote with respect to matters involving
the issuer thereof, or any right to share in the profits, or upon liquidation,
the assets of the issuer thereof.
     “Cash Payment” is defined in Section 2.3(a)(iii).
     “Casualty” is defined in Section 6.17.

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     “Claimed Amount” is defined in Section 2.6(d).
     “Claims” is defined in Section 6.13(a).
     “Closing” and “Closing Date” are defined in Section 2.6(a).
     “Closing Date Adjusted Book Value” is defined in Section 2.4(b)(ii).
     “Closing Date Financial Statements” is defined in Section 2.4(b)(i).
     “Closing Payment” is defined in Section 2.3(a)(iii).
     “Code” means the Internal Revenue Code of 1986, as amended (or any
successor thereto).
     “Company” is defined in the introductory paragraph of this Agreement.
     “Company Benefit Plans” means each of the following which is sponsored,
maintained or contributed to by any of the Acquired Companies for the benefit of
the current or former employees, officers or directors of any of the Acquired
Companies, or with respect to which the Acquired Companies have or could
reasonably be expected to have any Liability: (i) each “employee benefit plan,”
as such term is defined in Section 3(3) of ERISA, and (ii) each stock option
plan, bonus plan or arrangement, incentive award plan or arrangement, change in
control or severance pay plan, policy, or agreement, deferred compensation
agreement or arrangement, or supplemental income arrangement, and each other
benefit or compensation plan, program or practice which is not described in
clause (i) of this sentence; provided, however, that such term shall not include
collective bargaining agreements, employment, severance or change in control
agreements or consulting agreements.
     “Company Common Stock” is defined in Section 4.2(a).
     “Company Permits” is defined in Section 4.7(b).
     “Company Preferred Stock” is defined in Section 4.2(a).
     “Company Transaction Expenses” is defined in Section 6.5(a).
     “Competing Business” is defined in Section 4.13(ii).
     “Condemnation” is defined in Section 6.17.
     “Confidentiality Agreement” means the Confidentiality Agreement among Alon
and the Sellers, dated December 3, 2001, including the letter agreement dated
May 11, 2004, extending the term of the Confidentiality Agreement, and as
further extended by that certain Letter Agreement among Alon, the Company and
the Sellers, dated March 21, 2006, among other matters, extending the term for a
further two years from the date thereof.
     “Continuing Holdback Amount” is defined in Section 2.6(d).

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     “Contracts” shall mean all contracts, agreements, and other instruments and
understandings of any kind, and all amendments, supplements, modifications,
extensions or renewals in respect of the foregoing, in each case, whether
written or oral.
     “Costs” is defined in Section 11.4.
     “Craig Barto Trust” means Craig C. Barto and Gisele M. Barto Living Trust,
dated April 5, 1991, a Seller.
     “Damage Estimate” is defined in Section 9.4(a).
     “Damages” is defined in Section 7.2(a).
     “Debt” means, with respect to any Person, (i) all indebtedness of such
Person, whether or not contingent, for borrowed money, (ii) all obligations for
cash overdrafts, (iii) all obligations of such Person for the deferred purchase
price of property or services, (iv) all obligations of such Person evidenced by
notes, bonds, debentures or other similar instruments, (v) all indebtedness
created or arising under any conditional sale or other title retention agreement
with respect to property acquired by such Person (even though the rights and
remedies of the seller or lender under such agreement in the event of default
are limited to repossession or sale of such property), (vi) all obligations,
contingent or otherwise, of such Person under acceptance, letter of credit or
similar facilities, (vii) all Debt of others referred to in clauses (i) through
(vi) for which such Person is potentially liable as guarantor or otherwise, and
(viii) all Debt referred to in clauses (i) through (vi) above secured by (or for
which the holder of such Debt has an existing right, contingent or otherwise, to
be secured by) any Lien on property (including accounts and contract rights)
owned by such Person, even though such Person has not assumed or become liable
for the payment of such Debt.
     “December Adjusted Book Value” is defined in Section 2.3(a)(i).
     “Deposit” means a deposit in the amount of $10,000,000 to be placed with
Escrow Agent by Alon concurrent with the execution of this Agreement, provided
the Deposit shall be increased to $25,000,000 if the Termination Date is
automatically extended to August 31, 2006.
     “Deposit Escrow Agreement” means the Deposit Escrow Agreement among the
Sellers, Alon and the Escrow Agent to be entered into concurrent with this
Agreement, in the form set forth in Exhibit A, relating to the Deposit.
     “Designated Employees” is defined in Section 6.10.
     “employee” means employees and other persons filling similar functions.
     “Employee Cash Bonuses” is defined in Section 6.10.
     “Environmental Laws” means the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. 9601 et seq., the Emergency Planning
and Community Right-to-Know Act of 1986, 42 U.S.C. 11001 et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. 6901 et seq., the Toxic Substances
Control Act, 15 U.S.C. 2601 et

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seq., the Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. 136 et
seq., the Clean Air Act, 42 U.S.C. 7401 et seq., the Clean Water Act (Federal
Water Pollution Control Act), 33 U.S.C. 1251 et seq., the Safe Drinking Water
Act, 42 U.S.C. 300f et seq., the Occupational Safety and Health Act, 29 U.S.C.
641 et seq., the Hazardous Materials Transportation Act, 49 U.S.C. 1801 et seq.,
the Oil Petroleum Act, 33, U.S.C. § 2701 et seq., the Toxic Substances Control
Act, 15 U.S.C. § 2601 et seq., the National Environmental Policy Act, 42, U.S.C.
§ 4321 et seq., the Rivers and Harbors Act of 1899, 33 U.S.C. § 401 et seq., the
Endangered Species Act, 16 U.S.C. § 1531 et seq., as any of the above statutes
have been or may be amended from time to time, all rules and regulations
promulgated pursuant to any of the above statutes, and any other foreign,
federal, state or local law, statute, ordinance, permit, order, decree, common
law, rule or regulation related to or governing Environmental Matters as the
same have been or may be amended from time to time.
     “Environmental Matters” means all matters involving pollution, wetlands and
other natural resources and protection of the environment.
     “Environmental Permit” means any Company Permit issued, granted or required
under Environmental Laws.
     “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended (or any successor thereto).
     “ERISA Affiliate” means any Person that, together with an Acquired Company,
would be considered a single employer within the meaning of Sections 414(b),
(c), (m) or (o) of the Code.
     “Escrow Agent” means Bank of New York or such other escrow agent selected
by the parties.
     “Estimated Closing Date Adjusted Book Value” is defined in
Section 2.3(a)(i).
     “Estimated Closing Date Financial Statements” is defined in Section 2.4(a).
     “Estimated Financial Statements” is defined in Section 4.5(a).
     “Exceptions” is defined in Section 6.18.
     “Exchange Act” means the Securities Exchange Act of 1934, as amended.
     “Excluded Claims” is defined in Section 7.3(c).
     “Excluded Company” means Point Wells, LLC, a Washington limited liability
company, which holds title to the Upper Bluff Property.
     “Financial Statements” is defined in Section 4.5(a).
     “First Holdback Termination Date” is defined in Section 7.1(a)(iv).
     “FTC” is defined in Section 6.2(a).

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     “GAAP” means United States generally accepted accounting principles as in
effect from time to time and applied on a consistent basis throughout the
periods involved.
     “Governmental Entity” means any foreign, domestic, federal, territorial,
state or local governmental authority, instrumentality, court, commission,
tribunal or organization or any regulatory, administrative or other agency, or
any political or other subdivision, department or branch of any of the foregoing
which has or claims to have competent jurisdiction over the relevant Persons or
its business, property, assets or operations.
     “Hazardous Materials” means any substance or material that is defined under
Environmental Laws as a “hazardous substance,” “regulated substance,”
“pollutant,” “contaminant,” “hazardous waste,” “extremely hazardous substance,”
“toxic substance,” or “hazardous material,” or that is otherwise defined in or
regulated under the Environmental Laws, including, without limitation, asbestos,
polychlorinated biphenyls, petroleum and petroleum products.
     “Holdback Amount” means an amount equal to $20,000,000.
     “Holdback Escrow Agreement” means the Holdback Escrow Agreement, among the
Sellers, Alon and the Escrow Agent to be entered into concurrent with the
Closing, substantially in the form set forth in Exhibit B, relating to the
Holdback Amount and the Continuing Holdback Amount.
     “HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.
     “HSR Approval” means expiration or termination of the waiting period under
the HSR Act.
     “Insurance Policies” is defined in Section 4.20(a).
     “Intellectual Property” means, collectively, patents, trademarks, trade
names, service marks, internet domain names and copyrights and applications for
registration of any of the foregoing, technology, know-how, computer software
programs or applications, and any other tangible or intangible intellectual
property or proprietary rights, whether or not subject to statutory registration
or protection.
     “Interim Statements” is defined in Section 4.5(a).
     “Jerrel Barto Trust” means the Jerrel C. Barto and Janice D. Barto Living
Trust, dated March 18, 1991, a Seller.
     “knowledge” means matters actually known by the persons set forth on
Schedule 1(a), with respect to the knowledge of the Sellers, and Schedule 1(b),
with respect to knowledge of Alon, or that would be reasonably expected to be
discovered after a due and careful inquiry by such persons. For purposes of this
Agreement, a “due and careful inquiry” means for any such person, reasonable
consultations with the immediate subordinates of such person, as to whom such
person reasonably believes would have actual knowledge of the matters
represented.

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     “Leased Real Property” is defined in Section 4.15(b).
     “Liability” means, with respect to any Person, any liability or obligation
of such Person of any kind, absolute or contingent, accrued or unaccrued,
liquidated or unliquidated, secured or unsecured, joint or several, due or to
become due, vested or unvested, executory, determined, determinable or
otherwise, whether or not the same is required to be accrued on the financial
statements of such Person.
     “Lien” or “Liens” means all liens (including judgment and mechanics’ liens,
regardless of whether liquidated), mortgages, assessments, security interests,
easements, claims, pledges, trusts (constructive or otherwise), option or other
charges, encumbrances, restrictions or other Contracts having the same effect as
any of the foregoing.
     “Lovejoy” means W. Scott Lovejoy III, a Seller.
     “Material Adverse Effect” means with respect to any Person one or more
events, occurrences or effects (whether or not covered by insurance) which,
individually or in the aggregate, result in a material adverse effect on (i) the
business, operations, assets, liabilities, condition (financial or otherwise),
or results of operations of such Person, taken as a whole with its Subsidiaries,
or (ii) the ability of such Person to timely perform its obligations hereunder
and consummate the transactions contemplated hereby.
     “Material Contracts” is defined in Section 4.4(b).
     “Milano” means Mark R. Milano, a Seller.
     “Most Recent Balance Sheet ” is defined in Section 4.5(a).
     “Most Recent Balance Sheet Date” shall mean the date of the Most Recent
Balance Sheet.
     “Option Agreements” means collectively those certain option agreements
between the Trusts and Lovejoy and Milano listed on Section 3.1(b) of the
Sellers’ Disclosure Schedule.
     “Option Purchase” is defined in the fourth recital of this Agreement.
     “Options” is defined in the second recital of this Agreement.
     “Order” is defined in Section 9.1(b).
     “Owned Real Property” is defined in Section 4.15(a).
     “Permitted Liens” is defined in Section 4.15(c).
     “Person” shall mean any individual, corporation, limited liability company,
partnership, trust, joint venture, association, organization or other entity or
group (which term shall include a “group” as such term is defined in
Section 13(d)(3) of the Exchange Act) or Governmental Entity.

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     “Potential Contributor” is defined in Section 7.6(b).
     “Prepayment Penalties” means all premium, penalties and other amounts
(other than principal and accrued but unpaid interest) payable to lenders in
connection with the prepayment or other retirement of any indebtedness of the
Acquired Companies in connection with the Closing.
     “Pro Rata Portion” for each Seller is as set forth in Schedule 2.3(c) under
the heading “Seller’s Pro Rata Portion.”
     “Purchase Price” means the Closing Payment as adjusted by any post-closing
adjustment pursuant to Section 2.4.
     “Qualified Termination” is defined in Section 2.1(b).
     “Real Property” means, collectively, the Owned Real Property and the Leased
Real Property.
     “Relative” of a person means such person’s spouse, parents, children,
siblings, mothers and fathers-in-law, sons and daughters-in-law and brothers and
sisters-in-law, and in the case of the Trusts, such Relatives of the trustees of
such Trusts.
     “Release” means any releasing, spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, disposing, or
dumping into the soil, surface waters, groundwaters, land, stream sediments,
surface or subsurface strata, ambient air, or any other environmental medium.
     “Released Parties” is defined in Section 6.13(a).
     “Restrictive Covenants” is defined in Section 6.8(b).
     “Revolving Credit Agreement” means the Credit Agreement, as amended and
restated as of July 26, 2005, among the Company, Bank of America, N.A., as
administrative agent, and the lending parties thereto.
     “Securities Act” means the Securities Act of 1933, as amended.
     “Seller Indemnified Parties” is defined in Section 7.2(b).
     “Sellers” means, collectively, the Craig Barto Trust, the Jerrel Barto
Trust, Lovejoy and Milano.
     “Sellers’ Disclosure Schedule” is defined in the introductory paragraph of
Article III.
     “Sellers’ Representative” is defined in Section 6.12(a).
     “Shares” is defined in the first recital of this Agreement.
     “Stock Purchase” is defined in the third recital of this Agreement.

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     “Stockholder Agreement” means the Shareholder Agreement for Paramount
Petroleum Corporation, dated January 5, 1996, among the Company and each of the
Sellers, as amended by the amendment dated May 20, 1998.
     “Straddle Periods” is defined in Section 8.1(a)(ii).
     “Subordinated Debt” means all Debt owed to the Sellers by the Company under
the four Promissory Notes, issued to the Sellers by the Company, dated July 15,
2005, each in the principal amount of $1,000,000.
     “Subsidiary” or “Subsidiaries” means, with respect to any Person, any
corporation, limited liability company, partnership, joint venture or other
entity of which such Person (either alone or through or together with any other
subsidiary), owns, directly or indirectly, securities or other interests (A) the
holders of which are generally entitled to at least 50% of the vote for the
election of the board of directors or other similar governing body of such
corporation or other legal entity, or otherwise having the power to direct the
business and policies of that Person, or (B) representing at least 50% of the
outstanding Capital Stock of such corporation or other legal entity.
     “Survey” is defined in Section 6.18.
     “Tail Policy” is defined in Section 6.9(c).
     “Tax” or “Taxes” means (A) all federal, state, local, foreign, and other
net income, gross income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, license, lease, service, service use, withholding, payroll,
employment, excise, severance, stamp, occupation, premium, property, windfall
profits, customs duties or other taxes, fees, assessments or charges of any kind
whatsoever, together with any interest and any penalties, additions to tax or
additional amounts with respect thereto, (B) any Liability for payment of
amounts described in clause (A) whether as a result of transferee Liability,
joint and several Liability for being a member of an affiliated, consolidated,
combined or unitary group for any period, or otherwise through operation of law,
and (C) any Liability for the payment of amounts described in clauses (A) or
(B) as a result of any tax sharing, tax indemnity or tax allocation agreement or
any other express or implied Contract to indemnify any other Person.
     “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.
     “Termination Date” means June 30, 2006, provided, however, the Termination
Date (i) shall be automatically extended until August 31, 2006, if on June 30,
2006, the condition to Closing set forth in Section 9.1(a) shall not have been
satisfied, or (ii) may be extended as provided in Section 9.4.
     “Term Loan Agreement” means the Term Loan Agreement, dated as of
December 22, 2003, and amended and restated as of March 1, 2005, among the
Company, Wells Fargo Bank Northwest, National Association, acting in its
capacity as administrative agent and the financial institutions referenced
therein.

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     “Third Party Acquisition” is defined in Section 6.7(b).
     “Third Party Claim” is defined in Section 7.5.
     “Title Commitment” is defined in Section 6.18.
     “Title Company” is defined in Section 6.18.
     “Title Objections” is defined in Section 6.18.
     “Title Policies” is defined in Section 6.18.
     “Transaction Documents” is defined in Section 3.2(a).
     “Trusts” means the Craig Barto Trust and the Jerrel Barto Trust,
collectively.
     “Unrelated Accounting Firm” is defined in Section 2.5.
     “Upper Bluff Property” means the approximately 35 acre “Upper Bluff” land
holdings of the Excluded Company adjacent to Paramount of Washington, Inc.’s
Richmond Beach facility.
     “WARN Act ” is defined in Section 6.6(d).
ARTICLE II
STOCK PURCHASE
     2.1 Deposit
          (a) Concurrent with the execution of this Agreement the Sellers, Alon
and the Escrow Agent shall enter into the Deposit Escrow Agreement. Within one
Business Day after execution of this Agreement, Alon shall deposit with the
Escrow Agent $10,000,000 by wire transfer of immediately available funds. If the
Termination Date is automatically extended to August 31, 2006, within one
Business Day after June 30, 2006, Alon shall deposit a further $15,000,000, with
the Escrow Agent. The Escrow Agent shall deposit the Deposit into an interest
bearing account as set forth in the Deposit Escrow Agreement. If this Agreement
is terminated for any reason, except as set forth in Section 2.1(b), Alon shall
be entitled to receive and retain the Deposit.
          (b) The Sellers shall be entitled to receive and retain the Deposit
if:
     (i) the Sellers terminate this Agreement pursuant to Section 10.3(a)(i) or
(ii), or Alon terminates this Agreement pursuant to Section 10.4(a)(i) or (ii),
and in each case the condition to Closing set forth in Section 9.1(a) shall not
have been satisfied; or
     (ii) the Sellers terminate this Agreement pursuant to Section 10.3(b)
     (any termination described in clause (i) or (ii) above being a “Qualified
Termination”).

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          (c) If the Closing does not occur for any reason, all interest or
other returns earned on the Deposit shall be paid to Alon. If the Closing does
not occur as a result of a Qualified Termination, the Sellers and Alon agree
that it would be impractical and extremely difficult to estimate the damages
that the Sellers may suffer; however the Sellers and Alon agree that the Deposit
is a reasonable estimate of the minimum total damages that the Sellers would
suffer in the event the Closing does not occur, provided however, that the
amount of the Deposit shall not limit the Seller’s recovery in the event the
Closing does not occur as a result of a Qualified Termination, and, in addition
to retaining the Deposit, in the event that the Closing does not occur as a
result of a Qualified Termination, the Sellers shall be entitled to seek any
other available remedy, whether at law or in equity. The payment of the Deposit
as set forth herein is not intended as a forfeiture or penalty within the
meaning of applicable law.
     2.2 Sale and Delivery. At the Closing, on the terms and subject to the
conditions set forth herein, the Sellers shall sell and deliver to Alon the
Shares, free and clear of all Liens, and Alon shall purchase and accept the
Shares from the Sellers.
     2.3 Purchase Price.
          (a) At the Closing, Alon shall:
          (i) pay to the Sellers by wire transfer of immediately available funds
$307,000,000 less (A) the Deposit, plus (B) Sellers’ good faith estimate of the
value of the current assets (with the inventory component thereof being an
estimate of actual inventory calculated at fair market value as of the Closing
Date, as provided in Schedule 2.4(b)) less current liabilities (including
current portions of long-term debt and borrowings under the Revolving Credit
Agreement), long-term indebtedness and minority interest of the Acquired
Companies on the Closing Date (the “Estimated Closing Date Adjusted Book
Value”), less (C) the value of the current assets (with inventory calculated at
fair market value as of December 31, 2005, as provided in Schedule 2.4(b)) less
current liabilities (including current portions of long-term debt and borrowings
under the Revolving Credit Agreement), long-term indebtedness and minority
interest of the Acquired Companies on December 31, 2005, as set forth on
Schedule 2.3(a) (the “December Adjusted Book Value”), less (D) the Holdback
Amount, less (E) the amount, if any, by which $7,400,000 exceeds the amount of
cash actually received by the Acquired Companies prior to the Closing in respect
of the income and property insurance claim for damage to Heater H 805 (the
“Heater H805 Claim”), less (F) the amount, if any, by which $27,500,000 exceeds
the amount of cash actually received by the Acquired Companies prior to Closing
as a result of the sale of the Acquired Companies’ 75% interest in Tidelands Oil
Production Corporation, and less (G) all Prepayment Penalties;
          (ii) direct the Escrow Agent (A) to pay the Sellers the Deposit and
(B) to pay all interest and returns thereon to Alon; and
          (iii) deposit the Holdback Amount with the Escrow Agent by wire
transfer of immediately available funds
          (the amounts in clause (i), the “Cash Payment", and with the amounts
in (ii) and (iii),

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collectively, the “Closing Payment”). If the Purchase Price (and the Cash
Payment) is reduced pursuant to subclause (E) of Section 2.3(a)(i), the parties
shall cause the Acquired Companies to assign to the Sellers at the Closing, in
their Pro Rata Portion, without warranty or recourse of any kind or character,
all right, title and interest of the Acquired Companies in and to the Heater
H805 Claim.
          The adjustment to the Cash Payment shall be calculated consistent with
the hypothetical calculation of the Closing Date Cash Payment set forth in
Schedule 2.3(b) and its supporting schedules (the “Hypothetical Calculation”).
The Hypothetical Calculation has been prepared for illustrative purposes only
and does not purport to be a forecast or otherwise indicative of the actual
anticipated Cash Payment.
          For the avoidance of doubt, the parties intend that the Sellers shall
bear the cost of the Employee Cash Bonuses and the Company Transaction Expenses,
and that such expenses shall be paid on or before the Closing Date so that
deductions therefor will be allocated to the pre-Closing Straddle Period for
purposes of Section 8.1(c). The parties further agree that the Purchase Price
shall not be affected in any manner, either directly or indirectly, or through
the adjustment to the Purchase Price contemplated by Section 2.4 as a result of
the transactions contemplated by Section 2.3(d).
          (b) Concurrent with the Closing, Lovejoy and Milano will assign to the
Trusts the Option Agreements, and the Trusts shall immediately thereafter cancel
the Option Agreements and the Options. The Sellers agree that a portion of the
Pro Rata Portion of the Purchase Price to be paid to Lovejoy and Milano is a
payment on behalf of the Trusts for the Option Purchase.
          (c) At the Closing, each Seller’s Pro Rata Portion of the Cash
Payment, as set forth on Schedule 2.3(c), shall be delivered to such Seller by
wire transfer. Each Seller shall designate in writing to Alon and the Escrow
Agent at least three days prior to the Closing the account to which such wire
transfer payment shall be made.
     (d) (i) The provisions of Sections 2.3(d)(ii) though (v) below shall not be
effective unless and until (i) any consent required for the relevant Acquired
Company to enter into an agreement for the sale of the 1031 Assets and to
consummate such a sale, as contemplated by this Agreement, that is required in
order to avoid a breach of or default or event of default under the Term Loan
Agreement has been obtained in accordance with the terms of the Term Loan
Agreement, and (ii) any consent required for the relevant Acquired Company to
enter into an agreement for the sale of the 1031 Assets and to consummate such a
sale, as contemplated by this Agreement, that is required in order to avoid a
breach of or default or event of default under the Revolving Credit Agreement
has been obtained in accordance with the terms of the Revolving Credit
Agreement. For the avoidance of doubt, the parties agree that the Sellers are
not creating any duty or obligation of any sort whatsoever to cause any Acquired
Company to enter into any agreement to sell the 1031 Assets to Alon, unless and
until all consents described in the preceding sentence have been obtained at
which time the provisions set forth in Sections 2.3(d)(ii) though (v) shall be
effective, but not otherwise.

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     (ii) Provided that the consents described in Section 2.3(d) shall have been
obtained, at least two Business Days prior to the Closing Date, at least one
Business Day prior to the Closing Date, Alon shall direct its qualified
intermediary to purchase from the Acquired Companies the 1031 Assets at the
purchase prices specified in Schedule 2.3(d). On the date the purchase of the
1031 Assets is consummated (the "Asset Purchase Date"), (A) Alon shall direct
its qualified intermediary to pay to the Acquired Company set forth in such
schedule as the owner of the 1031 Asset to be purchased, the purchase price
specified in Schedule 2.3(d) for such asset by wire transfer of immediately
available funds (and in the event that its qualified intermediary shall have
insufficient funds for such purposes, Alon shall itself concurrently pay the
deficiency), and (B) the applicable Acquired Company shall transfer all of its
right, title and interest in, to and under the 1031 Asset being purchased to
Alon’s qualified intermediary. The selling Acquired Company shall bear all Taxes
attributed to the sale of the 1031 Asset under this Section 2.3(d) and Alon
shall bear all filing fees and recording costs and other expenses attributable
to or arising from the purchase and sale of the 1031 Assets. The Sellers and the
Acquired Companies shall comply with all reasonable requests of Alon to assist
Alon in its efforts to qualify the purchase of the 1031 Assets as an exchange
under Section 1031 of the Code.
     (iii) If the Closing Date does not occur within three Business Days
following the Asset Purchase Date, the purchase and sale of the 1031 Assets
under this Section 2.3(d) shall be rescinded and (A) title to the purchased 1031
Assets shall revert to the Acquired Companies, and (B) the purchase price for
the 1031 Assets shall be refunded to Alon. Alon shall bear all costs,
liabilities and expenses attributable to rescinding the 1031 Asset sale, and the
Acquired Companies shall be entitled to recover any such costs, liabilities and
expenses by offset against the purchase price refunded to Alon.
     (iv) The consummation of the transactions described above in this Section
2.3(d) and the effect thereof on the assets and conditions of the Acquired
Companies shall in no event be deemed to violate any representation, warranty,
covenant or other obligation of the Sellers under this Agreement.
     (v) The Sellers shall cause the relevant Acquired Company to take all
necessary corporate or limited liability company action on the part of such
Acquired Company to approve the execution, delivery and performance by the
relevant Acquired Company under any agreement conveying the 1031 Asset to Alon
and to duly execute and deliver such agreement and to perform all obligations
thereunder.
     2.4 Adjustment to the Closing Payment.
          (a) At least five Business Days prior to the Closing Date, the Sellers
shall deliver to Alon (i) the Sellers’ good faith estimate of the consolidated
balance sheet of the Acquired Companies as of the Closing Date (the “Estimated
Closing Date Financial Statements”); and (ii) the Estimated Closing Date
Adjusted Book Value.

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          (b) Within 60 days following the Closing, Alon shall prepare and
deliver to the Sellers’ Representative:
          (i) a consolidated balance sheet of the Acquired Companies as of the
Closing Date (the “Closing Date Financial Statements”); and
          (ii) Alon’s calculation of the book value of the current assets
(except inventory shall be calculated at fair market value as of the Closing
Date), less current liabilities (including current portions of long-term debt
and borrowings under the Revolving Credit Agreement), long-term indebtedness and
minority interest of the Acquired Companies as shown on the Closing Date
Financial Statements (the “Closing Date Adjusted Book Value”).
     Except (i) as expressly provided herein, and (ii) in each case, inventory
shall be valued at fair market value as of the Closing Date (as provided in
Schedule 2.4(b)), the Estimated Closing Date Financial Statements, the Closing
Date Financial Statements, the Estimated Closing Date Adjusted Book Value and
the Closing Date Adjusted Book Value shall be prepared (A) in conformity with
GAAP, (B) consistent with the December Adjusted Book Value and the methodology
used by the Company in preparing the December Adjusted Book Value and the
Hypothetical Calculation and (C) consistent with the practices and policies of
the Company in preparing its audited consolidated financial statements for the
fiscal year ended December 31, 2005, provided that such consolidated financial
statements were prepared in conformity with GAAP.
     For purposes of calculating the Estimated Closing Date Adjusted Book Value
and the Closing Date Adjusted Book Value, such calculation shall not take into
account (i) the impact of any purchase accounting adjustments relating to Alon’s
acquisition of the Acquired Companies, including any write-up or write-down of
assets or liabilities resulting from such purchase accounting, (ii) any
reduction in indebtedness of the Acquired Companies that results from the
retirement thereof with funds provided by Alon pursuant to Section 6.19 and
(iii) the impact of the transactions contemplated by Section 2.3(d), (e.g., the
current assets of the Acquired Companies shall not be increased by the purchase
price received by any Acquired Company or decreased by any Taxes paid by any
Acquired Company and the current liabilities of the Acquired Companies will not
be increased for any accrual for Taxes payable by any Acquired Company, in each
case as a result of the transactions contemplated by Section 2.3(d)).
          (c) Within 45 days following Alon’s delivery to the Sellers’
Representative of its calculation of the Closing Date Financial Statements and
the Closing Date Adjusted Book Value, the Sellers’ Representative shall deliver
to Alon a notice of objection signed by the Sellers’ Representative (an
“Adjusted Book Value Objection Notice”) or a notice of acceptance signed by the
Sellers Representative (an “Adjusted Book Value Acceptance Notice”) with respect
to Alon’s calculation of the Closing Date Adjusted Book Value. Alon shall
provide the Sellers and their accountant and other representatives, upon
reasonable advance notice, access to such books and records of the Acquired
Companies relating to the calculation of the Closing Date Financial Statements
and the Closing Date Adjusted Book Value as may be reasonably requested by the
Sellers’ Representative.

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          (d) Alon’s calculation of the Closing Date Adjusted Book Value shall
be final and binding on the parties if an Adjusted Book Value Acceptance Notice
is delivered to Alon or if no Adjusted Book Value Objection Notice is delivered
to Alon within the 45-day period required by Section 2.4(c). Any Adjusted Book
Value Objection Notice shall specify the items disputed, shall describe the
reasons for the objection thereof, shall state the amount in dispute and shall
state the Sellers’ calculation of the Closing Date Adjusted Book Value. If an
Adjusted Book Value Objection Notice is delivered, the potential dispute shall
be resolved as set forth in Section 2.5.
          (e) If the Sellers’ Representative delivers to Alon an Adjusted Book
Value Acceptance Notice or the Sellers’ Representative fails to deliver an
Adjusted Book Value Objection Notice within the 45-day period required by
Section 2.4(c), (i) an amount equal to the Closing Date Adjusted Book Value
minus the Estimated Closing Date Adjusted Book Value shall be paid (A) by Alon
to the Sellers, in their Pro Rata Portion, if such amount is positive, and
(B) by the Sellers to Alon, if such amount is negative, within five Business
Days after the delivery of such Adjusted Book Value Acceptance Notice or the
expiration of such 45-day period, as the case may be. Alternatively, if the
Sellers’ Representative delivers to Alon an Adjusted Book Value Objection
Notice, within five Business Days after such delivery, the owing parties shall
pay the undisputed portion, if any, of the amount owed and, within five Business
Days after the resolution of any dispute by the parties or the Unrelated
Accounting Firm relating to the Adjusted Book Value Objection Notice, the owing
parties shall pay the remainder owed, if any. Any payment pursuant to this
Section 2.4 shall be made in immediately available funds.
     2.5 Dispute Resolution of Calculation of Purchase Price. If an Adjusted
Book Value Objection Notice is given, the Sellers’ Representative and Alon shall
consult with each other with respect to the objection. If Alon and the Sellers’
Representative are unable to reach agreement within 15 days after an Objection
Notice has been given, any unresolved disputed items shall be promptly referred
to the Los Angeles office of Deloitte and Touche USA LLP, provided however, if
such firm is unavailable or if either of the parties has used the services of
Deloitte and Touche USA LLP (or its Affiliates) at any time in the twelve month
period prior to the date the Adjusted Book Value Objection Notice is given, then
the unresolved items shall be promptly referred to such other nationally
recognized independent accounting firm mutually agreed to by Alon and the
Sellers’ Representative (Deloitte and Touche USA LLP, or such other firm, the
“Unrelated Accounting Firm”). The Unrelated Accounting Firm shall be directed to
render a written report on the unresolved disputed issues as promptly as
practicable (but in no event later than 45 days following submission of the
matter to the Unrelated Accounting Firm) and to resolve only those issues of
dispute set forth in the Adjusted Book Value Objection Notice. The resolution of
the dispute by the Unrelated Accounting Firm shall be final and binding on the
parties for purposes of determining the amounts owed by the parties hereunder
with respect to such dispute. The percentage of the expenses of the Unrelated
Accounting Firm that shall be borne by the Sellers on the one hand (in their Pro
Rata Portion), and Alon on the other hand, shall be the same as the percentage
of the amount in dispute that the Unrelated Accounting Firm shall determine the
other party is entitled to receive.

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     2.6 Closing.
          (a) The closing (the “Closing”) of the transactions contemplated by
this Agreement shall take place at the offices of Gibson, Dunn & Crutcher LLP,
at 4 Park Plaza, Irvine, California, at 10:00 a.m. (local time) on the second
Business Day after the last of the conditions to Closing set forth in
Sections 9.1, 9.2 and 9.3 have been satisfied or waived by the party or parties
entitled to waive the same (excluding conditions that by their nature cannot be
satisfied until the Closing, but subject to satisfaction or waiver of those
conditions on the Closing Date) or such other date and time as to which Alon and
the Sellers’ Representative may agree in writing (the “Closing Date”).
          (b) At the Closing:
          (i) each Seller shall deliver, or cause to be delivered, to Alon,
against payment by Alon to such Seller of such Seller’s Pro Rata Portion of the
Cash Payment:
          (A) the stock certificate or certificates representing the Shares
owned by such Seller set forth on Section 3.1(a) of the Sellers’ Disclosure
Schedule, duly endorsed for transfer, or accompanied by duly executed
assignments separate from the certificate, and any other documentation
reasonably requested by Alon to transfer the Shares in the stock records of the
Company, transferring to Alon full and exclusive ownership of the Shares, free
and clear of all Liens; and
          (B) all other documents, certificates and other instruments required
to be delivered, or caused to be delivered, by such Seller pursuant hereto.
          (ii) Lovejoy and Milano shall deliver to the Craig Barto Trust and the
Jerrel Barto Trust the Option Agreements accompanied by duly executed
assignments to the Trusts and the Trusts shall cancel the Option Agreements and
the Options, and provide Alon any documentation reasonably requested by Alon to
evidence the Option Purchase and Option cancellation.
          (iii) Alon shall deliver, or cause to be delivered, to each Seller,
against delivery of the certificates representing the Shares of such Seller
(properly endorsed for transfer or accompanied by proper assignments):
          (A) the Seller’s Pro Rata Portion of the Cash Payment, as set forth in
Schedule 2.3(c); and
          (B) all of the documents, certificates and other instruments required
to be delivered, or caused to be delivered, by Alon pursuant hereto.
          (iv) Alon shall deliver the Holdback Amount to the Escrow Agent:
          (A) the Escrow Agent shall deliver to each Seller, such Seller’s Pro
Rata Portion of the Deposit, as set forth in Schedule 2.3(c); and

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          (B) to Alon, all interest and other returns on the Deposit.
          (c) On the Closing Date, Alon shall withhold the Holdback Amount from
the Closing Payment and deposit the Holdback Amount with the Escrow Agent. The
Holdback Amount shall be held by the Escrow Agent and paid out pursuant to the
terms and conditions of the Holdback Escrow Agreement to be entered into by
Alon, the Sellers and the Escrow Agent on the Closing Date, substantially in the
form attached hereto as Exhibit B. The Holdback Amount (together with any
interest or other returns thereon) shall be used to satisfy any claims for
indemnification by the Alon Indemnified Parties determined to be due and payable
pursuant to the Holdback Escrow Agreement and Article VII.
          (d) Promptly following the First Holdback Termination Date, Alon and
the Sellers’ Representative shall give joint written instructions to the Escrow
Agent to (i) retain $10,000,000 (plus any portion of the Holdback Amount subject
to a good faith pending claim for indemnification (the “Claimed Amount”)), or,
if less, any remaining portion of the Holdback Amount (the “Continuing Holdback
Amount”) and (ii) pay and distribute to the Sellers, in accordance with each
Seller’s Pro Rata Portion or as otherwise instructed in writing by the Sellers’
Representative to address circumstances under which a Seller was deemed to be
severally liable in accordance with the terms of this Agreement, any remaining
portion of the Holdback Amount, plus any interest or other return accrued
thereon through the First Holdback Termination Date.
          (e) On the third anniversary of the Closing Date, Alon and the
Sellers’ Representative shall give joint written instructions to the Escrow
Agent to (A) pay and distribute to the Sellers (in accordance with each Seller’s
Pro Rata Portion or as otherwise instructed in writing by the Sellers’
Representative to address circumstances under which a Seller was deemed to be
severally liable in accordance with the terms of this Agreement) the amount of
the Continuing Holdback Amount (together with any interest or other returns
thereon) still being held in escrow pursuant to the Holdback Escrow Agreement,
less the Claimed Amount which is unresolved as of such date, if any, and
(B) retain an amount equal to the Claimed Amount which is unresolved as of such
date, if any, until such amount is released pursuant to the Holdback Escrow
Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
     Subject to the exceptions set forth in the disclosure schedule delivered by
the Sellers to Alon concurrent herewith (the “Sellers’ Disclosure Schedule”),
each of the Sellers, severally but not jointly, represents and warrants to Alon,
as follows:
     3.1 Ownership of the Shares and Options.
          (a) Such Seller is the sole record and beneficial owner of the shares
of Capital Stock of the Company set forth next to such Seller’s name in
Section 3.1(a) of the Sellers’ Disclosure Schedule, free and clear of all Liens
(other than Liens created pursuant to: (i) the Option Agreements, in the case of
the Trusts, (ii) the Stockholder Agreement, (iii) the Bank Pledge, and (iv) the
four Agreements of Subordination and Assignment, dated as of December 9,

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2002, each between a Seller and the Company; provided that each agreement listed
in (i) through (iv) will be terminated on or before the Closing, subject in the
case of (iii) and (iv) to compliance by Alon with its obligations set forth in
Section 6.19). Such shares of Capital Stock of the Company are duly registered
in the name of such Seller on the stock register of the Company. Upon delivery
to Alon at the Closing of the certificates representing such Seller’s Shares,
Alon will own such Shares, free and clear of any Liens (other than Liens created
or arising from actions of Alon).
          (b) The Option Agreements to which such Seller is a party are set
forth in Section 3.1(b) of the Sellers’ Disclosure Schedule and are valid and
binding and in full force and effect and are enforceable by such Seller in
accordance with their terms. True, complete and accurate copies of the Option
Agreements have been provided to Alon.
          (c) The Shares set forth next to such Seller’s name in Section 3.1(a)
of the Sellers’ Disclosure Schedule and such Sellers’ rights under the Option
Agreements to purchase Shares, if any, represent such Seller’s sole and entire
interest in the Capital Stock of the Company.
          (d) Except for the Stockholder Agreement and this Agreement, the
Shares are not subject to any voting trust or stockholder agreement or other
similar Contract, including any such Contract restricting or otherwise relating
to the voting rights or disposition of the Shares. A true, complete and accurate
copy of Stockholder Agreement has been provided to Alon.
     3.2 Authorization, Validity, and Effect of Agreements.
          (a) Such Seller has all requisite power and authority to execute and
deliver this Agreement and all agreements and documents contemplated herein
(collectively, the “Transaction Documents”) to be executed and delivered by such
Seller and to consummate the transactions contemplated hereby and thereby. This
Agreement has been duly executed and delivered by such Seller and constitutes,
and the Transaction Documents to be executed by such Seller (when executed and
delivered pursuant hereto) will constitute, the valid and legally binding
obligations of such Seller, enforceable in accordance with their respective
terms, subject to applicable bankruptcy, insolvency, moratorium, or other
similar laws relating to creditors’ rights and general principles of equity,
whether at equity or law.
          (b) If such Seller is an individual, such Seller has delivered to Alon
the consent of such Seller’s spouse (if any) consenting to the execution of this
Agreement and the consummation of the transactions contemplated herein and such
consent has not been revoked.
     3.3 No Violations. Neither the execution and delivery by such Seller of
this Agreement, nor the other Transaction Documents, nor the consummation by
such Seller of the transactions contemplated hereby or thereby in accordance
with the terms hereof or thereof, will:
     (i) conflict with or result in a breach of any provisions of the trust
documents of such Seller, if any; or
     (ii) violate any judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to such Seller; or

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     (iii) violate, or conflict with, or result in a material breach of any
provision of, or constitute a material default (or an event which, with notice
or lapse of time or both, would constitute a material breach or default) under,
any of the terms, conditions or provisions of any material Contract to which
such Seller is a party or by which its assets are bound, including the
Stockholder Agreement.
     Section 3.4 Trusts. If such Seller is a Trust:
     (i) Section 3.4 of the Sellers’ Disclosure Schedule sets forth the legal
name of such Seller, the name of all of the trustee(s) of the Trust and the
state or other jurisdiction which governs the trustee’s duties with respect to
the Trust.
     (ii) There has not been any challenge to (A) the authority, appointment or
capacity of the trustee over the Trust or (B) the validity of the Trust.
     (iii) True, complete and accurate copies of the relevant provisions
relating to the trust powers of each trustee of the Trust, and all applicable
amendments, supplements or modifications thereto have been provided or made
available to Alon.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
AS TO THE COMPANY AND ITS SUBSIDIARIES
     Subject to the exceptions set forth in the Sellers’ Disclosure Schedule,
the Sellers, jointly and severally, represent and warrant to Alon, as follows:
     4.1 Existence; Good Standing.
          (a) The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware.
     (b) The Company is duly licensed or qualified to do business and is in good
standing under the laws of each state in the United States in which the
character of the properties owned or leased by it therein or in which the
transaction of its business makes such qualification or licensing necessary,
except in such jurisdictions where the failure to be so duly qualified and
licensed or in good standing has not had and could not reasonably be expected to
have a Material Adverse Effect on the Company. The Company has all requisite
corporate power and authority to own, operate and lease its properties and
assets and carry on its business as now conducted. True, complete and accurate
copies of the certificate of incorporation and bylaws of the Company have been
provided to Alon.
     4.2 Capitalization.
          (a) The authorized Capital Stock of the Company consists of 1,000
shares of common stock, par value $0.01 per share (“Company Common Stock”) and
100,000 shares of preferred stock, par value $1.00 per share (“Company Preferred
Stock”), of which 1,000 shares of Company Common Stock, 30,000 shares of Company
Preferred Stock designated as “Senior Preferred Stock,” of which 10,000 shares
are designated as “Series A,” 10,000 shares are

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designated as “Series B” and 10,000 shares are designated as “Series C,” and
20,500 shares of non-voting Company Preferred Stock designated as “Junior
Preferred Stock” are issued and outstanding and held of record by the Sellers in
the amounts set forth in Section 3.1(a) of the Sellers’ Disclosure Schedule. The
Option Agreements provide Lovejoy and Milano the right to purchase from the
Craig Barto Trust and the Jerrel Barto Trust (i) an aggregate of 10,000 shares
of Series B Senior Preferred Stock and (ii) an aggregate of 10,000 shares of
Series C Senior Preferred Stock. All of the outstanding shares of Company Common
Stock and Company Preferred Stock have been duly authorized and validly issued,
are fully paid and nonassessable, have been issued in compliance with all
applicable federal and state securities laws, and are not subject to any
preemptive rights or rights of first refusal created by statute, the charter
documents of the Company or any Contract to which the Company or any of the
Sellers is a party or by which it is bound, except for (i) the Stockholder
Agreement, which will be terminated on the Closing Date, and (ii) the Option
Agreements, which will be cancelled immediately after the Option Purchase.
          (b) Except for the Options, there are no outstanding options,
warrants, calls, subscriptions, convertible securities, convertible debt or
other rights or other Contracts which obligate the Company to issue, or the
Company or any of the Sellers to transfer or sell, any Capital Stock of the
Company or any securities exercisable or exchangeable for, or convertible into,
such Capital Stock.
          (c) The Company has no outstanding bonds, debentures, notes or other
obligations the holders of which have the right to vote (or which are
convertible into or exercisable or exchangeable for securities having the right
to vote) with its stockholders on any matter. Except as set forth in
Section 4.2(c) of the Sellers’ Disclosure Schedule, there are no obligations,
contingent or otherwise, of the Company to repurchase, redeem or otherwise
acquire any of the Capital Stock of the Company or to make any investment (in
the form of a loan, capital contribution or otherwise) in any Person.
          (d) The Company is not in material default or breach (and no event has
occurred which with notice or lapse of time or both, would constitute a material
breach or default) of any terms or provision of its articles of incorporation or
by-laws.
     4.3 Acquired Subsidiaries and Other Interests.
          (a) Section 4.3(a) of the Sellers’ Disclosure Schedule sets forth a
list of all of the Company’s directly and indirectly owned Subsidiaries,
together with (i) the jurisdiction of organization, and (ii) for each Acquired
Subsidiary, (A) that is a corporation, the amount of its authorized Capital
Stock, the amount of its outstanding Capital Stock and the owners of its
outstanding Capital Stock, (B) that is a limited liability company, the names
and interests of the members thereof, and (C) that is a partnership, the names
and interests of the partners thereof. Except as set forth in Section 4.3(a) of
the Sellers’ Disclosure Schedule, the Company owns directly or indirectly all of
the outstanding Capital Stock of each of the Acquired Subsidiaries, and the
Company’s interests are held free and clear of all Liens. Except as set forth in
Section 4.3(a) of the Sellers’ Disclosure Schedule, the Company does not hold,
directly or indirectly, any Capital Stock of any other Person.

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          (b) Each of the Acquired Subsidiaries is a corporation duly
incorporated, or a limited liability company or partnership duly formed, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or formation. Each of the Acquired Subsidiaries is duly licensed
or qualified to do business and is in good standing under the laws of each state
in the United States in which the character of the properties owned or leased by
it therein or in which the transaction of its business makes such qualification
or licensing necessary, except in such jurisdictions where the failure by any
Acquired Subsidiary to be so duly qualified and licensed or in good standing has
not had and could not reasonably be expected to have a Material Adverse Effect
on such Acquired Subsidiaries. Each of the Acquired Subsidiaries has all
requisite corporate, limited liability company or partnership power and
authority to own, operate and lease its properties and assets and carry on its
business as now conducted.
          (c) Except as set forth in Section 4.3(c) of the Sellers’ Disclosure
Schedule, (i) all of the outstanding Capital Stock of each Acquired Subsidiary
is duly authorized, validly issued, fully paid and nonassessable, and (ii) there
are no outstanding options, warrants, calls, subscriptions, convertible
securities, convertible debt or other rights or other Contracts which obligate
any Acquired Company to issue, transfer or sell any Capital Stock of such
Acquired Subsidiary or any securities exercisable or exchangeable for, or
convertible into, any Capital Stock.
          (d) None of the Acquired Subsidiaries has any outstanding bonds,
debentures, notes or other obligations the holders of which have the right to
vote (or which are convertible into or exercisable or exchangeable for
securities having the right to vote) with its stockholders, members or partners
on any matter. Except as set forth in Section 4.3(d) of the Sellers’ Disclosure
Schedule, there are no obligations, contingent or otherwise, of the Company or
any of its Subsidiaries to repurchase, redeem or otherwise acquire any of the
Capital Stock of the Acquired Subsidiaries or to make any investment (in the
form of a loan, capital contribution or otherwise) in any Person.
          (e) None of the Acquired Subsidiaries is in material default or breach
(and no event has occurred which with notice or lapse of time or both, would
constitute a material breach or default) of any terms or provision of its
articles of incorporation or by-laws (or other similar constituent documents).
True, complete and accurate copies of the certificate of incorporation and
bylaws of each Acquired Subsidiary that is a corporation and similar constituent
documents of each Acquired Subsidiary that is a limited liability company or
partnership have been provided to Alon.
     4.4 Material Contracts; No Violation.
          (a) Except as set forth in Section 4.4(a) of the Sellers’ Disclosure
Schedule, Contracts permitted to be entered into after the date hereof under
Section 6.1(k) or Contracts entered into in connection with the transactions
contemplated in Section 2.3(d), none of the Acquired Companies is a party to nor
are any of their respective assets bound by any Contract:
               (i) that restricts in any material manner any Acquired Company
from carrying on its business as currently conducted;

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               (ii) to provide funds to or to make any investment in any other
Person (in the form of a loan, capital contribution or otherwise);
               (iii) with respect to obligations as guarantor, surety,
co-signer, endorser, co-maker, indemnitor or otherwise in respect of the
obligation of any other Person;
               (iv) for any line of credit, standby financing, revolving credit,
term credit or other Contract relating to Debt;
               (v) with advisors, independent contractors or consultants that
(A) are not cancelable by the Acquired Company on no more than 60 days’ notice
and without liability, penalty or premium or (B) require payments of more than
$200,000 in any twelve-month period;
               (vi) relating to the supply of products to any Acquired Company
or for the sale or distribution of products by or for any Acquired Company,
other than Contracts which (A) are for a term of no more than 90 days or are
cancelable by the Acquired Company on no more than 90 days’ notice and without
liability, penalty or premium or (B) require payments of no more than $500,000
in any twelve month period;
               (vii) with any Governmental Entity or involving the provision of
products to a Governmental Entity which require payments of more than $250,000
in any twelve-month period;
               (viii) with any employee of any of the Acquired Companies
(including any employment, severance or change in control agreement) which
provide for annual compensation, severance or other payments of more than
$100,000;
               (ix) for the lease or sublease of Real Property under which
(A) any Acquired Company is a lessor or sublessor of, or makes available for use
to any Person (other than the Acquired Companies), any Real Property of the
Acquired Companies, or (B) any Acquired Company is a lessee or sublessee of, or
holds or uses any Real Property owned by any other Person (other than the
Acquired Companies);
               (x) for the lease or sublease of personal property under which
(A) any Acquired Company is a lessee or sublessee of, or holds or uses, any
machinery, equipment, vehicle or other tangible personal property owned by any
Person (other than the Acquired Companies, and except personal property leases
and installment and conditional sales agreements having annual payments of less
than $250,000), or (B) any Acquired Company is a lessor or sublessor of, or
makes available for use by any Person (other than the Acquired Companies), any
tangible personal property owned or leased by any Acquired Company, in each such
case which has a future payment or receivable, as the case may be, in excess of
$250,000;
               (xi) for Tax sharing or Tax allocation;
               (xii) for a joint venture, partnership or similar arrangement;

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               (xiii) that relates to the Intellectual Property of the Acquired
Companies;
               (xiv) that commits an Acquired Company to make any fixed or
contingent payment or expenditure or any related series of fixed or contingent
payments or expenditures totaling more than $250,000 in any twelve-month period
(provided that this clause shall not include any Contract of the nature
described in subclauses (i) through (xiii) that is included in any of such
subclauses or that is excluded pursuant to any durational or dollar thresholds
set forth therein);
               (xv) with any Seller or any Affiliate or Relative of any of the
Sellers; or
               (xvi) that is otherwise material to the Business.
     (b) Except as set forth in Section 4.4(b) of the Sellers’ Disclosure
Schedule, (i) each Contract listed in Section 4.4(a) to the Sellers’ Disclosure
Schedule and each Contract entered into after the date hereof that would be
required to be so listed if entered into prior to the date hereof (collectively,
the “Material Contracts”) is, or when entered into will be, a valid and binding
obligation of the Acquired Company party to the Contract and, to the Sellers’
knowledge, each other Person who is a party thereto, enforceable against the
Acquired Company party thereto, and to the Sellers’ knowledge, each such other
Person, in accordance with its terms, subject to applicable bankruptcy,
insolvency, moratorium, fraudulent conveyance, reorganization or other similar
laws relating to creditors’ rights and general principles of equity, whether at
equity or at law, (ii) the Acquired Companies have performed all obligations
required to be performed by them to date under the Material Contracts and they
are not (with or without the lapse of time or the giving of notice, or both) in
breach or default thereunder, and (iii) to the knowledge of the Sellers, no
other party to any of the Material Contracts is (with or without the lapse of
time or the giving of notice, or both) in breach or default thereunder, except
in each case in clauses (i) through (iii), as has not had and could not
reasonably be expected to have a Material Adverse Effect on the Company. True,
complete and accurate copies of the Material Contracts entered into on or prior
to the date hereof have been provided to Alon and true, complete and accurate
copies of any Material Contracts entered into after the date hereof will be
provided to Alon promptly after being so entered into.
     (c) Neither the execution and delivery by the Sellers of this Agreement and
the other Transaction Documents, nor the consummation by Sellers of the
transactions contemplated hereby or thereby in accordance with the terms hereof
or thereof, will violate, or conflict with, or result in a material breach of
any provision of, or constitute a material default (or an event which, with
notice or lapse of time or both, would constitute a material breach or default)
under any of the terms, conditions or provisions of any Material Contract.
     (d) Except as set forth on Section 4.4(d) of the Sellers’ Disclosure
Schedule, no notice to or consent or approval of any party to a Material
Contract is required in connection with the execution, delivery and performance
of this Agreement, the other Transaction Documents or the consummation of the
transactions contemplated hereby and thereby.

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     4.5 Financial Statements; No Undisclosed Liabilities.
          (a) Section 4.5(a) of the Sellers’ Disclosure Schedule sets forth true
and complete copies of the consolidated balance sheets and related consolidated
statements of operations, retained earnings and cash flows for the Company and
its Subsidiaries as of the years ended December 31, 2003 and 2004, in each case
audited by the independent public accountants of the Company whose unqualified
reports are attached thereto (together with the 2005 Annual Statements, the
“Annual Statements”) and the estimated consolidated balance sheet and related
consolidated statement of operations as of and for the twelve months ended
December 31, 2005 (the “Estimated Financial Statements”, and together with the
Annual Statements and the Interim Statements, the "Financial Statements”). The
most recent balance sheet included in the Estimated Financial Statements is
referred to herein as the “Most Recent Balance Sheet.”
          (b) Each of the Financial Statements presents, or in the case of the
Interim Statements and the 2005 Annual Statements, will present fairly the
consolidated financial condition, consolidated results of operations and
consolidated statements of cash flow of the Company and its Subsidiaries as of
the dates or for the periods indicated in accordance with GAAP, subject in the
case of the Interim Statements to normal, recurring year-end adjustments (except
such Interim Statements do not provide for (i) inventory recorded at LIFO,
(ii) current accruals for paid time off, (iii) accruals for bonuses,
(iv) current accounts receivable reserves, (v) a provision for deferred taxes,
and (vi) other adjustments which will not, individually or in the aggregate be
material), and have been prepared based on the books and records of the Company
and its Subsidiaries and in accordance with the Company’s normal accounting
practices, consistent with past practice and with each other.
          (c) To the Sellers’ knowledge, at all times since January 1, 2003, the
Company has had in effect a system of internal controls over financial reporting
sufficient to provide reasonable assurance that assets of the Company and its
Subsidiaries are protected and transactions involving the Company and its
Subsidiaries are properly recorded. The Company’s certified public accountants
have not notified the Sellers that any reportable conditions or material
weakness (each as defined in AU 325 of the AICPA Professional Standards) have
been discovered in the Company’s internal controls by such accountants in
connection with their audit of the Annual Statements.
          (d) Except as set forth in Section 4.5(d) of the Sellers’ Disclosure
Schedule, there are no Liabilities of the Company and its Subsidiaries other
than: (i) Liabilities accrued on the Most Recent Balance Sheet; and
(ii) Liabilities incurred since the Most Recent Balance Sheet Date that have
been incurred in the ordinary course of business of the Company and its
Subsidiaries consistent with past practice, and that do not, and could not
reasonably be expected to, individually or in the aggregate, have a Material
Adverse Effect on the Company (provided that as to those matters in respect of
which the Sellers’ representations or warranties set forth elsewhere in this
Article IV are expressly limited to the Sellers’ knowledge, to the Sellers’
knowledge there are no such Liabilities).
          (e) The sole asset of the Excluded Company is the Upper Bluff
Property. The Excluded Company has not conducted any business other than owning
and taking actions to develop the Upper Bluff Property.

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     4.6 No Violations; Consents.
          (a) The execution and delivery by the Sellers of this Agreement, and
the other Transaction Documents, the performance by the Sellers of their
obligations hereunder and thereunder and the consummation of the transactions
contemplated hereby or thereby in accordance with the terms hereof or thereof
will not:
               (i) conflict with or result in a breach of any provisions of the
articles of incorporation or by-laws (or other similar constituent documents) of
any of the Acquired Companies; or
               (ii) violate any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to any of the Acquired Companies, or
their respective properties or assets.
          (b) No consent, approval or authorization of, or declaration, filing,
notice or registration with, any Governmental Entity or any other Person is
required to be made by or with respect to the Acquired Companies in connection
with the execution, delivery and performance of this Agreement and the other
Transaction Documents or the consummation of the transactions contemplated
hereby or thereby, except (i) the filing under the HSR Act and (ii) as set forth
in Section 4.4(d) of the Sellers’ Disclosure Schedule.
     4.7 Compliance; Permits; Litigation.
          (a) To the knowledge of the Sellers (i) each of the Acquired Companies
is and at all times has been in material compliance with, all laws, ordinances,
governmental rules and regulations to which they or any of their respective
properties or assets is subject, and (ii) none of the Acquired Companies is
party or subject to or in default under any judgment, order, injunction or
decree of any Governmental Entity or arbitration tribunal applicable to it or
any of its respective properties, assets, operations or business.
          (b) To the knowledge of the Sellers (i) each of the Acquired Companies
has obtained all licenses, permits, consents, certificates, orders, approvals
and other authorizations of all Governmental Entities (collectively, the
“Company Permits”) and has taken all actions required by applicable law or
regulations of any Governmental Entity in connection with its respective
business, except where the failure to obtain any such Company Permit or take
such action, individually or in the aggregate, has not had and could not
reasonably be expected to have a Material Adverse Effect on the Company, and
(ii) each Acquired Company is in material compliance with the terms of the
Company Permits to which it is subject.
          (c) Section 4.7(c) of the Sellers’ Disclosure Schedule sets forth a
list and description of all pending, and to the knowledge of the Sellers,
threatened, lawsuits, arbitrations, proceedings or investigations against the
Acquired Companies or their officers or directors (as such) or any of their
respective properties or assets as of the date hereof.
          (d) Except as set forth in Section 4.7(d) of the Sellers’ Disclosure
Schedule, there is no lawsuit, arbitration, proceedings or investigations by any
Acquired Company pending against any other Person.

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     4.8 Absence of Certain Changes. Except as disclosed in Section 4.8 of the
Sellers’ Disclosure Schedule or permitted under Section 6.1, since December 31,
2005 each Acquired Company has conducted its business only in the ordinary
course of such business consistent with past practice and there has not been:
               (i) any event or events through the date hereof which,
individually or in the aggregate, had or could reasonably be expected to have a
Material Adverse Effect on the Company (provided that as to those matters in
respect of which the Sellers’ representations or warranties set forth elsewhere
in this Article IV are expressly limited to the Sellers’ knowledge, to the
Sellers’ knowledge there have been no such events);
               (ii) any damage or destruction, whether covered by insurance or
not, suffered by any Acquired Company which has had or could reasonably be
expected to have a Material Adverse Effect on the Company;
               (iii) any increase in the compensation payable or to become
payable by any Acquired Entity to its officers or employees, except to employees
in the ordinary course consistent with past practice or pursuant to
nondiscretionary provisions of existing employment agreements listed in
Section 4.4.(a) of the Sellers’ Disclosure Schedule;
               (iv) any dividend declared, set aside or paid or any other
distribution on or in respect of the shares of its Capital Stock made or any
direct or indirect redemption, retirement, purchase or other acquisition of such
Capital Stock;
               (v) any material change through the date hereof in (A) the
accounting methods or practices it follows, whether for general financial or Tax
purposes, or (B) its depreciation or amortization policies or rates;
               (vi) any sale, lease, sublease, abandonment or other disposal of
any Real Property, leasehold interests, machinery, equipment or other operating
property, other than in the ordinary course of business and consistent with past
practice;
               (vii) any sale, assignment, transfer, license or other disposal
of any Intellectual Property of the Acquired Companies;
               (viii) any entry into any material commitment or transaction
(including, without limitation, any borrowing) other than in the ordinary course
of business and consistent with past practice;
               (ix) any material incurrence of Debt, except in the ordinary
course of business and consistent with past practice;
               (x) any of its property, leasehold interests or assets subjected
to any Lien, except for Liens for current taxes not yet due and purchase money
security interests incurred in the ordinary course of business and consistent
with past practice;
               (xi) any transaction between any Acquired Company, on the one
hand, and any Seller or any Affiliate or Relative of any Seller, on the other
hand; or

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               (xii) any agreement to take any action described in this
Section 4.8 or which would constitute a breach of any of the representations or
warranties of the Sellers contained in this Agreement.
     4.9 Taxes.
          (a) All Tax Returns that were required to be filed with respect to any
of the Acquired Companies have been accurately prepared and timely filed. All
such Tax Returns are true, correct, and complete in all material respects and
such Tax Returns contain all disclosures and other items required to avoid
additional Taxes or other adverse Tax consequences.
          (b) Each of the Acquired Companies has timely paid all Taxes that have
become due or payable (without regard to whether or not such Taxes are shown on
any Tax Return) and has adequately provided in the Financial Statements (in
accordance with GAAP) for all Taxes that have accrued but are not yet due or
payable.
          (c) No claim has been made by any taxing authority in any jurisdiction
where any Acquired Company does not file Tax Returns that such Acquired Company
is or may be subject to Tax by that jurisdiction. No extensions or waivers of
statutes of limitations with respect to any Tax Returns have been given by or
requested from any Acquired Company.
          (d) No Acquired Company is a party to any action, proceeding or audit
relating to Taxes by any taxing authority. There is no pending and, to the
knowledge of the Sellers, threatened, action, proceeding or audit by any taxing
authority for which any Acquired Company could be held liable. All deficiencies
asserted or assessments made against any Acquired Company as a result of any
examinations by any taxing authority, have been fully paid. No issue has been
raised in any such examination, audit, or other proceeding, which by application
of the same or similar principles, reasonably could be expected to result in a
proposed deficiency in Taxes of any other Acquired Company or for the Acquired
Companies for any other period.
          (e) There are no Liens for Taxes (other than for current Taxes not yet
due and payable) upon the assets of the Acquired Companies. None of the assets
of the Acquired Companies (i) is property that is required to be treated as
being owned by any other Person pursuant to the so-called “safe harbor lease”
provisions of former Section 168(f)(8) of the Code; (ii) directly or indirectly
secures any Debt the interest on which is tax exempt under Section 103(a) of the
Code; or (iii) is “tax-exempt use property” within the meaning of Section 168(h)
of the Code.
          (f) No Acquired Company is a party to or bound by any closing
agreement, offer in compromise, or other agreement with any taxing authority
that could affect Taxes for which the Acquired Companies may be liable.
          (g) No Acquired Company has been a member of an affiliated group of
corporations, within the meaning of Section 1504 of the Code, or a member of a
combined, consolidated or unitary group for state, local or foreign Tax
purposes.

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          (h) No Acquired Company has been a “distributing corporation” or a
“controlled corporation” in connection with a distribution described in
Section 355 of the Code.
     4.10 Certain Employee Plans.
          (a) (i) Except as set forth in Section 4.10(a) of the Sellers’
Disclosure Schedule, each Company Benefit Plan complies, and has been
administered, in all material respects in accordance with its governing
documents and all applicable requirements of law and each of the Acquired
Companies has satisfied in all material respects all of its statutory,
regulatory and contractual obligations with respect to each such Company Benefit
Plan, and (ii) no non-exempt “prohibited transaction” (as such term is defined
in Section 406 of ERISA and Section 4975 of the Code) has occurred with respect
to any Company Benefit Plan that could be reasonably expected to result in any
material Liability to the Acquired Companies. Section 4.10(a) of the Sellers’
Disclosure Schedule lists each material Company Benefit Plan. Copies of all
written material Company Benefit Plans (including all amendments thereto) and
descriptions of all unwritten material Company Benefit Plans have previously
been made available to Alon. The Sellers have made available to Alon, with
respect to each Company Benefit Plan, the most recent annual Form 5500 filing
and the most recent summary plan description, in each case, to the extent such
filing or description is required by applicable law.
          (b) Except as set forth on Section 4.10(b) of the Sellers’ Disclosure
Schedule, each Company Benefit Plan intended to qualify under Section 401(a) of
the Code is the subject of a determination letter (or an opinion letter upon
which it can rely) issued by the IRS with respect to the qualification of such
Company Benefit Plan, and, to the knowledge of the Sellers, no circumstances
exist which could reasonably be expected to materially and adversely affect such
qualification. A copy of each determination or opinion letter referred to in the
preceding sentence has previously been made available to Alon. No Company
Benefit Plan, nor any employee benefit plan, within the meaning of Section 3(3)
of ERISA, which is or has been within the six years preceding the date hereof,
sponsored, maintained, or contributed to by an ERISA Affiliate (i) is subject to
Title IV of ERISA, Part 3 of Subtitle B of Title I of ERISA or Section 412 of
the Code or (ii) is a “multiemployer plan” as defined in Section 3(37) of ERISA.
Except as set forth on Section 4.10(b) of the Sellers’ Disclosure Schedule, no
Company Benefit Plan, nor any employee benefit plan, within the meaning of
Section 3(3) of ERISA, which is sponsored, maintained, or contributed to by an
ERISA Affiliate is a “multiple employer plan” within the meaning of Section
413(c) of the Code. Each Contract or Company Benefit Plan that is a
“nonqualified deferred compensation plan” within the meaning of Section 409A of
the Code has been operated and administered since January 1, 2005, in all
material respects in good faith compliance with Section 409A of the Code and the
proposed regulations promulgated thereunder or IRS Notice 2005-1.
          (c) Except as required by applicable law or as set forth on
Section 4.10(c) of the Sellers’ Disclosure Schedule, none of the Company Benefit
Plans provide any health, welfare or life insurance benefits to any former or
retired employees, officers or directors of any Acquired Company or ERISA
Affiliate.
          (d) There are no actions, suits, or claims pending (other than routine
claims for benefits) or, to the knowledge of the Sellers, threatened against, or
with respect to, any of the

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Company Benefit Plans or their assets, which could reasonably be expected to
result in a material Liability to any Acquired Company. To the knowledge of the
Sellers, none of the Pension Benefit Guaranty Corporation, the Internal Revenue
Service or the Department of Labor is currently auditing or reviewing any
Company Benefit Plan, and neither an Acquired Company nor any ERISA Affiliate
has received notice, written or otherwise, of an impending audit or review of
any such arrangements from the Pension Benefit Guaranty Corporation, the
Internal Revenue Service or the Department of Labor.
          (e) Except as disclosed in Section 4.10(e) of the Sellers’ Disclosure
Schedule, the execution and delivery of this Agreement and the other Transaction
Documents and the consummation of the transactions contemplated hereby and
thereby will not (i) require any Acquired Company to pay greater benefits or
provide other rights under, any Contract between any Acquired Company and its
officers, employees or directors (or former officers, employees or directors) or
Company Benefit Plan than it otherwise would, whether or not some other
subsequent action or event would be required to cause such payment or provision
to be triggered, or (ii) create or give rise to any additional vested rights or
service credits under any such Contract or Company Benefit Plan.
          (f) Other than as required by law or as disclosed in Section 4.10(f)
of the Sellers’ Disclosure Schedule, none of the Acquired Companies nor any
ERISA Affiliate has made any commitment to (i) create any new Company Benefit
Plans, or (ii) modify or amend any existing Company Benefit Plans which would
result in a material increase in the expense of maintaining such plans above the
level of expense incurred in respect thereto for the most recent fiscal year
ended prior to the date hereof. In addition, other than as required by law,
there has been no amendment to, written interpretation of or announcement
(whether or not written) by any Acquired Company or ERISA Affiliate relating to,
or change in the class of employees eligible for participation or coverage
under, any Company Benefit Plan that would increase materially the expense of
maintaining such Company Benefit Plan above the level of expense incurred in
respect thereto for the most recent fiscal year ended prior to the date hereof.
          (g) All material contributions, premiums or payments required to be
made to date with respect to any Company Benefit Plan have been timely made.
     4.11 Labor Matters.
          (a) Section 4.11(a) of the Sellers’ Disclosure Schedule contains a
list of the names of all employees of each Acquired Company as of the date of
this Agreement whose annual base compensation exceeds $25,000 and their salaries
or wages (or other payment terms), exemption status, dates of employment and
positions.
          (b) Except as set forth on Section 4.11(b) of the Sellers’ Disclosure
Schedule, no Acquired Company is a party to, or bound by, any collective
bargaining agreement or Contract with a labor union or labor organization. There
is no unfair labor practice or labor arbitration proceeding pending or, to the
knowledge of the Sellers, threatened against any Acquired Company, and to the
knowledge of the Sellers, there are no organizational efforts with respect to
the formation of a collective bargaining unit being made or threatened involving
employees of any Acquired Company.

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          (c) (i) There are no controversies pending or, to the knowledge of the
Sellers, threatened between any Acquired Company and any of its employees,
which, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect on the Company; and (ii) none of the Acquired Companies
has received notice of any strikes, slowdowns, work stoppages, lockouts, or
threats thereof, by or with respect to any employees of the Acquired Companies.
          (d) Except as set forth on Section 4.11(d) of the Sellers’ Disclosure
Schedule, no charges have been filed claiming employment discrimination or
unfair labor practices against or involving any Acquired Company by any employee
or former employee of the Acquired Companies (other than charges that were fully
resolved prior to the date hereof), and to the knowledge of the Sellers, no such
charges are threatened.
     4.12 Environmental Matters. The Sellers have made available to Alon all
environmental assessments, audit reports, testing and investigation results, and
other reports relating to environmental conditions with respect to all Real
Property owned or leased by the Acquired Companies which are in the possession
of the Sellers or the Acquired Companies or any of their agents. Except as set
forth on Section 4.12 of the Sellers’ Disclosure Schedule, to the knowledge of
the Sellers:
     (i) each Acquired Company has been and currently is in material compliance
with all applicable Environmental Laws;
     (ii) (A) each Acquired Company has obtained all Environmental Permits
necessary for the operation of the Business as it is currently being operated,
(B) all such Environmental Permits are in full force and effect, (C) no appeal
nor any other action is pending, or is threatened, to revoke any such
Environmental Permit, (D) each Acquired Company is in compliance with its
Environmental Permits, and (E) to the extent required by applicable
Environmental Law, each Acquired Company has timely filed all applications
necessary to renew or obtain any necessary Environmental Permit, except, in each
case for subclauses (A) through (E), where such failure has not had and could
not be reasonably expected to have a Material Adverse Effect on the Company; and
the Sellers have provided Alon with copies of all such material Environmental
Permits;
     (iii) with regard to the properties currently or formerly owned or operated
by any of the Acquired Companies, there was and has been no Release of any
Hazardous Materials that could reasonably be expected to result in any material
Liability under the Environmental Laws;
     (iv) no Acquired Company has disposed or arranged to dispose of any
Hazardous Materials on any third party property that could reasonably be
expected to result in any material Liability under the Environmental Laws;
     (v) none of the Acquired Companies or the Sellers has received any notices,
demand letters, complaints, claims or requests for information from any

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Governmental Entity or any other Person indicating that an Acquired Company may
be in violation of, or liable under, any Environmental Law;
          (vi) none of the Acquired Companies or their respective properties are
subject to any order or decree of any Governmental Entity or any Contract with
any Government Entity arising under any Environmental Law, or is a party to any
indemnity or other Contract with any third party which could reasonably be
expected to result in any Liability under any Environmental Law; and
          (vii) none of the properties currently owned or operated by the
Acquired Companies are subject to any Liens imposed by any Governmental Entity
in connection with the presence on or off such property of any Hazardous
Materials.
     4.13 Related Party Transactions. Except as set forth in Section 4.13 of the
Sellers’ Disclosure Schedule, none of the Sellers, the Excluded Company, or any
Affiliate (other than the Acquired Companies) or Relative of any of the
foregoing Persons:
          (i) has, or at any time since December 31, 2003 has had, any interest
in any property (whether real, personal, or mixed and whether tangible or
intangible), used in the operations of the Acquired Companies;
          (ii) owns, or at any time since December 31, 2003 has owned (of record
or as a beneficial owner), an equity interest or any other financial or profit
interest in, a Person that has (A) business dealings or a material financial
interest in any transaction with any Acquired Company, or (B) engaged in
competition with any Acquired Company with respect to the business of any
Acquired Company (a “Competing Business”) in any market presently served by any
Acquired Company, except for ownership (of record or as a beneficial owner) of
less than three percent of the outstanding Capital Stock of any Competing
Business that is publicly traded on any national or foreign stock exchange, the
Nasdaq Stock Market or the over-the-counter market; or
          (iii) has any claim or right against any Acquired Company, or is a
party to any Contract with any Acquired Company.
     4.14 Business Activities.
          (a) There is no judgment, injunction, order, decree, or other action
pending before a Governmental Entity or, to the knowledge of the Sellers, being
considered by a Governmental Entity, which has or would have the effect of
restricting the conduct of business of any of the Acquired Companies.
          (b) None of the Sellers nor, to the knowledge of the Sellers, any
director, officer, agent, employee, consultant or contractor of any Acquired
Company, has directly or indirectly made any contribution, gift, bribe, rebate,
payoff, influence payment, kickback, or other payment to any Person, private or
public, regardless of form, whether in money, property, or services that is
illegal (i) to obtain favorable treatment in securing business, (ii) to pay for
favorable treatment for business secured, or (iii) to obtain special concessions
or for special

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concessions already obtained, for or in respect of any Acquired Company, or
established or maintained any fund or asset that has not been recorded in the
books and records of the Acquired Companies.
          (c) All of the prices charged by any Acquired Company in connection
with the marketing or sale of any of its products have been in material
compliance with all applicable laws and regulations. No claims are pending or,
to the knowledge of the Sellers, threatened against any Acquired Company with
respect to discriminatory pricing, price fixing, unfair competition, or any
other violation of any laws or regulations relating to anti-competitive
practices or unfair trade practices.
     4.15 Real Property.
          (a) Section 4.15(a) of the Sellers’ Disclosure Schedule lists (by
location and description) all real property currently owned by any of the
Acquired Companies, which together with all easements, rights of way and other
appurtenances thereto and all buildings, structures, fixtures and improvements
located thereon (other than fixtures and improvements which are the property of
tenants under applicable Contracts) shall be referred to as the “Owned Real
Property”.
          (b) Section 4.15(b) of the Sellers’ Disclosure Schedule lists all real
property currently leased by any of the Acquired Companies, which together with
any Acquired Company’s rights in all of the buildings, structures, fixtures and
improvements located thereon shall be referred to as the “Leased Real Property”.
          (c) As to the Owned Real Property, each of the Acquired Companies has
good and indefeasible title, free and clear of all Liens, excepting only Liens
for Taxes and assessments not yet delinquent, Liens relating to the indebtedness
described in Section 4.4(a) of the Sellers’ Disclosure Schedule, or Contracts
not required to be disclosed thereon because the amount thereof does not meet
the disclosure threshold for such schedule, and such other easements,
restrictions and covenants presently of record, unrecorded Liens of which the
Sellers have no knowledge, and other imperfections of title which have not, and
could not be reasonably expected to, individually or in the aggregate,
materially reduce the value of the Real Property for its present use or
materially interfere with the present use of the Real Property by the Acquired
Company, in each case, taken as a whole (collectively, the “Permitted Liens”).
The foregoing representation shall be interpreted as would a special warranty of
title that can be breached only if (1) a failure or impairment in title first
occurs with respect to any such Owned Real Property due to a defect or claim
arising on or before the Closing Date by, through or under the Sellers or any of
the Acquired Companies (during the time that such Acquired Companies were held,
directly or indirectly, by the Sellers), but no further, or (2) during the
shorter of the (i) period of ownership of the Owned Real Property by the
applicable Acquired Company and (ii) the period of ownership of the applicable
Acquired Company, directly or indirectly, by the Sellers, a failure or
impairment of title has first occurred with respect to the Owned Real Property
that remains open and uncured as of the Closing.

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          (d) As to the Leased Real Property, each of the Acquired Companies has
good and valid title to the leasehold estate and the right to quiet enjoyment,
free and clear of all Liens, except Permitted Liens.
          (e) Except as set forth in Section 4.15(e) of the Sellers’ Disclosure
Schedule, no condemnation, eminent domain, or similar proceeding exists or is
pending with respect to any Owned Real Property, or to the Sellers’ knowledge
exists or is pending with respect to any Leased Real Property, or to the
Sellers’ knowledge, is threatened, with respect to any such Real Property.
          (f) Except as set forth in Section 4.15(f) of the Sellers’ Disclosure
Schedule, to Sellers’ knowledge, each Acquired Company has obtained all permits
and rights-of-ways which are currently required to allow vehicular and
pedestrian ingress and egress to and from the Real Property.
          (g) Except this Agreement, no Acquired Company is a party to any
option to purchase or sell, right of first refusal to purchase or sell or
agreement for the sale and purchase of the Owned Real Property to any Person.
          (h) Except pursuant to Contracts disclosed on Section 4.4 of the
Sellers’ Disclosure Schedule, or Contracts not required to be disclosed thereon
because the amount thereof does not meet the disclosure threshold for such
schedule, other than the Acquired Companies, there are no parties in possession
of any portion of the Owned Real Property or Leased Real Property, as lessees,
subtenants, or tenants at sufferance, or trespassers. The Real Property and
pipelines constitute all the parcels, tracts of land, buildings, fixtures and
improvements that are used or held for use primarily in connection with the
Business.
          (i) To the Sellers’ knowledge, Section 4.15(i) of the Sellers’
Disclosure Schedule sets forth (i) a description of all pipelines owned or
operated by the Acquired Companies and (ii) a list of all easements, rights of
way, property use agreements, line rights, and real property licenses and
permits (including right-of-way permits from railroads and road crossing permits
or other rights-of-way permits from Governmental Entities) and all other right,
title and interest of any of the Acquired Companies in and to real property by,
through and under which any pipelines are operated and which are necessary for
the operation or maintenance of such pipelines. To the Sellers’ knowledge,
(i) such material pipeline easements of the Acquired Companies are in full force
and effect, and there is no pending modification or cancellation of such
easements, and (ii) except for (A) any matters that have been settled and
resolved prior to the date hereof or (B) matters disclosed on Section 4.15(i)(B)
of the Sellers’ Disclosure Schedule, no Acquired Company has received any
written notice from any third party that (1) such Acquired Company is in
material default under any material easement, right of way, property use
agreement, line right, real property license or permit, (2) there exists any
easement gap affecting any material pipeline owned or used by such Acquired
Company, and (3) any such pipeline is not located within applicable easement
boundaries.

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     4.16 Intellectual Property.
          (a) Section 4.16(a) of the Sellers’ Disclosure Schedule sets forth a
true and complete list of all patents, trademarks, trade names, service marks,
internet domain names and copyrights and applications for registration of any of
the foregoing, owned, used, filed by or licensed to any of the Acquired
Companies, in each case which are, individually or in the aggregate, material to
the Acquired Companies.
          (b) Except as set forth in Section 4.16(b) of the Sellers’ Disclosure
Schedule, the Acquired Companies own, free and clear of any and all Liens, or
are licensed or otherwise possess legally enforceable rights to use, without
payment to any other Person, all Intellectual Property that is used in the
Business as currently conducted, except where the failure to own, be licensed or
to possess such rights has not had and could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company, and
the consummation of the transactions contemplated hereby will not conflict with,
alter or impair any such Intellectual Property in any material respect.
          (c) To the knowledge of the Sellers, (i) the conduct of the Business
does not conflict with the valid Intellectual Property rights of others and
(ii) there are no conflicts with or infringements of any of the Intellectual
Property of the Acquired Companies by any other Person. Except as set forth on
Section 4.16(c) of the Sellers’ Disclosure Schedule, no other Person has any
rights in or right to use any of the Intellectual Property owned by any of the
Acquired Companies.
     4.17 Inventories. The inventories shown on the Most Recent Balance Sheet or
thereafter acquired by the Acquired Companies consist of items of a quantity and
quality usable or salable in the ordinary course of business, except for
obsolete items and items below standard quality, all of which have been written
off or written down to net realizable value in the Most Recent Balance Sheet, or
will be written off or written down, as of the Closing Date, on the accounting
records of the Acquired Companies consistent with past practice. The quantities
of each item of inventory (whether raw materials or finished product) of the
Acquired Companies are reasonable under the circumstances. The value of the
inventories on the Most Recent Balance Sheet reflects the inventory valuation
policy of the Company, which is consistent with its past practice.
     4.18 Accounts Receivable. Section 4.18 of the Sellers’ Disclosure Schedule
sets forth the accounts receivable as of the date of the Most Recent Balance
Sheet, which schedule also sets forth the aging of each such account receivable.
Such accounts receivable arose in the ordinary course of business of the
Acquired Companies and have been collected or, to the knowledge of the Sellers,
are collectible in the book amounts thereof, less an amount not in excess of the
allowance for doubtful accounts and returns provided for in the Most Recent
Balance Sheet. The accounts receivable of the Acquired Companies arising after
the Most Recent Balance Sheet Date arose in the ordinary course of business and
have been collected or, to the knowledge of the Sellers, will be collectible in
the book amounts thereof, less allowances for doubtful accounts to be included
on the accounting records of the Acquired Companies, as of the Closing Date,
determined in accordance with GAAP and consistent with past practices of the
Company.

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     4.19 Other Assets.
          (a) Except as set forth in Section 4.19 of the Sellers’ Disclosure
Schedule, the Acquired Companies own, and have good and valid title to, all
other material assets reflected on the Most Recent Balance Sheet or thereafter
acquired (except those sold or otherwise disposed of since the Most Recent
Balance Sheet Date in the ordinary course of business consistent with past
practice and not in violation of this Agreement), in each case free and clear of
all Liens except:
          (i) such Liens as are set forth in Section 4.19 of the Sellers’
Disclosure Schedule;
          (ii) mechanics’, carriers’, workmen’s, repairmen’s or other like Liens
arising or incurred in the ordinary course of business, Liens arising under
original purchase price conditional sales contracts and equipment leases with
third parties entered into in the ordinary course of business and Liens for
Taxes or assessments which are not due and payable or which may thereafter be
paid without penalty;
          (iii) Liens which secure Debt issued pursuant to agreements listed in
Section 4.4(a) of the Sellers’ Disclosure Schedule; and
          (iv) other immaterial imperfections of title or encumbrances, if any.
          (b) All of the books and records of the Acquired Companies (including
without limitation, the financial records) are true, complete and accurate in
all material respects and have been maintained in accordance with generally
accepted business practices.
          (c) The assets and rights of the Acquired Companies are sufficient to
conduct the Business as conducted as of the date hereof and constitute all of
the material operating assets currently used by the Acquired Companies in the
Business (subject to changes after the date hereof permitted under Section 6.1).
     4.20 Insurance.
          (a) The Acquired Companies have insurance policies in full force and
effect for such amounts as are sufficient for material compliance with all
requirements of law and all Contracts to which any Acquired Company is a party
or by which it is bound. Section 4.20(a) of the Sellers’ Disclosure Schedule
contains a true and complete list of all liability, property, workers’
compensation, directors’ and officers’ liability and other insurance policies in
effect since January 1, 2005 that insure the business, operations or employees
of the Acquired Companies or the assets of the Acquired Companies, whether
issued to the Acquired Companies or to any other Person for the benefit of the
Acquired Companies (the “Insurance Policies”). Except for expirations or
terminations in the ordinary course, all such Insurance Policies will remain in
full force and effect with respect to periods prior to the Closing Date.
          (b) There is no material claim pending under any of the Insurance
Policies as to which coverage has been questioned, denied or disputed by the
underwriters of such policies. All premiums due and payable under all Insurance
Policies have been paid, and each Acquired Company is otherwise in compliance
with the terms of such policies. Except for (i) Insurance

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Policies terminated or expired prior to the date hereof and (ii) premium
increases disclosed on Section 4.20(b) of the Sellers’ Disclosure Schedule, to
the Seller’s knowledge, there is no threatened termination of, or material
premium increase with respect to, any of the Insurance Policies.
          (c) Section 4.20(c) of the Sellers’ Disclosure Schedule contains a
listing of all material open claims made or otherwise asserted by the Acquired
Companies against any Insurance Policy as of the date hereof. All material
claims under the Insurance Policies have been filed in a timely fashion.
          (d) To the knowledge of the Sellers, none of the Acquired Companies
has failed to disclose any fact to the insurance companies or failed to take any
other action, the consequences of non-disclosure or failure to take action would
reasonably be expected to render any Insurance Policy void or voidable.
     4.21 Bank Accounts. Section 4.21 of the Sellers’ Disclosure Schedule sets
forth the names and locations of all banks and other financial institutions at
which any Acquired Company maintains accounts of any nature and the names of all
persons authorized to draw thereon or make withdrawals therefrom.
     4.22 No Brokers. Except as disclosed in Section 4.22 of the Sellers’
Disclosure Schedule, the Sellers have not directly or indirectly (including
through the Acquired Companies) entered into any Contract with any Person, or
taken any other action, which may result in the obligation to pay any investment
banking or finder’s fees, brokerage or agent’s commissions or other like
payments in connection with the negotiations leading to this Agreement or the
consummation of the transactions contemplated hereby.
     4.23 Customers and Suppliers. Section 4.23(a) of the Sellers’ Disclosure
Schedule sets forth (a) a list of the ten largest customers of the Acquired
Companies collectively based on sales during the year ended December 31, 2005,
showing the approximate total sales by the Acquired Companies to each such
customer during the year ended December 31, 2005, and (b) a list of the ten
largest suppliers of the Acquired Companies collectively based on purchases
during the year ended December 31, 2005, showing the approximate total purchases
by the Acquired Companies from each supplier during the year ended December 31,
2005. Except as set forth on Section 4.23(b) of the Sellers’ Disclosure
Schedule, to the knowledge of the Sellers, since January 1, 2005 through the
date hereof, there has not been any material adverse change in the business
relationship of the Acquired Companies with any customer or supplier named in
Section 4.23(a) of the Sellers’ Disclosure Schedule.
     4.24 Limitations on Representations and Warranties.
          (a) To the Sellers’ knowledge, (i) the Sellers have heretofore made
available to Alon, all material, documentary information pertaining to the
assets, properties, businesses and operations of the Acquired Companies
(including, but not limited to, data and information concerning: accounts
receivable and payable; commercial contracts or other financial commitments;
real and personal property interests belonging to the Acquired Companies;
operating licenses and/or permits needed to conduct the business of the Acquired
Companies; the

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personnel of the Acquired Companies and their compensation and employee
benefits; and Intellectual Property used by the Acquired Companies; and taxation
matters), and (ii) the Sellers have provided Alon with all such information that
Alon has requested. TO THE SELLERS’ KNOWLEDGE, THEY HAVE NOT KNOWINGLY PROVIDED,
AND WILL NOT KNOWINGLY PROVIDE, FALSE, MISLEADING OR INCORRECT INFORMATION TO
ALON, AND HAVE NOT KNOWINGLY WITHHELD (AND WILL NOT KNOWINGLY WITHHOLD) MATERIAL
INFORMATION ABOUT THE ACQUIRED COMPANIES, BUT EXCEPT AS OTHERWISE SPECIFICALLY
PROVIDED IN THIS AGREEMENT, THE SELLERS HAVE MADE AND ARE MAKING NO
REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, AS TO THE ACCURACY,
RELIABILITY, COMPLETENESS OR DEPENDABILITY OF ANY DATA OR INFORMATION THAT THE
SELLERS HAVE PROVIDED OR WILL PROVIDE TO ALON IN CONNECTION WITH THIS AGREEMENT.
          (b) To the Sellers’ knowledge, Alon is not in breach, as of the date
hereof, of any of the representations or warranties of Alon contained in this
Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF ALON
     Alon represents and warrants to the Sellers, as follows:
     5.1 Existence; Good Standing; Corporate Authority.
          (a) Alon is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware.
          (b) Alon is duly licensed or qualified to do business as a foreign
corporation and is in good standing under the laws of any other state of the
United States in which the character of the properties owned or leased by it
therein or in which the transaction of its business makes such qualification
necessary, except where the failure to be so qualified or in good standing could
not reasonably be expected to have a Material Adverse Effect on Alon. Alon has
all requisite corporate power and authority to own, operate and lease its
properties and carry on its businesses as now conducted. Alon is not in
violation of any order or decree of any Governmental Entity, or any law,
ordinance, or regulation to which Alon or any of its properties or assets is
subject, except where such violation, individually or in the aggregate, has not
and could not reasonably be expected to have a Material Adverse Effect on Alon.
     5.2 Authorization, Validity, and Effect of Agreements. Alon has the
requisite corporate power and authority to execute and deliver this Agreement
and the other Transaction Documents to be executed by it. The consummation by
Alon of the transactions contemplated herein and therein has been duly
authorized by all requisite corporate action on the part of Alon, and no further
corporate action is required to consummate the transactions contemplated hereby.
This Agreement constitutes, and the other Transaction Documents to be executed
by Alon (when executed and delivered pursuant hereto for value received) will
constitute, the valid and legally binding obligations of Alon, enforceable in
accordance with their respective terms, subject to

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applicable bankruptcy, insolvency, moratorium, fraudulent conveyance,
reorganization or other similar laws relating to creditors’ rights and general
principles of equity, whether at equity or at law.
     5.3 No Violation; Litigation.
          (a) Neither the execution and delivery by Alon of this Agreement or
the other Transaction Documents, nor the consummation by Alon of the
transactions contemplated hereby or thereby in accordance with the terms hereof
and thereof, will:
          (i) conflict with or result in a breach of any provisions of the
certificate of incorporation or by-laws of Alon;
          (ii) violate, or conflict with, or result in a breach of any provision
of, or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under any of the terms, conditions or
provisions of any material Contract to which Alon or its Subsidiaries is a
party, or by which Alon or its Subsidiaries or any of their respective
properties or assets are bound; or
          (iii) require any material consent, approval or authorization of, or
declaration, filing or registration with, any Governmental Entity or other
Person (other than under the HSR Act) required to be obtained by Alon.
          (b) There is no action, suit or proceeding, claim, arbitration or
investigation pending against Alon or its assets or business or as to which Alon
has received any written notice of assertion, which could reasonably be expected
(i) to have a Material Adverse Effect on Alon, or (ii) to prevent or materially
alter or delay the transactions contemplated by this Agreement.
     5.4 No Brokers. Neither Alon nor any of its Affiliates has entered into any
Contract with any Person, or taken any other action, which may result in the
obligation to pay any investment banking or finder’s fees, brokerage or agent’s
commissions or other like payments in connection with the negotiations leading
to this Agreement or the consummation of the transactions contemplated hereby.
     5.5 Funds. Alon will have at the Closing Date the funds necessary to
consummate the Stock Purchase in accordance with this Agreement.
     5.6 Investment Purpose. Alon is an “accredited investor,” as such term is
defined in Regulation D of the Securities Act, and will acquire the Shares for
its own account and not with a view to a sale or distribution thereof in
violation of any securities laws and will not sell or distribute any of the
Shares in violation of any securities laws. Alon has the present intention of
holding the Shares for investment purposes.
     5.7 Access to Information.
          (a) During the course of the negotiation of this Agreement, Alon has
reviewed or been afforded the opportunity to review all information provided to
it by the Sellers and has had the opportunity to ask questions of and receive
answers to its satisfaction from

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representatives of the Sellers concerning the Acquired Companies, the Shares and
the Options, and to obtain any additional information reasonably requested by
it.
          (b) Alon has relied solely on its own review of the Acquired Companies
and the representations of the Sellers made in Articles III and IV of this
Agreement and in the Transaction Documents and not on any other representations
made by or on behalf of the Sellers or their representatives.
          (c) Alon has expertise in evaluating and investing in private
placement transactions of securities of companies similar to the Acquired
Companies and has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of the prospective
investment in the Shares.
          (d) EXCEPT AS OTHERWISE EXPRESSLY STATED TO THE CONTRARY IN THIS
AGREEMENT, ALON ACKNOWLEDGES AND AGREES THAT IT SHALL AT THE CLOSING (OR, IF
APPLICABLE, THE ASSET PURCHASE DATE) ACCEPT THE PROPERTY AND ASSETS OF THE
ACQUIRED COMPANIES IN AN “AS IS” AND “WHERE IS” CONDITION WITH ALL FAULTS,
SUBJECT TO THE PROVISIONS OF SECTION 6.1. IN PARTICULAR, BUT WITHOUT LIMITATION,
ALON ACKNOWLEDGES THAT EXCEPT FOR THE SELLERS’ EXPRESS REPRESENTATIONS AND
WARRANTIES IN THIS AGREEMENT AND THE TRANSACTION DOCUMENTS, THE SELLERS DO NOT
MAKE AND THE SELLERS, THEIR AFFILIATES AND AGENTS HAVE NOT MADE ANY
REPRESENTATIONS OR WARRANTIES OF ANY KIND WHATSOEVER, EITHER EXPRESS OR IMPLIED,
INCLUDING ANY REPRESENTATION OR WARRANTY WHATSOEVER AS TO TITLE,
MERCHANTABILITY, QUALITY, VALUE, CONDITION, SAFETY, CONFORMITY OR FITNESS FOR
ANY PARTICULAR USE OR PURPOSE OF ANY ASSETS OR OTHER PROPERTIES OF THE ACQUIRED
COMPANIES.
          (e) ALON ACKNOWLEDGES THAT IT IS ENGAGED IN AND EXPERIENCED IN THE
BUSINESS OF OWNING AND OPERATING REFINERIES. ALON ACKNOWLEDGES THAT, EXCEPT FOR
THE SELLERS’ EXPRESS REPRESENTATIONS AND WARRANTIES IN THIS AGREEMENT, IT IS
ENTERING INTO THIS AGREEMENT AND WILL PERFORM ITS OBLIGATIONS HEREUNDER
(INCLUDING THE STOCK PURCHASE) ON THE BASIS OF ALON’S OWN INVESTIGATION,
JUDGMENT AND CONCLUSIONS OF THE VALUE OF THE ACQUIRED COMPANIES AND THE BUSINESS
AND THE CONDITION OF THE PROPERTY, ASSETS, BUSINESS AND OPERATIONS OF THE
ACQUIRED COMPANIES (INCLUDING PHYSICAL AND ENVIRONMENTAL CONDITION) AND OF ALL
OTHER MATTERS RELATING TO SUCH VALUE AND SUCH PROPERTY, ASSETS, BUSINESS AND
OPERATIONS.
          (f) To the knowledge of Alon, the Sellers are not in breach, as of the
date hereof, of any of the representations or warranties of the Sellers
contained in this Agreement.

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ARTICLE VI
COVENANTS
     6.1 Conduct of Business. Except (i) as expressly contemplated in this
Agreement, or (ii) with the express written approval of Alon (which approval
shall not be unreasonably withheld or delayed), during the period from the date
hereof to the earlier of the termination of this Agreement or the Closing Date,
the Sellers shall cause the Acquired Companies:
          (a) to conduct their respective operations in the ordinary course, in
substantially the same manner as heretofore conducted;
          (b) to use commercially reasonable efforts to (i) preserve their
respective business organization and goodwill, (ii) keep available the services
of their respective employees in the ordinary course and (iii) maintain
satisfactory relationships with their customers, suppliers and other Persons
having business relationships with them;
          (c) to confer on a regular basis with one or more representatives of
Alon, including to report material operational matters and any proposals of the
Acquired Companies to engage in material transactions, and to provide such other
information as Alon may reasonably request;
          (d) not to amend the organizational documents of the Acquired
Companies;
          (e) to notify Alon within three Business Days of (i) any material
change in the condition (financial or otherwise) of the business, properties,
assets or liabilities of any of the Acquired Companies, or (ii) any material
litigation or investigations or hearings of any Governmental Entity against any
Acquired Company;
          (f) not to (i) issue any Capital Stock, effect any stock split or
combination, reclassify its Capital Stock or otherwise change its
capitalization, (ii) grant, confer or award any option, warrant, conversion
right or other right to acquire any of its Capital Stock, (iii) increase any
compensation or benefits or enter into or amend any employment, severance,
termination or similar Contract with any of its employees, officers or
directors, except for (A) ordinary increases in compensation and benefits to
employees consistent with past practice, (B) employment arrangements with new
employees that are consistent with employment arrangements for similarly
situated employees, and (C) arrangements that relate to the Employee Cash
Bonuses, (iv) adopt any new employee benefit plan or amend any existing employee
benefit plan in any material respect, except for (A) changes which may be
required by applicable law or (B) plans that relate to the Employee Cash
Bonuses, or (v) increase the amount, or expand the scope, of any indemnification
currently provided for employees, officers or directors;
          (g) not to (i) declare, set aside or pay any dividend or make any
other distribution or payment with respect to any of its Capital Stock (other
than the distribution of the equity interests in the Excluded Company to the
Sellers); or (ii) directly or indirectly redeem, purchase or otherwise acquire
any of its Capital Stock or that of any of the other Acquired Companies;

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          (h) except in the ordinary course of business consistent with past
practice to (i) use best efforts to maintain the assets of the Acquired
Companies in substantially the same condition existing as of the date of this
Agreement, (ii) not sell, lease or otherwise dispose of any assets, or enter
into any commitment to do so (other than entry into an agreement to sell, and
consummation of the sale, of the 1031 Assets to Alon, as contemplated herein);
and (iii) not move any asset to any location other than the Real Property;
          (i) not to (i) incur or assume any Debt or issue any Debt securities,
(ii) assume, guaranty, endorse or otherwise become liable or responsible
(whether directly, indirectly, contingently or otherwise) for the obligations of
any other Person; (iii) modify in any manner adverse to any of the Acquired
Companies any outstanding Debt of the Acquired Companies; or (iv) mortgage or
pledge any of its material assets, tangible or intangible, or create or suffer
to create any Lien of any kind in respect to such asset, except (A) the
incurrence of Debt under the Revolving Credit Agreement under subclause (i) to
the extent necessary to pay the Employee Cash Bonuses, and (B) in each case,
actions in the ordinary course of business consistent with past practice;
          (j) not to materially change any of its accounting principles or
practices, except as required pursuant to GAAP or applicable law;
          (k) not to:
          (i) enter into any Contract that would be required to be listed on
Section 4.4(a) of the Sellers’ Disclosure Schedule, or amend any Material
Contract (provided that (A) the Acquired Companies may enter into Contracts
without such approval if such Contracts relate to the supply of products to the
Acquired Companies in the ordinary course of business consistent with past
practice or the sale or distribution of products for any Acquired Company in the
ordinary course of business, which (1) are for a term of no more than 90 days or
are cancelable by it on no more than 90 days’ notice and without liability,
penalty or premium or (2) require payments of no more than $500,000 in any
twelve month period, and (B) the Acquired Companies may enter into Contracts
without such approval to the extent necessary or advisable to permit a change in
administrator of the Company’s 401(k) plan and to modify the waiting period for
eligibility under such plan);
          (ii) authorize any new capital expenditure or expenditures (except in
the ordinary course of business consistent with past practice or pursuant to
Contracts listed in Section 4.4(a) of the Sellers’ Disclosure Schedule) which,
individually, is in excess of $250,000 or, in the aggregate, are in excess of
$500,000 for the Acquired Companies, as a whole; or
          (l) not to pay, discharge or satisfy any Liabilities, other than
(A) the payment, discharge or satisfaction in the ordinary course of business of
Liabilities reflected, reserved against or disclosed in the Most Recent Balance
Sheet or incurred in the ordinary course of business thereafter consistent with
past practice or (B) the repayment of the Subordinated Debt in accordance with
this Agreement;

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          (m) not to settle or compromise any material pending or threatened
suit, action or claim, except settlements or compromises in the ordinary course
of business solely for monetary payments to be paid prior to the Closing;
          (n) not to make any material Tax election (other than in a manner
consistent with prior practices of the Acquired Companies), file any Tax Return
(other than Tax Returns due), settle or compromise any material Tax Liability
(other than Taxes due) or agree to an extension of a statute of limitations with
respect to any material amount of Tax (other than extensions for filing Tax
Returns), except to the extent the amount of any such Tax, settlement or
compromise has been reserved for in the Most Recent Balance Sheet; provided,
Alon shall not unreasonably withhold or delay consent as to such matters;
          (o) not to loan or advance any amount to, or sell, transfer or lease
any of its assets to, or enter into any Contract or other transaction with, or
otherwise make any payments to any Seller, the Excluded Company, or any of their
respective Affiliates (other than the Acquired Companies); except payments of
salary and advancement of expenses in the ordinary course, consistent with past
practice, to Sellers, in their capacity as employees of the Acquired Companies);
and
          (p) not to take any action or agree to take any action described in
Sections 6.1(a) through (o).
     During the period from the date hereof until the termination of this
Agreement or the Closing Date, the Sellers shall not exercise any right to
require the Company to redeem any of the Shares.
     6.2 Further Action.
          (a) Alon and the Sellers shall promptly prepare and file Notification
and Report Forms under the HSR Act with the Federal Trade Commission (the “FTC”)
and the Antitrust Division of the Department of Justice (the “Antitrust
Division”), but in no event later than five Business Days after the date hereof,
and respond as promptly as practicable to all inquiries received from the FTC or
the Antitrust Division for additional information or documentation.
          (b) Upon the terms and subject to the conditions of this Agreement,
the Sellers, on the one hand, and Alon, on the other hand, shall use
commercially reasonable efforts, and with respect to clause (i), Alon shall use
its best efforts, to take, or cause to be taken, all other actions, and to do,
or cause to be done, all other things necessary, proper or advisable (i) to
consummate, and make effective as promptly as practicable the transactions
contemplated in this Agreement, (ii) to obtain in a timely manner all waivers,
consents and approvals with respect to the execution and delivery of this
Agreement and the performance of the transactions contemplated hereby, including
to obtain the HSR Approval, to obtain the release of the Bank Pledge and to
obtain the consents set forth in Section 4.4(d) of the Sellers’ Disclosure
Schedule, and (iii) otherwise to satisfy or cause to be satisfied in all
material respects all conditions precedent to its obligations under this
Agreement.

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          (c) Without limiting subsections (a) and (b) of this Section 6.2, Alon
shall take all actions necessary to obtain the HSR Approval, provided however,
Alon shall not be required to agree to commit to divest, hold separate, offer
for sale, abandon, limit its operation of or take similar action with respect to
any assets (tangible or intangible) or any business interest of it or any of its
Subsidiaries (including the Company after consummation of the transaction
contemplated by this Agreement) in each case existing as of the date of this
Agreement in connection with or as a condition to obtaining HSR Approval.
          (d) The Sellers shall deliver the notices and request the consents set
forth on Section 4.4(d) of the Sellers’ Disclosure Schedule as soon as
practicable after the date hereof, and the parties shall pursue such consent
requests in a good faith and diligent manner. The Sellers further agree to
provide Alon with detailed progress reports on such requested consents on at
least a weekly basis.
          (e) Within one Business Day after the Company’s receipt thereof, the
Sellers shall deliver to Alon true and complete copies of the consolidated
balance sheet and related consolidated statements of operations, retained
earnings and cash flows for the Company and its Subsidiaries as of and for the
year ended December 31, 2005 audited by the independent public accountants of
the Company with such accountants’ unqualified reports attached thereto (the
“2005 Financial Statements"). With respect to each calendar month ending after
December 31, 2005 and prior to the earlier of termination of this Agreement or
the Closing Date, the Sellers shall provide monthly financial statements for
such calendar month (the “Interim Statements") to Alon, within two Business Days
following the time such financial statements are completed.
     6.3 Access to Information; Confidentiality.
          (a) From the date hereof until the termination of this Agreement or
the Closing Date, upon reasonable notice and subject to applicable laws, the
Sellers shall cause the Acquired Companies to afford Alon and its accountants,
counsel, and other representatives, during normal business hours and subject to
the Seller’s reasonable security requirements, access to all of the properties
and assets, books, Contracts, records and personnel of the Acquired Companies
reasonably requested by Alon. Alon shall, and shall cause its advisors and
representatives to:
          (i) conduct its investigation in such a manner that will not
unreasonably interfere with the normal operations, customers or employee
relations of the Acquired Companies, and
          (ii) treat as confidential in accordance with the terms of the
Confidentiality Agreement all such information obtained hereunder or in
connection herewith and not otherwise known to them prior to execution of the
Confidentiality Agreement.
          (b) From the date hereof until the termination of this Agreement or
the Closing Date, each party shall furnish promptly to the other a copy of all
filings made by such party or its Affiliates with any Governmental Entity in
connection with the transactions

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contemplated in this Agreement and all written communications received from such
Governmental Entities related thereto.
          (c) The Sellers shall, and shall cause their respective employees,
accountants, counsel, consultants, advisors, agents and Affiliates to hold, in
confidence, unless compelled to disclose by judicial, administrative or other
legal process or by other requirements of law or disclosed in a legal proceeding
brought by a party hereto to enforce its rights or in the exercise of its
remedies hereunder, all proprietary and confidential documents and information
of or concerning Alon and its Affiliates, and if the Closing occurs, the
Acquired Companies, and their respective businesses and affairs, except to the
extent that such information is or becomes generally available to the public
other than as a direct result of the disclosure of any such information by a
Seller or any of their respective Affiliates after the Closing Date.
          (d) Neither the Sellers nor, prior to the Closing, any of the Acquired
Companies shall, without the prior written consent of Alon, terminate, amend,
modify or waive any provision of any confidentiality or similar agreement
pertaining to proprietary or confidential documents or information of or
concerning the Acquired Companies or their respective businesses to which any of
the Sellers or any Acquired Company is a party. Each of the Sellers and, prior
to the Closing, the Acquired Companies shall enforce, to the fullest extent
permitted under applicable law, the provisions of any such agreements, including
using commercially reasonable efforts to obtain injunctions to prevent any
breaches of such agreements and to enforce specifically the terms and provisions
thereof in any court having jurisdiction over the matter.
          (e) Each party shall promptly notify the other parties orally and in
writing if such party becomes aware (unless such party knows that the other
party has actual knowledge) of:
          (i) (A) the material inaccuracy at any time of any representation or
warranty contained in this Agreement of any party, (B) the material breach of
any covenant or agreement under this Agreement of any party, or (C) the
inability of such party to comply with or satisfy in any material respect any
covenant, condition or agreement under this Agreement;
          (ii) any notice or other communication from any third party alleging
that the consent of such third party is or may be required in connection with
the transactions contemplated in this Agreement or the other Transaction
Documents;
          (iii) any notice or other communication from any Governmental Entity
in connection with this Agreement or the transactions contemplated hereby; and
          (iv) any change that could reasonably be expected to have a Material
Adverse Effect on the Company, or could reasonably be expected to delay or
impede the ability of Alon to fulfill its obligations set forth herein.
     6.4 Publicity. The initial press release and other public communications
relating to this Agreement shall be in the form heretofore approved by the
parties, and thereafter until the Closing Date or termination of this Agreement,
the Sellers and Alon shall, subject to their

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respective legal obligations (including requirements of stock exchanges and
similar Governmental Entities), consult with each other, and use reasonable
efforts to agree upon the text of any press release or other public
communication, before issuing any such press release or public communication
with respect to the transactions contemplated hereby and in making any filings
with any Governmental Entity or with any national securities exchange with
respect thereto.
     6.5 Expenses; Law Firms.
          (a) Except as set forth herein, all costs and expenses (including fees
of attorneys, accountants and brokers or finders) incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such expenses; provided however, Alon, on the one hand, and the
Sellers, on the other hand, shall each be responsible for one half of (i) all
filing fees in connection with the filings required by the HSR Act, (ii) all
fees of the entity providing the inventory measurement as set forth in
Schedule 2.4(b), and (iii) the premium for the Tail Policy. Notwithstanding the
foregoing, if the Stock Purchase is consummated, all legal, accounting,
financial advisory, consulting, investment banking, brokers and finders fees and
expenses incurred by the Company or the Sellers relating to the negotiation,
preparation and carrying out of this Agreement and the transactions contemplated
hereby, and obtaining all authorizations, consents, orders or approvals of, or
declarations or filings with, all Governmental Entities in connection with such
transactions, including fees and other expenses under the HSR Act, for inventory
measurement and the Tail Policy (the “Company Transaction Expenses”) shall be
paid by the Company prior to the Closing Date in accordance with Section 2.3(a).
          (b) Alon acknowledges that the law firms representing the Sellers and
the Company in connection with the Stock Purchase listed on Schedule 6.5 have
long-standing relationships with the Sellers, and notwithstanding any payment by
the Company of any legal fees of the Sellers or the Acquired Companies pursuant
to Section 6.5(a), in the event of any dispute or potential dispute between the
parties hereto, the Sellers may desire to engage one or more of such law firms
to advise the Sellers in connection with such dispute or potential dispute or
any other matter. Accordingly, Alon hereby agrees that it shall not, and shall
not permit any of the Acquired Companies to, assert any claim that such
representation of the Sellers by such law firms in any such matter creates an
impermissible conflict of interest with the interests of the Acquired Companies
(or any one of them) under the applicable rules of professional conduct. If the
Closing occurs, to the extent of any such potential conflict of interest, Alon
hereby waives, on behalf of itself, and the Acquired Companies, any such
conflict, and with a full understanding of the implications of such potential
conflicts of interest, provides its informed consent to the representation of
the Sellers by any or all of such law firms in any such matters that may be
adverse to Alon or the Acquired Companies.
     6.6 Employee Matters.
          (a) Until December 31, 2007, Alon shall cause the Acquired Companies
to provide the continuing employees of the Acquired Companies employee benefits
that are substantially equivalent to those provided to such employees as of the
Closing Date by the Acquired Companies. Such benefits shall be provided though
Company Benefit Plans, Alon

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benefit plans or policies, or a combination of the foregoing, as determined by
Alon in its discretion. Following the Closing, Alon shall recognize the years of
service of each continuing employee of the Acquired Companies with the Acquired
Companies prior to the Closing Date for all purposes (other than benefit accrual
under a defined benefit pension plan) under the employee benefit plans and
policies of Alon; provided, that such service shall not be recognized to the
extent that such recognition would result in a duplication of benefits for the
same period of service or to the extent that such service was not recognized
under the corresponding Company Benefit Plan. To the extent that the continuing
employees of the Acquired Companies become covered by any Alon group health
plan, Alon shall cause any and all pre-existing condition (or actively at work
or similar) limitations, eligibility waiting periods and evidence of
insurability requirements under such plans to be waived with respect to such
continuing employees of the Acquired Companies and their eligible dependents, to
the extent satisfied under a corresponding Company Benefit Plan, and shall
provide them with credit for any co-payments, deductibles, and offsets (or
similar payments) made during the plan year including the date such employees
become eligible to participate in such Alon group health plan for the purposes
of satisfying any applicable deductible, out-of-pocket, or similar requirements
under any such plan. For purposes of this Section 6.6, “continuing employee of
the Acquired Companies” means an employee of the Acquired Companies as of the
Closing Date.
          (b) Nothing contained in this Section 6.6 shall confer upon any
employee of the Acquired Companies any right to continued employment or
participation in any Company Benefit Plan at any time after the Closing Date.
          (c) If within one year after the Closing Date, the employment of any
continuing employee of the Acquired Companies is terminated by the Acquired
Company employer of such continuing employee (excluding any termination which is
concurrent with the hiring of such continuing employee by another Acquired
Company or an Affiliate of such Acquired Company), for other than cause (as
defined under applicable law), the Acquired Companies shall pay such employee a
lump sum, promptly after such termination, equal to the product of (i) two weeks
of such employee’s base salary immediately prior to such termination (excluding
any overtime or bonus payments) and (ii) the number of years of continuous
service of such continuing employee with the Acquired Companies. The foregoing
payments shall not apply to any continuing employee of the Acquired Companies
who is party to a Contract with one of the Acquired Companies that provides for
severance benefits upon termination of the employment of such employee or any
continuing employee subject to a collective bargaining agreement or other labor
contract.
          (d) Alon shall be solely responsible for any required notice and
payments under the Worker Adjustment Retraining and Notification Act of 1988
(the “WARN Act”) and any similar state statutes, and otherwise to comply with
any such statute with respect to any “plant closing” or “mass layoff” (as
defined in the WARN Act) or group termination or similar event affecting any
continuing employees of the Acquired Companies occurring on or after the Closing
Date. The Sellers shall be solely responsible for causing the Acquired Companies
to provide any required notice and payments under the WARN Act, and any similar
state statutes, and otherwise to comply with any such statute with respect to
any “plant closing” or “mass layoff” (as defined in the WARN Act) or group
termination or similar event affecting any employees of the Acquired Companies
before the Closing Date.

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          (e) Prior to the Closing, the Sellers shall take all actions necessary
to terminate the participation in the Company Benefit Plans, effective as of the
Closing Date, of each Person that is not an Acquired Company, including, without
limitation, Signal Hill Petroleum Inc.
     6.7 Third Party Acquisition.
          (a) From and after the date of this Agreement until the earlier of the
Closing or termination of this Agreement, each of the Sellers, and their
Affiliates (including the Acquired Companies) and their respective officers,
directors, trustees, employees, representatives (including, without limitation,
any investment banker, attorney or accountant) and agents shall immediately
cease any discussions or negotiations with any Persons with respect to any Third
Party Acquisition, and none of the Sellers, their Affiliates (including the
Acquired Companies) nor any of their respective officers, directors, trustees,
employees, representatives (including, without limitation, any investment
banker, attorney or accountant) or agents shall, directly or indirectly,
encourage, solicit, participate in or initiate any inquiries, discussions or
negotiations with or, except as expressly required to comply with the provisions
of the Agreement listed on Schedule 6.7, provide any information or access to
any Person concerning any potential Third Party Acquisition or otherwise
facilitate any effort to make a Third Party Acquisition. The Sellers shall
promptly communicate to Alon the existence or occurrence and the terms of any
potential Third Party Acquisition or contact related to any potential Third
Party Acquisition that the Sellers, their Affiliates (including the Acquired
Companies) or any of their respective officers, directors, trustees, employees,
representatives or agents, receive in respect of such a proposed transaction,
and the identity of the Person from whom such proposal or contact was received.
          (b) “Third Party Acquisition” means the acquisition by a Person or
group, other than Alon or any Affiliate of Alon, in a single transaction or
series of transactions, of any of the Capital Stock or the operating or other
tangible assets of any of the Acquired Companies (other than inventory in the
ordinary course of business), or any interest therein, whether by sale or other
disposition of Capital Stock, sale, lease or other disposition of assets, merger
or otherwise, or any other transaction that would interfere with the Stock
Purchase; provided however, a Third Party Acquisition shall not include the
Option Purchase or the distribution of the Excluded Company to the Sellers.
     6.8 Restrictive Covenants.
          (a) For a period of two years from the Closing Date, each of the
Sellers shall not, and each Seller shall cause each of its Affiliates under its
control not to, directly or indirectly:
          (i) perform any act to encourage the following: (A) soliciting or
recruiting any employees of the Acquired Companies; (B) soliciting or
encouraging any employee of the Acquired Companies to leave the employment of
the Acquired Companies; or

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          (ii) solicit or encourage any contractor or other supplier of the
Acquired Companies to terminate or adversely alter in any material respect any
relationship such supplier may have with any of the Acquired Companies.
          Notwithstanding the foregoing, nothing herein shall prohibit general
solicitations by the Sellers or their Affiliates not directed at any specific
employees of the Acquired Companies, including any newspaper advertisements or
internet job postings.
          (b) The Sellers acknowledge that if they violate any of the covenants
contained in Section 6.8(a) (collectively, the “Restrictive Covenants”), it will
be difficult to determine the resulting damages to Alon and, in addition to any
other remedies Alon may have, Alon shall be entitled to temporary or permanent
injunctive relief without the necessity of proving actual damages. Each Seller
shall be solely liable for a breach by such Seller of the covenants contained in
this Section 6.8, and such liability shall not be joint. The non-prevailing
party or parties shall be severally liable to pay all costs, including
reasonable attorneys’ fees and expenses, that the prevailing party or parties
may incur in enforcing or defending, to any extent, any of the Restrictive
Covenants.
     6.9 Directors; Indemnification.
          (a) Effective as of the Closing Date, the Sellers shall cause all
directors of the Acquired Companies to resign.
          (b) From and after the Closing, Alon shall cause the Acquired
Companies to continue to honor, with respect to all persons who served as
directors and/or officers of the Acquired Companies prior to the Closing, the
provisions of their respective organizational documents relating to the
exculpation and indemnification of their respective directors and officers as
such provisions are in effect on the date hereof.
          (c) Prior to the Closing, the Sellers may, or may cause the Company
to, obtain a “tail” policy providing for coverage comparable to that provided
under the Company’s director and officer liability and employment practices
insurance as in effect on the date hereof in respect of claims made during a
period ending six years after the Closing Date with respect to the current and
former directors and officers of the Company (the “Tail Policy”).
     6.10 Employee Cash Bonuses. At or prior to the Closing, the Company may pay
cash bonuses (the “Employee Cash Bonuses”) to certain employees of the Company
designated by the Sellers, in their sole discretion (the “Designated
Employees"). The Sellers shall notify Alon in writing at least one Business Day
prior to the Closing Date of the aggregate amount of the Employee Cash Bonuses
and the amount to be paid to each Designated Employee, which amounts shall be
determined in the sole discretion of the Sellers.
     6.11 Termination of the Stockholder Agreement. On or before the Closing
Date, the Sellers shall terminate the Stockholder Agreement.

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     6.12 Sellers’ Representative.
          (a) The Sellers shall until at least five years after the Closing Date
maintain a representative (the “Sellers’ Representative”) for purposes of:
          (i) giving and receiving notices and communications to or from Alon
(on behalf of itself or any other Alon Indemnified Party) and/or the Escrow
Agent relating to this Agreement, the Holdback Escrow Agreement or any of the
transactions and other matters contemplated hereby or thereby (except to the
extent that this Agreement or the Holdback Escrow Agreement expressly
contemplates that any such notice or communication shall be given or received by
a Seller individually);
          (ii) authorizing deliveries to Alon of cash out of the Holdback Amount
in satisfaction of claims asserted by Alon (on behalf of itself or any other
Alon Indemnified Party, including by not objecting to such claims) for which the
Sellers are jointly liable;
          (iii) objecting to such claims pursuant to Article VII;
          (iv) consenting or agreeing to, negotiating, entering into settlements
and compromises of, and prosecuting and defending litigation, arbitration or
other proceedings with respect to, such claims;
          (v) asserting, negotiating, entering into settlements and compromises
of, and prosecuting and defending litigation, arbitration or other proceedings
with respect to, any other claim by any Alon Indemnified Party against the
Sellers for which they are jointly liable, in each case relating to this
Agreement, the Holdback Escrow Agreement or the transactions contemplated hereby
or thereby; and
          (vi) taking all actions necessary or appropriate in the judgment of
the Sellers’ Representative for the accomplishment of the foregoing.
          No Seller will have any right to receive any such notice or
communication or take any of the foregoing actions individually.
          (b) Within 10 Business Days after the date hereof the Sellers shall
appoint the initial Sellers’ Representative, and notify Alon in writing as to
the identity of such person. The Sellers (or their successors), may elect
replacements to the Sellers’ Representative by the affirmative vote of at least
three of the four Sellers, provided that Alon is notified in writing thereof
(including written agreement by such replacement to serve as the Sellers’
Representative as set forth herein). Each of the Sellers acknowledge that
actions taken, consents given and representations made by the Sellers’
Representative on behalf of the Sellers pursuant hereto shall be binding upon
the Sellers. This appointment and grant of power and authority by each Seller is
coupled with an interest and is irrevocable and shall not be terminated by any
act of the Seller or by operation of law, whether by the death or incapacity of
the Seller or by the occurrence of any other event. The Sellers’ Representative
is authorized by the Sellers to take any action on behalf of the Sellers to
facilitate or administer the transactions contemplated hereby, including without
limitation, amending this Agreement, and executing such other documents or
instruments as the Sellers’ Representative deems necessary or appropriate.

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     6.13 Release. In consideration of the payments of the Purchase Price by
Alon to the Sellers, but subject to Section 6.9, each Seller hereby gives the
following general release effective as of the Closing Date.
          (a) Each Seller on behalf of himself or itself and his or its agents
(including its trustees, if applicable), successors and assigns, hereby
irrevocably and unconditionally releases, acquits and forever discharges each of
Alon, the Acquired Companies, and their respective partners, stockholders,
members, directors, officers and agents, and respective successors and assigns
(collectively, the “Released Parties”), to the extent not prohibited by
applicable law, from any and all charges, complaints, claims, obligations,
promises, agreements, controversies, damages, causes of action, suits, demands,
remedies, costs, losses, debts, expenses and fees, of every type, kind, nature,
description or character, whether known or unknown, suspected or unsuspected,
liquidated or unliquidated, including those arising out of or in connection with
(i) the Seller’s employment with any of the Acquired Companies, if any, (ii) any
equity or other interests the Seller may have or claim to have in the Acquired
Companies, and (iii) the assets, properties, business, operations and
Liabilities of the Excluded Company, whether before, on or after the Closing
Date, or the existence of Hazardous Materials in or on soils, sediments, surface
water or groundwater at, on, under or from such assets and properties, in each
case arising from events, occurrences or circumstance prior to the Closing (the
“Claims”). Each Seller represents that he or it has not heretofore assigned or
transferred or purported to have assigned or transferred to any Person any
Claims released, acquitted and forever discharged herein. This general release
shall not affect any rights that the Sellers may have which arise solely under
this Agreement, including payment of the Purchase Price, or that arise after the
Closing Date.
          (b) Each Seller acknowledges and agrees that the releases made herein
constitute final and complete releases of the Released Parties with respect to
all Claims. Each Seller expressly acknowledges and agrees that this general
release is intended to include in its effect, without limitation, all Claims
which Seller does not know or suspect to exist in his or its favor at the time
hereof, and this general release contemplates the extinguishment of any and all
such Claims. In this regard, each Seller expressly waives the provisions of
Section 1542 of the California Civil Code, which states:
          A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR.
Furthermore, each Seller hereby expressly waives and relinquishes any rights and
benefits he or it may have under other statutes or common law principles of
similar effect. Each Seller understands that the facts under which he or it
gives this full and complete release and discharge of the Released Parties may
hereafter prove to be different than now known or believed by such Seller and
such Seller hereby accepts and assumes the risk thereof and agrees that his or
its full and complete release and discharge of the Released Parties shall remain
effective in all respects and not be subject to termination, rescission or
modification by reason of any such difference in facts.

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     6.14 Distribution of Excluded Company. Subject to compliance of Alon with
its obligations in Section 6.19, on or before the Closing Date, the Sellers
shall cause all of the equity interests in the Excluded Company to be
transferred to the Sellers in their Pro Rata Portion as a distribution in
partial redemption of the stock of the Company.
     6.15 Subordinated Debt. On or before the Closing Date, the Sellers shall
cause the Company to repay to the Sellers the principal amount of the
Subordinated Debt. For the avoidance of doubt, the net effect of such repayment
shall not result in any adjustment to the Purchase Price.
     6.16 Holdback Escrow Agreement. At or prior to the Closing, Alon and the
Sellers shall, and shall use commercially reasonable efforts to cause the Escrow
Agent to, execute the Holdback Escrow Agreement.
     6.17 Casualty; Condemnation. In the event that, after execution of this
Agreement but prior to the Closing Date, any material asset of the Acquired
Companies is subject to (a) loss, destruction or damage (a “Casualty”), or
(b) condemnation or partial condemnation by a Governmental Entity (a
“Condemnation”), all proceeds from any insurance claims, condemnation awards,
compensation or other reimbursements relating to such Casualty or Condemnation
(i) received by any Seller or any Affiliate of a Seller, whether before, on or
after the Closing Date, shall be promptly paid over to the Company, or
(ii) received by the Company whether before, on or after the Closing Date, shall
be retained by the Company (and may, for the avoidance of doubt, at the
Company’s sole option, be used to repair any such loss, destruction or damage).
Any party receiving a notice of Casualty or Condemnation shall notify all other
parties to this Agreement in accordance with Section 11.3.
     6.18 Title Commitments. Prior to the Closing, Alon may in its sole
discretion obtain a title commitment (the “Title Commitment”) for one or more
ALTA title insurance policies (the "Title Policies”) to be issued by a title
company selected by Alon (the “Title Company”) and a survey (the “Survey”) with
respect to each parcel of Owned Real Property and Leased Real Property. Each
Title Commitment shall list as exceptions all matters that may affect title to
such Owned Real Property, including, without limitation, all easements,
covenants, restrictions, Liens, encumbrances, tenancies and other exceptions to
title affecting title to the applicable parcel of Real Property (collectively,
the “Exceptions”) and shall include copies of all instruments creating such
Exceptions. Alon may following its review of any Title Commitment and no more
than ten days after receipt of the Title Commitment, provide the Acquired
Companies with written notice of objection to any Exceptions (other than the
Permitted Liens, except Permitted Liens which are unrecorded Liens) that it
claims constitutes a title or survey defect that first occurred during the
period such Owned Real Property was owned by the Acquired Companies, or if a
shorter period, during the period the applicable Acquired Company was owned,
directly or indirectly, by the Sellers (the “Title Objections”). The Acquired
Companies shall use commercially reasonable efforts to cure or remove such Title
Objections to Alon’s reasonable satisfaction prior to Closing; provided however,
so long as the Acquired Companies have used commercially reasonable efforts to
cure or remove such Title Objections, the cure or removal of such Title
Objections shall not be a condition of Alon to close the transactions
contemplated hereby. Sellers and the Acquired Companies agree to reasonably
cooperate with Alon in executing any documents reasonably requested by the Title
Company which may be necessary to

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issue the Title Policies, including providing any affidavit reasonably requested
by the Title Company or Alon to evidence the payment or satisfaction of any
Liens, to evidence the payment of any Taxes affecting the Owned Real Property,
or to evidence the satisfaction of any other matter which Alon may be required
to establish in order to obtain the Title Policies or any endorsement thereto
(other than in each case, Permitted Liens, except Permitted Liens which are
unrecorded Liens, if satisfied). Alon shall pay the premium for the Title
Policies, fees for title searches and costs of any endorsements or deletions to
the Title Policies. In addition, Alon shall pay for the costs of Surveys, if
any, that Alon elects to obtain with respect to the Real Property or any portion
thereof.
     6.19 Bank Facilities.
          (a) At the Closing, Alon will pay to, or make available to the Company
for payment to, the lenders under the Term Loan Agreement an amount sufficient
to repay the principal and accrued but unpaid interest outstanding thereunder as
of the Closing Date, together with all Prepayment Penalties and other amounts
due to such lenders in connection with such repayment. The Sellers will cause
the Company to apply all funds made available to it pursuant to the immediately
preceding sentence to the payments to the lenders under the Term Loan Agreement
in the manner contemplated by the immediately preceding sentence.
          (b) The Sellers and the Acquired Companies shall comply with all
reasonable requests of Alon to assist Alon in its efforts to (i) cause the
Revolving Credit Agreement, and the ability of the Company to effect borrowings
thereunder and under the credit facilities provided for therein, to remain in
full force and effect immediately after and unaffected by the Closing (subject
to Alon pledging the Shares as security for the Acquired Companies’ obligations
thereunder if and to the extent requested by the lenders thereunder) or
(ii) cause all Liens securing indebtedness and other amounts due under the
Revolving Credit Agreement to be released effective as of the Closing (subject
to Alon’s fulfillment of its obligations under the immediately succeeding
sentence). If, as of five Business Days prior to the Closing, the parties have
not received the consent of the lenders under the Revolving Credit Agreement to,
as of the Closing, (i) keep the Revolving Credit Facility in full force and
effect after the Closing, (ii) release all existing guarantors, sureties, and
indemnitors (other than the Acquired Companies) of or under the Revolving Credit
Agreement, and any related agreements executed in connection with the Revolving
Credit Agreement, from their respective obligations, and (iii) fully reconvey
the Upper Bluff Property from any recorded deed of trust encumbering the Upper
Bluff Property granted in connection with the Term Loan Agreement, then Alon, at
the Closing, shall pay to, or make available to the Company for payment to, the
lenders under the Revolving Credit Agreement an amount sufficient to repay the
principal and accrued but unpaid interest outstanding thereunder as of the
Closing Date, together with all Prepayment Penalties and other amounts due to
such lenders in connection with such repayment.

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ARTICLE VII
SURVIVAL; INDEMNIFICATION
     7.1 Survival of Representations and Warranties; Effect of Materiality
Qualifiers.
          (a) The representations and warranties made in this Agreement shall
survive the Closing as follows:
          (i) the representations and warranties in Sections 3.1, 3.2, 4.1(a),
4.2, 4.3(a) and (c), 4.15(c), 5.1(a) and 5.2 shall survive the Closing
indefinitely;
          (ii) the representations and warranties in Sections 4.9 and 4.10 shall
survive until 90 days after the applicable statute of limitations (subject, in
the case of Section 4.9, to the covenants of Alon in Section 8.2(c) regarding
granting of extensions of any statute of limitations and its covenant to timely
file);
          (iii) the representations and warranties in Sections 4.12, 4.22 and
5.4 shall survive the closing and will not terminate until the third anniversary
of the Closing Date; and
          (iv) all other representations and warranties in this Agreement shall
survive the Closing and will not terminate until the first anniversary of the
Closing Date (the “First Holdback Termination Date”);
provided, however, that if a written notice of a claim under Section 7.2(a)(i)
or 7.2(b)(i) has been given pursuant to Section 7.4 prior to the expiration of
the applicable survival period, then the party giving such notice shall continue
to have the right to be indemnified with respect to the matter or matters to
which such claim relates until such claim has been finally resolved.
          (b) The covenants and agreements of the parties hereto contained in
this Agreement shall, subject to the express terms thereof, survive the Closing
indefinitely (subject to the expiration of the statute of limitations, or
termination of rights under laches or other equitable bar to the matters covered
thereby).
          (c) Subject to Section 7.3(a) and (b), for purposes of this Article
VII, in determining (i) whether any representation or warranty in this Agreement
was true and correct as of any particular date and (ii) the amount of any
Damages in respect of the failure of any such representation or warranty to be
true and correct as of any particular date, any qualification or limitation as
to materiality (whether by reference to Material Adverse Effect or otherwise)
contained in such representation or warranty shall be disregarded.
     7.2 Indemnification.
          (a) Each of the Sellers shall, jointly and severally, indemnify and
hold harmless Alon, its Affiliates (including the Acquired Companies following
the Closing) and each of their respective officers, directors, employees,
agents, successors and assigns (the “Alon Indemnified Parties”) from any and all
costs, expenses, losses, Liabilities, damages, amounts paid in settlement,
claims, interests, awards, judgments, fines, diminution of value and penalties

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(including reasonable legal, accounting and consulting fees and expenses and any
other reasonable out-of-pocket expenses) actually suffered or incurred by them
(including in connection with any action, suit or proceeding brought or
otherwise initiated by any of them) (collectively "Damages”), arising out of or
resulting from:
               (i) any failure of any representation or warranty made by the
Sellers in this Agreement or any of the other Transaction Documents to be true
and correct as of the Closing Date; provided however, that each Seller shall be
solely liable for a breach by such Seller of the representations and warranties
of such Seller in Article III, and such liability shall not be joint;
               (ii) any breach of any covenant of the Sellers contained in this
Agreement required to be performed on or prior to the Closing;
               (iii) any breach of any covenant of the Sellers contained in this
Agreement, by its terms, required to be performed after the Closing; provided
however, that each Seller shall be solely liable for a breach by such Seller of
the covenants contained in Section 6.8, and such liability shall not be joint;
               (iv) the Employee Cash Bonuses or the Company Transaction
Expenses; and
               (v) the assets, properties, business, operations and Liabilities
of the Excluded Company, whether before, on or after the Closing Date, or the
existence of Hazardous Materials in or on soils, sediments, surface water or
groundwater at, on, under or from such assets and properties, in each case
arising from events, occurrences or circumstances prior to the Closing.
          (b) Alon shall indemnify and hold harmless the Sellers and their
Affiliates and each of their respective officers, directors, employees, agents,
successors and assigns (the “Seller Indemnified Parties”) from any and all
Damages arising out of or resulting from:
               (i) any failure of any representation or warranty made by Alon in
this Agreement or any of the other Transaction Documents to be true and correct
as of the Closing Date;
               (ii) any breach of any covenant of Alon contained in this
Agreement; and
               (iii) the conduct of the business and operations of the Acquired
Companies after the Closing Date.
     7.3 Other Limitations.
          (a) Except for claims based on fraud or intentional misrepresentations
by the Sellers and claims relating to the matters arising under Section 3.1,
3.2, 4.1(a), 4.2 or 4.3(a) and (c) to which the thresholds described in this
Section 7.3(a) shall be inapplicable, the Sellers shall have no liability (for
indemnification or otherwise) with respect to (i) any individual claim based

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on an occurrence, event or circumstance relating to the matters described in
Section 7.2(a)(i), unless the Damages with respect to such claim exceed $85,000,
or (ii) the matters described in Section 7.2(a)(i) until the total of all
Damages with respect to such matters exceeds $2,000,000, and then only for the
amount by which such Damages exceed $2,000,000 (and for such purpose, no claims
excluded under clause (i) shall be included in determining if such aggregated
Damages have been met).
          (b) Except for claims based on fraud or intentional misrepresentations
by Alon and claims relating to the matters arising under Section 5.1(a) or 5.2,
Alon shall have no liability (for indemnification or otherwise) with respect to
(i) any individual claim based on an occurrence, event or circumstance relating
to the matters described in Section 7.2(b)(i), unless the Damages with respect
to such claim exceed $85,000, or (ii) the matters described in Section 7.2(b)(i)
until the total of all Damages with respect to such matters exceeds $2,000,000,
and then only for the amount by which such Damages exceed $2,000,000 (and for
such purpose, no claims excluded under clause (i) shall be included in
determining if such aggregated Damages have been met).
          (c) In no event will the Sellers’ liability (for indemnification or
otherwise) with respect to the matters in Section 7.2(a)(i) exceed, in the
aggregate, $40,000,000, provided however, (i) the Sellers’ liability for claims
or causes of action arising from fraud or intentional misrepresentation by the
Sellers or arising from the representations and warranties contained in
Sections 3.1, 3.2, 4.1(a), 4.2 and 4.3(a) and (c) shall not be limited to
$40,000,000 (collectively, with fraud and intentional misrepresentation, the
“Excluded Claims”); provided that with respect to the Excluded Claims, in no
event shall the aggregate liability of the Sellers for Damages relating to the
Excluded Claims exceed the Purchase Price. Notwithstanding the foregoing, if the
Alon Indemnified Parties are entitled to recover any Damages relating to claims
or causes of action arising from the Excluded Claims or the matters set forth in
Sections 7.2(a)(ii), (iii), (iv) or (v), the Alon Indemnified Parties shall
first satisfy such claims for indemnification from the Holdback Amount, and if
the Holdback Amount is depleted and shall be insufficient to pay the full amount
of such Damages, then such amounts shall be paid by the Sellers.
          (d) Only the Sellers’ Representative, on behalf of the Seller
Indemnified Parties, may assert a claim for indemnification against Alon
pursuant to this Article VII.
          (e) The amount of any Damages subject to indemnification hereunder
shall be reduced by any insurance proceeds actually received by the indemnified
party from an unrelated third party on account of such Damages prior to the time
payment by the indemnifying party is due and payable under this Agreement. In
the event that the indemnifying party pays to or on behalf of an indemnified
party any amount in respect of Damages subject to indemnification under this
Article VII prior to the indemnified party’s receipt, directly or indirectly, of
any insurance proceeds on account of such Damages from an unrelated third party
which duplicate, in whole or in part, the payment made by the indemnifying party
to or on behalf of the indemnified party, the indemnified party shall remit to
the indemnifying party an amount equal to the amount of the insurance proceeds
actually received by the indemnified party on account of such Damages which
duplicate, in whole or in part, the payment made by the indemnifying party to or
on behalf of the indemnified party.

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          (f) The amount of any Damages subject to indemnification hereunder
shall be reduced by the amount of any net Tax benefit actually realized by such
Person after the Closing Date on account of such Damages prior to the time
payment by the indemnifying party is due and payable under this Agreement. In
the event that the indemnifying party pays to or on behalf of an indemnified
party any amount in respect of Damages subject to indemnification under this
Article VII and, subsequent to such payment the indemnified party actually
realizes a net Tax benefit on account of such Damages, the indemnified party
shall remit to the indemnifying party an amount equal to the amount of such net
Tax benefit actually realized on account of such Damages.
          (g) Notwithstanding anything contained herein to the contrary, the
Sellers shall have no liability hereunder for any Damages to the extent specific
reserves for such Damages were reflected on the Closing Date Financial
Statements and had the effect of reducing the Closing Date Adjusted Book Value.
          (h) If Alon commences any legal proceedings seeking indemnification
hereunder, it shall use commercially reasonable efforts (for a period of
30 days) to serve, and join in such action, all of the Sellers potentially
liable therefor. Notwithstanding the foregoing, except as expressly set forth
herein, each of the Sellers shall be jointly and severally liable to the Alon
Indemnified Parties hereunder for 100% of the Damages to which the Alon
Indemnified Parties are entitled under this Agreement. Nothing herein shall
effect the rights of such Sellers to contribution from the other Sellers.
          (i) Except for matters disclosed in the Sellers’ Disclosure Schedule,
to the extent that such matters constitute exceptions to the Sellers’
representations and warranties, and provided, in the case of Alon, it is in
material compliance with its representations and warranties in Section 5.7(f)
and its covenants in Section 6.3(e), and in the case of the Sellers, they are in
material compliance with their respective representations and warranties in
Section 4.24(b) and their covenants in Section 6.3(e), no right or remedy of any
Person shall be limited in any respect by any investigation made by such Person,
the knowledge of such Person of any breach of any provision of this Agreement or
any inaccuracy of any representation, warranty or certificate contained herein
or delivered pursuant hereto, or the decision of such Person to consummate the
transactions contemplated by this Agreement.
     7.4 Procedures Relating to Indemnification Involving Third Party Claims.
          (a) In order for an indemnified party to be entitled to any
indemnification provided for under this Agreement in respect of, arising out of
or involving a claim or demand made by any Person not a party to this Agreement
against the indemnified party (a “Third Party Claim”), such indemnified party
must promptly notify the indemnifying party in writing of the Third Party Claim
after receipt by such indemnified party of written notice of the Third Party
Claim; provided, however, that failure to give such notification shall not
affect the indemnification provided hereunder except to the extent the
indemnifying party shall have been actually prejudiced as a result of such
failure. The notice of claim shall describe in reasonable detail the facts known
to the indemnified party giving rise to such indemnification claim, and the
amount or good faith estimate of the amount arising therefrom. Thereafter, the
indemnified party shall promptly deliver to the indemnifying party after the
indemnified party’s receipt thereof,

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copies of all notices and documents (including court papers) received by the
indemnified party relating to the Third Party Claim. In the event the provisions
of Section 8.4 are inconsistent with any provision of this Article VII, the
provisions of Section 8.4 shall control with respect to the contest of Tax
matters. In the event that more than one Seller is an indemnifying party
hereunder, the indemnified party may provide the notices and other
communications required pursuant to this Section 7.5 solely to the Sellers’
Representative.
          (b) The Sellers’ Representative, on behalf of the Sellers (if the
indemnified party is an Alon Indemnified Party), or Alon (if the indemnified
party is a Seller Indemnified Party), as applicable, shall be entitled to assume
and control the defense of such Third Party Claim at its expense (or, in the
care of the Sellers’ Representative, at the expense of the Sellers) and through
counsel of its choice if it gives written notice of its intention to do so to
the indemnified party within 30 calendar days of the receipt of the notice of
claim from the indemnified party in which case the indemnifying party shall not
be liable to the indemnified party for any fees of counsel or any other expenses
with respect to the defense of such Third Party Claim; provided, however, that
if the indemnified party reasonably determines based upon written advice of
counsel that a conflict of interest exists that would make it inappropriate for
the same counsel to represent both the indemnified party and the indemnifying
party, then the indemnified party shall be entitled to retain its own counsel at
the expense of the indemnifying party; provided, further, that the indemnifying
party shall not in such event be responsible hereunder for the fees and expenses
of more than one firm of separate counsel in connection with any Third Party
Claim in the same jurisdiction, in addition to one firm of local counsel. In the
event that the Sellers’ Representative or Alon exercises the right to undertake
any such defense against such Third Party Claim as provided above, the
indemnified party shall cooperate with the Sellers’ Representative or Alon, as
applicable, in such defense and make available to the Sellers’ Representative or
Alon, as applicable, at the indemnifying party’s expense, all witnesses,
pertinent records, materials and information in the indemnified party’s
possession or under the indemnified party’s control relating thereto as is
reasonably requested by or on behalf of the indemnifying party. Similarly, in
the event the indemnified party is, directly or indirectly, conducting the
defense against any such Third Party Claim, the indemnifying party shall
cooperate with the indemnified party in such defense and make available to the
indemnified party, at the indemnifying party’s expense, all such witnesses,
records, materials and information in the indemnifying party’s possession or
under the indemnifying party’s control relating thereto as is reasonably
requested by the indemnified party.
          (c) No compromise or settlement of such Third Party Claim may be
effected by either the indemnified party, on the one hand, or the Sellers’
Representative (if the indemnified party is an Alon Indemnified Party) or Alon
(if the indemnified party is a Seller Indemnified Party), on the other hand,
without the consent of the other (which shall not be unreasonably withheld or
delayed). Notwithstanding the foregoing, the Sellers’ Representative (if the
indemnified party is an Alon Indemnified Party) or Alon (if the indemnified
party is a Seller Indemnified Party) may pay, settle or compromise a Third Party
Claim without the written consent of the indemnified party, so long as such
settlement includes (i) an unconditional release of the indemnified party from
all Liability in respect of such Third Party Claim, (ii) does not subject the
indemnified party to any injunctive relief or other equitable remedy, and
(iii) does not include a statement or admission of fault, culpability or failure
to act by or on behalf of any indemnified party.

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     7.5 Other Claims. A claim for indemnification for any matter not involving
a Third Party Claim may be asserted by written notice to the Sellers’
Representative (if the indemnified party is an Alon Indemnified Party) or to
Alon (if the indemnified party is a Seller Indemnified Party), as applicable,
which notice of claim shall describe in reasonable detail the facts known to the
indemnified party giving rise to such indemnification claim, and the amount or
good faith estimate of the amounts thereof. Such claims shall be paid promptly
after receipt of such notice, unless such claim is disputed, in which case it
shall be promptly paid upon resolution of such dispute, if any payment is then
due.
     7.6 Mitigation of Damages.
          (a) Alon and the Sellers shall cooperate with each other with respect
to resolving any claim or liability with respect to which one party is obligated
to indemnify the other party hereunder, including by making commercially
reasonable efforts to mitigate or resolve any such claim or liability. In the
event that Alon or the Sellers shall fail to make commercially reasonably
efforts to mitigate or resolve any claim or liability, which efforts are
proposed by the other party, then notwithstanding anything else to the contrary
contained herein, the other party shall not be required to indemnify any Person
for any Damages to the extent the same could reasonably be expected to have been
avoided if Alon or the Sellers, as the case may be, had made such efforts
following such proposal.
          (b) If any Alon Indemnified Party requests any payment from the
Sellers in respect of any Damages pursuant to Section 7.2(a) and the Acquired
Companies or the Alon Indemnified Party could have recovered all or a part of
such Damages from a third party (a “Potential Contributor”) based on the
underlying claim asserted against the Sellers, the Alon Indemnified Party shall
assign, on a non-recourse basis and without any representation or warranty, such
of its rights to proceed against the Potential Contributor as are necessary to
permit the Sellers to recover from the Potential Contributor any amount paid by
the Sellers to the Alon Indemnified Parties.
     7.7 Sole and Exclusive Remedy. Should the Closing occur, except as set
forth in the Confidentiality Agreement and Section 6.8(b), (i) Alon’s sole and
exclusive remedies for any breach of the representations, warranties or
covenants of the Sellers under this Agreement and any other Transaction
Documents (other than claims of or causes of action arising from fraud or
intentional misrepresentation by the Sellers), shall be the remedies provided in
this Article VII and Article VIII, and Alon hereby waives, from and after the
Closing, any and all other remedies (other than claims of or causes of actions
arising from fraud or intentional misrepresentation by the Sellers) which may be
available at law or equity for any breach or alleged breach of the
representations, warranties and covenants of the Sellers hereunder, and (ii) the
Sellers’ sole and exclusive remedies for any breach of the representations,
warranties or covenants of Alon under this Agreement and any other Transaction
Documents (other than claims of or causes of action arising from fraud or
intentional misrepresentation by Alon), shall be the remedies provided in this
Article VII and Article VIII, and each of the Sellers hereby waives, from and
after the Closing, any and all other remedies (other than claims of or causes of
actions arising from fraud or intentional misrepresentation by Alon) which may
be available at law or equity for any breach or alleged breach of the
representations, warranties and covenants of Alon hereunder. Notwithstanding the
foregoing, nothing herein will limit the right of any party to seek injunctive

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or other equitable relief for any breach or alleged or threatened breach of any
covenant in this Agreement or any other Transaction Document.
ARTICLE VIII
TAX MATTERS
     8.1 Indemnification Obligations With Respect to Taxes.
          (a) The Sellers shall be responsible for, and shall indemnify, defend
and hold harmless Alon and the Acquired Companies from and against:
          (i) all Taxes of the Acquired Companies due with respect to periods
ending on or prior to the Closing Date including, all Taxes of the Acquired
Companies that are due with respect to periods (“Straddle Periods”) that include
but do not end on the Closing Date to the extent attributable to the portion of
the Straddle Period ending on the Closing Date;
          (ii) all losses resulting from any inaccuracy in or breach of the
representations and warranties with respect to Tax matters that are contained in
Section 4.9 or in this Article VIII and any covenants contained in this
Agreement with respect to Tax matters (without giving effect to any supplement
to the Sellers’ Disclosure Schedule delivered after the date hereof or any
materiality qualifier), or contained in any certificate or other Transaction
Document delivered pursuant hereto; and
          (iii) all losses imposed on or sustained by Alon or its Affiliates
(including the Acquired Companies after the Closing Date), directly or
indirectly, by reason of or in connection with the foregoing amounts.
          Notwithstanding the foregoing, the Sellers (i) shall only be liable
for such amounts to the extent that such amounts are in excess of the amounts,
if any, specifically reserved for such amounts (excluding any reserves for
deferred Taxes established to reflect timing differences between book and Tax
income) on the Closing Date Balance Sheet and (ii) shall in no event have any
liability to Alon or any obligation to indemnify Alon for any Tax liability to
the extent resulting from or related to the transactions contemplated by
Section 2.3(d).
          (b) Alon shall be responsible for, and shall indemnify, defend and
hold harmless the Sellers from and against:
          (i) all Taxes of the Acquired Companies that are due with respect to
periods commencing after the Closing Date;
          (ii) all Taxes of the Acquired Companies that are due with respect to
Straddle Periods to the extent attributable to the portion of the Straddle
Period commencing on the day following the Closing Date;
          (iii) all losses resulting from any breach of any covenants of Alon
and Alon contained in this Agreement with respect to tax matters or contained in
any certificate or other Transaction Document delivered by Alon pursuant hereto;

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          (iv) Taxes of the Acquired Companies that are due with respect to the
transactions contemplated by Section 2.3(d); and
          (v) all losses imposed on or sustained by the Sellers or their
Affiliates, directly or indirectly, by reason or in connection with the
foregoing amounts.
          (c) For purposes of this Article VIII, whenever it is necessary to
determine the liability for Taxes of the Acquired Companies for a Straddle
Period, the determination of the Taxes for the portion of the Straddle Period
ending on and including, and the portion of the Straddle Period beginning after,
the Closing Date shall be determined by assuming that the Straddle Period
consisted of two taxable years or periods, one of which ended at the close of
the Closing Date and the other of which began at the beginning of the day
following the Closing Date, and items of income, gain, deduction, loss or
credit, and state and local apportionment factors of the Acquired Companies for
the Straddle Period shall be allocated between such two taxable years or periods
on a “closing of the books basis” by assuming that the books of the Acquired
Companies were closed at the close of business on the Closing Date; provided
however, (i) exemptions, allowances or deductions that are calculated on an
annual basis, such as the deduction for depreciation; and (ii) periodic taxes,
such as real and personal property taxes, shall be apportioned ratably between
such periods on a daily basis; provided further however, except with respect to
any deduction for Employee Cash Bonuses and the Company Transaction Expenses
(which shall be allocated to the pre-Closing Straddle Period), Alon and Sellers
agree to report all transactions not in the ordinary course of business
occurring on the Closing Date after Alon’s purchase of the Shares on Alon’s
Federal income tax return to the extent permitted by Treasury Regulation Section
1.1502-76(b)(1)(ii)(B). Notwithstanding anything to the contrary in this
Section 8.1, any item of income, gain, deduction, loss or credit with respect to
the transactions contemplated by Section 6.14 shall be allocated to the
pre-Closing Straddle Period and any items of income, gains, deduction, loss or
credit with respect to the transaction contemplated by Section 2.3(d) shall be
allocated to the post-Closing Straddle Period.
          (d) Notwithstanding anything to the contrary in this Agreement, the
obligations of the Sellers and Alon under this Article VIII shall be
unconditional and absolute, and shall not be subject to a deductible, threshold,
or similar concept, but the representations of the Sellers set forth in
Section 4.9 shall be subject to the $40,000,000 cap in Section 7.3(c) and such
representations shall remain in effect until 90 days after the expiration of the
applicable statute of limitations as set forth in Section 7.1.
     8.2 Tax Returns.
          (a) Alon shall prepare or cause to be prepared and file or cause to be
filed all Tax Returns for the Acquired Companies that are filed after the
Closing Date.
          (b) All Tax Returns that are to be prepared and filed by Alon pursuant
to the preceding paragraph and that relate to Taxes for which the Sellers are
liable under this Article VIII (including Straddle Period Tax Returns) shall be
submitted to the Sellers not later than 15 days prior to the due date for filing
of such Tax Returns, taking into account applicable extensions (or if such due
date is within 45 days following the Closing Date, as promptly as practicable
following the Closing Date). The Sellers shall have the right to review such Tax

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Returns and to review all work papers and procedures used to prepare any such
Tax Return. If the Sellers’ Representative, within 10 days after delivery of any
such Tax Return, notifies Alon in writing that it objects to any of the items in
such Tax Return, the parties shall attempt in good faith to resolve the dispute
and, if they are unable to do so, the disputed items shall be resolved (within a
reasonable time, taking into account the deadline for filing such Tax Return) by
an internationally recognized independent accounting firm chosen by both Alon
and the Sellers. Upon resolution of all such items, the relevant Tax Return
shall be filed on that basis. The costs, fees and expenses of such accounting
firm shall be borne equally by Alon and the Sellers.
          (c) Alon shall not (and shall not cause or permit the Acquired
Companies to) amend, refile or otherwise modify (or grant an extension of any
statute of limitation with respect to) any Tax Return relating in whole or in
part to the Acquired Companies with respect to any taxable year or period ending
on or before the Closing Date or with respect to any Straddle Period without the
prior written consent of the Sellers’ Representative, which consent may not be
unreasonably withheld or delayed. The Sellers shall not amend, refile, or
otherwise modify any such Tax Return if such action could have an adverse affect
on the liability of the Acquired Companies, without the prior written consent of
Alon, which consent may not be unreasonably withheld or delayed.
          (d) All sales, use, transfer and other similar Taxes, including any
stock transfer stamp Taxes resulting from the sale of the Shares, shall be borne
jointly and severally by the Sellers.
     8.3 Contest Provisions.
          (a) In the event (i) any Seller or their Affiliates or (ii) Alon or
its Affiliates receive notice of any pending or threatened Tax audits or
assessments or other disputes concerning Taxes with respect to which the other
party may incur liability under this Article VIII, the party in receipt of such
notice shall promptly notify the other party of such matter in writing, provided
that failure to comply with this provision shall not affect a party’s right to
indemnification hereunder unless such failure materially adversely affects the
party’s ability to challenge such Tax audits or assessments.
          (b) The Sellers shall have the sole right to represent the interests
of the Acquired Companies in any Tax audit or administrative or court proceeding
relating to any Tax for any taxable period ending on or before the Closing Date,
and to employ counsel of their choice at their expense. Notwithstanding the
foregoing, the Sellers shall not be entitled to settle, either administratively
or after the commencement of litigation, any claim for Taxes with respect to any
Tax Return of any of the Acquired Companies which would adversely affect the
liability for Taxes of Alon or the Acquired Companies for any period after the
Closing Date to any extent (including, but not limited to, the imposition of
income Tax deficiencies, the reduction of asset basis or cost adjustments, the
lengthening of any amortization or depreciation periods, the denial of
amortization or depreciation deductions, or the reduction of the loss or credit
carry forwards) without the prior written consent of Alon, which consent shall
not be unreasonably withheld or delayed.

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          (c) Alon shall have the sole right to represent the interests of the
Acquired Companies in any Tax audit or administrative or court proceeding
relating to Taxes with respect to taxable periods including (but not ending on)
or beginning after the Closing Date and to employ counsel of its choice at its
expense, provided that Alon shall not be entitled to settle, either
administratively or after the commencement of litigation, any claim regarding
Taxes that would adversely affect the liability of the Sellers for any Taxes for
any period ending on or before the Closing Date or for any Straddle Period,
without the prior consent of the Sellers’ Representative, which consent shall
not be unreasonably withheld or delayed and shall not be required to the extent
that Alon has indemnified the Sellers against the effects of such settlement.
Where consent to a settlement is withheld by the Sellers’ Representative
pursuant to this section, the Sellers may continue or initiate any further
proceedings at their own expense, Alon shall not be obligated to incur any
further expenses in such matter and the liability of Alon, after giving effect
to this Agreement, shall not exceed the liability that would have resulted from
the settlement or amended return.
     8.4 Assistance and Cooperation. After the Closing Date, the Sellers, on the
one hand, and Alon, on the other hand, shall (and shall cause their respective
Affiliates to): (a) assist the other party in preparing and filing any Tax
Returns or reports which such other party is responsible for preparing and
filing in accordance with this Article VIII; (b) cooperate fully in preparing
for any audits of, or disputes with taxing authorities regarding, any Tax
Returns of the Acquired Companies; (c) make available to the other and to any
taxing authority as reasonably requested all information, records, and documents
relating to Taxes of the Acquired Companies; (d) provide timely notice to the
other in writing of any pending or threatened Tax audits or assessments of the
Acquired Companies for taxable periods for which the other may have a liability
under this Article VIII; and (e) furnish the other with copies of all
correspondence received from any taxing authority in connection with any Tax
audit or information request with respect to any such taxable period.
     8.5 Retention of Records. After the Closing Date, the Sellers, Alon and the
Acquired Companies will preserve all information, records or documents relating
to liabilities for Taxes of the Acquired Companies until six months after the
expiration of any applicable statute of limitations (including extensions
thereof) with respect to the assessment of such Taxes, provided that neither
party shall dispose of any of the foregoing items without first offering such
items to the other party.
     8.6 Refunds and Tax Benefit. Except to the extent included as current
assets in the Closing Date Adjusted Book Value, any Tax refunds that are
received by Alon or the Acquired Companies, and any amount credited against Tax
to which Alon or the Acquired Companies become entitled, that relate to the Tax
periods or portions thereof ending on or before the Closing Date (including,
without limitation, the pre-Closing Straddle Period) shall be for the account of
the Sellers, and Alon shall pay to the Sellers, in their Pro Rata Portions, any
such refund or the amount of any such credit within 15 days after receipt or
entitlement thereto. In addition, to the extent that a claim for refund or a
proceeding results in a payment or credit against Tax by a taxing authority to
Alon or the Acquired Companies of any amount accrued as a current liability in
the Closing Date Adjusted Book Value, Alon shall pay such amount to the Sellers,
in their Pro Rata Portions, within 15 days after receipt or entitlement thereto.

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     8.7 Other Provisions. The provisions of this Article VIII (and not Section
7.2) shall govern all indemnity claims with respect to Tax matters of the
Acquired Companies and the Stock Purchase pursuant to this Agreement. All
indemnity payments under this Agreement and any adjustment to any payment of the
Purchase Price as described in Section 2.3 shall be treated as an adjustment to
the Purchase Price paid for the Shares for tax purposes.
ARTICLE IX
CONDITIONS
     9.1 Conditions to Each Party’s Obligation to Effect the Stock Purchase. The
respective obligations of each party to effect the Stock Purchase and the other
transactions contemplated hereby are subject to the satisfaction or waiver at or
prior to the Closing Date of each of the following conditions:
          (a) all consents of any Governmental Entity required to be obtained
prior to the Closing Date by the Sellers, Alon or any of their respective
Affiliates in connection with the execution and delivery of this Agreement and
the consummation of the transactions contemplated herein by the Sellers and Alon
shall have been made or obtained (as the case may be), including the HSR
Approval.
          (b) no court or other Governmental Entity of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, judgment, decree, injunction or other order, whether temporary,
preliminary or permanent (collectively, an “Order”) that is in effect and
restrains, enjoins or otherwise prohibits, materially delays, makes illegal, or
would be violated by consummation of the transactions contemplated in this
Agreement.
     9.2 Conditions to Obligations of Alon. The obligations of Alon to effect
the Stock Purchase and the other transactions contemplated hereby are also
subject to the satisfaction or waiver by Alon at or prior to the Closing Date of
the following conditions (provided that the condition in Section 9.2(j) may not
be waived by Alon):
          (a) all of the representations and warranties of the Sellers set forth
in this Agreement, shall be true and correct as of the Closing Date (except to
the extent such representations and warranties speak as of an earlier date, in
which case such representation or warranty shall be true and correct as of such
earlier date), without regard to any materiality qualifier contained in such
representations and warranties, except where the failure to be so true and
correct, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect on the Company or a material adverse effect upon
the consummation of the Stock Purchase;
          (b) the Sellers shall have performed in all material respects all
obligations required to be performed by them under this Agreement at or prior to
the Closing Date;
          (c) Alon shall have been furnished with a certificate, executed by the
Sellers’ Representative, dated the Closing Date, certifying as to the
fulfillment of the conditions in Sections 9.2(a) and (b);

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          (d) all consents required under the Material Contracts listed on
Schedule 9.2(d) in connection with the execution, delivery and performance of
this Agreement, the other Transaction Documents or the consummation of the
transactions contemplated hereby or thereby, shall have been obtained, shall be
in full force and effect and shall have been delivered to Alon;
          (e) there shall not be pending any suit, action or proceeding by any
Governmental Entity, (i) seeking to obtain from Alon or any Affiliate thereof,
in connection with the purchase of the Shares or the other transactions
contemplated hereby, any material money damages; (ii) seeking to impose material
limitations on the ability of Alon to acquire or hold, or exercise full rights
of ownership of the Shares, including the right to vote the Shares on all
matters properly presented to the stockholders of the Company; or (iii) that
would likely have the effect of preventing or otherwise materially interfering
with the transactions contemplated by this Agreement and the other Transaction
Documents;
          (f) subject to Section 9.4, since the date of this Agreement, there
shall have been no event, change, occurrence or circumstance which has had, or
which reasonably could be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company; provided however, for purposes of this
condition, a Material Adverse Effect on the Company shall be deemed to exclude
any event, change, occurrence or circumstance resulting from (i) changes, after
the date hereof, in GAAP, (ii) compliance by the Sellers or the Acquired
Companies with the terms and conditions of this Agreement, (iii) changes
affecting the industry in which the Acquired Companies operate which do not in
any material respect disproportionately affect the Acquired Companies as a
whole, compared to similarly situated companies in the same business, or
(iv) any events or changes affecting general economic or capital market
conditions which do not in any material respect disproportionately affect the
Acquired Companies as a whole, compared to similarly situated companies in the
same business;
          (g) Alon shall have received the resignations of the directors of the
Acquired Companies pursuant to Section 6.9;
          (h) the Option Agreements and the Options shall have been cancelled;
          (i) the Stockholder Agreement shall have been terminated;
          (j) all Liens securing indebtedness and other amounts due under the
Term Loan Agreement and, if Alon shall have become obligated pursuant to the
second sentence of Section 6.19(b) to pay to, or make available to the Company
for payment to, the lenders under the Revolving Credit Agreement the amounts due
to the lenders thereunder as of the Closing Date, all Liens securing
indebtedness and other amounts due under the Revolving Credit Agreement, shall
have been released effective as of the Closing;
          (k) the Sellers and the Escrow Agent shall have executed and delivered
the Holdback Escrow Agreement; and
          (l) Alon shall have received such other documents as Alon reasonably
requests evidencing the satisfaction of any condition referred to in this
Section 9.2.

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     9.3 Conditions to Obligations of the Sellers. The obligations of the
Sellers to effect the Stock Purchase and the other transactions contemplated
hereby are also subject to the satisfaction or waiver by the Sellers prior to
the Closing Date of the following conditions:
          (a) all of the representations and warranties of Alon set forth in
this Agreement, shall be true and correct as of the Closing Date (except to the
extent such representations and warranties speak as of an earlier date, in which
case such representation or warranty shall be true and correct as of such
earlier date), without regard to any materiality qualifier contained in such
representations and warranties, except where the failure to be so true and
correct, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect on Alon or a material adverse effect upon the
consummation of the Stock Purchase;
          (b) Alon shall have performed in all material respects all obligations
required to be performed by it under this Agreement at or prior to the Closing
Date;
          (c) the Sellers’ Representative shall have been furnished with a
certificate, executed by a duly authorized officer of Alon, dated the Closing
Date, certifying as to the fulfillment the conditions in Sections 9.3(a) and
(b);
          (d) Alon shall have delivered to each Seller, such Seller’s Pro Rata
Portion of the Cash Payment;
          (e) Alon shall have delivered to the Escrow Agent the Holdback Amount;
          (f) the Escrow Agent shall have delivered to each Seller, such
Seller’s Pro Rata Portion of the Deposit;
          (g) Alon and the Escrow Agent shall have executed and delivered the
Holdback Escrow Agreement; and
          (h) the Sellers shall have received such other documents as the
Sellers’ Representative reasonably requests evidencing the satisfaction of any
condition referred to in this Section 9.3.
     9.4 Remedies in the Event of Certain Material Adverse Effects on the
Company.
          (a) If after the date hereof and prior to the Closing or the
termination of this Agreement, there shall be an event, circumstance or
occurrence that causes the failure of any condition to the obligation of Alon
set forth in Section 9.2(a), (b), or (f) (a “Pre-Closing Adverse Change”) and
the Damages that could reasonably be expected to result from such Pre-Closing
Adverse Change (the "Damage Estimate") are in the aggregate no more than
$40,000,000, then the Sellers may elect to extend the Termination Date to a date
no more than 30 days after the occurrence of such Pre-Closing Adverse Change and
(i) if the Damages or other effects resulting from such Pre-Closing Adverse
Change are curable, to cure the Damages or other effects resulting from such
Pre-Closing Adverse Change in all material respects, or (ii) in the event that
such Damages or effects are not curable, or the Sellers elect not to cure such
Damages or effects, the Sellers may elect to proceed with the Closing, subject
to and in accordance with subsection (c) below. For purposes of determining
whether the Damage Estimate is no more than $40,000,000 or more

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than $40,000,000 in the context of determining whether Alon is obligated to
proceed with the Closing pursuant to Section 9.4(c) below, the Damage Estimate
shall be determined without regard to any insurance, condemnation or other
proceeds. For purposes of determining the amount of any adjustment to the
Purchase Price (and, if applicable, the Cash Payment) pursuant to this
Section 9.4, the Damage Estimate shall exclude any Damages to the extent that
such Damages shall have or have had the effect of reducing the Purchase Price
(and the Cash Payment) pursuant to Section 2.3(a) and shall be reduced by the
amount of any insurance, condemnation or other proceeds previously received by
the Acquired Companies (and, if so received prior to the Closing, retained by
the Acquired Companies), and not included in the Closing Date Adjusted Book
Value. If following any reduction in the Purchase Price (and, if applicable, the
Cash Payment) pursuant to this Section 9.4, the Acquired Companies receive any
insurance, condemnation or other proceeds which duplicate, in whole or in part,
such reduction in the Purchase Price (and, if applicable, the Cash Payment),
Alon shall remit to the Sellers in their Pro Rata Portions an amount equal to
the amount of such insurance, condemnation or other proceeds actually so
received by the Acquired Companies which duplicate, in whole or in part, such
reduction in the Purchase Price (and, if applicable, the Cash Payment).
          (b) If after seven days following the election set forth in subsection
(a)(ii) above, the parties have not mutually agreed, after using their good
faith reasonable best efforts, to the amount of the Damage Estimate, the parties
shall pursue such valuation and/or dispute resolution mechanisms as may be
reasonably appropriate and available to the parties to permit in all due haste a
determination of the amount of the Damage Estimate prior to the Termination
Date, such mechanism to include each party designating one independent expert in
the profession most relevant to the nature of the Damages.
     (c) (i) If prior to the Termination Date (as extended pursuant to this
Section 9.4, if applicable), the parties (or their independent experts, if
applicable) have mutually determined the amount of the Damage Estimate and such
amount is no more than $40,000,000, and all other conditions set forth in
Sections 9.1, 9.2 and 9.3 have been satisfied or waived, the parties shall
proceed with the Closing and the Purchase Price (and Cash Payment) shall be
reduced by the agreed amount of the Damage Estimate and the relevant condition
set forth in Section 9.2, to the extent not satisfied as a result of the
Post-Closing Adverse Change, shall be deemed satisfied. If, prior to the
Termination Date (as extended pursuant to this Section 9.4, if applicable), the
parties (or their independent experts, if applicable) have mutually determined
that the Damage Estimate is greater than $40,000,000 (whether or not the
specific amount of the Damage Estimate has been determined) the relevant
condition set forth in Section 9.2 shall be deemed to not have been satisfied
and Alon shall have all remedies available to it under this Agreement.
          (ii) If, prior to the Termination Date (as extended pursuant to this
Section 9.4, if applicable), neither the parties nor their independent experts
have mutually determined that the Damage Estimate is either more than
$40,000,000 or not more than $40,000,000, the Sellers may elect to extend the
Termination Date by an additional fifteen days and the parties’ experts shall
promptly provide their respective best and good faith estimate of the Damage
Estimate to a third independent expert mutually selected by the parties’ experts
(the “Third Expert”), together with all information, materials, work

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papers and other data utilized or developed by the parties’ experts in
connection with their efforts to determine the amount of the Damage Estimate.
     (A) If, prior to the Termination Date (as further extended pursuant to this
clause (ii)), the Third Expert shall have determined the amount of the Damage
Estimate, and such amount is no more than $40,000,000, and all other conditions
set forth in Sections 9.1, 9.2 and 9.3 have been satisfied or waived, the
parties shall proceed with the Closing and the Purchase Price (and Cash Payment)
shall be reduced by the amount of the Damage Estimate (so determined) and the
relevant condition set forth in Section 9.2, to the extent not satisfied as a
result of the specific event, circumstance or occurrence giving rise to the
Damage Estimate, shall be deemed satisfied.
     (B) If, prior to the Termination Date (as further extended pursuant to this
clause (ii)), the Third Expert shall have determined that the Damage Estimate is
greater than $40,000,000 (whether or not the specific amount of the Damage
Estimate has been determined), the relevant condition set forth in Section 9.2
shall be deemed to not have been satisfied and Alon shall have all remedies
available to it under this Agreement.
     (C) If, prior to the Termination Date (as further extended pursuant to this
clause (ii)), the Third Expert shall have determined that the Damage Estimate is
less than $40,000,000, but has not determined the specific amount of the Damage
Estimate, then if all other conditions set forth in Sections 9.1, 9.2 and 9.3
have been satisfied or waived, (A) the parties shall proceed with the Closing,
(B) the relevant condition set forth in Section 9.2, to the extent not satisfied
as a result of the Post-Closing Adverse Change, shall be deemed satisfied,
(C) the Purchase Price (and Cash Payment), shall be reduced by the Third
Expert’s good faith best estimate of the amount of the Damage Estimate, and
(D) the Third Expert shall, within 30 days after the Closing, make a final
determination of the amount of the Damage Estimate. If the final amount of the
Damage Estimate determined by the Third Expert in such 30 day period exceeds the
reduction to the Purchase Price (and Cash Payment) made at Closing pursuant to
the proceeding sentence, the Sellers shall promptly pay the amount of the
difference to Alon. If the final amount of the Damage Estimate determined by the
Third Expert is less than such reduction to the Purchase Price (and Cash
Payment) made at Closing, Alon shall promptly pay the amount of the difference
to the Sellers.
          (iii) If, prior to the Termination Date (as extended pursuant to this
Section 9.4, if applicable) the parties or their independent experts have
mutually determined that the Damage Estimate is no more than $40,000,000, but
neither the parties nor their independent experts have mutually agreed to the
specific amount of the Damage Estimate, then if all other conditions set forth
in Sections 9.1, 9.2 and 9.3 have been satisfied or waived, (A) the parties
shall proceed with the Closing, (B) the relevant condition set forth in
Section 9.2, to the extent not satisfied as a result of the Post-Closing Adverse
Change shall be deemed satisfied, (C) the Purchase Price (and Cash Payment)
shall be reduced by the average of each parties’ expert’s good faith best
estimate of the

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amount of the Estimated Damages, and (D) the parties’ experts shall promptly
provide their best and good faith estimate of the Damage Estimate to the Third
Expert, together with all information, materials, work papers and other data
utilized or developed by the parties’ experts in connection with their efforts
to determine the amount of the Damage Estimate. The Third Expert shall make a
final determination of the amount of the Damage Estimate which determination
shall be (1) either the amount of the Damage Estimate proposed by either party’s
expert or an amount between such two proposals and (2) determined by such Third
Expert no later than 30 days after the Closing Date. If the final amount of the
Damage Estimate so determined exceeds the reduction to Purchase Price (and Cash
Payment) made at Closing pursuant to the preceding sentence, the Sellers shall
promptly pay the amount of the difference to Alon. If the final amount of the
Damage Estimate so determined is less than such reduction to the Purchase Price
(and Cash Payment) made at Closing, Alon shall promptly pay the amount of the
difference to the Sellers.
          (d) For all purposes of Section 9.4(c), in the event that any Damage
Estimate provided by an expert engaged pursuant to this Section 9.4 shall
consist of a range of possible amounts of the Damage Estimate, the midpoint
amount in such range shall be deemed to be the Damage Estimate provided by such
expert.
          (e) Any mutual determination by the parties or the parties’ experts
regarding the Damage Estimate, and any determination by the Third Expert
regarding the Damage Estimate, shall be final and binding on the parties. Each
party shall bear all costs and expenses of its respective expert and the costs
and expenses of the Third Expert shall be shared equally by the parties. Each
party shall act in good faith with respect to all matters arising under this
Section 9.4, including in negotiating and determining the amount of any Damage
Estimate and in its selection of and dealings with its respective independent
expert. Each party will fully cooperate with the other party and each of the
experts engaged pursuant to this Section 9.4 in the efforts to determine the
amount of any Damage Estimate, including the provision of access to any property
or facility of any affected Acquired Company and the provision of all
information, materials, documents and other data relevant to such determination.
ARTICLE X
TERMINATION
     10.1 Termination by Mutual Consent. This Agreement may be terminated and
the Stock Purchase may be abandoned at any time prior to the Closing, by mutual
written consent of the Sellers and Alon.
     10.2 Termination by Either Alon or the Sellers. This Agreement may be
terminated and the Stock Purchase may be abandoned at any time prior to the
Closing by either Alon or the Sellers if any Order permanently restraining,
enjoining or otherwise prohibiting the Stock Purchase shall be entered and such
Order is or shall have become nonappealable, provided that (i) the party seeking
to terminate this Agreement shall have complied with its obligations under
Section 6.2 with respect to the removal or lifting of such Order, and (ii) the
breach of or

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noncompliance with this Agreement by the party seeking to terminate this
Agreement shall not have been the proximate cause of the issuance of the Order.
     10.3 Termination by the Sellers. This Agreement may be terminated and the
Stock Purchase may be abandoned at any time prior to the Closing, by the
Sellers, by written notice to Alon, if:
     (a) (i) the Stock Purchase shall not have been consummated on or before the
Termination Date, or
          (ii) any of the conditions set forth in Section 9.1 or 9.3 shall have
become incapable of fulfillment ; provided, however, that this Agreement may not
be terminated prior to the Termination Date as a result of the condition in
Section 9.1 having become incapable of fulfillment so long as Alon is continuing
to seek to cause the condition in Section 9.1 to be fulfilled;
provided, however, that the right to terminate this Agreement pursuant to this
subsection (a) shall not be available to the Sellers if the breach of or
noncompliance with this Agreement by any of them shall have proximately
contributed to the failure referenced in this subsection (a); or
          (b) there has been a material breach by Alon of any representation,
warranty, covenant or agreement of Alon contained in this Agreement that is not
curable or, if curable, is not cured prior to the earlier of (i) 30 days after
written notice of such breach is given by the Sellers to Alon and (ii) the
Termination Date; provided that no Seller is then in material default or breach
of this Agreement.
     10.4 Termination by Alon. This Agreement may be terminated and the Stock
Purchase may be abandoned at any time prior to the Closing by Alon, by written
notice to the Sellers, if:
     (a) (i) the Stock Purchase shall not have been consummated on or before the
Termination Date, or
          (ii) any of the conditions set forth in Section 9.1 or Section 9.2
shall have become incapable of fulfillment ; provided, however, that this
Agreement may not be terminated prior to the Termination Date as a result of the
condition in Section 9.1 having become incapable of fulfillment so long as Alon
is continuing to seek to cause the condition in Section 9.1 to be fulfilled;
provided, however, that the right to terminate this Agreement pursuant to this
subsection (a) shall not be available to Alon if the breach of or noncompliance
with this Agreement by it shall have proximately contributed to the failure
referred to in this subsection (a); or
          (b) subject to Section 9.4, there has been a material breach of any
representation, warranty, covenant or agreement of the Sellers contained in this
Agreement that is not curable or, if curable, is not cured prior to the earlier
of (i) 30 days after written notice of such breach is given by Alon to the
Sellers’ Representative, and (ii) the Termination Date; provided that Alon is
not then in material default or breach of this Agreement.

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     10.5 Effect of Termination. Each party’s right of termination under this
Article X is in addition to any other rights it may have under this Agreement or
otherwise, and the exercise of a right of termination will not be an election of
remedies. If this Agreement is terminated, all further obligations of the
parties under this Agreement will terminate, except that Sections 6.3 and 6.5
and Article XI hereof and the Confidentiality Agreement will survive.
Notwithstanding the foregoing, if this Agreement is terminated by a party
because of the willful breach of the Agreement by another party or because one
or more of the conditions to the terminating party’s obligations under this
Agreement is not satisfied as a result of another party’s willful failure to
comply with its obligations under this Agreement, the terminating party’s right
to pursue all legal remedies will survive such termination unimpaired.
ARTICLE XI
MISCELLANEOUS
     11.1 Entire Agreement; Assignment.
          (a) This Agreement (including the documents, schedules, exhibits and
instruments referred to herein) and the Confidentiality Agreement constitute the
entire agreement and supersede all prior agreements and understandings, both
written and oral, and all contemporaneous oral agreements and understandings
among the parties hereto with respect to the subject matter hereof.
          (b) Neither this Agreement nor any of the rights, interests or
obligations hereunder will be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent of each of the
other parties hereto; provided, however, that Alon may assign all or a portion
of its rights and obligations under this Agreement to any Subsidiary of Alon
without the consent of the Sellers (which such assignment shall not relieve Alon
of any obligation or liability under this Agreement).
          (c) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns.
     11.2 Validity. Whenever possible, each provision or portion of any
provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable Law or rule in any jurisdiction, such
invalidity, illegality or unenforceability shall not affect the validity,
legality or enforceability of any other provision or portion of any provision in
such jurisdiction, and this Agreement shall be reformed, construed and enforced
in such jurisdiction in such manner as will effect as nearly as lawfully
possible the purposes and intent of such invalid, illegal or unenforceable
provision.
     11.3 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered in person, by overnight courier or facsimile to the
respective parties as follows:
     If to Alon:

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Alon USA Energy, Inc.
7616 LBJ Frwy, Suite 300
Dallas, TX 75251
Attention: General Counsel
Facsimile No.: (972) 367-3724
with a copy to:
Jones Day
2727 North Harwood
Dallas, Texas 75201
Attention:  Mark E. Betzen
Mark T. Goglia
Fax No.: 214-969-5100
If to the Sellers (prior to the Closing):
Paramount Petroleum
14700 Downey Avenue
Paramount, CA 90723
Attn: W. Scott Lovejoy III
Facsimile Number: (562) 408-0926
with a copy to:
Songstad & Randall LLP
2201 Dupont Drive
Suite 100
Irvine, CA 92612
Attn: L. Allan Songstad, Jr.
Facsimile Number: (949) 757-1613
and
Gibson Dunn & Crutcher, LLP
4 Park Plaza
Irvine, CA. 92614-8557
Attn: Michelle Hodges
Facsimile Number: (949) 475-4703
Copies to such persons shall also be made with respect to notices sent to the
Sellers’ Representative post-Closing, with notices sent to the Sellers’
Representative at the address set forth in the notice of appointment required by
Section 6.12,

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or to such other address as the Person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above;
provided that notice of any change of address shall be effective only upon
receipt thereof.
     11.4 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, regardless of the laws or
rules that might otherwise govern under applicable principles of conflicts of
laws thereof. In the event of the bringing of any action or suit by a party
hereto against another party hereunder arising out of or relating to this
Agreement, then in that event, (i) the sole forum for resolving such disputes
shall be the federal courts located in Orange County, California, and each of
the parties hereby irrevocably submits to such exclusive jurisdiction, and
(ii) the prevailing party in such action or dispute, whether by final judgment,
or out of court settlement shall be entitled to have and recover of and from the
non-prevailing parties all costs and expenses of suit, including actual
attorneys’ fees. Any judgment or order entered in any final judgment shall
contain a specific provision providing for the recovery of all costs and
expenses of suit, including actual attorneys’ fees (collectively "Costs”)
incurred in enforcing, perfecting and executing such judgment. For the purposes
of this paragraph, Costs shall include, without limitation, attorneys’ fees,
costs and expenses incurred in (a) appeals, (b) post-judgment motions,
(c) contempt proceeding, (d) garnishment, levy, and debtor and third party
examination, (e) discovery, and (f) bankruptcy litigation.
     11.5 Specific Performance. The parties recognize that if the Sellers refuse
to perform under the provisions of this Agreement, monetary damages alone will
not be adequate to compensate Alon for its injury. Alon shall therefore be
entitled, in addition to any other remedies that may be available, to obtain
specific performance of this Agreement. If any action is brought by Alon to
enforce this Agreement, the Sellers shall waive the defense that there is an
adequate remedy at law. In the event of a default by the Sellers which results
in the filing of a lawsuit for damages, specific performance, or other remedies,
Alon shall be entitled to reimbursement from the Sellers of reasonable legal
fees and expenses incurred by Alon.
     11.6 Construction. The headings herein are inserted for convenience of
reference only and are not intended to be part of or to affect the meaning or
interpretation of this Agreement. Unless the context clearly requires otherwise
“or” is not exclusive, and “includes” means “includes, but is not limited to.”
     11.7 Counterparts. This Agreement may be executed in counterparts,
including facsimile counterparts, each of which shall be deemed to be an
original, but all of which shall constitute one and the same agreement. Delivery
of an executed counterpart of a signature page to this Agreement by facsimile
transmission shall be effective delivery of a manually executed counterpart to
this Agreement.
     11.8 Parties In Interest. This Agreement shall be binding upon and inure
solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to confer upon any other Person any rights or
remedies of any nature whatsoever under or by reason of this Agreement,
including any employee or former employee of the Acquired Companies (or any
beneficiary or dependent thereof), except that each Alon Indemnified Party and
Seller

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Indemnified Party shall be a third party beneficiary with respect to Article VII
and shall be entitled to the rights and benefits of, and to enforce, the
provisions thereof.
     11.9 Waiver. No waiver of any breach of the provisions of this Agreement
will be deemed to have been made by any party, unless such waiver is expressed
in writing and signed by the party against which it is to be enforced. The
waiver by any party of any right under this Agreement or to a remedy for the
breach of any of the provisions herein shall not operate nor be construed by the
breaching party as a waiver of the non-breaching party’s remedies with respect
to any other or continuing or subsequent breach.
     11.10 Amendments. No amendment or modification in respect of this Agreement
shall be effective unless it shall be in writing and signed by the parties
hereto.
     11.11 Further Assurances; Post Closing Cooperation. The parties agree
(a) to furnish upon request to each other such further information, (b) to
execute and deliver to each other such other documents, and (c) to do such other
acts and things, all as any other party hereto may reasonably request for the
purpose of carrying out the transactions contemplated by this Agreement. After
the Closing Date, Alon shall provide the Sellers reasonable access, during
normal business hours and on at least three Business Day’s prior notice, to the
records of the Acquired Companies relating to periods prior to the Closing Date
for any reasonable purpose. After the Closing, Alon shall cause the Acquired
Companies to fulfill all of their obligations hereunder, and shall guarantee
such performance.
     11.12 Cumulative Remedies. The rights, remedies, powers and privileges
herein provided are cumulative and not exclusive of any other rights, remedies,
powers and privileges provided by law.
     11.13 Disclosure . Notwithstanding anything to the contrary contained in
the Disclosure Schedules or in this Agreement, the information and disclosures
contained in any section of the Disclosure Schedule shall be deemed to be
disclosed and incorporated by reference in any other section of the Disclosure
Schedule as though fully set forth in such section of the Disclosure Schedule to
the extent that the applicability of such information and disclosure is
reasonably apparent on its face. The fact that any item of information is
disclosed in any section of the Disclosure Schedule shall not be construed to
mean that such information is required to be disclosed by this Agreement. Such
information and the dollar thresholds set forth herein shall not be used as a
basis for interpreting the terms “material” or “Material Adverse Effect” or
other similar terms in this Agreement.
[Signature page follows]

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[SIGNATURE PAGE — STOCK PURCHASE AGREEMENT]
     IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its respective officer thereunto duly authorized, all
as of the day and year first above written.
“ALON”
ALON USA ENERGY, INC.,
a Delaware corporation

             
By:
  /s/David Wiessman   By:   /s/ Jeff D. Morris
 
           
Name:
  DAVID WIESSMAN,   Name:   JEFF D. MORRIS,
 
  Executive Chairman       President and CEO
 
            “SELLERS”
 
            THE CRAIG C. BARTO AND GISELE M. BARTO LIVING TRUST, DATED APRIL 5,
1991
 
           
By:
  /s/ Gisele M. Barto   By:   /s/ Craig C. Barto
 
           
Name:
  GISELE M. BARTO, Trustee of the   Name:   CRAIG C. BARTO, Trustee of the
 
  Craig C. Barto and Gisele M. Barto       Craig C. Barto and Gisele M. Barto
 
  Living Trust, Dated April 5, 1991       Living Trust, Dated April 5, 1991
 
            THE JERREL C. BARTO AND JANICE D. BARTO LIVING TRUST, DATED MARCH
18, 1991
 
           
By:
  /s/ Jerrel C. Barto   By:   /s/Janice D. Barto
 
           
Name:
  JERREL C. BARTO, Trustee of the   Name:   JANICE D. BARTO, Trustee of the
 
  Jerrel C. Barto and Janice D. Barto       Jerrel C. Barto and Janice D. Barto
 
  Living Trust, Dated March 18, 1991       Living Trust, Dated March 18, 1991
 
           
By:
  /s/ W. Scott Lovejoy III   By:   /s/ Mark R. Milano
 
           
Name:
  W. SCOTT LOVEJOY III, an individual   Name:   MARK R. MILANO, an individual