EXECUTION COPY

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                            STOCK PURCHASE AGREEMENT

                                 BY AND BETWEEN

                   KANEB PIPE LINE OPERATING PARTNERSHIP, L.P.

                                       AND

                           STATIA TERMINALS GROUP N.V.

                          Dated as of November 12, 2001



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<PAGE>

                            STOCK PURCHASE AGREEMENT

          STOCK  PURCHASE  AGREEMENT,  dated  as  of  November  12,  2001  (this
"Agreement"),  by and between  Kaneb Pipe Line  Operating  Partnership,  L.P., a
limited  partnership   organized  under  the  laws  of  the  State  of  Delaware
("Purchaser"),  and Statia  Terminals  Group N.V., a public company with limited
liability organized under the laws of the Netherlands Antilles ("Company").


                              W I T N E S S E T H:
                              - - - - - - - - - -


          WHEREAS,  the  Company  owns (i)  6,100  common  shares  (the  "Statia
International   Common   Shares"),   par  value  $1.00,   of  Statia   Terminals
International  N.V.  ("Statia  International"),  a Netherlands  Antilles limited
liability  company,  (ii) 1,220 shares of common  stock (the "Statia  Technology
Common  Shares"),   par  value  $0.01,  of  Statia  Technology,   Inc.  ("Statia
Technology"),  a Delaware  corporation,  and (iii)  471,720  common  shares (the
"Statia Marine Common Shares" and,  collectively  with the Statia  International
Common Shares and the Statia Technology Common Shares, the "Shares"),  par value
$0.01, of Statia Marine,  Inc.  ("Statia Marine" and,  collectively  with Statia
International and Statia  Technology,  the "Operating  Subsidiaries"),  a Cayman
Islands company;

          WHEREAS,  the  Company  desires  to sell,  and  Purchaser  desires  to
purchase, the Shares pursuant to this Agreement;

          WHEREAS,  it is  the  intention  of  the  parties  hereto  that,  upon
consummation  of the purchase  and sale of the Shares  pursuant to the terms and
subject to the conditions set forth in this  Agreement,  Purchaser shall own all
of  the   outstanding   shares  of  capital  stock  of  each  of  the  Operating
Subsidiaries;

          WHEREAS,  Purchaser is unwilling to enter into this  Agreement  unless
Statia Terminals Holdings N.V. ("Holdings"), concurrently with the execution and
delivery  of this  Agreement,  enters  into a voting and option  agreement  (the
"Voting  Agreement"),  dated  the date  hereof,  by and  between  Purchaser  and
Holdings  providing for,  among other things,  the agreement of Holdings to vote
its Company  Shares in favor of this  Agreement and the  transactions  and other
matters  contemplated  by, and  described  more fully in, this  Agreement and to
grant to Purchaser an option to purchase all such Company Shares.

          NOW,  THEREFORE,  in  consideration  of the premises and of the mutual
covenants,  representations,  warranties and agreements  herein  contained,  the
parties hereto, intending to be legally bound, agree as follows:


<PAGE>

                                    ARTICLE I

                                DEFINITIONS; ETC.

     Section 1.1 Definitions.  When used in this Agreement,  the following terms
shall have the respective meanings specified therefor below (such meanings to be
equally applicable to both the singular and plural forms of the terms defined).

          "Affiliate" of any Person shall mean any Person directly or indirectly
controlling, controlled by, or under common control with, such Person.

          "Antitrust  Authorities" shall mean the Federal Trade Commission,  the
Antitrust  Division of the United States  Department  of Justice,  the attorneys
general of the several  states of the United  States and any other  Governmental
Entity having jurisdiction with respect to the transactions  contemplated hereby
pursuant to applicable Antitrust Laws.

          "Antitrust  Laws" shall mean the  Sherman  Antitrust  Act of 1890,  as
amended,  the Clayton Act of 1914,  as amended,  the HSR Act, the Federal  Trade
Commission  Act of 1914,  as amended  and all other  federal,  state and foreign
statutes,  rules,  regulations,  orders,  decrees,  administrative  and judicial
doctrines, and other Laws that are designed or intended to prohibit, restrict or
regulate actions having the purpose or effect of  monopolization or restraint of
trade.

          "Business  Day" shall mean any day except a Saturday,  a Sunday or any
other day on which  commercial  banks are required or authorized to close in New
York, New York or Curacao, Netherlands Antilles.

          "Code" shall mean the United States Internal  Revenue Code of 1986, as
amended from time to time.

          "Commission" shall mean the U.S. Securities and Exchange Commission.

          "Company  Business  Party"  shall mean any supplier or customer of the
Company or any of its  Subsidiaries  that is disclosed as a supplier or customer
of the  Company  or  any of its  Subsidiaries  on  Schedule  4.8 of the  Company
Disclosure Letter.

          "Company  Common  Shares"  shall mean the class A common  shares,  par
value $0.01, of the Company.

          "Company Disclosure Letter" shall mean the disclosure letter delivered
to Purchaser upon or prior to entering into this Agreement.

          "Company  Incentive  Rights" shall mean the class C shares,  par value
$0.01, of the Company.

          "Company  Material  Adverse  Effect"  shall  mean any  event,  change,
occurrence, effect, fact or circumstance having a material adverse effect on (i)
the ability of the Company to perform its obligations under this Agreement or to
consummate the transactions contemplated

                                      -2-
<PAGE>

hereby on a timely basis or (ii) the business,  properties, assets, liabilities,
value,   results  of  operations   or  financial   condition  of  the  Operating
Subsidiaries and their respective Subsidiaries, taken as a whole; other than any
such effect  resulting from or arising out of (u) the performance by the Company
of any of its obligations pursuant to this Agreement,  (v) any general change in
global  economic  conditions or the economic  conditions of the United States of
America, Canada or the Netherlands Antilles, (w) any changes in the condition of
any  industry  in which  any  Operating  Subsidiary  or any of their  respective
Subsidiaries  operates  that does not  affect  such  Subsidiary  of the  Company
disproportionately,  (x) any change,  in and of itself,  in the market  price or
trading volume of the Company Common Shares, (y) any failure,  in and of itself,
by  the  Company  or  any  Operating  Subsidiary  or  any  of  their  respective
Subsidiaries to meet the revenue or earnings  predictions of equity analysts for
any period  ending (or for which  earnings are released) on or after the date of
this Agreement and prior to the Closing, or (z) the announcement by Purchaser of
any plan or intention to make any change in the conduct of any of the businesses
of any Operating  Subsidiary  or any of their  respective  Subsidiaries  as such
businesses are being conducted on the date of this Agreement.

          "Company Shares" shall mean  collectively,  the Company Common Shares,
the Company Subordinated Shares and the Company Incentive Rights.

          "Company  Subordinated  Shares"  shall  mean the class B  subordinated
shares, par value $0.01, of the Company.

          "Completed Commission Filings" shall mean the Commission Filings filed
prior to the date hereof.

          "Contingent  Tax Payment Note" shall mean an instrument  substantially
in the form attached hereto as Annex A.

          "control" (including with correlative meanings,  the terms "controlled
by" and "under common control with"), as used with respect to any Person,  shall
mean the possession, directly or indirectly, of the power to direct or cause the
direction of the  management  and policies of such Person,  whether  through the
ownership  of  voting  securities  or  partnership  interests,  by  contract  or
otherwise.

          "Environmental  Law" shall mean any Law, Order or other requirement of
law,  including any principle of common law, relating to the protection of human
health  or the  environment,  or the  manufacture,  use,  transport,  treatment,
storage,   disposal,  release  or  threatened  release  of  petroleum  products,
asbestos,  urea  formaldehyde  insulation,   polychlorinated  biphenyls  or  any
substance listed,  classified or regulated as hazardous or toxic, or any similar
term, under such Law, Order or other requirement of Law.

          "Exchange  Act" shall mean the  Securities  Exchange  Act of 1934,  as
amended, and the rules and regulations promulgated thereunder.

          "GAAP" shall mean  generally  accepted  accounting  principles  of the
United States of America consistently applied, as in effect from time to time.

                                      -3-
<PAGE>

          "Governmental  Entity"  shall  mean any  domestic  or  foreign  court,
arbitral tribunal,  administrative agency or commission or other governmental or
regulatory agency, authority or body.

          "HSR Act" shall mean the Hart-Scott-Rodino  Antitrust Improvements Act
of 1976, as amended, and the rules and regulations promulgated thereunder.

          "Intellectual Property" shall mean all registered domestic and foreign
trademark,  service mark and trade name registrations and applications therefor,
patents, patent applications,  copyright registrations and applications,  domain
names and trade secrets.

          "Law" shall mean any statute, law, code, ordinance, rule or regulation
of any Governmental Entity.

          "Lien" shall mean any lien,  security interest,  charge or encumbrance
of any kind or nature.

          "Net Cash Amount"  shall mean the  difference  of (a) the aggregate of
(i) the  combined  cash  of the  Operating  Subsidiaries  and  their  respective
Subsidiaries  as of the close of business  on the day before the  Closing  Date,
(ii) one million five  hundred  sixteen  thousand  four  hundred  three  dollars
($1,516,403),  representing  the amount of the accruals  from  November 15, 2001
through  December 31, 2001 for interest  payable by any Operating  Subsidiary or
any of their  respective  Subsidiaries  pursuant to the 11-3/4%  First  Mortgage
Notes of Statia International and Statia Terminals Canada,  Incorporated,  (iii)
the amount of the accruals  from the date hereof  through  December 31, 2001 for
interest  payable  by  any  Operating  Subsidiary  or any  of  their  respective
Subsidiaries  pursuant  to the  Transamerica  Loan,  and (iv) the  amount of any
payments of principal under the  Transamerica  Loan from the date hereof through
the  Closing  Date,  minus (b) the  aggregate  of (i) the  amount of the  unpaid
accruals  through and  including  the Closing Date for  interest  payable by any
Operating  Subsidiary or any of their  respective  Subsidiaries  pursuant to any
indebtedness  for borrowed  money  outstanding  from time to time,  (ii) the Tax
Reserve  Amount and (iii)  indebtedness  of any  Subsidiary  of the  Company for
borrowed money (other than  indebtedness  for borrowed money described in clause
(a)(ii) or (a)(iii) above and indebtedness for borrowed money owing to any other
Subsidiary of the Company).

          "Order" shall mean any judgment, order, injunction,  decree or writ of
any Governmental Entity.

          "Person"  shall  mean and  include an  individual,  a  partnership,  a
limited  liability  partnership,  a joint  venture,  a  corporation,  a  limited
liability  company,  a trust, an  unincorporated  organization,  any other legal
entity, a group and a government or other department or agency thereof.

          "Purchaser  Material  Adverse  Effect"  shall mean any event,  change,
occurrence, effect, fact or circumstance having a material adverse effect on the
ability of  Purchaser  to perform its  obligations  under this  Agreement  or to
consummate the transactions contemplated hereby on a timely basis.

                                      -4-
<PAGE>

          "Securities Act" shall mean the Securities Act of 1933, as amended.

          "Subsidiary",   with  respect  to  any  Person,  shall  mean  (i)  any
partnership  of  which  such  Person  or any of its  Subsidiaries  is a  general
partner,  (ii) any other Person in which such Person or any of its  Subsidiaries
owns or has the  power to vote  more  than  fifty  percent  (50%) of the  equity
interests in such other Person having general voting power to participate in the
election of the  governing  body of such other  Person or (iii) any other Person
directly or indirectly (through another Person or otherwise)  controlled by such
Person.

          "Subsidiary  Property"  shall mean any real property and  improvements
owned  (directly,  indirectly,  or  beneficially),  leased,  used,  operated  or
occupied by any Operating Subsidiary or any of their respective Subsidiaries.

          "Tax Reserve Amount" shall mean the amount shown as a liability on the
Interim Balance Sheet,  plus any amounts accrued by the Company pursuant to GAAP
for the period from the date of the Interim  Balance  Sheet  through the Closing
Date for amounts that may be payable to the Island  Territory of Sint  Eustatius
and the Land  Territory  of the  Netherlands  Antilles  pursuant to an agreement
regarding  Taxes to be  entered  into by the  Operating  Subsidiaries  and their
respective  Subsidiaries and the Island Territory of Sint Eustatius and the Land
Territory of the Netherlands Antilles.

          "Transamerica  Loan"  shall  mean  the  Loan  Agreement  dated,  as of
December 20,  2000,  by and between  Statia  Marine and  Transamerica  Equipment
Financial Services Corporation

          Section  1.2 Cross  References.  The  following  terms  shall have the
meaning assigned to such term in the respective section.

<TABLE>
<S>                                                              <C>
Acquisition Proposal...........................5.5(b)            Material Contracts.............................3.17
Agreement......................................Preamble          Notice of Objection............................2.3(b)(i)
Arbitrator.....................................2.3(b)(ii)        Operating Subsidiaries.........................Recitals
Cash Deficiency Amount.........................2.4(a)            Permits........................................3.8(b)
Cash Excess Amount.............................2.4(a)            Proposals......................................3.15
Closing Date Net Cash Amount...................2.2               Proxy Materials................................3.15
Closing Date...................................2.5               Purchaser......................................Preamble
Closing Payment................................2.3               Returns........................................3.12(a)
Closing........................................2.5               Severance Protection Plans.....................5.8(b)
"commercially reasonable efforts"..............5.7(b)            Shareholder Meeting............................3.15
Commission Filings.............................3.5               Shares.........................................Recitals
Company Articles...............................3.1               Statia International Common Shares.............Recitals
Company........................................Preamble          Statia International...........................Recitals
Company Indemnified Parties....................5.9(b)            Statia Marine Common Shares....................Recitals
Confidentiality Agreement......................5.2(a)            Statia Marine..................................Recitals
Contracts......................................3.17              Statia Technology Common Shares................Recitals
Employee Benefit Plans.........................3.10              Statia Technology..............................Recitals
ERISA..........................................3.10              Subsidiary Indemnified Parties.................5.9(b)

</TABLE>


<PAGE>
<TABLE>
<S>                                                              <C>
Estimated Net Cash Amount......................2.2               Superior Proposal..............................5.5(b)
Holdings.......................................Recitals          Taxes..........................................3.12(a)
Interim Balance Sheet..........................3.7               Transfer Taxes.................................5.14
                                                                 Voting Agreement...............................Recitals
</TABLE>



          Section 1.3 Knowledge.  Where any  representation or warranty or other
provision contained in this Agreement is expressly qualified by reference to the
knowledge of the Company,  such knowledge  means to the actual  knowledge of the
following individuals, after reasonable investigation under the circumstances of
the transaction  contemplated by this Agreement  (including the decision to keep
the transactions  contemplated hereby confidential until the announcement of the
execution  of  this   Agreement)  but  without  giving  effect  to  constructive
knowledge:  James G. Cameron,  James F. Brenner,  Jack R. Pine, Paul R. Crissman
(solely with respect to matters involving the Point Tupper  facility),  Clarence
W. Brown (solely with respect to matters  involving the St. Eustatius  facility)
or Robert C. Gaffney (solely with respect to Section 3.18).

                                   ARTICLE II

                                 SALE OF SHARES

          Section 2.1 Sale of Shares. On the terms and subject to the conditions
set forth in this Agreement,  the Company agrees to sell,  assign,  transfer and
deliver to Purchaser on the Closing Date, and Purchaser  agrees to purchase from
the Company on the Closing  Date,  all right,  title and  interest in and to the
Shares.  The Company  agrees to deliver to  Purchaser  at the Closing all right,
title and interest in and to the Shares,  free and clear of all Liens,  with the
certificate or certificates,  if any,  evidencing the Shares being duly endorsed
or  acknowledged  for transfer by the Company  (and  otherwise  acknowledged  on
behalf of the  respective  Operating  Subsidiary,  if required by Law),  and any
deeds of transfer  relating to the Shares and, in each case,  accompanied by all
powers of  attorney  and/or  other  instruments  necessary  to convey  valid and
unencumbered title thereto to Purchaser.

          Section 2.2  Delivery of  Estimated  Net Cash  Amount.  Not later than
three (3) Business Days prior to the Closing Date,  the Company shall deliver to
Purchaser a good faith  estimate  (the  "Estimated  Net Cash Amount") of the Net
Cash Amount ("Closing Date Net Cash Amount"),  prepared on the same basis as the
line item cash and cash  equivalents  within  financial  statements  prepared in
accordance with GAAP, which shall describe in reasonable  detail the calculation
thereof.

          Section  2.3 Closing  Payment.  In  consideration  for the sale of the
Shares by the Company to  Purchaser,  Purchaser  shall deliver to the Company at
the Closing (a) an amount (the "Closing  Payment") equal to the aggregate of (i)
one hundred eighty-four  million eight hundred seventy-two  thousand two hundred
twenty-three dollars  ($184,872,223) plus (ii) the Estimated Net Cash Amount, by
wire  transfer  of  immediately  available  funds to the  designated  account or
accounts of the Company  (which  account or accounts  shall be designated by the
Company in writing to

                                      -6-
<PAGE>

Purchaser at least two (2) Business  Days prior to the Closing Date) and (b) the
Contingent Tax Payment Note, duly executed by Purchaser.

          Section 2.4  Determination  of Purchase Price.  (a) Promptly after the
Closing  Date,  and in any event not later than  forty-five  (45)  calendar days
following the Closing Date, Purchaser shall prepare and deliver to the Company a
statement, prepared on the same basis as the line item cash and cash equivalents
within  financial  statements  prepared in accordance  with GAAP, of the Closing
Date Net Cash Amount,  which shall describe in reasonable detail the calculation
thereof  and shall  specify  the amount by which (i) the  Closing  Date Net Cash
Amount  exceeds the Estimated Net Cash Amount (the "Cash Excess  Amount") or, as
the case may be, (ii) the Estimated Net Cash Amount exceeds the Closing Date Net
Cash Amount (the "Cash Deficiency  Amount").  Upon delivery of such statement by
Purchaser  to  the  Company,   Purchaser  shall  provide  the  Company  and  its
representatives  with  reasonable  access during business hours to the books and
records of the Operating Subsidiaries and their respective Subsidiaries in order
to allow the  Company  and its  representatives  to verify the  accuracy  of the
determination by Purchaser of the Closing Date Net Cash Amount.

          (b)  (i)  In the  event  that  the  Company  does  not  object  to the
     determination  by  Purchaser of the Closing Date Net Cash Amount by written
     notice of  objection  (the  "Notice of  Objection")  delivered to Purchaser
     within ten (10) Business Days after the Company's  receipt of the statement
     referred  to in Section  2.4(a),  such Notice of  Objection  to describe in
     reasonable  detail the  Company's  objections  to the Closing Date Net Cash
     Amount, the Closing Date Net Cash Amount shall be deemed final and binding.

          (ii) If the Company delivers a Notice of Objection to Purchaser,  then
     any dispute shall be resolved as follows:

               (x) the Company and Purchaser  shall  promptly  endeavor to agree
          upon the  determination  of the Closing Date Net Cash  Amount.  In the
          event that a written  agreement  determining the amount of the Closing
          Date Net Cash Amount has not been  reached  within  five (5)  Business
          Days after the date of receipt by  Purchaser  from the  Company of the
          Notice of Objection, Purchaser's determination of the Closing Date Net
          Cash Amount,  together with a description of any  unresolved  dispute,
          shall be submitted to the Miami,  Florida  office of BDO Seidman,  LLP
          (the "Arbitrator");

               (y) the Company and Purchaser shall use  commercially  reasonable
          efforts to cause the  Arbitrator  to render a decision  in  accordance
          with this Section 2.4(b),  along with a statement of reasons therefor,
          within thirty (30)  calendar days after the  submission of any dispute
          concerning  the  determination  of the Closing Date Net Cash Amount to
          the  Arbitrator.  The  decision of the  Arbitrator  shall be final and
          binding  upon each party  hereto and  deemed to be an  arbitral  award
          which may be entered in any court having competent jurisdiction; and

                                      -7-
<PAGE>

               (z) in the event the Company and Purchaser  submit any unresolved
          disputes to the  Arbitrator  for  resolution  pursuant to this Section
          2.4(b)(ii),  the Company and  Purchaser  shall each pay fifty  percent
          (50%) of the fees and expenses of the Arbitrator.

          (c) If the Estimated Net Cash Amount exceeds the Closing Date Net Cash
Amount,  then  the  Company  shall be  obligated  to pay to  Purchaser  the Cash
Deficiency  Amount within three (3) Business Days after the determination of the
Closing Date Net Cash Amount by wire transfer of immediately  available funds to
an account  designated  in writing by  Purchaser.  If the Closing  Date Net Cash
Amount exceeds the Estimated Net Cash Amount,  then Purchaser shall be obligated
to pay to the Company the Cash Excess  Amount  within  three (3)  Business  Days
after the  determination of the Closing Date Net Cash Amount by wire transfer of
immediately available funds to an account designated in writing by the Company.

          Section  2.5  Closing.  The  sale  referred  to in  Section  2.1  (the
"Closing")  shall take place at 10:00 A.M. New York time at the offices of White
& Case  LLP,  1155  Avenue  of the  Americas,  New  York,  New  York  as soon as
practicable  after  the  last of the  conditions  set  forth  in  Article  VI is
satisfied  or waived,  but in no event later than the fifth (5th)  Business  Day
thereafter  or at such other time and date as the parties  hereto  shall  agree.
Such date is herein referred to as the "Closing Date".

                                   ARTICLE III

                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

          The Company hereby represents and warrants to Purchaser as follows:

          Section 3.1 Due  Organization,  Good Standing and Corporate Power. The
Company is a limited liability  company in the form of a "naamloze  venootschap"
duly  organized,  validly  existing and in good  standing  under the laws of the
Netherlands Antilles. Each Subsidiary of the Company is duly organized,  validly
existing and in good standing (where such concept is applicable)  under the laws
of the jurisdiction of its  incorporation or formation.  Each of the Company and
each  Subsidiary of the Company has all requisite  corporate power and authority
to own,  lease and operate its  properties  and to carry on its  business as now
being conducted. Each Subsidiary of the Company is duly qualified or licensed to
do business and is in good standing  (where such concept is  applicable) in each
jurisdiction  in which the  property  owned,  leased or  operated  by it, or the
nature of the  business  conducted  by it makes  such  qualification  necessary,
except in such  jurisdictions  where the failure to be so  qualified or licensed
and in good  standing  does not have,  and would not  reasonably  be expected to
have,  individually or in the aggregate,  a Company Material Adverse Effect. The
Company has,  prior to the date of this  Agreement,  made available to Purchaser
complete and correct copies of the articles of  incorporation of the Company (as
amended  from  time  to  time,  the  "Company   Articles")  and  the  formation,
organizational and other governing  documents of each Subsidiary of the Company,
each as in effect as of the date of this Agreement.

                                      -8-
<PAGE>

          Section 3.2 Authorization and Validity of this Agreement.  The Company
has the  requisite  corporate  power and  authority  to execute and deliver this
Agreement,   to  perform  its  obligations   hereunder  and  to  consummate  the
transactions  contemplated  hereby.  The execution,  delivery and performance of
this Agreement by the Company,  and the  consummation by it of the  transactions
contemplated  hereby and by the Voting Agreement,  have been duly authorized and
approved  by its  Board  of  Directors  and,  except  for the  shareholder  vote
contemplated  by  Section  5.11,  no other  corporate  action on the part of the
Company is necessary to authorize the  execution,  delivery and  performance  of
this  Agreement  by  the  Company  and  the  consummation  of  the  transactions
contemplated  hereby and by the Voting  Agreement.  This Agreement has been duly
executed  and  delivered  by the  Company  and,  assuming  that  this  Agreement
constitutes a valid and binding obligation of Purchaser, constitutes a valid and
binding obligation of the Company  enforceable against the Company in accordance
with its terms,  except to the extent that its  enforceability may be subject to
applicable bankruptcy, insolvency,  reorganization,  moratorium or other similar
Laws relating to or affecting the enforcement of creditors' rights generally and
by  general   equitable   principles   (regardless   of  whether  the  issue  of
enforceability is considered in a proceeding in equity or at law).

          Section 3.3  Capitalization.  The  authorized  capital stock of Statia
International  consists of 30,000 Statia  International  Common Shares, of which
6,100 are issued and  outstanding  and none are held in the  treasury  of Statia
International.  The authorized  capital stock of Statia  Technology  consists of
3,000 Statia Technology Common Shares, of which 1,220 are issued and outstanding
and none are held in the treasury of Statia  Technology.  The authorized capital
stock of Statia Marine  consists of 5,000,000  Statia Marine Common  Shares,  of
which  471,720 are issued and  outstanding  and none are held in the treasury of
Statia Marine.  The Shares  constitute all of the issued and outstanding  equity
interests in the Operating Subsidiaries.  All of the Shares are owned, of record
and beneficially, by the Company, free and clear of any Liens. All of the issued
and outstanding  shares of the capital stock and other equity  interests of each
of the Operating  Subsidiaries  and each of their respective  Subsidiaries  have
been duly  authorized and validly  issued and are fully paid and  nonassessable,
and are not  subject to, nor were they issued in  violation  of, any  preemptive
rights. Except as set forth on Schedule 3.3(a) of the Company Disclosure Letter,
there are no outstanding or authorized options, warrants, rights, subscriptions,
agreements,  obligations,  convertible  or  exchangeable  securities,  or  other
commitments  or claims of any  character,  contingent or otherwise,  relating to
shares of capital stock or other equity interests of any Operating Subsidiary or
any of  their  respective  Subsidiaries  or  pursuant  to  which  any  Operating
Subsidiary or any of their respective Subsidiaries is or may become obligated to
issue  shares of  capital  stock or other  equity  interests  or any  securities
convertible  into,  exchangeable  for, or evidencing the right to subscribe for,
any  shares  of  capital  stock  or  other  equity  interests  of any  Operating
Subsidiary  or any of their  respective  Subsidiaries.  Except  as set  forth on
Schedule  3.3(b)  of the  Company  Disclosure  Letter,  none  of  the  Operating
Subsidiaries  or  any  of  their  respective   Subsidiaries  has  authorized  or
outstanding  bonds,  debentures,  notes or other  indebtedness  that entitle the
holders to vote (or are  convertible or  exercisable  for or  exchangeable  into
securities  that  entitle  the  holders to vote) with the  shareholders  of such
Person on any  matter.  Except as set forth on  Schedule  3.3(c) of the  Company
Disclosure  Letter,  all of the  outstanding  capital  shares  and other  equity
interests of each of the respective  Subsidiaries  of each Operating  Subsidiary
are owned, of record and beneficially, by such Operating Subsidiary or one or

                                      -9-

<PAGE>

more of its  Subsidiaries,  free and clear of any Liens.  Except as set forth on
Schedule 3.3(d) of the Company  Disclosure Letter or pursuant to applicable Law,
there are no  restrictions  of any kind that  prevent or restrict the payment of
dividends by any Operating  Subsidiary or any of their respective  Subsidiaries.
Except as set forth on Schedule 3.3(e) of the Company Disclosure Letter, none of
the  Operating  Subsidiaries  or  any of  their  respective  Subsidiaries  owns,
directly  or  indirectly,  any  shares  of the  capital  stock or other  equity,
ownership or  proprietary  interest in any Person (other than any  Subsidiary of
any Operating Subsidiary).

          Section 3.4 Consents and Approvals;  No  Violations.  Assuming (a) the
filings  required under the HSR Act are made and the applicable  waiting periods
thereunder have been terminated or have expired,  and (b) the sale of the Shares
by the Company  pursuant to this  Agreement has been approved  and/or adopted by
the shareholders of the Company, the execution and delivery of this Agreement by
the Company and the consummation by the Company of the transactions contemplated
hereby do not:  (i)  violate  or  conflict  with any  provision  of the  Company
Articles or the comparable governing documents of any of its Subsidiaries;  (ii)
violate or conflict in any material respect with any statute,  ordinance,  rule,
regulation, order or decree of any Governmental Entity applicable to the Company
or any of its  Subsidiaries  or by which any of their  respective  properties or
assets may be bound; (iii) except as set forth on Schedule 3.4(a) of the Company
Disclosure  Letter,  require any  material  filing  with,  or  material  Permit,
material  consent or approval of, or the giving of any  material  notice to, any
Governmental Entity or any other Person; or (iv) except as set forth on Schedule
3.4(b) of the Company  Disclosure  Letter,  result in a violation  or breach of,
conflict with,  constitute (with or without due notice or lapse of time or both)
a default under (or give rise to any right of termination, cancellation, payment
or acceleration under),  result in the creation of any material Lien upon any of
the properties or assets of any Operating  Subsidiary or any of their respective
Subsidiaries  under,  or give  rise to any  obligation,  right  of  termination,
cancellation, acceleration or increase of any obligation or a loss of a material
benefit or any right that becomes  effective  upon the  occurrence  of a merger,
amalgamation,  scheme of arrangement,  consolidation or change of control under,
any of the terms, conditions or provisions of any material note, bond, mortgage,
indenture,  franchise, Permit, Contract, arrangement, lease, franchise agreement
or other  obligation to which the Company or any of its Subsidiaries is a party,
or by which any such Person or any of its properties or assets are bound.

          Section 3.5 Company Reports and Financial  Statements.  Since December
31,  1999,  the Company  has filed all forms,  reports,  schedules,  statements,
registration  statements and other  documents  with the  Commission  relating to
periods  commencing on or after such date required to be filed by it pursuant to
the federal securities Laws and the Commission rules and regulations  thereunder
(such forms, reports, schedules,  statements,  registration statements and other
documents being hereinafter referred to as the "Commission  Filings") and, as of
their respective dates, the Commission Filings complied in all material respects
with  all  applicable  requirements  of the  federal  securities  Laws  and  the
Commission rules and regulations promulgated thereunder.  The Company has, prior
to the date of this  Agreement,  made  available to Purchaser  true and complete
copies of all portions of any Commission Filings not publicly  available.  As of
their  respective  dates,  the  Commission  Filings  did not  contain any untrue
statement  of a material  fact or omit to state a material  fact  required to be
stated  therein or necessary to make the  statements  therein not  misleading in
light of the circumstances under which they were made. All financial statements


                                      -10
<PAGE>

contained in the Commission  Filings have been prepared in accordance  with GAAP
throughout the periods indicated and present fairly in all material respects the
financial  position,  results of operations and changes in financial position of
the Company as of the indicated dates and for the indicated periods (except,  in
the case of interim financial  statements,  for the absence of notes thereto and
subject to normal year-end audit adjustments and accruals required to be made in
the  ordinary  course of  business  which  are not  materially  adverse  and are
consistent with past practices).

          Section  3.6  Absence  of  Certain  Changes.  Except  as set  forth on
Schedule 3.6 of the Company  Disclosure  Letter or in the  Completed  Commission
Filings, or as contemplated by this Agreement, since December 31, 2000 and prior
to the date of this Agreement,  (a) there has not occurred any event,  change or
development  that has or would reasonably be expected to have a Company Material
Adverse Effect, (b) the business of each Operating  Subsidiary and each of their
respective  Subsidiaries  has been  conducted  only in the  ordinary  course  of
business,  (c) none of the  Operating  Subsidiaries  or any of their  respective
Subsidiaries  has  increased  the  compensation  of any  officer or granted  any
general salary or benefits increase to their respective employees, other than in
the ordinary  course of  business,  (d) there has been no  declaration,  setting
aside or payment of any dividend or other distribution with respect to any class
of shares or any  repurchase,  redemption or other  acquisition by any Operating
Subsidiary of any shares or other securities of such Operating  Subsidiary,  and
(e)  there  has  been no  change  by any  Operating  Subsidiary  or any of their
respective Subsidiaries in their respective accounting principles,  practices or
methods.

          Section 3.7 Title to Properties;  Encumbrances. Except as set forth on
Schedule 3.7 of the Company  Disclosure  Letter or in the  Completed  Commission
Filings,  one  of  the  Operating   Subsidiaries  or  one  of  their  respective
Subsidiaries  has valid  title to,  or,  in the case of  leased  properties  and
assets,  valid  leasehold  interests  in, (a) all of the  material  tangible and
intangible properties and assets (real and personal) used in connection with the
businesses  of the Operating  Subsidiaries  and their  respective  Subsidiaries,
including, without limitation, all of the properties and assets reflected in the
consolidated  balance sheet of the Company and its  Subsidiaries as of September
30,  2001 and  previously  supplied by the Company to  Purchaser  (the  "Interim
Balance  Sheet"),  except as  indicated  in the notes  thereto  and  except  for
properties and assets reflected in the Interim Balance Sheet that have been sold
or  otherwise  disposed of in the  ordinary  course of  business  after the date
thereof,  and (b) all of the  tangible  and  intangible  properties  and  assets
purchased by the Operating Subsidiaries or any of their respective  Subsidiaries
since  September 30, 2001,  except for such properties and assets that have been
sold or otherwise  disposed of in the ordinary course of business;  in each case
subject to no material Liens,  except for Liens reflected or reserved against in
the Completed  Commission  Filings or the Interim Balance Sheet.  The assets and
properties owned or held pursuant to valid leases by any Operating Subsidiary or
any of their respective Subsidiaries are all of the assets and properties needed
by the Operating  Subsidiaries and their respective  Subsidiaries to operate the
businesses of the Company and its Subsidiaries in all material  respects as such
businesses  have been  operated by the Company and its  Subsidiaries  during the
twelve (12)-month period immediately  preceding the date of this Agreement.  The
Company owns no assets other than the Shares and conducts no business other than
the business incident to ownership of the Shares.

                                      -11-

<PAGE>

          Section 3.8 Compliance  with Laws. (a) Except as set forth on Schedule
3.8 of the Company Disclosure Letter or in the Completed Commission Filings, the
Operating  Subsidiaries  and  their  respective  Subsidiaries  are  in  material
compliance with all material applicable federal,  state, local and foreign Laws,
orders, judgments and decrees.

          (b)  Except as set forth on  Schedule  3.8 of the  Company  Disclosure
Letter,  the Operating  Subsidiaries and their respective  Subsidiaries hold all
material  federal,  state,  local  and  foreign  permits,  approvals,  licenses,
authorizations,  certificates,  rights,  exemptions and orders from Governmental
Entities (the "Permits") that are necessary for the operation of the business of
the  Operating   Subsidiaries  and/or  their  respective   Subsidiaries  as  now
conducted, and there has not occurred any default under any such Permit.

          (c)  To  the   knowledge  of  the  Company,   none  of  the  Operating
Subsidiaries or any of their  respective  Subsidiaries  has made, or promised or
authorized the making of, any payment of any money or anything of value,  or the
provision of any gift, to any foreign official,  political party,  candidate for
office or any other Person for any purpose prohibited by any applicable Law.

          Section 3.9  Litigation.  Except as set forth on  Schedule  3.9 of the
Company Disclosure Letter or in the Completed Commission Filings, on the date of
this Agreement, there is no action, suit, proceeding at law or in equity, or any
arbitration  or  any  administrative  or  other  proceeding  by  or  before  any
Governmental  Entity  pending or, to the  knowledge of the Company,  threatened,
against  or  affecting  any  Operating  Subsidiary  or any of  their  respective
Subsidiaries,  or any of their  respective  properties  or rights.  There are no
suits,  actions,  claims,  proceedings  or  investigations  pending  or,  to the
knowledge  of the Company,  threatened,  seeking to prevent or  challenging  the
transactions contemplated by this Agreement. Except as set forth on Schedule 3.9
of the Company Disclosure Letter,  none of the Operating  Subsidiaries or any of
their  respective  Subsidiaries  is  subject  to any  judgment,  order or decree
entered in any lawsuit or proceeding.

          Section 3.10 Employee  Benefit Plans.  Each material  employee benefit
plan  within the  meaning  of Section  3(3) of the  Employee  Retirement  Income
Security Act of 1974,  as amended  ("ERISA"),  and all other  material  employee
benefit  agreements or arrangements  that are not employee  benefit plans within
the meaning of Section  3(3) of ERISA,  including  without  limitation  deferred
compensation plans,  incentive plans, bonus plans or arrangements,  stock option
plans,  stock purchase plans,  stock award plans,  golden parachute  agreements,
severance pay plans,  dependent care plans, cafeteria plans, employee assistance
programs,   scholarship  programs,  employment  contracts,  retention  incentive
agreements,  noncompetition agreements,  consulting agreements,  confidentiality
agreements and vacation policies,  maintained by any Operating Subsidiary or any
of their respective Subsidiaries, or to which any Operating Subsidiary or any of
their respective Subsidiaries contributes or with respect to which any Operating
Subsidiary  or any of  their  respective  Subsidiaries  may  have  any  material
liability  (collectively,  the "Employee  Benefit  Plans") is listed on Schedule
3.10 of the Company  Disclosure  Letter.  Except as disclosed  in the  Completed
Commission  Filings or as set forth on Schedule  3.10 of the Company  Disclosure
Letter:  (a) each  Employee  Benefit  Plan is in  material  compliance  with any
applicable Law and has been  administered and operated in all material  respects
in accordance with its terms; (b) each Employee Benefit Plan that is intended to

                                      -12-

<PAGE>

be  "qualified"  within the meaning of Section 401(a) of the Code has received a
favorable  determination  letter or opinion  letter  from the  Internal  Revenue
Service  and, to the  knowledge  of the  Company,  no event has  occurred and no
condition  exists that would  reasonably be expected to result in the revocation
of any  such  determination  letter  or  opinion  letter;  (c)  (i)  none of the
Operating  Subsidiaries  or any of their  respective  Subsidiaries or any Person
that was at any  time  after  December  1,  1996  treated  as a single  employer
together with any Operating  Subsidiary or any of their respective  Subsidiaries
under  section  414 of the  Code  has  ever  maintained,  had an  obligation  to
contribute to, or  contributed  to, or incurred any liability with respect to, a
pension  plan that is or was  subject to Title IV of ERISA or Section 412 of the
Code and (ii)  none of the  Operating  Subsidiaries  or any of their  respective
Subsidiaries  or any Person that was at any time during the six (6)-year  period
immediately  preceding the date of this Agreement  treated as a single  employer
together with any Operating  Subsidiary or any of their respective  Subsidiaries
under  Section 414 of the Code has,  within  such six  (6)-year  period,  had an
obligation  to contribute  to, or  contributed  to, or incurred any  unsatisfied
liability with respect to, a  multiemployer  plan (within the meaning of Section
4001(a)(3) of ERISA that is or was subject to Title IV of ERISA; (d) none of the
Operating  Subsidiaries  or any of their  respective  Subsidiaries,  or,  to the
knowledge of the Company, any other "disqualified person" or "party in interest"
(as  defined  in  Section  4975(e)(2)  of the Code and  Section  3(14) of ERISA,
respectively)  has engaged in any  transactions  in connection with any Employee
Benefit Plan that would  reasonably be expected to result in the imposition of a
material  penalty pursuant to Section 502(i) of ERISA or a material tax pursuant
to Section 4975 of the Code; (e) no claims have been made,  commenced or, to the
knowledge of the Company,  threatened with respect to any Employee  Benefit Plan
(other than routine  claims for benefits  payable in the  ordinary  course,  and
appeals of denied  routine claims for benefits  payable in the ordinary  course)
that would  reasonably  be  expected  to result in a material  liability  of any
Operating  Subsidiary or any of their respective  Subsidiaries;  (f) no Employee
Benefit Plan  provides  medical,  surgical,  hospitalization  or life  insurance
benefits  (whether  or not  insured by a third  party) for  employees  or former
employees of any Operating  Subsidiary or any of their  respective  Subsidiaries
for periods  extending  beyond  their  terminations  of  employment,  other than
coverage mandated by the Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended, or a similar state Law; and (g) the consummation of the transactions
contemplated  by this  Agreement,  either alone or in  conjunction  with another
event (such as a termination of employment), will not (i) entitle any current or
former  employee  of  any  Operating  Subsidiary  or  any  of  their  respective
Subsidiaries  to severance pay or any other  payment under any Employee  Benefit
Plan, (ii) accelerate the time of payment or vesting,  or trigger any payment or
funding  (through a grantor  trust or  otherwise)  of  compensation  or benefits
under,  increase  the amount  payable or trigger any other  material  obligation
pursuant  to,  any  Employee  Benefit  Plan,  or (iii)  increase  the  amount of
compensation  due any  such  employee,  or  result  in any  material  breach  or
violation of, or default under, any Employee Benefit Plan.

          Section 3.11 Employment  Relations and  Agreements.  (a) Except as set
forth on Schedule 3.11(a) of the Company  Disclosure  Letter or in the Completed
Commission  Filings  (i) each of the  Operating  Subsidiaries  and each of their
respective  Subsidiaries is in material  compliance  with all federal,  foreign,
state or other applicable Laws respecting employment and employment practices,

                                      -13-

<PAGE>

terms and conditions of employment  and wages and hours,  and has not and is not
engaged in any unfair labor practice;  (ii) there is no labor strike,  slowdown,
stoppage  or  material  dispute  pending or, to the  knowledge  of the  Company,
threatened  against  or  involving  any  Operating  Subsidiary  or any of  their
respective Subsidiaries;  (iii) no representation question exists respecting the
employees of any Operating  Subsidiary or any of their respective  Subsidiaries;
(iv) no collective  bargaining  agreement is currently  being  negotiated by any
Operating  Subsidiary or any of their  respective  Subsidiaries  and none of the
Operating Subsidiaries or any of their respective  Subsidiaries is or has been a
party  to  a  collective  bargaining  agreement;   (v)  none  of  the  Operating
Subsidiaries  or any of their  respective  Subsidiaries  is  experiencing or has
experienced any material labor  difficulty  during the last three (3) years; and
(vi) no grievance or arbitration proceeding arising out of or under a collective
bargaining  agreement  is  pending  and no claim  thereunder  exists  or, to the
knowledge of the Company,  is threatened  with respect to the  operations of the
Operating Subsidiaries or any of their respective Subsidiaries.

          (b) Except as set forth on Schedule 3.11(b) of the Company  Disclosure
Letter,  there exist no employment,  consulting,  severance,  indemnification or
deferred  compensation  agreements  between any  Operating  Subsidiary or any of
their  respective  Subsidiaries  and any  director,  officer or  employee of any
Operating  Subsidiary or any of their  respective  Subsidiaries or any agreement
that would give any director, officer or employee of any Operating Subsidiary or
any of their  respective  Subsidiaries the right to receive any payment from any
Operating Subsidiary or any of their respective  Subsidiaries as a result of the
transactions contemplated by this Agreement.

          Section  3.12  Taxes.  Except  as set  forth on  Schedule  3.12 of the
Company Disclosure Letter:

          (a)  Tax  Returns.   Each  Operating  Subsidiary  and  each  of  their
respective Subsidiaries have filed or caused to be filed, or shall file or cause
to be filed on or prior to the Closing Date, all material  returns,  statements,
forms and reports for Taxes (the "Returns") that are required to be filed by, or
with respect to, the Operating Subsidiaries and their respective Subsidiaries on
or prior to the Closing Date (taking into account any  extension of time to file
granted  to or on behalf of the  Company  or any of its  Subsidiaries),  and the
information  set  forth on the  Returns  is true  and  correct  in all  material
respects and contains all material  information required to be reported thereon.
"Taxes" shall mean all taxes,  assessments,  charges,  duties,  fees,  levies or
other governmental  charges  including,  without  limitation,  all United States
federal,  state, local, foreign and other income,  franchise,  profits,  capital
gains,  capital stock,  transfer,  sales,  use,  occupation,  property,  excise,
severance,  windfall profits,  stamp,  license,  payroll,  withholding and other
taxes, assessments,  charges, duties, fees, levies or other governmental charges
of any kind whatsoever  (whether  payable directly or by withholding and whether
or not  requiring  the  filing of a Return),  all  estimated  taxes,  deficiency
assessments, additions to tax, penalties and interest.

          (b) Payment of Taxes.  All material Taxes and material Tax liabilities
of the Operating Subsidiaries and their respective  Subsidiaries for all taxable
years or periods that end on or prior to the Closing  Date and,  with respect to
any taxable year or period beginning prior to and ending after the Closing Date,

                                      -14-

<PAGE>


the portion of such taxable year or period  ending on and  including the Closing
Date, have been paid or shall be paid in full on or prior to the Closing Date or
accrued and adequately disclosed and fully provided for on the books and records
of the Operating  Subsidiaries and their  respective  Subsidiaries in accordance
with GAAP.

          (c) Tax  Liens.  There  are no Liens for Taxes  upon any  property  or
assets of any of the Operating Subsidiaries --------- or any of their respective
Subsidiaries,  except  for Liens for Taxes not yet due or  payable  or Liens for
Taxes being contested in good faith.

          (d)  Tax  Audits.  No  Federal,   state,   local  or  foreign  audits,
examinations,  investigations  or  other  administrative  proceedings  or  court
proceedings are presently  pending with regard to any Taxes or Tax Returns filed
by or on behalf of any of the Operating  Subsidiaries or any of their respective
Subsidiaries,  and no written notification of such proceedings has been received
by the Company,  any of the Operating  Subsidiaries  or any of their  respective
Subsidiaries.

          (e)  Statute  of  Limitations.  There  are  no  outstanding  requests,
agreements,  consents or waivers to extend the statutory  period of  limitations
applicable  to the  assessment of any Taxes or  deficiencies  against any of the
Operating Subsidiaries or any of their respective Subsidiaries.

          (f) Tax Agreements. None of the Operating Subsidiaries or any of their
respective Subsidiaries is a party to any material tax sharing, tax indemnity or
other similar agreement or arrangement with any Person.

          (g) Powers of  Attorney.  No power of attorney  has been  granted with
respect to any matter  relating to Taxes of any  Operating  Subsidiary or any of
their respective Subsidiaries that is currently in force.

          (h) Tax  Deficiencies.  No  material  deficiency  or  claim  has  been
formally proposed,  asserted or assessed by any Governmental  Entity with regard
to any Taxes of any Operating Subsidiary or any of their respective Subsidiaries
or Tax Returns including or required to be filed by any Operating  Subsidiary or
any of their  respective  Subsidiaries  for which Purchaser would be liable as a
result of the  transactions  contemplated by this Agreement,  which has not been
resolved and paid in full.

          (i)  Consolidated,  Combined  or  Unitary  Tax  Returns.  None  of the
Operating Subsidiaries or any of their respective Subsidiaries has been included
in a  consolidated,  combined,  unitary or similar Tax Return that  included the
Company.

          (j) No Joint or Several Liability.  None of the Operating Subsidiaries
or any of their  respective  Subsidiaries  has any  liability,  either  joint or
several, for any Taxes owed by the Company.

          Section 3.13  Liabilities.  As of the date of this Agreement,  none of
the  Operating  Subsidiaries  or  any  of  their  respective   Subsidiaries  has
outstanding any claims, liabilities or indebtedness, contingent or otherwise, of
any kind whatsoever  (whether accrued,  absolute,  contingent or otherwise,  and

                                      -15-
<PAGE>


whether or not  required to be  reflected  in the  financial  statements  of the
Operating  Subsidiaries  and their  respective  Subsidiaries  in accordance with
GAAP),  except  (a) as set  forth on  Schedule  3.13 of the  Company  Disclosure
Letter,  (b) as set forth in the Completed  Commission Filings or on the Interim
Balance Sheet, and (c) other claims,  liabilities or indebtedness  that are not,
individually or in the aggregate, material.

          Section  3.14  Intellectual  Property.  (a) Except as set forth in the
Completed Commission Filings, one of the Operating  Subsidiaries or one of their
respective  Subsidiaries  owns or has a valid and enforceable right to use, free
and clear of all material Liens, all material Intellectual Property necessary to
operate their respective  businesses in all material respects as such businesses
have been operated during the twelve (12)-month period immediately preceding the
date of this Agreement.

          (b) Except as set forth in the Completed  Commission Filings,  neither
the conduct of the businesses of the Operating Subsidiaries and their respective
Subsidiaries  nor the use of the  Intellectual  Property  materially  infringes,
violates,  misappropriates  or misuses any  Intellectual  Property rights or any
other proprietary right of any Person.

          Section  3.15  Proxy  Materials.   The  proxy  statement  (the  "Proxy
Materials")  prepared by the Company  soliciting the proxies of the shareholders
of the Company in favor of the proposals (the "Proposals")  substantially in the
form set  forth on Annex B to be  voted on at an  extraordinary  meeting  of the
shareholders  of the Company  (the  "Shareholder  Meeting"),  together  with all
materials included therewith and any amendments or supplements thereto will not,
at the time they are filed with the Commission or are first published,  sent or,
as the case may be, given,  to shareholders of the Company or at the time of the
Shareholders Meeting, contain any untrue statement of a material fact or omit to
state any material fact  required to be stated  therein or necessary to make the
statements  therein,  in light of the circumstances  under which they were made,
not   misleading.   Notwithstanding   the   foregoing,   the  Company  makes  no
representation  or warranty  with respect to any  information  supplied or to be
supplied by Purchaser or any of its  representatives in writing for inclusion in
the  foregoing  documents.  The Proxy  Materials  will  comply  in all  material
respects with the requirements of the Exchange Act.

          Section 3.16 Broker's or Finder's Fee.  Other than Merrill Lynch & Co.
and  Houlihan  Lokey  Howard & Zukin  Financial  Advisors,  Inc.  (the  fees and
expenses  of each of whom shall be paid by the  Company in  accordance  with the
agreements of the Company with such firms, true and correct copies of which have
been  previously  delivered  to  Purchaser by the  Company),  no agent,  broker,
investment bank, Person or firm acting on behalf of the Company is, or shall be,
entitled to any commission or broker's or finder's fees in connection  with this
Agreement or any of the transactions contemplated hereby from any of the parties
hereto, or from any Affiliate of the parties hereto.

          Section  3.17  Certain  Contracts  and  Arrangements.  As of the  date
hereof,  except as set forth on Schedule 3.17 of the Company  Disclosure Letter,
none of the Operating Subsidiaries or any of their respective  Subsidiaries is a
party  to  or  bound  by  any  contracts,  agreements,   instruments,  licenses,
commitments   or   understandings   ("Contracts")   of  the   following   nature
(collectively, the "Material Contracts"):

                                      -16-

<PAGE>

          (a) storage and throughput Contracts;

          (b)  Contracts  in respect of the sale or  provision  of  products  or
     services by the Company or any of its Subsidiaries involving, in each case,
     either (i)  annualized  consideration  in excess of five  hundred  thousand
     dollars ($500,000) that are not cancelable without penalty upon ninety (90)
     days'  notice or (ii)  aggregate  consideration  in  excess of two  million
     dollars ($2,000,000);

          (c) collective  bargaining  agreements,  union agreements,  employment
     agreements,  "change  of  control  agreements"  with  employees,  severance
     agreements  or  consulting  agreements;  (d)  loan  or  credit  agreements,
     indentures,  guarantees  (other  than  endorsements  made for  collection),
     mortgages,  pledges, conditional sales or other title retention agreements,
     or equipment  financing  obligations,  lease or  lease-purchase  agreements
     involving,  in each case,  borrowings,  or capacity to borrow, in excess of
     one hundred thousand dollars ($100,000);

          (e) leases or similar instruments  regarding real property (other than
     storage and throughput Contracts);

          (f) (i) Contracts relating to competitive activities that restrict any
     Operating Subsidiary or any of their respective Subsidiaries from competing
     in any line of business  or with any Person in any  geographical  area,  or
     that restrict any other Person from competing with any Operating Subsidiary
     or any of their  respective  Subsidiaries in any line of business or in any
     geographical  area and (ii)  Contracts  that are material to the  Operating
     Subsidiaries and their respective Subsidiaries,  taken as a whole, and that
     restrict any Operating  Subsidiary or any of their respective  Subsidiaries
     from  disclosing  any  information  concerning  or obtained  from any other
     Person,  or that restrict any other Person from  disclosing any information
     concerning  or  obtained  from  any  Operating  Subsidiary  or any of their
     respective  Subsidiaries (other than Contracts entered into in the ordinary
     course of business);

          (g)  Contracts  with  any  Affiliate  that  would  be  required  to be
     disclosed under Item 404 of Regulation S-K under the Securities Act;

          (h) except for  Contracts for the purchase of inventory to be used for
     product  sales,  other  Contracts  of a type not  described  in clauses (a)
     through (g) above that involve,  in each case,  receipts or expenditures of
     or by the  Operating  Subsidiaries  and their  respective  Subsidiaries  in
     excess of five hundred thousand dollars ($500,000); or

          (i) offers or tenders  outstanding and capable of being converted into
     an obligation of the Company described in clauses (a) through (h) above.

          Except as set forth on Schedule 3.17 of the Company Disclosure Letter,
none of the Operating Subsidiaries or any of their respective Subsidiaries is in
material breach or default under any Material Contract nor, to the knowledge of
the Company, is any other party to any

                                      -17-

<PAGE>

Material  Contract  in  material  breach  or  default  thereunder.  There  is no
condition that, with the passage of time or the giving of notice or both,  would
constitute a material  breach or default by any  Operating  Subsidiary or any of
their  respective  Subsidiaries  under  any  Material  Contract.  Copies  of all
Material Contracts (or in the case of oral Material  Contracts,  descriptions of
the terms  thereof)  have been  delivered to Purchaser and such copies are true,
complete and accurate and such  descriptions are true,  complete and accurate in
all material  respects and in each case include all  amendments,  supplements or
modifications thereto, as at the date hereof. None of the Operating Subsidiaries
or any of their  respective  Subsidiaries  has  received  any written  notice of
cancellation of any Material Contract,  and to the knowledge of the Company,  no
Person has threatened to cancel any Material Contract.

          Section 3.18 Environmental  Laws and Regulations.  Except as set forth
on Schedule 3.18 of the Company Disclosure Letter or in the Completed Commission
Filings  (a) each of the  Operating  Subsidiaries  and each of their  respective
Subsidiaries is in material  compliance with all applicable  Environmental Laws,
and have obtained,  and are in material compliance with, all Permits required of
them  under  applicable  Environmental  Laws;  (b)  there  are  no  proceedings,
investigations,  actions or material claims by any  Governmental  Entity pending
or,  to  the  knowledge  of  the  Company,  threatened,  against  any  Operating
Subsidiary or any of their respective  Subsidiaries under any Environmental Law;
(c) there is no material obligation,  undertaking or liability arising out of or
relating to  Environmental  Laws that any  Operating  Subsidiary or any of their
respective  Subsidiaries has agreed to or assumed, by Contract or otherwise,  or
has expressly retained by Contract;  (d) to the knowledge of the Company,  there
are no existing or proposed  requirements  under  Environmental  Laws that would
require any Operating  Subsidiary  or any of their  respective  Subsidiaries  to
incur any material  expenses  subsequent  to the Closing to remain in compliance
with Environmental Laws or to otherwise make capital improvements; and (e) there
are no  facts,  circumstances  or  conditions  relating  to the past or  present
business or operations of any  Operating  Subsidiary or any of their  respective
Subsidiaries  (including  the disposal of any wastes,  hazardous  substances  or
other  materials),  or to any past or present  Subsidiary  Property,  that would
reasonably be expected to give rise to any  proceeding or action or any material
claim or liability under any Environmental Law.

          Section 3.19 Voting Requirements. At a meeting duly called and held at
which at least  one-half  of the  aggregate  of the  Company  Common  Shares and
Company  Subordinated  Shares is present or represented by proxy and entitled to
vote,  the  affirmative  vote of holders of more than  sixty-six and  two-thirds
percent (66-2/3%) of the Company Common Shares and Company  Subordinated Shares,
voting  together as a single class,  is the only vote required to approve and/or
adopt the Proposals to approve this  Agreement and dissolve the Company (each as
more fully set forth on Annex B).

          Section  3.20  Insurance.  Set forth on  Schedule  3.20 of the Company
Disclosure  Letter is a list of all policies of fire,  liability and other forms
of  insurance  and all fidelity  bonds held by or  applicable  to any  Operating
Subsidiary or any of their  respective  Subsidiaries at any time during the last
three (3) years.  Except as set forth on Schedule 3.20 of the Company Disclosure
Letter,  the  insurance  currently  held  by or  applicable  to  each  Operating
Subsidiary and each of their  respective  Subsidiaries  is in such amount and of
such type and scope as is  customary  in the industry in which it is engaged and

                                      -18-

<PAGE>

each of them has had in full force and effect at all appropriate times insurance
of appropriate type,  amount and scope.  Except as set forth on Schedule 3.20 of
the Company Disclosure Letter, there has been no change in the type of insurance
coverage  held by or  applicable  to any  Operating  Subsidiary  or any of their
respective Subsidiaries during the past three (3) years that has resulted in any
period during which any of them failed to have appropriate  insurance  coverage.
Excluding  insurance policies that have expired and been replaced,  no insurance
policy of any Operating  Subsidiary or any of their respective  Subsidiaries has
been  canceled  within  the last  three (3) years and no threat has been made to
cancel any such insurance policy within such period.

          Section 3.21  Inventory.  Except as set forth on Schedule  3.21 of the
Company Disclosure  Letter, the inventories owned by the Operating  Subsidiaries
or their  respective  Subsidiaries  consist of a quality usable by the Operating
Subsidiaries  or  their  respective  Subsidiaries  in  the  ordinary  course  of
business.  There  are no  material  shortages  in the  quantity  of  product  of
customers  being held by any  Operating  Subsidiary  or any of their  respective
Subsidiaries.  There are no contaminations of product of customers being held by
any Operating  Subsidiary or any of their respective  Subsidiaries for which any
Operating  Subsidiary or any of their  respective  Subsidiaries has any material
liability.

          Section 3.22  Information  Furnished.  Except as set forth on Schedule
3.22 of the  Company  Disclosure  Letter,  the  Company  has made  available  to
Purchaser  or its  attorneys,  accountants  or  other  representatives  true and
correct copies of all agreements and documents listed on the Company  Disclosure
Letter  and all  minute  books  and  stock  records  of  each  of the  Operating
Subsidiaries  and each of their  respective  Subsidiaries,  and none of (a) this
Agreement,  (b) the Company  Disclosure Letter or (c) the minute books and stock
records of the Operating  Subsidiaries and their  respective  Subsidiaries as of
the date hereof and as of the Closing Date,  contains or will contain any untrue
statement of a material fact or omits or will omit any material  fact  necessary
to make the statements herein or therein, as the case may be, not misleading.

                                   ARTICLE IV

                   REPRESENTATIONS AND WARRANTIES OF PURCHASER

          Purchaser hereby represents and warrants to the Company as follows:

          Section 4.1 Due  Organization,  Good  Standing  and  Corporate  Power.
Purchaser is a limited partnership duly organized and validly existing under the
laws of the State of Delaware.

          Section 4.2 Authorization and Validity of Agreement. Purchaser has the
requisite partnership power and authority to execute and deliver this Agreement,
to  perform  its  obligations  hereunder  and  to  consummate  the  transactions
contemplated  hereby. The execution,  delivery and performance of this Agreement
by Purchaser and the consummation by it of the transactions  contemplated hereby
have been duly authorized by its general partner. No other partnership action on
the part of Purchaser is necessary  to  authorize  the  execution,  delivery and
performance  of  this  Agreement  by  Purchaser  and  the  consummation  of  the
transactions  contemplated  hereby.  This  Agreement  has been duly executed and
delivered by Purchaser and, assuming that this Agreement constitutes a valid and

                                      -19-

<PAGE>

binding obligation of the Company, constitutes a valid and binding obligation of
Purchaser,  enforceable  against Purchaser in accordance with its terms,  except
that such  enforcement  may be limited  by  applicable  bankruptcy,  insolvency,
reorganization,  moratorium or other similar Laws  affecting  creditors'  rights
generally, and general equitable principles.

          Section 4.3 Consents and Approvals;  No  Violations.  Assuming (a) the
filings  required under the HSR Act are made and the applicable  waiting periods
thereunder  have been  terminated or have  expired,  and (b) the purchase of the
Shares  by  Purchaser  pursuant  to this  Agreement  has  been  approved  by the
shareholders  of the Company,  the execution  and delivery of this  Agreement by
Purchaser and the  consummation  by Purchaser of the  transactions  contemplated
hereby do not:  (i)  violate  or  conflict  with any  provision  of the  limited
partnership  agreement  of  Purchaser;  (ii) violate or conflict in any material
respect with any statute,  ordinance,  rule, regulation,  order or decree of any
Governmental Entity applicable to Purchaser or by which any of its properties or
assets may be bound; (iii) require any filing with, or Permit,  material consent
or  approval  of, or the giving of any  material  notice  to,  any  Governmental
Entity;  or (iv) result in a violation or breach of,  conflict with,  constitute
(with or without  due notice or lapse of time or both) a default  under (or give
rise to any right of termination,  cancellation, payment or acceleration under),
or result in the  creation of any Lien upon any of the  properties  or assets of
Purchaser  under,  or  give  rise  to  any  obligation,  right  of  termination,
cancellation, acceleration or increase of any obligation or a loss of a material
benefit or any right that becomes  effective  upon the  occurrence  of a merger,
amalgamation,  scheme of arrangement,  consolidation or change of control under,
any of the terms, conditions or provisions of any material note, bond, mortgage,
indenture,  franchise, Permit, Contract, arrangement, lease, franchise agreement
or other obligation to which Purchaser or any of its Subsidiaries is a party, or
by which any such Person or any of its properties or assets may be bound.

          Section  4.4 Proxy  Materials.  None of the  information  provided  by
Purchaser  in  writing  for  inclusion  in the Proxy  Materials,  any  materials
included therewith or any amendments or supplements  thereto,  will, at the time
such Proxy  Materials,  materials,  amendments or supplements are filed with the
Commission  or are first  published,  sent or, as the case may be,  given to the
shareholders of the Company or at the time of the Shareholder  Meeting,  contain
any untrue  statement  of a  material  fact or omit to state any  material  fact
required to be stated  therein or necessary to make the statements  therein,  in
light of the circumstances under which they were made, not misleading.

          Section 4.5  Broker's or Finder's  Fee. No agent,  broker,  investment
bank,  Person or firm acting on behalf of Purchaser is, or shall be, entitled to
any commission or broker's or finder's fees in connection with this Agreement or
any of the transactions  contemplated  hereby from any of the parties hereto, or
from any Affiliate of the parties hereto.

          Section 4.6 Funds. Purchaser has sufficient funds available to pay (a)
the Closing Payment, (b) the Cash Excess Amount, if any, and (c) all obligations
set forth on Schedule 4.6 of the Company  Disclosure  Letter,  which will,  as a
result of the consummation of the transactions  contemplated hereby,  become due
in respect of any  indebtedness  of the Operating  Subsidiaries  or any of their
respective Subsidiaries for money borrowed.

                                      -20-


<PAGE>

          Section 4.7  Litigation.  On the date of this  Agreement,  there is no
action,  suit,  proceeding  at  law or in  equity,  or  any  arbitration  or any
administrative or other proceeding by or before any Governmental  Entity pending
or, to the knowledge of Purchaser, threatened, against or affecting Purchaser or
any of its respective  Subsidiaries,  or any of their  respective  properties or
rights that has, or would  reasonably be expected to have, a Purchaser  Material
Adverse  Effect.   There  are  no  suits,   actions,   claims,   proceedings  or
investigations pending or, to the knowledge of Purchaser, threatened, seeking to
prevent or challenging the transactions contemplated by this Agreement.  Neither
Purchaser nor any of its Affiliates is subject to any judgment,  order or decree
entered in any lawsuit or proceeding that has or would reasonably be expected to
have, individually or in the aggregate, a Purchaser Material Adverse Effect.

          Section 4.8 No Knowledge of Adverse Change. To the actual knowledge of
Edward D. Doherty, Fred Johnson, Ron Rushton, Alan Barclay or Jim Tidmore, after
reasonable  investigation  but without giving effect to constructive  knowledge,
there exists no fact, event or condition that resulted from or was caused by any
dealing  Purchaser or any of its  Affiliates  has had with any Company  Business
Party  that,  as  a  result  of  the  announcement  of  this  Agreement  or  the
consummation of the transactions  contemplated by this Agreement,  will have, or
would  reasonably  be  expected to have,  individually  or in the  aggregate,  a
Company Material Adverse Effect.


                                    ARTICLE V

                       TRANSACTIONS PRIOR TO CLOSING DATE

          Section 5.1 Access to Information  Concerning  Properties and Records.
During the period commencing on the date hereof and ending on the earlier of (a)
the Closing Date and (b) the date on which this Agreement is terminated pursuant
to Section  6.3,  the  Company  shall  cause each of its  Subsidiaries  to, upon
reasonable  notice,  afford Purchaser and its employees,  counsel,  accountants,
consultants and other authorized representatives,  access during normal business
hours to the officers, directors, employees, accountants,  properties, books and
records of such  Subsidiaries.  The Company shall furnish  promptly to Purchaser
all information concerning its Subsidiaries' business,  properties and personnel
as Purchaser may reasonably request.

          Section 5.2 Confidentiality. (a) Information obtained by Purchaser and
its  counsel,  accountants,  consultants  and other  authorized  representatives
pursuant   to  Section   5.1  shall  be  subject  to  the   provisions   of  the
Confidentiality Agreement by and between the Company and Kaneb Pipe Line Company
LLC, dated July 27, 2001 (the "Confidentiality  Agreement"). The Confidentiality
Agreement shall terminate as of the Closing.

          (b) The Company  recognizes and acknowledges  that it has had and will
have access to certain  confidential  information  concerning  Purchaser and its
business that is the  valuable,  special and unique  property of Purchaser.  The
Company agrees that, during the term of this Agreement and for a period of three
(3) years following the Closing Date or any  termination of this  Agreement,  it
will  not  disclose,  and it will use its  commercially  reasonable  efforts  to
prevent disclosure by any Affiliate or authorized  representative of the Company

                                      -21-

<PAGE>

of,  any such  confidential  information  to any  Person,  except to  authorized
representatives of Purchaser in connection with the fulfillment of the Company's
obligations  under this Agreement or as required by applicable Law or Order. The
Company  agrees  that money  damages  would not be a  sufficient  remedy for any
breach of its obligations under this Section 5.2(b) and that, in addition to all
other remedies, Purchaser or any of its Affiliates shall be entitled to specific
performance  and injunctive or other  equitable  relief as a remedy for any such
breach and the Company agrees to waive, and to use its  commercially  reasonable
efforts  to cause  each of its  Affiliates  and  representatives  to waive,  any
requirement  for the  securing  or posting of any bond in  connection  with such
remedy.

          (c) The  Company  recognizes  and  acknowledges  that  it has  certain
confidential   information  concerning  the  Operating  Subsidiaries  and  their
respective  Subsidiaries  and their  respective  businesses  that is,  after the
Closing,  the valuable,  special and unique  property of Purchaser.  The Company
agrees that, for a period of three (3) years following the Closing Date, it will
not disclose,  and it will use its  commercially  reasonable  efforts to prevent
disclosure by any Affiliate or authorized  representative of the Company of, any
such   confidential   information   to  any   Person,   except   to   authorized
representatives of Purchaser in connection with the fulfillment of the Company's
obligations  under this Agreement or as required by applicable Law or Order. The
Company  agrees  that money  damages  would not be a  sufficient  remedy for any
breach of its obligations under this Section 5.2(c) and that, in addition to all
other remedies, Purchaser or any of its Affiliates shall be entitled to specific
performance  and injunctive or other  equitable  relief as a remedy for any such
breach and the Company agrees to waive, and to use its  commercially  reasonable
efforts  to cause  each of its  Affiliates  and  representatives  to waive,  any
requirement  for the  securing  or posting of any bond in  connection  with such
remedy.

          Section 5.3 Conduct of Business  Pending the Closing Date. The Company
agrees  that,  except as set forth on  Schedule  5.3 of the  Company  Disclosure
Letter or unless expressly  permitted or required by this Agreement or otherwise
consented  to  in  writing  by  Purchaser   (which  consent  (i)  shall  not  be
unreasonably  withheld,  conditioned  or delayed and (ii) in the case of Section
5.3(b)(xv),  shall only be required of Mr. Edward D. Doherty which  consent,  in
the case of  storage  and  throughput  Contracts,  shall be deemed  given if not
received or affirmatively refused within twenty-four (24) hours after receipt by
Mr. Doherty of the request  therefor),  during the period commencing on the date
hereof and ending at the earlier of (x) the Closing and (y) any  termination  of
this Agreement pursuant to Section 6.3:

          (a)  it  shall  cause  each  of  its   Subsidiaries  to  conduct  such
Subsidiary's  operations only in accordance with the ordinary course of business
of such Subsidiary,  use such Subsidiary's  commercially  reasonable  efforts to
preserve  intact,  in  all  material   respects,   such  Subsidiary's   business
organization,  keep available,  in all material  respects,  the services of such
Subsidiary's  officers and  employees and  maintain,  in all material  respects,
satisfactory  relationships with licensors,  suppliers,  distributors,  clients,
customers  and  others  having  significant  business  relationships  with  such
Subsidiary; and

          (b) it shall cause each of its Subsidiaries not to:

                                      -22-

<PAGE>

          (i) take  any  action  to make  any  change  in or  amendment  to such
     Subsidiary's articles of incorporation (or comparable governing documents);

          (ii)  issue  or sell,  or  authorize  to  issue  or sell,  any of such
     Subsidiary's  share capital or any other  securities,  or issue or sell, or
     authorize to issue or sell, any securities convertible into or exchangeable
     for, or options,  warrants or rights to purchase or subscribe for, or enter
     into any  arrangement  or contract with respect to the issuance or sale of,
     any of such Subsidiary's share capital or any other securities, or make any
     other changes in such Subsidiary's capital structure;

          (iii) sell,  pledge or dispose of or agree to sell,  pledge or dispose
     of any shares or other equity  interest owned by such  Subsidiary's  in any
     other Person;

          (iv) declare,  pay or set aside any dividend or other  distribution or
     payment  with  respect  to, or split,  combine,  redeem or  reclassify,  or
     purchase  or  otherwise  acquire,  any  shares of such  Subsidiary's  share
     capital or such Subsidiary's other securities (other than (x) distributions
     to any other Subsidiary of the Company or (y)  distributions to the Company
     to the extent necessary to make the  distributions  required by the Company
     Articles);

          (v) enter into any  contract  or  commitment  with  respect to capital
     expenditures with a value in excess of, or requiring expenditures in excess
     of, one million dollars ($1,000,000), individually, or enter into contracts
     or commitments with respect to capital  expenditures with a value in excess
     of,  or  requiring   expenditures   in  excess  of,  two  million   dollars
     ($2,000,000),  in the  aggregate,  other than  inventory  purchased  in the
     ordinary course of business;

          (vi)  acquire,  by  amalgamating,  merging or  consolidating  with, by
     purchasing  an equity  interest in or a portion of the assets of, or by any
     other manner, any business or any Person or otherwise acquire any assets of
     any Person  (other than the  purchase of assets in the  ordinary  course of
     business);

          (vii)  except  to the  extent  required  by  applicable  Law or  under
     existing  employee or director  benefit plans,  Contracts,  arrangements or
     collective  bargaining  Contracts in effect on the date of this  Agreement,
     increase the  compensation or fringe  benefits of any of such  Subsidiary's
     directors,  officers  or  employees,  or grant  any bonus or  severance  or
     termination pay not currently  required to be paid under existing severance
     plans,  or enter into any employment,  consulting or severance  Contract or
     arrangement  with any of such  Subsidiary's  present  or former  directors,
     officers or other  employees,  or establish,  adopt,  enter into,  amend or
     terminate  any  collective  bargaining,   bonus,  profit  sharing,  thrift,
     compensation, stock option, restricted stock, pension, retirement, deferred
     compensation,  employment,  termination, severance or other plan, Contract,
     trust,  fund,  policy or arrangement  for the benefit of such  Subsidiary's
     directors, officers or employees; provided, that, without the prior consent
     of  Purchaser,   (A)  the  Operating   Subsidiaries  and  their  respective


                                      -23-
<PAGE>

     Subsidiaries may increase the aggregate annualized compensation paid to all
     of the  employees  of  the  Operating  Subsidiaries  and  their  respective
     Subsidiaries (other than employees who have an employment Contract with any
     Operating  Subsidiary or any of their respective  Subsidiaries or employees
     who are covered by any collective  bargaining Contract) by an amount not to
     exceed four percent (4%) of the aggregate annualized compensation as of the
     date hereof payable to such employees,  and (B) such Subsidiaries may, with
     respect  to  any  employee  of any  Operating  Subsidiary  or any of  their
     respective  Subsidiaries having an employment  Contract,  (1) set the bonus
     target for such employee at an amount not in excess of seventy-five percent
     (75%) of such  employee's base pay, (2) set the bonus target EBITDA for the
     Operating  Subsidiaries and their  respective  Subsidiaries for fiscal year
     2002 for the purpose of determining the incentive thresholds  applicable to
     such Contract at an amount not lower than  forty-two  million seven hundred
     thousand dollars ($42,700,000) and (3) set the annual compensation increase
     for such  employee  at an amount not in excess of the  minimum  required by
     such employee's employment Contract;

          (viii) transfer, lease, license,  guarantee,  sell, mortgage,  pledge,
     dispose of, subject to any Lien,  (other than Liens arising by operation of
     Law in the  ordinary  course of  business  including,  without  limitation,
     mechanics'  or  materialmens'  Liens  and  maritime  Liens,  that  are not,
     individually  or in the  aggregate,  material)  or  otherwise  encumber any
     material  assets,  or incur or modify any  indebtedness  or other  material
     liability, or issue any debt securities or assume,  guarantee or endorse or
     otherwise as an accommodation become responsible for the obligations of any
     Person (other than any other Subsidiary of the Company) or make any loan or
     other extension of credit;

          (ix) make or rescind any material Tax election;

          (x) except as required by  applicable  Law or GAAP,  make any material
     change in its method of accounting;

          (xi) adopt or enter into a plan of  complete  or partial  liquidation,
     dissolution,  merger,  consolidation,  restructuring,  recapitalization  or
     other reorganization;

          (xii) (x) incur any  indebtedness  for borrowed money or guarantee any
     such indebtedness of another Person,  other than  indebtedness  owing to or
     guarantees of indebtedness owing to any other Subsidiary of the Company, or
     (y) make any loans or advances to any other Person, other than to any other
     Subsidiary  of the  Company,  except,  in  the  case  of  clause  (x),  for
     borrowings  under  existing  credit  facilities  described in the Completed
     Commission  Filings in the ordinary  course of business for working capital
     purposes;

          (xiii)  accelerate  the  payment,  right to  payment or vesting of any
     bonus, severance, profit sharing, retirement, deferred compensation,  stock
     option, insurance or other compensation or benefits;

                                      -24-

<PAGE>

          (xiv) pay, discharge or satisfy any claims, liabilities or obligations
     (absolute, accrued, asserted or unasserted, contingent or otherwise), other
     than  the  payment,  discharge  or  satisfaction  (x) of any  such  claims,
     liabilities  or  obligations  in the ordinary  course of business or (y) of
     claims,  liabilities  or obligations  reflected or reserved  against in, or
     contemplated  by,  the  consolidated  financial  statements  (or the  notes
     thereto) contained in the Completed Commission Filings;

          (xv) enter into,  materially  modify,  amend or terminate any Material
     Contract (other than any storage and throughput  Contract that both (x) has
     a duration  (immediately  before  terminating  such  Material  Contract  or
     immediately after entering into, modifying or, as the case may be, amending
     such Material Contract) of less than ninety (90) days and (y) involves even
     payment obligations throughout the term of such Contract);

          (xvi) other than  routine  employee  terminations  for cause or in the
     ordinary  course of business or as  disclosed in the  Completed  Commission
     Filings,  plan,  announce,  implement  or effect  any  reduction  in force,
     lay-off,  early retirement  program,  severance program or other program or
     effort concerning the termination of employment of any of such Subsidiary's
     employees; or

          (xvii)  enter into any Tax  agreement  or similar  agreement  with the
     Island Territory of Sint Eustatius or the Land Territory of the Netherlands
     Antilles; or

          (xviii) agree,  in writing or otherwise,  to take any of the foregoing
     actions.

          Section 5.4 Commercially Reasonable Efforts.  Subject to the terms and
conditions  provided  herein,  the Company and Purchaser  shall, and the Company
shall cause each of its  Subsidiaries  to,  cooperate  and use their  respective
commercially  reasonable  efforts to take, or cause to be taken, all appropriate
action,  and do, or cause to be done,  and assist and  cooperate  with the other
parties in doing,  all things  necessary,  proper or advisable to consummate and
make effective,  in the most expeditious  manner  practicable,  the transactions
contemplated  hereby  including,  without  limitation,  the  satisfaction of the
conditions set forth in Article VI and to make, or cause to be made, all filings
necessary,  proper or advisable  under  applicable  Laws to consummate  and make
effective the  transactions  contemplated  by this  Agreement,  including  their
respective commercially reasonable efforts to obtain, prior to the Closing Date,
all Permits,  consents and  approvals  of  Governmental  Entities and parties to
Contracts with any Operating Subsidiary or any of their respective  Subsidiaries
as are required to fulfill the conditions set forth in Article VI.

          Section 5.5 No  Solicitation  of Other Offers.  (a) The Company shall,
and shall use its  commercially  reasonable  efforts to cause its Affiliates and
each   of   its   and   their   respective   officers,   directors,   employees,
representatives,  consultants,  investment bankers,  attorneys,  accountants and
other agents  immediately  to, cease any  discussions or  negotiations  with any
other  Person or Persons  that may be ongoing  with  respect to any  Acquisition
Proposal. The Company shall not take, and shall use its commercially  reasonable
efforts to cause its Affiliates and each of its and their  respective  officers,

                                      -25

<PAGE>


directors,   employees,   representatives,   consultants,   investment  bankers,
attorneys,  accountants or other agents not to take, any action (i) to encourage
knowingly,  solicit, initiate or facilitate,  directly or indirectly, the making
or submission of any  Acquisition  Proposal,  (ii) to enter into any  agreement,
arrangement or understanding with respect to any Acquisition Proposal,  (iii) to
initiate or participate in any way in any discussions or  negotiations  with, or
furnish or disclose any  information  to, any Person  (other than  Purchaser) in
connection with any Acquisition  Proposal,  (iv) to facilitate or further in any
other manner any  inquiries  or the making or  submission  of any proposal  that
constitutes, or may reasonably be expected to lead to, any Acquisition Proposal,
or (v) to grant any waiver or release under any standstill,  confidentiality  or
similar  agreement  (other than  waivers or releases in the  ordinary  course of
business)   entered   into  by  the  Company  or  any  of  its   Affiliates   or
representatives;  provided,  that the  Company,  in response  to an  unsolicited
Acquisition  Proposal  that did not result from a breach of this Section  5.5(a)
and otherwise in compliance  with its  obligations  under  Section  5.5(c),  may
participate  in  discussions  with,  request  clarifications  from,  or  furnish
information  to, any Person  (other than  Purchaser)  that makes an  unsolicited
Acquisition  Proposal if (x) such action is taken  subject to a  confidentiality
agreement  with terms not more  favorable  to such  Person than the terms of the
Confidentiality  Agreement (as in effect on the date  hereof),  (y) the Board of
Directors  of  the  Company  reasonably  determines  in  good  faith  that  such
Acquisition Proposal is, or could reasonably likely lead to, a Superior Proposal
and (z) the Board of  Directors  of the Company  reasonably  determines  in good
faith, after receiving advice from Netherlands  Antilles counsel to the Company,
that it is necessary to take such actions in order to comply with the  fiduciary
duties of the Board of Directors under applicable Law.

          (b) Neither the Board of  Directors  of the Company nor any  committee
thereof shall (i) withdraw,  modify or amend, or propose to withdraw,  modify or
amend, in a manner adverse to Purchaser, the approval,  adoption or, as the case
may be,  recommendation of (x) this Agreement and the transactions  contemplated
hereby, or (y) the approval by the shareholders of the Company of the Proposals,
or  (ii)  approve  or  recommend,  or  propose  to  approve  or  recommend,  any
Acquisition  Proposal;   provided,   that  the  Company  may  recommend  to  its
shareholders an Acquisition Proposal and, in connection  therewith,  withdraw or
modify its approval or  recommendation  of this  Agreement and the  transactions
contemplated  by this  Agreement  if (x)  the  Company  has  complied  with  its
obligations  under Sections  5.5(a) and (c), (y) the  Acquisition  Proposal is a
Superior  Proposal and (z) the Board of Directors of the Company has determined,
in good faith,  after receiving advice from Netherlands  Antilles counsel to the
Company,  that it is  necessary  to take such action in order to comply with the
fiduciary  duties of the Board of Directors of the Company under applicable Law.
Nothing in this Section 5.5 shall prohibit the Company or the Board of Directors
of the Company from taking and disclosing to the  shareholders  of the Company a
position with respect to an Acquisition  Proposal by a third party to the extent
required under Rule 14e-2 of the Exchange Act.

          "Acquisition  Proposal" shall mean (i) any inquiry,  proposal or offer
(including,  without  limitation,  any proposal to  shareholders of the Company)
from any Person or group  relating  to any  direct or  indirect  acquisition  or
purchase  of (x) any class of equity  securities  of the  Company  or any of its
Subsidiaries or (y) five percent (5%) or more of the consolidated  assets of the
Company and its  Subsidiaries,  (ii) any tender offer or exchange offer that, if
consummated,  would result in any Person beneficially owning any class of equity
securities of the Company or any of its  Subsidiaries,  (iii) any  amalgamation,

                                      -26-

<PAGE>

merger,  consolidation,  business  combination,  recapitalization,  liquidation,
dissolution  or  similar  transaction  involving  the  Company  or  any  of  its
Subsidiaries,  or (iv) any other  transaction  the  consummation  of which could
reasonably be expected to impede,  interfere with,  prevent or materially  delay
the  consummation  of the  transactions  contemplated  by this Agreement or that
could  reasonably be expected to dilute  materially the benefits to Purchaser of
the transactions contemplated hereby.

          "Superior  Proposal"  shall  mean  a  bona  fide  written  Acquisition
Proposal  made by a third party to acquire  either all of the Company  Shares or
the  Shares  or  substantially  all  of the  combined  assets  of the  Operating
Subsidiaries  and their  respective  Subsidiaries,  in either case pursuant to a
tender offer, an amalgamation, a merger or a sale (i) on terms that the Board of
Directors of the Company (after  consultation  with an  independent,  nationally
recognized  investment  bank)  reasonably  determines  in good  faith to be more
favorable,  from a financial point of view, to the Company and its  shareholders
(in their capacity as such) than the transactions  contemplated hereby, and (ii)
that is reasonably  capable of being  consummated  (taking into  account,  among
other  things,  all  legal,  financial,  regulatory  and other  aspects  of such
proposal and the identity of the Person making such proposal).

          (c) In  addition  to the  obligations  of the  Company  set  forth  in
paragraph (a) above,  promptly after receipt or occurrence thereof,  the Company
shall  advise  Purchaser  of any request  for  information  with  respect to any
Acquisition Proposal or of any Acquisition Proposal,  or any inquiry,  proposal,
discussions or negotiation with respect to any Acquisition  Proposal,  the terms
and  conditions  of  such  request,  Acquisition  Proposal,  inquiry,  proposal,
discussion or negotiation and the Company shall, promptly after receipt thereof,
provide to Purchaser copies of any written materials  received by the Company in
connection with any of the foregoing,  and the identity of the Person making any
such Acquisition Proposal or such request,  inquiry or proposal or with whom any
discussions or negotiations are taking place.

          Section 5.6 Notification of Certain Matters. Purchaser and the Company
shall promptly notify each other of the occurrence or non-occurrence of any fact
or event  that has  caused  or could  reasonably  be  expected  to cause (a) any
representation  or  warranty  made  by it in  this  Agreement  to be  untrue  or
inaccurate  in any  material  respect  at any time  from the date  hereof to the
Closing, or (b) any covenant, condition or agreement under this Agreement not to
be complied with or satisfied by it in any material respect; provided,  however,
that no such notification shall modify the  representations or warranties of any
party or the conditions to the obligations of any party hereunder.

          Section 5.7  Antitrust.  (a) Each party hereto shall promptly take all
actions  necessary to make the filings  required of it or any of its  Affiliates
under any applicable  Antitrust  Laws in connection  with this Agreement and the
transactions  contemplated hereby,  including but not limited to filing with the
appropriate  Antitrust  Authorities,  no later than the fifth (5th) Business Day
following the date hereof,  a  Notification  and Report Form with respect to the
transactions   contemplated  by  this  Agreement,   complying  at  the  earliest
practicable date with any formal or informal request for additional  information
or  documentary  material  received  by it or  any of its  Affiliates  from  any
Antitrust Authority,  and cooperating,  as permitted by Law, with one another in
connection  with any filing under  applicable  Antitrust  Laws and in connection

                                      -27-

<PAGE>

with resolving any  investigation  or other inquiry  concerning the transactions
contemplated by this Agreement initiated by any Antitrust Authority.

          (b) Each party hereto shall use its commercially reasonable efforts to
resolve  such  objections,  if  any,  as may be  asserted  with  respect  to the
transactions  contemplated  by this Agreement  under any Antitrust Law.  Without
limiting the  generality of the  foregoing,  "commercially  reasonable  efforts"
shall include:

               (i) in the  case  of  each  of  Purchaser  and  the  Company,  if
          Purchaser  or the Company  receives a formal  request  for  additional
          information  or  documentary  material  from an  Antitrust  Authority,
          substantially  complying  with such formal request within a reasonable
          period of time following the date of its receipt thereof;

               (ii) in the case of the Company only,  subject to the  compliance
          by  Purchaser  with this  Section  5.7,  not  frustrating  or impeding
          strategy or  negotiating  positions  of Purchaser  with any  Antitrust
          Authority; and

               (iii) in the case of each of Purchaser and the Company, using all
          commercially  reasonable  efforts to (x) defend  against any lawsuits,
          actions or proceedings,  judicial or administrative,  challenging this
          Agreement or the consummation of the transactions contemplated hereby;
          (y)  seek to  prevent  the  entry  or  imposition  of any  preliminary
          injunction, temporary restraining order, stay or other legal restraint
          or prohibition by any Governmental  Entity; and (z) appeal and seek to
          have vacated or reversed as promptly as possible any such  injunction,
          order,  stay or other  restraint or prohibition  that is not yet final
          and nonappealable.

The parties agree that,  notwithstanding  the foregoing,  Purchaser shall not be
obligated by this Agreement to hold separate,  divest,  license or cause a third
party to purchase assets and/or businesses of any Operating Subsidiary or any of
their respective Subsidiaries or of Purchaser or any of its Affiliates.

          (c) Each party hereto shall  promptly  inform the other parties of any
material  communication  made to, or received by such party from,  any Antitrust
Authority or any other  Governmental  Entity  regarding any of the  transactions
contemplated hereby.

          Section 5.8 Employee Benefits. (a) During the period commencing at the
Closing and ending on the first anniversary  thereof,  Purchaser shall cause the
current and former employees of the Operating  Subsidiaries and their respective
Subsidiaries who are, on the Closing Date,  entitled to receive  compensation or
any  benefits  from  any  Operating   Subsidiary  or  any  of  their  respective
Subsidiaries to be provided with  compensation and employee benefit plans (other
than stock option or other plans involving the potential  issuance of securities
of any Operating Subsidiary,  Purchaser or any of their respective Subsidiaries)
that in the aggregate are not materially  less  favorable  than those  currently
provided to such employees by the Operating  Subsidiaries  and their  respective
Subsidiaries.  The  provisions  of this  Section  5.8(a) shall not create in any
current  or  former  employee  of any  Operating  Subsidiary  or  any  of  their

                                      -28-

<PAGE>


respective  Subsidiaries  any rights to employment or continued  employment with
Purchaser or any Operating Subsidiary or any of their respective Subsidiaries or
Affiliates or any right to specific terms or conditions of employment.

          (b) The parties  hereto  agree that,  upon the  Closing,  a "change in
control", "change of control" or "consolidation" as applicable,  shall be deemed
to have  occurred  in respect of each of the  employment  agreements,  change in
control agreements and severance agreements and other employee benefit plans and
agreements  set  forth on  Schedule  5.8(b)  of the  Company  Disclosure  Letter
(collectively,  the "Severance Protection Plans"). This Section 5.8(b) shall not
affect  any  terms  of,  or  otherwise  imply  that  the  Closing  or any  other
termination  shall not  constitute  a "change in control" or "change of control"
under,  any  employment  agreement,  change  in  control  agreement,   severance
agreement or other employee benefit plan or agreement that is not listed on such
Schedule 5.8(b).

          (c) From and after the Closing, Purchaser shall cause the Operating
Subsidiaries  and  their  respective  Subsidiaries  to (i) pay and  perform  the
respective  obligations  of the  Operating  Subsidiaries  and  their  respective
Subsidiaries  under the Severance  Protection Plans and (ii) take such action as
may be necessary to pay promptly any  severance  payments or other  amounts from
time to time due thereunder.

          (d) Notwithstanding  the foregoing  provisions of this Section 5.8, no
employee of any Operating Subsidiary or any of their Subsidiaries shall have any
continued right to employment with any Operating Subsidiary or any Subsidiary of
any Operating Subsidiary following the Closing, except as provided in writing by
Purchaser; provided, that nothing in this Section 5.8(d) shall affect the rights
of any employee pursuant to any employment Contract.

          Section 5.9  Directors' and Officers'  Insurance and  Indemnification.
(a)  The  provisions  with  respect  to  indemnification  and  exculpation  from
liability  set  forth  in  the  respective   organizational   documents  of  the
Subsidiaries of the Company as in effect on the date of this Agreement shall not
be amended,  repealed or otherwise  modified for a period of six (6) years after
the Closing in any manner that would adversely  affect the rights  thereunder of
individuals  who on or prior to the Closing  Date were  directors or officers of
the Subsidiaries of the Company, unless such modification is required by Law.

          (b) For a period of six (6) years  following  the  Closing,  Purchaser
shall  cause the  Operating  Subsidiaries  to either (i)  maintain in effect the
current directors' and officers' liability insurance of the Company covering (x)
those  Persons  who are  currently  covered  as  directors  or  officers  of any
Subsidiary of the Company on the date of this  Agreement by the  directors'  and
officers'  liability  insurance  policy of the Company (a copy of which has been
heretofore  delivered to Purchaser) (the "Subsidiary  Indemnified  Parties") and
(y) those  Persons who are  currently  covered as  directors  or officers of the
Company on the date of this Agreement by the directors' and officers'  liability
insurance policy of the Company (the "Company Indemnified  Parties");  provided,
however,  that  in no  event  shall  Purchaser  be  required  to  expend,  on an
annualized  basis,  an amount in excess  of two  hundred  percent  (200%) of the
annualized premiums currently paid by the Company for such insurance,  which the
Company represents to be two hundred and five thousand ($205,000) for the twelve

                                      -29-

<PAGE>


(12) month  period  ending on March 31,  2002;  provided,  further,  that if the
annual premiums of such insurance  coverage exceed such amount,  Purchaser shall
cause the  Operating  Subsidiaries  to  obtain a policy  or, as the case may be,
policies,  with the greatest  coverage  available for a cost not exceeding  such
amount; and provided, further, that Purchaser may substitute or, as the case may
be, cause to be  substituted  for such policies other policies with at least the
same coverage containing terms and conditions that are no less advantageous, and
provided  that  said  substitution  does not  result  in any gaps or  lapses  in
coverage with respect to matters  occurring prior to the Closing,  or (ii) cause
directors'  and  officers'  liability  insurance of Purchaser  then in effect to
cover the Company  Indemnified  Parties and the Subsidiary  Indemnified  Parties
with respect to those matters covered by the directors' and officers'  liability
insurance  policy  of the  Company  so long  as the  terms  thereof  are no less
advantageous to the Company Indemnified  Parties and the Subsidiary  Indemnified
Parties than the current  directors'  and officers'  liability  insurance of the
Company covering the Company Indemnified Parties and the Subsidiary  Indemnified
Parties.

          (c) The  Operating  Subsidiaries  shall and, if, at any time after the
Closing, any Operating Subsidiary or any of their respective  Subsidiaries shall
be  liquidated,  dissolved or wound up,  Purchaser,  or a Person  designated  by
Purchaser  that  has a net  worth  at  least  equal  to that of the  liquidated,
dissolved or, as the case may be, wound up, Operating  Subsidiary at the time of
such  liquidation,  dissolution  or,  as  the  case  may  be,  winding  up  (the
"Substitute Party"),  shall indemnify all Subsidiary  Indemnified Parties to the
fullest  extent  permitted  by  applicable  Law  with  respect  to all  acts and
omissions  prior to the  Closing  arising out of such  individuals'  services as
officers, directors,  employees or agents of any Subsidiary of the Company or as
trustees  or  fiduciaries  of any  plan  for the  benefit  of  employees  of any
Subsidiary of the Company including,  without limitation,  the execution of, and
the  transactions  contemplated  by, this Agreement.  Without  limitation of the
foregoing,  in the event any such  Subsidiary  Indemnified  Party is or  becomes
involved,  in any  capacity,  in any  action,  proceeding  or  investigation  in
connection  with any matter  occurring  prior to and  including  the time of the
Closing,  including,  without limitation,  the transactions contemplated by this
Agreement,  the  Operating  Subsidiaries,  Purchaser or, as the case may be, the
Substitute  Party,  shall  pay,  as  incurred,  the  reasonable  legal and other
expenses  of  such  Subsidiary  Indemnified  Party  (including  the  cost of any
investigation  and  preparation)  incurred in connection  therewith.  Subject to
Section 5.9(d) below, the Operating Subsidiaries,  Purchaser or, as the case may
be,  the  Substitute  Party,  shall  pay  all  reasonable  expenses,   including
attorneys'  fees,  that may be incurred by any Subsidiary  Indemnified  Party in
enforcing  this  Section 5.9 or any action  involving a  Subsidiary  Indemnified
Party resulting from the transactions contemplated by this Agreement.

          (d) Any Subsidiary  Indemnified Party wishing to claim indemnification
under Section 5.9(a), upon learning of any such claim, action, suit,  proceeding
or investigation,  shall promptly notify the Operating  Subsidiaries,  Purchaser
or, as the case may be, the Substitute Party,  thereof. In the event of any such
claim,   action,   suit,   proceeding  or   investigation,   (i)  the  Operating
Subsidiaries, Purchaser or, as the case may be, the Substitute Party, shall have
the right,  from and after the  Closing,  to assume the  defense  thereof  (with
counsel engaged by the Operating Subsidiaries, Purchaser or, as the case may be,
the Substitute  Party,  to be reasonably  acceptable to the relevant  Subsidiary
Indemnified Party), and none of the Operating Subsidiaries, Purchaser or, as the
case  may  be,  the  Substitute  Party,  shall  be  liable  to  such  Subsidiary
Indemnified  Party for any legal expenses of other counsel or any other expenses

                                      -30-

<PAGE>


subsequently  incurred by such Subsidiary  Indemnified  Party in connection with
the defense thereof,  (ii) such Subsidiary  Indemnified Party shall cooperate in
the defense of any such matter,  and (iii) none of the  Operating  Subsidiaries,
Purchaser or, as the case may be, the Substitute Party,  shall be liable for any
settlement  effected without its prior written consent,  which consent shall not
be unreasonably  withheld,  conditioned or delayed;  provided,  that none of the
Operating  Subsidiaries,  Purchaser or, as the case may be, the Substitute Party
shall have any obligation hereunder to any Subsidiary Indemnified Party when and
if a court  of  competent  jurisdiction  shall  ultimately  determine,  and such
determination  shall  have  become  final,  that  the  indemnification  of  such
Subsidiary  Indemnified Party in the manner contemplated hereby is prohibited by
applicable  Law. None of the Operating  Subsidiaries,  Purchaser or, as the case
may be, the  Substitute  Party  shall  enter into any  settlement  that does not
include  as an  unconditional  term  thereof  the  giving  by each  claimant  or
plaintiff to each Subsidiary  Indemnified  Party a release from all liability in
respect of such matter.

          (e)  Notwithstanding  any other provisions  hereof, the obligations of
Purchaser, the Operating Subsidiaries and the Substitute Party contained in this
Section 5.9 shall be binding upon their  respective  successors and assigns.  In
the event Purchaser,  any Operating  Subsidiary,  the Substitute Party or any of
their  respective  successors or assigns (i) consolidates or amalgamates with or
merges into any other Person or (ii) transfers all or  substantially  all of its
properties  or  assets  to any  Person,  then,  and in each  such  case,  proper
provision  shall be made so that the successors  and assigns of Purchaser  honor
the indemnification obligations set forth in this Section 5.9.

          (f) The obligations of Purchaser,  the Operating  Subsidiaries and the
Substitute Party and their respective  Subsidiaries under this Section 5.9 shall
survive the Closing and shall not be  terminated or modified in such a manner as
to affect adversely any Company Indemnified Party or any Subsidiary  Indemnified
Party to whom this  Section  5.9 applies  without  the consent of such  affected
Indemnified  Party (it  being  expressly  agreed  that the  Company  Indemnified
Parties  and  Subsidiary  Indemnified  Parties to whom this  Section 5.9 applies
shall be third-party beneficiaries of this Section 5.9, each of whom may enforce
the provisions of this Section).

          Section 5.10 Public  Announcements.  Purchaser  and the Company  shall
consult with each other before issuing any press release or otherwise making any
public  statements  with  respect  to  the  transactions  contemplated  by  this
Agreement  and shall not issue any such press  release  or make any such  public
statement  prior to such  consultation  and  review by the  other  party of such
release or  statement,  or without the prior  consent of the other party,  which
consent shall not be unreasonably  withheld,  conditioned or delayed;  provided,
however,  that a party may, without the prior consent of the other party,  issue
such press release or make such public statement as may be required by Law or by
any listing agreement with a national securities exchange or automated quotation
system to which  Purchaser or any Affiliate of Purchaser or, as the case may be,
the Company is a party, if it has used all  commercially  reasonable  efforts to
consult  with the other party and to obtain the  consent of such party,  but has
been unable to do so in a timely manner.

                                      -31-


<PAGE>

          Section 5.11 Shareholder Approval.  As soon as reasonably  practicable
after the date of this  Agreement,  the Company shall (a) duly call, give notice
of, convene and hold the Shareholder Meeting,  including adjourning or recalling
the same if  necessary  to  obtain a  quorum,  (b)  make  all  filings  with all
Governmental  Entities necessary in connection  therewith  (including filing the
Proxy Materials with the Commission),  (c) subject to the rights of the Board of
Directors of the Company pursuant to Section 5.5(b), provide the Proxy Materials
to the shareholders of the Company and, if so requested by Purchaser, retain the
services of a proxy  solicitation  firm and/or an information agent (selected by
the  Company) to assist in  obtaining  proxies for  approval and adoption of the
Proposals at the Shareholder Meeting, and (d) subject to the rights of the Board
of Directors of the Company  pursuant to Section  5.5(b),  use all  commercially
reasonable  efforts to obtain  approval of all of the Proposals by the requisite
vote of the shareholders of the Company.

          Section 5.12  Section 338  Election.  Notwithstanding  anything to the
contrary contained in this Agreement, if Purchaser or any Affiliate of Purchaser
acquires or becomes the owner,  for U.S.  federal  income tax  purposes,  of any
Company  Shares  (other than  Company  Shares held by Holdings) at any time that
Holdings is the owner,  for U.S.  federal  income tax  purposes,  of any Company
Shares,  neither  Purchaser nor any Affiliate of Purchaser shall make, or permit
to be made,  an  election  under  Section  338 of the Code with  respect to such
Company Shares or with respect to any of the  transactions  contemplated by this
Agreement, unless the Company provides prior express written consent to any such
election.

          Section 5.13  Repayment of  Indebtedness.  At or prior to the Closing,
Purchaser  shall,  in a manner  satisfactory to the Company (which consent shall
not be unreasonably withheld,  conditioned or delayed),  either (a) discharge in
full the indebtedness  under the Transamerica Loan, (b) obtain a release for the
Company of its obligations as guarantor of the Transamerica Loan or (c) agree to
indemnify the Company for its obligations as guarantor of the Transamerica Loan.

          Section  5.14  Transfer  Taxes.  All stamp,  documentary,  transfer or
similar  Taxes  ("Transfer  Taxes")  resulting  directly  from the  transactions
contemplated  by this Agreement  shall be borne fifty percent (50%) by Purchaser
and fifty  percent  (50%) by the Company.  Any Tax Returns that must be filed in
connection with Transfer Taxes shall be prepared and filed when due by the party
primarily or customarily  responsible  under the applicable local law for filing
such Tax Returns,  provided that New York State stock  transfer tax stamps shall
be affixed to the Shares  transferred at the Closing.  The Company and Purchaser
hereby  agree to  cooperate  with each other  prior to the  Closing to allow the
relevant  party to  satisfy  its  obligations  under the  immediately  preceding
sentence.

          Section 5.15 Termination of Existing Tax Sharing  Agreements.  Any and
all existing Tax sharing  agreements or arrangements,  written or oral,  between
the Company (or any  Subsidiary or Affiliate of the  Company),  on the one hand,
and any  Subsidiary  of the Company,  on the other,  shall be  terminated by the
Company and such Subsidiaries as of the Closing Date.

          Section 5.16 Refunds of Taxes for  Pre-Closing  Periods.  In the event
that the Company receives,  after the Closing Date, but prior to any liquidation

                                      -32-

<PAGE>


of the Company,  a refund of Taxes paid by any  Subsidiary  of the Company,  the
Company shall promptly remit such refund to Purchaser.

          Section 5.17 Resignation of Directors.  Unless otherwise  requested in
writing  by  Purchaser  on or prior to  December  15,  2001,  at or prior to the
Closing,  the Company shall either (a) cause each director of each Subsidiary of
the Company to deliver to Purchaser his or her resignation as a director of such
Subsidiary or (ii) remove each  director of each  Subsidiary of the Company from
his or her position as a director of such Subsidiary.


                                   ARTICLE VI

               CONDITIONS TO CLOSING; TERMINATION AND ABANDONMENT

          Section 6.1 Conditions to Purchaser's Obligations. The purchase of the
Shares by Purchaser on the Closing Date is conditioned  upon the satisfaction or
waiver by Purchaser, at or prior to the Closing, of the following conditions:

          (a) Statutes,  Orders; No Injunction. (i) There shall not be in effect
any Order by any Governmental Entity of competent  jurisdiction and no Law shall
have been  promulgated  or  enacted  by any  Governmental  Entity  of  competent
jurisdiction   that  (A)  restrains  or  prohibits  the   consummation   of  the
transactions  contemplated  by this  Agreement,  (B)  prohibits or restricts the
ownership  or  operation  by the  Operating  Subsidiaries  or  their  respective
Subsidiaries  or by Purchaser of any material  portion of the business or assets
of the Operating  Subsidiaries  and their  respective  Subsidiaries,  taken as a
whole, or that would substantially  deprive the Operating  Subsidiaries or their
respective Subsidiaries or Purchaser of the benefit of ownership of the business
or assets of the Operating Subsidiaries and their respective Subsidiaries, taken
as a whole, or compels  Purchaser (or any of its Affiliates or  Subsidiaries) to
dispose of or hold  separate any  material  portion of the business or assets of
the Operating Subsidiaries and their respective Subsidiaries,  taken as a whole,
(C) imposes  material  limitations  on the ability of Purchaser  effectively  to
acquire or to hold or to exercise  full rights to vote the Shares on all matters
properly presented to the shareholders of the respective  Operating  Subsidiary,
or (D)  imposes  any  material  limitations  on  the  ability  of the  Operating
Subsidiaries   or  their   respective   Subsidiaries  or  Purchaser  to  control
effectively in any material respect the business and operations of the Operating
Subsidiaries and their respective Subsidiaries, taken as a whole, and (ii) there
shall not be pending any action by any  Governmental  Entity seeking to restrain
or prohibit the making or consummation of the transactions  contemplated by this
Agreement or to impose any other restriction, prohibition or limitation referred
to in the foregoing clause (i);

          (b) Truth of Representations  and Warranties.  The representations and
warranties  of the  Company  in this  Agreement  (without  giving  effect to any
materiality  qualification set forth in such  representation or warranty,  other
than the materiality  qualifications set forth in Sections 3.6(a), 3.15 and 3.22
and the first and third  sentences  of Section 3.5) shall be true and correct as
of the date of this Agreement and as of the Closing Date as though made on or as
of such date (other than  representations  and warranties  that, by their terms,
address  matters  only as of another  specified  date,  which  shall be true and

                                      -33-

<PAGE>


correct only as of such other specified  date),  other than any such failures to
be true  and  correct  that,  in the  aggregate,  do not  have,  and  would  not
reasonably be expected to have, a Company  Material  Adverse  Effect;  provided,
that unless the Company  has, not later than  December  15,  2001,  delivered to
Purchaser a copy of the  shareregister of each Subsidiary of the Company that is
organized under the laws of the Netherlands  Antilles, in each case certified by
the requisite number of the members of the board of directors of such Subsidiary
and showing the  information  thereon with respect to such  Subsidiary  to be as
represented  in Section 3.3, the  representations  and  warranties  set forth in
Section  3.3 shall be true and correct in all  respects.  For the  avoidance  of
doubt, the parties  acknowledge that it is their intention that, for purposes of
determining  whether  the  condition  set  forth in the first  sentence  of this
Section 6.1(b) has been satisfied,  all materiality  qualifications set forth in
the  representations and warranties of the Company in this Agreement (other than
those  set  forth in  Sections  3.6(a),  3.15 and 3.22 and the  first  and third
sentences   of  Section   3.5)   shall  be  deemed  to  be  deleted   from  such
representations   and  warranties   and  the  truth  and   correctness  of  such
representations  and  warranties  shall  be  determined  as if such  materiality
qualifications did not exist;

          (c) Performance of Covenants.  The Company shall have performed in all
material respects its obligations and complied in all material respects with the
agreements  and  covenants of the Company to be performed or complied with by it
under this Agreement;

          (d) No  Company  Material  Adverse  Effect.  Since  the  date  of this
Agreement, there shall have occurred no event, nor shall there exist any fact or
circumstance,  that, individually or in the aggregate,  has, or would reasonably
be expected to have, a Company Material Adverse Effect;

          (e)  Board  Recommendation.  Neither  the  Board of  Directors  of the
Company nor any committee thereof shall have withdrawn,  modified or amended, in
a manner adverse to Purchaser, the approval, adoption or recommendation,  as the
case may be, of this Agreement or the transactions contemplated hereby, or shall
have approved or recommended, any Acquisition Proposal;

          (f)  Shareholder  Approval.  (i) Each of the  Proposals  (each as more
fully set forth on Annex B) shall have been  approved and adopted by the holders
of more than  sixty-six and two-thirds  percent  (66-2/3%) of the Company Common
Shares and Company Subordinated Shares,  voting together as a single class, that
are present or  represented by proxy and voting at a meeting at which holders of
at least  one-half  of the  issued and  outstanding  Company  Common  Shares and
Company  Subordinated  Shares,  counted  as  a  single  class,  are  present  or
represented by proxy, and (ii) the Proposal with respect to the amendment of the
Company  Articles (as more fully set forth on Annex B) shall have been  approved
and  adopted  by the  holders  of more than  sixty-six  and  two-thirds  percent
(66-2/3%) of the Company Common  Shares,  voting as a separate  class,  that are
present or  represented  by proxy and  voting at a meeting  at which  holders of
least one-half of the issued and  outstanding  Company Common Shares are present
or represented by proxy; and


                                      -34-

<PAGE>

          (g) HSR Act Waiting Periods.  All applicable waiting periods under the
HSR Act with respect to the  transactions  contemplated  by this Agreement shall
have expired or been terminated.

          Section 6.2 Conditions to the Company's  Obligations.  The sale of the
Shares by the Company on the Closing Date is conditioned  upon the  satisfaction
or  waiver  by the  Company,  at or  prior  to  the  Closing,  of the  following
conditions:

          (a) Statutes, Orders; No Injunction.  There shall not be in effect any
Order by any Governmental Entity of competent jurisdiction and no Law shall have
been promulgated or enacted by a Governmental  Entity of competent  jurisdiction
that restrains or prohibits the consummation of the transactions contemplated by
this  Agreement  and there  shall not be pending  any  action by a  Governmental
Entity  seeking  to  restrain  or  prohibit  the making or  consummation  of the
transactions contemplated by this Agreement;

          (b) Truth of Representations  and Warranties.  The representations and
warranties  of  Purchaser  in  this  Agreement  (without  giving  effect  to any
materiality  qualification  set forth in any such  representation  or  warranty,
other than the materiality qualification set forth in Section 4.4) shall be true
and  correct  as of the date of this  Agreement  and as of the  Closing  Date as
though  made on or as of such date (other than  representations  and  warranties
that, by their terms,  address matters only as of another  specified date, which
shall be true and correct only as of such other specified date),  other than any
such  failures to be true and correct that,  in the  aggregate,  do not have, or
would not reasonably be expected to have, a Purchaser  Material  Adverse Effect.
For the avoidance of doubt,  the parties  acknowledge that it is their intention
that, for purposes of  determining  whether the condition set forth in the first
sentence  of  this  Section   6.2(b)  has  been   satisfied,   all   materiality
qualifications set forth in the  representations  and warranties of Purchaser in
this Agreement (other than those set forth in Section 4.4) shall be deemed to be
deleted from such  representations  and warranties and the truth and correctness
of  such   representations  and  warranties  shall  be  determined  as  if  such
materiality qualifications did not exist;

          (c)  Performance of Covenants.  Purchaser  shall have performed in all
material respects its obligations and complied in all material respects with the
agreements  and  covenants of  Purchaser to be performed or complied  with by it
under this Agreement;

          (d)  Shareholder  Approval.  (i) Each of the  Proposals  (each as more
fully set forth on Annex B) shall have been  approved and adopted by the holders
of more than  sixty-six and two-thirds  percent  (66-2/3%) of the Company Common
Shares and Company Subordinated Shares,  voting together as a single class, that
are present or  represented by proxy and voting at a meeting at which holders of
at least  one-half  of the  issued and  outstanding  Company  Common  Shares and
Company  Subordinated  Shares,  counted  as  a  single  class,  are  present  or
represented by proxy, and (ii) the Proposal with respect to the amendment of the
Company  Articles (as more fully set forth on Annex B) shall have been  approved
and  adopted  by the  holders  of more than  sixty-six  and  two-thirds  percent
(66-2/3%) of the Company Common  Shares,  voting as a separate  class,  that are
present or  represented  by proxy and voting at a meeting at which holders of at
least one-half of the issued and  outstanding  Company Common Shares are present
or represented by proxy; and

                                      -35-

<PAGE>

          (e) HSR Act Waiting Periods.  All applicable waiting periods under the
HSR Act with respect to the  transactions  contemplated  by this Agreement shall
have expired or been terminated.

          Section 6.3  Termination.  This  Agreement may be  terminated  and the
transactions  contemplated  hereby  may be  abandoned  at any time  prior to the
Closing Date:

          (a) by mutual consent of the Company and Purchaser;

          (b) by either Purchaser, on the one hand, or the Company, on the other
     hand:

               (i) if any court of competent  jurisdiction  or any  Governmental
          Entity shall have issued an order, decree or ruling or taken any other
          action permanently  restricting,  enjoining,  restraining or otherwise
          prohibiting  the sale of the Shares  pursuant to this  Agreement,  and
          such order,  decree or ruling or other  action shall have become final
          and nonappealable;

               (ii) if at the Shareholder  Meeting, or any adjournment or recall
          thereof,  the  shareholders of the Company shall not have approved the
          Proposals; or

               (iii) at any time after April 30,  2002 if the Closing  shall not
          have  occurred  by such date other than as a result of (x) a breach of
          this Agreement by Purchaser,  if Purchaser is the party  attempting to
          terminate  this  Agreement  or (y) a breach of this  Agreement  by the
          Company or a breach by  Holdings of its  obligations  under the Voting
          Agreement,  if the Company is the party  attempting to terminate  this
          Agreement;

          (c) by the Company,  if a Superior  Proposal is received and the Board
of Directors of the Company reasonably determines in good faith, after receiving
advice from Netherlands Antilles counsel to the Company, that it is necessary to
terminate  this  Agreement  and enter into an  agreement  to effect the Superior
Proposal in order to comply with the fiduciary  duties of the Board of Directors
under applicable Law;  provided,  however,  that (x) prior to such  termination,
Purchaser has received the payment  required by Section  8.1(b) by wire transfer
of  immediately   available  funds  and  (y)   simultaneously  or  substantially
simultaneously  with such  termination  the  Company  enters  into a  definitive
acquisition,  merger,  stock  purchase,  asset purchase or similar  agreement to
effect the Superior Proposal; or

          (d) by Purchaser at any time prior to the Closing, if:

               (i) the Company shall have (x) withdrawn,  modified or amended in
          a  manner   adverse  to   Purchaser,   the   approval,   adoption   or
          recommendation,  as the case may be, of the relevant  Proposals or (y)
          approved or recommended any Acquisition Proposal; or

               (ii)  there  shall  have  been a  breach  by the  Company  of any
          provision of Section 5.5(a) or Section 5.5(b) or a material  breach by


                                      -36-


<PAGE>

          the Company of any provision of Section 5.5(c) or a breach by Holdings
          of its obligations under the Voting Agreement.

          Section 6.4 Effect of Termination.  In the event of the termination of
this  Agreement  pursuant to Section 6.3 by Purchaser  or the  Company,  written
notice  thereof  shall  forthwith  be given to the other  party  specifying  the
provision  hereof  pursuant to which such  termination is made,  and,  except as
provided in this  sentence and in the last  sentence of this  Section 6.4,  this
Agreement shall become void and have no effect,  and there shall be no liability
hereunder on the part of Purchaser or the Company, except that the provisions of
Section 5.2(b), Section 5.12, this Section 6.4 and Article VII shall survive any
termination of this  Agreement.  Termination of this Agreement shall not relieve
any party to this Agreement of liability for breach of this Agreement.


                                   ARTICLE VII

                                  NON-SURVIVAL

          Section 7.1 Non-Survival of  Representations,  Warranties,  Agreements
and Covenants. None of the representations,  warranties, agreements or covenants
contained in this  Agreement or in any Schedule,  Annex,  Exhibit or certificate
delivered pursuant to this Agreement,  shall survive the Closing, other than the
agreements and covenants in Sections 2.4, 5.2(b),  5.2(c), 5.8, 5.9, 5.12, 5.13,
5.14, 5.16, this Article VII and Article VIII.

                                  ARTICLE VIII

                                  MISCELLANEOUS

          Section 8.1 Fees and Expenses. (a) Except as provided in paragraph (b)
below, all costs and expenses incurred in connection with this Agreement and the
consummation of the transactions  contemplated hereby shall be paid by the party
incurring such costs and expenses;  provided,  that all out-of-pocket  costs and
expenses  related to the  printing,  filing and  mailing of the Proxy  Materials
shall be borne by the Company.

          (b) If this  Agreement is  terminated  (i) by Purchaser in  accordance
with  Section  6.3(d)(i);  or (ii) by the  Company in  accordance  with  Section
6.3(c),  then the  Company  shall (A) in the case of clause (i), on the day next
succeeding  the date of such  termination,  or (B) in the case of  clause  (ii),
immediately  prior to the Company  entering into an agreement with respect to an
Acquisition  Proposal,  pay to  Purchaser  in  immediately  available  funds (in
recognition of the fees and expenses  incurred and efforts extended by Purchaser
in connection  with the  transactions  contemplated by this Agreement) an amount
equal to eight million dollars ($8,000,000).

          (c) If this  Agreement  is  terminated  by Purchaser or the Company in
accordance  with  Section  6.3(b)(ii),  the Company  shall pay to  Purchaser  in
immediately  available  funds an amount equal to the  documented,  out-of-pocket
expenses  incurred by Purchaser in connection  with the  preparation  of its bid

                                      -37-

<PAGE>

for, and due  diligence  of, the  Operating  Subsidiaries  and their  respective
Subsidiaries,   negotiation  and  execution  of,  and  the  performance  of  its
obligations  under,  this Agreement,  and  preparation  for  consummation of the
transactions  contemplated by this Agreement,  such amount not to exceed, in any
event, five hundred thousand dollars ($500,000).

          Section  8.2  Investigation  and  Agreement;   Projections;  No  Other
Representations   and  Warranties.   (a)  Each  of  Purchaser  and  the  Company
acknowledges and agrees that it has made its own inquiry and investigation into,
and, based thereon,  has formed an independent  judgment  concerning,  the other
party and its Subsidiaries  and their businesses and operations,  and such party
has requested and received such documents and  information  from the other party
as such  party  considers  material  in  determining  whether to enter into this
Agreement and to consummate the  transactions  contemplated  by this  Agreement.
Each of  Purchaser  and the Company  acknowledges  and agrees that it has had an
opportunity  to ask  questions of and receive  answers from the other party with
respect to matters such party considers material in determining whether to enter
into this  Agreement and to consummate  the  transactions  contemplated  by this
Agreement.

          (b) The respective  representations  and warranties of the Company and
Purchaser  contained herein or in any certificates or other documents  delivered
prior to or at the Closing shall not be deemed  waived or otherwise  affected by
any  investigation  made by any party.  Each and every such  representation  and
warranty shall expire with, and be terminated and  extinguished by, the Closing,
and  thereafter  neither the Company nor Purchaser  shall be under any liability
whatsoever  with respect to any such  representation  or warranty.  This Section
8.2(b) shall have no effect upon any other obligation of the parties hereto.

          (c) In connection with the  investigation  by Purchaser of the Company
and its  Subsidiaries  and their  businesses and  operations,  Purchaser and its
representatives  have received from the Company or its  representatives  certain
projections and other forecasts for the Company and its Subsidiaries and certain
estimates, plans and budget information.  Purchaser acknowledges and agrees that
there  are  uncertainties  inherent  in  attempting  to make  such  projections,
forecasts,  estimates,  plans  and  budgets;  that  it  is  familiar  with  such
uncertainties;  that  it is  taking  full  responsibility  for  making  its  own
evaluation  of  the  adequacy  and  accuracy  of  all  estimates,   projections,
forecasts, plans and budgets so furnished to it or its representatives; and that
it will not (and will cause all of its  Subsidiaries or other  Affiliates or any
other  person  acting on its behalf to not)  assert any claim or cause of action
against any of the direct or indirect partners, directors,  officers, employees,
shareholders or Affiliates of the Company with respect thereto, or hold any such
person liable with respect thereto.

          (d)   Purchaser   and  the  Company   agree   that,   except  for  the
representations  and  warranties  made by the other party that are expressly set
forth  herein,  neither  the  other  party  nor  any of its  representatives  or
Affiliates has made and shall not be deemed to have made to such party or to any
of its representatives or Affiliates any representation or warranty of any kind.
Without limiting the generality of the foregoing, each party agrees that neither
the other party nor any of its Affiliates  makes or has made any  representation
or warranty to such party or to any of its  representatives  or Affiliates  with
respect to:

               (i) any projections,  forecasts,  estimates,  plans or budgets of
          future  revenues,   expenses  or   expenditures,   future  results  of


                                      -38-


          operations  (or any  component  thereof),  future  cash  flows (or any
          component  thereof) or future  financial  condition  (or any component
          thereof) of the other party or any of its  Subsidiaries  or the future
          business,  operations  or  affairs  of the  other  party or any of its
          Subsidiaries heretofore or hereafter delivered to or made available to
          such   party  or  its   counsel,   accountants,   advisors,   lenders,
          representatives or Affiliates; and

               (ii) any other information,  statement or documents heretofore or
          hereafter delivered to or made available to such party or its counsel,
          accountants,  advisors,  lenders,  representatives  or Affiliates with
          respect to the other party or any of its Subsidiaries or the business,
          operations or affairs of the other party or any of its Subsidiaries,

except, with respect to clauses (i) and (ii), to the extent and as expressly
covered by a representation and warranty made by the other party and contained
in this Agreement.

          Section 8.3 Extension; Waiver. At any time prior to the Closing, the
parties hereto, by action taken by, on behalf of, or at the direction of the
Board of Directors of the Company or the general partner of Purchaser, may (a)
extend the time for the performance of any of the obligations or other acts of
the other parties hereto, (b) waive any inaccuracies in the representations and
warranties contained herein by any other applicable party or in any document,
certificate or writing delivered pursuant hereto by any other applicable party,
or (c) waive compliance with any of the agreements or conditions contained
herein. Any agreement on the part of any party to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on behalf of
such party.

          Section 8.4 Notices. All notices, requests, demands, waivers and other
communications  required or permitted to be given under this Agreement  shall be
in writing and shall be deemed to have been duly given if delivered in person or
sent by facsimile (upon confirmation of receipt), as follows:

                  (a)      if to the Company, to it:

                           c/o Statia Terminals, Inc.
                           800 Fairway Drive
                           Suite 295
                           Deerfield Beach, Florida 33441
                           Attention:  James G. Cameron, President
                           Fax:  (954) 570-3453

                  with copies (which shall not constitute notice) to:

-39-

<PAGE>

                           Statia Terminals, Inc.
                           801 Warrenville Road
                           Suite 200
                           Lisle, Illinois 60532-1396
                           Attention:  Jack R. Pine, Secretary
                           Fax:  (630) 435-9542

                  and

                           White & Case LLP
                           1155 Avenue of the Americas
                           New York, New York  10036
                           Attention: Eugene W. Goodwillie, Jr., Esq.
                                      Oliver C. Brahmst, Esq.
                           Fax:  (212) 354-8113

                  (b)      if to Purchaser, to it at:

                           Kaneb Pipe Line Operating Partnership, L.P.
                           2435 N. Central Expressway
                           Suite 700
                           Richardson, TX  75080
                           Attention:  Mr. Edward D. Doherty
                           Fax:  (972) 699-1894

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

                           Fulbright & Jaworski L.L.P
                           2200 Ross Avenue
                           Suite 2800
                           Dallas, TX  75201
                           Attention:  Kenneth L. Stewart, Esq.
                           Fax:  (214) 855-8200

or to such other  Person or address as either  party shall  specify by notice in
writing  to other  party.  All such  notices,  requests,  demands,  waivers  and
communications  shall be deemed to have been  received on the date of  delivery,
except for a notice of a change of address,  which shall be effective  only upon
receipt thereof.

          Section  8.5  Entire  Agreement.  This  Agreement,  together  with the
Company Disclosure Letter,  Annex A, Annex B and the Confidentiality  Agreement,
contains  the entire  understanding  of the parties  hereto with  respect to the
subject  matter  contained  herein  and  supersedes  all  prior  agreements  and
understandings,   oral  and  written,  with  respect  thereto,  other  than  the
Confidentiality Agreement.


                                      -40-

<PAGE>

          Section 8.6 Binding Effect; Benefit;  Assignment. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and, with respect
to the  provisions of Section 5.9,  shall inure to the benefit of the Persons or
entities  benefiting  from  the  provisions  thereof  who  are  intended  to  be
third-party beneficiaries thereof. Neither this Agreement nor any of the rights,
interests  or  obligations  hereunder  shall be  assigned  by any of the parties
hereto without the prior written  consent of each of the other  parties,  except
that  Purchaser may assign and transfer its right and  obligations  hereunder to
any of its Affiliates.  Except as provided in the first sentence of this Section
8.6, nothing in this Agreement,  expressed or implied,  is intended to confer on
any Person (including,  without  limitation,  any current or former employees of
the Company), other than the parties hereto, any rights or remedies.

          Section 8.7 Amendment  and  Modification.  Subject to applicable  Law,
this  Agreement  may be amended,  modified  and  supplemented  in writing by the
parties  hereto in any and all  respects  before the  Closing,  by action by, on
behalf of, or at the  direction  of the Board of Directors of the Company or the
general partner of Purchaser.

          Section 8.8 Further  Actions.  Each of the parties hereto agrees that,
subject  to its  legal  obligations,  it shall use its  commercially  reasonable
efforts to fulfill all conditions precedent specified herein, to the extent that
such  conditions  are  within  its  control,  and  to do all  things  reasonably
necessary to consummate the transactions contemplated hereby.

          Section 8.9 Headings. The descriptive headings of the several Articles
and  Sections of this  Agreement  are  inserted  for  convenience  only,  do not
constitute a part of this  Agreement and shall not affect in any way the meaning
or interpretation of this Agreement.

          Section 8.10  Counterparts.  This Agreement may be executed in several
counterparts,  each of which shall be deemed to be an original, and all of which
together shall be deemed to be one and the same instrument.

          Section 8.11  APPLICABLE  LAW. THIS AGREEMENT AND THE LEGAL  RELATIONS
BETWEEN THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK,  WITHOUT REGARD TO THE CONFLICT OF LAWS RULES
THEREOF.  THE STATE OR FEDERAL COURTS LOCATED WITHIN THE STATE AND COUNTY OF NEW
YORK SHALL HAVE  JURISDICTION  OVER ANY AND ALL  DISPUTES  BETWEEN  THE  PARTIES
HERETO,  WHETHER IN LAW OR EQUITY,  ARISING OUT OF OR RELATING TO THIS AGREEMENT
AND THE  AGREEMENTS,  INSTRUMENTS  AND  DOCUMENTS  CONTEMPLATED  HEREBY  AND THE
PARTIES CONSENT TO AND AGREE TO SUBMIT TO THE JURISDICTION OF SUCH COURTS.  EACH
OF THE PARTIES  HEREBY WAIVES AND AGREES NOT TO ASSERT IN ANY SUCH  DISPUTE,  TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY CLAIM THAT (I) SUCH PARTY IS
NOT PERSONALLY  SUBJECT TO THE JURISDICTION OF SUCH COURTS,  (II) SUCH PARTY AND
THE  PROPERTY  OF SUCH  PARTY IS IMMUNE  FROM ANY LEGAL  PROCESS  ISSUED BY SUCH
COURTS OR (III) ANY LITIGATION OR OTHER  PROCEEDING  COMMENCED IN SUCH COURTS IS
BROUGHT IN AN  INCONVENIENT  FORUM.  THE PARTIES  HEREBY  AGREE THAT  MAILING OF

                                      -41-


<PAGE>

PROCESS OR OTHER PAPERS IN CONNECTION  WITH ANY SUCH ACTION OR PROCEEDING IN THE
MANNER  PROVIDED IN SECTION  8.4, OR IN SUCH OTHER MANNER AS MAY BE PERMITTED BY
LAW,  SHALL BE VALID  AND  SUFFICIENT  SERVICE  THEREOF  AND  HEREBY  WAIVE  ANY
OBJECTIONS TO SERVICE ACCOMPLISHED IN THE MANNER HEREIN PROVIDED.

          Section  8.12  Severability.  If  any  term,  provision,  covenant  or
restriction  contained  in  this  Agreement  is held  by a  court  of  competent
jurisdiction or other authority to be invalid,  void,  unenforceable  or against
its regulatory  policy,  the remainder of the terms,  provisions,  covenants and
restrictions  contained in this Agreement  shall remain in full force and effect
and shall in no way be affected,  impaired or  invalidated,  and this  Agreement
shall be  reformed,  construed  and  enforced  in such  jurisdiction  as if such
invalid,  illegal or unenforceable term,  provision,  covenant or restriction or
any portion thereof had never been contained herein.

          Section  8.13  Interpretation.  When  a  reference  is  made  in  this
Agreement  to a Section  or  Article,  such  reference  shall be to a Section or
Article of this Agreement unless otherwise indicated.  The table of contents and
headings  contained in this Agreement are for convenience of reference  purposes
only and  shall not  affect in any way the  meaning  or  interpretation  of this
Agreement.  Whenever the words "include",  "includes" or "including" are used in
this  Agreement,  they  shall be deemed  to be  followed  by the words  "without
limitation."

          Section 8.14 Specific Enforcement.  The parties agree that irreparable
damage  would occur in the event that any of the  provisions  of this  Agreement
were not performed in accordance  with their  specific  terms or were  otherwise
breached.  Accordingly,  the  parties  shall be  entitled  to an  injunction  or
injunctions to prevent  breaches of this  Agreement and to enforce  specifically
the terms and provisions of this Agreement,  this being in addition to any other
remedy to which they are entitled at law or in equity.

          Section  8.15  Waiver  of  Jury  Trial.  Each of the  parties  to this
Agreement hereby  irrevocably waives all right to a trial by jury in any action,
proceeding or  counterclaim  arising out of or relating to this Agreement or the
transactions contemplated hereby.


                                    * * * * *

                                      -42-

<PAGE>

          IN WITNESS WHEREOF,  each of Purchaser and the Company has caused this
Agreement to be executed by its respective  officers  thereunto duly authorized,
all as of the date first above written.

                              KANEB PIPE LINE OPERATING
                                PARTNERSHIP, L.P.

                              By   KANEB PIPE LINE COMPANY
                                   LLC, its general partner



                              By
                                --------------------------------------------
                                 Name:
                                 Title:


                              STATIA TERMINALS GROUP N.V.



                              By
                                --------------------------------------------
                                 Name:
                                 Title:


                              By
                                --------------------------------------------
                                 Name:
                                 Title:


                                      -43-


<PAGE>


                                                               Annex A

                                 PROMISSORY NOTE

_____, 200_

          On the Due Date, as defined below,  the  undersigned,  Kaneb Pipe Line
Operating  Partnership,  L.P. (the  "Maker"),  a Delaware  limited  partnership,
hereby  promises upon the terms and subject to the provisions of this promissory
note (this  "Note") to pay to Statia  Terminals  Group N.V.  (the  "Holder"),  a
public  company  with  limited  liability   organized  under  the  laws  of  the
Netherlands  Antilles,  or its  registered  assigns,  the  Principal  Amount (as
defined  below) in lawful money of the United States of America,  which shall at
the time of payment be legal tender in payment of all debts and dues, public and
private.

          1. Principal  Amount and Due Date. The "Principal  Amount" shall be an
amount equal to eighty  percent (80%) of the amount by which (a) the Tax Reserve
Amount (as defined in the Stock  Purchase  Agreement,  dated as of November  12,
2001, by and between the Holder and the Maker (the "Stock  Purchase  Agreement")
(as such  amount is finally  determined  pursuant  to  Section  2.4 of the Stock
Purchase  Agreement)  exceeds (b) the aggregate actual amount paid or payable by
the  Maker and its  Affiliates  in  satisfaction  of Taxes  pursuant  to the Tax
Agreement for periods prior to the date hereof.

          The Principal Amount shall be due and payable in full on the date (the
"Due Date") that is five (5)  Business  Days after the date of  execution of the
Tax Agreement.

          2. No  Presentment.  The  Maker,  for itself  and its  successors  and
assigns, waives presentment,  demand, protest and notice thereof or of dishonor,
and waives any right to be released by reason of any extension of time or change
in the terms of payment.

          3.  Amendment.  This Note may not be  changed  orally,  but only by an
agreement in writing signed by the Holder and the Maker.

          4.  Cancellation.  After the  Principal  Amount has been paid in full,
this Note shall be  surrendered to the Maker for  cancellation  and shall not be
reissued.

          5. Transfer Restrictions.  This Note shall not be assignable by either
the Maker or the Holder  without the prior  written  consent of the other party,
which  consent  shall not be  unreasonably  withheld,  conditioned  or  delayed;
provided,  that the Holder  shall be entitled to assign this Note to Holdings or
any one  shareholder  of  Holdings in  connection  with the  liquidation  of the
Holder.

          6. GOVERNING LAW. THE  CONSTRUCTION,  VALIDITY AND  INTERPRETATION  OF
THIS NOTE SHALL BE GOVERNED BY AND  CONSTRUED  IN  ACCORDANCE  WITH THE DOMESTIC
LAWS OF THE STATE OF NEW YORK,  WITHOUT  GIVING  EFFECT TO ANY  CHOICE OF LAW OR
CONFLICT OF LAW PROVISION THEREOF.

          7.  Descriptive  Headings.  The descriptive  headings of this Note are
inserted for convenience only, and do not constitute a part of this Note.

<PAGE>

          8.  Definitions.  Capitalized  terms  used but not  otherwise  defined
herein  shall have the  meaning  ascribed  to such  terms in the Stock  Purchase
Agreement.

                            [Signature page follows]



<PAGE>


          IN WITNESS WHEREOF,  the Maker has executed and delivered this Note on
the date first written above.

                                     KANEB PIPE LINE OPERATING
                                       PARTNERSHIP, L.P.

                                     By KANEB PIPE LINE COMPANY LLC,
                                        its general partner

                                     By:
                                        ----------------------------------------
                                        Name:
                                        Title:







<PAGE>

                                                                         ANNEX B


This Annex B to the Stock Purchase  Agreement (the  "Agreement")  by and between
Kaneb Pipe Line Operating  Partnership,  L.P. ("Purchaser") and Statia Terminals
Group  N.V.  (the  "Company")  dated as of  November  12,  2001  sets  forth the
proposals  that  will  be  presented  at  the   extraordinary   meeting  of  the
shareholders of the Company. Capitalized terms used but not defined herein shall
have the respective meaning ascribed thereto in the Agreement.

AMENDMENT TO THE ARTICLES OF INCORPORATION OF THE COMPANY

PROPOSED,  TO ADOPT the Amendment (the  "Amendment") to the Company  Articles to
add a provision with respect to the  distribution of the proceeds from a sale of
all or  substantially  all of the assets of the Company  comprising  the capital
stock  of the  Operating  Subsidiaries,  a copy of which is  annexed  hereto  as
Schedule 1, and to authorize, with full right of substitution, each director and
officer of the Company and any of the lawyers of the civil law notary  office of
Smeets  Thesseling  van  Bokhorst in Curacao to (i) request the  approval of the
Ministry of Justice in the  Netherlands  Antilles with respect to the Amendment,
(ii) to make such changes as the Ministry of Justice  requires to the  Amendment
and  (iii)  to  execute  the  notarial  deed of  amendment  to the  Articles  of
Incorporation of the Company incorporating the Amendment.

STOCK PURCHASE AGREEMENT

SUBJECT TO ADOPTION OF THE  AMENDMENT BY (i) THE HOLDERS OF MORE THAN  SIXTY-SIX
AND TWO-THIRDS  PERCENT (66-2/3%) OF THE COMMON SHARES AND SUBORDINATED  SHARES,
VOTING TOGETHER AS A SINGLE CLASS, THAT ARE PRESENT OR REPRESENTED AND VOTING AT
A MEETING AT WHICH  HOLDERS OF AT LEAST  ONE-HALF OF THE ISSUED AND  OUTSTANDING
COMMON SHARES AND SUBORDINATED SHARES, COUNTED AS A SINGLE CLASS, ARE PRESENT OR
REPRESENTED  BY  PROXY,  AND (ii) BY THE  HOLDERS  OF MORE  THAN  SIXTY-SIX  AND
TWO-THIRDS PERCENT (66-2/3%) OF THE COMMON SHARES, VOTING AS A SEPARATE CLASS AT
A MEETING AT WHICH  HOLDERS OF AT LEAST  ONE-HALF OF THE ISSUED AND  OUTSTANDING
COMMON  SHARES ARE PRESENT OR  REPRESENTED  BY PROXY,  PROPOSED,  TO APPROVE the
Agreement,  pursuant to which the Company will sell to Purchaser the Shares, and
the  transactions   contemplated  thereby,  to  approve  the  distribution  (the
"Distribution")  of  the  proceeds  received  by  the  Company  pursuant  to the
Agreement in accordance with Article 17A of the Company  Articles and to approve
any and all actions in connection  with the  Distribution by or on behalf of the
Company.

DISSOLUTION OF THE COMPANY

SUBJECT  TO  APPROVAL  OF THE  AGREEMENT,  PROPOSED,  TO ADOPT a  resolution  to
dissolve the Company in accordance with Article 18,  Paragraph 6A of the Company
Articles  immediately  following  the  Distribution,  to  appoint  the  Board of
Directors  of the  Company as the  liquidator  of the Company and to approve any
distribution of any  liquidation  proceeds of the Company in accordance with the
provisions of Article 18, paragraph 6A of the Company Articles.

<PAGE>



                                                                      Schedule I


                PROPOSED TEXT OF THE AMENDMENT TO THE ARTICLES OF
                  INCORPORATION OF STATIA TERMINALS GROUP N.V.




I.  ARTICLE 17,  PARAGRAPH 1 SHALL BE AMENDED AS FOLLOWS:  A new final  sentence
shall be added to paragraph 1 ("Definitions") of this article,  which shall read
as follows:  "The provisions of this article 17 will,  other than the provisions
set forth in  paragraphs  2, 3, 4 and 5 of this  article 17, not apply to a Sale
Event (as defined in article 17A) or any  distribution  made to the shareholders
of the company from the proceeds of a Sale Event."

II. A NEW  ARTICLE  17A SHALL BE ADDED  AFTER  ARTICLE  17 WHICH  SHALL HAVE THE
FOLLOWING HEADING:  "DEFINITIONS/SPECIFIC  PROVISION ON A SALE EVENT (AS DEFINED
BELOW)  OF OR BY THE  COMPANY  AND ON  DISTRIBUTIONS  TO  SHAREHOLDERS  FROM THE
PROCEEDS OF A SALE EVENT", WHICH ARTICLE SHALL READ AS FOLLOWS:

          "In the event (a) the Board of Directors  has adopted a resolution  to
approve and to recommend  to the General  Meeting the adoption and approval of a
Sale Event,  (b) the General  Meeting has adopted and approved  such Sale Event,
and (c) a  definitive  agreement  has been  entered  into by or on behalf of the
company with a third party purchaser in connection with such Sale Event, and the
transactions  contemplated by such definitive  agreement have been  consummated,
then,  with due  observance  of the  provisions  of  paragraphs 2, 3, 4 and 5 of
article  17  of  these  articles  of   incorporation,   a  distribution  to  the
shareholders shall be made out of the proceeds received by the company from such
Sale Event in accordance with the following provisions:

1. Sale Event  Distribution:  A  distribution  of any  proceeds  received by the
company from a Sale Event shall be made and be paid from legally available funds
therefor,  by or on behalf of the company in cash as a distribution from profit,
as a  dividend  or  interim-dividend,  as the case may be,  and/or  from  freely
distributable  reserves of the company  including,  but not limited to,  capital
surplus reserves, to and for the benefit of its shareholders.

2. Sale Event: Sale Event shall mean a sale or other voluntary disposition, in a
single  transaction,  of all or  substantially  all of the assets of the company
comprising  the capital stock of Statia  Terminals  International  N.V.,  Statia
Technology, Inc. and Statia Marine, Inc.

3.  Distribution from Sale Event: Any distribution from proceeds received by the
company from a Sale Event shall be made in the following manner:

(a) First,  to the common shares,  pro rata,  until each issued and  outstanding
common  share has been paid an amount  equal to $18.00  (such  amount  being the
value per  common  share  attributed  to each such  common  share by one or more
independent  experts, as appointed by or on behalf of the company in conjunction
with the establishment of the going concern value of the company);

(b) Second,  after  satisfaction in full of the payment of the amounts under (a)
above, to the subordinated  shares,  pro rata, until each issued and outstanding
subordinated  share has been paid an amount  equal to $16.40  (such amount being


<PAGE>


the value per subordinated  share as attributed to each such subordinated  share
by the company in conjunction with the  establishment of the going concern value
of the company referred to in clause (a) above);

(c) Third,  after  satisfaction  in full of the payment of the amounts under (a)
and (b) above,  to the incentive  shares,  pro rata, the balance of the proceeds
received by the company  from the Sale Event  (such  amount  being the value per
incentive  share as  attributed to each such  incentive  share by the company in
conjunction  with the  establishment  of the going  concern value of the company
referred  to in clause  (a) above)  minus (x) the  amount  due from the  company
pursuant to the obligations of the company under the 1999 Stock Option Plan, (y)
the amount necessary to satisfy any outstanding  liabilities of the company,  as
determined by the Board of Directors and (z) $[insert dollar amount equal to 20%
of the  authorized  capital of the  company],  and subject to upward or downward
adjustment  commensurate  with the  adjustment  of the purchase  price,  if any,
pursuant to the definitive  agreement  entered into in connection with such Sale
Event.

Distributions  under this paragraph 3 shall satisfy in full any obligations with
respect to, and shall be in lieu of payment of, any Common Share  Arrearages and
any deferred  distributions  declared on the Subordinated  Shares,  in each case
accrued  and unpaid for any period  prior to the Sale Event  giving rise to such
distributions.

III ARTICLE 18, PARAGRAPH 1 SHALL BE AMENDED AS FOLLOWS:  After "to dissolve the
company or to sell all or substantially  all of the assets of the company",  the
following shall be added ", including but not limited to, a Sale Event".

IV ARTICLE 18,  PARAGRAPH 6 SHALL BE AMENDED AS FOLLOWS:  After "(a  Liquidation
Event)" the following  text shall be added:  "not  constituting a Sale Event (as
defined in these articles of  incorporation)  in which case paragraph 6A of this
article 18 shall apply".

V A NEW PARAGRAPH 6A SHALL BE ADDED TO ARTICLE 18 AFTER PARAGRAPH 6, WHICH SHALL
HAVE THE HEADING  "SALE  EVENT/DISTRIBUTION  IN  CONJUNCTION  WITH A LIQUIDATION
EVENT"  AND  WHICH  SHALL  READ AS  FOLLOWS:  "In  case of a  Liquidation  Event
following the distribution of the proceeds from a Sale Event, after satisfaction
of all the  company's  creditors in the order of priority as set out by or under
applicable law, any distribution of proceeds of such liquidation will be made to
the  holders of common and  subordinated  shares  and the  holders of  incentive
shares as follows:

     (a)  First,  to the  common  shares,  pro rata,  until  each  common  share
          received an amount equal to $18.00;

     (b)  Second, to the subordinated  shares, pro rata, until each subordinated
          share receives an amount equal to $16.40; and

     (c)  Third, to the incentive shares, pro rata, all remaining  proceeds,  if
          any.

     provided however that (x) with any such distribution under (a), (b) and (c)
     respectively,  any amounts paid under  paragraph  17A of these  articles of
     incorporation,  with respect to the common shares, the subordinated  shares
     and the incentive shares, respectively,  shall be deducted from the amounts
     of  liquidation  proceeds  prior  to  any  allocation  and  payment  of the
     foregoing  distribution of liquidation  proceeds and (y) no holder shall be
     entitled to any distribution under Article 17 hereof.


<PAGE>

VI ARTICLE 18,  PARAGRAPH 7 SHALL BE AMENDED AS  FOLLOWS:  A new final  sentence
shall be added which reads as follows:  "This  paragraph  shall not apply in the
case of a distribution  following a Sale Event in conjunction with a Liquidation
Event under paragraph 6A of article 18 of these articles of incorporation."



<PAGE>


                                TABLE OF CONTENTS


                                                                            Page
ARTICLE I

         Section 1.1  Definitions..............................................2
         Section 1.2  Cross References.........................................5
         Section 1.3  Knowledge................................................6

ARTICLE II

         SALE OF SHARES........................................................6

         Section 2.1  Sale of Shares...........................................6
         Section 2.2  Delivery of Estimated Net Cash Amount....................6
         Section 2.3  Closing Payment..........................................6
         Section 2.4  Determination of Purchase Price..........................7
         Section 2.5  Closing..................................................8

ARTICLE III

         REPRESENTATIONS AND WARRANTIES OF THE COMPANY.........................8

         Section 3.1  Due Organization, Good Standing and Corporate Power......8
         Section 3.2  Authorization and Validity of this Agreement.............9
         Section 3.3  Capitalization...........................................9
         Section 3.4  Consents and Approvals; No Violations...................10
         Section 3.5  Company Reports and Financial Statements................10
         Section 3.6  Absence of Certain Changes..............................11
         Section 3.7  Title to Properties; Encumbrances.......................11
         Section 3.8  Compliance with Laws....................................12
         Section 3.9  Litigation..............................................12
         Section 3.10  Employee Benefit Plans.................................12
         Section 3.11  Employment Relations and Agreements....................13
         Section 3.12  Taxes..................................................14
                  (a)      Tax Returns........................................14
                  (b)      Payment of Taxes...................................14
                  (c)      Tax Liens..........................................15
                  (d)      Tax Audits.........................................15
                  (e)      Statute of Limitations.............................15
                  (f)      Tax Agreements.....................................15
                  (g)      Powers of Attorney.................................15
                  (h)      Tax Deficiencies...................................15
                  (i)      Consolidated, Combined or Unitary Tax Returns......15
                  (j)      No Joint or Several Liability......................15
         Section 3.13  Liabilities............................................15

                                      (i)
         <PAGE>


         Section 3.14  Intellectual Property..................................16
         Section 3.15  Proxy Materials........................................16
         Section 3.16  Broker's or Finder's Fee...............................16
         Section 3.17  Certain Contracts and Arrangements.....................16
         Section 3.18  Environmental Laws and Regulations.....................18
         Section 3.19  Voting Requirements....................................18
         Section 3.20  Insurance..............................................18
         Section 3.21  Inventory..............................................19
         Section 3.22  Information Furnished..................................19

ARTICLE IV

         REPRESENTATIONS AND WARRANTIES OF PURCHASER..........................19

         Section 4.1  Due Organization, Good Standing and Corporate Power.....19
         Section 4.2  Authorization and Validity of Agreement.................19
         Section 4.3  Consents and Approvals;  No Violations..................20
         Section 4.4  Proxy Materials.........................................20
         Section 4.5  Broker's or Finder's Fee................................20
         Section 4.6  Funds...................................................20
         Section 4.7  Litigation..............................................20
         Section 4.8  No Knowledge of Adverse Change..........................21

ARTICLE V

         TRANSACTIONS PRIOR TO CLOSING DATE...................................21

         Section 5.1  Access to Information Concerning Properties
                        and Records...........................................21
         Section 5.2  Confidentiality.........................................21
         Section 5.3  Conduct of Business Pending the Closing Date............22
         Section 5.4  Commercially Reasonable Efforts.........................25
         Section 5.5  No Solicitation of Other Offers.........................25
         Section 5.6  Notification of Certain Matters.........................27
         Section 5.7  Antitrust...............................................27
         Section 5.8  Employee Benefits.......................................28
         Section 5.9  Directors' and Officers' Insurance and
                        Indemnification.......................................29
         Section 5.10  Public Announcements...................................31
         Section 5.11  Shareholder Approval...................................31
         Section 5.12  Section 338 Election...................................32
         Section 5.13  Repayment of Indebtedness..............................32
         Section 5.14  Transfer Taxes.........................................32
         Section 5.15  Termination of Existing Tax Sharing Agreements.........32
         Section 5.16  Refunds of Taxes for Pre-Closing Periods...............32
         Section 5.17  Resignation of Directors...............................32

<PAGE>


ARTICLE VI

         CONDITIONS TO CLOSING; TERMINATION AND ABANDONMENT...................33

         Section 6.1  Conditions to Purchaser's Obligations...................33
                  (a)  Statutes, Orders; No Injunction........................33
                  (b)  Truth of Representations and Warranties................33
                  (c)  Performance of Covenants...............................34
                  (d)  No Company Material Adverse Effect.....................34
                  (e)  Board Recommendation...................................34
                  (f)   Shareholder Approval..................................34
                  (g)  HSR Act Waiting Periods................................34
         Section 6.2  Conditions to the Company's Obligations.................34
                  (a)  Statutes, Orders; No Injunction........................34
                  (b)  Truth of Representations and Warranties................35
                  (c)  Performance of Covenants...............................35
                  (d)   Shareholder Approval..................................35
                  (e)  HSR Act Waiting Periods................................35
         Section 6.3  Termination.............................................35
         Section 6.4  Effect of Termination...................................36

ARTICLE VII

         NON-SURVIVAL.........................................................37

         Section 7.1  Non-Survival of Representations, Warranties,
                        Agreements and Covenants..............................37

ARTICLE VIII

         MISCELLANEOUS........................................................37

         Section 8.1  Fees and Expenses.......................................37
         Section 8.2  Investigation and Agreement; Projections; No
                        Other Representations and Warranties..................37
         Section 8.3  Extension; Waiver.......................................39
         Section 8.4  Notices.................................................39
         Section 8.5  Entire Agreement........................................40
         Section 8.6  Binding Effect; Benefit; Assignment.....................40
         Section 8.7  Amendment and Modification..............................40
         Section 8.8  Further Actions.........................................41
         Section 8.9  Headings................................................41
         Section 8.10  Counterparts...........................................41
         Section 8.11  APPLICABLE LAW.........................................41
         Section 8.12  Severability...........................................41
         Section 8.13  Interpretation.........................................41
         Section 8.14  Specific Enforcement...................................42


         <PAGE>

         Section 8.15  Waiver of Jury Trial...................................42


         ANNEX A - Form of Contingent Tax Payment Note

         ANNEX B - Form of Shareholder Proposals

         SCHEDULE 1