Document:

exv10w1

 

Exhibit 10.1

EXECUTION COPY

STOCK PURCHASE AGREEMENT

By and Among

WOODLAWN PIPELINE COMPANY, INC.

as the Company,

LANTERN RESOURCES, L.P.,

and

DAVID P. DEISON,

as the Sellers

and

PRISM GAS SYSTEMS I, L.P.,

as the Purchaser

April 27, 2007

 

 

Table of Contents

	 	 	 	 	 
	 	 	Page
	ARTICLE I PURCHASE AND SALE; CLOSING
	 	 	1	 
	Section 1.1 Purchase and Sale of Stock
	 	 	1	 
	Section 1.2 Purchase Price; Escrow Amount
	 	 	1	 
	Section 1.3 Closing
	 	 	2	 
	Section 1.4 Pre-Closing Deliveries
	 	 	2	 
	Section 1.5 Closing Deliveries
	 	 	3	 
	Section 1.6 Adjustment of the Purchase Price
	 	 	4	 
	 
	 	 	 	 
	ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLERS
	 	 	5	 
	Section 2.1 Authorization
	 	 	5	 
	Section 2.2 Title to Company Shares
	 	 	6	 
	Section 2.3 Governmental Authorization
	 	 	6	 
	Section 2.4 Noncontravention
	 	 	6	 
	Section 2.5 Brokers; Advisors
	 	 	6	 
	 
	 	 	 	 
	ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY
	 	 	7	 
	Section 3.1 Existence and Power
	 	 	7	 
	Section 3.2 Company Authorization
	 	 	7	 
	Section 3.3 Governmental Authorization
	 	 	7	 
	Section 3.4 Noncontravention
	 	 	7	 
	Section 3.5 Capitalization of the Company; Subsidiaries
	 	 	7	 
	Section 3.6 Financial Statements
	 	 	8	 
	Section 3.7 Absence of Undisclosed Liabilities
	 	 	8	 
	Section 3.8 Absence of Certain Changes
	 	 	8	 
	Section 3.9 Material Contracts
	 	 	10	 
	Section 3.10 Litigation
	 	 	10	 
	Section 3.11 Compliance with Laws and Court Orders
	 	 	11	 
	Section 3.12 Intellectual Property
	 	 	11	 
	Section 3.13 Insurance Coverage
	 	 	11	 
	Section 3.14 Employment Matters
	 	 	12	 
	Section 3.15 Employee Benefit Matters
	 	 	12	 
	Section 3.16 Gas Regulatory Matters
	 	 	13	 
	Section 3.17 Tax Matters
	 	 	13	 
	Section 3.18 Environmental Matters
	 	 	13	 
	Section 3.19 Letters of Credit; Bank Accounts
	 	 	14	 
	Section 3.20 Real Property
	 	 	14	 
	Section 3.21 Tangible Personal Property
	 	 	15	 
	Section 3.22 Accounts Receivable
	 	 	15	 
	Section 3.23 Brokers; Advisors
	 	 	15	 
	Section 3.24 Disclaimer
	 	 	15	 
	 
	 	 	 	 
	ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER
	 	 	16	 
	Section 4.1 Existence and Power
	 	 	16	 

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Table of Contents

(continued)

	 	 	 	 	 
	 	 	Page
	Section 4.2 Authorization
	 	 	16	 
	Section 4.3 Governmental Authorization
	 	 	16	 
	Section 4.4 Noncontravention
	 	 	16	 
	Section 4.5 Purchase for Investment
	 	 	16	 
	Section 4.6 Litigation
	 	 	16	 
	Section 4.7 Brokers; Advisors
	 	 	16	 
	 
	 	 	 	 
	ARTICLE V COVENANTS OF THE PARTIES
	 	 	17	 
	Section 5.1 Conduct of Business
	 	 	17	 
	Section 5.2 Access and Information
	 	 	18	 
	Section 5.3 Notices of Certain Events
	 	 	18	 
	Section 5.4 Reasonable Best Efforts; Further Assurances
	 	 	18	 
	Section 5.5 Certain Filings
	 	 	19	 
	Section 5.6 Post-Effective Date, Pre-Closing Activity
	 	 	19	 
	Section 5.7 Publicity
	 	 	19	 
	Section 5.8 Financing
	 	 	19	 
	Section 5.9 Payment of Post Closing Insurance Claim
	 	 	19	 
	Section 5.10 Certain Tax Matters
	 	 	19	 
	 
	 	 	 	 
	ARTICLE VI OTHER AGREEMENTS
	 	 	20	 
	Section 6.1 Employees; Employee Benefits
	 	 	20	 
	Section 6.2 Title Defects
	 	 	20	 
	Section 6.3 Phase I Environmental Assessment
	 	 	20	 
	Section 6.4 Wells Fargo Debt and Release of Guarantors and Related Matters
	 	 	21	 
	Section 6.5 Agreements with Star Compression, Inc.
	 	 	21	 
	Section 6.6 Consulting Agreement
	 	 	21	 
	Section 6.7 Excluded Assets
	 	 	21	 
	 
	 	 	 	 
	ARTICLE VII CONDITIONS TO CLOSING
	 	 	21	 
	Section 7.1 Conditions to Each Party’s Obligations
	 	 	21	 
	Section 7.2 Further Conditions to Obligations of Purchaser
	 	 	22	 
	Section 7.3 Conditions to Obligations of Sellers
	 	 	23	 
	 
	 	 	 	 
	ARTICLE VIII TERMINATION
	 	 	23	 
	Section 8.1 Termination
	 	 	23	 
	 
	 	 	 	 
	ARTICLE IX INDEMNIFICATION
	 	 	24	 
	Section 9.1 Indemnification by Sellers
	 	 	24	 
	Section 9.2 Indemnification by Purchaser
	 	 	25	 
	Section 9.3 Procedure for Indemnification
	 	 	25	 
	Section 9.4 Survival
	 	 	27	 
	Section 9.5 Limitations on Indemnification
	 	 	27	 
	Section 9.6 Inconsistent Provisions
	 	 	28	 

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Table of Contents

(continued)

	 	 	 	 	 
	 	 	Page
	Section 9.7 Right to Indemnification Not Affected by Knowledge
	 	 	28	 
	Section 9.8 Express Negligence
	 	 	28	 
	 
	 	 	 	 
	ARTICLE X GENERAL PROVISIONS; MISCELLANEOUS
	 	 	28	 
	Section 10.1 Modification; Waiver
	 	 	28	 
	Section 10.2 Entire Agreement
	 	 	28	 
	Section 10.3 Expenses
	 	 	28	 
	Section 10.4 Further Actions
	 	 	29	 
	Section 10.5 Notices
	 	 	29	 
	Section 10.6 Assignment
	 	 	30	 
	Section 10.7 No Third Party Beneficiaries
	 	 	30	 
	Section 10.8 Counterparts
	 	 	30	 
	Section 10.9 Headings
	 	 	30	 
	Section 10.10 Terms Generally
	 	 	30	 
	Section 10.11 Governing Law
	 	 	30	 
	Section 10.12 Jurisdiction
	 	 	30	 

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EXHIBITS

	 	 	 
	Exhibit A

	 	Definitions
	Exhibit B

	 	Escrow Agreement
	Exhibit C

	 	Non-Competition Agreement

LIST OF SCHEDULES

	 	 	 
	Schedule 1.6(a)

	 	Agreed Upon Procedures for Working Capital Calculation
	Schedule 2.2

	 	Title to Company Shares
	Schedule 3.4

	 	Noncontravention
	Schedule 3.7

	 	Undisclosed Liabilities
	Schedule 3.8

	 	Absence of Certain Changes
	Schedule 3.9

	 	Material Contracts
	Schedule 3.10

	 	Litigation
	Schedule 3.11

	 	Compliance with Laws and Court Orders
	Schedule 3.12(a)

	 	Company Intellectual Property
	Schedule 3.12(b)

	 	Licensed Intellectual Property
	Schedule 3.13

	 	Insurance Coverage
	Schedule 3.14

	 	Employment Matters
	Schedule 3.15

	 	Employee Benefit Matters
	Schedule 3.17

	 	Tax Matters
	Schedule 3.18

	 	Environmental Matters
	Schedule 3.18(c)

	 	Environmental Investigations
	Schedule 3.18(d)

	 	Hazardous Substances
	Schedule 3.18(e)

	 	Inactive or Discontinued Operations on Real Property
	Schedule 3.19

	 	Letters of Credit; Bank Accounts
	Schedule 3.20(a)

	 	Owned Real Property
	Schedule 3.20(b)

	 	Leased Real Property
	Schedule 3.22

	 	Accounts Receivable
	Schedule 5.1(d)

	 	Capital Expenditures
	Schedule 6.7

	 	Excluded Assets

-iv-

 

STOCK PURCHASE AGREEMENT

     THIS STOCK PURCHASE AGREEMENT (this “Agreement”), dated as of April 27, 2007, is
entered into by and among (i) Prism Gas Systems I, L.P., a Texas limited partnership
(“Purchaser”), (ii) Woodlawn Pipeline Company, Inc., a Texas corporation (the “Company”)
and (iii) Lantern Resources, L.P., a Texas limited partnership, and David P. Deison (each a
“Seller” and collectively, the “Sellers”).

RECITALS

     WHEREAS, Sellers are the owners of those shares of capital stock of the Company listed
opposite their names on Schedule 2.2 attached hereto (collectively, the “Company
Shares”);

     WHEREAS, Purchaser desires to purchase from Sellers, and Sellers desire to sell to Purchaser,
all of the Company Shares, in each case on the terms and conditions set forth herein; and

     WHEREAS, capitalized terms used herein but not otherwise defined herein shall have the
meanings ascribed to them in Exhibit A attached hereto.

AGREEMENT

     NOW, THEREFORE, in consideration of these recitals and the respective representations,
warranties and covenants contained herein, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree as follows:

ARTICLE I

PURCHASE AND SALE; CLOSING

     Section 1.1 Purchase and Sale of Stock. Subject to and in accordance with the terms and
conditions set forth in this Agreement, at the Closing, Purchaser will purchase from each Seller,
and each Seller will severally sell to Purchaser, the Company Shares listed opposite each Seller’s
name on Schedule 2.2 attached hereto.

     Section 1.2 Purchase Price; Escrow Amount.

     (a) The aggregate purchase price for the Company Shares (the “Purchase Price”)
shall equal $30,200,000, (i) plus (or minus, to the extent a negative number) an amount
equal to Working Capital as of the Effective Date, (ii) minus the Wells Fargo Payment
Amount, and (iii) minus the Escrow Amount. The Purchase Price shall be divided among
Sellers in proportion to the number of Company Shares sold to Purchaser by each of them as
provided in Section 1.1 (subject to such adjustments as shall be made with the
consent of each Seller affected thereby). The Purchase Price, as adjusted pursuant to this
Section 1.2, shall be payable in cash at Closing in immediately available funds to the
accounts specified in writing by the Sellers at least 48 hours prior to Closing.

1

 

     (b) Purchaser shall pay by wire transfer of immediately available funds to Wells Fargo
Bank, N.A., at closing an amount equal to all outstanding obligations owed by the Company to
Wells Fargo Bank, N.A. (the “Wells Fargo Payment Amount”). Such funds shall be wired to the
account specified in writing by the Sellers at least 48 hours prior to Closing.

     (c) $250,000 of the Purchase Price (the “Escrow Amount”) shall be placed in escrow
pursuant to the terms of the escrow agreement (the “Escrow Agreement”) attached hereto as
Exhibit B. The Agreement shall provide that the funds shall relate to the
remediation, to the reasonable satisfaction of the Purchaser, of all deficiencies in the
plant and field compressor permits listed on Schedule 3.11. In the event that the
cost of the remediation of such deficiencies is less than the Escrow Amount, upon completion
of such remediation, the difference between the cost expended by the Purchaser to undertake
such remediation, including all fees, fines and expenses of advisors and counsel, and the
Escrow Amount shall be released to Sellers. The parties have agreed that the Sellers will
continue to supervise the activities of the third party consultant, Crowther & Associates,
Austin, Texas, retained by the Company to obtain the necessary plant and field compressor
air quality permits listed in Schedule 3.11 from the Texas Commission on
Environmental Quality; provided however, that Sellers must consult with and obtain the prior
consent of Purchaser (which consent may not unreasonably be withheld) in connection with
each step in the permit remediation process before the TCEQ. All expenses of remediation
will be submitted by the Sellers to the Purchaser and paid under the terms of the Escrow
Agreement.

     Section 1.3 Closing. The purchase and sale (the “Closing”) provided for in this
Agreement will take place at the offices of the Purchaser at 10:00 a.m. C.D.T., on the date that is
the later of, (i) May 2, 2007, or (ii) two (2) Business Days following the satisfaction or waiver
of all conditions to closing in Article VII (other than those conditions that by their
nature are to be satisfied at the Closing, but subject to the fulfillment or waiver of those
conditions), or at such other time and place as the parties may agree in writing. The date and
time on which the Closing actually takes place is referred to herein as the “Closing Date”.
Upon consummation, the closing shall be deemed to be effective for financial and accounting
purposes as of the close of business on the Effective Date.

     Section 1.4 Pre-Closing Deliveries. No later than three (3) Business Days prior to the
Closing Date, Sellers shall deliver to Purchaser a statement setting forth the Company’s good faith
estimate of (i) the Working Capital as of the Effective Date (the “Estimated Working Capital”),
(ii) the Wells Fargo Payment Amount and (iii) the Purchase Price (the “Estimated Purchase Price”),
and a reasonably detailed computation of such estimates, including an estimated consolidated
balance sheet for the Company as of the Effective Date, supporting schedules, including, without
limitation, accounting reconciliations for cash, accounts receivable and accounts payable, and
other relevant information, in each case prepared in accordance with the Company’s historical
method of accounting on a basis consistent with the December 31, 2006 balance sheet included in the
Financial Statements in a manner agreed to by the parties that fairly presents the assets,
liabilities and equity of the Company as of the Effective Date. Purchaser shall be entitled to
conduct a timely review of such information and to provide good faith, reasonable objections to any
such calculations not later than one (1) Business Day prior to

2

 

the Closing Date. Subject to resolution of any such good faith, reasonable objections, the
Estimated Purchase Price shall be paid at Closing and shall be subject to further adjustment
post-Closing as provided in Section 1.6.

     Section 1.5 Closing Deliveries.

     (a) At the Closing, Sellers or the Company will deliver to Purchaser:

     (i) certificate(s) representing the Company Shares, which certificate(s) shall
be duly endorsed in blank (or accompanied by duly executed stock powers);

     (ii) a certificate of non-foreign status executed by each Seller in compliance
with U.S. Treasury Regulation Section 1.1445-2(b)(2);

     (iii) certificates, dated the Closing Date, executed by each Seller and the
Company and certifying the matters set forth in Section 7.2(d);

     (iv) duly executed copies of all consents and approvals required for the
consummation of the transactions contemplated by this Agreement, including, without
limitation, the consents listed on Schedule 3.4;

     (v) certified copies of resolutions of the general partner of Lantern
Resources, L.P. authorizing the transactions contemplated by this Agreement;

     (vi) duly executed resignations of all officers and directors of the Company;

     (vii) non-competition agreements in the form attached hereto as Exhibit
C (the “Non-Competition Agreements”) duly executed by each of Richard C. Coe, H.
Douglas Coe, Jr., Barbara Anne Coe and W. Philip Coe;

     (viii) the Amendments to the Star Compression Contracts pursuant to Section
6.5, duly executed by Star;

     (ix) the Consulting Agreement pursuant to Section 6.6, duly executed by Joe
Baugh; and

     (x) such other documents to be delivered by Sellers as may be required by this
Agreement or reasonably requested by Purchaser.

     (b) At the Closing, Purchaser will deliver to Sellers:

     (i) the Purchase Price, as adjusted, in accordance with Section 1.2;

     (ii) a certificate, dated the Closing Date, executed by Purchaser and
certifying the matters set forth in Section 7.3(c);

3

 

     (iii) certified copies of resolutions of the general partner of the Purchaser
authorizing the transactions contemplated by this Agreement;

     (iv) the Non-Competition Agreements duly executed by the Purchaser;

     (v) Amendments to the Star Agreements pursuant to Section 6.5, duly
executed by the Purchaser; 

     (vi) the Letter of Credit; and

     (vii) such other documents to be delivered by Purchaser as may be required by
this Agreement or reasonably requested by Sellers.

     Section 1.6 Adjustment of the Purchase Price.

          (a) As promptly as practicable, but not later than 45 Business Days after the Closing Date,
Purchaser will cause to be prepared and delivered to Sellers an actual balance sheet of the Company
as of the close of business on the Effective Date (the “Closing Balance Sheet”) and a certificate
based on such Closing Balance Sheet setting forth the Purchaser’s good faith calculation of the
Working Capital as of the Effective Date. The Closing Balance Sheet shall (x) fairly present the
assets, liabilities and equity of the Company as of the Effective Date in accordance with the
Company’s historical method of accounting applied on a basis consistent with those used in the
preparation of the December 31, 2006 balance sheet included in the Financial Statements, and (y)
include line items substantially consistent with those in such December 31, 2006 balance sheet; and
(z) shall be prepared in the manner agreed to by the parties set forth in Schedule 1.6(a).

          (b) If Sellers disagree with Purchaser’s calculation of the Working Capital delivered pursuant
to Section 1.6(a), Sellers may, within 10 Business Days after delivery of the documents
referred to in Section 1.6(a), deliver a notice to Purchaser disagreeing with such
calculation which specifies Sellers’ calculation of such amount and, in reasonable detail, Sellers’
grounds for such disagreement.

          (c) If a notice of disagreement shall be duly delivered pursuant to this Section 1.6,
Purchaser and Sellers shall, during the 15 Business Days following such delivery, use commercially
reasonable efforts to reach agreement on the disputed items or amounts in order to determine, as
may be required, the amount of the Working Capital, which amount shall not be less than the amount
thereof shown in Purchaser’s calculation delivered pursuant to Section 1.6(a) nor more than
the amount thereof shown in Sellers’ calculation delivered pursuant to Section 1.6(b). If
during such period, Purchaser and Sellers are unable to reach such agreement, they shall promptly
thereafter cause the audit group of a nationally recognized “Big 4” accounting firms, or another
mutually acceptable accounting firm, that does not provide tax or audit services to Purchaser, the
Company or any Seller (the “Accounting Referee”) promptly to review this Agreement and the
disputed items or amounts for the purpose of calculating the Working Capital. Each party shall set
forth in writing its estimate of the Working Capital referred to the Accounting Referee for
resolution and the Accounting Referee shall, as promptly

4

 

as practicable, be required to select the position of either one party or the other party with
respect to the Working Capital and to communicate such selection to both parties. The costs of the
Accounting Referee shall be borne entirely by the party which does not have its position selected
by the Accounting Referee. The determination of the Accounting Referee shall be final, conclusive
and binding on the parties and shall be enforceable in any court having jurisdiction.

          (d) Purchaser and Sellers agree that they will, and cause their respective independent
accountants to and the Company to, cooperate and assist in the preparation of the Closing Balance
Sheet, the calculation of the Working Capital and, if applicable, the reviews referred to in this
Section 1.6, including making available, to the extent necessary, books, records, work
papers and personnel of the Company.

          (e) If the Estimated Working Capital exceeds the Final Working Capital (as defined below),
Sellers shall pay to Purchaser, as an adjustment to the Purchase Price, in the manner and with the
interest as provided in Section 1.6(f), the amount of such excess. If the Final Working
Capital exceeds the Estimated Working Capital, then Purchaser shall pay to Sellers as an adjustment
to the Purchase Price, in the manner and with interest as provided in Section 1.6(f), the
amount of such excess. The “Final Working Capital” means the Working Capital as of the Effective
Date (i) as shown in Purchaser’s calculation delivered pursuant to Section 1.6(a), if no
notice of disagreement with respect thereto is duly delivered pursuant to Section 1.6(b);
or (ii) if such a notice of disagreement is delivered, (A) as agreed by Purchaser and Sellers, or
(B) in the absence of such agreement, as determined by the Accounting Referee pursuant to
Section 1.6(c); provided that in no event shall the Final Working Capital be less than
Purchaser’s calculation of the Working Capital delivered pursuant to Section 1.6(a) or more
than Sellers’ calculation of the Working Capital delivered pursuant to Section 1.6(b).

          (f) Any payment pursuant to Section 1.6(e) shall be made within five days after the
Final Working Capital has been determined (x) in the case of payments made by Purchaser, by
delivery by Purchaser of immediately available funds, or (y) in the case of payments made by
Sellers, by delivery from Sellers (pro rata from each Seller in accordance with the percentages of
prior ownership of the stock of the Company) in immediately available funds. Payments made
pursuant to Section 1.6(e) shall bear cash interest at the rate of 6% per annum from the
Closing Date to the date of payment.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF SELLERS

     Sellers have delivered to Purchaser the Disclosure Schedules to this Agreement referred to in
this Article II. Each Seller, jointly and severally, represents and warrants to Purchaser
that, except as otherwise set forth in the Disclosure Schedules, the following statements are true
and correct as of the date hereof (except that any representation and warranty that is made as of a
specific date need only be true as of such date):

     Section 2.1 Authorization.

(a) David P. Deison has the full capacity to execute and deliver this Agreement and to
perform his obligations hereunder. This Agreement has been duly executed and

5

 

delivered by David P. Dieson and, assuming that this Agreement has been duly executed and
delivered by Purchaser, this Agreement constitutes the valid and binding obligation of David
P. Deison, enforceable against him in accordance with its terms, except as such enforcement
may be limited by laws affecting the enforcement of creditors’ rights generally or by
general equitable principles.

(b) Lantern Resources, L.P. is a limited partnership duly organized, validly existing and in
good standing under the laws of the state of its formation. Lantern Resources, L.P. has the
full limited partnership power and authority to execute and deliver this Agreement and to
perform its obligations hereunder. This Agreement has been duly executed and delivered by
Lantern Resources, L.P. and, assuming that this Agreement has been duly executed and
delivered by Purchaser, this Agreement constitutes the valid and binding obligation of
Lantern Resource, L.P., enforceable against it in accordance with its terms, except as such
enforcement may be limited by laws affecting the enforcement of creditors’ rights generally
or by general equitable principles.

     Section 2.2 Title to Company Shares. Each Seller owns beneficially and of record the
number of Company Shares listed on Schedule 2.2 opposite such Seller’s name under the
heading “Number of Shares,” free and clear of any Liens, other than those described on Schedule
2.2. Except as set forth on Schedule 2.2, there are no restrictions on or agreements
with respect to the voting rights of such Seller’s Company Shares, including, without limitation,
any proxies or voting trusts. Upon the delivery of and payment for the Company Shares at the
Closing as provided for in this Agreement, Purchaser will receive good and valid title to such
Seller’s Company Shares, free and clear of any Lien, other than (i) Liens created by or resulting
from the actions of Purchaser or any of its Affiliates or (ii) restrictions under applicable
securities laws and under any legend reflecting the limitations set forth in Section 4.5.

     Section 2.3 Governmental Authorization. The execution, delivery and performance by such
Sellers of this Agreement and the consummation of the transactions contemplated hereby require no
action, notice, filing, authorization, consent, waiver or approval by or in respect of, a
Governmental Authority.

     Section 2.4 Noncontravention. The execution, delivery and performance by such Sellers of
this Agreement and the consummation of the transactions contemplated hereby do not and will not (i)
violate any Applicable Law; (ii) except as disclosed in Schedule 3.4, require any
authorization, consent, waiver, or approval, or other action by any Person under, constitute a
default under, or give rise to any right of termination, modification, cancellation or acceleration
of any right or obligation of the Company or to a loss of any benefit to which the Company is
entitled under any provision of any agreement, contract, lease, license, instrument, decree,
judgment or other arrangement binding upon the Company, or (iii) result in the creation or
imposition of any Lien, except for any Permitted Liens.

     Section 2.5 Brokers; Advisors. All negotiations relating to this Agreement and the
transactions contemplated hereby have been carried out without the services of any Person acting on
behalf of such Seller in such manner as to give rise to any valid claim against Purchaser or the
Company for any brokerage or finder’s commission or similar compensation, or any legal, accounting
or other professional advisory fees.

6

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     The Company has delivered to Purchaser the Disclosure Schedules to this Agreement referred to
in this Article III. The Company represents and warrants to Purchaser that, except as
otherwise set forth on the Disclosure Schedules, the following statements are true and correct as
of the date hereof (except that any representations and warranties that are made as of a specific
date need only be true as of such date):

     Section 3.1 Existence and Power. The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Texas, and it has all powers and all
governmental licenses, authorizations, permits, consents and approvals required to carry on its
business as now conducted and to own, lease, and operate all properties and assets now owned,
leased or operated by it. The Company is duly qualified to do business as a foreign Person and is
in good standing in each jurisdiction where such qualification is necessary, except for those
jurisdictions where failure to be so qualified would not, individually or in the aggregate, have a
Material Adverse Effect.

     Section 3.2 Company Authorization. The execution, delivery and performance by the Company
of this Agreement and the consummation of the transactions contemplated hereby are within the
Company’s powers and have been duly authorized by all necessary action on the part of the Company.
This Agreement constitutes a valid and binding agreement of the Company.

     Section 3.3 Governmental Authorization. The execution, delivery and performance by the
Company of this Agreement and the consummation of the transactions contemplated hereby require no
action, notice, filing, authorization, consent, waiver or approval by or in respect of, a
Governmental Authority.

     Section 3.4 Noncontravention. The execution, delivery and performance by the Company of
this Agreement and the consummation of the transactions contemplated hereby do not and will not (i)
violate the Organizational Documents of the Company, (ii) violate any Applicable Law that is
material to the Business or the Company’s assets; (iii) except as disclosed in Schedule
3.4, require any authorization, consent, waiver, or approval, or other action by any Person
under, constitute a default under, or give rise to any right of termination, modification,
cancellation or acceleration of any right or obligation of the Company or to a loss of any benefit
to which the Company is entitled under any provision of any agreement, contract, lease, license,
instrument, decree, judgment or other arrangement binding upon the Company, or (iv) result in the
creation or imposition of any Lien, except for any Permitted Liens.

     Section 3.5 Capitalization of the Company; Subsidiaries.

     (a) The Company. The authorized capital stock of the Company consists of
1,000,000 shares of Common Stock no par value each, of which, as of the date hereof, 1,000
shares are issued and outstanding. The Company Shares held by Sellers constitute all of the
outstanding capital stock of the Company. All of the outstanding shares of capital stock of
the Company have been duly authorized and validly issued and are fully paid and
nonassessable.

7

 

     (b) Agreements with Respect to Company Capital Stock. There are no (i)
preemptive or similar rights on the part of any holder of any class of securities of the
Company; (ii) subscriptions, options, warrants, conversion, exchange or other rights,
agreements or commitments of any kind obligating the Company to issue or sell, or cause to
be issued and sold, any shares of Common Stock or any securities convertible into or
exchangeable for any such shares; (iii) stockholder agreements, voting trusts or other
agreements or understandings to which the Company is a party relating to the voting,
purchase, redemption or other acquisition of any shares of Common Stock; or (iv) outstanding
dividends, whether current or accumulated, due or payable on any of the capital stock of the
Company.

     (c) Organizational Documents. The Company has provided Purchaser with true and
complete copies of the Organizational Documents of the Company.

     (d) Subsidiaries; Investments. The Company has no Subsidiaries and does not
presently own, of record or beneficially, or control, directly or indirectly, any capital
stock, securities convertible into or exchangeable for capital stock or any other equity
interest in any Person.

     Section 3.6 Financial Statements. The Company has made available to Purchaser true and
complete copies of unaudited financial statements of the Company for the fiscal years ended
December 31, 2006 and 2005 (collectively, the “Financial Statements”), which are attached
as a part of Schedule 3.6. The Financial Statements (including the related notes and
schedules) fairly present the financial condition and results of operations of the Company as of
the dates and for the periods presented, and have been prepared in accordance with the Company’s
historical method of accounting consistent with past practice. 

     Section 3.7 Absence of Undisclosed Liabilities. Except as disclosed in Schedule
3.7 , as of the date hereof and as of the Closing Date, the Company does not have any material
debts, liabilities or obligations of any kind or character (whether fixed, contingent, existing or
inchoate), except for (i) debts, liabilities and obligations reflected on the Latest Balance Sheet,
(ii) continuing obligations under contracts, and (iii) debts, liabilities and obligations incurred
by the Company in the ordinary course of business consistent with past practice since the date of
the Latest Balance Sheet and in compliance with the provisions set forth in Sections 3.8
and 5.1.

     Section 3.8 Absence of Certain Changes. Except as disclosed in Schedule 3.8 or as
expressly contemplated by this Agreement, since December 31, 2006, the business of the Company has
been conducted in the ordinary course consistent with past practices and since December 31, 2006
there has not been:

     (a) a Material Adverse Effect;

     (b) any declaration, setting aside or payment of any dividend or other distribution in
respect of the capital stock of the Company;

     (c) any repurchase, redemption or other acquisition by the Company of any outstanding
capital stock or other securities of the Company;

8

 

     (d) any amendment of any material term of any outstanding security of the Company, or
any issuance of additional equity securities or grant of any option, warrant or right to
acquire any equity securities or issue any security convertible into or exchangeable for
equity securities;

     (e) any incurrence, creation, renewal, assumption or guarantee by the Company of any
(i) indebtedness for borrowed money, (ii) capitalized lease arrangement, (iii) hedging
transactions, or (iv) operating lease arrangements, in any case other than in the ordinary
course of business consistent with past practices and in all cases, not in excess of
$100,000 in the aggregate;

     (f) any making of any loan, advance or capital contributions to, or investment in, any
Person other than loans, advances or capital contributions to or investments made in the
ordinary course of business consistent with past practices;

     (g) any (i) amendment of the articles or certificate of incorporation or bylaws of the
Company, (ii) recapitalization, reorganization, liquidation or dissolution of the Company or
(iii) merger or other business combination involving the Company;

     (h) any commencement or termination by the Company of any line of business;

     (i) any transaction or commitment made, including any capital expenditure or any
contract or agreement entered into by the Company relating to its assets or business, in
either case, material to the Company, other than transactions and commitments in the
ordinary course of business consistent with past practices and those contemplated by this
Agreement;

     (j) any material change in any method of accounting or accounting practice by the
Company;

     (k) any (i) increase in the salary, wages or other compensation of any officer,
employee or consultant of the Company whose annual salary is, or after giving effect to such
change would be, $20,000 or more, (ii) employment, deferred compensation, severance,
retirement or other similar agreement entered into with any director, officer or employee of
the Company (or any amendment to any such existing agreement), (iii) grant of any severance
or termination pay to any director, officer or employee of the Company (iv) change in
compensation or other benefits payable to any director, officer or employee of the Company
to any severance or retirement plans or policies thereof, in each case other than in the
ordinary course of business consistent with past practices, or (v) any adoption, entering
into or becoming bound by any employee benefit plan, employment-related contract or
collective bargaining agreement, or amendment, modification or termination (partial or
complete) of any employee benefit plan, employment-related contract or collective bargaining
agreement, except to the extent required by Applicable Law;

     (l) any (i) change in accounting method, (ii) closing agreement (as defined in Section
7121 of the Code) or settlement of a material Tax liability entered into that

9

 

affects the Company, (iii) sale or other disposition of assets that is subject to the
installment method or has been treated as an open transaction, (iv) change in a Tax
election, or (v) amendment to a Tax Return filed by the Company;

     (m) any transfer, assignment or encumbrance of any material asset of the Company, other
than the Permitted Liens;

     (n) any physical damage, destruction or other casualty loss (whether or not covered by
insurance) affecting any material asset of the Company in an amount exceeding $10,000
individually or $50,000 in the aggregate;

     (o) any capital expenditure in excess of $100,000 in the aggregate in the case of all
capital expenditures, other than for capital expenditures related to projects set forth on
Schedule 3.8;

     (p) any other transaction involving or development affecting the Purchased Assets
outside the ordinary course of business consistent with past practice; or

     (q) any entering into a contract or committing to do or engage in any of the foregoing
after the date hereof.

     Section 3.9 Material Contracts.

     (a) Schedule 3.9 discloses any agreements, contracts, plans, leases,
arrangements or commitments binding upon the Company that provide for the payment or
delivery of assets or services, with obligations that could result in payments of amounts in
excess of $100,000 on an annual basis. Schedule 3.9 also discloses (i) any
agreement pursuant to which the Company is entitled to, or required to provide,
indemnification to or from a third party including, without limitation, with respect to
breached representations or warranties, breached covenants and/or environmental matters or
conditions, and (ii) whether any indemnification claims have been asserted or are
contemplated thereunder, including with respect to asserted claims, the disposition of such
claims. Each agreement, contract, plan, lease, arrangement or commitment required to be
disclosed pursuant to this Section 3.9(a) is referred to herein as a “Material
Contract”.

     (b) The Company has furnished or made available to Purchaser complete and correct
copies of the Material Contracts listed on Schedule 3.9, as in effect on the date
hereof. Neither the Company nor, to the Knowledge of the Company, any other party thereto,
is in default under any Material Contract, and each Material Contract is in full force and
effect as to the Company, and to the Knowledge of the Company, as to each other party
thereto. The Company has not received any written notice of any material default under any
Material Contract that has not been cured or any other termination notice with respect
thereto.

     Section 3.10 Litigation. Except as disclosed on Schedule 3.10, there is no action,
claim, suit, investigation or proceeding pending against, or to the Knowledge of the Company,

10

 

threatened against or affecting the Company or any of its properties before any court or arbitrator
or any governmental body, agency or official.

     Section 3.11 Compliance with Laws and Court Orders. Except as set forth in Schedule
3.11, the Company is not in violation of, or has not received any written notice of any
violation of, or to the Knowledge of the Company, is under investigation with respect to or has
been threatened to be charged with any violation of, any applicable law, rule, regulation,
judgment, injunction, order or decree. Schedule 3.11 lists all permits and licenses held
by the Company with respect to the operation of the business and there are no other permits or
licenses required to own and operate the business of the Company in the manner in which the
business is currently owned and operated (collectively, “Permits”).

     Section 3.12 Intellectual Property. The Company owns, or otherwise has the right to use
pursuant to license, sublicense, agreement or otherwise, all items of Intellectual Property
required in connection with the operation of the Business as presently conducted. To the Knowledge
of the Company, no third party is infringing on any material Intellectual Property owned by the
Company, and no third party has asserted in writing that the Company is infringing on the
Intellectual Property of such third party.

     (a) Schedule 3.12(a) contains a list of all registrations and applications for
registration and other material owned Intellectual Property included in the Company
Intellectual Property.

     (b) Schedule 3.12(b) sets forth a list of (i) all agreements as to which the
Company is a party and pursuant to which any Person is authorized to use any material
Company Intellectual Property and (ii) all agreements to which the Company is a party and
pursuant to which the Company has a license or right to use Intellectual Property of a third
party.

     (c) No Company Intellectual Property or, to the Knowledge of the Company, any
Intellectual Property licensed to the Company, is subject to any outstanding judgment,
injunction, order, decree or agreement restricting the use thereof by the Company or
restricting the license thereof by the Company to any Person.

     (d) To the Knowledge of the Company, the conduct of the business of the Company as
presently conducted does not infringe upon, misappropriate, or otherwise violate the
Intellectual Property of any third party.

     Section 3.13 Insurance Coverage. The Company has made available to Purchaser, and has
included as Schedule 3.13 hereto, a list of, and true and complete copies of, all insurance
policies or binders and fidelity or performance bonds relating to the assets, business, operations,
employees, officers or directors of the Company, including any environmental policy, together with
a schedule of the material claims history of the Company under such policies and bonds since
January of 2002. Schedule 3.13 also lists all claims which are presently contemplated
under such policies. There are no claims by the Company pending under any of such policies or
bonds as to which coverage has been questioned, denied or disputed by the underwriters of such
policies or bonds or in respect of which such underwriters have reserved their rights. Each such

11

 

policy and bond is in full force and effect, and the Company is not in breach of any material term
of such policies or bonds and, to the Knowledge of the Company, no insurer or other party to any
such policy or bond is in breach of any material term thereof. The insurance coverage maintained
by the Company is of such a type and in such amounts as similarly situated operators of businesses
that are similar to the Business would reasonably be expected to maintain.

     Section 3.14 Employment Matters. Schedule 3.14 sets forth a complete and accurate
list of all employees of the Company, including their title, job description, salary amounts, bonus
paid in 2006 and their tenure with the Company. Other than those Persons set forth on Schedule
3.14, the Company has no employees. Except as set forth on Schedule 3.14, (i) the Company
has complied with all laws relating to the employment of labor, including provisions thereof
relating to wages, hours, equal opportunity, collective bargaining and the payment of social
security and other taxes; (ii) the Company has not experienced any strike, material grievance or
other collective bargaining dispute, and no such action is pending or, to the Knowledge of the
Company, threatened; (iii) there are no workers’ compensation claims pending against the Company;
(iv) to the Knowledge of the Company, no employee of the Company is subject to any secrecy or
noncompetition agreement or any other agreement or restriction of any kind that would impede in any
way the ability of such employee to carry out fully all activities of such employee in furtherance
of the Business; (v) all employees of the Company are legally employed, the Company is in
compliance with all requirements of the Immigration and Reform Control Act of 1986, and the Company
is not a party to or bound by any collective bargaining agreement.

     Section 3.15 Employee Benefit Matters.

     (a) Schedule 3.15 lists each “employee benefit plan” (as defined in Section
3(3) of ERISA) and any other material employee plan or agreement maintained, contributed to,
or required to be contributed to by the Company (each, a “Company Benefit Plan”).
The Company has made available to Purchaser correct and complete copies of (i) each Company
Benefit Plan (or, in the case of any such Company Benefit Plan that is unwritten,
descriptions thereof) and (ii) the most recent summary plan description for each Company
Benefit Plan for which such summary plan description is required. Each Company Benefit Plan
maintained, contributed to, or required to be contributed to by the Company has been
administered in accordance with its terms. The Company and all of the Company Benefit Plans
are in compliance with the applicable provisions of ERISA, the Code and all other applicable
laws with respect to employee benefit matters.

     (b) During the past six years, the Company has not made or been required to make,
directly or indirectly, contributions to any “multiemployer plan,” as defined in Section
3(37) of ERISA, or an employee pension plan subject to Title IV of ERISA or Section 412 of
the Code. The Company has paid and discharged promptly when due all liabilities and
obligations arising under ERISA or the Code of a character which if unpaid or unperformed
would result in the imposition of a Lien against the assets of the Company.

12

 

     Section 3.16 Gas Regulatory Matters. The Company is not subject to regulation under the
Public Utility Holding Company Act, as amended, or the Investment Company Act of 1940, as amended.
The Company is not subject to regulation under the Natural Gas Act of 1938, as amended. No portion
of the assets of the Company are subject to the jurisdiction of the Federal Energy Regulatory
Commission under the Natural Gas Act of 1938, the Natural Gas Policy Act of 1978 or the Interstate
Commerce Act.

     Section 3.17 Tax Matters. Each Tax Return required to have been filed by the Company has
been timely filed and all amounts shown as due on such Tax Returns have been paid. All such Tax
Returns are true, correct and complete in all material respects. All employment and withholding
Taxes required to be paid or withheld by or on behalf of the Company has been paid or properly set
aside in accounts for such purpose. As of the date hereof, no written agreement or other document
extending, or having the effect of extending, the period of assessment or collection of any Taxes
payable by the Company, and no power of attorney with respect to any such Taxes, has been executed
or filed with the Internal Revenue Service or any other taxing authority that is currently in
effect. The Company is not, as of the date hereof, the beneficiary of any extension of time (other
than an automatic extension of time not requiring the consent of the Internal Revenue Service or
any other taxing authority) within which to file any Tax Return not previously filed. As of the
date hereof, to the Knowledge of the Company, there are no pending audits, examinations,
investigations or other proceedings in respect of Taxes payable by the Company. The Company (a) is
not a party to any Tax allocation or sharing agreement, (b) is not or has not been a member of an
affiliated group filing consolidated or combined Tax Returns or (c) otherwise has no liability for
the Taxes of any Person (other than the Company).

     Section 3.18 Environmental Matters. Except as disclosed on Schedule 3.18:

     (a) (i) no written and pending notice, order, request for information, complaint or
penalty has been received by the Company, and (ii) there are no judicial, administrative or
other third party claims, demands, suits or proceedings pending or threatened, in the case
of each of (i) and (ii), which allege a violation of or liability under any Environmental
Law by the Company or any predecessor to the Company;

     (b) except as set forth in Schedule 3.18(b), the Company is in compliance with
all applicable Environmental Laws, has obtained all permits, licenses, consents and
approvals required under all applicable Environmental Laws to entitle the Company to own or
lease and operate its respective assets and to carry on and conduct the Business as
currently conducted (“Environmental Permits”), and is in compliance with the terms
of such Environmental Permits and with all other applicable Environmental Laws;

     (c) there has been no written environmental investigation, study or audit conducted
within the past five years by, or on behalf of, or in the possession or control of the
Company of any property currently or formerly owned, operated or leased by the Company which
has not been delivered or made available to Purchaser prior to the date hereof and is not
listed on Schedule 3.18(c);

13

 

     (d) except as disclosed on Schedule 3.18(d), no Hazardous Substances have been
released, discharged, dumped, or disposed of to (i) soil in amounts that would reasonably be
expected to impact groundwater or surface water, (ii) groundwater, or (iii) surface water,
in the case of each of (i), (ii), and (iii), at, under, on or from real property currently
or, to the Knowledge of the Company, formerly owned, leased, and/or operated by the Company
or that would otherwise violate Applicable Law; and

     (e) except as disclosed in Schedule 3.18(e), to the Knowledge of the Company,
there is no Real Property where operations are inactive or discontinued as of the date
hereof.

     Section 3.19 Letters of Credit; Bank Accounts. Except as set forth on the Latest Balance
Sheet (or as disclosed in the notes thereto) or as disclosed on Schedule 3.19, no surety
bonds, letters of credit, or cash collateral issued in respect of the Company is outstanding.
Schedule 3.19 also lists all bank accounts, and lockboxes of the Company by location,
account number and authorized signatory thereto.

     Section 3.20 Real Property .

     (a) Schedule 3.20(a) indicates which parcels of Real Property constitute owned
Real Property (the “Owned Real Property”), and sets forth an accurate and complete
(in all material respects) legal description of the Owned Real Property. The Owned Real
Property constitutes all of the real property owned by the Company that is used or held for
use in connection with the Business. The Company is in possession of all Owned Real
Property. Except as set forth in Schedule 3.20(a), the Company has good and
defensible title in fee simple absolute to such Owned Real Property free and clear of all
Liens except for Permitted Liens. Such Owned Real Property is sufficient to permit the
Business to operate in the historical ordinary course of business.

     (b) Schedule 3.20(b) indicates which parcels of Real Property constitute leased
Real Property (the “Leased Real Property”), and sets forth a list of the Leased Real
Property (including all known right of way agreements), except as indicated on Schedule
3.20(b). The Leased Real Property constitutes all of the real property leased by the
Company (including all known right of way agreements), that is used or held for use in
connection with the Business. The Leased Real Property is sufficient to permit the Business
to operate in the historical ordinary course of business.

     (c) There are no contracts affecting the title to or possession of any of the Real
Property other than those set out in Schedule 3.20(b).

     (d) Neither the whole nor any portion of the Real Property has been condemned,
requisitioned, or otherwise taken by any public authority, and no notice of any such
condemnation, requisition, or taking has been received by the Company. To the Company’s
Knowledge, no such condemnation, requisition, or taking is threatened or contemplated. The
Company has no Knowledge of any public improvements that may result in special assessments
against the Real Property.

14

 

     (e) (i) The Real Property is in compliance in all respects with all applicable zoning,
building, health and fire laws, (ii) the zoning of each parcel of Real Property permits the
existing improvements and the continuation following consummation of the transactions
contemplated hereby of the Business as presently conducted thereon, (iii) the Company has
all licenses, certificates of occupancy, permits, and authorizations required to conduct the
Business as currently conducted by the Company on the Real Property, (iv) the Company has
such easements and rights as are necessary to conduct the Business as currently conducted by
the Company on the Real Property, and (v) no fact or condition exists that has resulted or
is reasonably likely to result in the termination or impairment of access to the Real
Property or discontinuation of sewer, water, electric, gas, telephone, waste disposal, or
other utilities necessary to conduct the Business on the Real Property.

     (f) The Company has delivered or made available to Purchaser accurate, correct, and
complete (in all material respects) copies of all valid and existing deeds, leases,
mortgages, deeds of trust, certificates of occupancy, easements, right of way agreements,
existing title insurance policies, title reports, surveys, and all amendments thereof that
are within the Company’s possession or control with respect to any Real Property.

     Section 3.21 Tangible Personal Property. The inventory owned by the Company is in such
amounts as are consistent with its respective past practices and such inventory is saleable, and
not obsolete or defective. The Company is in possession of and has good title to, or has valid
leasehold interests in or valid rights under contract to use, all tangible and intangible property
reflected on the balance sheets included in the Financial Statements and tangible and intangible
property acquired since the date of the Latest Balance Sheet, other than property disposed of since
such date in the ordinary course of business consistent with past practice. All such tangible and
intangible property is free and clear of all Liens, other than Permitted Liens, and is in good
working condition, ordinary wear and tear excepted. Such tangible and intangible property is
sufficient to permit the Business to operate in the historical ordinary course of business.

     Section 3.22 Accounts Receivable. The accounts receivable owed to the Company as of the
Effective Date are listed on Schedule 3.22. All such accounts receivable are collectible
in full.

     Section 3.23 Brokers; Advisors. All negotiations relating to this Agreement and the
transactions contemplated hereby have been carried out without the services of any Person acting on
behalf of such Seller in such manner as to give rise to any valid claim against Purchaser or the
Company for any brokerage or finder’s commission or similar compensation, or any legal, accounting
or other professional advisory fees.

     Section 3.24 Disclaimer. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT AND THE
DOCUMENTS AND AGREEMENTS EXECUTED IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY, SELLERS
MAKE NO REPRESENTATIONS OR WARRANTIES OF ANY KIND OR NATURE WITH RESPECT TO THE ASSETS OR
LIABILITIES OF THE COMPANY OR THE BUSINESS.

15

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PURCHASER

     Purchaser hereby makes the following representations and warranties to Sellers:

     Section 4.1 Existence and Power. Purchaser is a limited partnership duly formed, validly
existing and in good standing under the laws of the State of Texas, and it has all powers and all
material governmental licenses, authorizations, permits, consents and approvals required to carry
on its business as now conducted and to own, lease, and operate all properties and assets now
owned, leased or operated by it, except for those licenses, authorizations, permits, consents and
approvals the absence of which would not have a material adverse effect on (i) the business, assets
or results of operations of Purchaser and its subsidiaries, taken as a whole, or (ii) the ability
of Purchaser to perform its material legal obligations under this Agreement.

     Section 4.2 Authorization. The execution, delivery and performance by Purchaser of this
Agreement and the consummation of the transactions contemplated hereby are within the powers of
Purchaser and have been duly authorized by all necessary action on the part of Purchaser. This
Agreement constitutes a valid and binding agreement of Purchaser.

     Section 4.3 Governmental Authorization. The execution, delivery and performance by
Purchaser of this Agreement and the consummation of the transactions contemplated hereby require no
action, notice, filing, authorization, consent, waiver or approval with any governmental body,
agency or official.

     Section 4.4 Noncontravention. The execution, delivery and performance by Purchaser of this
Agreement and the consummation of the transactions contemplated hereby do not and will not (i)
violate the Organizational Documents of Purchaser, (ii) assuming compliance with the matters
referred to in Section 4.3, violate any Applicable Law, rule, regulation, judgment,
injunction, order or decree, or (iii) require any consent or other action by any Person under,
constitute a default under, or give rise to any right of termination, cancellation or acceleration
of any right or obligation of Purchaser.

     Section 4.5 Purchase for Investment. Purchaser is acquiring the Company Shares for
investment for its own account and not with a view to, or for sale in connection with, any
distribution thereof. Purchaser (either alone or together with its advisors) has sufficient
knowledge and experience in financial and business matters so as to be capable of evaluating the
merits and risks of its investment in the Company Shares and is capable of bearing the economic
risks of such investment.

     Section 4.6 Litigation. There is no action, suit, investigation or proceeding pending
against, or to the Knowledge of Purchaser threatened against or affecting, Purchaser before any
court or arbitrator or any governmental body, agency or official which in any manner challenges or
seeks to prevent, enjoin, alter or materially delay the transactions contemplated by this
Agreement.

     Section 4.7 Brokers; Advisors. In the event Purchaser has retained an advisor, investment
banker, broker, finder or other intermediary in connection with the transactions

16

 

contemplated by this Agreement, Sellers shall not have any liability or obligation to pay and shall
not pay any such fees or expenses to any such Person.

ARTICLE V

COVENANTS OF THE PARTIES

     Section 5.1 Conduct of Business. From the date hereof until the Closing, the Company (i)
will conduct the Business in the ordinary course in substantially the same manner in which it
previously has been conducted, and (ii) will not, without the prior consent of Purchaser, take any
of the following actions:

     (a) amend the Organizational Documents of the Company;

     (b) merge or consolidate with any other Person or acquire a material amount of assets
from any other Person;

     (c) sell, lease, license or otherwise dispose of or subject to any Lien (other than
Permitted Liens) any material assets or property except (i) pursuant to existing contracts
or commitments or (ii) otherwise in the ordinary course consistent with past practices;

     (d) make any capital expenditure in excess of $100,000 in the aggregate in the case of
all capital expenditures without prior written consent of Purchaser, other than for (i)
capital expenditures related to projects set forth on Schedule 5.1(d) or (ii)
unanticipated capital expenditures necessary for the business of the Company to operate in
compliance with Applicable Law enacted after the date of this Agreement;

     (e) cancel or terminate its current insurance policies or cause any of the coverage
thereunder to lapse, unless simultaneously with such termination, cancellation or lapse,
replacement policies providing coverage equal to or greater than the coverage under the
canceled, terminated or lapsed policies for substantially similar premiums are in full force
and effect;

     (f) terminate or materially amend any contracts with material customers or suppliers;

     (g) hire as an employee, or extend offers of employment to any Person;

     (h) (i) amend or terminate any employment or severance agreement with any officer or
employee of the Company, or (ii) change the compensation or other benefits payable to any
officer or employee of the Company pursuant to any severance or retirement plans or policies
thereof, in each case other than in the ordinary course of business consistent with past
practices;

     (i) change an accounting method or Tax election, enter into a closing agreement (as
defined in Section 7121 of the Code) or settlement with respect to Taxes, or file an amended
Tax Return;

17

 

     (j) issue or sell any shares of capital stock or other securities of the Company;

     (k) declare, set aside, make or pay any dividend or other distribution in respect of
any shares of Common Stock or other securities of the Company, or repurchase, redeem or
otherwise acquire any outstanding shares of Common Stock or other securities of the Company;

     (l) incur, create, renew, assume or guarantee any (i) indebtedness for borrowed money,
(ii) capitalized lease arrangement, (iii) hedging transactions, or (iv) operating lease
arrangements, in any case other than in the ordinary course of business consistent with past
practices and in all cases not in excess of $100,000 in the aggregate; or

     (m) agree, whether in writing or otherwise, to do any of the foregoing.

     Section 5.2 Access and Information. From and after the date of this Agreement, Sellers
will cause the Company to give Purchaser and its representatives reasonable access during normal
business hours to the properties, books, records, business plans and budgets of the Company and
will furnish such information and documents in its possession relating to the Company as Purchaser
may reasonably request. All such information and documents obtained by Purchaser shall be subject
to the terms and conditions of that certain letter agreement, dated September 5, 2006 by and
between Purchaser and the Company (the “Confidentiality Agreement”). Notwithstanding the
foregoing, Purchaser shall not have access to personnel records of the Company which in the
Company’s good faith opinion would violate Applicable Laws.

     Section 5.3 Notices of Certain Events. The Company shall promptly notify Purchaser of:

     (a) any notice or other communication from any Person alleging that the consent of such
Person is or may be required in connection with the transactions contemplated by this
Agreement;

     (b) any notice or other communication from any Governmental Authority in connection
with the transactions contemplated by this Agreement;

     (c) any breach or inaccuracy of the Company’s, or to the Knowledge of the Company, the
Sellers’ representations and warranties contained in this Agreement; or

     (d) any actions, suits, claims, investigations or proceedings commenced relating to the
Company that, if pending on the date of this Agreement, would have been required to have
been disclosed pursuant to Section 3.10.

     Section 5.4 Reasonable Best Efforts; Further Assurances. Subject to the terms and
conditions of this Agreement, Purchaser, Sellers and the Company will use their reasonable best
efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things
necessary or desirable under applicable laws and regulations to consummate the transactions
contemplated by this Agreement. The Sellers, prior to the Closing, and Purchaser, after the

18

 

Closing, agree to cause the Company to execute and deliver such other documents, certificates,
agreements and other writings and to take such other actions as may be necessary or desirable in
order to consummate or implement expeditiously the transactions contemplated by this Agreement.

     Section 5.5 Certain Filings. The parties shall cooperate with one another (i) in
determining whether any action by or in respect of, or filing with, any governmental body, agency,
official or authority is required, or any actions, consents, approvals or waivers are required,
including in connection with the possible transfer of any permits, authorizations, licenses or
consents for any Real Property, to be obtained from parties to any material contracts, in
connection with the consummation of the transactions contemplated by this Agreement and (ii) in
taking such actions or making any such filings, furnishing information required in connection
therewith and seeking to obtain, in a timely manner, any such actions, consents, approvals or
waivers.

     Section 5.6 Post-Effective Date, Pre-Closing Activity. Between the Effective Date and the
Closing Date, Sellers shall cause the Company to (x) collect all accounts, notes and loans
receivable strictly in accordance with past practice and Section 3.8 and (y) pay all accounts
payable strictly in accordance with past practice. Both Sellers, on one hand, and Purchaser, on
the other, shall have complete access to the Company and its employees and management to monitor
the Company’s activities with respect to such collections and payments during the period between
the Effective Date and the Closing Date.

     Section 5.7 Publicity. The parties agree to consult with each other before issuing any
press release or making any public statement with respect to this Agreement or the transactions
contemplated hereby and, except for any press releases and public announcements the making of which
may be required by applicable law or any listing agreement with any national securities exchange,
will not issue any such press release or make any such public statement prior to such consultation.

     Section 5.8 Financing. The Sellers and the Company agree to provide all information
reasonably requested by Purchaser or any lending institution in connection with financing the
transactions contemplated by this Agreement.

     Section 5.9 Payment of Post Closing Insurance Claim. The Company has lodged a claim with
its casualty insurance carrier to reimburse the Company for approximately $85,356.75 in repairs to
a compressor. The Company has already paid for all these repairs and is seeking reimbursement for
the entire amount of the repairs from its carrier. Since the amount, if any, that may ultimately
be recovered from the carrier cannot be determined until after Closing, the parties have agreed
that the Purchase Price will be adjusted in an amount equal to the amount of the Company’s ultimate
recovery under this insurance claim and that such amount will be paid over to the Sellers within
ten (10) Business Days of its receipt by the Company. The Purchasers agree to allow the Sellers to
continue to communicate with the insurance carrier and/or its representatives following Closing for
the purposes of resolving this claim.

     Section 5.10 Certain Tax Matters. Sellers with respect to Tax Returns which relate solely
to a taxable period ending on or before the Closing Date, and Purchaser, with respect to

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Tax Returns otherwise required to be filed by the Company, shall have the right to control any Tax
audit, initiate any claim for refund, contest, resolve and defend against any assessment, notice of
deficiency, or other adjustment or proposed adjustment, or contest any extension or waiver of the
limitations period applicable to any Tax claim or assessment with respect to the Company.

ARTICLE VI

OTHER AGREEMENTS

     Section 6.1 Employees; Employee Benefits.. Immediately prior to the Closing, Sellers shall
cause the Company to terminate all employees, and any severance payments required to be made by the
Company to such terminated employees, shall be paid by the Company prior to the Closing. Sellers
agree to jointly and severally indemnify Purchaser from any claims relating to the Company’s
employment of Persons prior to the Closing.

     Section 6.2 Title Defects.

     (a) Purchaser has caused Commonwealth Land Title Insurance Company (the “Title
Company”) to deliver to Purchaser a commitment for a title insurance policy (GF No. 5
SET59023C-dated April 5, 2007) in favor of Purchaser with respect to the Real Property (the
“Title Policy”). Purchaser shall be responsible for the payment of all costs and
expenses associated with the issuance of the Title Policy and Sellers shall use their
commercially reasonable efforts to deliver to the Title Company any affidavits, agreements
or other documents or assurances reasonably necessary to cause the issuance of the Title
Policy. Upon receipt from the Title Company of the Title Policy, Purchaser shall provide a
copy of the Title Policy to Sellers.

     (b) Purchaser may seek to cause a Texas registered and licensed professional surveyor
identified by Purchaser to deliver to Purchaser a standard current survey with respect to
the Real Property (the “Survey”) to meet the requirements of the Minimum Standard
Detail Requirements for ALTA/ACSM Land Title Surveys jointly established by the American
Land Title Association, the American Congress on Surveying and Mapping and the National
Society of Professional Surveyors. The Purchasers shall be responsible for the payment of
all costs and expenses associated with the issuance of the Survey. Upon receipt from the
surveyor of the Survey, Purchaser shall provide a copy of the Survey to Sellers.

     (c) If the results of the Title Policy or the Survey are unsatisfactory to Purchaser,
Purchaser may terminate this agreement in its sole discretion at any time prior to Closing.

     Section 6.3 Phase I Environmental Assessment. Prior to the Closing Date, at Purchaser’s
sole cost and expense, Purchaser shall have the right to conduct a Phase I environmental assessment
(the “Phase I Environmental Assessment”), prepared by an environmental consultant selected
by Purchaser. If the results of the Phase I Environmental Assessment are unsatisfactory to
Purchaser, Purchaser, in its sole discretion, may either (a) terminate this Agreement or (b) at its
sole cost and expense, undertake additional environmental

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assessments, including, without limitation, a Phase II environmental assessment (the “Phase II
Environmental Assessment”). Upon receipt from the consultant of any Phase I Environmental
Assessment or Phase II Environmental Assessment, Purchaser shall provide a copy of such to Sellers.
If the results of the Phase II Environmental Assessment are unsatisfactory to Purchaser, Purchaser
may terminate this Agreement in its sole discretion at any time prior to Closing.

     Section 6.4 Wells Fargo Debt and Release of Guarantors and Related Matters. Purchaser
agrees to arrange for the release of all obligations under that certain Irrevocable Letter of
Credit Number NZS590799 issued by Wells Fargo on February 14, 2007 in favor of Penn Virginia Oil &
Gas, L.P. The parties agree that the Sellers and all other guarantors of the Company’s obligations
to Wells Fargo must be released from their guarantees to Wells Fargo at or prior to Closing.

     Section 6.5 Agreements with Star Compression, Inc.. The Company currently leases seven
compressors from an Affiliate, Star Compression, Inc. (“Star”). The Company also has an agreement
with Star to service these seven compressors. Notwithstanding anything to the contrary in any
existing agreement between the Company and Star, the Purchasers agree, and the Sellers agree to
cause Star, to enter into amendments to the Star leases (the “Star Amended Leases”) that reflect
the current terms with the sole exception that the agreements be revised to reflect that without
good cause, neither the Company nor Star will terminate the Star Agreements without 180 days prior
written notice.

     Section 6.6 Consulting Agreement. Sellers shall cause Joe Baugh to enter into a consulting
arrangement with the Company that is acceptable to Purchaser. Such consulting arrangement shall be
pursuant to a consulting agreement (the “Consulting Agreement”) to be entered into by the Company
and Joe Baugh at the Closing, which, among other items, will contain appropriate non-competition
provisions.

     Section 6.7 Excluded Assets. The parties have agreed that certain specific assets owned by
the Company may be distributed to or for the benefit of the Sellers at or prior to Closing. These
assets (“Excluded Assets”) are listed in Schedule 6.7.

ARTICLE VII

CONDITIONS TO CLOSING

     Section 7.1 Conditions to Each Party’s Obligations. The respective obligations of
Purchaser and Sellers to consummate the transactions contemplated by this Agreement are subject to
the satisfaction at or prior to the Closing Date of the following conditions:

     (a) No provision of Applicable Law and no judgment, injunction, order, decree, ruling
or charge shall prohibit or prevent the consummation of the transactions contemplated by
this Agreement or the consummation of the Closing;

     (b) No action, suit, or proceeding initiated by a Governmental Authority shall be
pending before any Governmental Authority seeking an injunction, judgment, order,

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decree, ruling, or charge that would prohibit or prevent the consummation of the
transactions contemplated by this Agreement;

     (c) That certain Asset Purchase Agreement between the Peak Gas Gathering L.P. (“Peak”)
and Prism Gas Systems I, L.P. dated April 27, 2007 covering the purchase of the Residue
Pipeline from the Woodlawn Plant to Texas Eastern Transmission Company owned by Peak for a
purchase price of $2,150,000 shall be closed simultaneous with this Agreement; and

     (d) Purchaser shall purchase from Star a 700 horsepower compressor, labeled Unit 1081,
for purchase price of $400,000.

     Section 7.2 Further Conditions to Obligations of Purchaser. The obligation of Purchaser to
consummate the transactions contemplated by this Agreement is further subject to the satisfaction
or waiver in writing by Purchaser at or prior to the Closing Date of the following conditions:

     (a) each of the representations and warranties of the Company and Sellers contained in
this Agreement shall be true and correct in all material respects as of the date of this
Agreement and as of the Closing, as if made at and as of that time (other than such
representations and warranties that expressly address matters only as of a certain date,
which need only be true as of such certain date);

     (b) Sellers and the Company shall have performed and complied in all material respects
with all covenants and obligations required by this Agreement to be performed or complied
with by it on or prior to the Closing Date;

     (c) no event or circumstance has occurred since the date of this Agreement which would
constitute a Material Adverse Effect;

     (d) Sellers and the Company shall have delivered to Purchaser certificates dated the
Closing Date, executed by each Seller and by an officer of the Company, certifying that the
conditions specified in Sections 7.2(a), (b) and (c) have been
fulfilled;

     (e) each item required to be executed and delivered to Purchaser pursuant to
Section 1.5(a) shall have been so executed and delivered;

     (f) all Liens, other than Permitted Liens, on the assets of the Company shall have been
released;

     (g) the Company’s 2006 Federal Income Tax Return, after review by the Purchaser, shall
have been filed and any Tax due with such return shall have been paid; and

     (h) Sellers shall have arranged for the person(s) performing the Company’s accounting
functions to continue to provide such services to the Company for a period of at least 90
days after Closing for a fee that is agreeable to the Purchaser.

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     Section 7.3 Conditions to Obligations of Sellers. The obligation of Sellers to consummate
the transactions contemplated by this Agreement is further subject to the satisfaction or waiver in
writing by Sellers at or prior to the Closing Date of the following conditions:

     (a) each of the representations and warranties of Purchaser contained in this Agreement
shall be true and correct in all material respects as of the date of this Agreement and as
of the Closing, as if made at and as of that time (other than such representations and
warranties that expressly address matters only as of a certain date, which need only be true
as of such certain date);

     (b) Purchaser shall have performed and complied in all material respects with all
covenants and obligations required by this Agreement to be performed or complied with by it
on or prior to the Closing Date;

     (c) Purchaser shall have delivered to Sellers a certificate dated the Closing Date,
executed by an appropriate officer of Purchaser, certifying that the conditions specified in
Sections 7.3(a) and (b) have been fulfilled; and

     (d) each item required to be executed and delivered to Purchaser pursuant to
Section 1.5(b) shall have been so executed and delivered.

ARTICLE VIII

TERMINATION

     Section 8.1 Termination.

     (a) This Agreement may be terminated:

     (i) at any time prior to the Closing Date by mutual consent of Purchaser and
Sellers;

     (ii) by Purchaser if there has been a material breach by any Seller or the
Company of any representation, warranty or covenant contained in this Agreement
which has prevented the satisfaction of any of the conditions of Purchaser to
consummate the transactions contemplated by this Agreement and, if such breach is of
a character that is capable of being cured, such breach has not been cured by
Sellers within 30 days after written notice thereof from Purchaser;

     (iii) by Sellers if there has been a material breach by Purchaser of any
representation, warranty or covenant contained in this Agreement which has prevented
the satisfaction of any of the conditions of Sellers to consummate the transactions
contemplated by this Agreement and, if such breach is of a character that is capable
of being cured, such breach has not been cured by Purchaser within 30 days after
written notice thereof from Sellers;

     (iv) by Purchaser or Sellers if any injunction, order or decree is issued by
any Governmental Authority materially restraining or prohibiting the

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consummation of the transactions contemplated by this Agreement and such
injunction, order or decree has become final and nonappealable;

     (v) by Purchaser or Sellers, if the Closing shall not have taken place on or
before May 31, 2007; provided, however, that the right to terminate this Agreement
pursuant to this Section 8.1(a)(v) shall not be available to Purchaser or
Sellers, as applicable, if the party seeking to terminate this Agreement, at such
time, is in material breach of any representation, warranty, covenant or agreement
set forth in this Agreement; or

     (vi) by Purchaser in accordance with Section 6.2(c) or Section
6.3.

     (b) In the event of termination pursuant to this Section 8.1, written notice
thereof shall forthwith be given to Purchaser or Sellers, as applicable, and the
transactions contemplated by this Agreement will be terminated without further action by any
party. If the transactions contemplated by this Agreement are terminated as provided
herein:

     (i) Purchaser will return to the Company all documents and other materials
received from Sellers, the Company and their respective agents (including all copies
of or materials developed from any such documents or other materials) relating to
the transactions contemplated hereby, whether obtained before or after the execution
hereof;

     (ii) Purchaser will not disclose, and will cause its agents and representatives
not to disclose, any non-public information received or otherwise learned in
connection with the transactions contemplated hereby relating to the Company,
whether obtained before or after the execution hereof;

     (iii) the Escrow Amount will be released to Purchaser; and

     (iv) this Agreement will become null and void and of no further force or
effect, except for Section 5.2 (relating to Confidential Information),
Section 5.7 (relating to publicity), and Article X; provided that
nothing in this Section 8.1 will be deemed to release any party from any
liability for any breach by such party of the terms and provisions of this
Agreement, or to impair the right of any party to compel specific performance by any
other party of its obligations under this Agreement.

ARTICLE IX

INDEMNIFICATION

     Section 9.1 Indemnification by Sellers. Each Seller hereby agrees, jointly and severally,
to indemnify and hold harmless Purchaser and its Affiliates and its and their managers, directors,
officers, members, shareholders, partners, employees and agents (the “Purchaser
Indemnitees”) from and after the Closing Date from and against, and shall reimburse the
Purchaser Indemnitees for, any and all Losses, including without limitation any Losses arising out
of the strict liability of any Person, paid, imposed on or incurred by the Purchaser

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Indemnitees, directly or indirectly, resulting from, caused by, arising out of, or in any way
relating to and with respect to any of, or any allegation by any third party of, the following:

     (a) any breach of or inaccuracy in any representation or warranty on the part of
Sellers or the Company under this Agreement (including the Disclosure Schedule); and

     (b) any non-fulfillment of any covenant or agreement on the part of Sellers or the
Company under this Agreement that has not been expressly waived by the party seeking the
indemnification in writing.

It shall not be necessary for Losses to be suffered as a result of or in connection with actions
taken, made or threatened by any third party or Governmental Authority for such Losses to be
indemnifiable under this Article IX.

     Section 9.2 Indemnification by Purchaser. Purchaser hereby agrees to indemnify and hold
harmless the Company and Sellers (the “Seller Indemnitees”) from and after the Closing Date
from and against, and shall reimburse the Seller Indemnitees for, any and all Losses, including
without limitation any Losses arising out of the strict liability of any Person, paid, imposed on
or incurred by the Seller Indemnitees, directly or indirectly, resulting from, caused by, arising
out of, or in any way relating to and with respect to any of, or any allegation by any third party
of, the following:

     (a) any breach of or inaccuracy in any representation or warranty on the part of
Purchaser under this Agreement (including the Disclosure Schedule); and

     (b) any non-fulfillment of any covenant or agreement on the part of Purchaser under
this Agreement that has not been expressly waived by the party seeking the indemnification
in writing.

It shall not be necessary for Losses to be suffered as a result of or in connection with actions
taken, made or threatened by any third party or Governmental Authority for such Losses to be
indemnifiable under this Article IX.

     Section 9.3 Procedure for Indemnification.

     (a) If there occurs an event that either party asserts is an indemnifiable event
pursuant to Section 9.2 or 9.3, the party seeking indemnification (the
“Indemnitee”) shall promptly provide notice (the “Notice of Claim”) to the
other party or parties obligated to provide indemnification (the “Indemnifying
Party”). Providing the Notice of Claim shall be a condition precedent to any Liability
of the Indemnifying Party hereunder, and the failure to provide prompt notice as provided
herein will relieve the Indemnifying Party of its obligations hereunder but only if and to
the extent that such failure materially prejudices the Indemnifying Party hereunder. In
case any such action shall be brought against any Indemnitee and it shall provide a Notice
of Claim to the Indemnifying Party of the commencement thereof, the Indemnifying Party shall
be entitled to participate therein and, to the extent that it shall wish, to assume the
defense thereof, with counsel reasonably satisfactory to such Indemnitee and, after notice
from the Indemnifying Party to such Indemnitee of such election so to assume the defense
thereof, the Indemnifying

25

 

Party shall not be liable to the Indemnitee hereunder for any
legal expenses of other counsel or any other expenses, in each case subsequently incurred by
the Indemnitee, in connection with the defense thereof other than reasonable costs of
investigation; provided, however, that if the Indemnitee reasonably believes that counsel
for the Indemnifying Party cannot represent both the Indemnitee and the Indemnifying Party
because such representation would be reasonably likely to result in a conflict of interest,
then the Indemnitee shall have the right to defend, at the sole reasonable cost and expense
of the Indemnifying Party, such action by all appropriate proceedings. The Indemnitee
agrees to reasonably cooperate with the Indemnifying Party and its counsel in the defense
against any such asserted liability. In any event, the Indemnitee shall have the right to
participate at its own expense in the defense of such asserted liability. No Indemnifying
Party, in the defense of any such claim or litigation, shall, except with the written
consent of each Indemnitee, consent to entry of any judgment or enter into any settlement
that does not include as an unconditional term thereof the release of the Indemnitee from
all Liability in respect to such claim or litigation or that does not solely require the
payment of money damages by the Indemnifying Person. The Indemnifying Party agrees to
afford the Indemnitee and its counsel, at the Indemnitee’s sole expense, the opportunity to
be present at, and to participate in, conferences with all Persons, including any
Governmental Authority, asserting any Claim against the Indemnitee or conferences with
representatives of or counsel for such Persons. In no event shall the Indemnifying Party,
without the written consent of the Indemnitee, settle any Claim on terms that provide for
(i) a criminal sanction against the Indemnitee or (ii) injunctive relief affecting the
Indemnitee.

     (b) Upon receipt of a Notice of Claim, the Indemnifying Party shall have twenty
calendar days (or such shorter period as may be appropriate under the circumstances) to
contest its indemnification obligation with respect to such claim, or the amount thereof, by
written notice to the Indemnitee (the “Contest Notice”); provided, however, that if,
at the time a Notice of Claim is submitted to the Indemnifying Party the amount of the Loss
in respect thereof has not yet been determined, such twenty day period in respect of, but
only in respect of the amount of the Loss, shall not commence until a further written notice
(the “Notice of Liability”) has been sent or delivered by the Indemnitee to the
Indemnifying Party setting forth the amount of the Loss incurred by the Indemnitee that was
the subject of the earlier Notice of Claim. Such Contest Notice shall specify the reasons
or bases for the objection of the Indemnifying Party to the claim, and if the objection
relates to the amount of the Loss asserted, the amount, if any, that the Indemnifying Party
believes is due the Indemnitee, and any undisputed amount shall be promptly paid over to the
Indemnitee. If no such Contest Notice is given within such twenty day period, the
obligation of the Indemnifying Party to pay the Indemnitee the amount of the Loss set forth
in the Notice of Claim, or subsequent Notice of Liability, shall be deemed established and
accepted by the Indemnifying Party.

     (c) If the Indemnifying Party fails to assume the defense of such Claim or, having
assumed the defense and settlement of such Claim, fails reasonably to contest such Claim in
good faith, the Indemnitee, without waiving its right to indemnification, may assume, at the
reasonable cost of the Indemnifying Party, the defense and settlement of such Claim;
provided, however, that (i) the Indemnifying Party shall be permitted to

26

 

join in the defense and settlement of such Claim and to employ counsel at its own
expense, (ii) the Indemnifying Party shall cooperate with the Indemnitee in the defense and
settlement of such Claim in any manner reasonably requested by the Indemnitee and (iii) the
Indemnitee shall not settle such Claim without obtaining the prior written consent of the
Indemnifying Party, which shall not be unreasonably withheld or delayed.

     (d) The Indemnifying Party shall make any payment required to be made under this
Article in cash and on demand. Any payments required to be paid by an Indemnifying Party
under this Article that are not paid within five (5) Business Days of the date on which such
obligation becomes final shall thereafter be deemed delinquent, and the Indemnifying Party
shall pay to the Indemnitee, immediately upon demand, interest at the rate of ten percent
per annum, not to exceed the maximum nonusurious rate allowed by Applicable Law, from the
date such payment becomes delinquent to the date of payment of such delinquent sums, which
interest shall be considered to be Losses of the Indemnitee.

     Section 9.4 Survival.

     (a) The liability of each Seller for his or her indemnification obligations arising
under Section 9.1(a) of this Agreement shall be limited to claims for which a Purchaser
Indemnitee delivers written notice to such Seller or to the Sellers, which shall constitute
written notice to all Sellers, on or before the second anniversary date of the Closing Date;
provided, however, that any indemnification obligation resulting from a breach of or
inaccuracy in any representation or warranty contained in (x) Sections 3.15, 3.17 and
3.18 shall survive until the applicable statute of limitations period has run with
respect to such claims and (y) Sections 2.1, 2.2, 2.3, 2.4,
2.6, 3.1, 3.2, 3.3, 3.4, 3.5, 3.16
and 3.24, as well as any claims under Section 9.1(b) shall not be
limited.

     (b) The liability of Purchaser for Purchaser’s indemnification obligations arising out
of Section 9.2 shall be limited to claims for which a Seller Indemnitee delivers
written notice to Purchaser on or before the third anniversary date of the Closing Date;
provided, however, that any indemnification obligation relating to (i) Section
9.2(a) and resulting from a breach of or inaccuracy in any representation or warranty
contained in Sections 4.1, 4.2, 4.3, 4.4 or 4.7 or
(ii) Section 9.2(b) shall not be limited.

     Section 9.5 Limitations on Indemnification. Notwithstanding anything in this Agreement to
the contrary, the maximum indemnification liability of Sellers, on the one hand, and Purchaser on
the other, shall not exceed $3,000,000 in the aggregate, provided, however, that such limitation
shall not apply to any indemnification obligation resulting from a breach of or inaccuracy in any
representation or warranty contained in Sections 2.1, 2.2, 2.3,
2.4, 3.1, 3.2, 3.3, 3.4, 3.5, 3.15,
3.17, 3.18 or 3.24 (ii) or Section 9.1(b). Notwithstanding
anything in this Agreement to the contrary, the maximum indemnification liability of Sellers, on
the one hand, and Purchaser on the other, shall not exceed the Purchase Price in the aggregate. No
claim may be made by the Purchaser Indemnities for indemnification under Section 9.1 hereof until
such Purchaser Indemnities have incurred aggregate Losses in excess of the Basket Threshold Amount
in the aggregate, at which time all amounts (including the Basket Threshold Amount) may be
recovered as provided in this Agreement.

27

 

     Section 9.6 Inconsistent Provisions. The provisions of this Article shall govern and
control over any inconsistent provisions of this Agreement.

     Section 9.7 Right to Indemnification Not Affected by Knowledge. The right to
indemnification in accordance with the provisions of this Article will not be affected by any
investigation conducted with respect to, or any knowledge acquired (or capable of being acquired)
at any time, whether before or after the Closing Date, with respect to the accuracy or inaccuracy
of or compliance with, any representation, warranty, covenant or obligation set forth in this
Agreement. If at any time prior to Closing, any of the parties hereto has knowledge of any facts,
circumstances or situations which constitute a breach of any representation, warranty or covenant
hereunder, such party shall give the other party prompt notice thereof.

     Section 9.8 Express Negligence. THE FOREGOING INDEMNITIES SET FORTH IN THIS ARTICLE ARE
INTENDED TO BE ENFORCEABLE AGAINST THE PARTIES IN ACCORDANCE WITH THE EXPRESS TERMS AND SCOPE
THEREOF, NOTWITHSTANDING ANY EXPRESS NEGLIGENCE RULE OR ANY SIMILAR DIRECTIVE THAT WOULD PROHIBIT
OR OTHERWISE LIMIT INDEMNITIES BECAUSE OF THE SIMPLE OR GROSS NEGLIGENCE (WHETHER SOLE, CONCURRENT,
ACTIVE OR PASSIVE) OR OTHER FAULT OR STRICT LIABILITY OF ANY INDEMNIFIED PARTY, INCLUDING, WITHOUT
LIMITATION, ARISING UNDER ENVIRONMENTAL LAWS. THE PARTIES HERETO ACKNOWLEDGE THAT THE INDEMNITIES
SET FORTH HEREIN MAY RESULT IN THE INDEMNITY OF A PARTY FOR ITS SIMPLE OR GROSS NEGLIGENCE (WHETHER
SOLE, CONCURRENT, ACTIVE OR PASSIVE) OR OTHER FAULT OR STRICT LIABILITY OF THE INDEMNIFIED PARTY.

ARTICLE X

GENERAL PROVISIONS; MISCELLANEOUS

     Section 10.1 Modification; Waiver. This Agreement may be modified only by a written
instrument executed by Purchaser, the Company and Sellers. Any of the terms and conditions of this
Agreement may be waived in writing at any time on or prior to the Closing Date by the party or
parties entitled to the benefits thereof.

     Section 10.2 Entire Agreement. This Agreement, including the Disclosure Schedules and
exhibits hereto, the documents, instruments and schedules referred to herein and all other
documents dated as of the date hereof and on the Closing, constitutes the entire agreement among
the parties with respect to the subject matter hereof and supersedes all other prior agreements and
understandings, both written and oral, among the parties or any of them with respect to the subject
matter hereof; provided,
however, that this Agreement does not supersede the Confidentiality Agreement, the terms and
conditions of which the parties hereto hereby expressly reaffirm.

     Section 10.3 Expenses. Except as expressly provided herein, whether or not the
transactions contemplated herein shall be consummated, each party shall pay its own expenses
incident to the preparation of this Agreement and the negotiation and consummation of the
transactions contemplated by this Agreement.

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     Section 10.4 Further Actions. Each party will execute and deliver such certificates and
other documents and take such other actions as may reasonably be requested by the other party in
order to consummate or implement the transactions contemplated hereby.

     Section 10.5 Notices. All notices, requests, demands and other communications hereunder
shall be in writing and shall be deemed to have been duly given or made as follows: (a) if sent by
registered or certified mail in the United States return receipt requested, upon receipt; (b) if
sent by reputable overnight air courier (such as DHL or Federal Express), one business day after
mailing; (c) if sent by facsimile transmission, when transmitted and receipt is confirmed by the
recipient by telephone; or (d) if otherwise actually personally delivered, when delivered, and
shall be delivered as follows:

     If to any Seller, to the address set forth under such Seller’s name on the signature page
hereto.

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

David N. Reed

Meadows, Collier, Reed, Cousins & Blau, LLP

901 Main Street, Suite 3700

Dallas, TX 75202

Fax: (214) 747-3732

     If to the Company:

Woodlawn Pipeline Company, Inc.

1800 Preston Park Blvd., Suite 112

Plano, Texas 75093

Fax: (972) 596-1713

Attention: Richard C. Coe, Vice President of Operations

     If to Purchaser:

Prism Gas Systems I, L.P.

2350 Airport Freeway, Suite 505

Bedford, Texas 76022

Fax: (817) 864-3101

Attention: Robert Dunn

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

Martin Midstream Partners L.P.

P. O. Box 41368

Beaumont, Texas 77725

Fax: (409) 835-3425

Attention: Chris Booth

or to such other address or to such other Person as any party hereto has last designated by notice
to the other parties.

     Section 10.6 Assignment. This Agreement will be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns. Neither this Agreement
nor any of the rights, interests or obligations hereunder may be assigned by any party hereto
without (i) the prior written consent of the Sellers in the case of an assignment by Purchaser,
(ii) the prior written consent of Purchaser in the case of an assignment by any Seller, and (iii)
the prior written consent of each of the other parties in the case of the Company; provided,
however, that Purchaser may assign this Agreement to an Affiliate without obtaining the consent of
Sellers. No assignment shall release the assigning party of its obligations and liabilities under
this Agreement.

     Section 10.7 No Third Party Beneficiaries. Nothing in this Agreement shall confer any
rights upon any Person that is not a party or a successor or permitted assignee of a party to this
Agreement.

     Section 10.8 Counterparts. This Agreement may be executed in counterparts, all of which
shall together constitute one and the same instrument.

     Section 10.9 Headings. The Section headings in this Agreement are for convenience of
reference only and will not be deemed to alter or affect the meaning or interpretation of any
provision hereof.

     Section 10.10 Terms Generally. The words “hereby,” “herein,”
“hereof,” “hereunder” and words of similar import refer to this Agreement as a
whole (including any exhibits and schedules hereto) and not merely to the specific section,
paragraph or clause in which such word appears. All references in this Agreement to Sections,
Exhibits and Schedules are references to Sections of, and Exhibits and Schedules to, this Agreement
unless the context otherwise requires. The words “include”, “includes” and
“including” are deemed to be followed by the phrase “without limitation.” The
definitions given in this Agreement apply equally to both the singular and plural forms of the
terms defined. Whenever the context requires, any pronoun includes the corresponding masculine,
feminine and neuter forms.

     Section 10.11 Governing Law. This Agreement shall be governed by and construed in
accordance with the law of the State of Texas, without regard to the conflicts of law rules that
would require the application of the law of another state.

     Section 10.12 Jurisdiction. The parties hereto agree that any suit, action or proceeding
seeking to enforce any provision of, or based on any matter arising out of or in connection with,

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this Agreement or the transactions contemplated hereby shall be brought in Collin County, Texas,
and that any cause of action arising out of this Agreement shall be deemed to have arisen from a
transaction of business in the State of Texas, and each of the parties hereby irrevocably consents
to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such
suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law, any
objection that it may now or hereafter have to the laying of the venue of any such suit, action or
proceeding in any such court or that any such suit, action or proceeding brought in any such court
has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be
served on any party anywhere in the world, whether within or without the jurisdiction of any such
court.

[Remainder of Page Intentionally Left Blank; Signature Page Follows]

31

 

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

	 	 	 	 	 
	 	 	PURCHASER:
	 
	 	 	 	 
	 	 	PRISM GAS SYSTEMS I, L.P.
	 

	 	By:
	 	Prism Gas Systems GP, LLC
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Robert Dunn
	 

	 	 	 	      Robert Dunn,
	 

	 	 	 	      Senior Vice President
	 
	 	 	 	 
	 	 	COMPANY:
	 
	 	 	 	 
	 	 	WOODLAWN PIPELINE COMPANY, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Richard C. Coe
	 

	 	 	 	      Richard C. Coe,
	 

	 	 	 	      Vice President of Operations
	 
	 	 	 	 
	 	 	SELLERS:
	 
	 	 	 	 
	 	 	/s/ David P. Deison
	 	 	David P. Deison
	 
	 	 	 	 
	 	 	Address:
	 	 	P.O. Box 1177
	 	 	109 Church Street
	 	 	Weatherford, Texas 76086
	 
	 	 	 	 
	 	 	LANTERN RESOURCES, L.P.
	 
	 	 	 	 
	 

	 	By:
	 	Lantern Holding Company, L.L.C.,
sole general partner
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Richard C. Coe
	 

	 	 	 	      Richard C. Coe, President
	 
	 	 	 	 
	 	 	Address:
	 	 	1800 Preston Park Blvd.
	 	 	Suite 112
	 	 	Plano, Texas 75093

Signature Page to Stock Purchase Agreement

32

 

EXHIBIT A

DEFINITIONS

     “Affiliate” means, with respect to any specified Person, a Person that directly, or
indirectly through one or more intermediaries, controls, or is controlled by, or is under
common control with, the Person specified. For purposes of this
definition, “control” (including
the correlative terms “controlling,”
“controlled by” and “under common control
with”) means the
possession, direct or indirect, of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting equity interest, by contract or otherwise.

     “Applicable
Law” means, with respect to any Person, any federal, state or local law
(statutory, common or otherwise), constitution, treaty, convention, ordinance, code, rule,
regulation, executive order, injunction, judgment, decree, ruling, or other similar requirement
enacted, adopted, promulgated, or applied by a Governmental Authority that is binding upon such Person.

     “Basket
Threshold Amount” means the sum of $305,000.00.

     “Business” means the business of the Company as currently conducted.

     “Business
Day” means a day, other than Saturday, Sunday or other day on which commercial
banks in New York, New York are authorized or required by law to close.

     “Claim” means any action, suit, proceeding, hearing, investigation, litigation,
charge, complaint, claim, Environmental Action or demand.

     “Code” means the Internal Revenue Code of 1986, as amended.

     “Common Stock” means the shares of Common Stock of the Company, no par value per
share.

     “Disclosure Schedules” means the disclosure schedules delivered by Company and Sellers
to Purchaser concurrently with the execution and delivery of this Agreement.

     “Effective Date” shall mean April 1, 2007, unless the Closing does not occur on or
before May 4, 2007, in which case the Effective Date shall mean the day on which the Company closes
its books for accounting purposes for the month most recently ended prior to the Closing Date;
provided, however that if Sellers cause the Closing to occur after May 4, 2007, the Effective Date
shall mean April 1, 2007.

     “Environmental Action” means any administrative, regulatory or judicial action, suit,
Claim, notice of non-compliance or violation, investigation, request for information, proceeding,
consent order or consent agreement by any Person relating in

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any way to any Environmental Law or any demand or threat with respect to any of the foregoing.

     “Environmental Laws” means any applicable United States federal, state, or local law,
rules, regulations, codes, ordinances, and orders, relating to pollution, contamination of soils or
ground water, or protection of the environment.

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

     “Governmental Authority” means any federal, state, local or foreign judicial,
legislative, executive or regulatory authority or agency.

     “Hazardous Substance” means any toxic or hazardous pollutant, contaminant, chemical,
waste, material or substance defined as such by any Environmental Law, that causes injury to the
environment and subjects the Company to costs or liability under any Environmental Law, and
specifically includes, but is not limited to: (i) petroleum and petroleum products, including crude
oil and any fractions thereof; (ii) natural gas, synthetic gas and any mixtures thereof; (iii)
PCBs; and (iv) asbestos or asbestos-containing materials.

     “Intellectual Property” means intellectual property rights under statutory or common
law, worldwide, including (i) trademarks, service marks, trade dress, slogans, logos and all
goodwill associated therewith, and any applications or registrations for any of the foregoing; (ii)
copyrights and any applications or registrations for any of the foregoing; and (iii) patents, all
confidential know-how, trade secrets and similar proprietary rights in confidential inventions,
discoveries, improvements, processes, techniques, devices, methods, patterns, formulae,
specifications, and lists of suppliers, vendors, customers, and distributors.

     “Knowledge of the Company,” “Knowledge of Sellers,” or any phrase of similar
import means the actual knowledge, after reasonable inquiry, of Richard Coe, David Deison or Joe
Baugh.

     “Knowledge of Purchaser,” or any phrase of similar import means the actual knowledge,
after reasonable inquiry, of Robert Dunn.

     “Latest Balance Sheet” means the balance sheet of the Company as of December 31, 2006.

     “Liability” means all indebtedness, Claims, legal proceedings, obligations, duties,
warranties or liabilities, including, without limitation, STRICT LIABILITY, of any nature
(including any undisclosed, unfixed, unknown, unliquidated, unsecured, unmatured, unaccrued,
unasserted, contingent, conditional, inchoate, implied, vicarious, joint, several or secondary
liabilities), regardless of whether any such indebtedness, Claims, legal proceedings, obligations,
duties, warranties or liabilities would be

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required to be disclosed on a balance sheet prepared in accordance with GAAP or is known as of
the Closing.

     “Liens” means, with respect to any property or asset, any mortgage, lien, pledge,
charge, restriction on use, security interest, encumbrance, adverse claim, right of first refusal
or purchase option in respect of such property or asset.

     “Loss” or “Losses” means any loss, damage, injury, harm, detriment,
Liability, diminution in value, exposure, claim, demand, proceeding, settlement, judgment, award,
punitive damage award, fine, penalty, fee, charge, cost or expense (including, without limitation,
reasonable costs of attempting to avoid or in opposing the imposition thereof, interest, penalties,
costs of preparation and investigation, and the reasonable fees, disbursements and expenses of
attorneys, accountants and other professional advisors), as well as with respect to compliance with
the requirements of environmental law, expenses of remediation and any other remedial, removal,
response, abatement, cleanup, investigative, monitoring, or record keeping costs and expenses.

     “Material Adverse Effect” means with respect to any Person, material adverse changes
in or effects or the business, assets, financial condition, results of operations or prospects of
such Person.

     “Organizational Documents” means with respect to a corporation, the articles or
certificate of incorporation and bylaws of such entity.

     “Permitted Liens” means “ means any or all of the following:

     (a) Liens granted under the terms of the existing credit facilities of the Company or any
related mortgage or security agreement;

     (b) Liens in favor of operators, vendors, carriers, warehousemen, repairmen, mechanics,
workmen and materialmen and construction or similar Liens arising by operation of law or in the
ordinary course of business in respect of obligations that are not yet due or that are being
contested in good faith by appropriate proceedings, and that do not relate to amounts in excess of
$50,000 in the aggregate;

     (c) workers’ or unemployment compensation Liens arising in the ordinary course of business,
and that do not relate to amounts in excess of $50,000 in the aggregate;

     (d) Liens or other encumbrances securing payment of Taxes or other similar assessments that
are, in either case, not yet delinquent or, if delinquent, are being contested in good faith by
appropriate proceedings, and that do not relate to amounts in excess of $50,000 in the aggregate;

     (e) rights of third parties pursuant to restrictive covenants, easements, rights-of-way,
servitudes, licenses, permits, surface leases, surface use restrictions, sub-

A-3

 

surface leases, mineral reservations or severances, grazing rights or logging rights or rights
related to ponds, lakes, waterways, canals, ditches, reservoirs, railways, streets, roads and
structures or other rights related to surface uses and impediments on, over or in respect of any of
the properties or assets of the Company that are not such as to interfere materially with the use
or enjoyment of the properties, assets to which they apply or the Business;

     (f) rights reserved to or vested in any Governmental Authority to control or regulate any of
the properties or assets of the Company in any manner, and all applicable laws, statutes,
ordinances, decrees, requirements, orders, judgments, rules or regulations of any Governmental
Authority; and

     (g) conditions in any permit or other authorization granted or issued by any Governmental
Authority for the ownership and operation of all or part of the properties or assets of the
Company.

     “Person” means any natural person, firm, partnership, association, corporation,
company, trust, business trust, Governmental Authority or other such entity.

     “Proceeding” means an action, arbitration, audit, hearing, investigation, litigation
or suit (whether civil, criminal, administrative, investigative or informal) commenced, brought,
conducted or heard by or before, or otherwise involving, any Governmental Authority or arbitrator.

     “Real Property” means any real property which the Company owns, leases, operates or
subleases.

     “Subsidiary” means, with respect to any Person (for the purposes of this definition,
the “parent”), any other Person (other than a natural person), whether incorporated or
unincorporated, of which at least a majority of the securities or ownership interests having by
their terms ordinary voting power to elect a majority of the board of directors or other persons
performing similar functions is directly or indirectly owned or controlled by the parent or by one
or more of its respective Subsidiaries or by the parent and any one or more of its respective
Subsidiaries.

     “Taxes” or “Tax” means all federal, state, local and foreign income taxes, franchise
taxes, withholding taxes, employment taxes, unemployment insurance taxes, social security taxes,
sales and use taxes, excise taxes, real and personal property taxes, stamp taxes, transfer taxes
and workers’ compensation taxes, together with all interest, penalties and additions payable with
respect thereto.

     “Tax Return” means all returns and reports (including declarations, disclosures,
schedules and information returns) required to be supplied to a Tax authority relating to Taxes.

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     “Title Defect” means (a) any title defect, Lien other than a Permitted Lien, that
causes the Company to not have good and indefeasible title, free and clear of all Liens other than
Permitted Lines, to any of the Real Property, (b) the extent to which any easement does not grant
all rights reasonably necessary for the operation, maintenance, repair and replacement of all the
properties, facilities or assets, or (c) any issued associated with access, encroachments, zoning
or land-use restriction or other matters relating to the Real Property that would restrict
Purchasers ability to operate and conduct the Business as it is presently conducted or that would
reduce the value of any of the Real Property; provided, however, that “Title Defect” shall not
include any matter that would otherwise be a Title Defect if (x) the related Title Defect Amount is
individually $10,000 or less, (y) it has been cured by Sellers to the reasonable satisfaction of
Purchaser prior to the Closing Date or (z) it is not set forth in a Title Defect Notice.

     “Working Capital” means the consolidated current assets less the consolidated current
liabilities of the Company that are balance sheet items, each as calculated in accordance with the
agreed upon procedures set forth in Schedule 1.6(a).

     In addition to the terms set forth above, the following terms shall have the meanings assigned
to them in the provisions of this Agreement shown in the table below:

	 	 	 
	Defined Term	 	Location in Agreement
	Accounting Referee
	 	Section 1.6(c)
	Agreement
	 	Introductory paragraph
	Closing
	 	Section 1.3
	Closing Balance Sheet
	 	Section 1.6(a)
	Closing Date
	 	Section 1.3
	Company
	 	Introductory paragraph
	Company Benefit Plan
	 	Section 3.15(a)
	Company Shares
	 	Recitals
	Confidentiality Agreement
	 	Section 5.2
	Consulting Agreement
	 	Section 6.6
	Contest Notice
	 	Section 9.3(b)
	Environmental Permits
	 	Section 3.18(b)
	Escrow Agreement
	 	Section 1.2(c)
	Escrow Amount
	 	Section 1.2(c)
	Excluded Assets
	 	Section 6.7
	Final Working Capital
	 	Section 1.6(e)
	Financial Statements
	 	Section 3.6
	GAAP
	 	Section 3.6
	Indemnitee
	 	Section 9.3(a)
	Indemnifying Party
	 	Section 9.3(a)
	Leased Real Property
	 	Section 3.20(a)
	Letter of Credit
	 	Section 6.4

A-5

 

	 	 	 
	Defined Term	 	Location in Agreement
	Material Contract
	 	Section 3.9(a)
	Non_Competition Agreement
	 	Section 1.5(a)(vii)
	Note
	 	Section 1.2
	Note Repayment Amount
	 	Section 6.4
	Notice of Claim
	 	Section 9.3(a)
	Notice of Liability
	 	Section 9.3(b)
	Owned Real Property
	 	Section 3.20(a)
	Phase I Environmental Assessment
	 	Section 6.3
	Phase II Environmental Assessment
	 	Section 6.3
	Permits
	 	Section 3.11
	Purchase Price
	 	Section 1.2
	Purchaser
	 	Introductory paragraph
	Purchaser Indemnitees
	 	Section 9.1
	Seller
	 	Introductory paragraph
	Seller Indemnitees
	 	Section 9.2
	Sellers Representative
	 	Section 10.1
	Star
	 	Section 6.5
	Star Agreements
	 	Section 6.5
	Survey
	 	Section 6.2(b)
	Title Company
	 	Section 6.2(a)
	Title Policy
	 	Section 6.2(a)
	Wells Fargo Payment Amount
	 	Section 1.2(b)

A-6

 

EXHIBIT B

ESCROW AGREEMENT

This
Escrow Agreement, dated this ___ day of May, 2007 (the “Escrow Agreement”), is entered into
by and among (i) Prism Gas Systems I, L.P., a Texas limited partnership (“Purchaser”), (ii) Lantern
Resources, L.P., a Texas limited partnership, and David P. Deison (each a “Seller” and
collectively, the “Sellers”) (Purchaser and Sellers collectively, the “Parties,” and individually,
a “Party”), and (iii) Wells Fargo Bank, National Association, as escrow agent (“Escrow Agent”).

RECITALS

A. This is
the Escrow Agreement referred to in the Stock Purchase Agreement,
dated April 27, 2007
(the “Stock Purchase Agreement”), among Purchaser, Sellers and Woodlawn Pipeline Company, Inc, a
Texas corporation. Capitalized terms used in this Agreement without definition shall have the
respective meanings given to them in the Stock Purchase Agreement. The Escrow Agent (i) has not
received a copy of, (ii) has not reviewed, (iii) is not a party to and (iv) will not be held
responsible under the terms of the Stock Purchase Agreement.

B. Purchaser agrees to place in escrow certain funds and the Escrow Agent agrees to hold and
distribute such funds in accordance with the terms of this Escrow Agreement. The funds relate to
the remediation, to the reasonable satisfaction of the Purchaser, of all permit and/or registration
deficiencies in the plant and field compressor units listed on Schedule 3.11 to the Stock Purchase
Agreement.

In consideration of the promises and agreements of the Parties and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties and the
Escrow Agent agree as follows:

ARTICLE 1

ESCROW DEPOSIT

Section 1.1. Receipt of Escrow Property. Upon execution hereof, Purchaser shall deliver to
the Escrow Agent the amount of $250,000 (the “Escrow Property”) in immediately available funds.

Section 1.2. Investments.

     (a) The Escrow Agent is hereby directed to deposit, transfer, hold and invest the Escrow Fund,
including principal and interest, in the Wells Fargo Money Market Deposit Account (“MMDA”).
Each of the parties hereby acknowledges that: (i) amounts on deposit in the MMDA are insured,
subject to the applicable rules and regulations of the Federal Deposit Insurance Corporation
(“FDIC”), in the basic FDIC insurance amount of $100,000 per depositor, per insured bank,
such deposit to include principal and accrued interest up to a total of $100,000); (ii) Wells Fargo
Bank, National Association has short term debt ratings of “P-1” from Moody’s Investors Service and
“A-1+” from Standard & Poor’s Ratings Services, (iii) deposits in the MMDA are not secured, (iv)
the Parties have full power to direct investments in the account,

B-1

 

and (v) the Parties may change this direction at any time and that it shall continue in effect
until revoked or modified by the Parties’ written notice to the Escrow Agent. Any investment
earnings and income on the Escrow Property shall become part of the Escrow Property, and shall be
disbursed in accordance with Section 1.3 or Section 1.5 of this Escrow Agreement.

     (b) The Escrow Agent is hereby authorized and directed to sell or redeem any such investments
as it deems necessary to make any payments or distributions required under this Escrow Agreement.
The Escrow Agent shall have no responsibility or liability for any loss which may result from any
investment or sale of investment made pursuant to this Escrow Agreement. The Escrow Agent is
hereby authorized, in making or disposing of any investment permitted by this Escrow Agreement, to
deal with itself (in its individual capacity) or with any one or more of its affiliates, whether it
or any such affiliate is acting as agent of the Escrow Agent or for any third person or dealing as
principal for its own account. The Parties acknowledge that the Escrow Agent is not providing
investment supervision, recommendations, or advice.

Section 1.3. Disbursements. From time to time after the Closing Date, Sellers and
Purchaser acting jointly may give notice (a “Claim Notice”) to Escrow Agent specifying that the
party named as payee in the Claim Notice is entitled to payment of a designated portion of the
Escrow Fund pursuant to Section 1.2(c) of the Stock Purchase Agreement (a “Claim”), which Claim
shall specify the basis for requesting payment of such portion of the Escrow Fund and the amount
requested for payment. Within five Business Days, Escrow Agent shall pay to the party named as
payee in the Claim Notice the portion of the Escrow Fund set forth in the Claim Notice. Escrow
Agent shall not inquire into or consider whether a Claim complies with the requirements of the
Stock Purchase Agreement.

Section 1.4. Income Tax Allocation and Reporting.

     (a) The Parties agree that, for tax reporting purposes, all interest and other income from
investment of the Escrow Property shall, as of the end of each calendar year and to the extent
required by the Internal Revenue Service, be reported as having been earned by Sellers, whether or
not such income was disbursed during a such calendar year.

     (b) Prior to closing, the Parties shall provide the Escrow Agent with certified tax
identification numbers by furnishing appropriate forms W-9 or W-8 and such other forms and
documents that the Escrow Agent may request. The Parties understand that if such tax reporting
documentation is not provided and certified to the Escrow Agent, the Escrow Agent may be required
by the Internal Revenue Code of 1986, as amended, and the Regulations promulgated thereunder, to
withhold a portion of any interest or other income earned on the investment of the Escrow Property.

     (c) To the extent that the Escrow Agent becomes liable for the payment of any taxes in respect
of income derived from the investment of the Escrow Property, the Escrow Agent shall satisfy such
liability to the extent possible from the Escrow Property. The Parties, jointly and severally,
shall indemnify, defend and hold the Escrow Agent harmless from and against any tax, late payment,
interest, penalty or other cost or expense that may be assessed against the Escrow

B-2

 

Agent on or with respect to the Escrow Property and the investment thereof unless such tax,
late payment, interest, penalty or other expense was directly caused by the gross negligence or
willful misconduct of the Escrow Agent. The indemnification provided by this Section 1.4(c) is in
addition to the indemnification provided in Section 3.1 and shall survive the resignation or
removal of the Escrow Agent and the termination of this Escrow Agreement.

1. Section 1.5. Termination. Purchaser and Sellers acting jointly shall provide
Escrow Agent with notice on or before April ___, 2009, of the termination of the Escrow Fund and
specifying that pursuant to Section 1.2(c) of the Stock Purchase Agreement either Purchaser or
Sellers is entitled to the payment of the funds remaining in the Escrow Fund (the “Termination
Notice”), Escrow Agent shall pay and distribute the then amount of the Escrow Fund to the party
designated in the Termination Notice. Notwithstanding anything to the contrary contained herein,
this Escrow Agreement shall terminate at the time that all funds in the Escrow Fund have been paid
and distributed and the provisions of Sections 1.4(c), 3.1 and 3.2 hereof shall survive
termination. If no Termination Notice has been received by the Escrow Agent by April ___, 2009, the
Escrow Agent shall interplead the remaining funds in an action commenced in a court of competent
jurisdiction in Collin County, Texas, in which action the Escrow Agent shall name the Purchaser and
the Sellers. The expense of initiating such interpleader action shall be withheld by the Escrow
Agent from the Escrow Property before the Escrow Property is delivered to the court.

ARTICLE 2

DUTIES OF THE ESCROW AGENT

Section 2.1. Scope of Responsibility. Notwithstanding any provision to the contrary, the
Escrow Agent is obligated only to perform the duties specifically set forth in this Escrow
Agreement, which shall be deemed purely ministerial in nature. Under no circumstances will the
Escrow Agent be deemed to be a fiduciary to any Party or any other person under this Escrow
Agreement. The Escrow Agent will not be responsible or liable for the failure of any Party to
perform in accordance with this Escrow Agreement. The Escrow Agent shall neither be responsible
for, nor chargeable with, knowledge of the terms and conditions of any other agreement, instrument,
or document other than this Escrow Agreement, whether or not an original or a copy of such
agreement has been provided to the Escrow Agent; and the Escrow Agent shall have no duty to know or
inquire as to the performance or nonperformance of any provision of any such agreement, instrument,
or document. References in this Escrow Agreement to any other agreement, instrument, or document
are for the convenience of the Parties, and the Escrow Agent has no duties or obligations with
respect thereto. This Escrow Agreement sets forth all matters pertinent to the escrow contemplated
hereunder, and no additional obligations of the Escrow Agent shall be inferred or implied from the
terms of this Escrow Agreement or any other agreement.

Section 2.2. Attorneys and Agents. The Escrow Agent shall be entitled to rely on and shall
not be liable for any action taken or omitted to be taken by the Escrow Agent in accordance with
the advice of counsel or other professionals retained or consulted by the Escrow Agent. The Escrow
Agent shall be reimbursed as set forth in Section 3.1 for any and all compensation (fees, expenses
and other costs) paid and/or reimbursed to such counsel and/or professionals. The

B-3

 

Escrow Agent may perform any and all of its duties through its agents, representatives, attorneys,
custodians, and/or nominees.

Section 2.3. Reliance. The Escrow Agent shall not be liable for any action taken or not
taken by it in accordance with the direction or consent of the Parties or their respective agents,
representatives, successors, or assigns. The Escrow Agent shall not be liable for acting or
refraining from acting upon any notice, request, consent, direction, requisition, certificate,
order, affidavit, letter, or other paper or document believed by it to be genuine and correct and
to have been signed or sent by the proper person or persons, without further inquiry into the
person’s or persons’ authority. Concurrent with the execution of this Escrow Agreement, the
Parties shall deliver to the Escrow Agent authorized signers’ forms in the form of Exhibit A-1 and
Exhibit A-2 to this Escrow Agreement.

Section 2.4. Right Not Duty Undertaken. The permissive rights of the Escrow Agent to do
things enumerated in this Escrow Agreement shall not be construed as duties.

Section 2.5. No Financial Obligation. No provision of this Escrow Agreement shall require
the Escrow Agent to risk or advance its own funds or otherwise incur any financial liability or
potential financial liability in the performance of its duties or the exercise of its rights under
this Escrow Agreement.

ARTICLE 3

PROVISIONS CONCERNING THE ESCROW AGENT

Section 3.1. Indemnification. The Parties, jointly and severally, shall indemnify, defend
and hold harmless the Escrow Agent from and against any and all loss, liability, cost, damage and
expense, including, without limitation, attorneys’ fees and expenses or other professional fees and
expenses which the Escrow Agent may suffer or incur by reason of any action, claim or proceeding
brought against the Escrow Agent, arising out of or relating in any way to this Escrow Agreement or
any transaction to which this Escrow Agreement relates, unless such loss, liability, cost, damage
or expense shall have been finally adjudicated to have been directly caused by the willful
misconduct or gross negligence of the Escrow Agent. The provisions of this Section 3.1 shall
survive the resignation or removal of the Escrow Agent and the termination of this Escrow
Agreement.

Section 3.2. Limitation of Liability. THE ESCROW AGENT SHALL NOT BE LIABLE, DIRECTLY OR
INDIRECTLY, FOR ANY (I) DAMAGES, LOSSES OR EXPENSES ARISING OUT OF THE SERVICES PROVIDED HEREUNDER,
OTHER THAN DAMAGES, LOSSES OR EXPENSES WHICH HAVE BEEN FINALLY ADJUDICATED TO HAVE DIRECTLY
RESULTED FROM THE ESCROW AGENT’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, OR (II) SPECIAL, INDIRECT
OR CONSEQUENTIAL DAMAGES OR LOSSES OF ANY KIND WHATSOEVER (INCLUDING WITHOUT LIMITATION LOST
PROFITS), EVEN IF THE ESCROW AGENT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSSES OR DAMAGES
AND REGARDLESS OF THE FORM OF ACTION.

B-4

 

Section 3.3. Resignation or Removal. The Escrow Agent may resign by furnishing written
notice of its resignation to the Parties, and the Parties may remove the Escrow Agent by furnishing
to the Escrow Agent a joint written notice of its removal along with payment of all fees and
expenses to which it is entitled through the date of termination. Such resignation or removal, as
the case may be, shall be effective thirty (30) days after the delivery of such notice or upon the
earlier appointment of a successor, and the Escrow Agent’s sole responsibility thereafter shall be
to safely keep the Escrow Property and to deliver the same to a successor escrow agent as shall be
appointed by the Parties, as evidenced by a joint written notice filed with the Escrow Agent or in
accordance with a court order. If the Parties have failed to appoint a successor escrow agent
prior to the expiration of thirty (30) days following the delivery of such notice of resignation or
removal, the Escrow Agent may petition any court of competent jurisdiction for the appointment of a
successor escrow agent or for other appropriate relief, and any such resulting appointment shall be
binding upon the Parties.

Section 3.4. Compensation. The Escrow Agent shall be entitled to compensation for its
services as stated in the fee schedule attached hereto as Exhibit B, which compensation shall be
paid 50% by Sellers and 50% by Purchaser. The fee agreed upon for the services rendered hereunder
is intended as full compensation for the Escrow Agent’s services as contemplated by this Escrow
Agreement; provided, however, that in the event that the conditions for the disbursement of funds
under this Escrow Agreement are not fulfilled, or the Escrow Agent renders any service not
contemplated in this Escrow Agreement, or there is any assignment of interest in the subject matter
of this Escrow Agreement, or any material modification hereof, or if any material controversy
arises hereunder, or the Escrow Agent is made a party to any litigation pertaining to this Escrow
Agreement or the subject matter hereof, then the Escrow Agent shall be compensated for such
extraordinary services and reimbursed for all costs and expenses, including reasonable attorneys’
fees and expenses, occasioned by any such delay, controversy, litigation or event. If any amount
due to the Escrow Agent hereunder is not paid within thirty (30) days of the date due, the Escrow
Agent in its sole discretion may charge interest on such amount up to the highest rate permitted by
applicable law. The Escrow Agent shall have, and is hereby granted, a prior lien upon the Escrow
Property with respect to its unpaid fees, non-reimbursed expenses and unsatisfied indemnification
rights, superior to the interests of any other persons or entities and is hereby granted the right
to set off and deduct any unpaid fees, non-reimbursed expenses and unsatisfied indemnification
rights from the Escrow Property.

Section 3.5. Disagreements. If any conflict, disagreement or dispute arises between,
among, or involving any of the parties hereto concerning the meaning or validity of any provision
hereunder or concerning any other matter relating to this Escrow Agreement, or the Escrow Agent is
in doubt as to the action to be taken hereunder, the Escrow Agent is authorized to retain the
Escrow Property until the Escrow Agent (i) receives a final non-appealable order of a court of
competent jurisdiction or a final non-appealable arbitration decision directing delivery of the
Escrow Property, (ii) receives a written agreement executed by each of the parties involved in such
disagreement or dispute directing delivery of the Escrow Property, in which event the Escrow Agent
shall be authorized to disburse the Escrow Property in accordance with such final court order,
arbitration decision, or agreement, or (iii) files an interpleader action in any court of competent
jurisdiction, and upon the filing thereof, the Escrow Agent shall be relieved of all liability as
to the Escrow Property and shall be entitled to recover attorneys’ fees, expenses and

B-5

 

other costs incurred in commencing and maintaining any such interpleader action. The Escrow Agent
shall be entitled to act on any such agreement, court order, or arbitration decision without
further question, inquiry, or consent.

Section 3.6. Merger or Consolidation. Any corporation or association into which the Escrow
Agent may be converted or merged, or with which it may be consolidated, or to which it may sell or
transfer all or substantially all of its corporate trust business and assets as a whole or
substantially as a whole, or any corporation or association resulting from any such conversion,
sale, merger, consolidation or transfer to which the Escrow Agent is a party, shall be and become
the successor escrow agent under this Escrow Agreement and shall have and succeed to the rights,
powers, duties, immunities and privileges as its predecessor, without the execution or filing of
any instrument or paper or the performance of any further act.

Section 3.7. Attachment of Escrow Property; Compliance with Legal Orders. In the event
that any Escrow Property shall be attached, garnished or levied upon by any court order, or the
delivery thereof shall be stayed or enjoined by an order of a court, or any order, judgment or
decree shall be made or entered by any court order affecting the Escrow Property, the Escrow Agent
is hereby expressly authorized, in its sole discretion, to respond as it deems appropriate or to
comply with all writs, orders or decrees so entered or issued, or which it is advised by legal
counsel of its own choosing is binding upon it, whether with or without jurisdiction. In the event
that the Escrow Agent obeys or complies with any such writ, order or decree it shall not be liable
to any of the Parties or to any other person, firm or corporation, should, by reason of such
compliance notwithstanding, such writ, order or decree be subsequently reversed, modified,
annulled, set aside or vacated.

ARTICLE 4

MISCELLANEOUS

Section 4.1. Successors and Assigns. This Escrow Agreement shall be binding on and inure
to the benefit of the Parties and the Escrow Agent and their respective successors and permitted
assigns. No other persons shall have any rights under this Escrow Agreement. No assignment of the
interest of any of the Parties shall be binding unless and until written notice of such assignment
shall be delivered to the other Party and the Escrow Agent and shall require the prior written
consent of the other Party and the Escrow Agent (such consent not to be unreasonably withheld).

Section 4.2. Escheat. The Parties are aware that under applicable state law, property
which is presumed abandoned may under certain circumstances escheat to the applicable state. The
Escrow Agent shall have no liability to the Parties, their respective heirs, legal representatives,
successors and assigns, or any other party, should any or all of the Escrow Property escheat by
operation of law.

Section 4.3. Notices. All notices, requests, demands, and other communications required
under this Escrow Agreement shall be in writing, in English, and shall be deemed to have been duly
given if delivered (i) personally, (ii) by facsimile transmission with written confirmation of
receipt, (iii) by overnight delivery with a reputable national overnight delivery service, or (iv)
by

B-6

 

mail or by certified mail, return receipt requested, and postage prepaid. If any notice is mailed,
it shall be deemed given five business days after the date such notice is deposited in the United
States mail. Any notice given shall be deemed given upon the actual date of such delivery. If
notice is given to a party, it shall be given at the address for such party set forth below. It
shall be the responsibility of the Parties to notify the Escrow Agent and the other Party in
writing of any name or address changes. In the case of communications delivered to the Escrow
Agent, such communications shall be deemed to have been given on the date received by the Escrow
Agent.

If to David P. Deison:

David P. Deison

P.O. Box 1177

109 Church Street

Weatherford, Texas 76086

with a copy to:

David N. Reed

Meadows, Collier, Reed, Cousins & Blau, LLP

901 Main Street, Suite 3700

Dallas, Texas 75202

Facsimile: 214.747.3732

If to Lantern Resources, L.P.:

Lantern Resources, L.P.

1800 Preston Park Blvd.

Suite 112

Plano, Texas 75093

with a copy to:

David N. Reed

Meadows, Collier, Reed, Cousins & Blau, LLP

901 Main Street, Suite 3700

Dallas, Texas 75202

Facsimile: 214.747.3732

If to Purchaser:

Prism Gas Systems I, L.P.

2350 Airport Freeway, Suite 505

Bedford, Texas 76022

B-7

 

Attention: Robert Dunn

Facsimile: 817.864.3101

with a copy to:

Martin Midstream Partners L.P.

P.O. Box 41368

Beaumont, Texas 77725

Attention: Chris Booth

Facsimile: 409.835.3425

If to the Escrow Agent:

Wells Fargo Bank, National Association

Corporate Trust and Escrow Services

Sixth and Marquette MAC N9303-110

Minneapolis, MN 55479

Attention: Thomas H. Caruth

Telephone: (612) 667-2124

Facsimile: (612) 667-2160

Section 4.4. Governing Law. This Escrow Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.

Section 4.5. Entire Agreement. This Escrow Agreement sets forth the entire agreement and
understanding of the parties related to the Escrow Property.

Section 4.6. Amendment. This Escrow Agreement may be amended, modified, superseded,
rescinded, or canceled only by a written instrument executed by the Parties and the Escrow Agent.

Section 4.7. Waivers. The failure of any party to this Escrow Agreement at any time or
times to require performance of any provision under this Escrow Agreement shall in no manner affect
the right at a later time to enforce the same performance. A waiver by any party to this Escrow
Agreement of any such condition or breach of any term, covenant, representation, or warranty
contained in this Escrow Agreement, in any one or more instances, shall neither be construed as a
further or continuing waiver of any such condition or breach nor a waiver of any other condition or
breach of any other term, covenant, representation, or warranty contained in this Escrow Agreement.

Section 4.8. Headings. Section headings of this Escrow Agreement have been inserted for
convenience of reference only and shall in no way restrict or otherwise modify any of the terms or
provisions of this Escrow Agreement.

B-8

 

Section 4.9. Counterparts. This Escrow Agreement may be executed in one or more
counterparts, each of which when executed shall be deemed to be an original, and such counterparts
shall together constitute one and the same instrument.

[The remainder of this page left intentionally blank.]

B-9

 

     IN WITNESS WHEREOF, this Escrow Agreement has been duly executed as of the date first written
above.

	 	 	 	 	 	 	 
	 	 	PRISM GAS SYSTEMS I, L.P.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	LANTERN RESOURCES, L.P.	 	 
	 

	 	By:
	 	Lantern Holding Company, L.L.C.,	 	 
	 

	 	 	 	sole general partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Richard C. Coe, President	 	 
	 
	 	 	 	 	 	 
	 	 	DAVID P. DEISON	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	David P. Deison	 	 
	 
	 	 	 	 	 	 
	 	 	WELLS FARGO BANK, NATIONAL ASSOCIATION, as Escrow Agent	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Thomas H. Caruth	 	 
	 	 	Title: Vice President	 	 

S-10

 

EXHIBIT A-1

CERTIFICATE AS TO AUTHORIZED SIGNATURES

The specimen signatures shown below are the specimen signatures of the individuals who have been
designated as authorized representatives of Purchaser and are authorized to initiate and approve
transactions of all types for the escrow account or accounts established under the Escrow Agreement
to which this Exhibit A-1 is attached, on behalf of Purchaser.

	 	 	 
	Name / Title	 	Specimen Signature
	 
	 

	 	 
	Richard C. Coe

	 	Signature
	Name
	 	 
	 
	 	 
	President, Lantern Holding Company,
	 	 
	L.L.C., the sole general partner of
	 	 
	Lantern Resources, L.P.
	 	 
	 

	 	 
	Title

	 	 
	 
	 	 
	David P. Deison
	 	 
	 

	 	 
	Name

	 	Signature
	 
	 	 
	On behalf of himself
	 	 
	 

	 	 
	Title
	 	 
	 
	 	 
	 

	 	 
	Name

	 	Signature
	 
	 	 
	 

	 	 
	Title

	 	 
	  

	 	  

	Name
	 	Signature
	 
	 	 
	 

	 	 

	Title
	 	 

 

EXHIBIT A-2

CERTIFICATE AS TO AUTHORIZED SIGNATURES

The specimen signatures shown below are the specimen signatures of the individuals who have been
designated as authorized representatives of Sellers and are authorized to initiate and approve
transactions of all types for the escrow account or accounts established under the Escrow Agreement
to which this Exhibit A-2 is attached, on behalf of Purchaser.

	 	 	 
	Name / Title	 	Specimen Signature
	 
	 

	 	 
	Name

	 	Signature
	 
	 	 
	 
	 	 
	Title
	 	 
	 
	 	 
	 

	 	 
	Name

	 	Signature
	 
	 	 
	Title
	 	 
	 
	 	 
	 

	 	 
	Name

	 	Signature
	 
	 	 
	 
	 	 
	Title
	 	 
	 
	 	 
	 

	 	 
	Name

	 	Signature
	 
	 	 
	 
Title
	 	 

 

EXHIBIT B

FEES OF ESCROW AGENT

	 	 	 
	Acceptance Fee

	 	 
	 
	 	 

The Acceptance Fee includes review of all related documents and accepting the appointment of Escrow
Agent on behalf of Wells Fargo Bank, National Association. The fee also includes setting up the
required account and accounting records, document filing, and coordinating the receipt of
funds/assets for deposit to the Escrow Account. The Acceptance Fee is due upon receipt of the
assets for deposit.

	 	 	 	 	 
	Escrow
Agent Annual Administration Fee

	 		 	 
	 
	 	 	 	 

The Administration Fee includes providing routine and standard fiduciary services of an Escrow
Agent. The fee includes administering the escrow account, performing investment transactions,
processing cash transactions (including wires and check processing), processing Claim Certificates
pursuant to the Agreement; disbursing funds in accordance with the Agreement and providing trust
account statements to applicable parties.

The first
year’s fees are due at the time of the funding of the escrow.

 

EXHIBIT C

NONCOMPETITION AGREEMENT

     This Noncompetition Agreement (“Agreement”) effective as of                     , 2007 (the “Effective
Date”), is by and between Prism Gas Systems I, L.P., a Texas limited partnership (the “Buyer”) and
                    
(“Shareholder”).

     WHEREAS, pursuant to the terms of that certain Stock Purchase Agreement, dated                     ,
2007 between the Buyer and all of the shareholders of Woodlawn Pipeline Company, Inc. (the
“Company”), the Buyer is acquiring all of the issued and outstanding shares of stock of the Company
(the “Acquisition”);

     WHEREAS, Shareholder                      has been, immediately prior to the Effective Date, an [owner
of shares of stock in the Company] [an owner of one of the shareholders of the Company];

     WHEREAS, Shareholder will receive substantial economic benefit upon the closing of the
Acquisition;

     WHEREAS, the Buyer’s willingness to enter into the Stock Purchase Agreement and to consummate
the Acquisition is explicitly conditioned upon Shareholder entering into this Agreement in order to
protect the goodwill and going concern value of the Company; and

     WHEREAS, the Buyer desires to be assured that the confidential information of the Company
acquired by the Buyer during his ownership of stock in the Company will be preserved for the
exclusive benefit of the Buyer following the closing of the Acquisition.

     NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants and
promises herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:

     Section 1. Acknowledgments and Agreements by Shareholder. Shareholder hereby
acknowledges and agrees that:

     Section 1.01. The Buyer would not consummate the transactions contemplated in the Stock
Purchase Agreement if Shareholder did not execute and deliver this Agreement to the Buyer at
Closing (as defined in the Stock Purchase Agreement).

     Section 1.02. Shareholder has had access to information that is confidential to the Company
and that relates to the Company and that constitutes a valuable, special and unique asset of the
Company, and that will, after the Closing, constitute a valuable, special and unique asset of the
Company, and with respect to which the Buyer and the Company is entitled to the protections
afforded by this Agreement and to the remedies for enforcement of this Agreement provided by law
or in equity (including, without limitation, those remedies the availability of which may be
within the discretion of the court in which any action for enforcement of this Agreement is
brought).

C-1

 

     Section 1.03. In consideration of the purchase by the Buyer of all of the issued and
outstanding shares of stock in the Company, Shareholder, through his association with and ownership
of the Company, will receive substantial economic benefit.

     Section 2. Confidentiality/Non-Disclosure. In consideration of the purchase by Buyer
of all of the issued and outstanding shares of stock in the Company, Shareholder agrees that he
will not at any time after the Effective Date reveal or use in any unauthorized manner or for any
unauthorized purpose (or facilitate any of the foregoing) any information obtained by Shareholder
from the Company, including any business methods that are confidential or proprietary, lists of
customers, business secrets, business relationships, product and sales information that is
confidential or proprietary, financial information, future plans, operating procedures that are
confidential or proprietary, trade secrets or other confidential or proprietary information of the
Company, for the benefit of the Shareholder or any other individual, firm, partnership, corporation
or entity, except for any such information that is (i) generally publicly known through no fault of
Shareholder or (ii) required to be disclosed by Shareholder pursuant to any applicable law or
regulation.

     No later than 30 days following the Closing, Shareholder (or his heirs or representatives)
shall deliver to the Buyer (i) all documents and materials containing trade secrets or other
confidential information relating to the business and affairs of the Company, and (ii) all
documents, materials and other property belonging to the Company, which are in the possession or
under the control of Shareholder (or his heirs or representatives).

     Section 3. Non-Competition. From and after the Effective Date and for a period of
two years thereafter, Shareholder will not directly or indirectly own, manage, operate, construct,
finance, join, control or participate in the ownership, management, operation or control of, or be
employed or engaged as an agent or consultant by, any person, company or business, which is the
same as, substantially the same as, or substantially similar to that of the Company. Further,
Shareholder will not solicit directly or indirectly any current customers of the Company for any
business related to that of the Company in competition with the Company. For the purposes of this
Agreement, a person, company or business entity shall be deemed to be in competition with the
Company only if the products or services of such person, company or business entity are
substantially similar in function or capability to the products or services being offered,
developed, manufactured or sold by Company. The mere passive ownership, direct or indirect, of not
more than 2% of the outstanding stock of any publicly traded company shall not be a violation of
this paragraph. Notwithstanding anything herein to the contrary, the restrictions in this
Section 3 shall apply only to the geographic area within five miles of any part of the
Company’s gas gathering system located in and around Woodlawn, Texas.

     Section 4. Non-Solicitation/Hire. From and after the Effective Date and for a period
of two years thereafter, Shareholder will not, directly or indirectly solicit, endeavor to employ
or employ either Dallas Rogers or Mike Sullivan, on his own behalf or on behalf of any person or
entity for which he is acting.

     Section 5. Remedies. Shareholder agrees that the remedies at law for any breach or
threatened breach by it of the provisions of Sections 2 through 4 hereof will be
inadequate, and that the Buyer, the Company or any of their respective parents, subsidiaries or
affiliates shall be entitled to a temporary restraining order, preliminary injunction and/or
injunction, to prevent breaches of said paragraphs and to enforce specifically the terms and
conditions thereof, in addition to any other remedy to which the Buyer, the Company or their
respective parents,

C-2

 

subsidiaries or affiliates may be entitled at law or equity. Shareholder recognizes and
agrees that the provisions of Sections 2 through 4 are entered into in connection
with and as partial consideration for the Acquisition by the Buyer.

     Section 6. Severable Provisions. The provisions of this Agreement are severable and
the invalidity of any one or more provisions shall not affect the validity of any other provision.
Shareholder acknowledges and agrees that the scope of this Agreement is reasonable and no greater
than required for the protection of the legitimate business interests of the Buyer in the Company,
it imposes no undue hardship on Shareholder, and in the event that a court of competent
jurisdiction shall determine that any provision of this Agreement or the application thereof is
unenforceable in whole or in part because of the duration or scope thereof, the parties hereto
agree that said court in making such determination shall have the power to reduce the duration and
scope of such provision to the extent necessary to make it enforceable, and that the Agreement in
its reduced form shall be valid and enforceable to the full extent permitted by law.

     Section 7. Miscellaneous.

     Section 7.01. Modification. This Agreement, the Stock Purchase Agreement and any
applicable written agreements or plans regarding the compensation or benefits set forth herein
constitute the entire agreement between the parties hereto with regard to Shareholder’s obligations
hereunder, superseding all prior understandings and agreements, whether written or oral. This
Agreement may not be amended or revised except by a writing signed by the parties.

     Section 7.02. Assignment and Transfer. This Agreement shall not be terminated by the
merger or consolidation of the Buyer, the Company or any of their respective parents, subsidiaries
or affiliates with any corporate or other entity or by the transfer of all or substantially all of
the assets of the Buyer or the Company or any of their respective parents, subsidiaries or
affiliates to any other person, corporation, firm or entity. The provisions of this Agreement
shall be binding on and shall inure to the benefit of any such successor in interest to the Buyer,
the Company or any of their respective parents, subsidiaries or affiliates.

     Section 7.03. Captions. Captions herein have been inserted solely for convenience of
reference and in no way define, limit or describe the scope or substance of any provision of this
Agreement.

     Section 7.04. Governing Law This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Texas, without regard to its conflicts of law
rules. Venue shall be in Harrison County, Texas.

     Section 7.05. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given when (a) delivered personally, (b) sent by
telecopier (with receipt confirmed), provided that a copy is mailed by registered or certified
mail, return receipt requested, or (c) received by the addressee, if sent by Express Mail, Federal
Express or other express delivery service (receipt requested) or by registered or certified mail,
return receipt requested, in each case to the other party at the following addresses and telecopier
numbers (or to such other address or telecopier number for a party as shall be specified by like
notice; provided that notices of a change of address or telecopier number shall be effective only
upon receipt thereof):

C-3

 

	 	 	 	 	 
	To Shareholder:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	Telephone: (___) ___ — ___	 	 
	 
	 	 	 	 
	To the Buyer:

	 	Prism Gas Systems I, L.P.	 	 
	 

	 	2350 Airport Freeway	 	 
	 

	 	Bedford, Texas 76022	 	 
	 

	 	Attention: Robert Dunn	 	 
	 

	 	Telephone: (817) 864-3112	 	 
	 

	 	Telecopy: (817) 864-3101	 	 

     IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and
year first above written.

	 	 	 	 	 	 	 
	 	 	PRISM GAS SYSTEMS I, L.P.	 	 
	 	 	By: Prism Gas Systems GP LLC, its general partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	SHAREHOLDER:	 	 

C-4exv10w2

 

Exhibit 10.2

EXECUTION COPY

ASSET PURCHASE AGREEMENT

By and Among

PEAK GAS GATHERING L.P.

as Seller,

and

PRISM GAS SYSTEMS I, L.P.,

as the Purchaser

April 27, 2007

 

 

Table of Contents

	 	 	 	 	 
	 	 	Page
	ARTICLE I PURCHASE AND SALE; CLOSING
	 	 	1	 
	Section 1.1 Purchase and Sale of Assets
	 	 	1	 
	Section 1.2 Retained Assets
	 	 	1	 
	Section 1.3 Post-Closing Liabilities
	 	 	1	 
	Section 1.4 Retained Liabilities
	 	 	2	 
	Section 1.5 Purchase Price
	 	 	2	 
	Section 1.6 Closing
	 	 	2	 
	Section 1.7 Execution and Delivery of Documents of Title
	 	 	2	 
	Section 1.8 Closing Deliveries
	 	 	3	 
	Section 1.9 Purchase Price Allocation
	 	 	3	 
	Section 1.10 Taxes; Apportionments
	 	 	4	 
	 
	 	 	 	 
	ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLER
	 	 	4	 
	Section 2.1 Existence and Power
	 	 	4	 
	Section 2.2 Authorization
	 	 	4	 
	Section 2.3 Governmental Authorization
	 	 	4	 
	Section 2.4 Noncontravention
	 	 	4	 
	Section 2.5 Intentionally Omitted
	 	 	4	 
	Section 2.6 Intentionally Omitted
	 	 	4	 
	Section 2.7 Intentionally Omitted
	 	 	5	 
	Section 2.8 Absence of Certain Changes
	 	 	5	 
	Section 2.9 Assigned Contracts
	 	 	5	 
	Section 2.10 Litigation
	 	 	5	 
	Section 2.11 Compliance with Laws and Court Orders
	 	 	5	 
	Section 2.12 Intellectual Property
	 	 	5	 
	Section 2.13 Insurance Coverage
	 	 	6	 
	Section 2.14 Gas Regulatory Matters
	 	 	6	 
	Section 2.15 Tax Matters
	 	 	6	 
	Section 2.16 Environmental Matters
	 	 	6	 
	Section 2.17 Pipeline
	 	 	7	 
	Section 2.18 Tangible Personal Property
	 	 	8	 
	Section 2.19 Brokers; Advisors
	 	 	8	 
	Section 2.20 Disclaimer
	 	 	8	 
	 
	 	 	 	 
	ARTICLE III REPRESENTATIONS AND WARRANTIES OF PURCHASER
	 	 	8	 
	Section 3.1 Existence and Power
	 	 	8	 
	Section 3.2 Authorization
	 	 	8	 
	Section 3.3 Governmental Authorization
	 	 	9	 
	Section 3.4 Noncontravention
	 	 	9	 
	Section 3.5 Litigation
	 	 	9	 
	Section 3.6 Brokers; Advisors
	 	 	9	 
	 
	 	 	 	 
	ARTICLE IV COVENANTS OF THE PARTIES
	 	 	9	 
	Section 4.1 Conduct of Business
	 	 	9	 

-i-

 

Table of Contents
(continued)

	 	 	 	 	 
	 	 	Page
	Section 4.2 Access and Information
	 	 	10	 
	Section 4.3 Notices of Certain Events
	 	 	10	 
	Section 4.4 Reasonable Best Efforts; Further Assurances
	 	 	10	 
	Section 4.5 Certain Filings
	 	 	10	 
	Section 4.6 Publicity
	 	 	11	 
	Section 4.7 Financing
	 	 	11	 
	Section 4.8 Post-Closing Payment
	 	 	11	 
	 
	 	 	 	 
	ARTICLE V CONDITIONS TO CLOSING
	 	 	11	 
	Section 5.1 Conditions to Each Party’s Obligations
	 	 	11	 
	Section 5.2 Further Conditions to Obligations of Purchaser
	 	 	12	 
	Section 5.3 Conditions to Obligations of Seller
	 	 	12	 
	 
	 	 	 	 
	ARTICLE VI TERMINATION
	 	 	13	 
	Section 6.1 Termination
	 	 	13	 
	 
	 	 	 	 
	ARTICLE VII INDEMNIFICATION
	 	 	14	 
	Section 7.1 Indemnification by Seller
	 	 	14	 
	Section 7.2 Indemnification by Purchaser
	 	 	14	 
	Section 7.3 Procedure for Indemnification
	 	 	15	 
	Section 7.4 Survival
	 	 	16	 
	Section 7.5 Limitations on Indemnification
	 	 	17	 
	Section 7.6 Inconsistent Provisions
	 	 	17	 
	Section 7.7 Right to Indemnification Not Affected by Knowledge
	 	 	17	 
	Section 7.8 Express Negligence
	 	 	17	 
	 
	 	 	 	 
	ARTICLE VIII GENERAL PROVISIONS; MISCELLANEOUS
	 	 	18	 
	Section 8.1 Modification; Waiver
	 	 	18	 
	Section 8.2 Entire Agreement
	 	 	18	 
	Section 8.3 Expenses
	 	 	18	 
	Section 8.4 Further Actions
	 	 	18	 
	Section 8.5 Notices
	 	 	18	 
	Section 8.6 Assignment
	 	 	19	 
	Section 8.7 No Third Party Beneficiaries
	 	 	19	 
	Section 8.8 Counterparts
	 	 	19	 
	Section 8.9 Headings
	 	 	19	 
	Section 8.10 Terms Generally
	 	 	19	 
	Section 8.11 Governing Law
	 	 	20	 
	Section 8.12 Jurisdiction
	 	 	20	 

-ii-

 

	 	 	 
	EXHIBITS
	 
	 	 
	Exhibit A

	 	Definitions
	Exhibit B

	 	Bill of Sale
	 
	 	 
	LIST OF SCHEDULES
	 
	 	 
	Schedule 1.1(a)

	 	Description of Pipeline
	Schedule 1.1(b)

	 	Assigned Contracts
	Schedule 1.9

	 	Purchase Price Allocation
	Schedule 2.4

	 	Noncontravention
	Schedule 2.8

	 	Absence of Certain Changes
	Schedule 2.10

	 	Litigation
	Schedule 2.11

	 	Compliance with Laws and Court Orders
	Schedule 2.12

	 	Seller Intellectual Property
	Schedule 2.13

	 	Insurance Coverage
	Schedule 2.15

	 	Tax Matters
	Schedule 2.16

	 	Environmental Matters
	Schedule 2.16(c)

	 	Environmental Investigations
	Schedule 2.16(d)

	 	Hazardous Substances
	Schedule 2.16(e)

	 	Inactive or Discontinued Operations on Real Property
	Schedule 2.17

	 	Pipeline

-iii-

 

ASSET PURCHASE AGREEMENT

     THIS ASSET PURCHASE AGREEMENT (this “Agreement”), dated as of April 27, 2007, is
entered into by and among Prism Gas Systems I, L.P., a Texas limited partnership
(“Purchaser”), and Peak Gas Gathering L.P., a Texas limited partnership (“Seller”).

RECITALS

     WHEREAS, Seller is the owner of the Purchased Assets (as hereinafter defined);

     WHEREAS, Purchaser desires to purchase from Seller, and Seller desires to sell to Purchaser,
the Purchased Assets, in each case on the terms and conditions set forth herein; and

     WHEREAS, capitalized terms used herein but not otherwise defined herein shall have the
meanings ascribed to them in Exhibit A attached hereto.

AGREEMENT

     NOW, THEREFORE, in consideration of these recitals and the respective representations,
warranties and covenants contained herein, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree as follows:

ARTICLE I

PURCHASE AND SALE; CLOSING

     Section 1.1 Purchase and Sale of Assets. Subject to and in accordance with the terms and
conditions set forth in this Agreement, at the Closing, Seller agrees to sell, assign, transfer and
convey to the Purchaser, and the Purchaser agrees to purchase, acquire and accept from Seller,
those assets listed below, free and clear of all Liens except Permitted Liens (collectively the
“Purchased Assets”):

     (a) all of Seller’s rights, title and interest in the Residue Pipeline from the
Woodlawn Plant to Texas Eastern Transmission Company described in Schedule 1.1(a)
and all rights, title and interest in any Real Property related thereto (the
“Pipeline”); and

     (b) all of Seller’s rights and interests in and to all Contracts listed in Schedule
1.1(b) (the “Assigned Contracts”).

     Section 1.2 Retained Assets. Notwithstanding anything to the contrary contained in
Section 1.1 or elsewhere in this Agreement, all property, assets, rights and interests of
Seller which are not expressly included in Section 1.1 within the definition of Purchased
Assets shall not be transferred to or purchased by Purchaser pursuant this Agreement and shall
remain the property of Seller after Closing (the “Retained Assets”).

     Section 1.3 Post-Closing Liabilities. Subject to the terms and conditions of this
Agreement, at Closing, Purchaser will assume and agree to pay, perform and discharge when due

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and
after the Effective Date the Liabilities listed below (collectively, the “Post-Closing
Liabilities”), but excluding, however, the Retained Liabilities:

     (a) such of the Liabilities that initially occur and are attributable solely to the
period after the Effective Date (and that do not relate to or arise out of any breach of any
representation or warranty of Seller hereunder) in respect of the Assigned Contracts
transferred and assigned to Purchaser hereunder in conformity with the provisions of such
Assigned Contracts; and

     (b) the Liabilities that pertain to the ownership, operation or conduct of the
Purchased Assets by the Purchaser arising from any acts, omissions, events, conditions or
circumstances that initially occur and are solely attributable to the Purchaser and to the
period after the Effective Date.

     Nothing herein prevents the Purchaser from contesting in good faith any of the Post-Closing
Liabilities. Seller agrees to satisfy and discharge all Liabilities of Seller that are not assumed
by Purchaser pursuant to the terms of this Agreement, whether known as of the date hereof or
thereafter determined. Seller represents that it is not in default in respect of the Purchased
Assets.

     Section 1.4 Retained Liabilities. Seller shall retain every Liability of Seller other than
the Post-Closing Liabilities (the “Retained Liabilities”). The Retained Liabilities shall
remain the sole responsibility of and shall be retained, paid, performed and discharged solely by
Seller.

     Section 1.5 Purchase Price. At the Closing, Purchaser shall pay to Seller for the
Purchased Assets $2,139,000 (the “Purchase Price”).

     Section 1.6 Closing. The closing of the transactions described in this Article I (the
“Closing”) will take place at the offices of Purchaser at 10:00 a.m. C.D.T., on the date
that is the later of, (i) May 2, 2007, or (ii) two (2) Business Days following the satisfaction or
waiver of all conditions to closing in Article V (other than those conditions that by their
nature are to be satisfied at the Closing, but subject to the fulfillment or waiver of those
conditions), or at such other time and place as the parties may agree in writing. The date and
time on which the Closing actually takes place is referred to herein as the “Closing Date”.

     Section 1.7 Execution and Delivery of Documents of Title. At the Closing, the Seller and
Purchaser shall execute and deliver a Bill of Sale, in the form attached hereto as Exhibit B (the
“Bill of Sale”). In addition, Seller will execute and deliver to Purchaser such deeds,
conveyances, certificates of title, assignments, assurances and other instruments and documents as
Purchaser may reasonably request in order to effect the sale, conveyance and transfer of the
Purchased Assets from Seller to Purchaser. Such instruments and documents shall be sufficient to
convey to Purchaser good and marketable title in all of the Purchased Assets, free and clear of any
Liens other than Permitted Liens. Seller will, from time to time after the Closing Date, take such
additional actions and execute and deliver such further documents as Purchaser may reasonably
request in order more effectively to sell, transfer and convey the Purchased Assets to Purchaser
and to place Purchaser in position to operate and control all of the Purchased Assets.

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     Section 1.8 Closing Deliveries.

     (a) At the Closing, Seller will deliver to Purchaser:

     (i) a certificate of non-foreign status executed by Seller in compliance with
U.S. Treasury Regulation Section 1.1445-2(b)(2);

     (ii) certificates, dated the Closing Date, executed by Seller certifying the
matters set forth in Section 5.2(d);

     (iii) duly executed copies of all consents and approvals required for the
consummation of the transactions contemplated by this Agreement, including, without
limitation, the consents listed on Schedule 2.4;

     (iv) certified copies of resolutions of the general partner of Seller
authorizing the transactions contemplated by this Agreement;

     (v) the documents contemplated by Section 1.7 of this Agreement,
including the Bill of Sale executed by Seller; and

     (vi) such other documents to be delivered by Seller as may be required by this
Agreement or reasonably requested by Purchaser.

     (b) At the Closing, Purchaser will deliver to Seller:

     (i) the Purchase Price in accordance with Section 1.5;

     (ii) a certificate, dated the Closing Date, executed by Purchaser and
certifying the matters set forth in Section 5.3(c);

     (iii) certified copies of resolutions of the general partner of Purchaser
authorizing the transactions contemplated by this Agreement; and

     (iv) the Bill of Sale, executed by Purchaser; and

     (v) such other documents to be delivered by Purchaser as may be required by
this Agreement or reasonably requested by Seller.

     Section 1.9 Purchase Price Allocation. Purchaser and Seller agree to allocate the Purchase
Price (together with any assumed liabilities) for the Purchased Assets as set forth on Schedule
1.9 (the “Asset Allocation”). The Asset Allocation shall be completed in the manner
required by Section 1060 of the Code. Purchaser and Seller further agree to comply with all
filing, notice and reporting requirements described in Section 1060 of the Code and the Treasury
Regulations promulgated thereunder, including the timely preparation and filing of Form 8594 based
on the Asset Allocation. Purchaser and Seller hereby agree that they will report the federal,
state, foreign and other Tax consequences of the transactions contemplated by this Agreement in a
manner consistent with the Asset Allocation.

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     Section 1.10 Taxes; Apportionments. All sales, use, transfer, filing, recordation,
registration and similar Taxes and fees arising from or associated with the transactions
contemplated by this Agreement, whether levied on Purchaser or Seller or their respective
Affiliates, shall be paid by Seller, and Seller shall file all necessary documentation with respect
to, and make all payments of, such Taxes and fees on a timely basis.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF SELLER

     Seller has delivered to Purchaser the Disclosure Schedules to this Agreement referred to in
this Article II. Seller represents and warrants to Purchaser that, except as otherwise set
forth on the Disclosure Schedules, the following statements are true and correct as of the date
hereof (except that any representations and warranties that are made as of a specific date need
only be true as of such date):

     Section 2.1 Existence and Power. Seller is a limited partnership duly formed, validly
existing and in good standing under the laws of the State of Texas, and it has all powers and all
governmental licenses, authorizations, permits, consents and approvals required to carry on its
business as now conducted and to own, lease, and operate all properties and assets now owned,
leased or operated by it. Seller is duly qualified to do business as a foreign Person and is in
good standing in each jurisdiction where such qualification is necessary, except for those
jurisdictions where failure to be so qualified would not, individually or in the aggregate, have a
Material Adverse Effect.

     Section 2.2 Authorization. The execution, delivery and performance by Seller of this
Agreement and the consummation of the transactions contemplated hereby are within Seller’s powers
and have been duly authorized by all necessary action on the part of Seller. This Agreement
constitutes a valid and binding agreement of Seller.

     Section 2.3 Governmental Authorization. The execution, delivery and performance by Seller
of this Agreement and the consummation of the transactions contemplated hereby require no action,
notice, filing, authorization, consent, waiver or approval by or in respect of, a Governmental
Authority.

     Section 2.4 Noncontravention. The execution, delivery and performance by Seller of this
Agreement and the consummation of the transactions contemplated hereby do not and will not (i)
violate the Organizational Documents of Seller, (ii) violate any Applicable Law that is material to
the Purchased Assets or Seller’s assets; (iii) except as disclosed in Schedule 2.4, require
any authorization, consent, waiver, or approval, or other action by any Person under, constitute a
default under, or give rise to any right of termination, modification, cancellation or acceleration
of any right or obligation of Seller or to a loss of any benefit to which Seller is entitled under
any provision of any agreement, contract, lease, license, instrument, decree, judgment or other
arrangement binding upon Seller, or (iv) result in the creation or imposition of any Lien, except
for any Permitted Liens.

     Section 2.5 Intentionally Omitted.

     Section 2.6 Intentionally Omitted.

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     Section 2.7 Intentionally Omitted.

     Section 2.8 Absence of Certain Changes. Except as disclosed in Schedule 2.8 or as
expressly contemplated by this Agreement, since December 31, 2006, the business of Seller relating
to the Purchased Assets has been conducted in the ordinary course consistent with past practices
and since December 31, 2006 there has not been:

     (a) a Material Adverse Effect affecting the Purchased Assets;

     (b) any physical damage, destruction or other casualty loss (whether or not covered by
insurance) affecting the Purchased Assets in an amount exceeding $10,000 individually or
$50,000 in the aggregate;

     (c) any other transaction involving or development affecting the Purchased Assets
outside the ordinary course of business consistent with past practice, including, but not
limited to, placing a lien on the Purchased Assets; or

     (d) any entering into a contract or committing to do or engage in any of the foregoing
after the date hereof.

     Section 2.9 Assigned Contracts. Seller has furnished or made available to Purchaser
complete and correct copies of the Assigned Contracts, as in effect on the date hereof. Neither
Seller nor, to the Knowledge of Seller, any other party thereto, is in default under any Assigned
Contract, and each Assigned Contract is in full force and effect as to Seller, and to the Knowledge
of Seller, as to each other party thereto. Seller has not received any written notice of any
material default under any Assigned Contract that has not been cured or any other termination
notice with respect thereto.

     Section 2.10 Litigation. Except as disclosed on Schedule 2.10, there is no action,
claim, suit, investigation or proceeding pending against, or to the Knowledge of Seller, threatened
against or affecting Seller or any of its properties before any court or arbitrator or any
governmental body, agency or official.

     Section 2.11 Compliance with Laws and Court Orders. Except as set forth in Schedule
2.11, Seller is not in violation of, or has not received any written notice of any violation
of, or to the Knowledge of Seller, is under investigation with respect to or has been threatened to
be charged with any violation of, any applicable law, rule, regulation, judgment, injunction, order
or decree. Schedule 2.11 lists all permits and licenses held by Seller with respect to the
operation of the Purchased Assets and, except as set forth on Schedule 2.11, there are no
other permits or licenses required to own and operate the Purchased Assets of Seller in the manner
in which the Purchased Assets are currently owned and operated (collectively, “Permits”).

     Section 2.12 Intellectual Property. Seller owns, or otherwise has the right to use
pursuant to license, sublicense, agreement or otherwise, all items of Intellectual Property
required in connection with the operation of the Purchased Assets. To the Knowledge of Seller, no
third party is infringing on any material Intellectual Property owned by Seller, and no third party
has asserted in writing that Seller is infringing on the Intellectual Property of such third

5

 

party.
Schedule 2.12 contains a list of all material Intellectual Property which forms a part of
the Purchased Assets (“Seller Intellectual Property”) included in Seller Intellectual
Property.

     Section 2.13 Insurance Coverage. Seller has made available to Purchaser, and has included
as Schedule 2.13 hereto, a list of, and true and complete copies of, all insurance policies
or binders and fidelity or performance bonds relating to the Purchased Assets, including any
environmental policy, together with a schedule of the material claims history of Seller under such
policies and bonds related to the Purchased Assets since January of 2002. Schedule 2.13
also lists all claims which are presently contemplated under such policies related to the Purchased
Assets. There are no claims by Seller relating to the Purchased Assets pending under any of such
policies or bonds as to which coverage has been questioned, denied or disputed by the underwriters
of such policies or bonds or in respect of which such underwriters have reserved their rights.
Each such policy and bond is in full force and effect, and Seller is not in breach of any material
term of such policies or bonds and, to the Knowledge of Seller, no insurer or other party to any
such policy or bond is in breach of any material term thereof.

     Section 2.14 Gas Regulatory Matters. Seller is not subject to regulation under the Public
Utility Holding Company Act, as amended, or the Investment Company Act of 1940, as amended. Seller
is not subject to regulation under the Natural Gas Act of 1938, as amended. No portion of the
Purchased Assets are subject to the jurisdiction of the Federal Energy Regulatory Commission under
the Natural Gas Act of 1938, the Natural Gas Policy Act of 1978 or the Interstate Commerce Act.

     Section 2.15 Tax Matters. Each Tax Return required to have been filed by Seller has been
timely filed and all amounts shown as due on such Tax Returns have been paid. All such Tax Returns
are true, correct and complete in all material respects. All employment and withholding Taxes
required to be paid or withheld by or on behalf of Seller has been paid or properly set aside in
accounts for such purpose. As of the date hereof, no written agreement or other document
extending, or having the effect of extending, the period of assessment or collection of any Taxes
payable by Seller, and no power of attorney with respect to any such Taxes, has been executed or
filed with the Internal Revenue Service or any other taxing authority that is currently in effect.
Seller is not, as of the date hereof, the beneficiary of any extension of time (other than an
automatic extension of time not requiring the consent of the Internal Revenue Service or any other
taxing authority) within which to file any Tax Return not previously filed. As of the date hereof,
to the Knowledge of Seller, there are no pending audits, examinations, investigations or other
proceedings in respect of Taxes payable by Seller. Seller (a) is not a party to any Tax allocation
or sharing agreement, (b) is not or has not been a member of an affiliated group filing
consolidated or combined Tax Returns or (c) otherwise has no liability for the Taxes of any Person
(other than Seller).

     Section 2.16 Environmental Matters. Except as disclosed on Schedule 2.16:

     (a) (i) no written and pending notice, order, request for information, complaint or
penalty has been received by Seller, and (ii) there are no judicial, administrative or other
third party claims, demands, suits or proceedings pending or threatened, in the case of each
of (i) and (ii), which allege a violation of or liability under any Environmental Law by
Seller or any predecessor to Seller;

6

 

     (b) except as set forth in Schedule 2.16(b), Seller is in compliance with all
applicable Environmental Laws, has obtained all permits, licenses, consents and approvals
required under all applicable Environmental Laws to entitle Seller to own or lease and
operate its respective assets and to carry on and conduct the Business as currently
conducted (“Environmental Permits”), and is in compliance with the terms of such
Environmental Permits and with all other applicable Environmental Laws;

     (c) there has been no written environmental investigation, study or audit conducted
within the past five years by, or on behalf of, or in the possession or control of Seller of
any property currently or formerly owned, operated or leased by Seller which has not been
delivered or made available to Purchaser prior to the date hereof and is not listed on
Schedule 2.16(c);

     (d) except as disclosed on Schedule 2.16(d), no Hazardous Substances have been
released, discharged, dumped, or disposed of to (i) soil in amounts that would reasonably be
expected to impact groundwater or surface water, (ii) groundwater, or (iii) surface water,
in the case of each of (i), (ii), and (iii), at, under, on or from real property currently
or, to the Knowledge of Seller, formerly owned, leased, and/or operated by Seller or that
would otherwise violate Applicable Law; and

     (e) except as disclosed in Schedule 2.16(e), to the Knowledge of Seller, there
is no Real Property where operations are inactive or discontinued as of the date hereof.

     Section 2.17 Pipeline.

     (a) Seller is in possession of the Pipeline. Except as set forth in Schedule
2.17(a), Seller has good and defensible title to the easements and rights of way which
comprise the Pipeline free and clear of all Liens except for Permitted Liens; provided,
however, that Seller’s title is subject to the terms and conditions of each of said
easements and right of way agreements.

     (b) There are no contracts affecting the title to or possession of the Pipeline other
than those set out in Schedule 2.17(b).

     (c) Neither the whole nor any portion of the Pipeline has been condemned,
requisitioned, or otherwise taken by any public authority, and no notice of any such
condemnation, requisition, or taking has been received by Seller. To Seller’s Knowledge, no
such condemnation, requisition, or taking is threatened or contemplated. Seller has no
Knowledge of any public improvements that may result in special assessments against the
Pipeline.

     (d) (i) The Pipeline is in compliance in all respects with all applicable zoning,
building, health and fire laws, (ii) except as disclosed in Schedule 2.17(a), Seller
has all licenses, permits, and authorizations required to operate the Pipeline as currently
operated by Seller, (iii) except as disclosed in Schedule 2.17(a), Seller has such
easements and rights as are necessary to operate the Pipeline as currently operated by
Seller, and (iv) to Seller’s Knowledge, no fact or condition exists that has resulted or is
reasonably likely to

7

 

result in the termination or impairment of access to the Pipeline or
discontinuation of utilities necessary to operate the Pipeline.

     (e) Except as set forth in Schedule 2.17(a), Seller has delivered or made
available to Purchaser accurate, correct, and complete (in all material respects) copies of
all valid and existing leases, mortgages, deeds of trust, certificates of occupancy,
easements, right of way agreements, existing title insurance policies, title reports,
surveys, and all amendments thereof that are within Seller’s possession or control with
respect to the Pipeline.

     Section 2.18 Tangible Personal Property. Except as set forth in Schedule 2.17(a),
Seller is in possession of and has good title to, or has valid leasehold interests in or valid
rights under contract to use, all tangible and intangible property which comprise a part of the
Purchased Assets. All such tangible and intangible property which comprise a part of the Purchased
Assets is free and clear of all Liens, other than Permitted Liens, and all tangible property is in
good working condition, ordinary wear and tear excepted. Such tangible and intangible property is
sufficient to permit Seller to operate the Purchased Assets in the ordinary course of business,
consistent with past practice.

     Section 2.19 Brokers; Advisors. All negotiations relating to this Agreement and the
transactions contemplated hereby have been carried out without the services of any Person acting on
behalf of Seller in such manner as to give rise to any valid claim against Purchaser for any
brokerage or finder’s commission or similar compensation, or any legal, accounting or other
professional advisory fees.

     Section 2.20 Disclaimer. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT AND THE
DOCUMENTS AND AGREEMENTS EXECUTED IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY, SELLER
MAKE NO REPRESENTATIONS OR WARRANTIES OF ANY KIND OR NATURE WITH RESPECT TO THE PURCHASED ASSETS OR
THE OTHER ASSETS OR LIABILITIES OF SELLER.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF PURCHASER

     Purchaser hereby makes the following representations and warranties to Seller:

     Section 3.1 Existence and Power. Purchaser is a limited partnership duly formed, validly
existing and in good standing under the laws of the State of Texas, and it has all powers and all
material governmental licenses, authorizations, permits, consents and approvals required to carry
on its business as now conducted and to own, lease, and operate all properties and assets now
owned, leased or operated by it, except for those licenses, authorizations, permits, consents and
approvals the absence of which would not have a material adverse effect on (i) the business, assets
or results of operations of Purchaser and its subsidiaries, taken as a whole, or (ii) the ability
of Purchaser to perform its material legal obligations under this Agreement.

     Section 3.2 Authorization. The execution, delivery and performance by Purchaser of this
Agreement and the consummation of the transactions contemplated hereby are within the

8

 

powers of
Purchaser and have been duly authorized by all necessary action on the part of Purchaser. This
Agreement constitutes a valid and binding agreement of Purchaser.

     Section 3.3 Governmental Authorization. The execution, delivery and performance by
Purchaser of this Agreement and the consummation of the transactions contemplated hereby require no
action, notice, filing, authorization, consent, waiver or approval with any governmental body,
agency or official.

     Section 3.4 Noncontravention. The execution, delivery and performance by Purchaser of this
Agreement and the consummation of the transactions contemplated hereby do not and will not (i)
violate the Organizational Documents of Purchaser, (ii) assuming compliance with the matters
referred to in Section 3.3, violate any Applicable Law, rule, regulation, judgment,
injunction, order or decree, or (iii) require any consent or other action by any Person under,
constitute a default under, or give rise to any right of termination, cancellation or acceleration
of any right or obligation of Purchaser.

     Section 3.5 Litigation. There is no action, suit, investigation or proceeding pending
against, or to the Knowledge of Purchaser threatened against or affecting, Purchaser before any
court or arbitrator or any governmental body, agency or official which in any manner challenges or
seeks to prevent, enjoin, alter or materially delay the transactions contemplated by this
Agreement.

     Section 3.6 Brokers; Advisors. In the event Purchaser has retained an advisor, investment
banker, broker, finder or other intermediary in connection with the transactions contemplated by
this Agreement, Seller shall not have any liability or obligation to pay and shall not pay any such
fees or expenses to any such Person.

ARTICLE IV

COVENANTS OF THE PARTIES

     Section 4.1 Conduct of Business. From the date hereof until the Closing, Seller (i) will
conduct the Business in the ordinary course in substantially the same manner in which it previously
has been conducted, and (ii) will not, without the prior consent of Purchaser, take any of the
following actions:

     (a) sell, lease, license or otherwise dispose of or subject to any Lien (other than
Permitted Liens) any Purchased Assets;

     (b) cancel or terminate its current insurance policies relating to the Purchased Assets
or cause any of the coverage thereunder to lapse, unless simultaneously with such
termination, cancellation or lapse, replacement policies providing coverage equal to or
greater than the coverage under the canceled, terminated or lapsed policies for
substantially similar premiums are in full force and effect;

     (c) change an accounting method or Tax election, enter into a closing agreement (as
defined in Section 7121 of the Code) or settlement with respect to Taxes, or file an amended
Tax Return; or

9

 

     (d) agree, whether in writing or otherwise, to do any of the foregoing.

     Section 4.2 Access and Information. From and after the date of this Agreement, Seller will
give Purchaser and its representatives reasonable access during normal business hours to the
properties, books, records, business plans and budgets of Seller and will furnish such information
and documents in its possession relating to Seller as Purchaser may reasonably request. All such
information and documents obtained by Purchaser shall be subject to the terms and conditions of
that certain letter agreement, dated September 5, 2006 by and between Purchaser and Woodlawn
Pipeline Company, Inc. (the “Confidentiality Agreement”). Notwithstanding the foregoing,
Purchaser shall not have access to personnel records of Seller which in Seller’s good faith opinion
would violate Applicable Laws.

     Section 4.3 Notices of Certain Events. Seller shall promptly notify Purchaser of:

     (a) any notice or other communication from any Person alleging that the consent of such
Person is or may be required in connection with the transactions contemplated by this
Agreement;

     (b) any notice or other communication from any Governmental Authority in connection
with the transactions contemplated by this Agreement;

     (c) any breach or inaccuracy of Seller’s, or to the Knowledge of Seller, Seller’s
representations and warranties contained in this Agreement; or

     (d) any actions, suits, claims, investigations or proceedings commenced relating to
Seller that, if pending on the date of this Agreement, would have been required to have been
disclosed pursuant to Section 2.10.

     Section 4.4 Reasonable Best Efforts; Further Assurances. Subject to the terms and
conditions of this Agreement, Purchaser and Seller will use their reasonable best efforts to take,
or cause to be taken, all actions and to do, or cause to be done, all things necessary or desirable
under applicable laws and regulations to consummate the transactions contemplated by this
Agreement. The Seller, prior to the Closing, and Purchaser, after the Closing, agree to execute and
deliver such other documents, certificates, agreements and other writings and to take such other
actions as may be necessary or desirable in order to consummate or implement expeditiously the
transactions contemplated by this Agreement.

     Section 4.5 Certain Filings. The parties shall cooperate with one another (i) in
determining whether any action by or in respect of, or filing with, any governmental body, agency,
official or authority is required, or any actions, consents, approvals or waivers are required,
including in connection with the possible transfer of any permits, authorizations, licenses or
consents for any Purchased Assets, to be obtained from parties to any material contracts, in
connection with the consummation of the transactions contemplated by this Agreement and (ii) in
taking such actions or making any such filings, furnishing information required in connection
therewith and seeking to obtain, in a timely manner, any such actions, consents, approvals or
waivers.

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     Section 4.6 Publicity. The parties agree to consult with each other before issuing any
press release or making any public statement with respect to this Agreement or the transactions
contemplated hereby and, except for any press releases and public announcements the making of which
may be required by applicable law or any listing agreement with any national securities exchange,
will not issue any such press release or make any such public statement prior to such consultation.

     Section 4.7 Financing. The Seller agrees to provide all information reasonably requested
by Purchaser or any lending institution in connection with financing the transactions contemplated
by this Agreement.

     Section 4.8 Post-Closing Payment. Purchaser understands and agrees that Seller is entitled
to receive the revenues due Seller for the period ending April 30, 2007 under that certain gas
gathering contract with Woodlawn Pipeline Company, Inc. described in Schedule 1.1(b)
hereto. Seller will invoice Woodlawn for the amount due to Seller for the month of April 2007 on
or about May 11, 2007 and Purchaser agrees to cause Woodlawn to promptly pay Seller all amounts due
under such invoice. Seller represents that the actual amount due to Seller for April 2007 under
said contract will be no more than approximately $11,000.

ARTICLE V

CONDITIONS TO CLOSING

     Section 5.1 Conditions to Each Party’s Obligations. The respective obligations of
Purchaser and Seller to consummate the transactions contemplated by this Agreement are subject to
the satisfaction at or prior to the Closing Date of the following conditions:

     (a) No provision of Applicable Law and no judgment, injunction, order, decree, ruling
or charge shall prohibit or prevent the consummation of the transactions contemplated by
this Agreement or the consummation of the Closing;

     (b) No action, suit, or proceeding initiated by a Governmental Authority shall be
pending before any Governmental Authority seeking an injunction, judgment, order, decree,
ruling, or charge that would prohibit or prevent the consummation of the transactions
contemplated by this Agreement;

     (c) That certain Stock Purchase Agreement between Woodlawn Pipeline Company, Inc.
(“Woodlawn”), Lantern Resources, L.P. (“Lantern”), David P. Deison
(“Deison”) and Prism Gas Systems I, L.P. dated April 27, 2007 covering the purchase
of all the outstanding stock of Woodlawn from Lantern and Deison to Purchaser for a purchase
price of $30,200,000 shall be closed simultaneous with this Agreement;

     (d) Purchaser shall purchase from Star a 700 horsepower compressor, labeled Unit 1081,
for purchase price of $400,000; and

     (e) The Pipeline is in operational condition, as operated by Seller in accordance with
past practice.

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     Section 5.2 Further Conditions to Obligations of Purchaser. The obligation of Purchaser to
consummate the transactions contemplated by this Agreement is further subject to the satisfaction
or waiver in writing by Purchaser at or prior to the Closing Date of the following conditions:

     (a) each of the representations and warranties of Seller contained in this Agreement
shall be true and correct in all material respects as of the date of this Agreement and as
of the Closing, as if made at and as of that time (other than such representations and
warranties that expressly address matters only as of a certain date, which need only be true
as of such certain date);

     (b) Seller shall have performed and complied in all material respects with all
covenants and obligations required by this Agreement to be performed or complied with by it
on or prior to the Closing Date;

     (c) no event or circumstance has occurred since the date of this Agreement which would
constitute a Material Adverse Effect;

     (d) Seller shall have delivered to Purchaser certificates dated the Closing Date,
executed by an appropriate officer of Seller, certifying that the conditions specified in
Sections 5.2(a), (b) and (c) have been fulfilled;

     (e) each item required to be executed and delivered to Purchaser pursuant to
Section 1.8(a) shall have been so executed and delivered; and

     (f) all Liens, other than Permitted Liens, on the Purchased Assets shall have been
released.

     Section 5.3 Conditions to Obligations of Seller. The obligation of Seller to consummate
the transactions contemplated by this Agreement is further subject to the satisfaction or waiver in
writing by Seller at or prior to the Closing Date of the following conditions:

     (a) each of the representations and warranties of Purchaser contained in this Agreement
shall be true and correct in all material respects as of the date of this Agreement and as
of the Closing, as if made at and as of that time (other than such representations and
warranties that expressly address matters only as of a certain date, which need only be true
as of such certain date);

     (b) Purchaser shall have performed and complied in all material respects with all
covenants and obligations required by this Agreement to be performed or complied with by it
on or prior to the Closing Date;

     (c) Purchaser shall have delivered to Seller a certificate dated the Closing Date,
executed by an appropriate officer of Purchaser, certifying that the conditions specified in
Sections 5.3(a) and (b) have been fulfilled; and

12

 

     (d) each item required to be executed and delivered to Purchaser pursuant to
Section 1.8(b) shall have been so executed and delivered.

ARTICLE VI

TERMINATION

     Section 6.1 Termination.

     (a) This Agreement may be terminated:

     (i) at any time prior to the Closing Date by mutual consent of Purchaser and
Seller;

     (ii) by Purchaser if there has been a material breach by Seller of any
representation, warranty or covenant contained in this Agreement which has prevented
the satisfaction of any of the conditions of Purchaser to consummate the
transactions contemplated by this Agreement and, if such breach is of a character
that is capable of being cured, such breach has not been cured by Seller within 30
days after written notice thereof from Purchaser;

     (iii) by Seller if there has been a material breach by Purchaser of any
representation, warranty or covenant contained in this Agreement which has prevented
the satisfaction of any of the conditions of Seller to consummate the transactions
contemplated by this Agreement and, if such breach is of a character that is capable
of being cured, such breach has not been cured by Purchaser within 30 days after
written notice thereof from Seller;

     (iv) by Purchaser or Seller if any injunction, order or decree is issued by any
Governmental Authority materially restraining or prohibiting the consummation of the
transactions contemplated by this Agreement and such injunction, order or decree has
become final and nonappealable; or

     (v) by Purchaser or Seller, if the Closing shall not have taken place on or
before May 31, 2007; provided, however, that the right to terminate this Agreement
pursuant to this Section 6.1(a)(v) shall not be available to Purchaser or
Seller, as applicable, if the party seeking to terminate this Agreement, at such
time, is in material breach of any representation, warranty, covenant or agreement
set forth in this Agreement.

     (b) In the event of termination pursuant to this Section 6.1, written notice
thereof shall forthwith be given to Purchaser or Seller, as applicable, and the transactions
contemplated by this Agreement will be terminated without further action by any party. If
the transactions contemplated by this Agreement are terminated as provided herein:

     (i) Purchaser will return to Seller all documents and other materials received
from Seller, the Seller and their respective agents (including all copies of or
materials developed from any such documents or other materials) relating to

13

 

the
transactions contemplated hereby, whether obtained before or after the execution
hereof;

     (ii) Purchaser will not disclose, and will cause its agents and representatives
not to disclose, any non-public information received or otherwise learned in
connection with the transactions contemplated hereby relating to Seller, whether
obtained before or after the execution hereof; or

     (iii) this Agreement will become null and void and of no further force or
effect, except for Section 4.2 (relating to Confidential Information),
Section 4.6 (relating to publicity), and Article VIII; provided that
nothing in this Section 6.1 will be deemed to release any party from any
liability for any breach by such party of the terms and provisions of this
Agreement, or to impair the right of any party to compel specific performance by any
other party of its obligations under this Agreement.

ARTICLE VII

INDEMNIFICATION

     Section 7.1 Indemnification by Seller. Seller hereby agrees to indemnify and hold harmless
Purchaser and its Affiliates and its and their managers, directors, officers, members,
shareholders, partners, employees and agents (the “Purchaser Indemnitees”) from and after
the Closing Date from and against, and shall reimburse the Purchaser Indemnitees for, any and all
Losses, including without limitation any Losses arising out of the strict liability of any Person,
paid, imposed on or incurred by the Purchaser Indemnitees, directly or indirectly, resulting from,
caused by, arising out of, or in any way relating to and with respect to any of, or any allegation
by any third party of, the following:

     (a) any breach of or inaccuracy in any representation or warranty on the part of Seller
under this Agreement (including the Disclosure Schedule); and

     (b) any non-fulfillment of any covenant or agreement on the part of Seller under this
Agreement that has not been expressly waived by the party seeking the indemnification in
writing.

It shall not be necessary for Losses to be suffered as a result of or in connection with actions
taken, made or threatened by any third party or Governmental Authority for such Losses to be
indemnifiable under this Article VII.

     Section 7.2 Indemnification by Purchaser. Purchaser hereby agrees to indemnify and hold
harmless Seller (the “Seller Indemnitees”) from and after the Closing Date from and
against, and shall reimburse Seller Indemnitees for, any and all Losses, including without
limitation any Losses arising out of the strict liability of any Person, paid, imposed on or
incurred by Seller Indemnitees, directly or indirectly, resulting from, caused by, arising out of,
or in any way relating to and with respect to any of, or any allegation by any third party of, the
following:

     (a) any breach of or inaccuracy in any representation or warranty on the part of
Purchaser under this Agreement (including the Disclosure Schedule); and

14

 

     (b) any non-fulfillment of any covenant or agreement on the part of Purchaser under
this Agreement that has not been expressly waived by the party seeking the indemnification
in writing.

It shall not be necessary for Losses to be suffered as a result of or in connection with actions
taken, made or threatened by any third party or Governmental Authority for such Losses to be
indemnifiable under this Article VII.

     Section 7.3 Procedure for Indemnification.

     (a) If there occurs an event that either party asserts is an indemnifiable event
pursuant to Section 7.1 or 7.2, the party seeking indemnification (the
“Indemnitee”) shall promptly provide notice (the “Notice of Claim”) to the
other party or parties obligated to provide indemnification (the “Indemnifying
Party”). Providing the Notice of Claim shall be a condition precedent to any Liability
of the Indemnifying Party hereunder, and the failure to provide prompt notice as provided
herein will relieve the Indemnifying Party of its obligations hereunder but only if and to
the extent that such failure materially prejudices the Indemnifying Party hereunder. In
case any such action shall be brought against any Indemnitee and it shall provide a Notice
of Claim to the Indemnifying Party of the commencement thereof, the Indemnifying Party shall
be entitled to participate therein and, to the extent that it shall wish, to assume the
defense thereof, with counsel reasonably satisfactory to such Indemnitee and, after notice
from the Indemnifying Party to such Indemnitee of such election so to assume the defense
thereof, the Indemnifying
Party shall not be liable to the Indemnitee hereunder for any legal expenses of other
counsel or any other expenses, in each case subsequently incurred by the Indemnitee, in
connection with the defense thereof other than reasonable costs of investigation; provided,
however, that if the Indemnitee reasonably believes that counsel for the Indemnifying Party
cannot represent both the Indemnitee and the Indemnifying Party because such representation
would be reasonably likely to result in a conflict of interest, then the Indemnitee shall
have the right to defend, at the sole reasonable cost and expense of the Indemnifying Party,
such action by all appropriate proceedings. The Indemnitee agrees to reasonably cooperate
with the Indemnifying Party and its counsel in the defense against any such asserted
liability. In any event, the Indemnitee shall have the right to participate at its own
expense in the defense of such asserted liability. No Indemnifying Party, in the defense of
any such claim or litigation, shall, except with the written consent of each Indemnitee,
consent to entry of any judgment or enter into any settlement that does not include as an
unconditional term thereof the release of the Indemnitee from all Liability in respect to
such claim or litigation or that does not solely require the payment of money damages by the
Indemnifying Person. The Indemnifying Party agrees to afford the Indemnitee and its
counsel, at the Indemnitee’s sole expense, the opportunity to be present at, and to
participate in, conferences with all Persons, including any Governmental Authority,
asserting any Claim against the Indemnitee or conferences with representatives of or counsel
for such Persons. In no event shall the Indemnifying Party, without the written consent of
the Indemnitee, settle any Claim on terms that provide for (i) a criminal sanction against
the Indemnitee or (ii) injunctive relief affecting the Indemnitee.

15

 

     (b) Upon receipt of a Notice of Claim, the Indemnifying Party shall have twenty
calendar days (or such shorter period as may be appropriate under the circumstances) to
contest its indemnification obligation with respect to such claim, or the amount thereof, by
written notice to the Indemnitee (the “Contest Notice”); provided, however, that if,
at the time a Notice of Claim is submitted to the Indemnifying Party the amount of the Loss
in respect thereof has not yet been determined, such twenty day period in respect of, but
only in respect of the amount of the Loss, shall not commence until a further written notice
(the “Notice of Liability”) has been sent or delivered by the Indemnitee to the
Indemnifying Party setting forth the amount of the Loss incurred by the Indemnitee that was
the subject of the earlier Notice of Claim. Such Contest Notice shall specify the reasons
or bases for the objection of the Indemnifying Party to the claim, and if the objection
relates to the amount of the Loss asserted, the amount, if any, that the Indemnifying Party
believes is due the Indemnitee, and any undisputed amount shall be promptly paid over to the
Indemnitee. If no such Contest Notice is given within such twenty day period, the
obligation of the Indemnifying Party to pay the Indemnitee the amount of the Loss set forth
in the Notice of Claim, or subsequent Notice of Liability, shall be deemed established and
accepted by the Indemnifying Party.

     (c) If the Indemnifying Party fails to assume the defense of such Claim or, having
assumed the defense and settlement of such Claim, fails reasonably to contest such Claim in
good faith, the Indemnitee, without waiving its right to indemnification, may assume, at the
reasonable cost of the Indemnifying Party, the defense and settlement of such Claim;
provided, however, that (i) the Indemnifying Party shall be permitted to
join in the defense and settlement of such Claim and to employ counsel at its own
expense, (ii) the Indemnifying Party shall cooperate with the Indemnitee in the defense and
settlement of such Claim in any manner reasonably requested by the Indemnitee and (iii) the
Indemnitee shall not settle such Claim without obtaining the prior written consent of the
Indemnifying Party, which shall not be unreasonably withheld or delayed.

     (d) The Indemnifying Party shall make any payment required to be made under this
Article in cash and on demand. Any payments required to be paid by an Indemnifying Party
under this Article that are not paid within five (5) Business Days of the date on which such
obligation becomes final shall thereafter be deemed delinquent, and the Indemnifying Party
shall pay to the Indemnitee, immediately upon demand, interest at the rate of ten percent
per annum, not to exceed the maximum nonusurious rate allowed by Applicable Law, from the
date such payment becomes delinquent to the date of payment of such delinquent sums, which
interest shall be considered to be Losses of the Indemnitee.

     Section 7.4 Survival.

     (a) The liability of Seller for its indemnification obligations arising under
Section 7.1(a) of this Agreement shall be limited to claims for which a Purchaser
Indemnitee delivers written notice to Seller on or before the second anniversary date of the
Closing Date; provided, however, that any indemnification obligation resulting from a breach
of or inaccuracy in any representation or warranty contained in (x) Sections 2.15
and 2.16 shall survive until the applicable statute of limitations period has run
with

16

 

respect to such claims and (y) Sections 2.1, 2.2, 2.3,
2.4, and 2.19, as well as any claims under Section 7.1(b) shall not
be limited.

     (b) The liability of Purchaser for Purchaser’s indemnification obligations arising out
of Section 7.2 shall be limited to claims for which a Seller Indemnitee delivers
written notice to Purchaser on or before the third anniversary date of the Closing Date;
provided, however, that any indemnification obligation relating to (i) Section
7.2(a) and resulting from a breach of or inaccuracy in any representation or warranty
contained in Sections 3.1, 3.2, 3.3, 3.4 or 3.6 or
(ii) Section 7.2(b) shall not be limited.

     Section 7.5 Limitations on Indemnification. Notwithstanding anything in this Agreement to
the contrary, the maximum indemnification liability of Seller, on the one hand, and Purchaser on
the other, shall not exceed $215,000 in the aggregate, provided, however, that such limitation
shall not apply to any indemnification obligation resulting from a breach of or inaccuracy in any
representation or warranty contained in Sections 2.1, 2.2, 2.3,
2.4, 2.15, 2.16 or 2.19, Section 7.1(b) or Section
7.2(b). Notwithstanding anything in this Agreement to the contrary, the maximum
indemnification liability of Seller, on the one hand, and Purchaser on the other, shall not exceed
the Purchase Price in the aggregate. No claim may be made by the Purchaser Indemnities for
indemnification under Section 7.1 hereof until such Purchaser Indemnities have incurred
aggregate Losses in
excess of the Basket Threshold Amount in the aggregate, at which time all amounts (including the
Basket Threshold Amount) may be recovered as provided in this Agreement.

     Section 7.6 Inconsistent Provisions. The provisions of this Article shall govern and
control over any inconsistent provisions of this Agreement.

     Section 7.7 Right to Indemnification Not Affected by Knowledge. The right to
indemnification in accordance with the provisions of this Article will not be affected by any
investigation conducted with respect to, or any knowledge acquired (or capable of being acquired)
at any time, whether before or after the Closing Date, with respect to the accuracy or inaccuracy
of or compliance with, any representation, warranty, covenant or obligation set forth in this
Agreement. If at any time prior to Closing, any of the parties hereto has knowledge of any facts,
circumstances or situations which constitute a breach of any representation, warranty or covenant
hereunder, such party shall give the other party prompt notice thereof.

     Section 7.8 Express Negligence. THE FOREGOING INDEMNITIES SET FORTH IN THIS ARTICLE ARE
INTENDED TO BE ENFORCEABLE AGAINST THE PARTIES IN ACCORDANCE WITH THE EXPRESS TERMS AND SCOPE
THEREOF, NOTWITHSTANDING ANY EXPRESS NEGLIGENCE RULE OR ANY SIMILAR DIRECTIVE THAT WOULD PROHIBIT
OR OTHERWISE LIMIT INDEMNITIES BECAUSE OF THE SIMPLE OR GROSS NEGLIGENCE (WHETHER SOLE, CONCURRENT,
ACTIVE OR PASSIVE) OR OTHER FAULT OR STRICT LIABILITY OF ANY INDEMNIFIED PARTY, INCLUDING, WITHOUT
LIMITATION, ARISING UNDER ENVIRONMENTAL LAWS. THE PARTIES HERETO ACKNOWLEDGE THAT THE INDEMNITIES
SET FORTH HEREIN MAY RESULT IN THE INDEMNITY OF A PARTY FOR ITS SIMPLE OR GROSS NEGLIGENCE (WHETHER
SOLE, CONCURRENT, ACTIVE

17

 

OR PASSIVE) OR OTHER FAULT OR STRICT LIABILITY OF THE INDEMNIFIED PARTY.

ARTICLE VIII

GENERAL PROVISIONS; MISCELLANEOUS

     Section 8.1 Modification; Waiver. This Agreement may be modified only by a written
instrument executed by Purchaser and Seller. Any of the terms and conditions of this Agreement may
be waived in writing at any time on or prior to the Closing Date by the party or parties entitled
to the benefits thereof.

     Section 8.2 Entire Agreement. This Agreement, including the Disclosure Schedules and
exhibits hereto, the documents, instruments and schedules referred to herein and all other
documents dated as of the date hereof and on the Closing, constitutes the entire agreement among
the parties with respect to the subject
matter hereof and supersedes all other prior agreements and understandings, both written and oral,
among the parties or any of them with respect to the subject matter hereof; provided, however, that
this Agreement does not supersede the Confidentiality Agreement, the terms and conditions of which
the parties hereto hereby expressly reaffirm.

     Section 8.3 Expenses. Except as expressly provided herein, whether or not the transactions
contemplated herein shall be consummated, each party shall pay its own expenses incident to the
preparation of this Agreement and the negotiation and consummation of the transactions contemplated
by this Agreement.

     Section 8.4 Further Actions. Each party will execute and deliver such certificates and
other documents and take such other actions as may reasonably be requested by the other party in
order to consummate or implement the transactions contemplated hereby.

     Section 8.5 Notices. All notices, requests, demands and other communications hereunder
shall be in writing and shall be deemed to have been duly given or made as follows: (a) if sent by
registered or certified mail in the United States return receipt requested, upon receipt; (b) if
sent by reputable overnight air courier (such as DHL or Federal Express), one business day after
mailing; (c) if sent by facsimile transmission, when transmitted and receipt is confirmed by the
recipient by telephone; or (d) if otherwise actually personally delivered, when delivered, and
shall be delivered as follows:

     If to Seller, to the address set forth under such Seller’s name on the signature page hereto.

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

David N. Reed

Meadows, Collier, Reed, Cousins & Blau, LLP

901 Main Street, Suite 3700

Dallas, TX 75202

Fax: (214) 747-3732

18

 

     If to Purchaser:

Prism Gas Systems I, L.P.

2350 Airport Freeway, Suite 505

Bedford, Texas 76022

Fax: (817) 864-3101

Attention: Robert Dunn

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

Martin Midstream Partners L.P.

P. O. Box 41368

Beaumont, Texas 77725

Fax: (409) 835-3425

Attention: Chris Booth

or to such other address or to such other Person as any party hereto has last designated by notice
to the other parties.

     Section 8.6 Assignment. This Agreement will be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns. Neither this Agreement
nor any of the rights, interests or obligations hereunder may be assigned by any party hereto
without (i) the prior written consent of Seller in the case of an assignment by Purchaser, (ii) the
prior written consent of Purchaser in the case of an assignment by Seller, and (iii) the prior
written consent of each of the other parties in the case of Seller; provided, however, that
Purchaser may assign this Agreement to an Affiliate without obtaining the consent of Seller. No
assignment shall release the assigning party of its obligations and liabilities under this
Agreement.

     Section 8.7 No Third Party Beneficiaries. Nothing in this Agreement shall confer any
rights upon any Person that is not a party or a successor or permitted assignee of a party to this
Agreement.

     Section 8.8 Counterparts. This Agreement may be executed in counterparts, all of which
shall together constitute one and the same instrument.

     Section 8.9 Headings. The Section headings in this Agreement are for convenience of
reference only and will not be deemed to alter or affect the meaning or interpretation of any
provision hereof.

     Section 8.10 Terms Generally. The words “hereby,” “herein,”
“hereof,” “hereunder” and words of similar import refer to this Agreement as a
whole (including any exhibits and schedules hereto) and not merely to the specific section,
paragraph or clause in which such word appears. All references in this Agreement to Sections,
Exhibits and Schedules are references to Sections of, and Exhibits and Schedules to, this Agreement
unless the context otherwise requires. The words “include”, “includes” and
“including” are deemed to be followed by the phrase “without limitation.” The
definitions given in this Agreement apply equally to both the singular

19

 

and plural forms of the
terms defined. Whenever the context requires, any pronoun includes the corresponding masculine,
feminine and neuter forms.

     Section 8.11 Governing Law. This Agreement shall be governed by and construed in
accordance with the law of the State of Texas, without regard to the conflicts of law rules that
would require the application of the law of another state.

     Section 8.12 Jurisdiction. The parties hereto agree that any suit, action or proceeding
seeking to enforce any provision of, or based on any matter arising out of or in connection with,
this Agreement or the transactions contemplated hereby shall be brought in Collin County, Texas,
and that any cause of action arising out of this Agreement shall be deemed to have arisen from a
transaction of business in the State of Texas, and each of the parties hereby irrevocably consents
to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such
suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law, any
objection that it may now or hereafter have to the laying of the venue of any such suit, action or
proceeding in any such court or that any such suit, action or proceeding brought in any such court
has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be
served on any party anywhere in the world, whether within or without the jurisdiction of any such
court.

[Remainder of Page Intentionally Left Blank; Signature Page Follows]

20

 

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

	 	 	 	 	 	 	 	 	 
	 	 	PURCHASER:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	PRISM GAS SYSTEMS I, L.P.	 	 
	 	 	By:	 	Prism Gas Systems GP, LLC	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Robert Dunn	 	 
	 	 	 	 	Robert Dunn,	 	 
	 	 	 	 	Senior Vice President	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	SELLER:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	PEAK GAS GATHERING L.P.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	Peak Gas Holding, LLC, a Texas limited liability company, sole general partner	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	Doug Coe & Associates, Inc., a Texas corporation,
sole manager	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Barbara C. Coe	 	 
	 

	 	 	 	 	 	Barbara C. Coe,	 	 
	 

	 	 	 	 	 	Secretary	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	1800 Preston Park Blvd., Suite 112

Plano, Texas 75093	 	 

Signature Page to Stock Purchase Agreement

 

 

EXHIBIT A

DEFINITIONS

     “Affiliate” means, with respect to any specified Person, a Person that directly, or
indirectly through one or more intermediaries, controls, or is controlled by, or is under common
control with, the Person specified. For purposes of this definition, “control” (including
the correlative terms “controlling,” “controlled by” and “under common control
with”) means the possession, direct or indirect, of the power to direct or cause the direction
of the management and policies of a Person, whether through the ownership of voting equity
interest, by contract or otherwise.

     “Applicable Law” means, with respect to any Person, any federal, state or local law
(statutory, common or otherwise), constitution, treaty, convention, ordinance, code, rule,
regulation, executive order, injunction, judgment, decree, ruling, or other similar requirement
enacted, adopted, promulgated, or applied by a Governmental Authority that is binding upon such
Person.

     “Basket Threshold Amount” means the sum of $21,500.

     “Business” means the business of Seller as it relates to the Purchased Assets as
currently conducted.

     “Business Day” means a day, other than Saturday, Sunday or other day on which
commercial banks in New York, New York are authorized or required by law to close.

     “Claim” means any action, suit, proceeding, hearing, investigation, litigation,
charge, complaint, claim, Environmental Action or demand.

     “Code” means the Internal Revenue Code of 1986, as amended.

     “Disclosure Schedules” means the disclosure schedules delivered by Seller to Purchaser
concurrently with the execution and delivery of this Agreement.

     “Environmental Laws” means any applicable United States federal, state, or local law,
rules, regulations, codes, ordinances, and orders, relating to pollution, contamination of soils or
ground water, or protection of the environment.

     “Governmental Authority” means any federal, state, local or foreign judicial,
legislative, executive or regulatory authority or agency.

     “Hazardous Substance” means any toxic or hazardous pollutant, contaminant, chemical,
waste, material or substance defined as such by any Environmental Law, that causes injury to the
environment and subjects Seller to costs or liability under any Environmental Law, and specifically
includes, but is not limited to: (i) petroleum and petroleum products, including crude oil and any
fractions thereof; (ii) natural gas,

A-1

 

synthetic gas and any mixtures thereof; (iii) PCBs; and (iv) asbestos or asbestos-containing
materials.

     “Intellectual Property” means intellectual property rights under statutory or common
law, worldwide, including (i) trademarks, service marks, trade dress, slogans, logos and all
goodwill associated therewith, and any applications or registrations for any of the foregoing; (ii)
copyrights and any applications or registrations for any of the foregoing; and (iii) patents, all
confidential know-how, trade secrets and similar proprietary rights in confidential inventions,
discoveries, improvements, processes, techniques, devices, methods, patterns, formulae,
specifications, and lists of suppliers, vendors, customers, and distributors.

     “Knowledge of Seller,” or any phrase of similar import means the actual knowledge,
after reasonable inquiry, of Richard Coe or Joe Baugh.

     “Knowledge of Purchaser,” or any phrase of similar import means the actual knowledge,
after reasonable inquiry, of Robert Dunn.

     “Liability” means all indebtedness, Claims, legal proceedings, obligations, duties,
warranties or liabilities, including, without limitation, STRICT LIABILITY, of any nature
(including any undisclosed, unfixed, unknown, unliquidated, unsecured, unmatured, unaccrued,
unasserted, contingent, conditional, inchoate, implied, vicarious, joint, several or secondary
liabilities), regardless of whether any such indebtedness, Claims, legal proceedings, obligations,
duties, warranties or liabilities would be required to be disclosed on a balance sheet prepared in
accordance with GAAP or is known as of the Closing.

     “Liens” means, with respect to any property or asset, any mortgage, lien, pledge,
charge, restriction on use, security interest, encumbrance, adverse claim, right of first refusal
or purchase option in respect of such property or asset.

     “Loss” or “Losses” means any loss, damage, injury, harm, detriment,
Liability, diminution in value, exposure, claim, demand, proceeding, settlement, judgment, award,
punitive damage award, fine, penalty, fee, charge, cost or expense (including, without limitation,
reasonable costs of attempting to avoid or in opposing the imposition thereof, interest, penalties,
costs of preparation and investigation, and the reasonable fees, disbursements and expenses of
attorneys, accountants and other professional advisors), as well as with respect to compliance with
the requirements of environmental law, expenses of remediation and any other remedial, removal,
response, abatement, cleanup, investigative, monitoring, or record keeping costs and expenses.

     “Material Adverse Effect” means with respect to any Person, material adverse changes
in or effects or the business, assets, financial condition, results of operations or prospects of
such Person.

A-2

 

     “Organizational Documents” means with respect to a limited partnership, the articles
or certificate of formation and limited partnership agreement of such entity.

     “Permitted Liens” means “ means any or all of the following:

     (a) Liens granted under the terms of the existing credit facilities of Seller or any related
mortgage or security agreement;

     (b) Liens in favor of operators, vendors, carriers, warehousemen, repairmen, mechanics,
workmen and materialmen and construction or similar Liens arising by operation of law or in the
ordinary course of business in respect of obligations that are not yet due or that are being
contested in good faith by appropriate proceedings, and that do not relate to amounts in excess of
$50,000 in the aggregate;

     (c) workers’ or unemployment compensation Liens arising in the ordinary course of business,
and that do not relate to amounts in excess of $50,000 in the aggregate;

     (d) Liens or other encumbrances securing payment of Taxes or other similar assessments that
are, in either case, not yet delinquent or, if delinquent, are being contested in good faith by
appropriate proceedings, and that do not relate to amounts in excess of $50,000 in the aggregate;

     (e) rights of third parties pursuant to restrictive covenants, easements, rights-of-way,
servitudes, licenses, permits, surface leases, surface use restrictions, sub-surface leases,
mineral reservations or severances, grazing rights or logging rights or rights related to ponds,
lakes, waterways, canals, ditches, reservoirs, railways, streets, roads and structures or other
rights related to surface uses and impediments on, over or in respect of any of the properties or
assets of Seller that are not such as to interfere materially with the use or enjoyment of the
properties, assets to which they apply or the Business;

     (f) rights reserved to or vested in any Governmental Authority to control or regulate any of
the properties or assets of Seller in any manner, and all applicable laws, statutes, ordinances,
decrees, requirements, orders, judgments, rules or regulations of any Governmental Authority; and

     (g) conditions in any permit or other authorization granted or issued by any Governmental
Authority for the ownership and operation of all or part of the properties or assets of Seller.

     “Person” means any natural person, firm, partnership, association, corporation,
company, trust, business trust, Governmental Authority or other such entity.

     “Real Property” means any real property which the Seller owns, leases, operates or
subleases.

A-3

 

     “Subsidiary” means, with respect to any Person (for the purposes of this definition,
the “parent”), any other Person (other than a natural person), whether incorporated or
unincorporated, of which at least a majority of the securities or ownership interests having by
their terms ordinary voting power to elect a majority of the board of directors or other persons
performing similar functions is directly or indirectly owned or controlled by the parent or by one
or more of its respective Subsidiaries or by the parent and any one or more of its respective
Subsidiaries.

     “Taxes” or “Tax” means all federal, state, local and foreign income taxes, franchise
taxes, withholding taxes, employment taxes, unemployment insurance taxes, social security taxes,
sales and use taxes, excise taxes, real and personal property taxes, stamp taxes, transfer taxes
and workers’ compensation taxes, together with all interest, penalties and additions payable with
respect thereto.

     “Tax Return” means all returns and reports (including declarations, disclosures,
schedules and information returns) required to be supplied to a Tax authority relating to Taxes.

     “Total Loss” means the actual, constructive or agreed total loss of the economic
benefit of any Purchased Asset.

     In addition to the terms set forth above, the following terms shall have the meanings assigned
to them in the provisions of this Agreement shown in the table below:

	 	 	 
	Defined Term	 	Location in Agreement
	Agreement

	 	Introductory paragraph
	Asset Allocation

	 	Section 1.9
	Assigned Contracts

	 	Section 1.1(b)
	Bill of Sale

	 	Section 1.7
	Closing

	 	Section 1.6
	Closing Date

	 	Section 1.6
	Confidentiality Agreement

	 	Section 4.2
	Contest Notice

	 	Section 7.3(b)
	Environmental Permits

	 	Section 2.16(b)
	Indemnitee

	 	Section 7.3(a)
	Indemnifying Party

	 	Section 7.3(a)
	Notice of Claim

	 	Section 7.3(a)
	Notice of Liability

	 	Section 7.3(b)
	Permits

	 	Section 2.11
	Pipeline

	 	Section 1.1(a)
	Post-Closing Liabilities

	 	Section 1.3
	Purchase Price

	 	Section 1.5
	Purchased Assets

	 	Section 1.1
	Purchaser

	 	Introductory paragraph

A-4

 

	 	 	 
	Defined Term	 	Location in Agreement
	Purchaser Indemnitees

	 	Section 7.1
	Retained Assets

	 	Section 1.2
	Retained Liabilities

	 	Section 1.4
	Seller

	 	Introductory paragraph
	Seller Indemnitees

	 	Section 7.2

A-5

 

EXHIBIT B

BILL OF SALE, ASSIGNMENT AND ASSUMPTION AGREEMENT

     THIS BILL OF SALE, ASSIGNMENT AND ASSUMPTION AGREEMENT (this “Agreement”), dated as of
May ___, 2007, is by and between Prism Gas Systems, L.P., a Texas limited partnership (the
“Purchaser”), and Peak Gas Gathering L.P., a Texas limited partnership (the
“Seller”).

RECITALS

     WHEREAS, the Purchaser and the Seller are parties to that certain Asset Purchase Agreement,
dated April 27, 2007 (together with the exhibits and the Disclosure Schedules thereto, the
“Purchase Agreement”);

     WHEREAS, pursuant to and in accordance with the Purchase Agreement, the Seller desires to sell
to the Purchaser, and the Purchaser desires to purchase from the Seller, the Purchased Assets (but
in no event including any Retained Assets);

     WHEREAS, the Purchased Assets include all of the Seller’s right, title and interest in and to
the Assigned Contracts and the Pipeline;

     WHEREAS, under the terms of the Purchase Agreement, the Purchaser has agreed to assume and to
pay, perform and discharge the Post-Closing Liabilities, but not the Retained Liabilities;

     WHEREAS, the parties wish to enter into this Agreement for the purpose of accomplishing the
transfer of title to the Purchased Assets, the assignment of the Assigned Contracts and the
assumption of the Post-Closing Liabilities, all in accordance with the terms of the Purchase
Agreement; and

     WHEREAS, any capitalized term used herein and not otherwise defined shall have the meaning
assigned to it in the Purchase Agreement.

AGREEMENT

     NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Seller hereby sells, transfers, assigns, conveys and delivers unto the
Purchaser and its successors and assigns all right, title and interest in and to the Purchased
Assets, free and clear of all Liens other than Permitted Liens. The Seller also hereby transfers,
assigns, conveys and sets over unto the Purchaser and its successors and assigns, and the Purchaser
hereby accepts and assumes from the Seller, all right, title and interest of the Seller in and to
each of the Post-Closing Liabilities and the Assigned Contracts.

B-1

 

     TO HAVE AND TO HOLD unto the Purchaser and its successors and assigns forever (a) the
Purchased Assets, together with, all and singular, the rights and appurtenances thereto in any way
belonging to the Seller, and (b) the Post-Closing Liabilities and the Assigned Contracts, subject
to the terms, covenants, conditions and provisions of each of the Post-Closing Liabilities and the
Assigned Contracts and subject further to the provisions of any applicable law, if any, to which
any of the other Post-Closing Liabilities and the Assigned Contracts may be subject.

     Notwithstanding anything to the contrary contained in this Agreement, the Retained Assets and
the Retained Liabilities are not intended to and shall not be sold, transferred, assigned,
conveyed, delivered or set over to the Purchaser. Other than the Post-Closing Liabilities and the
Assigned Contracts, the Purchaser shall not assume or be responsible for, and the Seller shall
retain and have sole responsibility for, all claims against, or Liabilities, commitments,
contracts, agreements or obligations of any nature whatsoever of, the Seller.

     The Seller hereby irrevocably constitutes and appoints the Purchaser as its true and lawful
limited attorney-in-fact with full power of substitution, in the name of the Seller, but only for
the matters expressly set forth in this paragraph related to the Purchased Assets, and on behalf of
and for the benefit of the Purchaser, to collect for the account of the Purchaser all items to be
transferred to the Purchaser as provided herein; to endorse checks received in connection
therewith; to institute and prosecute, in the name of the Seller or otherwise, all proceedings that
the Purchaser may deem proper in order to collect, assert or enforce any claim, right or title of
any kind in and to the Purchased Assets; to defend and compromise any and all actions, suits or
proceedings in respect of any part thereof; and to do all such acts and things in relation thereto
as the Purchaser shall deem advisable. The Seller agrees that the foregoing powers are coupled
with an interest and shall be irrevocable by the Seller or by its dissolution or in any manner or
for any reason. The Seller further agrees that the Purchaser shall retain for its own account any
amounts collected pursuant to the foregoing powers (unless such amounts constitute a Retained
Asset), including any sums payable as interest in respect thereof, and the Seller agrees to pay to
the Purchaser when received, any amounts which shall be received by the Seller in respect of any of
the Purchased Assets (unless such amounts constitute a Retained Asset).

     This Agreement is executed and delivered pursuant to Section 1.7 of the Purchase
Agreement; provided that this Agreement is subject to all of the terms and provisions of the
Purchase Agreement, does not in any way amend or modify any of the provisions of the Purchase
Agreement. Without limiting the generality of the foregoing provisions of this paragraph, this
Agreement shall neither expand, limit nor otherwise affect the rights or obligations of the parties
under Article VII of the Purchase Agreement.

     This Agreement may be executed in several original counterparts, each of which shall be deemed
to be an original, and all such counterparts shall together constitute one and the same document.

B-2

 

     This Agreement shall bind and inure to the benefit of the Purchaser and the Seller and their
respective successors and assigns.

     This Agreement and the legal relations between the parties hereto shall be governed by and
construed in accordance with the laws of the State of Texas, regardless of the laws that might
otherwise govern under applicable principles of conflicts of laws thereof.

[Remainder of page intentionally left blank – signature pages follow]

B-3

 

     EXECUTED AND DELIVERED on the date first written above.

	 	 	 	 	 	 	 	 	 
	 	 	PURCHASER	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	PRISM GAS SYSTEMS I, L.P.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	SELLER	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	PEAK GAS GATHERING L.P.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	Peak Gas Holding, LLC, a Texas limited liability

company, sole general partner	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	Doug Coe & Associates, Inc., a Texas corporation,
sole manager	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	1800 Preston Park Blvd., Suite 112

Plano, Texas 75093

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