<PAGE>




                       STOCK AND ASSET PURCHASE AGREEMENT


                                      dated


                                November 21, 1995





                
<PAGE>

                                TABLE OF CONTENTS
                                -----------------

                                                                            Page

I.        DEFINITIONS ..................................................       1
  1.1     Definitions ..................................................       1

II.       SALE OF STOCK AND ASSETS .....................................       9
   2.1    Sale of Stock ................................................       9
   2.2    Sale of Assets ...............................................       9
   2.3    Assumption of Liabilities ....................................      10
   2.4    "As Is" and "Where Is" .......................................      11

III.      PURCHASE PRICE ...............................................      11
   3.1    Purchase Price ...............................................      11
   3.2    Allocation ...................................................      12

IV.       REPRESENTATIONS AND WARRANTIES OF THE SELLERS ................      12
   4.1    Organization and Good Standing ...............................      12
   4.2    Authorization, Enforceability ................................      12
   4.3    Consents and Approvals .......................................      13
   4.4    No Violation .................................................      13
   4.5    Acquired Corporation .........................................      13
   4.6    Purchased Assets .............................................      14
   4.7    Compliance With Laws .........................................      14
   4.8    Employee Relations and Employee Benefit Plans; ERISA .........      14
   4.9    Financial Condition ..........................................      17
   4.10   Taxes ........................................................      18
   4.11   Insurance ....................................................      20
   4.12   No Broker ....................................................      20
   4.13   Accuracy of Information ......................................      20

V.        REPRESENTATIONS AND WARRANTIES OF BUYER ......................      20
   5.1    Organization and Good Standing ...............................      20
   5.2    Authorization; Enforceability ................................      20
   5.3    Consents and Approvals .......................................      21
   5.4    No Violation .................................................      21
   5.5    No Broker ....................................................      21
   5.6    Subsequent Sale ..............................................      21

VI.       TAX MATTERS ..................................................      21





                                        i

<PAGE>


                                                                            Page


   6.1   Access to Information ..........................................     21
   6.2   Tax Indemnification ............................................     22
   6.3   Transfer Taxes .................................................     22
   6.4   Post-Closing Audits and Other Proceedings ......................     23
   6.5   Certain Consolidated Return Matters ............................     23

VII.     COVENANTS OF SELLERS ...........................................     23
   7.1   Access to Information ..........................................     23
   7.2   Actions Prior to Closing Date ..................................     24
   7.3   Consents and Approvals .........................................     25
   7.4   Confidentiality ................................................     25
   7.5   Insurance ......................................................     26
   7.6   Names ..........................................................     26
   7.7   Transfer of Retirement Plans ...................................     26
   7.8   DB Plan Funding ................................................     27
   7.9   Intercompany Indebtedness ......................................     27
   7.10  Commercially Reasonable Efforts; Cooperation ...................     28
   7.11  Use of Asset Purchase Price; Payment of Creditors ..............     28
   7.12  Escrow Agreement ...............................................     28
   7.13  Use of Radnor Space ............................................     28
   7.14  Reimbursement for Inventory Liquidation ........................     29

VIII.    COVENANTS OF BUYER .............................................     29
   8.1   Consents and Approvals .........................................     29
   8.2   Confidentiality ................................................     29
   8.3   Transfer of Retirement Plans ...................................     30
   8.4   Reimbursement for Real Estate Taxes ............................     31
   8.5   Assistance with Inventory Liquidation ..........................     31
   8.6   Insurance Reimbursements and Payments ..........................     31
   8.7   Employee Matters ...............................................     31
   8.8   Commercially Reasonable Efforts; Cooperation ...................     32

IX.      CONDITIONS TO OBLIGATIONS OF BUYER .............................     32
   9.1   Truth of Representations and Warranties ........................     32
   9.2   Compliance with Covenants ......................................     32
   9.3   Absence of Suit ................................................     32
   9.4   Receipt of Consents and Approvals ..............................     33
   9.5   Proceedings and Instruments Satisfactory, Certificates .........     33
   9.6   Intercompany Indebtedness ......................................     33
   9.7   Deliveries at Closing ..........................................     33





                                       ii

<PAGE>


                                                                            Page


    9.8   No Material Adverse Change ....................................     33
    9.9   Bank Consents .................................................     33
    9.10  Mobil Consent .................................................     33
    9.11  Platinum Sale Documents .......................................     34

X.        CONDITIONS TO OBLIGATIONS OF THE SELLERS ......................     34
   10.1   Truth of Representations and Warranties .......................     34
   10.2   Compliance with Covenants .....................................     34
   10.3   Absence of Suit ...............................................     34
   10.4   Receipt of Consents and Approvals .............................     34
   10.5   Proceedings and Instruments Satisfactory; Certificates ........     34
   10.6   Intercompany Indebtedness .....................................     34
   10.7   Equity Contributions and Undertaking ..........................     35
   10.8   Deliveries at Closing .........................................     35
   10.9   Platinum Sale Documents .......................................     35
   10.10  Bank Consents .................................................     35
   10.11  Mobil Consent .................................................     35

XI.       INDEMNIFICATION ...............................................     35
   11.1   Requirement of Indemnification ................................     35
   11.2   Procedures Relating to Indemnification ........................     36
   11.3   Defense of Third-Party Claim ..................................     38
   11.4   Payment .......................................................     38
   11.5   Limitation on Indemnification .................................     38

XII.      CLOSING .......................................................     39
   12.1   Time and Place ................................................     39
   12.2   Items to be Delivered by the Sellers ..........................     39
   12.3   Items to be Delivered by Buyer ................................     41

XIII.     TERMINATION ...................................................     43
   13.1   Termination ...................................................     43
   13.2   No Other Transaction ..........................................     43

XIV.      AMENDMENT AND WAIVER ..........................................     44
   14.1   Amendment .....................................................     44
   14.2   Extension; Waiver .............................................     44

XV.       MISCELLANEOUS .................................................     44
   15.1   Notices .......................................................     44




                                       iii

 <PAGE>
  

                                                                           Page
   15.2          Governing Law ...................................            45
   15.3          Successors and Assigns ..........................            45
   15.4          Partial Invalidity ..............................            46
   15.5          Execution in Counterparts .......................            46
   15.6          Titles and Headings .............................            46
   15.7          Entire Agreement ................................            46
   15.8          Announcements ...................................            46
   15.9          Construction ....................................            47
   15.10         Jurisdiction ....................................            47
   15.11         Further Actions .................................            47
   15.12         Shell Litigation ................................            47
   15.13         Expenses ........................................            47




                                       iv

<PAGE>



                                    EXHIBITS
                                    --------


A                                Escrow Agreement
B                                Note
C                                Mortgage
D                                Platinum Sale Documents



                                    SCHEDULES
                                    ---------

1.1A                             Sellers' Knowledge Persons
1.1B                             Outstanding Liens
1.1C                             Trade Payables
1.1D                             Other Liabilities
2.1                              Shares
2.2A                             Real Property
2.2B                             Insurance Policies
2.2C                             Tank Bottoms
2.2D                             Excluded Receivables - Excluded Contracts -
                                 Other Excluded Assets
4.3                              Sellers' Required Filings and Approvals
4.4                              Sellers' Consents
4.8                              ERISA Matters
4.9                              IRC Bank Accounts
4.10                             Tax Matters
5.3                              Buyer's Required Filings and Approvals
8.4                              Real Estate Taxes
8.7                              Employees





                                        v


<PAGE>

                       STOCK AND ASSET PURCHASE AGREEMENT
                       ----------------------------------

          STOCK AND ASSET  PURCHASE  AGREEMENT (as the same may be amended,  the
"Purchase  Agreement"),  dated  as of November  21,  1995,  among CASTLE  ENERGY
CORPORATION,  a  Delaware  corporation  ("Castle"),  INDIAN  REFINING  I LIMITED
PARTNERSHIP,  an  Illinois  limited  partnership  ("IRLP"),  INDIAN  REFINING  &
MARKETING I, INC., an Illinois  corporation and the sole general partner of IRLP
("IRMI") (IRMI and IRLP are  collectively  referred to as the "Asset  Sellers"),
and AM WEST GP, INC., a Delaware corporation ("Buyer").


                                   WITNESSETH:
                                   -----------
          WHEREAS,  Castle  owns  directly or  indirectly  all of the issued and
outstanding partnership interests or capital stock of each of the Asset Sellers;
and

          WHEREAS,  Castle  also owns,  beneficially  and of record,  all of the
outstanding  capital stock of Indian Refining  Company,  a Delaware  corporation
(the "Acquired Corporation" or "IRC"); and

          WHEREAS,  Castle and the Asset Sellers wish to sell to Buyer and Buyer
wishes to  purchase  from the Asset  Sellers  certain of the assets of the Asset
Sellers upon the terms and conditions hereinafter set forth; and

          WHEREAS,  Castle  wishes to sell to Buyer and Buyer wishes to purchase
from Castle all of the capital stock of the Acquired  Corporation upon the terms
and conditions hereinafter set forth;

          NOW,  THEREFORE,  in consideration  of the foregoing  premises and the
mutual  covenants and agreements  set forth herein,  and intending to be legally
bound, Castle, the Asset Sellers and Buyer hereby agree as follows:

I.        DEFINITIONS

          Section 1.1  Definitions.  When used in this Purchase  Agreement,  the
following words or phrases have the following meanings:

          "Acquired  Corporation"  shall  have  the  meaning  set  forth  in the
preamble hereto.

          "Acquisition  Proposal"  shall  mean  any  proposal,   other  than  as
contemplated by this Purchase Agreement,  for the acquisition of the Refinery or
Terminal,  whether  through  a  merger,  consolidation,   reorganization,  other
business  combination,  recapitalization,  acquisition  of any shares of capital
stock or Assets, or otherwise.





                                        1

<PAGE>




          "Affiliate" shall mean a Person that directly,  or indirectly  through
one or more  intermediaries,  controls,  is  controlled  by or is  under  common
control with  another  Person or  beneficially  owns or has the power to vote or
direct  the vote of 20% or more of any class of  voting  stock or of any form of
voting equity  interest of such other Person in the case of a Person that is not
a corporation.  For purposes of this definition,  "control," including the terms
"controlling" and "controlled," means the power to direct or cause the direction
of the  management  and policies of a Person,  directly or  indirectly,  whether
through the ownership of securities or partnership or other ownership interests,
by contract or otherwise.

          "Asset Purchase Price" shall have the meaning set forth in Section 3.1
hereof.

          "Asset  Sellers"  shall  have the  meaning  set forth in the  preamble
hereto.

          "Assets" shall mean all rights, titles,  franchises,  and interests in
and to every  species of  property,  real,  personal,  and mixed,  tangible  and
intangible, including, without limitation, cash, cash equivalents,  receivables,
real  property,  together  with  buildings,  structures,  and  the  improvements
thereon, fixtures contained therein and appurtenances thereto, and easements and
other rights relating thereto,  machinery,  equipment,  supplies,  parts,  spare
parts, furniture, fixtures, leasehold improvements, inventory (including without
limitation,  "tank bottoms"),  vehicles, leases, licenses, insurance and similar
policies,    warranties,    indemnities,    guaranties,    permits,   approvals,
authorizations,  joint venture agreements,  Contracts, processes, trade secrets,
know-how,  computer  hardware and software,  computer programs and source codes,
protected formulae, all other Intellectual Property, goodwill, prepaid expenses,
records, files, claims (including, without limitation,  insurance and litigation
claims and causes) and privileges, and any other assets whatsoever.

          "Assignee" means a Delaware  limited  partnership of which Buyer shall
be the general  partner,  to which Buyer assigns at or prior to the Closing this
Agreement  and the  Escrow  Agreement  and  all of its  rights  and  obligations
thereunder and under the documents contemplated hereby.

          "Assumed  Contracts"  shall  mean  all  Contracts  of IRLP  including,
subject to the provisions of Section 9.10, the Mobil Contract, but excluding the
Excluded Contracts.

          "Assumed  Liabilities" shall have the meaning set forth in Section 2.3
hereof.

          "Balance Sheet" shall have the meaning set forth in Section 4.9 
hereof.

          "Balance  Sheet  Date" shall have the meaning set forth in Section 4.9
hereof.






                                        2

<PAGE>



          "Benefit Plans" shall have the meaning set forth in Section 4.8 
hereof.

          "Buyer" shall have the meaning set forth in the preamble hereto.

          "Buyer  Documents"  shall have the  meaning  set forth in Section  5.2
hereof.

          "Buyer  Indemnitees"  shall  mean  Buyer,  its  Affiliates,  and their
respective officers, directors,  employees, counsel, agents, investment bankers,
accountants, and Affiliates.

          "Castle" shall have the meaning set forth in the preamble hereto.

          "Castle  Employees"  shall have the  meaning  set forth in Section 7.7
hereof.

          "Castle Entities" shall mean, collectively, Castle, the Asset Sellers,
and the Acquired Corporation.

          "Castle Plan" shall have the meaning set forth in Section 7.7 hereof.

          "Castle Subsidiaries" shall mean, collectively, IRLP, IRMI and IRC.

          "Closing" and "Closing  Date" shall have the  respective  meanings set
forth in Section 12.1 hereof.

          "Code" shall mean the Internal Revenue Code of 1986, as amended.

          "Compliance  Cost Agreement" shall mean the Compliance Cost Agreement,
dated April 10, 1990, between IRC and IRLP.

          "Consolidated  Group" shall have the meaning set forth in Section 4.10
hereof.

          "Contract" shall mean a contract,  indenture,  bond,  note,  mortgage,
deed of trust, lease, agreement or written commitment.

          "Cooling  Tower  Claim"  shall have  meaning  set forth in Section 7.5
hereof.

          "Damages" shall mean losses, costs, liabilities,  reasonable expenses,
and/or other damages (including, without limitation,  reasonable attorneys' fees
and  expenses  and  any and  all  reasonable  expenses  whatsoever  incurred  in
investigating,  preparing,  or defending  against any  litigation,  commenced or
threatened, or any claim whatsoever,  and any and all amounts paid in settlement
of any claim or litigation).

          "DB Plan" shall have the meaning set forth in Section 4.8 hereof.



 


                                        3

<PAGE>



          "DB Plan and Trust"  shall have the  meaning  set forth in Section 4.8
hereof.

          "Determination Letter" shall have the meaning set forth in Section 4.8
hereof.

          "Environmental Claim" shall mean any claim by a Person alleging actual
or potential Liability of the Castle Subsidiaries or any other Seller Indemnitee
but in any case only if relating to the  Refinery  and/or the  Terminal  for any
investigatory cost, cleanup cost,  governmental response cost, natural resources
damage,  property damage, personal injury, or penalty, and arising out of, based
on, or resulting  from (a) the  presence,  transport,  disposal,  discharge,  or
release of any Materials of  Environmental  Concern at any location  (including,
without limitation, accrued liabilities for hazardous waste removal), whether or
not owned by Castle or any of the  Castle  Subsidiaries,  as the case may be, or
(b) circumstances forming the basis of any violation or alleged violation of any
Environmental Law.  Notwithstanding the foregoing,  under no circumstances shall
Environmental  Claims include any Liabilities of any Castle  Subsidiaries or any
other Seller  Indemnitees which related to the Powerine  Refinery's  (located in
Santa Fe Springs,  California)  business,  operation or Assets (as now or at any
time prior hereto  instituted),  the natural gas business,  the  exploration and
production  business  or any other  business,  properties,  Assets or affairs of
Castle or any of its Affiliates (or any of their predecessors in interest) other
than the Refinery or the Terminal.

          "Environmental  Law"  shall mean all Laws  relating  to  pollution  or
protection of human health,  the  environment,  including,  without  limitation,
ambient air, surface water,  ground water, land surface,  or subsurface  strata,
and  including,  without  limitation,  Laws relating to  emissions,  discharges,
releases or threatened  releases,  or the presence of Materials of Environmental
Concern,  or otherwise  relating to the manufacture,  processing,  distribution,
use, existence,  treatment, storage, disposal, transport,  recycling, reporting,
or handling of Materials of Environmental Concern.

          "ERISA"  shall mean the  Employee  Retirement  Income  Security Act of
1974, as amended, and the rules and regulations promulgated thereunder.

          "ERISA  Affiliate"  shall mean,  with respect to Castle,  any trade or
business that together  with Castle or any of the Castle  Subsidiaries  would be
deemed a "controlled group" within the meaning of Section 4001(a)(14) of ERISA.

          "Escrow  Agreement"  shall  mean an escrow  agreement  to be dated the
Closing Date among IRLP,  Castle,  Buyer, and an independent  entity  reasonably
acceptable  to the  parties  acting as escrow  agent,  in the form of  Exhibit A
attached  hereto and by this  reference  made a part hereof  (with such  changes
thereto as are required by such escrow agent and are  reasonably  acceptable  to
the parties).

          "Excluded  Contracts" shall mean the Contracts listed on Schedule 2.2D
attached hereto.






                                        4

<PAGE>



          "GAAP"  shall  mean  United  States  generally   accepted   accounting
principles consistently applied.

          "Governmental  Entity" shall mean a court,  legislature,  governmental
agency,    commission,    or   administrative   or   regulatory   authority   or
instrumentality, domestic foreign.

          "GWC" shall have the meaning set forth in Section 10.7 hereof.

          "Indian Benefit Plans" shall have the meaning set forth in Section 4.8
hereof.

          "Indian  401(k)  Plan" shall have the meaning set forth in Section 4.8
hereof.

          "Indian  401(k)  Plan and Trust"  shall have the  meaning set forth in
Section 4.8 hereof.

          "Intellectual Property" shall mean marks, names,  trademarks,  service
marks, patents,  patent rights, assumed names, logos,  copyrights,  trade names,
inventions,   protected  formulae,  processes,  proprietary  information,  trade
secrets,  computer software,  as well as related  documentation and manuals, all
applications for registration of such items with any  Governmental  Entity,  and
all licenses and research and development relating thereto.

          "Intervening  Lien"  shall mean any Lien  which is not an  Outstanding
Lien and encumbers any of the Purchased Assets as of the Closing Date.

          "IOC" shall mean Indian Oil Company, an Illinois  corporation which is
a wholly-owned Subsidiary of Castle.

          "IRLP" shall mean Indian Refining I Limited  Partnership,  an Illinois
limited partnership.

          "IRC" shall have the meaning set forth in the preamble hereto.

          "IRS" shall mean the Internal Revenue Service.

          "Knowledge"  of or with respect to (a) any  individual  shall mean the
actual knowledge of such individual and any knowledge such individual reasonably
should  have had  under  the  circumstances;  and (b)  Sellers,  shall  mean the
Knowledge of the individuals listed on Schedule 1.1A attached hereto.

          "Law" shall mean a law,  ordinance,  rule,  or  regulation  enacted or
promulgated,  or an Order issued or rendered, by any Governmental Entity, now or
hereafter.

          "Liability"  shall mean a liability,  obligation,  claim,  or cause of
action of any kind or nature whatsoever,  whether absolute, accrued, contingent,
or other and whether known or unknown.







                                        5

<PAGE>



          "License" shall mean a license,  certificate of authority,  permit, or
other  authorization  to  transact an activity or business or to use an asset or
process issued or granted by a Governmental Entity.

          "Lien"  shall  mean a lien,  mortgage,  deed to secure  debt,  pledge,
security interest,  lease,  sublease,  charge, levy, or other encumbrance of any
kind.

          "Litigation   Expenses"   shall  mean  all   out-of-pocket   expenses,
including, without limitation, reasonable legal fees, incurred in investigating,
preparing,  prosecuting,  defending or  negotiating  the settlement of the Shell
Litigation.

          "Materials of Environmental Concern" shall mean chemicals, pollutants,
contaminants,  wastes,  toxic  or  hazardous  substances,  petroleum,  petroleum
additives,   petroleum   intermediates,   and  petroleum   products  subject  to
environmental regulation.

          "MG Swap Agreement" shall mean the Natural Gas Swap Agreement dated as
of October 14, 1994 between MG Natural Gas Corp. and IRLP.

          "Mobil" shall have the meaning set forth in Section 9.10 hereof.

          "Mobil  Contract"  shall have the  meaning  set forth in Section  9.10
hereof.

          "Mortgage" shall have the meaning set forth in Section 3.1 hereof.

          "Multiemployer  Plan" means a "multiemployer  plan" within the meaning
of Section 4001(a)(3) of ERISA.

          "Order" shall mean an order,  writ,  ruling,  judgment,  injunction or
decree of, or any stipulation to or agreement with, any arbitrator,  mediator or
Governmental Entity.

          "Outstanding  Liens" shall mean the Liens  identified in Schedule 1.1C
attached hereto.

          "PBGC" shall mean the Pension Benefit Guaranty Corporation.

          "Permitted   Liens"   shall   mean   (i)   easements,   rights-of-way,
restrictions,  zoning  restrictions,  and other similar encumbrances on or minor
imperfections in title to real property which do not materially detract from the
value or use thereof, and (ii) Liens created by the Buyer.

          "Person" shall mean an individual,  corporation,  partnership, limited
liability  company,  association,  joint  stock  company,  Governmental  Entity,
business trust, unincorporated organization or other legal entity.






                                        6

<PAGE>



          "Platinum  Sale  Documents"  shall mean the Bill of Sale, the Security
Agreement and the Note, each dated as of the Closing Date, between IOC and Buyer
pursuant to which Buyer will purchase  platinum  catalyst from IOC, in the forms
attached hereto as Exhibits D-1, D-2 and D-3.

          "Purchase  Agreement" shall have the meaning set forth in the preamble
hereto.

          "Purchased  Assets"  shall have the  meaning  set forth in Section 2.2
hereof.

          "Qualified Plan" shall have the meaning set forth in Section 4.8
hereof.

          "Refinery" shall mean the crude oil refinery owned by IRLP and located
in  Lawrenceville,  Illinois,  including  the  underlying  land and all  related
properties owned by IRLP.

          "Required  Filings and  Approvals" of a party shall mean any filing of
this  Agreement with and the approval of such by all  Governmental  Entities and
such other applications,  registrations,  declarations, filings, authorizations,
Orders,  consents,  and  approvals  as may be required to be made or obtained by
such  party  from  any  Person  prior  to  or  to  permit  consummation  of  the
Transactions.

          "Relevant  Group"  shall have the  meaning  set forth in Section  4.10
hereof.

          "Schedule  1.1B"  shall  mean a  schedule  dated the date  hereof  and
attached  hereto  identifying  all  Persons  known  to have a Lien on any of the
Purchased Assets as of the date of this Agreement, and, in each case, the amount
secured by such Lien.

          "Schedule  1.1C"  shall  mean a  schedule  dated the date  hereof  and
attached hereto  identifying all known Liabilities of IRLP as of the date hereof
for trade  payables  (other  than  Liabilities  secured  by a Lien on any of the
Purchased Assets), and, in each case, the amount of such Liability.

          "Schedule  1.1D"  shall  mean a  schedule  dated the date  hereof  and
attached  hereto   identifying  all  known   Liabilities   (other  than  Assumed
Liabilities)  of IRLP at the  date  hereof  not  included  in  Schedule  1.1B or
Schedule 1.1C; provided that failure to identify a Liability of IRLP on Schedule
1.1D shall not mean that the Liability so omitted is an Assumed Liability.

          "Second  Stage  Financing"  shall mean the  completion by Buyer of the
requisite  equity,  long-term  debt  and  working  capital  financings  for  the
operation of the Refinery.

          "Seller  Indemnitees"  shall mean the  Sellers,  any present or future
parent or Subsidiary of the Sellers, and their respective  officers,  directors,
employees, counsel, agents, investment bankers, accountants, and Affiliates.

          Seller  Documents"  shall have the  meaning  set forth in Section  4.2
hereof.





                                        7

<PAGE>



          "Seller Note" shall have the meaning set forth in Section 3.1 hereof.

          "Sellers" shall mean Castle and the Asset Sellers.

          "Shares" shall mean the issued and outstanding shares of capital stock
of the Acquired Corporation.

          "Shell"  shall  mean Shell  Canada  Limited,  a Canadian  corporation,
together  with its wholly owned  Subsidiary,  Salmon  Resources  Ltd., a Wyoming
corporation.

          "Shell Contract" shall mean the Long Term Supply  Agreement,  dated as
of November 1, 1992,  as amended,  among Shell,  IRLP,  IRMI and MG Refining and
Marketing, Inc.

          "Shell Litigation" shall mean (i) the litigation commenced by Shell in
the  United  States  District  Court  for the  Northern  District  of  Illinois,
captioned  Salmon  Resources  Ltd. and Shell  Canada  Limited v. MG Refining and
Marketing,  Inc.,  Indian Refining  Limited  Partnership,  and Indian Refining &
Marketing, Inc., (ii) any other litigation which may be brought by Shell raising
similar claims or requesting  similar  relief  against IRLP,  IRMI or Castle and
(iii)  any  counterclaims,  cross-claims,  or other  claims  or causes of action
relating to any litigation referred to in clause (i) or (ii).

          "Subsidiary"   of  any  Person  shall  mean  any  other   corporation,
partnership,  or  other  entity  of  which  such  Person,  directly  or  through
Subsidiaries,  owns  shares of  capital  stock or  partnership  or other  equity
interests  which either (i)  represent at least 50% of the common equity of such
entity or (ii)  entitle  such  Person to cast at least a  majority  of the votes
entitled to be cast  generally  upon  election  of  directors  or other  similar
governing body.

          "Tax" shall mean any Federal,  state, local, or foreign income,  gross
receipts,  license, payroll,  employment,  excise, severance, stamp, occupation,
premium, windfall profits, motor fuel, environmental,  capital stock, franchise,
profits, gains, withholding,  social security,  unemployment,  disability,  real
property, personal property, sales, use, rental, transfer,  registration,  value
added,  alternative  or  add-on  minimum,  estimated,  or other  tax of any kind
whatsoever,  including  any  interest,  penalty,  or addition  thereto,  whether
disputed or not.

          "Tax Return"  shall mean any return,  declaration,  report,  claim for
refund,  or  information  return or statement  relating to Taxes,  including any
schedule or attachment thereto or amendment thereof.

          "Terminal" shall mean the terminal  facility owned by IRLP and located
in Mt.  Vernon,  Indiana,  including  the  underlying  property  and all related
properties owned by IRLP.

          "Termination  Date"  shall  mean that date which is 10  business  days
after the last to occur of (i) the date this  Purchase  Agreement is executed by
the parties thereto and (ii) the date on which Castle shall have filed a





                                        8

<PAGE>



complying notification report form pursuant to the requirements of the Hart
Scott Rodino Antitrust Improvements Act of 1976, as amended, with respect to the
Transactions.

          "Title  IV Plan"  shall  have the  meaning  set forth in  Section  4.8
hereof.

          "Third  Party  Claim"  shall have the  meaning as set forth in Section
11.2 hereof.

          "Transactions"  shall  mean  the  transactions   contemplated  by  the
Purchase Agreement.

          "Treasury  Regulations" shall mean the regulations  promulgated by the
Secretary of the Treasury pursuant to the Code and any predecessor and successor
thereto.

          "WARN  Act"  shall  mean  the   Worker   Adjustment   and   Retraining
Notification Act, 29 U.S.C. ss.ss. 2101-2109.


II.       SALE OF STOCK AND ASSETS

          Section 2.1 Sale of Stock. Subject to the terms and conditions of this
Purchase Agreement, on the Closing Date Castle shall, by appropriate instruments
of transfer,  sell,  transfer and convey to Buyer, and Buyer shall purchase from
Castle,  all of the Shares, as listed on Schedule 2.1 attached hereto,  free and
clear of all Liens.

          Section 2.2 Sale of Assets. (a) Subject to the terms and conditions of
this  Purchase  Agreement,  on the Closing  Date the Asset  Sellers  shall sell,
transfer,  and convey to Buyer, and Buyer shall purchase from the Asset Sellers,
by appropriate  instruments of transfer, each and all of the Assets of the Asset
Sellers (the "Purchased  Assets"),  including,  but not limited to, (i) all real
property owned by IRLP,  including the real property identified on Schedule 2.2A
hereto,  together with all improvements thereon,  including the Refinery and the
Terminal, (ii) all personal property,  equipment, spare parts and supplies at or
used in the business of the Refinery or the Terminal,  (iii) the rights (but not
the  obligations) of IRLP under the Assumed  Contracts  (including the insurance
policies listed on Schedule 2.2B hereto as insurance  policies to be transferred
to Buyer),  including all warranty,  indemnity and similar rights and provisions
set forth in the Assumed  Contracts in favor of the Sellers,  but  excluding the
receivables  thereunder  which are identified on Schedule 2.2D hereto,  (iv) the
Cooling  Tower Claim and (v) the tank  bottoms  listed on  Schedule  2.2C hereto
(which may not be owned by IRLP prior to the Closing Date);  provided,  however,
that the  Purchased  Assets shall not include (A) the  partnership  interests in
IRLP, (B) any accounts receivable of the Asset Sellers from Castle or any of its
Affiliates,  (C) cash and cash equivalents of the Asset Sellers (except any cash
or  cash   equivalents   collateralizing   any   obligations   of  the  Acquired
Corporation),  (D) any trade  accounts  receivable  of the Asset Sellers and the
excluded  receivables  identified on Schedule 2.2D, (E) the Excluded  Contracts,
(F) the  insurance  policies  of IRLP  identified  on  Schedule  2.2B  hereto as
insurance  policies not to be transferred  to Buyer,  and (G) any other excluded
asset specifically  identified in Schedule 2.2D hereto. On the Closing Date, the
Asset Sellers  shall sell,  transfer,  and convey the Purchased  Assets to Buyer
free and clear of all Liens other than (y) Permitted  Liens and (z),  subject to
the provisions of Sections 7.11 and 7.12 hereof and of the Escrow Agreement, the
Outstanding Liens.







                                        9

<PAGE>




          (b) To the extent that the assignment by the Asset Sellers to Buyer of
any Contract to be assigned to Buyer  hereunder  shall  require the consent of a
party other than a Castle  Entity  which has not been  obtained by the  Closing,
this  Purchase  Agreement  shall not  constitute  an  agreement  to assign  such
Contract  unless and until  such  consent  is  obtained.  Until such time as the
Sellers are able to obtain a consent required with respect to any Contract, such
Contract  shall  not  be  included  in  the  Purchased  Assets  or  the  Assumed
Liabilities and the Sellers shall use their  commercially  reasonable efforts to
obtain a consent or enter into an  arrangement  to provide to Buyer the benefits
under such Contract.

          Section  2.3  Assumption  of  Liabilities.  Subject  to the  terms and
conditions  of this  Purchase  Agreement,  on the Closing Date Buyer  shall,  by
appropriate  instruments,  assume the following Liabilities of the Asset Sellers
identified  in clauses (a) through (e) below (the  "Assumed  Liabilities"):  (a)
Liabilities  of  the  Asset  Sellers  relating  to  Environmental   Claims;  (b)
Liabilities  to the Indian  401(k) Plan and Trust or the DB Plan and Trust;  (c)
Liabilities  of  IRLP  to IRC  under  the  Compliance  Cost  Agreement;  (d) all
obligations  of IRLP to be  performed  under  the  Assumed  Contracts  after the
Closing Date, exclusive of (i) payments of money to be made by the Sellers after
the Closing Date,  the  obligation  for which accrued on or prior to the Closing
Date, (ii)  obligations of the Sellers to indemnify other parties to the Assumed
Contracts for breaches of, or acts or omissions under, the Assumed  Contracts by
the Sellers or their Affiliates prior to the Closing Date, and (iii) Liabilities
subject to  indemnification  by the Sellers under Section  11.1(a);  and (e) any
Liabilities  of the Asset Sellers (and to the extent set forth in the definition
of "Shell Litigation," of Castle) in the Shell Litigation.

          Buyer does not assume any  Liabilities of the Asset Sellers other than
the Assumed  Liabilities.  Liabilities  that are not assumed and for which Buyer
and its Affiliates shall have no  responsibility  include but are not limited to
the  following:   (i)  Liabilities  of  the  Asset  Sellers  arising  under  the
partnership  agreement of IRLP to IRLP's  partners,  (ii) any Liabilities of the
Asset Sellers to Castle or any of its Affiliates other than Liabilities  arising
under the Compliance Cost Agreement,  (iii) Liabilities for Taxes of Castle, the
Asset Sellers,  any of their respective  Affiliates or the Consolidated Group or
any  Relevant  Group of which  one or more of the  Castle  Entities  is or was a
member,  including without limitation any liability for Taxes of any such Castle
Entity as a withholding agent or transferee, or a Liability for Taxes arising by
Contract or otherwise, (iv) Liabilities for guaranteeing, endorsing or otherwise
becoming liable or responsible for any  indebtedness,  lease or other obligation
of Castle or any of its  Affiliates,  (v)  Liabilities  relating  to  employment
and/or  severance  agreements,  the WARN Act or any similar  laws,  rules and/or
regulations,  options, stock appreciation rights and similar arrangements and/or
rights between any of the Castle  Entities or any of their  Affiliates and their
respective directors, executives, employees and/or personnel, except as provided
in  Section  8.7,  (vi) any trade  and/or  other  accounts  payable of the Asset
Sellers,  including  without  limitation,  those payables and other  Liabilities
identified in Schedule 1.1B and Schedule 1.1C, and the  Liabilities set forth in
Schedule 1.1D, (vii) Liabilities  relating to the MG Swap Agreement,  and (viii)
Liabilities under any Contracts other than as expressly set forth in clauses (b)
through (d) above.






                                       10

<PAGE>




          Section  2.4 "As Is" and "Where  Is".  Except as  otherwise  expressly
provided in this  Agreement,  Buyer  shall  acquire the  Purchased  Assets,  the
Shares,  and,  indirectly,  the Assets of the Acquired  Corporation  "AS IS" AND
"WHERE IS." EXCEPT FOR THE  REPRESENTATIONS  AND WARRANTIES IN THIS AGREEMENT OR
ANY  EXHIBITS  OR  ATTACHMENTS  HERETO,  ANY AND ALL OTHER  REPRESENTATIONS  AND
WARRANTIES  WITH RESPECT TO THE  PURCHASED  ASSETS,  THE SHARES,  AND SUCH OTHER
ASSETS,  WHETHER  EXPRESS OR  IMPLIED,  ARE  HEREBY  DISCLAIMED,  INCLUDING  ANY
REPRESENTATIONS   OR  WARRANTIES  AS  TO  MERCHANTABILITY  OR  FITNESS  FOR  ANY
PARTICULAR PURPOSE.


III.      PURCHASE PRICE

          Section 3.1 Purchase Price.  The purchase price to be paid by Buyer to
Castle for the Shares  shall be $1.00.  In  addition  to the  assumption  of the
Assumed  Liabilities,  the  purchase  price  to be paid by Buyer to IRLP for the
Purchased  Assets  (the  "Asset  Purchase  Price")  shall be equal to:  (a) $3.0
million in cash to be paid at the Closing,  (b) $225,000 in cash to be paid upon
consummation and funding of the Second Stage Financing, it being understood that
said  $225,000  payment is  contingent  upon the  funding  of the  Second  Stage
Financing,  and (c) $5.0  million in the form of a limited  recourse  promissory
note (the "Seller  Note") issued to IRLP at the Closing in the form of Exhibit B
hereto,  which  Seller  Note shall be secured  by a first  mortgage  Lien on the
Refinery  (but not the  Terminal) in the form of Exhibit C attached  hereto (the
"Mortgage"),  it being understood and agreed that the payment  obligations under
the Seller Note shall not be enforceable  against any Assets of Buyer except the
Refinery.  The  principal  amount  of the  Seller  Note  may be  reduced  in the
circumstances provided for in Section 7.11(b). The Asset Purchase Price shall be
held and disbursed  solely in the manner specified in Sections 7.11 and 7.12 and
the Escrow Agreement.

          Section 3.2  Allocation.  The Asset  Purchase Price shall be allocated
among the Purchased Assets in accordance with their relative fair market values,
as  determined  by Buyer.  Buyer and  Sellers  agree to  prepare  and file their
federal income tax returns on a basis  consistent with such allocation and agree
not to take a position inconsistent with such allocation in any other Tax return
or otherwise.








                                       11

<PAGE>



IV.       REPRESENTATIONS AND WARRANTIES OF THE SELLERS

          The Sellers  jointly and  severally  represent and warrant to Buyer as
follows (it being  understood  that  representations  relating  specifically  to
Castle do not relate to any other Castle Entity):

          Section 4.1  Organization  and Good Standing.  Each Castle Entity is a
corporation or limited partnership duly organized, validly existing, and, to the
extent  applicable in the case of partnerships,  in good standing under the Laws
of the state of its incorporation or organization,  with all requisite corporate
or partnership power and authority to own, operate, and lease its properties and
to carry on its business as now being conducted. Each of the Castle Subsidiaries
is  qualified  or  otherwise  authorized  to transact  business,  and is in good
standing,  as a foreign  corporation or limited  partnership,  in the respective
jurisdictions  set forth in Schedule 4.1. To the Knowledge of Sellers,  there is
no other  jurisdiction  in which the ownership of their Assets or the conduct of
their business by the Castle  Subsidiaries makes such  qualification  necessary.
Except for the  ownership  by IRMI of its  partnership  interests  in IRLP,  the
Castle  Subsidiaries  do not  directly  or  indirectly  own any  interest in any
Subsidiary or any other Person.  Castle shall make available to Buyer,  prior to
the Closing,  true, correct,  and complete copies of the Articles or Certificate
of Incorporation, bylaws, and minute books of the Acquired Corporation.

          Section  4.2  Authorization,   Enforceability.  Each  Seller  has  the
requisite  corporate  or  partnership  power  and  authority  to enter  into and
consummate the  Transactions  and to perform its obligations  under the Purchase
Agreement  and the other  documents to be executed and  delivered in  connection
herewith to which such Seller is a party,  including the Escrow  Agreement  (the
"Seller  Documents").  The  execution,  delivery and  performance  of the Seller
Documents and the consummation of the  Transactions  have been duly approved and
authorized by the Board of Directors and  stockholders of each Seller which is a
corporation  and by IRMI as the general  partner of IRLP. No other  corporate or
partnership proceedings on the part of any Seller will be necessary to authorize
the Seller Documents and the Transactions. This Purchase Agreement and the other
Seller  Documents  have been,  duly  authorized  by each Seller.  This  Purchase
Agreement has been, and at the Closing the other Seller Documents will have been
duly executed and delivered by each Seller and, assuming this Purchase Agreement
and the other Seller  Documents  are legal,  valid,  and binding  obligation  of
Buyer,  constitutes or will  constitute at Closing a legal,  valid,  and binding
obligation of each Seller,  enforceable  against each Seller in accordance  with
its terms.

          Section 4.3 Consents and Approvals.  Listed on Schedule 4.3 hereof are
all of the Required Filings and Approvals of Castle and the Castle  Subsidiaries
in connection with the execution and delivery of this Purchase Agreement and the
other Seller Documents and the consummation of the Transactions. At the Closing,
all such Required  Filings and  Approvals of Castle and the Castle  Subsidiaries
will have been  obtained,  except any listed on a schedule  to be  delivered  by
Sellers pursuant to Section 12.2(f).






                                       12

<PAGE>



          Section 4.4 No Violation. The execution,  delivery, and performance of
this  Purchase  Agreement  by the  Sellers and the  consummation  by them of the
Transactions  contemplated  hereby  will not (a) violate  any  provision  of the
charter  or by-laws or  similar  organizational  documents  of any of the Castle
Entities or (b) subject to obtaining  the  consents  set forth on Schedule  4.4,
violate,  conflict  with,  result in a breach of any provision of,  constitute a
default  or an  event  which,  with  notice  or  lapse  of time or  both,  would
constitute a default  under,  result in the  termination  of or  accelerate  the
performance required by, result in a right of termination or acceleration under,
or result in the  creation  of any Lien upon any of the Shares or the  Purchased
Assets  under any of the  terms of any  Contract  to which  Castle or any of its
Subsidiaries is a party.

          Section 4.5 Acquired Corporation.  The authorized capital stock of the
Acquired Corporation consists of 100 Shares of common stock, of which 100 Shares
are issued and  outstanding.  All of the Shares  have been duly  authorized  and
validly issued,  are fully paid and nonassessable and are owned beneficially and
of  record by  Castle.  There are no other  shares of the  capital  stock of the
Acquired  Corporation  authorized,   issued,  or  outstanding  or  reserved  for
issuance,  no outstanding  preemptive rights or subscription rights with respect
to any such shares, and no outstanding options, warrants, rights, voting trusts,
convertible  securities,  or other agreements or commitments with respect to any
such  shares.  At the  Closing,  good and valid title to the Shares will pass to
Buyer  free and  clear of all  Liens.  The  Acquired  Corporation  has or at the
Closing  will have good and valid title to the Assets held by it, free and clear
of all Liens except the Permitted Liens.

          Section 4.6 Purchased Assets. The Asset Sellers have or at the Closing
will have good and valid  title to the  Purchased  Assets and at the Closing the
Asset  Sellers  will have full power and  authority  to transfer  the  Purchased
Assets to Buyer.  At the Closing,  good and valid title to the Purchased  Assets
will pass to Buyer,  free and clear of all Liens  except  the  Permitted  Liens.
Neither Castle nor any of its  Subsidiaries  other than the Castle  Subsidiaries
owns,  leases,  or  licenses  any  material  Assets  used in the  conduct of the
business of, or otherwise relating to, the Refinery and/or the Terminal,  except
for the inventory, the catalyst and receivables from third parties owned by IOC.

          Section 4.7 Compliance With Laws. (a) Castle and its Subsidiaries have
obtained  all  Licenses  required  to be  obtained  by  Castle  or  any  of  its
Subsidiaries  for the  conduct of the  business  of the Castle  Subsidiaries  as
presently conducted, except where the failure to have obtained any such Licenses
would not have a material adverse effect on the financial  condition,  operating
results, assets, properties, or business of any of the Castle Subsidiaries.  All
such Licenses are in full force and effect,  except to the extent  failure to be
in effect would not be reasonably  likely to have a material  adverse  effect on
the financial condition,  operating results, Assets,  properties, or business of
any of the Castle Subsidiaries, or the operation of the Refinery.

          (b)  Castle  and  its  Subsidiaries  have  complied  with  and  are in
compliance  with all, and have not  received  any written  notice of any claimed
violation of any, Laws  applicable  to the business of the Castle  Subsidiaries,
excluding  Environmental  Laws,  except where the failure to comply with, or the
violation  of,  any  such  Laws,  excluding  Environmental  Laws,  would  not be
reasonably likely to have a material adverse effect on the financial  condition,
operating  results,  Assets,  properties,  or  business  of any  of  the  Castle
Subsidiaries, or the operation of the Refinery.






                                       13

<PAGE>




          Section 4.8  Employee Relations and Employee Benefit Plans; ERISA.

                   (a) None of the  Castle  Subsidiaries  has  entered  into any
collective  bargaining  agreement.  To the Knowledge of Sellers, (i) there is no
labor  strike,  dispute,  slowdown,  or work  stoppage  or  lockout  pending  or
threatened  against or  affecting  any of the Castle  Subsidiaries,  and (ii) no
union  organizational  campaign is in progress  with respect to the employees of
any of the Castle  Subsidiaries.  There is no unfair labor practice,  charge, or
complaint  pending  or, to the  Knowledge  of  Sellers,  threatened  before  the
National Labor  Relations  Board against any of the Castle  Subsidiaries  and no
charges  with  respect  to or  relating  to any of the Castle  Subsidiaries  are
pending before the Equal Employment Opportunity Commission.

                   (b) (i)  Schedule  4.8  attached  hereto  contains a true and
complete  list of each  "employee  benefit  plan," as defined in Section 3(3) of
ERISA, and each other employee benefit plan, welfare plan,  program,  agreement,
policy, or arrangement,  including,  without  limitation,  severance pay, salary
continuation  for  disability and  consulting or other  compensation  agreements
("Benefit Plans"),  sponsored,  maintained,  or contributed to or required to be
contributed  to by the Asset Sellers  within six years prior to the Closing Date
(the "Indian Benefit Plans").

                   (ii) With  respect to each Indian  Benefit  Plan,  Castle has
delivered  to Buyer a true,  correct,  and  complete  copy of: (A) each  writing
constituting a part of such Indian Benefit Plan, including,  without limitation,
all plan documents, benefit schedules, trust agreements, and insurance contracts
and other funding vehicles;  (B) the three most recent Annual Reports (Form 5500
Series)  and  accompanying  schedule,  if any;  (C)  the  current  summary  plan
description, if any; (D) the three most recent annual financial reports, if any;
and (E) the most recent  Determination  Letter from the IRS, if any.  The Annual
Reports  (Form 5500 Series)  with respect to each Indian  Benefit Plan have been
properly filed,  including the payment in full of any late fees,  interest,  and
penalties,  if and to the extent applicable.  Except as specifically provided in
the  foregoing  documents  delivered to Buyer,  there are no  amendments  to any
Indian  Benefit  Plan that  have been  adopted  or  approved  nor have the Asset
Sellers or Castle undertaken or committed to make any such amendments;  provided
that  amendments to each Indian Benefit Plan that is intended to be a "qualified
plan" within the meaning of Section 401(a) of the Code ("Qualified  Plans") that
are required by the Internal Revenue Service as a condition to the granting of a
favorable Determination Letter will be timely drafted under the supervision, and
at the  expense,  of Seller and adopted by Seller (if prior to Closing) or Buyer
(upon  Buyer's  reasonable  approval and timely  submission  by Seller to Buyer)
prior to the end of the  applicable  remedial  amendment  period  under  Section
401(b) of the Code.






                                       14

<PAGE>



                   (iii) Schedule 4.8 identifies each Qualified Plan. The Indian
Refining Limited Partnership 401(k) Plan (the "Indian 401(k) Plan" and, together
with the Assets thereof and its related trust agreement, the "Indian 401(k) Plan
and Trust") has been issued a favorable  determination  letter as to its current
qualified  status (the  "Determination  Letter").  The Indian  Refining  Limited
Partnership  Defined Benefit Pension Plan (the "DB Plan" and,  together with the
Assets thereof and its related trust agreement, the "DB Plan and Trust") has not
been issued a favorable  Determination  Letter  with  respect to the  amendments
required by the Tax Reform Act of 1986 and subsequent tax law changes.  However,
a request to the Internal  Revenue Service has been made on a timely basis.  The
DB Plan remains within the applicable  remedial  amendment  period under Section
401(b) of the Code for the  adoption  of such  amendments  and for  obtaining  a
favorable  Determination Letter with respect to such amendments,  as extended in
accordance with IRS Announcement 94-136.

                   (iv)  All  contributions  required  to be made to any  Indian
Benefit Plan by  applicable  law or  regulation or by any plan document or other
contractual  under-taking,  and all  premiums  due or  payable  with  respect to
insurance  policies  funding any Indian Benefit Plan, for any period through the
date hereof have been timely made or paid in full or, to the extent not required
to be made or paid on or before the date  hereof,  have been fully  reflected on
the  financial  statements  of the Asset  Sellers.  The  funding  method used in
connection with the DB Plan is acceptable and the actuarial  assumptions used in
connection  with funding the DB Plan are  reasonable.  As of the last day of the
last plan year of the DB Plan and as of the Closing  Date,  the present value of
DB Plan assets  exceeded the  actuarial  present  value of  accumulated  benefit
obligations  under the DB Plan,  and the  excess of present  value of  projected
benefit  obligations  over the fair  value of plan  assets  did not and will not
exceed $1,500,000.

                   (v) Castle,  the Asset  Sellers and each Indian  Benefit Plan
have  complied,  and are now in  compliance,  in all material  respects with all
provisions of ERISA,  the Code,  and all Laws  applicable to the Indian  Benefit
Plans,  except to the extent of amendments  to the Qualified  Plans which can be
adopted  during the  remedial  amendment  period.  There is not now,  nor do any
circumstances  exist that could give rise to, any requirement for the posting of
security with respect to any Indian  Benefit Plan or the  imposition of any Lien
on the assets of any of the Castle Subsidiaries or any of their ERISA Affiliates
under ERISA or the Code.

                   (vi) Schedule 4.8 sets forth each Indian  Benefit Plan (other
than a  multiemployer  plan)  that is  subject to Title IV of ERISA (a "Title IV
Plan").  Except as set forth on Schedule 4.8, no accumulated  funding deficiency
or unpaid  required  installments  within the meaning of Section 412 of the Code
exists,  nor has there been issued a waiver or  variance of the minimum  funding
standards  imposed by the Code with  respect  to any Title IV Plan,  nor has any
Lien been created under Section  302(f) of ERISA or security been required under
Section 307 of ERISA,  nor are any excise  taxes due or  hereafter to become due
under  Section  4971 or 4972 of the Code with respect to the funding of any such
plan for any plan year or other  fiscal  period  ending on or before the Closing
Date.  With  respect  to each  Title IV Plan,  (A)  there has not  occurred  any
reportable  event  within  the  meaning  of  Section  4043(b)  of  ERISA  or the





                                       15

<PAGE>



regulations thereunder, and (B) there exists no ground upon which the PBGC would
reasonably be expected to demand termination of any Title IV Plan or appointment
of itself or its nominee as trustee  thereunder.  The PBGC has not instituted or
threatened  in writing a  proceeding  to terminate  any Title IV Plan.  All PBGC
premiums  due on or before the  Closing  Date with  respect to any Title IV Plan
have been paid in full, including late fees, interest, and penalties,  if and to
the extent applicable. Copies of the actuarial report for the 1994 plan year and
an update  thereto  as of January 1, 1995 for each Title IV Plan and of a report
which accurately  projects the funded status and  contribution  requirements for
each Title IV Plan as of the Closing Date have been  delivered  to Buyer.  There
has been no material  adverse  change in the Assets,  Liabilities  or  financial
position  of any  Title IV Plan  since  the date of the  most  recent  actuarial
report.   None  of  the  Sellers'  purposes  of  engaging  in  the  transactions
contemplated  hereby is for the evasion or avoidance of Liability under Title IV
of ERISA.

                   (vii) None of the Castle Subsidiaries nor any ERISA Affiliate
has  ever  contributed  to or has  ever  been  obligated  to  contribute  to any
Multiemployer Plan.

                   (viii)  There  does not now exist,  nor do any  circumstances
exist that could result in, any Liability  under (A) the  continuation  coverage
requirements  of Section 601 et seq. of ERISA and Section 4980B of the Code, (B)
Title IV of ERISA,  Section 302 of ERISA,  or Sections 412 and 4971 of the Code,
or (C)  corresponding  or similar  provisions  of  foreign  Laws that would be a
Liability  of the  Buyer  following  the  Closing  Date.  Without  limiting  the
generality  of the  foregoing,  neither  Castle nor the Asset Sellers nor any of
their  Affiliates  have engaged in any  transaction  described in Section  4069,
4204, or 4212 of ERISA.

                   (ix) The Asset  Sellers have no Liability  for life,  health,
medical,  or other  welfare  benefits to former  employees or  beneficiaries  or
dependents  thereof,  except for health  continuation  coverage  as  required by
Section  4980B  of the  Code  or Part 6 of  Title I of  ERISA  and  such  health
continuation  coverage  is at no  expense  to any  Castle  Subsidiary  or  ERISA
Affiliate.

                   (x) There are no pending  actions,  claims,  litigations,  or
arbitrations  which have been asserted in writing or  instituted  (other than in
respect of benefits due in the ordinary course) against the Assets of any of the
Indian Benefit Plans or against the Asset Sellers or any fiduciary of the Indian
Benefit Plans.

                   (xi) The  Liabilities for all benefits  provided  pursuant to
all Indian  Benefit  Plans have been fully and  adequately  provided  for on the
books of account of the Asset Sellers in accordance with GAAP.

                   (xii) Following the Closing,  Buyer will have no Liability of
any kind, actual,  contingent,  present, future or otherwise with respect to any
Benefit  Plans  (other  than the Indian  401(k)  Plan and the DB Plan) for which
Castle,  any Asset  Seller or any ERISA  Affiliate or any of them could have any
Liability.





                                       16

<PAGE>



          Section 4.9 Financial Condition. Castle has delivered to Buyer (a) the
audited  consolidated balance sheet as of September 30, 1994 (the "Balance Sheet
Date") of Castle and its  Subsidiaries  (the  "Balance  Sheet")  and the audited
consolidated  statement of income,  consolidated statement of retained earnings,
and consolidated  statement of cash flows of Castle and its Subsidiaries for the
year then ended,  (b) the audited  balance sheet as of the Balance Sheet Date of
IRLP and the audited statement of income,  statement of retained  earnings,  and
statement of cash flows of IRLP for the year then ended,  and (c) the  unaudited
balance  sheet as of August  31,  1995 of IRLP and the  unaudited  statement  of
income,  statement of retained earnings, and statement of cash flows of IRLP for
the period then ended.  Each such balance  sheet  presents  fairly the financial
condition,  assets, liabilities, and stockholders' equity or partnership capital
of the  respective  entities as of its date;  each such  statement of income and
statement of retained  earnings presents fairly the results of operations of the
respective  entities for the period  indicated;  and each such statement of cash
flows presents  fairly the  information  purported to be shown  therein.  To the
Knowledge of Sellers,  the financial  statements referred to in this Section 4.9
have been prepared in accordance with GAAP (except, in the case of the unaudited
statements,  for the omission of footnote  disclosures and other information and
for normal  year-end  adjustments)  and the books and  records of Castle and its
Subsidiaries.  To the  Knowledge  of Sellers,  the Castle  Subsidiaries  have no
material capital lease obligations (other than leases for copiers, vehicles. and
similar  equipment which may have been  capitalized)  and no material  long-term
liabilities for the deferred  purchase price of any assets (other than a license
fee for the Penex  process).  As of the date hereof (with  respect to clause (a)
only) and as of the Closing Date: (a) the Acquired Corporation has at least $3.5
million of cash plus  interest  accrued  thereon in bank  accounts  specified in
Schedule  4.9  attached  hereto,  which cash and  interest  shall be part of the
Assets  owned by IRC at  Closing,  and has no  Liabilities,  known  or  unknown,
accrued or unaccrued,  aggregating more than $25,000,  other than  Environmental
Claims;  and (b) IRLP has title to the "tank bottoms" specified on Schedule 2.2C
attached hereto.

          Section  4.10 Taxes.  (a) The Acquired  Corporation  is a member of an
affiliated group of corporations  within the meaning of Section 1504 of the Code
(the "Consolidated  Group"), and Castle is the common parent of the Consolidated
Group.

                   (b) The  Acquired  Corporation  has  joined in the  filing of
consolidated  Federal  income Tax  Returns by the  Consolidated  Group,  and the
Acquired   Corporation  will  continue  to  be  included  as  a  member  of  the
Consolidated  Group for  Federal  income tax  purposes up to and  including  the
Closing Date,  including for purposes of filing the consolidated  Federal income
Tax Return of the Consolidated Group for the tax year which includes the Closing
Date.

                   (c) The Consolidated  Group has filed all Tax Returns that it
was  required to file,  and each of the Castle  Subsidiaries  and any  combined,
consolidated, or unitary group of which any of the Castle Subsidiaries is or has
at any time been a member (any such group  being a  "Relevant  Group") has filed
all Tax Returns that it was required to file prior to the Closing Date. All such
Tax Returns were correct and complete in all material respects.  All Taxes shown
to be due on such Tax Returns have been paid.  Neither the  Consolidated  Group,






                                       17

<PAGE>



any  Relevant  Group,  nor any of the  Castle  Subsidiaries  is a  party  to any
agreement  extending  the time within  which to file any Tax Return.  No closing
agreement pursuant to Section 7121 of the Code or compromise pursuant to Section
7122 of the Code (or any predecessor provisions) or any similar provision of any
state or local law has been  entered  into by or with  respect  to the  Acquired
Corporation.  No claim has ever been made by any authority in a jurisdiction  in
which any of the Castle Subsidiaries does not file Tax Returns that it is or may
be subject to taxation by that jurisdiction.

                   (d) Each of the Castle Subsidiaries has withheld and paid all
material Taxes required to be withheld and paid prior to the Closing Date.

                   (e) There is no  dispute  or claim  concerning  any  material
liability  for Taxes of any of the Castle  Subsidiaries  or any  Relevant  Group
currently pending.

                   (f) No Tax  Returns of any of the Castle  Subsidiaries  or of
any Relevant  Group or  Consolidated  Group for any taxable year beginning on or
after January 1, 1991 have been audited except as set forth on Schedule 4.10(f).

                   (g) None of the Castle  Subsidiaries,  any Relevant  Group or
the Consolidated Group has waived any statute of limitations in respect of Taxes
or agreed  to any  extension  of time  with  respect  to any Tax  assessment  or
deficiency.

                   (h) All Taxes  attributable  to periods or  portions  thereof
ending on or before the Closing Date for which any Castle  Subsidiary  is or may
be liable,  whether by  Contract,  by reason of its  status as a  transferee  or
member of the Consolidated  Group or any Relevant Group or otherwise,  have been
paid or an adequate reserve will have been  established  therefor as of December
31, 1995 in  accordance  with GAAP on the books of such Castle  Subsidiary,  and
each Castle  Subsidiary  has no Liability  for Taxes in excess of the amounts so
paid or the reserves to be so established by it.

                   (i)   The   Acquired   Corporation   is  not  a   "consenting
corporation" within the meaning of Section 341(f)(1) of the Code and none of the
assets of any Castle Entity is subject to any election  under Section  341(f) of
the Code.

                   (j) The Acquired  Corporation is not party to any tax sharing
agreement or  arrangement  that will survive or give rise to any  liabilities or
obligations  on the part of the Acquired  Corporation or Buyer after the Closing
Date.

                   (k) None of the  Castle  Subsidiaries  has made any  material
payments,  is  obligated  to make any  material  payments,  or is a party to any
agreement  that  under  certain  circumstances  could  obligate  it to make  any
material payments that will not be deductible under Section 280G of the Code.







                                       18

<PAGE>



                   (l) Following the Closing,  none of the Purchased  Assets and
none of the assets of the Acquired Corporation will be an asset or property that
the Buyer or the Acquired  Corporation  will be required to treat as being owned
by any other  Person  pursuant to the  provisions  of Section  168(f)(8)  of the
Internal Revenue Code of 1954, as amended and in effect  immediately  before the
enactment  of the Tax Reform Act of 1986.  None of the  Purchased  Assets or the
assets of the Acquired  Corporation is (i) "tax-exempt use property"  within the
meaning of Section  168(h)(1) of the Code, (ii) used  predominantly  outside the
United  States  within  the  meaning of  Proposed  Treasury  Regulation  Section
1.168-2(g)(5),  or (iii) "tax-exempt bond financed  property" within the meaning
of Section 168(g)(5) of the Code.

                   (m) The  Acquired  Subsidiary  is not  required  to make  any
adjustment  under  Section  481(a) of the Code or any  comparable  provision  of
state,  local or other Tax law by reason of any change in  accounting  method or
otherwise.

          Section  4.11  Insurance.  Listed on Schedule  2.2B are all  insurance
policies  relating  to the  Assets  of the  Acquired  Corporation  or the  Asset
Sellers.  Each  such  insurance  policy  is,  as of the  date of  this  Purchase
Agreement, in full force and effect and will be in effect on the Closing Date.

          Section  4.12 No  Broker.  The  Castle  Entities  have not  engaged or
authorized any broker,  investment banking firm, finder,  agent, or other Person
to act on their  behalf,  directly  or  indirectly,  as a broker  or  finder  in
connection with the Transactions.

          Section 4.13  Accuracy of  Information.  The Castle  Entities have not
omitted  to  disclose  to Buyer any  material  fact  necessary  in order for the
representations  and  warranties of Castle and the Castle  Subsidiaries  in this
Purchase Agreement and the other Seller Documents not to be misleading.


V.        REPRESENTATIONS AND WARRANTIES OF BUYER

          Buyer represents and warrants to the Sellers as follows:

          Section 5.1  Organization  and Good  Standing.  Buyer is a corporation
duly  organized,  validly  existing,  and in good standing under the laws of its
state of  organization.  At the  Closing  Assignee,  if any,  will be a  limited
partnership duly organized,  validly existing and, to the extent applicable,  in
good  standing  under  the laws of its  state of  organization  and will be duly
qualified in the State of Illinois (if other than its state of organization).

          Section 5.2  Authorization;  Enforceability.  Buyer has the  requisite
power and authority to enter into this Purchase Agreement,  the Seller Note, the
Mortgage  and the Escrow  Agreement  and the other  documents to be executed and
delivered by Buyer in connection herewith (collectively, the "Buyer Documents"),





                                       19

<PAGE>



and to consummate the Transactions. The execution and delivery of the Buyer
Documents and the consummation of the Transactions have been duly approved and
authorized by Buyer. The Buyer Documents and the Transactions have been duly
authorized by Buyer. This Purchase Agreement has been duly executed and
delivered by Buyer and at the Closing the other Buyer Documents will have been
duly executed and delivered by Buyer. Assuming this Purchase Agreement is and
the other Buyer Documents to which any Seller will be a party are the legal,
valid, and binding obligations of the Sellers, this Purchase Agreement
constitutes and such other Buyer Documents will constitute the legal, valid, and
binding obligations of Buyer, enforceable against Buyer in accordance with its
terms.

          Section 5.3 Consents and Approvals.  Listed on Schedule 5.3 are all of
the Required Filings and Approvals of Buyer in connection with the execution and
delivery of the Buyer Documents and the consummation of the Transactions. At the
Closing,  all such  Required  Filings and  Approvals  of Buyer will be obtained,
except any listed on a schedule  to be  delivered  by Buyer  pursuant to Section
12.3(e).

          Section 5.4 No Violation. The execution,  delivery, and performance of
the Buyer Documents by Buyer and the consummation by it of the Transactions will
not (a) violate any provision of the  certificate of  incorporation  of Buyer or
(b) violate, conflict with, result in a breach of any provision of, constitute a
default  or an  event  which,  with  notice  or  lapse  of time or  both,  would
constitute a default  under,  result in the  termination  of or  accelerate  the
performance required by, result in a right of termination or acceleration under,
or result in the  creation of any Lien upon any of the assets of Buyer under any
of the terms of any Contract to which Buyer is a party before  giving  effect to
the Transactions to be consummated on the Closing Date.

          Section 5.5 No Broker. Buyer has not engaged or authorized any broker,
investment  banking firm,  finder,  agent, or other Person to act on its behalf,
directly  or  indirectly,   as  a  broker  or  finder  in  connection  with  the
Transactions,  other than  Oppenheimer & Co. Sellers shall have no liability for
the  fees  payable  to  Oppenheimer  & Co.  by  Buyer  in  connection  with  the
Transactions, which fees shall be paid by Buyer.

          Section 5.6 Subsequent Sale. Buyer has no present intention to sell or
cause to be sold the Shares,  the Assets of the Acquired  Corporation  or all or
substantially  all of the  Purchased  Assets,  and has  received  no  offers  or
proposals  regarding any such sale. The Sellers recognize that after the Closing
circumstances  may change and Buyer will deal with such  Assets in its  economic
self-interest as it sees fit under the circumstances, which could include a sale
of some or all such Assets.






                                       20

<PAGE>

VI.       TAX MATTERS

          Section 6.1 Access to  Information.  (a) Castle will make available to
Buyer  any  information  relating  to the  Acquired  Corporation  which has been
included  in  the   consolidated   Federal  income  Tax  Returns  filed  by  the
Consolidated  Group for the taxable  years up to and  including the Closing Date
that is relevant for purposes of determining  the tax liabilities and attributes
of the Acquired  Corporation.  Sellers  will make  available to Buyer such other
information concerning Taxes as may reasonably be requested by Buyer.

                   (b) Following the Closing,  Buyer agrees to make available to
Castle any information relating to the Acquired Corporation (including,  but not
limited  to, its books and  records and work papers for all periods in which the
Acquired Corporation has been included as a member in the Consolidated Group for
purposes of filing consolidated Federal income Tax Returns) that is relevant for
purposes of  determining  the tax  liability of the  Consolidated  Group for all
periods up to and including the Closing Date, as is reasonably necessary for the
preparation of any Tax Return,  and for purposes of dealing with any examination
by or controversy with the IRS or any other taxing authority.

          Section 6.2 Tax  Indemnification.  Sellers shall jointly and severally
indemnify and hold the Buyer  Indemnitees,  including  without  limitation,  the
Acquired Corporation, harmless from (a) any and all Liabilities for Taxes of any
Castle  Subsidiary,  the Consolidated  Group, or any Relevant Group, and (b) any
and all Liabilities for Taxes for which any Castle Subsidiary,  the Consolidated
Group,  or any Relevant Group is liable as withholding  agent or transferee,  by
Contract,  or otherwise,  including in each case any related Damages;  provided,
however, that, except in the case of Liability for Federal or state income taxes
of the  Consolidated  Group or any  Relevant  Group for the taxable  year of the
Consolidated  Group or such Relevant Group which includes the Closing Date, such
indemnity shall include only Taxes with respect to periods ending on or prior to
the Closing Date and the portion  through and  including the Closing Date of any
taxable period that includes,  but does not end on, the Closing Date (determined
by means of a closing of the books and records of the Acquired Corporation as of
the close of business on the Closing Date).

          Section 6.3 Transfer Taxes, Sellers,  jointly and severally, and Buyer
shall each be  responsible  to pay 50% of any and all sales,  use,  value added,
excise and other  transfer  or similar  Taxes  imposed  on the  transfer  of the
Purchased  Assets and the Shares  hereunder,  including  without  limitation the
following  Taxes  relating to the transfer of the real property  included in the
Purchased Assets:  (a) the Illinois state transfer tax of $.50 per $500 paid for
real property located in Illinois,  (b) the Lawrence County transfer tax of $.25
per $500 paid for real property located in Lawrence County,  and (c) the Indiana
State  Corporate  Gross  Income Tax of 1.2% of the  consideration  paid for real
property  located in Indiana.  Buyer shall execute and deliver to Sellers at the
Closing any certificates or other documents as Sellers may reasonably request to
comply with any reporting,  notification, or filing requirements relating to, or
to perfect any exemption from, any transfer,  documentary,  sales, excise or use
tax, or other similar taxes.

   



                                       21

<PAGE>

          Section 6.4 Post-Closing Audits and Other Proceedings.  (a) Castle and
Buyer agree to give prompt  notice to each other of any proposed  adjustment  to
Taxes for periods  ending on or prior to the Closing  Date or any period  within
which the Closing Date occurs.  Castle and Buyer shall cooperate with each other
in the  conduct  of  any  audit  or  other  proceeding  involving  the  Acquired
Corporation  for  such  periods  and each may  participate  at its own  expense;
provided  that  Castle  shall have the right to control  the conduct of any such
audit or  proceeding  for which  Castle (i)  agrees  that any  resulting  Tax is
covered  by the  indemnity  provided  in Section  6.2 above and (ii)  reasonably
demonstrates   to  Buyer   its   ability   to  make  such   indemnity   payment.
Notwithstanding the foregoing, neither party may settle or otherwise resolve any
such claim,  suit,  or proceeding  without the consent of the other party,  such
consent not to be unreasonably withheld; provided, however, that Buyer shall not
be required  to contest any  proposed  adjustment  to, or claim for,  any Tax if
Buyer waives its right to any indemnity in respect to such Tax hereunder.  Buyer
shall promptly pay over to Castle any Tax refund received by any of the Acquired
Corporation  (or by Buyer or any of its  Affiliates  with  respect to any of the
Acquired Corporation) relating to any period ending on or prior to the Closing.

                   (b)  Castle  shall be  responsible  for the  preparation  and
filing of all state  income and other Tax Returns for the  Acquired  Corporation
for short taxable  periods  ending on the Closing Date in states the tax laws of
which require Tax Returns for such short taxable periods.

          Section 6.5 Certain  Consolidated Return Matters.  (a) Any tax sharing
agreement or  arrangement  between  Castle and its  Affiliates  and the Acquired
Corporation  shall be  terminated  as of the  Closing  Date,  and shall  have no
further effect for any taxable year.

                   (b) Castle  shall  include the income or loss of the Acquired
Corporation  for periods  through the Closing Date in the  consolidated  Federal
income Tax Return filed by the  Consolidated  Group for the period including the
Closing Date. Castle shall prepare books and working papers (including a closing
of the books) which will clearly  demonstrate  the income and  activities of the
Acquired Corporation for the period ending on the Closing Date.


VII.      COVENANTS OF SELLERS

          The Sellers hereby jointly and severally covenant and agree with Buyer
as follows (all such  covenants  and  agreements  to survive the Closing  unless
otherwise expressly stated):

          Section  7.1  Access to  Information.  From and after the date of this
Purchase Agreement and until the Closing Date or the Termination Date, Buyer and
its authorized  representatives  shall upon reasonable notice have access during
normal  business hours to (a) all properties,  books,  records,  Contracts,  and
documents  of  Sellers  relating  to any of the Castle  Subsidiaries,  including
without  limitation all such  consolidating  financial  statements and financial
statements  of the Castle  Subsidiaries  as are prepared in the normal course of
the preparation of the audited  financial  statements  described in Section 4.9,
and Sellers shall  furnish or cause to be furnished to Buyer and its  authorized
representatives  information  with  respect to the affairs  and  business of the
Castle  Subsidiaries  as  Buyer  may  reasonably   request,   and  (b)  counsel,
representatives, accountants and auditors of Castle and the Castle Subsidiaries.





                                       22

<PAGE>



          Section 7.2 Actions Prior to Closing Date.  From and after the date of
this  Purchase  Agreement  and  until  the  Closing  Date or  Termination  Date,
whichever first occurs:

                   (a) Sellers  shall not  undertake or institute  any action of
the Castle  Subsidiaries  which could  reasonably be expected to have a material
adverse  effect on the assets,  properties,  financial  condition,  or operating
results of any of the Castle Subsidiaries.

                   (b) Sellers  shall not (i) sell,  pledge,  convey,  transfer,
lease or encumber  any of the Shares or any  partnership  interests in the Asset
Sellers or the Purchased Assets, or (ii) sell or permit any Castle Subsidiary to
issue or sell any  shares of  capital  stock or other  equity  interests  of any
Castle Subsidiary or any securities convertible or exchangeable for, or options.
warrants,  commitments,  or rights of any kind to  acquire,  any such  shares of
capital stock or other equity interests.

                   (c)  Castle  shall  promptly  notify  Buyer  of any  material
lawsuits, claims, proceedings, or investigations of which Sellers have Knowledge
that may be threatened, brought, asserted, or commenced against or involving any
of the Castle Subsidiaries, the Purchased Assets, or the Transactions.

                   (d) The Asset  Sellers  shall not, and the Sellers  shall not
permit the Acquired  Corporation to: (i) make any loans or advances to any other
person  or  enter  into  any  Contract  relating  to the  borrowing  of money or
extension of credit (including  obligations with respect to capital leases);  or
(ii) assume,  guarantee,  endorse, or otherwise become liable or responsible for
the  obligations  of  any  other  person  (whether  directly,  contingently,  or
otherwise).

                   (e) The Asset  Sellers  shall not, and the Sellers  shall not
permit the  Acquired  Corporation  to: (i)  increase  or agree to  increase  the
compensation  payable to any of the  directors,  officers,  or  employees of the
Castle  Subsidiaries,  except  pursuant to the terms of  agreements  or plans as
currently in effect;  or (ii) enter into or adopt any  pension,  profit-sharing,
incentive,   deferred   compensation,   stock  purchase,   stock  option,  stock
appreciation  rights,  or severance  pay plan or any  employment  or  consulting
agreement, with or for the benefit of any director,  officer, or employee of the
Castle Subsidiaries,  whether past or present, or amend or terminate any of such
plans or any of such agreements in existence on the date hereof.

                   (f) The Asset  Sellers  shall not, and the Sellers  shall not
permit the Acquired Corporation to, enter into any Contracts which, individually
or in the aggregate,  are material to the Castle Subsidiaries or modify,  amend,
terminate, or cancel any existing material Contract.

                   (g) The Asset  Sellers  shall not, and the Sellers  shall not
permit the  Acquired  Corporation  to,  declare,  set aside,  or pay to any such
stockholder any dividend or other distribution in respect of its capital stock.






                                       23

<PAGE>



                   (h) The Asset  Sellers  shall not, and the Sellers  shall not
permit  the  Acquired  Corporation  to,  enter  into or agree to enter  into any
transaction with or for the benefit of any Affiliate.

                   (i) The Asset  Sellers  shall not, and the Sellers  shall not
permit the  Acquired  Corporation  to,  make any change in any of its methods of
accounting or in any of its accounting principles or practices.

          Section 7.3 Consents and  Approvals.  (a) The Sellers  shall use their
commercially  reasonable efforts to obtain the Required Filings and Approvals of
the Castle Entities.

                   (b) The Castle Entities shall, without directly incurring any
costs or expenses (other than fees and expenses of their counsel),  cooperate in
good faith with Buyer in the  obtaining  by Buyer of the  Required  Filings  and
Approvals of the Buyer.

          Section 7.4 Confidentiality.  The Sellers shall use their commercially
reasonable  efforts  to  insure  that all  confidential  information  which  the
Sellers,  the  Acquired  Corporation,  or  any  of  their  respective  officers,
directors,  employees,  counsel, agents,  investment bankers, or accountants may
now  possess  or may  hereafter  create  or  obtain  relating  to the  financial
condition, results of operations,  business, properties, Assets, Liabilities, or
future  prospects of any Castle  Subsidiary or Buyer or any customer or supplier
of any of them shall not be published,  disclosed,  or made accessible by any of
them to any other  Person at any time or used by any of them except  pending the
Closing in the business and for the benefit of the Castle Entities, in each case
without  the  prior  written  consent  of  Buyer;  provided,  however,  that the
restrictions of this sentence shall not apply (a) after this Purchase  Agreement
is terminated,  but only to the extent such confidential  information relates to
the financial condition, results of operations,  business,  properties,  Assets,
Liabilities or future  prospects of any Castle  Subsidiary,  of any Affiliate of
any of them,  or any customer or supplier of any of them,  (b) to  disclosure to
existing or prospective  lenders  (including  lenders to IOC) or other investors
and their legal advisors or to others whose consent may be required or desirable
in connection  with  obtaining  the consents  which are required or desirable to
consummate the Transactions, (c) as may otherwise be required by law, (d) as may
be necessary or appropriate in connection  with the enforcement of this Purchase
Agreement,  (e) to the  extent  such  information  shall have  otherwise  become
publicly  available  not  in  violation  of  the  provisions  of  this  Purchase
Agreement, or (f) as may otherwise be permitted by Section 13.2(b).

          Section 7.5 Insurance.  The Sellers shall maintain in effect insurance
covering the Castle  Subsidiaries and the Purchased  Assets, of the types and in
the amounts in effect at the date of this Purchase Agreement. As of the Closing,
Sellers shall take all steps necessary to cause the transfer to Buyer of (a) the
insurance  policies  identified on Schedule 2.2B hereto as being  transferred to
Buyer,  and (b) all claims which have been or may hereafter be made with respect
to any  insurance  policies now or  previously  in effect at any time where such
claims relate (in whole or in part) to the Refinery, the Terminal, the Purchased





                                       24

<PAGE>



Assets and/or the Assumed Liabilities, including, without limitation, the claims
for insurance recovery Assets and/or the Assumed for the cooling tower at the
Refinery damaged in September, 1995 (the "Cooling Tower Claim"); provided that
Sellers shall make appropriate arrangements (including through the issuance of
separate insurance policies) with their insurers, satisfactory to IOC, to insure
that insurance costs and proceeds under said insurance policies which pertain to
IOC's inventory located at the Refinery are allocated and made payable to IOC or
its lenders or their agent, as the case may be.

          Section  7.6 Names.  After the  Closing,  upon  Buyer's  request,  the
Sellers shall  promptly  change the name of each Asset Seller and its Affiliates
to a name which does not  include  the word  "Indian"  or  derivatives  thereof,
provided  that Buyer  reimburses  Sellers  for the  reasonable  legal  costs and
disbursements incurred by Seller to effect any such name changes and any related
filings,  if necessary,  under the Uniform Commercial Code, and provided further
that such costs have been  pre-approved in writing by Buyer.  Effective upon the
earlier  of (a) the sale of IOC's  inventory  located  at the  Refinery  and the
Terminal or (b) the name changes  above  referred to, the Sellers will cease the
use of the name "Indian" or derivatives  thereof in connection with the business
of the Sellers and their Affiliates.

          Section 7.7 Transfer of Retirement  Plans. (a) As of the Closing Date,
the Asset  Sellers  shall take all steps  necessary to cause the transfer to the
Buyer of (i) all of each Asset Seller's right, title, and interest in and to the
Indian 401(k) Plan and Trust,  including all  Liabilities  and account  balances
thereunder and (ii) all of each Asset Seller's right, title, and interest in and
to the DB Plan and Trust and to substitute  Buyer as the successor  plan sponsor
under both the Indian 401(k) Plan and Trust and the DB Plan and Trust. Moreover,
if Buyer so elects following the Closing Date, Persons designated by Buyer shall
be appointed to serve as successor  trustees of the Indian 401(k) Plan and Trust
and the DB Plan  and  Trust.  Absent  the  appointment  by  Buyer  of  successor
trustees,  the Asset  Sellers  shall have  secured  the  consent of the  present
trustees  of the  Indian  401(k)  Plan and Trust and of the DB Plan and Trust to
continue to serve in that capacity for up to one year after the date hereof. The
Asset Sellers and Buyer agree to execute  after the Closing Date any  additional
documents necessary,  in the reasonable judgment of the other, to effectuate the
transfer of the Indian 401(k) Plan,  the DB Plan,  and their  related  Trusts to
Buyer.

                   (b) As soon as practicable  after the Closing Date, the Asset
Sellers  shall  deliver to Buyer such  copies of the Asset  Sellers'  applicable
records  concerning the  participants  in the Indian 401(k) Plan and the DB Plan
and such  copies of other  applicable  records of Asset  Sellers  regarding  the
Indian 401(k) Plan and DB Plan as Buyer may reasonably require and request.

                   (c) The Asset Sellers  represent  that an  application  for a
favorable  Determination  Letter on the  qualification of the Indian 401(k) Plan
and the DB Plan under Section  401(a) of the Code has been  submitted to the IRS
prior to the  expiration  of the  extension  of the  remedial  amendment  period
provided in IRS Advance Announcement 94-136.






                                       25

<PAGE>



                   (d)  Effective  prior to or as of the  Closing  Date,  Castle
shall adopt a new Section  401(k)  plan (the  "Castle  Plan") for the benefit of
Castle's  employees  designated by Castle (the "Castle  Employees").  The Castle
Plan shall  contain a provision  authorizing  the receipt of assets  transferred
from another qualified plan. As soon as practicable  following the Closing Date,
Castle  shall  submit an  application  to the IRS for a  determination  that the
Castle Plan is a qualified  pension or profit sharing plan within the meaning of
Sections  401(a) and 401(k) of the Code and shall make any and all changes which
may be  necessary  to obtain a  favorable  determination  from the IRS as to the
qualified   status  of  the  Castle  Plan.  Upon  the  receipt  of  a  favorable
Determination Letter as to the qualified status of the Castle Plan, Castle shall
furnish Buyer with a copy of such favorable Determination Letter.

          Section 7.8 DB Plan Funding.  On or before the Closing Date, the Asset
Sellers  shall  cause to be paid to the DB Plan the  amount,  if any,  which the
current  enrolled actuary for the DB Plan has determined is required in order to
satisfy the minimum funding requirement of Code Section 412 for the plan year of
the DB Plan ending on December 31, 1994 and for the period commencing January 1,
1995 and ending on the Closing Date, as if Code Section 412 required all minimum
funding  contributions with respect to such period to be made on or prior to the
Closing Date.

          Section  7.9  Intercompany  Indebtedness.  On or prior to the  Closing
Date,  Castle shall contribute to capital or execute and deliver to the Acquired
Corporation  a  release  and  discharge  of  all  Liabilities  of  the  Acquired
Corporation to Castle or any Affiliate of Castle  existing prior to the Closing,
other than under the Compliance  Cost  Agreement,  and the Acquired  Corporation
shall  execute  and  deliver to the  Sellers a release  and  discharge  or shall
declare  and  pay a  dividend  of all  Liabilities  of  the  Sellers  and  their
Affiliates to the Acquired Corporation existing prior to the Closing, except any
Liabilities arising under this Purchase Agreement and the Transactions.

          Section 7.10 Commercially Reasonable Efforts; Cooperation. The Sellers
agree to use all  commercially  reasonable  efforts to cause the  conditions set
forth in Articles IX and X to be  satisfied,  and to take, or cause to be taken,
all action and to do, or cause to be done,  and to assist  and  cooperate  fully
with the other parties in doing, all things  necessary,  proper, or advisable to
consummate  the  Transactions,  provided that nothing in this Section 7.10 shall
obligate Castle to contribute any capital to the Asset Sellers as a condition to
the Closing, other than as contemplated by Section 7.9.

          Section 7.11  Use of Asset Purchase Price; Payment of Creditors.

          (a) At the  Closing,  (i)  $500,000  of the cash  portion of the Asset
Purchase  Price  shall  be paid by IRLP to IOC or its  designees  as part of the
consideration  for (A) its  consent  to the  release,  and  its  release  at the
Closing,  of all of the Liens held by it on IRLP's Assets (including the release
of all such Liens that were previously assigned to third parties by IOC) and (B)
the transfer of the tank bottoms identified in Schedule 2.2C hereto and (ii) the
balance of the Asset Purchase Price (other than the $225,000  contingent payment
referred to in Section 3.1(b)) shall be  delivered  to the escrow  agent  under 
the Escrow  Agreement  to be held and disbursed as contemplated thereby.






                                       26

<PAGE>




          (b) If at any time after the date of execution of this  Agreement  and
prior to the  Closing,  (i) an  Intervening  Lien  shall be placed on any of the
Purchased Assets or (ii) IRLP shall become aware of any Liabilities  (other than
Assumed  Liabilities)  in respect of trade  payables which are not identified in
Schedule  1.1C,  and such Lien shall not have been  released  or such  Liability
shall not have been discharged, then (A) the principal amount of the Seller Note
shall be  reduced by the  aggregate  amount of the  claims  underlying  all such
Intervening Liens and of all such other  unidentified  Liabilities in respect of
trade  payables and (B) the amount by which the Seller Note is so reduced  shall
be  provided by Buyer and shall be used to pay such  claims and  Liabilities  at
Closing.

          Section 7.12 Escrow  Agreement.  The  representations,  warranties and
covenants  of the parties  set forth in the Escrow  Agreement  are  incorporated
herein by this reference as if fully set forth herein.

          Section  7.13  Use of  Radnor  Space.  For a period  beginning  on the
Closing Date and ending on April 30, 1996, (a) Castle shall  continuously  allow
Buyer to use office  and  conference  space and  related  equipment  (including,
without   limitation,    telephones,   facsimile   machines,   copiers,   etc.),
receptionist,  secretarial support and the like at Castle's Radnor, Pennsylvania
office,  to the same  extent  that IRLP  made use of the same over the  two-year
period ending as of the date hereof and (b) Buyer shall  continuously allow IRLP
to use a similar amount of space and similar services at the Refinery.  All such
use shall be at no cost or charge to Buyer or IRLP, as  applicable,  except that
Buyer shall reimburse Castle,  and Castle shall reimburse Buyer, for Castle's or
Buyer's  out-of-pocket  expense costs (but not any equipment or personnel costs)
for Buyer's or IRLP's, as applicable, use of the telephones,  facsimile machines
and copiers.

          Section 7.14 Reimbursement for Inventory  Liquidation.  From and after
the Closing,  Sellers shall jointly and  severally pay and reimburse  Buyer,  on
demand  upon   presentation   of   standard   and   appropriate   substantiating
documentation,  for any and all out-of-pocket  costs and expenses (not including
internal  personnel  costs but  including  costs of  personnel  hired  solely to
perform such services) incurred by Buyer with respect to any delivery, refining,
processing, movement, storage, administration,  selling, liquidating,  financing
or other action or transaction relating to any inventories of any Sellers or any
of their  Affiliates.  Such costs and  expenses  shall not  include  any fees or
profits  to Buyer but shall  include,  without  limitation,  operating  costs of
processing,  refining,  storage  and/or  delivery  units and/or other  equipment
(other than  depreciation),  taxes and personnel.  Sellers jointly and severally
covenant and agree that all such inventories  shall be removed from the Refinery
and the Terminal on or prior to January 31, 1996.







                                       27

<PAGE>



VIII.     COVENANTS OF BUYER

          Buyer covenants and agrees with Sellers as follows (all such covenants
and agreements to survive the Closing unless  otherwise  expressly stated or, to
take effect after the Closing Date in the case of Section 8.1(c)(ii) below):

          Section  8.1  Consents  and   Approvals.   (a)  Buyer  shall  use  its
commercially  reasonable efforts to obtain the Required Filings and Approvals of
Buyer.

                   (b) Buyer  shall,  without  incurring  any costs or  expenses
(other than fees and expenses of Buyer's counsel),  cooperate in good faith with
the Castle  Entities in the  obtaining  by the Castle  Entities of the  Required
Filings and Approvals of the Castle Entities.

                   (c)  Buyer  shall  use  commercially  reasonable  efforts  to
obtain, as promptly as practicable after the Closing, the Second Stage Financing
on terms and conditions acceptable to Buyer.

          Section  8.2   Confidentiality.   Buyer  shall  use  its  commercially
reasonable efforts to insure that all confidential  information which Buyer, its
Affiliates, or any of their respective officers, directors,  employees, counsel,
agents,  investment  bankers,  or  accountants  may now possess or may hereafter
create or obtain  relating to the financial  condition,  results of  operations,
business,  properties,  Assets,  Liabilities  or future  prospects of any Castle
Subsidiary  or any  customer or supplier of any of them shall not be  published,
disclosed,  or made accessible by any of them to any other Person at any time or
used by any of them  except  pending  the  Closing in the  business  and for the
benefit of the Castle  Entities,  in each case without the prior written consent
of Castle;  provided,  however, that the restrictions of this sentence shall not
apply (a) after the  Closing,  (b) to  disclosure  to  existing  or  prospective
lenders or other  investors (and their  advisors) or to others whose consent may
be required or desirable in connection  with obtaining the financing or consents
which are required or  desirable  to  consummate  the  Transactions,  (c) as may
otherwise  be  required  by  law,  (d) as may be  necessary  or  appropriate  in
connection with the enforcement of this Purchase Agreement, or (e) to the extent
such information shall have otherwise become publicly available not in violation
of the provisions of this Purchase Agreement.

          Section 8.3 Transfer of  Retirement  Plans.  (a) Buyer agrees to adopt
the Indian  401(k) Plan and Trust,  including  all  amendments  thereto,  on the
Closing Date as the Indian 401(k) Plan and Trust exist immediately prior to such
date and  agrees  to assume  all  rights,  duties  and  obligations  thereunder.
Notwithstanding  anything herein  contained to the contrary,  Buyer shall retain
the right to amend or to terminate  the Indian 401(k) Plan and Trust (as adopted
and assumed by Buyer) at any time after the Closing  Date,  in  accordance  with
applicable law.

                   (b) Buyer  agrees to adopt the DB Plan and  Trust,  including
all  amendments  thereto,  on the Closing  Date,  as the DB Plan and Trust exist
immediately  prior to such date and agrees to assume  all  rights,  duties,  and
obligations thereunder, including, without limitation, the Liability for all 
"unfunded current liability" (as defined under Section 412 of the Code) as well
as all minimum funding requirements for periods commencing on the Closing Date.
Notwithstanding anything herein contained to the contrary, Buyer shall retain
the right to amend and to terminate the DB Plan and Trust (as adopted and
assumed by Buyer) at any time after the Closing Date, in accordance with
applicable law.





                                       28

<PAGE>




                   (c) Buyer shall be  responsible  for  satisfying  any and all
governmental  reporting  and  disclosure  requirements  applicable to the Indian
401(k)  Plan and the DB Plan  with  respect  to plan  years  ending on and after
December 31, 1995.  Castle and the Asset Sellers shall furnish promptly to Buyer
any  information  or data related to periods prior to the Closing Date which may
be  necessary  to Buyer in order to  satisfy  such  governmental  reporting  and
disclosure requirements in a timely manner.

                   (d) When Castle has  received a favorable  IRS  Determination
Letter with  respect to the Castle  Plan,  Buyer shall cause the entire  account
balance  of  each  of the  Castle  Employees  in the  Indian  401(k)  Plan to be
transferred  to the trustee of the Castle Plan and to be credited to that Castle
Employee's  account  under the Castle Plan. In  connection  with such  transfer,
Buyer shall provide to Castle a statement from the plan  administrator  that the
Buyer's  401(k) Plan either has or will apply for a favorable IRS  determination
letter,  and Castle and Buyer shall  execute all  documents and make all filings
necessary or appropriate in order to satisfy the requirements of applicable Law.

          Section 8.4 Reimbursement  for Real Estate Taxes.  Buyer agrees to pay
to the  appropriate  tax  authorities  when due the dollar  amount  specified in
Schedule 8.4 for the periods specified in said Schedule, representing 50% of the
real estate  taxes  respecting  the  Refinery  and the  Terminal  identified  in
Schedule  8.4 for the periods  specified  in said  Schedule,  provided  that the
making of such payment shall be subject to the condition  precedent  that 50% of
all such taxes  shall have been paid in full  (together  with any  interest  and
penalties)  by the Castle  Entities  and any and all Liens (or  possible  future
Liens) relating thereto shall have been released, and subject to presentation by
Sellers to Buyer of appropriate substantiating documentation.

          Section  8.5  Assistance  with  Inventory   Liquidation.   Subject  to
fulfillment of the ongoing  reimbursement  obligations set forth in Section 7.14
above,  for the period  commencing on the Closing Date and ending on January 31,
1996,  Buyer  shall,  to the  extent  reasonably  practicable  and  specifically
requested  in  writing  by Sellers  or IOC from time to time,  and  without  any
requirement  to incur any material  incremental  Liability (or lose any material
opportunity)  of any kind or nature  whatsoever,  utilize the  Refinery  and the
Terminal to assist IOC in the liquidation of any inventory which IOC may own
immediately following the Closing (including the storage, consolidation and
transmission of feedstocks previously delivered to IOC at the Refinery and
products previously refined by IRLP for IOC at the Refinery). Sellers and IOC
hereby jointly and severally waive, release and discharge Buyer and all Buyer
Indemnitees from any and all Liabilities, claims and causes of action relating
to any actions (or omissions) of Buyer or any Buyer Indemnitees with respect to
such inventory liquidation (except for Liabilities directly caused by the gross
negligence or wilful misconduct of Buyer). Subject to IOC's agreement to be
bound by the provisions of the preceding sentence, and of the last sentence of
Section 7.14, IOC shall be a third party beneficiary of the provisions of this
Section 8.5.





                                       29

<PAGE>




          Section  8.6  Insurance   Reimbursements  and  Payments.  Buyer  shall
promptly  reimburse and pay IRLP for (a) the allocable premium cost (relating to
periods beginning on the Closing Date) for any insurance policies  identified on
Schedule 4.11 attached  hereto and  transferred to Buyer pursuant to Section 7.5
above, and (b) 50% of the gross insurance  proceeds paid to (or at the direction
of) Buyer by the applicable insurance company for the Cooling Tower Claim (up to
a maximum of $350,000).

          Section 8.7 Employee  Matters.  Buyer shall reimburse IRLP on or prior
to December 15, 1995,  for the aggregate  gross salary  payments and  applicable
payroll  taxes and  benefits  made by IRLP with  respect to the period  from the
Closing Date through  November 30, 1995 to those of its employees  identified in
Schedule  8.7,  Part 1 attached  hereto who become  employees of Buyer as of the
Closing Date as set forth in said  Schedule 8.7, Part 1, subject to such changes
to said Schedule  8.7,  Part 1 as may be made pursuant to a written  notice from
Buyer  to  IRLP at the  Closing.  Further,  except  for  the  senior  management
personnel  identified  on  Schedule  8.7,  Part 2,  for a  period  of 18  months
following the Closing Date,  Buyer agrees not to hire or retain (as an employee,
consultant  or  otherwise)  any  employee  of IRLP as of the date  hereof who is
identified on Schedule 8.7, Part 3, who does not waive any right to severance or
other similar payments from Castle or any of its Affiliates for any period after
November 30, 1995.

          Section 8.8 Commercially Reasonable Efforts; Cooperation. Buyer agrees
to use all commercially  reasonable efforts to cause the conditions set forth in
Articles IX and X to be satisfied, and to take, or cause to be taken, all action
and to do, or cause to be done, and to assist and cooperate fully with the other
parties in doing,  all things  necessary,  proper or advisable to consummate the
Transactions.


IX.       CONDITIONS TO OBLIGATIONS OF BUYER

          The  obligations of Buyer to purchase the Shares and Purchased  Assets
at the Closing are subject to the fulfillment at or prior to the Closing of each
of the following conditions, unless waived in writing by Buyer.

          Section   9.1   Truth   of   Representations   and   Warranties.   The
representations  and warranties  made by the Sellers in this Purchase  Agreement
shall be true and correct in all material respects on and as of the Closing Date
with the same effect as though such representations and warranties had been made
or given on and as of such date.






                                       30

<PAGE>



          Section  9.2  Compliance  with  Covenants.   The  Sellers  shall  have
performed and complied in all material  respects with all of their covenants and
obligations under this Purchase  Agreement which are to be performed or complied
with by them prior to or at the Closing.

          Section  9.3  Absence  of  Suit.  No  action,  suit,  proceeding,   or
investigation  shall have been  commenced or  threatened  by any Person  against
Buyer, the Sellers, the Purchased Assets or any of their officers,  directors or
Affiliates seeking to modify in any material respect, or to restrain or prevent,
and no Law shall have been enacted,  issued, or promulgated which has the effect
of  modifying  in  any  material  respect  or  restraining  or  preventing,  the
Transactions or questioning the validity or legality of the Transactions.

          Section 9.4 Receipt of Consents and  Approvals.  All Required  Filings
and  Approvals  indicated on  Schedules  4.3,  4.4, or 5.3 as material  Required
Filings and approvals shall have been obtained.

          Section 9.5 Proceedings and  Instruments  Satisfactory,  Certificates.
All  proceedings,  corporate  or  otherwise,  to be  taken  by  the  Sellers  in
connection with the  Transactions  shall have occurred and all  certificates and
other  documents  reasonably  incident  thereto as Buyer may reasonably  request
shall have been delivered to Buyer.

          Section 9.6 Intercompany  Indebtedness.  Castle shall have contributed
to capital or executed and  delivered to the Acquired  Corporation a release and
discharge  of all  Liabilities  of the  Acquired  Corporation  to  Castle or any
Affiliate  of Castle  existing  prior to the  Closing,  except  any  Liabilities
arising under this Purchase Agreement or under the Compliance Cost Agreement.

          Section 9.7  Deliveries  at Closing.  All  documents  and  instruments
required to be  delivered  by the Sellers  and their  Affiliates  at the Closing
shall have been delivered to Buyer as provided in Section 12.2.

          Section 9.8 No Material  Adverse Change.  From date hereof through the
Closing Date,  there shall not have occurred (a) any material  adverse change in
the financial condition,  operating results, Assets,  properties, or business of
any of the  Castle  Subsidiaries  from that  shown in the  financial  statements
delivered  pursuant to Section 4.9, other than any such material  adverse change
resulting  from the  shut-down of the Refinery on September 30, 1995 or from any
acts of Buyer or its Affiliates, or (b) any material adverse change in the Shell
Contract or any amendment,  modification  or termination of the Shell  Contract,
whether or not agreed to by any of the Sellers.

          Section 9.9 Bank  Consents.  All lenders to Castle and its  Affiliates
who have any direct or indirect  Liens on or other interest or Contract right in
or  relating  to  the  Purchased  Assets  (including,   without  limitation,  BT
Commercial  Corporation  and Mees Pierson  N.V.) shall have (i) consented to the
Transactions,  and the transactions contemplated by the Platinum Sale Documents,
to the full extent necessary to permit consummation of the Transactions, and the





                                       31

<PAGE>



transactions  contemplated by the Platinum Sale Documents,  without violation of
any such  lender's  rights,  including,  but not  limited  to, the terms of this
Purchase  Agreement  and the Escrow  Agreement and (ii) released all such Liens,
interests  and  rights,  all as  acceptable  to  Buyer  in its  sole  discretion
(collectively, the "Bank Consents").

          Section 9.10 Mobil Consent. Mobil Oil Corporation ("Mobil") shall have
agreed and  consented in writing to (a) an  assignment to Buyer of all of IRLP's
rights under that certain  Exchange  Agreement dated as of July 29, 1994 between
Mobil and IRLP (as amended, the "Mobil Contract"), and (b) a modification of the
Mobil Contract,  acceptable to Buyer in its sole  discretion,  limiting  Buyer's
Liabilities  under  the Mobil  Contract  to an  amount  acceptable  to Buyer and
extending the timing of payment of any such  Liabilities in a manner  acceptable
to Buyer.

          Section 9.11 Platinum  Sale  Documents.  The Platinum  Sale  Documents
shall  be duly  executed  and  delivered  by IOC to Buyer  and the  transactions
contemplated thereby shall be consummated concurrently with the Transactions.


X.        CONDITIONS TO OBLIGATIONS OF THE SELLERS

          The  obligations  of the Sellers to be  performed  hereunder  shall be
subject  to the  satisfaction  prior  to or at  the  Closing  of  the  following
conditions unless waived in writing by Castle.

          Section   10.1   Truth  of   Representations   and   Warranties.   The
representations and warranties of Buyer in this Purchase Agreement shall be true
and correct in all material respects on and as of the Closing Date with the same
effect as though such  representations  and warranties had been made or given on
and as of such date.

          Section 10.2 Compliance with Covenants. Buyer shall have performed and
complied in all material  respects  with all of its  covenants  and  obligations
under this Purchase  Agreement  which are to be performed or complied with by it
prior to or at the Closing.

          Section  10.3  Absence  of  Suit.  No  action,  suit,  proceeding,  or
investigation  shall have been  commenced or  threatened  by any Person  against
Buyer, the Sellers, or any of their officers, directors or Affiliates seeking to
modify in any material respect, or to restrain or prevent, and no Law shall have
been enacted,  issued,  or promulgated  which has the effect of modifying in any
material   respect  or  of  restraining  or  preventing,   the  Transactions  or
questioning the validity or legality of the Transactions.

          Section 10.4 Receipt of Consents and Approvals.  All Required  Filings
and  Approvals  indicated on  Schedules  4.3,  4.4, or 5.3 as material  Required
Filings and Approvals shall have been obtained.






                                       32

<PAGE>



          Section 10.5 Proceedings and Instruments  Satisfactory;  Certificates.
All proceedings, corporate or otherwise, to be taken by Buyer in connection with
the  Transactions  shall have occurred and all  certificates and other documents
reasonably  incident  thereto as the Sellers may  reasonably  request shall have
been delivered to the Sellers.

          Section 10.6 Intercompany Indebtedness. The Acquired Corporation shall
have  executed  and  delivered  to the  Sellers a release and  discharge  of all
Liabilities  of the Sellers and their  Affiliates  to the  Acquired  Corporation
existing  prior to the  Closing,  except  any  Liabilities  arising  under  this
Purchase Agreement.

          Section 10.7 Equity  Contributions  and Undertaking.  Buyer shall have
received $5 million cash in equity  contributions and Seller shall have received
from Gadgil Western  Corporation ("GWC") an undertaking duly executed by GWC, in
the form previously agreed upon by Castle and GWC.

          Section 10.8  Deliveries at Closing.  All  documents  and  instruments
required to be delivered by Buyer and its  Affiliates  at the Closing shall have
been delivered to the Sellers as provided in Section 12.3.

          Section 10.9 Platinum  Sale  Documents.  The Platinum  Sale  Documents
shall be duly  executed  and  delivered  by  Buyer  to IOC and the  transactions
contemplated thereby shall be consummated concurrently with the Transactions.

          Section  10.10  Bank  Consents.  The Bank  Consents  shall  have  been
obtained, in form and substance acceptable to Sellers in their sole discretion.

          Section 10.11 Mobil Consent.  Mobil shall have agreed and consented to
in  writing to the Mobil  assignment  contemplated  by Section  9.10(a) on terms
acceptable to IRLP in its sole discretion.


XI.       INDEMNIFICATION

          Section 11.1 Requirement of Indemnification. (a) Sellers shall jointly
and severally indemnify and hold the Buyer Indemnitees harmless from and against
any Damages  suffered by them resulting  from,  arising out of, or incurred with
respect to, or (in the case of claims asserted against any Buyer Indemnitee by a
third party)  alleged to result from,  arise out of, or have been  incurred with
respect  to (i)  the  falsity,  breach,  or  inaccuracy  of any  representation,
warranty,  covenant,  or  agreement of the Sellers  contained  in this  Purchase
Agreement or in any schedule,  exhibit,  document,  or  instrument  delivered in
connection herewith, (ii) any current or future Liability whatsoever relating to
tax  obligations of the Castle  Entities,  except as provided in Section 8.4 and
except  for  Liabilities  for  Taxes of the  Acquired  Corporation  for  periods
commencing  on the Closing Date,  (iii) any Liability  whatsoever of the Sellers




                                       33

<PAGE>



other than the Assumed  Liabilities,  whether arising prior to, on, or after the
Closing  Date,  whether or not known at the date hereof or on the Closing  Date,
and whether or not identified in a Schedule to this Purchase Agreement, provided
that Castle  shall not be liable for any such  Liability  to trade  creditors of
IRLP for which it was not liable prior to the Closing, (iv) any Liability of the
Asset  Sellers or any ERISA  Affiliate  related to any Indian  Benefit Plan that
existed prior to or at Closing,  maintained by,  contributed to, or obligated to
be  contributed  to, at any time,  by the Asset  Sellers or any ERISA  Affiliate
(other than the Indian  401(k) Plan and the DB Plan),  and any  Liability of the
Asset  Sellers  or any  ERISA  Affiliate  related  to any Title IV Plan or other
Benefit Plan other than the DB Plan and Trust,  (v) any  Liability of the Castle
Entities  under any  federal  or state  securities  or  similar  laws,  rules or
regulations with respect to any  transactions,  facts or circumstances  (real or
alleged)  occurring or existing  prior to the Closing  Date,  (vi) any Liability
with respect to intracompany claims among the Castle Entities,  except under the
Compliance Cost  Agreement,  (vii) any Liability  relating to employment  and/or
severance  agreements,  the WARN Act or any similar laws,  rules or regulations,
options,  stock  appreciation  rights and  similar  arrangements  and/or  rights
between  any of  the  Castle  Entities  or any of  their  Affiliates  and  their
respective personnel, except as provided in Section 8.7, (viii) any Liability or
Damage of any party  resulting  from the failure of the Asset Sellers to use the
Asset Purchase Price in the manner set forth in the Escrow  Agreement,  (ix) any
Liability   to   BT   Securities   Corporation,    its   Affiliates,    counsel,
representatives,  consultants,  employees or agents  relating to previous  "high
yield"  or other  financing  and/or  equity  transactions  with  respect  to the
Refinery,  and (x) any Liability of Buyer or any Buyer Indemnitee resulting from
the use of the Refinery or the  Terminal  pursuant to Section 8.5 above except a
Liability referred to in this clause (x) directly caused by the gross negligence
or wilful misconduct of Buyer).

                   (b) Buyer  shall  indemnify  and hold the Seller  Indemnitees
harmless from and against any Damages  suffered by them resulting from,  arising
out of, or incurred with respect to, or (in the case of claims asserted  against
any Seller Indemnitee by a third party) alleged to result from, arise out of, or
have been incurred with respect to (i) the falsity, breach, or inaccuracy of any
representation,  warranty,  covenant,  or agreement  of Buyer  contained in this
Purchase  Agreement  or  in  any  schedule,  exhibit,  document,  or  instrument
delivered  in  connection  herewith,  (ii) the  Assumed  Liabilities,  (iii) any
Environmental Claims and (iv) any Liability of Buyer relating to tax obligations
of the Acquired Corporation for periods on and after the Closing Date.

          Section 11.2 Procedures Relating to Indemnification.  (a) A party (the
"indemnified  party") seeking  indemnification  under this Purchase Agreement in
respect of,  arising  out of, or  involving a claim or demand made by any Person
against  the  indemnified  party  (a  "Third  Party  Claim")  shall  notify  the
indemnifying  party in writing  of the Third  Party  Claim  within 20 days after
receipt by the  indemnified  party of written  notice of the Third Party  Claim;
provided,  however,  that failure to give such notification shall not affect the
indemnification provided under this Purchase Agreement, except to the extent the
indemnifying   party  shall  actually  have  been  prejudiced  by  the  failure.
Thereafter,  the  indemnified  party shall  deliver to the  indemnifying  party,
promptly after the indemnified  party's receipt  thereof,  copies of all notices
and  documents  (including  court  papers)  received  by the  indemnified  party
relating to the Third Party Claim.





                                       34

<PAGE>



                   (b) The  indemnifying  party shall have the right,  within 30
days after  being so  notified,  to assume the defense of such Third Party Claim
with counsel  reasonably  satisfactory  to the  indemnified  party.  In any such
proceeding  the defense of which the  indemnifying  party shall have so assumed,
the indemnified party shall have the right to participate therein and retain its
own  counsel  at its own  expense  unless  (i)  the  indemnified  party  and the
indemnifying  party shall have mutually agreed to the retention of such counsel,
(ii) the  indemnified  party shall have received a written opinion of counsel to
the effect that there may be one or more legal  defenses  available  to it which
are different from or additional to those available to the  indemnifying  party,
or (iii) the named  parties  to any such  proceeding  (including  the  impleaded
parties)  include both the  indemnifying  party and the indemnified  party,  and
representation of both parties by the same counsel would be inappropriate in the
opinion of the indemnified  party's counsel due to actual or potential differing
interests  between them; in any such case, such separate counsel may be retained
by the indemnified party at the indemnifying  party's expense (provided that the
indemnifying  party shall not be required to bear the fees and  expenses of more
than one counsel (plus any local counsel as may be reasonably required) for each
group of similarly situated persons).  To the extent that the settlement of such
a Third Party Claim,  the defense of which has been assumed by the  indemnifying
party, involves the payment of money only, the indemnifying party shall have the
right,  in  consultation  with the  indemnified  party,  to settle those aspects
dealing only with the payment of money,  provided  that the  indemnifying  party
pays such money and such  settlement  includes a general  release from the other
parties  to such  Third  Party  Claim  in  favor of the  indemnified  party.  In
connection with any such defense or settlement, the indemnifying party shall not
enter into a consent  decree  involving  injunctive  or  non-monetary  relief or
consent to an injunction without the indemnified party's prior written consent.

                   (c) With respect to all Third Party Claims,  the  indemnified
party shall cooperate in all reasonable  respects with the indemnifying party in
connection  with such claims and the defense or compromise  of the claims.  Such
cooperation  shall  include the  retention  and (upon the  indemnifying  party's
request) the  provision  to the  indemnifying  party of records and  information
reasonably  relevant to the Third Party Claim,  making employees  available on a
mutually convenient basis to provide additional information,  and explanation of
any material provided under this Purchase  Agreement.  If the indemnifying party
shall have assumed the defense of a Third Party  Claim,  the  indemnified  party
shall not,  without  first  waiving the  indemnity  as to such claim,  admit any
liability with respect to, or settle,  compromise, or discharge, the Third Party
Claim, without the indemnifying party's prior written consent.

                   (d) The  foregoing  provisions of this Section 11.2 shall not
apply to matters  covered by the provisions of Article VI to the extent that the
provisions of this Section 11.2 are inconsistent  with the provisions of Article
VI.

          Section  11.3  Defense  of  Third-Party  Claim.  The  failure  by  the
indemnifying party to notify the indemnified party of its election to defend any
Third Party Claim within 30 days after  written  notice  thereof shall have been
given to the  indemnifying  party  shall be deemed a waiver by the  indemnifying
party of its right to defend  such  Third Party Claim. If the indemnifying party





                                       35

<PAGE>



shall not assume the  defense of any such Third  Party  Claim,  the  indemnified
party  may  defend  against  and,  subject  to  obtaining  the  consent  of  the
indemnifying  party, which shall not be unreasonably  delayed or denied,  settle
such Third Party Claim in such manner as it may deem appropriate.

          Section 11.4 Payment.  The  indemnifying  party shall pay directly all
Damages or shall, if the indemnified  party elects to pay any Damages  directly,
promptly reimburse the indemnified party for any Damages paid by the indemnified
party that is the subject of an indemnification given under this Article XI. The
indemnifying  party shall reimburse the  indemnified  party promptly upon demand
for the amount of any judgment rendered or settlement  entered into with respect
to any  Third  Party  Claim,  the  defense  of  which  was  not  assumed  by the
indemnifying  party,  and,  promptly  upon  demand,  for all Damages paid by the
indemnified party in connection with the defense against such Third Party Claim.

          Section 11.5 Limitation on  Indemnification.  (a) An indemnified party
shall not be  entitled  to assert  later than  September  30,  1997 any right of
indemnification  for any  Damages  suffered  by it as a result  of the  falsity,
inaccuracy,  or breach of any  representation or warranty (but not the breach of
any covenant or agreement) by the indemnifying party set forth herein;  provided
however, that (i) any claim with respect to the falsity,  inaccuracy,  or breach
of a  representation  or  warranty  with  respect  to (A) title to Assets may be
brought  at any time or (B) Taxes may be  brought  at any time  prior to 30 days
after the expiration of the applicable  statute of limitations and (ii) if there
shall then be pending  any claim for such  indemnification  hereunder  which has
been  asserted  prior  to the  applicable  date by the  indemnified  party  with
reasonable  specificity,  the indemnified party shall continue to have the right
to be indemnified with respect thereto.

                   (b)  A   Buyer   Indemnitee   shall   not  be   entitled   to
indemnification  hereunder  for any  Damages  suffered  by it as a result of the
falsity,  inaccuracy, or breach of any representation or warranty by the Sellers
unless the aggregate amount of Damages suffered by all Buyer Indemnitees for all
such falsities, inaccuracies, and breaches exceeds $25,000, and then the Sellers
shall be responsible only for the amount of such Damages that exceeds $25,000.

                   (c)  A  Seller   Indemnitee   shall   not  be   entitled   to
indemnification  hereunder  for any  Damages  suffered  by it as a result of the
falsity, inaccuracy, or breach of any representation or warranty by Buyer unless
the aggregate amount of Damages suffered by all Seller  Indemnitees for all such
falsities,  inaccuracies,  and breaches exceeds $25,000, and then Buyer shall be
responsible only for the amount of such Damages that exceeds $25,000.

                   (d) The aggregate amount to which an indemnified  party shall
be entitled to receive as indemnification under this Article XI shall be reduced
by the amount of all tax benefits or savings actually  available to and utilized
by such  party as a result  of any loss,  liability,  cost,  expense,  or damage
giving rise to such indemnification.






                                       36

<PAGE>



                   (e) Except as provided in Articles III, VI, and XIII, each of
the  parties  acknowledges  and  agrees  that,  from and  after the date of this
Purchase  Agreement,  its sole and exclusive  remedy with respect to any and all
claims  relating  to the  subject  matter of this  Purchase  Agreement  shall be
pursuant to the indemnification provisions in this Article XI.


XII.  CLOSING

          Section  12.1 Time and Place.  The  closing of the  Transactions  (the
"Closing")  shall  take  place at the  offices  of Latham &  Watkins,  885 Third
Avenue,  Suite 1000, New York,  New York, as promptly as  practicable  after the
satisfaction or waiver of the conditions set forth herein, or at such other date
and place as may be agreed upon by the parties (the "Closing Date").

          Section 12.2 Items to be Delivered by the Sellers. At the Closing, the
Sellers shall deliver in accordance  with this Purchase  Agreement,  among other
things, the following:

                   (a) Certificates  representing  the Shares,  duly endorsed in
blank or  accompanied  by  appropriate  stock  powers for transfer of all right,
title, and interest in the Shares to Buyer.

                   (b) Such bills of sale and other  instruments  of transfer as
are necessary or reasonably  requested for the transfer and  conveyance to Buyer
of the Purchased Assets.

                   (c) A certificate, signed by an officer of each of Castle and
of each other Seller which is a corporation  (on behalf of such  corporation and
of any partnership of which such corporation is a general partner), stating that
the  representations  and  warranties  made  by the  Sellers  in  this  Purchase
Agreement are true and correct in all material respects on and as of the Closing
Date with the same effect as though such representations and warranties had been
made on or given on and as of the Closing  Date,  that the  Sellers  have in all
material  respects  performed and complied with all of their  obligations  under
this Purchase Agreement which are to be performed or complied with by them prior
to or on the Closing Date,  and that to the Knowledge of Sellers all  conditions
to the  obligations  of Buyer to be performed  hereunder  have been satisfied or
waived.   The  delivery  of  such   certificate   shall  be  and   constitute  a
representation and warranty of each Seller as of the Closing Date to each of the
facts stated therein.

                   (d) A written  opinion of counsel  for the  Sellers  and IOC,
respectively,   dated  as  of  the  Closing  Date,   addressed  and   reasonably
satisfactory to Buyer, covering the following matters:

                         (i) the corporate existence and good standing of Castle
and the  corporate or  partnership  existence,  and good  standing of the Castle
Subsidiaries and IOC;






                                       37

<PAGE>



                         (ii) the due authorization,  execution, and delivery by
the  Sellers of this  Purchase  Agreement,  the Escrow  Agreement  and the other
agreements and instruments to be delivered by Sellers at Closing,  and by IOC of
the Platinum Documents to which it is a party, and the legal, valid, and binding
effect  of the  Sellers'  obligations  hereunder  and  thereunder,  and of IOC's
obligations  under  the  Platinum  Documents,   enforceable  against  Seller  in
accordance  with the terms hereof and thereof,  except as may be limited by Laws
affecting bankruptcy,  insolvency,  fraudulent conveyance, and creditors' rights
generally and subject to equitable  principles  and the discretion of a court to
grant equitable remedies;

                         (iii) the requisite  corporate or partnership power and
authority of the Castle Subsidiaries and IOC to own and operate their respective
businesses;

                         (iv) the capitalization of the Acquired Corporation and
the other matters referred to in Section 4.5;

                         (v)  that,  subject  to the  receipt  of  the  Required
Filings and  Approvals,  the execution and delivery of the Seller  Documents and
the  Platinum  Documents  do  not,  and  the  consummation  of the  Transactions
contemplated  hereby  and  thereby  will  not,  violate  any  provision  of  the
organizational  documents of Castle, the Castle  Subsidiaries or IOC, or any Law
to which the Castle Entities or IOC are subject or bound or, to the knowledge of
such counsel, result in the default or acceleration of any obligation or default
under any  provisions  of any  Contract or Order known to such  counsel to which
Castle  or any of the  Castle  Subsidiaries  or IOC is a party,  or by which the
business of the Castle Subsidiaries or IOC is bound or encumbered; and

                         (vi)  to  the  knowledge  of  such   counsel,   without
independent  investigation,  the existence of all Required Filings and Approvals
of the Castle  Entities  and IOC  indicated  as  material  Required  Filings and
Approvals on the Schedules hereto.

                   (e) A certified  copy of the duly adopted  resolutions of the
Board of Directors of each Seller and IOC which is a corporation authorizing and
recommending  the  Transactions  (on  behalf  of  such  corporation  and  of any
partnership of which such corporation is a general partner).

                   (f) A copy of each approval, consent,  assignment,  contract,
novation,  release,  or waiver,  including the Required Filings and Approvals of
Castle,  obtained  by the Sellers in  connection  with the  Transactions,  and a
schedule  of any  Required  Filings and  Approvals  of Castle that have not been
obtained.

                   (g) A duly  executed  and valid  certificate  of  non-foreign
status in accordance with Section 1445 of the Code and the Treasury  Regulations
thereunder.

                   (h) The Escrow Agreement duly executed by Castle and IRLP.





                                       38

<PAGE>



                   (i) The Platinum Sale Documents duly executed by IOC.

                   (j) Such other  documents,  instruments,  or  certificates as
Buyer may  reasonably  request,  including  UCC-3  termination  statements  duly
executed by IOC and its assignees with respect to all Purchased  Assets on which
they may have a Lien.

          Section  12.3 Items to be Delivered  by Buyer.  At the Closing,  Buyer
shall deliver, among other things:

                   (a) A  certificate,  signed by an officer  of Buyer,  stating
that the representations and warranties made by Buyer in this Purchase Agreement
are true and correct in all material respects on and as of the Closing Date with
the same effect as though such  representations  and warranties had been made on
or given on and as of the Closing Date, that Buyer has in all material  respects
performed and complied with all of its obligations under this Purchase Agreement
which are to be  performed  or  complied  with by it prior to or on the  Closing
Date,  and that to the Knowledge of Buyer all  conditions to the  obligations of
Sellers to be performed hereunder have been satisfied or waived. The delivery of
such certificate shall be and constitute a representation  and warranty of Buyer
as of the Closing Date to each of the facts stated therein.

                   (b) A written  opinion of counsel for Buyer or  Assignee,  as
applicable,  dated as of the Closing Date, addressed and reasonably satisfactory
to the Sellers, covering the following matters:

                         (i) the corporate  existence and good standing of Buyer
and the partnership existence of Assignee, if applicable;

                         (ii) the due authorization,  execution, and delivery by
Buyer of this  Purchase  Agreement,  the Escrow  Agreement  and the other  Buyer
Documents,  and of the Platinum  Documents,  and the legal,  valid,  and binding
effect of Buyer's  obligations  hereunder and  thereunder,  enforceable  against
Buyer in accordance with the terms hereof and thereof,  except as may be limited
by Laws affecting bankruptcy,  insolvency, fraudulent conveyance, and creditors'
rights  generally and subject to the  discretion  of a court to grant  equitable
remedies;

                         (iii)  that,  subject to the  receipt  of the  Required
Filings and Approvals, the execution and delivery of this Purchase Agreement and
the  other  Buyer  Documents,  and of the  Platinum  Documents  do not,  and the
consummation  of  the  Transactions  will  not,  violate  any  provision  of the
certificate of incorporation of Buyer or partnership  agreement of Assignee,  as
applicable,  or any Law to which Buyer is known to such counsel to be subject or
bound (before  giving effect to the  Transactions  to be consummated at Closing)
or, to the knowledge of such counsel,  result in the default or  acceleration of
any  obligation  or default  under any  provision of any Contract  known to such
counsel to which Buyer is a party (before giving effect to the  Transactions  to
be consummated at Closing); and






                                       39

<PAGE>



                         (iv)  to  the  knowledge  of  such   counsel,   without
independent investigation,
the  existence  of all  Required  Filings and  Approvals  of Buyer  indicated as
material Required Filings and Approvals on Schedule 5.3 hereto.

                   (c) The  duly  executed  Seller  Note,  Mortgage  and  Escrow
Agreement.

                   (d) A certified  copy of the duly adopted  resolutions of the
Board  of  Directors  of  Buyer  (or of the  general  partner  of  Assignee,  if
applicable) authorizing the Transactions.

                   (e) A copy of each approval, consent,  assignment,  contract,
novation,  release,  or waiver,  including the Required Filings and Approvals of
Buyer obtained by Buyer in connection  with the  Transactions  and a schedule of
any Required Filings and Approvals of Buyer that have not been obtained.

                   (f) An agreement  pursuant to which Buyer assumes the Assumed
Liabilities.

                   (g) The duly executed Platinum Sale Documents.

                   (h) Such other  documents,  instruments,  and certificates as
Castle may reasonably request.


XIII. TERMINATION

          Section 13.1  Termination.  This Purchase  Agreement may be terminated
and the purchase and sale of the Shares and  Purchased  Assets  abandoned at any
time prior to the Closing Date:

                   (a) by mutual consent of Castle and Buyer;

                   (b)  by  Buyer,  if  by  the  Termination  Date  any  of  the
conditions  provided in Article IX of this Purchase  Agreement have not been met
and have not been  waived in writing by Buyer,  except as a result of the wilful
acts or omissions of Buyer; or

                   (c)  by  Castle,  if by  the  Termination  Date  any  of  the
conditions  provided in Article X of this Purchase  Agreement  have not been met
and have not been waived in writing by Castle,  except as a result of the wilful
acts or omissions of Castle.

                   (d) The obligations  contained in Sections 7.4, 8.2, 15.8 and
15.13 hereof shall survive any termination of this Purchase Agreement.






                                       40

<PAGE>


          Section  13.2 No Other  Transaction.  (a) Each of Castle and the Asset
Sellers  hereby  covenants with Buyer that it will not enter into, or commit to,
any  transaction  to sell  or  otherwise  dispose  of any of the  Shares  or the
Purchased Assets with any Person other than Buyer prior to the close of business
on the  Termination  Date.  Upon  execution of this  Agreement the provisions of
clause  (b) of the third  paragraph  of that  certain  letter of intent  between
Castle  and  Gadgil  Western  America,  Inc.  dated  November  9, 1995  shall be
superseded by the provisions of this Section 13.2.

                   (b) Subject to the controlling provisions of Section 13.2(a),
Buyer  agrees  that the  Castle  Entities  and their  Affiliates  shall have the
complete  right and authority  to, and to authorize  and permit their  officers,
directors, employees, counsel, agents, investment bankers, accountants, or other
representatives  to, directly or indirectly,  (a) cooperate with, or, subject to
entering into a confidentiality  agreement  reasonable  acceptable to Buyer with
such  Person,  furnish  or  cause to be  furnished  any  non-public  information
concerning the business,  properties,  or assets of the Castle  Subsidiaries to,
any Person in connection with any Acquisition Proposal excluding,  however, this
Purchase  Agreement  and its  contents  (unless  otherwise  required  to be made
public);  and (b)  negotiate  with any Person  with  respect to any  Acquisition
Proposal; provided, however, that the Castle Entities and their Affiliates shall
not take,  authorize,  or permit any of their  officers,  directors,  employees,
counsel, agents, investment bankers,  accountants,  or other representatives to,
directly or indirectly, at any time after the date hereof, initiate contact with
any Person in an effort to solicit any Acquisition Proposal;  provided, that the
Castle  Entities  may take or permit any such  action at any time when Castle is
permitted to terminate this Purchase Agreement pursuant to Section 13.1.




XIV.  AMENDMENT AND WAIVER

          Section 14.1  Amendment.  This  Purchase  Agreement  may be amended or
modified in whole or in part at any time by an agreement in writing  executed in
the same manner as this Purchase Agreement.

          Section 14.2 Extension; Waiver. At any time prior to the Closing Date,
either party hereto may:

                  (a)  extend  the  time  for  the  performance  of  any  of the
obligations or other acts of the other party hereto,

                  (b)  waive  any  inaccuracies  in  the   representations   and
warranties contained herein or in any document delivered pursuant hereto, or

                  (c) waive  compliance with any of the agreements or conditions
contained herein.






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<PAGE>



Any  agreement  on the part of a party to any such  extension or waiver shall be
valid only if set forth in an  instrument in writing duly executed and delivered
on behalf of such party.  The failure of any party hereto to enforce at any time
any provision of this Purchase  Agreement  shall not be construed to be a waiver
of such  provision,  nor in any way to  affect  the  validity  of this  Purchase
Agreement  or any part  hereof or the right of such party  hereafter  to enforce
each and  every  such  provision.  No  waiver  of any  breach  of this  Purchase
Agreement  shall be held to  constitute  a  waiver  of any  other or  subsequent
breach.


XV.       MISCELLANEOUS

          Section 15.1 Notices. All notices or other communications  required or
permitted  hereunder  shall be in writing and shall be mailed by certified mail,
return  receipt  requested,  sent by Federal  Express,  Express Mail, or similar
overnight  delivery or courier service,  or delivered (in person or by telecopy,
telex, or similar communications equipment) against receipt to the party to whom
it is given, addressed as follows:

          if to the Sellers, to:

                   Castle Energy Corporation
                   One Radnor Corporate Center
                   Suite 250
                   100 Matsonford Road
                   Radnor, Pennsylvania   19087
                   Attention:  Joseph L. Castle, II, CEO
                   Telecopy No: (610) 995-0409

          with a copy to:

                   Duane, Morris & Heckscher
                   One Liberty Street
                   Philadelphia, PA 19103
                   Attention:  Sheldon M. Bonovitz, Esq.
                   Telecopy No: (215) 979-1020

          if to Buyer, to:

                   Am West GP, Inc.
                   c/o Latham & Watkins
                   885 Third Avenue, Suite 1000
                   New York, NY 10022
                   Attention:  Arun Chandrachud
                   Telecopy No:  (212) 751-4864 and (011)(973) 697845





                                       42

<PAGE>



          with a copy to:

                   Latham & Watkins
                   885 Third Avenue
                   New York, NY 10022
                   Attention:  Roger H. Kimmel, Esq.
                   Telecopy No:  (212) 751-4864

or to such  other  address  as the  Person  to whom  notice  is  given  may have
previously furnished to the other party in writing in accordance herewith.

          Section 15.2 Governing Law. This Purchase  Agreement shall be governed
by and construed in accordance  with the laws of the State of New York,  without
regard to its rules on conflicts of law.

          Section 15.3 Successors and Assigns.  This Purchase  Agreement and the
Escrow  Agreement shall not be assigned by any party without the written consent
of all other parties and any attempted  assignment  without such written consent
shall be null and void and without  legal  effect;  provided  that (a) Buyer may
assign  this  Agreement  (and the Escrow  Agreement)  to  Assignee  and Buyer or
Assignee  may assign its rights to  purchase  all or a portion of the  Purchased
Assets and/or Shares to a wholly-owned  subsidiary of Buyer or Assignee,  as the
case may be, and (b) Buyer,  Assignee or any such  subsidiary  may  collaterally
assign its rights hereunder to any lenders providing financing.  Upon assignment
of this Purchase Agreement to Assignee by Buyer, the term "Buyer", whenever used
in this Agreement,  shall mean Assignee,  unless the context otherwise requires.
This  Purchase  Agreement  shall be binding upon and inure to the benefit of the
parties hereto and their respective  successors and permitted  assigns and shall
inure to the benefit of the Persons entitled to indemnity under Article XI.

          Section  15.4  Partial  Invalidity.  In  case  any  one or more of the
provisions  contained  herein  shall,  for any  reason,  be held to be  invalid,
illegal,  or  unenforceable  in any respect,  such  invalidity,  illegality,  or
unenforceability   shall  not  affect  any  other  provision  of  this  Purchase
Agreement,  but this Purchase  Agreement  shall be construed as if such invalid,
illegal,  or  unenforceable  provision or  provisions  had never been  contained
herein unless the deletion of such provision or provisions  would result in such
a material change as to cause  completion of the Transactions to be unreasonable
or would  materially  and adversely  frustrate the  objectives of the parties as
expressed in this Purchase Agreement.

          Section 15.5 Execution in Counterparts. This Purchase Agreement may be
executed in two or more  counterparts,  all of which shall be considered one and
the same  agreement,  and  shall  become a  binding  agreement  when one or more
counterparts  have been signed by each of the parties and  delivered  to each of
the other parties.






                                       43

<PAGE>



          Section 15.6 Titles and Headings.  Titles and headings to Articles and
Sections  herein are inserted  for  convenience  of  reference  only and are not
intended  to be a part of or to affect  the  meaning or  interpretation  of this
Purchase Agreement.

          Section 15.7 Entire Agreement. This Purchase Agreement,  together with
all schedules and exhibits hereto and any documents  delivered  pursuant to this
Purchase Agreement, contains the entire understanding of the parties hereto with
regard to the subject matter contained herein.

          Section 15.8  Announcements.  Announcements to the public,  employees,
customers,  or suppliers  concerning  the  Transactions  by the Sellers or Buyer
shall be subject to the approval of the other parties in all essential respects,
except that the  approval by the other  parties  shall not be required as to any
statements and other  information  which a party may submit to any  Governmental
Entity or is required to announce pursuant to any Law.

          Section 15.9 Construction.  The parties  acknowledge that both parties
and their counsel have participated  fully in the negotiation and preparation of
this Purchase Agreement and agree that, in any construction or interpretation of
this Purchase Agreement, no provision shall be construed against the interest of
either party on the basis that such party drafted such provision.

          Section 15.10  Jurisdiction.  Any action,  suit, or proceeding arising
out of,  based  on,  or in  connection  with  this  Purchase  Agreement,  or the
Transactions  may be  brought  only  in any  United  States  District  Court  or
appropriate  state court in the State of Delaware and each party  covenants  and
agrees not to assert, by way of motion, as a defense, or otherwise,  in any such
action, suit, or proceeding,  any claim that it is not subject personally to the
jurisdiction  of such  court,  that  its  property  is  exempt  or  immune  from
attachment or execution,  that the action,  suit, or proceeding is brought in an
inconvenient  forum,  that the  venue of the  action,  suit,  or  proceeding  is
improper,  or that this Purchase  Agreement or the subject matter hereof may not
be enforced in or by such court.

          Section 15.11 Further Actions. At any time and from time to time, each
party hereto agrees, without further consideration,  to take such actions and to
execute and deliver such documents as may be reasonably  necessary to effectuate
the purposes of this Purchase  Agreement and to more  effectively  carry out the
transfer  of  stock  and  assets,  realization  of  assets,  and  assumption  of
liabilities contemplated by this Purchase Agreement.

          Section 15.12 Shell Litigation. (a) Until the Closing, Castle and IRLP
shall control the prosecution,  defense and negotiation of any settlement of the
Shell Litigation,  in each case with counsel of its choice,  and Castle and IRLP
shall bear all Litigation  Expenses with respect  thereto  incurred prior to the
Closing.  Any settlement  effected or judgment  rendered in the Shell Litigation
prior to the Closing shall be solely for the account of Castle.

 



                                       44

<PAGE>

                  (b) Upon and  following  the  Closing,  Buyer shall assume and
control the prosecution,  defense and negotiation of any settlement of the Shell
Litigation,  and shall bear all Litigation  Expenses  incurred after the Closing
with respect thereto.  Any settlement effected or judgment rendered in the Shell
Litigation  after the  Closing  shall be solely for the  account of Buyer.  Upon
request, all parties to the Shell Litigation that are controlled by Castle shall
execute, deliver and file any and all papers and documents as may be required to
effectuate the intent of this paragraph (b).

          Section 15.13 Expenses.  Each party hereto shall pay its own costs and
expenses incident to this Purchase  Agreement and to action taken in preparation
for carrying this Agreement into effect.






                                       45

<PAGE>





                   IN WITNESS  WHEREOF,  the  parties  hereto  have  caused this
Purchase  Agreement  to be duly  executed  as of the date and year  first  above
written.

                               AM WEST G.P., INC.

                               By:    /S/ B. N. BANERJEE
                                      ---------------------------------
                               Title: B. N. BANERJEE, PRESIDENT
                                      ---------------------------------

                               CASTLE ENERGY CORPORATION

                         
                               By:    /S/ JOSEPH L. CASTLE
                                      ---------------------------------
                               Title:
                                      ---------------------------------

                               INDIAN REFINING I LIMITED PARTNERSHIP
                               By:      INDIAN REFINING & MARKETING I INC.,
                                        General Partner



                               By:    /S/ WILLIAM S. SUDHAUS
                                      ---------------------------------
                               Title: WILLIAM S. SUDHAUS, CEO
                                      ---------------------------------
                            


                               INDIAN REFINING & MARKETING I INC.

                               By:    /S/ WILLIAM S. SUDHAUS
                                      ---------------------------------
                               Title: WILLIAM S. SUDHAUS, CEO
                                      ---------------------------------