Exhibit 10.15

ASSET PURCHASE AGREEMENT

By and Among

SUNOCO PARTNERS MARKETING & TERMINALS L.P.

and

BLUE DOLPHIN PIPE LINE COMPANY

and

BITTER CREEK PIPELINES, LLC

August 3, 2011

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Table of Contents

 

1.      Definitions.

     1   

2.      Purchase and Sale

     5   

(a)    Assets

     5   

(b)    Excluded Assets

     6   

(c)    Purchase Price

     7   

(d)    Easements

     7   

(e)    Product Agreement

     7   

(f)     Conveyance Documents

     7   

(g)    Excluded Liabilities

     7   

(h)    The Closing

     8   

(i)     Deliveries at the Closing

     8   

(j)     Apportionments

     8   

(k)    Purchase Price Allocation

     9   

3.      Representations and Warranties Concerning the Transaction

     10   

(a)    Representations and Warranties of the Seller

     10   

(b)    Representations and Warranties of the Buyer

     11   

4.      Representations and Warranties Concerning the Assets

     12   

(a)    Noncontravention

     12   

(b)    Title to Assets

     12   

(c)    Material Change

     12   

(d)    Legal Compliance

     13   

(e)    Contracts and Commitments

     13   

(f)     Litigation

     13   

(g)    Environmental Matters

     13   

(h)    Permits

     14   

(i)     Pipeline Rights-of-Way

     15   

(j)     Condition of Assets

     15   

(k)    Taxes

     15   

(l)     Disclaimer of Representations and Warranties Concerning Personal
Property, Equipment, and Fixtures

     15   

5.      Post-Closing Covenants

     16   

(a)    General

     16   

(b)    Litigation Support

     16   

(c)    Delivery and Retention of Records

     16   

(d)    Mail; Communications

     17   

 

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(e)    Certificate of Non-foreign Status

     17   

(f)     Identified Environmental Issue

     17   

6.      Remedies for Breaches of this Agreement

     18   

(a)    Claim Relating to Pre-Closing and Post Closing Obligations

     18   

(b)    Survival of Representations, Warranties and Certain Covenants

     18   

(c)    Indemnification Provisions for Benefit of the Buyer

     19   

(d)    Indemnification Provisions for Benefit of the Seller

     20   

(e)    Matters Involving Third Parties

     21   

(f)     Determination of Amount of Adverse Consequences

     22   

(g)    Special Indemnification Provisions

     22   

(h)    Buyer and Seller Damages

     23   

7.      Miscellaneous

     23   

(a)    Seller’s Representative

     23   

(b)    Press Releases and Public Announcements

     24   

(c)    No Third Party Beneficiaries

     24   

(d)    Succession and Assignment

     24   

(e)    Counterparts

     24   

(f)     Headings

     24   

(g)    Notices

     24   

(h)    Governing Law

     26   

(i)     Amendments and Waivers

     26   

(j)     Severability

     26   

(k)    Transaction Expenses

     26   

(l)     Certain Taxes

     26   

(m)   Construction

     26   

(n)    Incorporation of Exhibits and Schedules

     27   

(o)    Entire Agreement

     27   

 

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ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (this “Agreement”) is entered into as of August 3,
2011, by and among Blue Dolphin Pipe Line Company, a Delaware corporation (“Blue
Dolphin”), and Bitter Creek Pipelines, LLC, a Colorado limited liability company
(“Bitter Creek”), Blue Dolphin and Bitter Creek are collectively referred to
herein as the “Seller”), and Sunoco Partners Marketing & Terminals L.P., a Texas
limited partnership (the “Buyer”). The Seller and the Buyer are sometimes
referred to collectively herein as the “Parties” and each individually as a
“Party.”

RECITALS

WHEREAS, the Seller owns the Assets (as hereinafter defined); and

WHEREAS, this Agreement contemplates a transaction in which the Buyer will
purchase from the Seller, and the Seller will sell to the Buyer, all of the
Seller’s right, title and interest in and to the Assets in return for the
consideration specified herein;

NOW, THEREFORE, in consideration of the mutual promises herein made, and in
consideration of the representations, warranties, and covenants herein
contained, the Parties hereby agree as follows:

1. Definitions.

“Adverse Consequences” means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, reasonable
amounts paid in settlement, liabilities, obligations, Taxes, liens, losses,
expenses, and fees, including court costs and reasonable attorneys’ fees and
expenses, but excluding punitive, exemplary, special or consequential damages,
unless such punitive, exemplary, special or consequential damages are payable in
connection with a Third Party Claim by an Indemnified Party.

“Affiliate” means, with respect to any Person, any Person which directly or
indirectly, controls, is controlled by, or is under a common control with such
Person. The term “control” (including the terms “controlled by” and “under
common control with”) as used in the preceding sentence means the possession,
directly or indirectly, of the power to direct or cause the direction of
management and policies of a Person, whether through the ownership of voting
securities, by contract, or otherwise.

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

“Bill of Sale” has the meaning set forth in Section 2(f)(i).

 

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“Business Day” means any day other than a Saturday, Sunday, federal holiday or
state holiday in Houston, Texas, or any other day on which national banks with
offices in Houston, Texas, are authorized or required by Applicable Law to be
closed.

“Buyer” has the meaning set forth in the preface hereto.

“Buyer Easements” has the meaning set forth in Section 2(d).

“Buyer Parties” means the Buyer, its Affiliates and their respective officers,
directors, members, shareholders, employees and agents, and their successors and
permitted assigns.

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

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

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

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

“Deeds” has the meaning set forth in Section 2(f)(ii).

“Dow Plant” means the Dow Chemical Freeport, TX processing plant where the
Seller’s onshore natural gas pipeline terminates.

“Encumbrance” means any mortgage, deed of trust, lease, pledge, option,
easement, right of way, encroachment, conditional sales agreement, lien,
encumbrance, charge, security interest, charge or restriction of any kind, or
other defect in title.

“Environmental Law” or “Environmental Laws” has the meaning set forth in
Section 4(g)(i).

“Facility” has the meaning set forth in Section 2(b)(x).

“GAAP” means generally accepted accounting principles in the United States as in
effect from time to time and consistently applied.

“GIGS Valve Site” has the meaning set forth in Section 5(h).

“Governmental Authority” means the United States and any department, commission,
board, bureau, court, agency or any other instrumentality of any federal, state,
provincial, county, city, municipal or other political subdivision, agency,
court or instrumentality, whether foreign or domestic.

 

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“Hazardous Substances” means all hazardous or toxic materials, substances and
wastes which are regulated under any Environmental Law or which may form the
basis for liability under any Environmental Law.

“Identified Environmental Issue” shall have the meaning given said term in
Section 4(g).

“Indemnified Party” has the meaning set forth in Section 6(e)(i).

“Indemnifying Party” has the meaning set forth in Section 6(e)(i).

“Knowledge” means, in the case of the Seller, the actual knowledge of the
officers and directors of Blue Dolphin after reasonable investigation and
inquiry and with respect to Bitter Creek, the actual knowledge of the Executive
Vice President and Chief Operating Officer without any requirement to
investigate.

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

“Material Adverse Effect” means any change or effect that, individually or in
the aggregate with other changes or effects, is materially adverse to the Assets
and/or would cost in excess of $450,000 to cure or remedy, provided that in
determining whether a Material Adverse Effect has occurred, changes or effects
relating to (i) the natural gas pipeline industry generally (including the price
of natural gas and the costs associated with the drilling and/or production of
natural gas), (ii) United States or global economic conditions or financial
markets in general, or (iii) the transactions contemplated by this Agreement,
shall not be considered.

“Ordinary Course of Business” means the ordinary course of business consistent
with the Seller’s commercially reasonable past custom and practice (including
with respect to quantity and frequency).

“Party” and “Parties” have the meanings set forth in the preface.

“Permitted Encumbrances” means any of the following: (i) any liens for Taxes not
yet delinquent or, if delinquent, that are being contested in good faith in the
ordinary course of business; (ii) any obligations or duties reserved to or
vested in any municipality or other Governmental Authority to regulate any of
the Assets in any manner including all applicable Laws; (iii) the terms and
conditions of all permits, licenses and other agreements set forth in Schedule
1; (iv) easements, rights of way, servitudes, permits, surface leases and other
rights with respect to surface obligations, pipelines, conditions, covenants or
other restrictions, so long as individually or in the aggregate they are not
such as are reasonably likely to have a Material Adverse Effect; and
(v) materialmen’s, mechanics’, repairmen’s, and other similar liens or

 

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charges arising in the ordinary course of business incidental to construction,
maintenance or operation of the Assets (A) if they have not been filed pursuant
to law, (B) if filed, they have not yet become due and payable or (C) if their
validity is being contested in good faith in the ordinary course of business by
appropriate action. For the purposes of clarity, the liabilities underlying the
Permitted Encumbrances described in subclauses (i) and (v) are Excluded
Liabilities notwithstanding such liens or charges being Permitted Encumbrances.

“Person” means any individual, partnership, corporation, limited liability
company, association, joint stock company, trust, joint venture, unincorporated
organization, Governmental Authority or any other legal entity.

“Product Agreement” has the meaning set forth in Section 2(e).

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

“ROW Assignments” has the meaning set forth in Section 2(f)(ii).

“Seller” has the meaning set forth in the preface hereto.

“Seller Easements” has the meaning set forth in Section 2(d).

“Seller Parties” means the Seller, its Affiliates and their respective officers,
directors, members, shareholders, employees and agents, and their successors and
permitted assigns.

“Seller’s Representative” has the meaning set forth in Section 7(a).

“Tax” or “Taxes” means (i) any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code §59A),
custom duties, capital stock, franchise, profits, withholding, social security
(or similar excises), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax, assessment, charge, duty, levy or other
similar governmental charge of any kind whatsoever, including any interest,
penalty or addition thereto, whether disputed or not, together with all
estimated taxes, deficiency assessments, additions to tax, penalties and
interest; (ii) any liability for the payment of any amount of a type described
in clause (i) arising as a result of being or having been a member of any
consolidated, combined, unitary or other group or being or having been included
or required to be included in any Tax Return related thereto; and (iii) any
liability for the payment of any amount of a type described in clause (i) or
clause (ii) as a result of any obligation to indemnify or otherwise assume or
succeed to the liability of any other Person.

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

 

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“Third Party Claim” has the meaning set forth in Section 6(e)(i).

2. Purchase and Sale.

(a) Assets. Subject to the terms and conditions of this Agreement, the Seller
agrees to sell, and the Buyer agrees to purchase from the Seller, the following
assets (the “Assets”):

(i) that certain pipeline system located onshore in Brazoria County, Texas,
which is commonly known as the “Buccaneer Pipeline,” including the easements and
rights-of-way listed on Exhibit 2(a)(i), and all pipelines, pumping station,
barge terminal, including loading birth, resting dolphins and related equipment
and fixtures primarily used in the operation of the Buccaneer Pipeline;

(ii) those certain tracts or parcels of real estate described in Exhibit
2(a)(ii) (the “Land”), including (A) all right-of-ways, ingress and egress,
easements, rights, benefits, privileges, hereditaments, tenements, remainders,
interests, reversions and appurtenances thereto belonging or in any way
appertaining to the Land, (B) to the extent transferable, all access, air,
water, riparian, development, utility and solar rights related to the Land, and
(C) any unused, undeveloped or abandoned platted street, road, alley, highway,
right-of-way or avenue, which is not on the Retained Land, opened or proposed,
within, in front of, abutting or adjoining the Land, to the centerline thereof;

(iii) all improvements upon the Land, including any buildings, storage tanks,
including the onshore tanks numbered S-1000, S-1001, S-1002, and S-1003,
fixtures, facilities and other fixed assets located on and/or affixed to the
Land and related equipment, internal transfer pipelines and fixtures which are
located on the Land on the date of this Agreement;

(iv) all other tangible personal property and fixtures that are used by the
Seller primarily in the operation of the Assets, including all pipes, piping,
pumps, motors, valves, fittings, miscellaneous equipment, automation systems,
personal computers, printers and servers, electrical facilities, improvements,
storage tanks, buildings and all other fixed assets and personal property;

(v) all books, files, maps, records and reports (including electronic data files
that would not violate any license or Law) pertaining primarily to the Assets
other than income Tax Returns, income Tax work papers and other income Tax
records, including all pipeline and plant construction and testing records,
vessel and pipe certifications and weld x-rays, equipment specifications and
operating manuals and inspection reports, real and personal property and ad
valorem Tax records and information relating to the other Assets, and reports
and filings to and with the U.S. Environmental Protection Agency, the state of
Texas or any other Governmental Authority or agency thereof; and

 

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(vi) all permits, licenses, orders, concessions, certificates of occupancy and
other governmental authorizations and approvals obtained by the Seller
pertaining or relating to the Assets, including those set forth on Exhibit
2(a)(vi) hereto, to the extent legally assignable or transferable.

(b) Excluded Assets. Notwithstanding any provision of Section 2(a) hereof, the
Assets do not include, and the Seller shall retain all right, title and interest
in and to the following assets (the “Excluded Assets”):

(i) all cash and cash equivalents of the Seller;

(ii) all accounts and notes receivable arising out of, resulting from or
relating to the business and operations of the Assets for periods up to the
Closing Date, and all claims, causes of action and rights relating thereto and
proceeds thereof;

(iii) all rights under insurance policies of the Seller and its Affiliates
relating to the Assets;

(iv) all computer equipment;

(v) Tax credits, Tax refunds or other Tax assets relating to whole or partial
taxable periods on or before the Closing Date;

(vi) Tax Returns, Tax work papers and other Tax records and information other
than real and personal property and ad valorem Tax records and information
relating to the Assets;

(vii) All equipment located in the Seller’s offices;

(viii) The 20 inch liquids and natural gas pipeline offshore and onshore
pipeline which terminates at the Facility which is commonly known as the “Blue
Dolphin Pipeline;”

(ix) Any real estate interests which are not expressly included in the Land (the
“Retained Land”);

(x) The processing facility located on the Retained Land (the “Facility”);

(xi) The 16 inch natural gas pipeline which begins at the Facility and which
terminates at the Dow Plant; and

 

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(xv) All inventory of crude oil and crude products located in any of the onshore
tanks; and

(xvii) All other assets of Seller not specifically described in paragraph 2(a).

(c) Purchase Price. In consideration for the sale of the Assets, the Buyer
agrees to pay to the Seller at the Closing $4,500,000 (the “Purchase Price”),
less the Seller’s allocation for ad valorem and real property Taxes as set forth
on the written agreement by the Parties made in accordance with Section 2(j)(ii)
(the resulting amount, the “Closing Payment”), payable by wire transfer of
immediately available funds as follows: 16 2/3% of the Closing Payment shall be
paid to Bitter Creek, and 83 1/3% of the Closing Payment shall be paid to Blue
Dolphin.

(d) Easements. At the Closing, (i) the Seller shall deliver to the Buyer
easements (the “Buyer Easements”) with respect to the Retained Land in the form
of Exhibit 2(d)-1, and (ii) the Buyer shall deliver to the Seller easements with
respect to the Land (the “Seller Easements”), in the form of Exhibit 2(d)-2.

(e) Product Agreement. At the Closing, Blue Dolphin and the Seller will enter
into an agreement in the form of Exhibit 2(e) (the “Product Agreement”).

(f) Conveyance Documents.

(i) At the Closing, the sale, transfer, assignment, conveyance and delivery of
all tangible and intangible personal property, any assignable permits and the
books and records included in the Assets shall be effected pursuant to a bill of
sale and assignment agreement substantially in the form of Exhibit 2(f)(i)
(“Bill of Sale”).

(ii) At the Closing, the transfer of the Land and improvements on the Land shall
be effected pursuant to (1) one or more special warranty deeds substantially in
the form of Exhibit 2(f)(ii)-1 (the “Deeds”) and (2) one or more assignments of
easements and rights of way substantially in the form of Exhibit 2(f)(ii)-2 (the
“ROW Assignments”).

(g) Excluded Liabilities. The Buyer shall not assume, and the Seller shall
retain and be responsible for and shall pay and discharge when due, any
liabilities or obligations arising out of, resulting from or relating to any of
the Assets, whether absolute, contingent, matured or unmatured, arising or
relating to events or circumstances occurring prior to or on the Closing Date
(collectively, the “Excluded Liabilities”), and specifically (but not by way of
limitation), the Buyer shall not assume the following liabilities and
obligations:

(i) any accounts and notes payable arising out of, resulting from or relating to
the Assets to the extent relating to or for periods up to and including the
Closing Date;

 

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(ii) all indebtedness of the Seller for borrowed money;

(iii) all Taxes arising out of, resulting from or relating to the Assets for
whole or partial taxable periods on or before the Closing Date; and

(iv) all Liabilities relating to the ownership, use, operation or disposition of
the Assets prior to the Closing Date.

(h) The Closing. The closing of the transactions contemplated by this Agreement
(the “Closing”) shall take place at the offices of Stewart Title Company on the
date hereof, or on such other date as the Buyer and the Seller’s Representative
may mutually determine (the “Closing Date”). The Closing will be effective as of
1:00 p. m. on the Closing Date.

(i) Deliveries at the Closing. At the Closing, (i) Blue Dolphin will deliver the
Product Agreement and the Seller will deliver to the Buyer the Buyer Easements,
Bill of Sale, Deeds, ROW Assignments and various other certificates,
instruments, and documents required to be delivered by it pursuant to this
Agreement, (ii) the Buyer will deliver to Blue Dolphin the Product Agreement and
will deliver to the Seller the Seller Easements and various other certificates,
instruments, and documents required to be delivered by it pursuant to this
Agreement, (iii) the Seller will deliver to the Buyer such other instruments of
assignment and transfer as shall be necessary to transfer to the Buyer all of
the Seller’s right, title and interest in and to the Assets free and clear of
any Encumbrance other than any Permitted Encumbrance, and (iv) the Buyer will
deliver to the Seller the Closing Payment.

(j) Apportionments.

(i) Subject to Section 2(j)(ii) below, all charges, expenses, ad valorem and
property Taxes and other costs payable with respect to operating or owning any
or all of the Assets, including water, electricity, sewage, gas, and all other
utilities shall be prorated between the Seller and the Buyer as of the Closing
Date. Any charges, expenses, ad valorem and property Taxes and other costs
payable shall be deemed to have accrued when the event giving rise to such
charge, expense, ad valorem and property Tax and other cost payable occurred
(whether or not such charge, expense, ad valorem and property Tax and other cost
payable was invoiced or paid at the Closing Date). All proceeds attributable to
the operation, ownership, use or maintenance of or otherwise relating to the
Assets prior to the Closing Date shall be the property of the Seller. In the
event, through inadvertence, mistake or otherwise, any such proceeds are
transferred to or received by the Buyer, the Buyer shall promptly and fully
disclose, account for and transmit the same to the Seller’s Representative
(which shall distribute 1/6th of the proceeds to Bitter Creek and 5/6ths of the
proceeds to Blue Dolphin). All proceeds attributable to the operation,
ownership, use or maintenance of or otherwise relating to the Assets after the
Closing Date shall be the property of the Buyer. In the event, through
inadvertence, mistake or otherwise, any such proceeds are transferred to or
received by the Seller, the Seller shall promptly and fully disclose, account
for and transmit the same to the Buyer.

 

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(ii) The Buyer shall be responsible for the actual payment of all ad valorem and
property Taxes with respect to the Assets for the calendar year in which the
Closing occurs; provided, however, that the Seller shall reimburse the Buyer for
its pro rata share of such Taxes to the extent not previously paid by the
Seller. An estimate of such ad valorem and property Taxes, based upon the prior
year’s ad valorem and property Tax assessments plus five percent (5%), together
with a resulting calculation of the Closing Payment, is attached hereto as
Exhibit 2(j)(ii). Such amount shall be binding on the Parties as a final
allocation of ad valorem and property Taxes notwithstanding the actual amount of
Taxes paid by the Buyer and shall be included as an adjustment to the Purchase
Price reflected in the Closing Payment, as described in Section 2(c). The ad
valorem and property Taxes for the year of Closing for which the Seller is
responsible shall be determined by applying a fraction based on the number of
days in the calendar year prior to the Closing Date to such Taxes for the
calendar year.

(k) Purchase Price Allocation. The Seller’s Representative and the Buyer shall,
within thirty (30) days prior to the filing the respective 2011 federal Tax
Returns of Blue Dolphin, Bitter Creek and the Buyer attempt in good faith to
agree to an allocation of the Purchase Price among the Assets. Should the
allocation be agreed to, the Buyer, Blue Dolphin and Bitter Creek will
(i) report the federal, state and local income and other Tax consequences of the
transactions contemplated herein, and in particular report the information
required by Section 1060(b) of the Code, and jointly prepare Form 8594 (Asset
Acquisition Statement under Section 1060) in a manner consistent with such
allocation and (ii) not to take any position inconsistent therewith upon
examination of any Tax Return, in any refund claim, or in any litigation or
investigation or otherwise, unless required by applicable Laws or with the
consent of the other Parties. Blue Dolphin, Bitter Creek and the Buyer agree
that each will furnish to the others a copy of Form 8594 proposed to be filed
with the Internal Revenue Service by such Party or any Affiliate thereof within
ten (10) days prior to the filing of such form with the Internal Revenue
Service. Should the Parties not agree as to the allocation, they shall so
indicate the same on their respective Form 8594 to the extent required by the
Asset Acquisition Statement under IRC Section 1060. The Buyer further agrees
that if the amount of the Purchase Price allocated to any of the Assets by the
Seller and the Buyer increases (or decreases) after the taxable year that
includes the Closing Date, the Seller and the Buyer shall file “Supplemental
Asset Acquisition Statements” on Form 8594 with their respective income Tax
Returns for the taxable year in which the increase (or decrease) is properly
taken into account.

 

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3. Representations and Warranties Concerning the Transaction.

(a) Representations and Warranties of the Seller. Blue Dolphin hereby represents
and warrants to the Buyer, with respect to Blue Dolphin, and Bitter Creek hereby
represents and warrants to the Buyer, with respect to Bitter Creek, as follows:

(i) Organization of the Seller. Blue Dolphin and Bitter Creek are each, and on
the Closing Date each will be, a corporation and a limited liability company
respectively, duly organized, validly existing, and in good standing, in the
case of Blue Dolphin under the Laws of the state of Delaware, and in the case of
Bitter Creek under the Laws of the state of Colorado, and are each duly
qualified or licensed to do business as a foreign entity in all states where it
is necessary and required to be so qualified or licensed in order to perform the
obligations and effect the transactions contemplated by this Agreement.

(ii) Authorization of Transaction. Each of Blue Dolphin and Bitter Creek has
full power and authority to (i) own and operate the Assets and to carry on its
business with respect to the Assets as currently conducted and (ii) execute and
deliver this Agreement and to perform its obligations hereunder. The execution
and delivery of this Agreement, and all other documents required hereunder to be
executed and delivered by the Seller, and the performance of the transactions
contemplated hereby have been duly and validly authorized by such action,
corporate or otherwise, necessary on behalf of each of Blue Dolphin and Bitter
Creek. This Agreement constitutes, and each document required to be executed and
delivered by each of Blue Dolphin and Bitter Creek hereunder shall constitute,
the valid and legally binding obligation of each of Blue Dolphin and Bitter
Creek, enforceable in accordance with its terms and conditions, subject,
however, to the effects of bankruptcy, insolvency, reorganization, moratorium or
similar Laws affecting creditors’ rights generally, and to general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law). Except as set forth on Schedule 3(a)(ii), the Seller need
not give any notice to, make any filing with, or obtain any authorization,
consent, or approval of any Governmental Authority in order to consummate the
transactions contemplated by this Agreement.

(iii) Noncontravention. Except for the approvals and filings specified in
Schedule 3(a)(ii), or as set forth in Schedule 3(a)(iii), neither the execution
and delivery of this Agreement, nor the performance by Seller of its obligations
hereunder, nor the consummation of the transactions contemplated hereby, will
(A) violate any provision of the constituent organizational documents of either
Blue Dolphin or Bitter Creek, (B) violate any statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction of any
Governmental Authority to which either each of Blue Dolphin or Bitter Creek is
subject or any provision of its charter or bylaws, or (C) conflict with, result
in a breach of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify, or cancel, or
require any notice, approval or consent under any agreement, contract, lease,
license, instrument, or other arrangement to which either Blue Dolphin or Bitter
Creek is a party

 

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or by which it is bound or to which any of its assets is subject, except for
such violations, defaults, breaches, or other occurrences that do not,
individually or in the aggregate, have a Material Adverse Effect on the ability
of the Seller to consummate the transactions contemplated by this Agreement.

(iv) Brokers’ Fees. The Seller has no liability or obligation to pay any fees or
commissions to any broker, finder, agent or any other Person with respect to the
transactions contemplated by this Agreement for which the Buyer could become
liable or obligated.

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

(i) Organization of the Buyer. The Buyer is, and on the Closing Date will be, a
limited partnership duly organized, validly existing, and in good standing under
the Laws of the state of Texas, and is duly qualified or licensed to do business
as a foreign entity in all states where it is necessary and required to be so
qualified or licensed in order to perform the obligations and effect the
transactions contemplated by this Agreement.

(ii) Authorization of Transaction. The Buyer has full power and authority to
execute and deliver this Agreement and to perform its obligations hereunder. The
execution and delivery of this Agreement, and all other documents required
hereunder to be executed and delivered by Buyer, and the performance of the
transactions contemplated hereby have been duly and validly authorized by such
action, limited partnership or otherwise, necessary on behalf of the Buyer. This
Agreement constitutes, and each document required to be executed and delivered
by Buyer hereunder shall constitute, the valid and legally binding obligation of
the Buyer, enforceable in accordance with its terms and conditions, subject,
however, to the effects of bankruptcy, insolvency, reorganization, moratorium,
or similar Laws affecting creditors’ rights generally and to general principles
of equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law). The Buyer need not give any notice to, make any
filing with, or obtain any authorization, consent, or approval of any
Governmental Authority in order to consummate the transactions contemplated by
this Agreement.

(iii) Noncontravention. Neither the execution and delivery of this Agreement,
nor the performance by Buyer of its obligations hereunder, nor the consummation
of the transactions contemplated hereby, will (A) violate any provision of the
constituent organizational documents of Buyer, (B) violate any statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any Governmental Authority to which the Buyer is subject, or
(C) conflict with, result in a breach of, constitute a default under, result in
the acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice, approval or consent under any
agreement, contract, lease, license, instrument, or other arrangement to which
the Buyer is a party or by which it is bound or to which any of its assets is
subject, except for such violations, defaults, breaches, or other occurrences
that do not, individually or in the aggregate, have a material adverse effect on
the ability of the Buyer to consummate the transactions contemplated by this
Agreement.

 

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(iv) Brokers’ Fees. The Buyer has no liability or obligation to pay any fees or
commissions to any broker, finder, agent or any other Person with respect to the
transactions contemplated by this Agreement for which the Seller could become
liable or obligated.

(v) Financing. The Buyer has sufficient financial resources to enable it to make
payment of the Closing Payment at Closing without encumbrance or delay and
without causing the Buyer to become insolvent or to declare insolvency.

4. Representations and Warranties Concerning the Assets. The Seller hereby
represents and warrants to the Buyer as follows:

(a) Noncontravention. Neither the execution and delivery of this Agreement, nor
the consummation of the transactions contemplated hereby, will (i) violate any
Law or other restriction of any Governmental Authority to which the Assets are
subject or (ii) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice or trigger any
rights to payment or other compensation under any agreement, contract, lease,
license, instrument, or other arrangement to which any of the Assets is subject
(or result in the imposition of any Encumbrance upon any of the Assets), except
where the violation, conflict, breach, default, acceleration, termination,
modification, cancellation, failure to give notice, right to payment or other
compensation, or Encumbrance would not have a Material Adverse Effect, or would
not materially adversely affect the ability of the Seller to consummate the
transactions contemplated by this Agreement, or (iii) result in the
cancellation, forfeiture, revocation, suspension or modification of any Assets
or any existing permits or other governmental authorizations pertaining to the
Assets.

(b) Title to Assets. Seller has good and defensible title to the Assets, free
and clear of all Encumbrances, except for (i) Permitted Encumbrances, and
(ii) the Encumbrances disclosed in Schedule 4(b). Blue Dolphin has an undivided
5/6 interest in the Assets, and Bitter Creek has an undivided 1/6 interest in
the Assets; no other party has any interest in the Assets.

(c) Material Change. Except as set forth in Schedule 4(c), since February 28,
2011:

(i) there has not been any Material Adverse Effect;

(ii) the Assets have been prudently operated and maintained in the Ordinary
Course of Business;

(iii) there has not been any material damage, destruction or loss to any
material portion of the Assets, whether or not covered by insurance;

 

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(iv) there has been no change affecting any of the Assets with any customers,
licensors, suppliers, distributors or sales representatives, except for changes
that do not have a Material Adverse Effect; and

(v) there is no contract, commitment or agreement by Seller to do any of the
foregoing, except as expressly permitted hereby.

(d) Legal Compliance. The Assets are in legal compliance with all applicable
Laws of all Governmental Authorities as they are currently enforced, except
where the failure to comply would not have a Material Adverse Effect. The Seller
makes no representations or warranties in this Section 4(e) with respect to
Environmental Laws, for which the sole representations and warranties of the
Seller are set forth in Section 4(g).

(e) Contracts and Commitments. There are no material contracts or commitments
with respect to the Assets (including any contract, lease, agreement or
commitment, written or oral, providing for receipt or payment, contingent or
otherwise, of $25,000 or more, or which may not be terminated without payment or
penalty, or containing any indemnity obligation, or relating to indebtedness or
guarantee obligations, or concerning the transportation or processing of the
products of any party by means of the Assets) to which the Seller or any of its
Affiliates is a party, or which concerns the Assets as of the date hereof, with
respect to which the Buyer will have any legal obligation to perform after
Closing.

(f) Litigation. Schedule 4(f) sets forth each instance in which either Blue
Dolphin or Bitter Creek (with respect to the Assets) or the Assets (i) is
subject to any outstanding injunction, judgment, order, decree, ruling, or
charge or (ii) is a party to or the subject of any action, suit, proceeding,
hearing, or investigation of, in, or before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign jurisdiction, or
is the subject of any pending or, to the Seller’s Knowledge, threatened claim,
demand, or notice of violation or liability from any party.

(g) Environmental Matters. Except as set forth in Schedule 4(g):

(i) The Seller (with respect to the Assets) is in compliance with all applicable
Laws (including common law) relating to (A) the control of any pollution or
protection of human health and the environment (including the air, water, land
surface or substrata), (B) solid, gaseous or liquid waste generation, handling,
treatment, storage, disposal or transportation, (C) releases of or exposure to
any Hazardous Substances and (D) the protection of the environment, including
the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended, 42 U.S.C. section 9601, et seq. (“CERCLA”), the Resource
Conservation and Recovery Act of 1976, as amended, 42 U.S.C. section 6901, et
seq., the Clean Air Act, as

 

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amended, 42 U.S.C. section 7401, et seq., the Federal Water Pollution Control
Act, as amended, 33 U.S.C. section 1251, et seq., and the Oil Pollution Act of
1990, 33 U.S.C. section 2701, et seq. (collectively, the “Environmental Laws”
and individually an “Environmental Law”), except for such instances of
noncompliance that individually or in the aggregate do not have a Material
Adverse Effect.

(ii) The Seller (with respect to the Assets) has obtained all permits, licenses,
franchises, authorities, consents, and approvals, and has made all filings and
maintained all material information, documentation, and records, as necessary
under applicable Environmental Laws for operating the Assets and all such
permits, licenses, franchises, authorities, consents, approvals, and filings
remain in full force and effect, except for such matters that individually or in
the aggregate do not have, or would not reasonably be expected to have, a
Material Adverse Effect.

(iii) There are no pending or, to the Seller’s Knowledge, threatened, claims,
demands, actions, administrative proceedings or lawsuits against the Seller
(with respect to the Assets), and neither the Seller nor any of the Assets are
subject to any outstanding injunction, judgment, order, decree or ruling under
any Environmental Laws.

(iv) The Seller has not received any written notice that it is or may be a
potentially responsible party under CERCLA or any analogous state law in
connection with any site actually or allegedly containing or used for the
treatment, storage or disposal of Hazardous Substances.

(v) The Seller acknowledges, as of the Closing Date, the presence of the
environmental conditions and/or potential noncompliance with Environmental Laws
with respect to benzene levels identified in the Limited Phase II Environmental
Assessment – Blue Dolphin Processing Facility dated July 7, 2011 and prepared by
Groundwater & Environmental Services, Inc. for Sunoco Logistics Partners, L.P.,
which is referred to herein as the “Identified Environmental Issue.” The
Identified Environmental Issue shall be subject to Section 5(f).

The Seller makes no representation or warranty regarding any compliance or
failure to comply with, or any actual or contingent liability under, any
Environmental Law, except as expressly set forth in this Section 4(g).

(h) Permits. Except as set forth in Schedule 4(h), the Seller owns or holds all
franchises, licenses, permits, consents, approvals, and authorizations of all
Governmental Authorities necessary for the conduct of the business conducted
with the Assets (collectively, the “Permits”), except for Permits whose absence
would not have a Material Adverse Effect. Each Permit is in full force and
effect, and the Seller (with respect to the Assets) is in compliance with all of
its obligations with respect to each Permit, except where the failure to be in
full force and effect or to be in compliance would not have a Material Adverse
Effect, and, to the Seller’s

 

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Knowledge, no event has occurred that permits, or upon the giving of notice or
the lapse of time or otherwise would permit, revocation or termination of any
Permit except such as would not have a Material Adverse Effect.

(i) Pipeline Rights-of-Way. Except as expressly set forth in Schedule 4(i), the
Seller has not received written notice from any third party and does not have
Knowledge of any deficiency in any rights-of-way or other easements with respect
to the entire route of all pipelines owned and used or held for use with respect
to the Assets. The Seller has not sold or assigned any such rights-of-way and/or
easements, in whole or in part, or any undivided interest therein, to any party
whatsoever.

(j) Condition of Assets. Except as set forth in Schedule 4(j), the Assets
constitute all of the tangible assets, real and personal, and permits reasonably
necessary for Seller to operate the Assets as of the date hereof. Except as set
forth in Schedule 4(j), to the Knowledge of Seller, the Assets: (i) are in
serviceable and functional condition, (ii) have been maintained to normal
industry standards,(iii) are suitable for the purposes used by the Seller, and
there is no imminent repair or replacement pending with respect to the Assets.

(k) Taxes. Except as set forth in the Schedule 4(k), the Seller has timely filed
all material federal, state, local and foreign Tax returns related to the Assets
and has paid (except amounts being diligently contested in good faith by
appropriate proceedings and disclosed in Schedule 4(k)) when due all Taxes
arising from or related to the Assets, including any interest, penalties or
additions attributable thereto shown as due on all such filings. Taxes which the
Seller was required by applicable Laws to withhold or collect arising from or
related to the Assets have been withheld or collected and have been paid over to
the proper Governmental Authority or are properly held by the Seller for such
payment when due and payable.

(l) Disclaimer of Representations and Warranties Concerning Personal Property,
Equipment, and Fixtures. The Buyer acknowledges that (i) it has had and pursuant
to this Agreement will have before Closing access to the Seller and the Assets,
and the officers and employees of the Seller and (ii) in making the decision to
enter into this Agreement and consummate the transactions contemplated hereby,
the Buyer has relied solely on the basis of its own independent investigation
and upon the express representations, warranties, covenants, and agreements set
forth in this Agreement and in the other agreements referred to herein.
Accordingly, the Buyer acknowledges that, except as expressly set forth in this
Agreement and in the other agreements referred to herein, the Seller has not
made, and THE SELLER MAKES NO AND DISCLAIMS ANY REPRESENTATION OR WARRANTY,
WHETHER EXPRESS OR IMPLIED, AND WHETHER BY COMMON LAW, STATUTE, OR OTHERWISE,
REGARDING (A) THE QUALITY, CONDITION, OR OPERABILITY OF ANY PERSONAL PROPERTY,
EQUIPMENT, OR FIXTURES, (B) ITS MERCHANTABILITY, (C) ITS FITNESS FOR ANY
PARTICULAR PURPOSE, (D) ITS CONFORMITY TO MODELS, SAMPLES OF MATERIALS OR
MANUFACTURER DESIGN, AND ALL PERSONAL

 

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PROPERTY AND EQUIPMENT IS DELIVERED “AS IS, WHERE IS” IN THE CONDITION IN WHICH
THE SAME EXISTS, OR (E) ANY INFORMATION, DATA OR OTHER MATERIALS (WRITTEN OR
ORAL) FURNISHED TO BUYER BY OR ON BEHALF OF SELLER (INCLUDING WITHOUT
LIMITATION, IN RESPECT OF THE EXISTENCE OR EXTENT OF OIL, GAS OR OTHER MINERAL
RESERVES, THE RECOVERABILITY OF OR THE COST OF RECOVERING SUCH RESERVES, OR THE
LIKELIHOOD THAT SUCH RESERVES, IF RECOVERED, WILL BE TRANSPORTED OR PROCESSED BY
MEANS OF THE ASSETS).

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

(a) General. In case at any time after the Closing any further action is
necessary to carry out the purposes of this Agreement, each of the Parties will
take such further action (including the execution and delivery of such further
instruments and documents) as the other Party reasonably may request, all at the
sole cost and expense of the requesting Party (unless the requesting Party is
entitled to indemnification therefore under Section 6, in which case the
allocation of such cost and expense shall be in accordance with Section 6).

(b) Litigation Support. In the event and for so long as any Party actively is
contesting or defending against any action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand in connection with (i) any
transaction contemplated under this Agreement or (ii) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act, or transaction involving the Assets, the other
Party shall reasonably cooperate with the contesting or defending Party and its
counsel in the defense or contest, make available its personnel, and provide
such testimony and access to its books and records (other than books and records
which are subject to privilege or to confidentiality restrictions) as shall be
reasonably necessary in connection with the defense or contest, all at the sole
cost and expense of the contesting or defending Party (unless the contesting or
defending Party is entitled to indemnification therefor under Section 6, in
which case the allocation of such cost and expense shall be in accordance with
Section 6), but there shall be no cost to the contesting or defending Party for
the direct labor cost of employees of the other Party.

(c) Delivery and Retention of Records. On or promptly after the Closing Date,
the Seller will deliver or cause to be delivered to the Buyer all files,
records, ad valorem and real property Tax records, information and data relating
to the Assets, together with all of the Seller’s and its subsidiaries’
contractual rights to request other such files, records, information, and data
from any third party (other than income Tax Returns, income Tax workpapers and
other income Tax records and information that are in the possession or control
of the Seller and its subsidiaries) (the “Records”). The Buyer agrees (i) to
hold the Records and not to destroy or dispose of any thereof for a period of 4
years from the Closing Date or such longer time as may be required by Law,
provided that, if it desires to destroy or dispose of such Records during such
period, it will first offer in writing at least 60 days before such destruction
or disposition to

 

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surrender them to the Seller’s Representative and if the Seller’s Representative
does not accept such offer in writing within 20 days after receipt of such
offer, the Buyer may take such action and (ii) following the Closing Date to
afford the Seller’s Representative, its accountants, and counsel, during normal
business hours, upon reasonable request, at any time, full access to the Records
and to the Buyer’s employees to the extent that such access may be requested for
any legitimate purpose at no cost to the Seller’s Representative (other than for
reasonable out-of-pocket expenses), so long as such access does not unreasonably
interfere with Buyer’s operations, is conducted during normal business hours and
is limited solely to such legitimate purpose; provided that such access will not
be construed to require the disclosure of Records that would cause the waiver of
any attorney-client, work product or like privilege; provided, further, that in
the event of any litigation nothing herein shall limit either Party’s rights of
discovery under applicable Law. The Buyer shall have the same rights, and the
Seller shall have the same obligations, as are set forth in this Section 5(c)
with respect to any copies of the records of the Seller pertaining to the Assets
that are retained by the Seller, provided that such access will not be construed
to require the disclosure of records that would cause the waiver of any
attorney-client, work product, or like privilege.

(d) Mail; Communications.

(i) The Seller hereby authorizes the Buyer from and after the Closing to receive
and open all mail and other communications relating to the business conducted
with the Assets, and to act with respect to such communications in such manner
as the Buyer may elect to the extent that such communications relate to the
rights and obligations of the Buyer with respect to the Assets. If any
communication does not relate exclusively to the rights and obligations of the
Buyer with respect to the Assets, the Buyer shall forward the original or a copy
of such communication promptly to the Seller’s Representative.

(ii) The Seller shall promptly deliver to the Buyer the original or a copy of
any mail or other communication received by it after the Closing pertaining to
the Assets.

(e) Certificate of Non-foreign Status. On the Closing Date, each of Blue Dolphin
and Bitter Creek shall provide the Buyer with a properly executed certificate of
non-foreign status in accordance with Treasury Regulation §1.1445-2(b)
certifying under penalties of perjury that such Party is not a foreign person
within the meaning of Section 1445(f) of the Code and Treasury Regulation
§1.1445-2(b).

(f) Identified Environmental Issue. As promptly as may be practicable following
Closing, the Seller shall perform such remediation work to the extent required
to obtain a closure letter from the Texas Railroad Commission with respect to
the Identified Environmental Issue. Such remediation work shall be done at the
expense and risk of the Seller. The Buyer shall cooperate with the Seller with
respect to such remediation work to the extent reasonably required by Seller.
Upon the obtainment of such closure letter, Seller shall no longer have any
liability or responsibility for the Identified Environmental Issue.

 

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(g) Division of Tax Parcels. The Parties shall use commercially reasonable
efforts to effectuate the division of any tax parcels of land for which Seller
does not acquire a 100% interest in as part of the Land, including (i) Lot 1 of
the Brazos County Investment Company Subdivision No. 10, in the F.J. Calvit
League, Abstract 51, Brazoria County, Texas and (ii) a 105.52 acre tract out of
the F.J. Calvit League, Abstract 51, Brazoria County, Texas, said tract being
more particularly described by metes and bounds in a deed from Shell Oil Company
recorded in Volume 1058, Page 783 of the Deed Records, Brazoria County, Texas,
as promptly as may be practicable following Closing.

(h) GIGS Valve Site Easement. Within 90 days of the Closing Date, Blue Dolphin
shall perform a survey of the “GIGS” pipeline constructed pursuant to the
easement granted to TPC Transmission, Inc. and Buccaneer Land Partnership dated
September 12, 1980 recorded in the Official Real Property Records of Brazoria
County, Texas in Volume (89)730, Page 366, and shall determine an appropriate
valve site on the Land (if any) for a connection between Seller’s Blue Dolphin
Pipeline and the “GIGS” pipeline, which shall be for a parcel of land of a size
no less than 30 feet by 30 feet and no more 100 feet by 100 feet (the “GIGS
Valve Site”); provided that (i) Blue Dolphin shall use commercially reasonable
efforts to minimize the amount of land required for the GIGS Valve Site and
(ii) the GIGS Valve Site shall not unreasonably interfere with the operations of
the Buccaneer Pipeline as of the Closing Date. After Blue Dolphin has determined
the GIGS Valve Site, Buyer shall execute in favor of Seller an easement in
substantially the same form as Exhibit 2(d)-2 “Pipeline and Valve Site Easement”
for a 2-year term; provided that such easement shall provide that when Seller
completes construction of a stub-up/GIGS connection, such stub-up/GIGS
connection to be reasonably acceptable to Buyer, such easement shall become
permanent with no additional fee, subject to abandonment and removal provisions
in the easement; provided further, that such easement shall provide that Seller
may renew the easement for successive one-year periods prior to the expiration
of the term by paying to Buyer $10,000 per calendar year, escalated 3% annually,
due 30 days prior to the expiration of the easement.

6. Remedies for Breaches of this Agreement.

(a) Claim Relating to Pre-Closing and Post Closing Obligations. From and after
the Closing the Seller will indemnify the Buyer Parties against any Adverse
Consequences relating to claims brought by Third Parties which arise from the
operation of the Assets prior to the Closing. From and after the Closing the
Buyer will indemnify the Seller Parties against any Adverse Consequences
relating to claims brought by Third Parties which arise from the operation of
the Assets subsequent to the Closing.

(b) Survival of Representations, Warranties and Certain Covenants. (i) All of
the

 

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representations and warranties of the Seller contained in this Agreement shall
survive the Closing hereunder for a period of one year after the Closing Date,
provided that the representations of the Seller contained in Sections 3(a)(i),
3(a)(ii), 3(a)(iv) and 4(b) shall survive the Closing indefinitely, and the
representations made by the Seller in Section 4(k) shall survive until 60 days
following the expiration of the applicable statute of limitations (taking into
account any extensions thereof). The representations and warranties of the Buyer
contained in this Agreement shall survive the Closing for a period of one year
after the Closing Date, provided that the representations of the Buyer contained
in Sections 3(b)(i), 3(b)(ii) and 3(b)(iv) shall survive the Closing
indefinitely. The covenants contained in this Agreement to be performed after
the Closing shall survive the Closing indefinitely.

(c) Indemnification Provisions for Benefit of the Buyer.

(i) From and after the Closing, in the event that: (x) the Seller breaches any
of its representations and warranties contained herein (other than the
representations and warranties in Section 3(a)(i), (ii) and (iv) and
Section 4(b)); and (y) a Buyer Party makes a written claim for indemnification
against the Seller pursuant to Section 10(g) within the applicable survival
period as set forth in Section 6(b), then the Seller shall indemnify the Buyer
Parties from and against any Adverse Consequences to the extent in excess of
$10,000 per breach to the extent they are caused proximately by the breach and
suffered by the Buyer Parties; provided, that the Seller shall not have any
obligation to indemnify the Buyer Parties from and against any such Adverse
Consequences (A) until the Buyer Parties have suffered Adverse Consequences by
reason of all such breaches in excess of a $100,000 aggregate deductible (after
which point the Seller will be obligated only to indemnify the Buyer Parties
from and against further such Adverse Consequences) or thereafter (B) to the
extent the Adverse Consequences the Buyer Parties have suffered by reason of all
such breaches exceeds a $1,125,000 aggregate ceiling (after which point the
Seller will have no obligation to indemnify the Buyer Parties from and against
further such Adverse Consequences). Blue Dolphin and Bitter Creek’s liability is
several and not joint and as such, Blue Dolphin’s aggregate ceiling is $937,500
and Bitter Creek’s aggregate ceiling is $187,500.

(ii) From and after the Closing, in the event the Seller breaches any of its
representations and warranties in Section 3(a)(i), (ii) or (iv) or Section 4(b)
or its post-Closing covenants contained herein (other than the covenants in
Section 2(g)), then the Seller shall indemnify the Buyer Parties from and
against the entirety of any Adverse Consequences caused proximately by the
breach and suffered by the Buyer Parties through and after the date of the claim
for indemnification, up to a maximum aggregate indemnification amount equal to
the Purchase Price. Blue Dolphin and Bitter Creek’s liability is several and not
joint and as such, Blue Dolphin’s aggregate indemnification amount is 5/6ths of
the indemnification amount and Bitter Creek’s aggregate indemnification amount
is 1/6th of the indemnification amount.

(iii) Except for (A) the rights of indemnification provided in Section 6(a),
this

 

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Section 6(c), Section 6(d) and in the Product Agreement, (B) the covenants in
Section 6(a), which the Buyer may specifically enforce, (C) rights with respect
to any agreement entered into by the Parties after the Closing Date, and
(D) claims arising out of the Seller’s actual fraud or willful misconduct, the
Buyer hereby waives any claim or cause of action pursuant to common or statutory
law or otherwise against the Seller regarding obligations and liabilities of any
nature whatsoever that are attributable to the Assets, whether arising before or
after the Closing Date.

(d) Indemnification Provisions for Benefit of the Seller.

(i) From and after the Closing, in the event that: (x) the Buyer breaches any of
its representations and warranties contained herein (other than the
representations and warranties in Section 3(b)(i), (ii) and (iv)); and (y) a
Seller Party makes a written claim for indemnification against the Buyer
pursuant to Section 6(g) within the applicable survival period as set forth in
Section 6(b), then the Buyer shall indemnify the Seller Parties from and against
any Adverse Consequences to the extent in excess of $10,000 per breach to the
extent they are caused proximately by the breach and suffered by the Seller
Parties; provided, that the Buyer shall not have any obligation to indemnify the
Seller Parties from and against any such Adverse Consequences (A) until the
Seller Parties have suffered Adverse Consequences by reason of all such breaches
in excess of a $100,000 aggregate deductible (after which point the Buyer will
be obligated only to indemnify the Seller Parties from and against further such
Adverse Consequences) or thereafter (B) to the extent the Adverse Consequences
the Seller Parties have suffered by reason of all such breaches exceeds a
$1,125,000 aggregate ceiling (after which point the Buyer will have no
obligation to indemnify the Seller Parties from and against further such Adverse
Consequences).

(ii) From and after the Closing, in the event the Buyer breaches any of its
representations and warranties in Section 3(b)(i), (ii) or (iv) or its
post-Closing covenants contained herein, then the Buyer shall indemnify the
Seller Parties from and against the entirety of any Adverse Consequences caused
proximately by the breach and suffered by the Seller Parties through and after
the date of the claim for indemnification, up to a maximum aggregate
indemnification amount equal to the Purchase Price.

(iii) Except for (A) the rights of indemnification provided in Section 6(a),
this Section 6(d), and in the Product Agreement, (B) the covenants in
Section 6(a), which the Seller may specifically enforce, (C) rights with respect
to any agreement entered into by the Parties after the Closing Date, and
(D) claims arising out of the Buyer’s actual fraud or willful misconduct, the
Seller hereby waives any claim or cause of action pursuant to common or
statutory law or otherwise against the Buyer regarding obligations and
liabilities of any nature whatsoever that are attributable to the Assets,
whether arising before or after the Closing Date.

 

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(e) Matters Involving Third Parties.

(i) If any third party shall notify any Seller Party or Buyer Party (the
“Indemnified Party”) with respect to any matter (a “Third Party Claim”) that may
give rise to a claim for indemnification against any Party (the “Indemnifying
Party”) under this Section 6, then the Indemnified Party shall promptly (and in
any event within 10 Business Days after receiving notice of the Third Party
Claim) notify the Indemnifying Party thereof in writing. The failure of any
Indemnified Party to give notice of any such Third Party Claim on a timely basis
shall not affect the rights of the Indemnified Party to indemnification
hereunder unless the Indemnified Party demonstrates actual and material Adverse
Consequences caused by such failure, in which case the Indemnified Party’s right
to be indemnified shall be reduced to the extent the Indemnifying Party
demonstrates actual and material Adverse Consequences caused by such failure.

(ii) The Indemnifying Party (provided that for purposes of this Section 6(e) the
Seller’s Representative shall have the sole and exclusive right to act on behalf
of the Seller as Indemnifying Party) will have the right to assume and
thereafter conduct the defense of the Third Party Claim with reputable counsel
of its choice reasonably satisfactory to the Indemnified Party; provided that,
prior to the Indemnifying Party assuming control of such defense it shall first
verify to the Indemnified Party in writing that such Indemnifying Party shall be
fully responsible (with no reservation of any rights) for all Adverse
Consequences relating to such claim for indemnification and that (subject to all
monetary limitations set forth herein) it shall provide full indemnification
(subject to the monetary limitations set forth herein) to the Indemnified Party
with respect to such Third Party Claim giving rise to such claim for
indemnification hereunder; provided further, however, that notice of the
intention to so contest and defend shall be delivered by the Indemnifying Party
to the Indemnified Party within 30 calendar days following receipt of the notice
of the Third Party Claim. Notwithstanding the foregoing, the Indemnifying Party
shall not be entitled to assume control of such defense (unless otherwise agreed
to in writing by the Indemnified Party) and shall pay the reasonable fees and
expenses of counsel retained by the Indemnified Party if (A) the claim for
indemnification relates to or arises in connection with any criminal or quasi
criminal Proceeding; (B) the claim seeks an injunction or equitable or other
non-monetary relief against the Indemnified Party; (C) the Indemnified Party has
been advised by counsel that a reasonable likelihood exists of a conflict of
interest between the Indemnifying Party and the Indemnified Party that would
make it inappropriate in the reasonable judgment of such counsel, that the same
counsel represent both the Indemnified Party and the Indemnifying Party;
(D) upon petition by the Indemnified Party, the appropriate court rules that the
Indemnifying Party failed or is failing to vigorously prosecute or defend such
claim; or (E) the Indemnified Party reasonably believes that the Adverse
Consequences relating to the Claim could exceed the maximum amount that such
Indemnified Party could then be entitled to recover under the applicable
provisions of this Section 6. The Indemnified Party shall have the right to
participate in such Third Party Claim and to be represented by counsel of its
own choosing at its own cost and expense. The Indemnifying Party will not
consent to the entry of any judgment or enter into any settlement with respect
to the Third Party Claim without the prior written consent of the Indemnified
Party (not to be withheld unreasonably), unless the judgment or proposed

 

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settlement (A) involves only the payment of money damages and does not impose an
injunction or other equitable relief upon the Indemnified Party, (B) does not
involve a payment of money damages that exceeds the maximum amount that such
Indemnified Party could then be entitled to recover under the applicable
provisions of this Section 6, and (C) provides that the Indemnified Party will
be fully and completely released from any further liability or obligation with
respect to the matters which are the subject of such Third Party Claim, in which
case consent shall not be required.

(iii) Unless and until the Indemnifying Party assumes the defense of the Third
Party Claim as provided in subsection 6(d)(ii), the Indemnified Party may defend
against the Third Party Claim in any manner it reasonably may deem appropriate,
and the Indemnifying Party shall be responsible for all costs incurred in
connection therewith.

(iv) In no event will the Indemnified Party consent to the entry of any judgment
or enter into any settlement with respect to the Third Party Claim without the
prior written consent of the Indemnifying Party, which consent shall not be
withheld unreasonably; provided that, (A) if the Indemnifying Party does not
give notice to the Indemnified Party of its election to contest and defend any
such Third Party Claim in accordance with Section 6(d)(ii), then no such consent
shall be required and the Indemnifying Party shall be bound by the result
obtained with respect thereto by the Indemnified Party and (B) the Indemnified
Party may consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent of the
Indemnifying Party if such judgment or settlement would result in no liability
to the Indemnifying Party pursuant to this Section 6.

(f) Determination of Amount of Adverse Consequences. The Adverse Consequences
giving rise to any indemnification obligation hereunder shall be limited to the
actual loss suffered by the Indemnified Party (i.e., reduced by any insurance
proceeds or other payment or recoupment received, realized or retained by the
Indemnified Party as a result of the events giving rise to the claim for
indemnification net of any expenses related to the receipt of such proceeds,
payment or recoupment, including retrospective or prospective premium
adjustments, if any). The amount of the actual loss and the amount of the
indemnity payment shall be computed by taking into account the timing of the
loss or payment, as applicable, using a 10 percent interest or discount rate, as
appropriate. Upon the request of the Indemnifying Party, the Indemnified Party
shall provide the Indemnifying Party with information sufficient to allow the
Indemnifying Party to calculate the amount of the indemnity payment in
accordance with this Section 6(f). An Indemnified Party shall take reasonable
steps to mitigate damages in respect of any claim for which it is seeking
indemnification and shall use reasonable efforts to avoid any costs or expenses
associated with such claim and, if such costs and expenses cannot be avoided, to
minimize the amount thereof.

(g) Special Indemnification Provisions. Notwithstanding any terms and provisions
of this Agreement to the contrary, from and after the Closing, the Seller hereby
covenants and

 

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agrees to protect, defend, indemnify and save the Buyer, its successors and
assigns, harmless from and against any and all Adverse Consequences incurred in
connection with or arising out of all breaches, if any, by the Seller of its
covenants to the Buyer under Section 2(g) above, or otherwise relating to or
arising from the Excluded Liabilities.

(h) BUYER AND SELLER (I) AGREE THAT ONLY ACTUAL DAMAGES SHALL BE RECOVERABLE
UNDER THIS AGREEMENT AND (II) HEREBY WAIVE ANY RIGHT TO RECOVER SPECIAL,
PUNITIVE, CONSEQUENTIAL, INCIDENTAL OR EXEMPLARY DAMAGES EXCEPT TO THE EXTENT
ANY SUCH PARTY SUFFERS SUCH DAMAGES TO AN UNAFFILIATED THIRD-PARTY IN CONNECTION
WITH A THIRD-PARTY CLAIM, IN WHICH EVENT SUCH DAMAGES SHALL BE RECOVERABLE AS
PROVIDED PURSUANT TO THE TERMS OF THIS SECTION 6.

(i) Liability of Blue Dolphin and Bitter Creek under this Agreement, including
this Section 6, is several and not joint.

7. Miscellaneous.

(a) Seller’s Representative. Blue Dolphin and Bitter Creek hereby designate Blue
Dolphin as the representative for the Seller (collectively, the “Seller’s
Representative”) to represent Blue Dolphin and Bitter Creek, as the Seller, from
and after the date hereof in all matters relating to this Agreement and the
transactions contemplated hereby. The Seller’s Representative shall have the
following powers and duties: (i) to take the actions contemplated to be taken by
the Seller’s Representative under this Agreement; (ii) to compromise, modify,
settle, waive, relinquish, exchange, liquidate or otherwise resolve the rights
of the Seller in and to any amounts that are or may be payable after the Closing
Date by the Seller to the Buyer hereunder, which compromise, modification,
settlement, waiver, relinquishment, exchange, liquidation or resolution may
include payment to the Buyer of cash, property or any combination thereof;
(iii) to compromise, modify, settle, waive, relinquish, exchange, liquidate or
otherwise resolve the rights of the Seller in and to any amounts that are or may
be payable after the Closing Date by the Buyer to the Seller hereunder, which
compromise, modification, settlement, waiver, relinquishment, exchange,
liquidation or resolution may include payment to the Seller of cash, property or
any combination thereof; (iv) to take all actions the Seller’s Representative
deems necessary or advisable on behalf of the Seller pursuant to the terms of
this Agreement; and (v) to take all actions which the Seller’s Representative
deems necessary or advisable in order to carry out the foregoing. The Seller’s
Representative shall consult with Bitter Creek in performing actions under this
section. The Seller’s Representative shall serve without compensation, but shall
be entitled to reimbursement from Bitter Creek for 1/6th of its costs and
expenses. The Seller’s Representative shall not be liable to Bitter Creek for
the performance of any act or failure to act in such capacity so long as it does
not act (or fail to act) in bad faith. The Seller’s Representative shall be
entitled to indemnity from Bitter Creek from and against 1/6th of any and all
damages which may at any time be imposed on, incurred by or asserted against the
Seller’s

 

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Representative in any way relating to or arising out of this Agreement or any
related agreement or instrument or any action taken or omitted to be taken by
the Seller’s Representative under or in connection therewith, unless such
damages resulted from the bad faith of the Seller’s Representative.

(b) Press Releases and Public Announcements. No Party shall issue any press
release or make any public announcement relating to the subject matter of this
Agreement before the Closing without the prior written approval of the other
Party, which approval shall not be unreasonably withheld, delayed or denied;
provided that any Party may make any public disclosure it believes in good faith
is required by applicable Law or any listing or trading agreement concerning its
publicly traded securities (in which case the disclosing Party will use its
commercially reasonable efforts to advise the other Party before making the
disclosure).

(c) No Third Party Beneficiaries. This Agreement shall not confer any rights or
remedies upon any Person other than the Parties and their respective successors
and permitted assigns.

(d) Succession and Assignment. This Agreement shall be binding upon and inure to
the benefit of the Parties named herein and their respective successors and
permitted assigns. No Party may assign either this Agreement or any of its
rights, interests or obligations hereunder without the prior written approval of
the other Party; provided that Buyer may assign its interest in this Agreement,
in whole or in part, at or prior to Closing.

(e) Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed an original but which together will constitute one and the same
instrument. Facsimile or other electronic copies (such as .pdf files delivered
by electronic mail) of signatures shall constitute original signatures for all
purposes of this Agreement and any enforcement hereof.

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

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

 

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If to the Buyer:

Sunoco Partners Marketing & Terminals L.P.

One Fluor Daniel Drive, Bldg A, Level 3

Sugar Land, TX 77478

Attention: Vice President of Business Development

FAX: 877-501-4380

with a copy to counsel (which copy shall not constitute notice to the Buyer):

Sunoco Partners Marketing & Terminals L.P.

1818 Market Street, Suite 1500

Philadelphia, PA 19103

Attention: General Counsel

Fax: (215) 977-3565

If to the Seller:

Blue Dolphin Pipe Line Company

801 Travis Street, Suite 2100

Houston, Texas 77002

Fax: (713) 227-7626

Attention: President

Bitter Creek Pipelines, LLC

1250 West Century Avenue

Bismarck, ND 58503

Fax: (701)530-1596

Attention: Executive Vice President and Chief Operating Officer

If to the Seller’s Representative:

Blue Dolphin Pipeline Company

801 Travis Street, Suite 2100

Houston, Texas 77002

Fax: (713) 227-7626

Attention: President

Additionally, any Party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the addresses set forth
above using any other means (including personal delivery, expedited courier,
messenger service, telecopy, ordinary mail, facsimile or electronic mail), and
such notice, request, demand, claim, or other communication shall be deemed to
have been duly given when it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Party
notice in the manner herein set forth.

 

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(h) Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic Laws of the state of Texas without giving effect to
any choice or conflict of law provision or rule (whether of the state of Texas
or any other jurisdiction) that would cause the application of the Laws of any
jurisdiction other than the state of Texas.

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

(j) Severability. Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the validity
or enforceability of the remaining terms and provisions hereof or the validity
or enforceability of the offending term or provision in any other situation or
in any other jurisdiction. The Parties furthermore agree to execute and deliver
such amendatory contractual provisions to accomplish lawfully as nearly as
possible the goals and purposes of the provision so held to be invalid or
unenforceable.

(k) Transaction Expenses. Buyer and Seller shall each pay 50% of the costs of
the survey of the Land by Topographic, including the access road on Lot 107 and
surveys of Seller’s other pipelines located on the Land. Buyer shall pay 100% of
the costs to acquire its title policy on the Land. Except as expressly otherwise
set forth herein, each of the Buyer and the Seller will bear its own costs and
expenses (including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby.

(l) Certain Taxes. Notwithstanding anything in this Agreement to the contrary,
the Seller will file all necessary Tax Returns and other documentation with
respect to all transfer, documentary, sales, use, stamp, registration and other
Taxes and fees in connection with this Agreement, and, if required by applicable
law, the Buyer will, and will cause its Affiliates to, join in the execution of
any such Tax Returns and other documentation. The Buyer will pay to the Seller,
on or before the date such payments are due from the Seller, any transfer,
documentary, sales, use, stamp, registration and other Taxes and fees incurred
in connection with this Agreement.

(m) Construction. The Parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the Parties and no presumption or burden of proof shall arise favoring or
disfavoring any Party by virtue of the authorship of any of the provisions of
this Agreement. Any reference to any federal, state, local, or foreign statute
or Law shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. The word “including” shall
mean including without limitation.

 

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(n) Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.

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

*****

 

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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
date first above written.

 

BUYER: SUNOCO PARTNERS MARKETING & TERMINALS L.P. By: Sunoco Logistics Partners
Operations GP LLC, its general partner By:     Name:     Title:    

 

SELLER: BLUE DOLPHIN PIPE LINE COMPANY By:     Name:     Title:    

 

BITTER CREEK PIPELINES, LLC By:     Name:     Title:    

[Signature Page to Asset Purchase Agreement]