Document:

EXHIBIT 10.1

 

SALE AND PURCHASE AGREEMENT

 

THIS
SALE AND PURCHASE AGREEMENT (the “Agreement”) is made and entered into as of
the 1st day of July, 2005 (the “Effective Date”), by and among SUPPORT
TERMINALS OPERATING PARTNERSHIP, L.P. (“STOP”), KANEB PIPE LINE OPERATING
PARTNERSHIP, L.P. (“KPOP”), SHORE TERMINALS LLC (“Shore”), and PACIFIC ENERGY
GROUP LLC, a Delaware limited liability company (“Purchaser”).  STOP, KPOP and Shore are sometimes
collectively referred to herein as “Sellers”.

 

PRELIMINARY STATEMENT

 

STOP
owns two terminals located in Philadelphia, PA and one terminal located in
Paulsboro, NJ.

 

KPOP
owns a system of pipelines and terminals commonly referred to as the Kaneb West
System.

 

Shore
owns a terminal located in Martinez, CA and a terminal located in Richmond, CA.

 

Sellers
are willing to sell, and Purchaser is willing to purchase, the Assets (defined
below) in accordance with the terms of this Agreement.

 

NOW
THEREFORE, in consideration of the matters set forth in the Preliminary
Statement, the mutual promises and covenants herein set forth, and subject to
the terms and conditions hereof, the parties hereby agree as follows:

 

ARTICLE I

DEFINITIONS

 

The
following terms shall have the meanings set forth below for all purposes of
this Agreement:

 

“Affiliate” means, with respect to a party, any individual or
legal business entity that, directly or indirectly, controls, is controlled by,
or is under common control with, such party. 
The term “control” (including the term “controlled by”) as used in the
preceding sentence means the possession, directly or indirectly, of the power
to direct or cause the direction of management and policies.

 

“Agreement” means this Sale and Purchase Agreement.

 

“Assets” has the meaning specified in Section 2.1.

 

“Assignment of Permits and Contracts” has the meaning specified in Section 6.2.5.

 

 

“Assignments of Easements and Licenses” has the meaning specified in Section 6.2.3.

 

“Assignments of Leases” has the meaning specified in Section 6.2.2.

 

“Assumed Liabilities” has the meaning specified in Section 4.2.

 

“Bill of Sale”
has the meaning specified in Section 6.2.4.

 

“CAG”
means the Office of the Attorney General of the State of California.

 

“CAG Hold Separate
Order” has the meaning specified in Section 14.1.

 

“California Consent Decree”
means the Consent Decree and Final Judgment filed on June 15, 2005 in The
State of California v. Valero L.P., Valero Energy Corporation, Kaneb Pipe Line
Partners, L.P., and Kaneb Services LLC, Civil Action No. C-05-2419 (U.S.
Dist. Ct., N.D. Cal.).

 

“Casualty”
has the meaning specified in Section 14.3.1.

 

“CBA” has the meaning specified in Section 16.4.

 

“Closing” has
the meaning specified in Section 6.1.

 

“Closing Date”
has the meaning specified in Section 6.1.

 

“Contracts” has the meaning specified in Section 2.1.4.

 

“CPUC” has the meaning specified in Section 7.1.9.

 

“Deeds” has
the meaning specified in Section 6.2.1.

 

“Earnest Money L/C” has the meaning specified in Section 3.2.

 

“Effective Date” has the meaning specified in the introductory
paragraph of this Agreement.

 

“Environmental
Claims” means any known, unknown, contingent or non-contingent loss,
liability, claim (including tort claims, claims for personal injury, claims for
property damage, natural resource damage claims, claims for injunctive relief,
and claims for remediation activities), action, proceeding (including any
notice of non-compliance with or violation of Environmental Law), obligation
(including any obligation to perform remediation activities required under Environmental
Law in connection with any release of Hazardous Materials), suit, Order
(including any compliance order, consent order, cleanup and abatement order and
cease-and-desist order), lien, fine, penalty, damages, expense, cost and fees
(including reasonable

 

2

 

attorney and consultant fees
and costs for investigation and defense) arising out of or related to a
violation of Environmental Law or a release of Hazardous Materials into the
environment.

 

“Environmental
Laws” shall mean all applicable federal, state, and local Laws,
common law, standards, prohibitions, restrictions, directives, interpretations,
Orders, guidelines, permits, licenses, approvals and entitlements that relate
to safety, the protection of human health and/or the environment or create
rights or obligations in connection with the presence or release of Hazardous
Materials.

 

“Excluded Property” has the meaning specified in Section 2.2.

 

“Expenses” has the meaning specified in Section 6.4.1.

 

“FTC”
means the United States Federal Trade Commission.

 

“FTC Hold Separate
Order” has the meaning specified in Section 14.1.

 

“FTC
Order” means the FTC’s proposed Decision and Order dated June 14,
2005, in the matter of Valero L.P., Valero Energy Corporation, Kaneb Services
LLC, and Kaneb Pipe Line Partners, L.P., Docket No. C-4141.

 

“Governmental
Authority” means any federal, state or local governmental authority,
agency, board, commission, judicial body or other body having jurisdiction over
the matter.

 

“Hazardous
Materials” means any substance which is listed, regulated or defined
as a hazardous substance, hazardous material, toxic substance, hazardous waste,
hazardous chemical, hazardous air pollutant, contaminant or pollutant under any
Environmental Laws.

 

“Improvements” has the meaning specified in Section 2.1.2.

 

“Hold Separate Orders”
has the meaning specified in Section 14.1.

 

“Income Taxes” means any individual, partnership or corporate
income or franchise tax based on net income.

 

“Indemnitee(s)” has the meaning specified in Section 12.1.

 

“Indemnitor(s)” has the meaning specified in Section 12.1.

 

“Intellectual Property” means all patents, patent rights, trademarks, service marks, trade
names, and copyrights, and all applications for the foregoing, and all trade
secrets, know-how, inventions, research records, confidential information,
product designs, engineering specifications and drawings, technical information
and other intellectual property rights.

 

“Interim Period” has the meaning specified in Section 14.2.

 

3

 

“Interim Policies” has the meaning specified in Section 14.2.

 

“Laws” means
all laws, rules, regulations, statutes, ordinances, codes, plans, Orders,
decrees, rulings and charges of any Governmental Authority, including
Environmental Laws.

 

“Loss” means any loss, liability, claim, action, proceeding,
obligation, suit, judgment, decree, lien, fine, penalty, Tax, damages
(excluding special, consequential, indirect or loss of profit damages, except
as noted herein), expense, cost and fee. 
“Loss” shall include Environmental Claims and, in each instance, shall
include all reasonable costs of investigating and defending any claim.

 

“Obligated Party” has the meaning specified in Section 6.4.5.

 

“Order” means any judgment, order, writ, injunction or decree
of any Governmental Authority having jurisdiction over the matter.

 

“Outside Closing Date” has the meaning specified in Section 6.1.

 

“Permits” means the permits, licenses, registrations, and
certificates from any Governmental Authority required to own or operate, and
relating exclusively to the operation or ownership of the Assets.

 

“Permitted Encumbrances” has the meaning specified in Section 11.1.

 

“Personal Property” has the meaning specified in Section 2.1.3.

 

“Purchase Price” has the meaning specified in Section 3.1.

 

“Purchaser” has the meaning specified in the introductory
paragraph.

 

“Purchaser Default” has the meaning specified in Section 19.3.

 

“Real Property” means all real property interests (including
leasehold, easement and right of way interests) included in the Assets.

 

“RP Agreements” means the leases, easements, licenses and
rights of way included within the definition of “Real Property”.

 

“Receiving Party” has the meaning specified in Section 6.4.5.

 

“Retained Liabilities”
has the meaning specified in Section 4.1.

 

“Sellers” has the meaning specified in the introductory
paragraph.

 

4

 

“Sellers’ Knowledge” means the actual knowledge of any of the
persons listed on Schedule 1-S as of the date a particular
representation or warranty is made without any review of files or other due
diligence on the part of such persons.

 

“Sharing Party” has the meaning specified in Section 6.4.5.

 

“Taxes”
means any and all federal, state, local and foreign taxes, charges, fees,
levies, imposts, assessments, withholdings, impositions, or other similar
governmental charges and any interest, liens, additions to tax or penalties
thereon; provided, however that “Taxes” shall not include any of the foregoing
items which were imposed due to Environmental Claims or violation of
Environmental Laws.

 

“Taking” has
the meaning specified in Section 14.3.1.

 

“Third Party” means any person, group or entity (including
any corporation, partnership or other business entity) other than an
Indemnitee.

 

“Title Company” has the meaning specified in Section 11.2.

 

“Title  Commitment” has
the meaning specified in Section 11.2.

 

“Title Objections” has the meaning specified in Section 11.3.1.

 

“Title Objections Notice” has the meaning specified in Section 11.3.1.

 

“Transfer Taxes” has the meaning specified in Section 6.4.3.

 

“Transferred Employee” has the meaning specified in Section 16.1.

 

“Transferred Intellectual Property” has the meaning specified
in Section 2.1.6.

 

“Union” has the meaning specified in Section 16.4.

 

“WPSC” has the meaning specified in Section 7.1.9.

 

ARTICLE II

SALE AND PURCHASE OF ASSETS 

 

2.1                               Sale of Assets.  On
the terms and subject to the conditions of this Agreement and for the
consideration stated herein, at the Closing, Purchaser shall purchase and
receive from Sellers, and Sellers shall sell and deliver to Purchaser, all of
Sellers’ right, title and interest in and to the following properties and assets
(collectively, the “Assets”):

 

2.1.1                        The Real Property, as more particularly
described in Attachment I hereto;

 

5

 

2.1.2                        The improvements located on the Real
Property, including buildings, facilities, fixtures, aboveground and
underground storage tanks, aboveground and underground piping and related
on-site facilities and appurtenances (the “Improvements”);

 

2.1.3                        All supplies, machinery, equipment, rolling
stock, computers, spare parts, tools, drawings, plats, equipment manuals, operating
records and data, books and records, cost and pricing information, training
materials and records, maintenance and inspection reports and furniture and
other personal property used exclusively in the operation of the Assets as
currently operated by Sellers (the “Personal Property”);

 

2.1.4                        Subject to Article XVII, all of Sellers’
rights and obligations under all contracts used exclusively in the operation of
the Assets (but excluding the RP Agreements) (the “Contracts”);

 

2.1.5                        Subject to Article XVII, the Permits;
and

 

2.1.6                        The Intellectual Property listed on Attachment
III (the “Transferred Intellectual Property”).

 

2.2                               Excluded Property. 
Notwithstanding anything else in this Agreement, the Assets exclude the
following (collectively, the “Excluded Property”):

 

2.2.1                        Intra-company accounts and contracts of Sellers
including, without limitation, any accounts and contracts between any Seller
and any of its Affiliates, other than the contracts set forth on Schedule 2.2.1;

 

2.2.2                        Cash or bank accounts of Sellers;

 

2.2.3                        Accounts receivable, notes receivable,
employee receivables and other receivables;

 

2.2.4                        Proprietary trade names, trademarks, service
marks, logos, trade dress, insignia, and imprints of Sellers and all signs whose
purpose is to display any of the foregoing and all forms and documents which
incorporate any of the foregoing;

 

2.2.5                        All Intellectual Property other than the
Transferred Intellectual Property.

 

2.2.6                        All rights to any of Sellers’ claims (whether
or not filed) for any federal, state, local, or foreign Income Tax or Tax
refunds or carrybacks.

 

2.2.7                        The
following documents:  (A) all minute
books, tax returns, partnership documents of Sellers or any of their Affiliates
as well as other business records or related documents of Sellers or any of
their Affiliates that are not related to the Assets; and (B) all records
that are (i) covered by the
attorney-client privilege or work product doctrine, except to the extent such
documents relate to claims or litigation included in the Assumed Liabilities

 

6

 

(provided that such documents shall be subject to a joint defense
agreement to be entered by Sellers and Purchaser before such documents are
provided), (ii) not readily severable from Sellers’ general records through
diligent efforts, or (iii) required by applicable Law to be retained by Sellers
or any of Sellers’ Affiliates in its care, custody, or control.

 

2.2.8                        All rights in connection with and assets of
any employee benefit or similar plans.

 

2.2.9                        All insurance policies and rights thereunder,
except as provided in Section 14.2.

 

2.2.10                  The capital stock of any Affiliate of any
Seller.

 

2.2.11                  Any other properties or assets of Sellers not
specifically described herein as being part of the “Assets.”

 

2.3                               As-Is Sale. 
EXCEPT AS OTHERWISE
EXPRESSLY PROVIDED IN THIS AGREEEMENT, ALL ASSETS TO BE CONVEYED HEREUNDER WILL
BE CONVEYED ON AN “AS IS”, “WHERE IS”, AND “WITH ALL FAULTS” BASIS AT THE
CLOSING, INCLUDING ANY ENVIROMENTAL CONDITIONS, AND SELLER MAKES NO, AND HEREBY
DISCLAIMS ALL, REPRESENTATIONS OR WARRANTIES, EXPRESS, IMPLIED, STATUTORY OR
OTHERWISE, CONCERNING THE PHYSICAL CONDITION, UTILITY OR OPERATABILIY OF ANY OF
THE ASSETS, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTY OF MERCHANTABILITY OR
OF FITNESS FOR PARTICULAR OR ORDINARY USES OR PURPOSES.

 

PURCHASER HAS
INSPECTED (AND UPON CLOSING SHALL BE DEEMED TO HAVE WAIVED ITS RIGHT TO
INSPECT), THE ASSETS FOR ALL PURPOSES AND SATISFIED ITSELF AS TO THEIR PHYSICAL
AND ENVIRONMENTAL CONDITION, BOTH SURFACE AND SUBSURFACE, INCLUDING, BUT NOT
LIMITED TO, CONDITIONS SPECIFICALLY RELATED TO THE PRESENCE, RELEASE, OR
DISPOSAL OF HAZARDOUS MATERIALS IN, ON, OR UNDER THE ASSETS.  PURCHASER IS RELYING SOLELY UPON ITS OWN INSPECTION
OF THE ASSETS. WITHOUT LIMITATION OF THE FOREGOING, SELLER MAKES NO, AND HEREBY
DISCLAIMS ANY, WARRANTY OR REPRESENTATION, EXPRESS, IMPLIED, STATUTORY, OR
OTHERWISE, AS TO THE ACCURACY OR COMPLETENESS OF ANY DATA, REPORTS, RECORDS,
PROJECTIONS, INFORMATION, OR MATERIALS NOW, HERETOFORE, OR HEREAFTER FURNISHED
OR MADE AVAILABLE TO PURCHASER IN CONNECTION WITH THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.  ANY
AND ALL SUCH DATA, RECORDS, REPORTS, PROJECTIONS, INFORMATION, AND OTHER
MATERIALS (WRITTEN OR ORAL) FURNISHED BY SELLER OR OTHERWISE MADE AVAILABLE OR
DISCLOSED TO PURCHASER ARE PROVIDED TO PURCHASER AS A CONVENIENCE AND SHALL NOT
CREATE OR GIVE RISE TO ANY LIABILITY OF OR AGAINST SELLER, AND ANY RELIANCE ON
OR USE OF THE SAME SHALL BE AT PURCHASER’S SOLE RISK TO THE MAXIMUM EXTENT
PERMITTED BY LAW.

 

7

 

2.4                               Use of Names. 
By
no later than ninety (90) days after Closing, Purchaser shall remove or cause
to have removed the names and marks used by Sellers and Sellers’ Affiliates
(including replacement of Sellers’ and their Affiliates name and number on any
applicable pipeline markers) and all variations and derivations thereof and
logos relating thereto from the Assets. 
After expiration of such time period specified above, Purchaser shall
not make any use whatsoever of those names, marks, and logos.  If Purchaser has not completed such removal
within ninety (90) days after Closing, Sellers shall have the right, but not
the obligation, to take such steps as are required to complete such name change
and removal or cause such name change and removal to be completed and Purchaser
shall promptly reimburse Sellers for any costs or expenses incurred by Sellers
in connection therewith.

 

2.5                               Accounts Receivable;
Revenue; Expenses.  From and after the Closing, Purchaser will
use its commercially reasonable efforts to assist Sellers and their authorized
representatives in collecting the amounts due with respect to the accounts
receivable of Sellers from use of the Assets prior to the Closing, which
efforts shall include, without limitation, commercially reasonable assistance
in billing for such accounts receivable and reasonable access to customer files
and records with respect to such accounts receivable.  Purchaser agrees that it will pay to Sellers
within thirty (30) days of receipt by Purchaser (i) any amounts received
by Purchaser with respect to such accounts receivable, and (ii) any
revenues attributable to the Assets prior to the month of Closing to the extent
same are paid to Purchaser.  Sellers agree that they will
promptly pay to Purchaser within thirty (30) days of receipt by Sellers any
amounts received by Seller with respect to the operation of the Assets after
the Closing Date, including, without limitation, revenues and accounts
receivable.

 

2.6                               FTC Order.  The Assets described herein are consistent
with the terms “Philadelphia Area Terminals”, “San Francisco Bay Terminals” and
“West Pipeline System” in the FTC Order, it being understood that nothing in
this Section 2.6 is intended to enlarge or contract the Assets to be
conveyed pursuant to this Agreement.

 

ARTICLE III

PURCHASE PRICE

 

3.1                               Consideration.  The
cash price to be paid by Purchaser for the transfer, sale and assignment by Sellers
of the Assets is Four Hundred Fifty Five Million Dollars ($455,000,000) (subject
to adjustments as expressly provided for in this Agreement) (the “Purchase Price”).  On
the Closing Date, Purchaser shall pay the Purchase Price to Sellers by wire
transfer of immediately available funds to the account designated by Sellers.
If the capital projects described on Schedule 3.1 are not
completed before the Closing, then the
Purchase Price shall be reduced by the budgeted amount remaining to be paid to
complete such capital projects.

 

3.2                               Earnest
Money L/C.  Within one business
day after the Effective Date, Purchaser
shall deliver to Sellers an irrevocable stand-by letter of credit drawn
on a bank acceptable to Sellers and in form and substance satisfactory to
Sellers, in the amount of Five Percent
(5%) of the Purchase Price (the “Earnest Money L/C”) as
consideration for Seller’s entry into this Agreement.  The Earnest Money L/C shall provide
that it may be drawn upon by

 

8

 

Sellers upon Sellers’
certification to the issuing bank of a Purchaser Default under this
Agreement.  In the event the Closing occurs, Sellers
shall return the Earnest Money L/C to Purchaser as a condition to payment of the
Purchase Price.  In the event the Closing
does not occur by the Outside Closing Date and the failure to close is not the
result of a Purchaser Default hereunder, then Sellers shall return the Earnest
Money L/C to Purchaser on the third business day following the Outside Closing
Date.  If the Closing does not occur by
the Outside Closing Date and the failure to close is the result of Purchaser Default
hereunder, then Sellers shall be entitled to draw the full amount of the
Earnest Money L/C in accordance with Section 19.3.

 

3.3                               Allocation of Purchase Price.  Sellers
and Purchaser agree that subsequent to the execution of this Agreement they
will discuss the proper allocation for purposes of IRS Form 8594 of
amounts paid in connection with the transactions contemplated hereunder.   If the parties are able to reach an
agreement, it shall be attached hereto as Attachment IV, and the parties
shall file IRS Forms 8594 consistently with the terms of such Attachment IV.  If the parties are not able to reach an
agreement, each party shall make such filings as are required of it under
applicable tax laws applying the requirements of Section 1060 of the Code
in its own discretion.  The parties agree
that they shall promptly advise each other regarding the existence of any tax
audit, controversy or litigation related to such allocation, and, upon request
from the other party, shall from time to time provide further information
concerning the tax positions being asserted by the Internal Revenue Service
and, if any settlement of the issue is reached, the amount(s) so determined.

 

ARTICLE IV

RETAINED LIABILITIES; ASSUMED LIABILITIES; PURCHASER’S RELEASE

 

4.1                               Sellers’ Retained Liabilities.  Sellers
shall retain only the following liabilities (the “Retained
Liabilities”):

 

4.1.1                        except for certain multiemployer plan withdrawal liability expressly
assumed by Purchaser as provided in Section 4.2 below, all liabilities and
obligations for: (i) salary, wages and benefits for any current or former
employees of Sellers and their Affiliates pertaining to their employment by Sellers
at or in connection with the Assets (including liabilities to the
Pension Benefit Guaranty Corporation or to any plan, including a multiemployer
plan, under Title IV of the Employee Retirement Income Security Act of 1974, as
amended arising, in whole or in part, out of events or conduct that occurred on
or prior to the Closing, including but not limited to any liability that is
triggered by the closing of the transactions contemplated by this Agreement), and (ii) any violations of law by
Sellers relating to the hiring, employment or termination of employment of any
current or former employees of Sellers pertaining to their employment by Sellers
at the Assets;

 

4.1.2                        all costs for property furnished or services rendered to or for the
benefit of the Assets on or before the Closing Date, and all indebtedness for
borrowed money and related liens;

 

9

 

4.1.3                        any (1) liability of Sellers and their
Affiliates for Income Taxes and (2) liability of Sellers for Taxes arising
during, or relating to, any period (or portion thereof) ended on or before the
Closing Date; provided, however, that Purchaser shall assume those Taxes set
forth in Sections 6.4.2 and 6.4.3; and

 

4.1.4                        all liabilities and obligations arising out of any of the Excluded
Property.

 

4.2                               Purchaser’s Assumed Obligations.  Except
for the Retained Liabilities, Purchaser shall assume, and pay, perform and
discharge when due, all liabilities and obligations relating to the Assets,
whether arising before or after the Closing, whether known or unknown, including
all Environmental Claims relating to the pre- and post-Closing ownership or
operation of the Assets, and including any withdrawal liability under any
multiemployer plan which is triggered by an action or event after the Closing (the
“Assumed Liabilities”).

 

4.3                               Purchaser’s Release.  Effective as of the Closing, Purchaser hereby
unconditionally releases and discharges Sellers, Sellers’ Affiliates, and the partners,
employees, officers and directors of Sellers and Sellers’ Affiliates, from all of
the Assumed Liabilities, which include all environmental liabilities (including
all Environmental Claims) relating to or arising
out of the Assets, whether existing or asserted before or after the Closing
Date,  whether based on past, present or
future conditions or events, whether or not known to Purchaser on the Closing
Date and wherever located.  This release
includes, but is not limited to, any environmental liabilities under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended, the Resource Conservation and Recovery Act of 1976, as amended, the
federal Clean Air Act, as amended, and other Environmental Laws, and environmental
liabilities for injury, death, destruction, loss or damage to the person
or property of Purchaser and its employees arising out (i) the
environmental condition of the Assets, and (ii) the existence of Hazardous
Materials at the Assets.

 

In connection with this release, Purchaser hereby expressly
waives the benefits of any statute limiting the waiver of unknown claims,
including Section 1542 of the California Civil Code which reads as
follows:

 

“A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing the release
which if known to him must have materially affected his settlement with the
debtor.”

 

For the avoidance of doubt,
nothing in Sections 4.2 or 4.3 are intended to deprive Purchaser of its rights
against Sellers under Sections 6.4 or 12.1 (as limited by Section 12.3).

 

10

 

ARTICLE V

RELATED AGREEMENTS

 

At the Closing, Sellers and Purchaser shall
enter into the following agreement:

 

5.1                                 Transition Services Agreement substantially
in the form of Exhibit A.

 

ARTICLE VI

CLOSING

 

6.1                               Time and Place.  The closing of the transaction
contemplated hereby (the “Closing”)
shall be held at Seller’s offices in San Antonio, Texas, on or before the day
which is the tenth business day to occur following the satisfaction or waiver
of the conditions set forth in Article VII unless another time, place or
date is agreed to in writing by the parties hereto (the day of the Closing
being referred to herein as the “Closing Date”).
 If the Closing does not occur by December 15,
2005 (the “Outside Closing Date”), a party that is
not then in material default under this Agreement may, by written notice to the
other party, terminate this Agreement without further obligation to the other
party, and if Purchaser is not then in material default under this Agreement,
Seller shall return the Earnest Money L/C to Purchaser within 3 business
days after giving or receiving notice of termination pursuant to this Section 6.1.

 

6.2                               Sellers’ Deliveries.  At
the Closing, Sellers shall do the following:

 

6.2.1                        deliver to the Title Company special warranty
deeds for Seller’s right, title and interest to the fee-owned portions of the Real
Property, subject to the Permitted Encumbrances, in the forms attached as Exhibit B
(“Deeds”), executed and acknowledged by Sellers,
which documents shall also be executed and acknowledged by Purchaser;

 

6.2.2                        deliver to the Title Company assignments of leases
for the leased portions of the Real Property, in the forms attached as Exhibit C
(“Assignments of Leases”), executed and
acknowledged by Sellers, which documents shall also be executed and
acknowledged by Purchaser;

 

6.2.3                        deliver to the Title Company assignments of easements
and licenses for the easement and license portions of the Real Property, in the
forms attached as Exhibit D (“Assignments of Easements
and Licenses”), executed and acknowledged by Sellers, which
documents shall also be executed and acknowledged by Purchaser;

 

6.2.4                        deliver to Purchaser a bill of sale for the
Personal Property, in the form attached as Exhibit E (“Bill of Sale”), executed by Sellers, which document shall
also be executed by Purchaser;

 

11

 

6.2.5                        deliver to Purchaser an assignment of Permits
and Contracts, in the form attached as Exhibit F (“Assignment of Permits and Contracts”), executed by Sellers,
which document shall also be executed by Purchaser;

 

6.2.6                        deliver to Purchaser possession of the Assets,
subject to the Permitted Encumbrances;

 

6.2.7                        deliver to Purchaser counterparts executed by
Sellers of those agreements required by the provisions of Article V;

 

6.2.8                        deliver to Purchaser certified copies of each
Seller’s duly executed organizational documents or governing instruments, and
certified copies of appropriate
partnership or limited liability company action by Sellers authorizing the
transactions contemplated by this Agreement and authorizing the person(s)
executing the documents referenced in this Section 6.2 to enter into this
Agreement and such other documents on behalf of Sellers;

 

6.2.9                        deliver to Purchaser a certificate that the
representations and warranties made by Sellers in this Agreement are true and
correct in all material respects as of the Closing Date, as though made at and
as of the Closing Date;

 

6.2.10                  deliver to Purchaser a certificate of non-foreign
status substantially in the form attached as Exhibit G and a
California Form 597W, in the form attached as Exhibit H,
executed by Sellers; and

 

6.2.11                  deliver to the Title Company such affidavits
and certificates as the Title Company shall reasonably require; provided,
however, that such affidavits and certificates do not require any increase in
the liability of Sellers under this Agreement.

 

6.3                               Purchaser’s Deliveries.  At
the Closing, Purchaser shall do the following:

 

                                                                                                6.3.1                        pay the Purchase Price to Sellers in accordance with Section 3.1,
and reimburse Sellers for sales tax as provided in Section 6.4.2;

 

6.3.2                        deliver to Sellers counterparts executed by
Purchaser of all those agreements required by the provisions of Article V;

 

6.3.3                        deliver to Sellers an assumption of all Assumed
Liabilities in the form of Exhibit I;

 

6.3.4                        deliver to Sellers certified copies of
appropriate partnership action by Purchaser authorizing the transactions
contemplated by this Agreement and authorizing the person(s) executing the
documents referenced in this Section 6.3 to enter into this Agreement and
such other documents on behalf of Purchaser;

 

12

 

6.3.5                        deliver to Sellers a certificate that the
representations and warranties made by Purchaser in this Agreement are true and
correct in all material respects as of the Closing Date, as though made at and
as of the Closing Date; and

 

6.3.6                        deliver to Sellers counterparts of the
documents identified in Section 6.2, executed (and acknowledged where
required) by Purchaser.

 

6.4                               Apportionment of Taxes and
Utilities.

 

6.4.1                        The following items relating to the Assets: (i) general
real estate ad valorem taxes for the then current fiscal year, (ii) personal
property taxes, (iii) charges for utilities or municipal charges, and (iv) other
prepaid expenses related to the Assets and their operations (collectively, “Expenses”), shall be prorated as of the Closing Date and
shall be adjusted at the Closing. 
Subject to such pro-ration, Sellers shall pay all Expenses assessed
against the Assets for periods on or before the Closing Date; provided, however, that if any Expenses are payable in
installments, Sellers shall be responsible for paying only those installments
that relate to periods on or before the Closing Date.  Subject to such pro-ration, Purchaser shall
pay all Expenses assessed against the Assets for all periods after the Closing
Date.

 

6.4.2                        Sellers (i) shall collect from Purchaser
at Closing sales tax reimbursement in such amount (which shall be in addition
to the Purchase Price provided for herein) as is determined by applying the
applicable sales tax rate to the taxable value of the personal property included
within the Assets, and (ii) shall pay such sales tax reimbursement to the
applicable Governmental Authority in accordance with applicable legal
requirements. 

 

6.4.3                        Purchaser shall pay and assume all liability
for the sales tax, documentary transfer tax, real property filing fees, and any
other similar Taxes (other than Income Taxes) (collectively, “Transfer Taxes”), whether imposed on Sellers or Purchaser,
and whether paid with a return or imposed by a Governmental Authority upon
audit, arising from the transfer of Assets contemplated by this Agreement.

 

6.4.4                        If any of the Expenses to be apportioned in Section 6.4.1
are not readily determinable as of the time of Closing, such apportionments
shall, to the extent necessary, be based on the parties’ reasonable estimate
thereof.  The parties shall cooperate
with each other in making the calculations upon which any Expenses are to be
allocated in favor of Sellers or Purchaser, as the case may be.  Such apportionments made on the basis of
estimates shall be recalculated as soon as possible after the availability of
required information, but in any event within one (1) year of the time of
delivery of this Agreement, and any overpayments or underpayments due a party
shall be adjusted by suitable payments from the applicable party.

 

6.4.5                        After the Closing Date, if either Purchaser
or Sellers (as applicable, the “Receiving Party”)
receives a bill for Expenses that covers periods both before and after the
Closing Date, the Receiving Party shall pay such bill and invoice the other
party (the “Sharing Party”) for the portion
of the Expenses payable by such other party in accordance with the principles
of proration set forth in Section 6.4.1, in which event the Sharing Party
shall promptly

 

13

 

reimburse
the Receiving Party upon receipt of such invoice.  After the Closing Date, if a Receiving Party
receives a bill for Expenses that covers only a period for which the Receiving
Party is not responsible under the terms of this Agreement, then the Receiving
Party shall forward the bill to the party who is responsible for such Expenses
in accordance with the terms of this Agreement (the “Obligated
Party”) for payment directly by the Obligated Party.  The Obligated Party shall pay such bill in
timely fashion (except to the extent that it is being protested through proper
procedures and the Obligated Party uses reasonable best efforts to cause the
governmental authority or other person issuing such bill to correct the name on
the account).

 

6.4.6                        Any refunds received in respect of Expenses
apportioned pursuant to this Section shall be paid to the party to whom
such Expenses are apportioned pursuant to this Section if received from
the payor by another party.

 

6.4.7                        Sellers and Purchaser will provide each other
with such cooperation and information as each may reasonably request of the
other with regard to the preparation and filing of returns, or the conduct of
an audit or other proceeding in respect of Taxes.

 

6.5                               Lease Payments.  At
or prior to the Closing, Sellers shall pay or cause to be paid all rental
payments for the period from June 1, 1998 through December 31, 2004,
under that certain Contra Costa County Submerged Lands General Lease (Lease No. PRC
4769.1)(such payments being at the annual rate of Seventy Nine Thousand Three
Hundred Seventy Dollars ($79,370) for a total of Five Hundred Twenty Two
Thousand Two Hundred Fifty Five Dollars ($522,255) for the period), less the
actual annual rental payments made during such period and the cash bond of
Fifty Thousand Dollars ($50,000) being held by the State of California under
the existing “hold-over” lease.

 

ARTICLE VII

CONDITIONS PRECEDENT TO CLOSING

 

Subject to the terms hereof, the obligations
of Sellers and Purchaser at the Closing are subject to the satisfaction or
waiver at or prior to the Closing of each of the respective conditions set
forth below.

 

7.1                               Conditions to Purchaser’s
Obligations.  The obligations of Purchaser at the Closing
are subject to the following conditions:

 

7.1.1                  Sellers shall have performed (a) in all
material respects those covenants required by this Agreement to be performed by
it at or prior to the Closing that are not qualified by materiality, and (b) in
all respects those covenants required by this Agreement that are qualified by
materiality to be performed by it at or prior to the Closing;

 

7.1.2                  Sellers shall have delivered to Purchaser all
agreements, instruments, certificates and documents required to be so delivered
under this Agreement, including those listed in Section 6.2;

 

14

 

7.1.3                  There shall not be in effect any Order
barring the consummation of the transactions contemplated by this Agreement;

 

7.1.4                  The FTC and the
CAG shall have approved the transaction contemplated by this Agreement and the
Purchaser as required by the FTC Order and the California Consent Decree in
accordance with Section 19.1;

 

7.1.5                  Purchaser shall have received the Title
Commitments described in Section 11.2 of this Agreement;

 

7.1.6                  Any Title Objections shall have been resolved
in accordance with the provisions of Section 11.3 of this Agreement;

 

7.1.7                  Sellers’ representations and
warranties set forth in Article VIII shall be true and correct in all
material respects on and as if made on the Closing Date;

 

7.1.8                  The transactions contemplated by the
following two agreements have been consummated: 
(i) the Agreement and Plan of Merger dated as of October 31,
2004, by and among Valero L.P., Riverwalk Logistics, L.P., Valero GP, LLC, VLI
Sub A LLC, and Kaneb Services LLC; and (ii) the Agreement and Plan of
Merger dated as of October 31, 2004, by and among Valero L.P., Riverwalk
Logistics, L.P., Valero GP, LLC, VLI Sub B LLC, Kaneb Pipe Line Partners L.P.,
and Kaneb Pipe Line Company LLC; and

 

7.1.9                  The Colorado Public Utilities
Commission (the “CPUC”) and the
Wyoming Public Service Commission (the “WPSC”)
shall have approved the transaction contemplated by this Agreement.

 

7.2                               Conditions to Sellers’
Obligations.  The obligations of Sellers at the Closing are
subject to the following conditions:

 

7.2.1                        Purchaser shall have performed (a) in all material respects those
covenants required by this Agreement to be performed by it at or prior to the
Closing that are not qualified by materiality, and (b) in all respects
those covenants required by this Agreement to be performed by it at or prior to
the Closing that are qualified by materiality;

 

7.2.2                        Purchaser shall have delivered to Sellers the Purchase Price and all
agreements, instruments, certificates and documents required to be so delivered
under this Agreement or such other agreements or instruments, including those
listed in Section 6.3;

 

7.2.3                        There shall not be in effect any Order
barring the consummation of the transactions contemplated by this Agreement;

 

7.2.4                        The FTC
and the CAG shall have approved the transaction contemplated by this Agreement
and the Purchaser as required by the FTC Order and the California Consent
Decree in accordance with Section 19.1;

 

15

 

7.2.5                        Purchaser’s representations and
warranties set forth in Article VIII shall be true and correct in all
material respects on and as if made on the Closing Date;

 

7.2.6                        The transactions contemplated by the following
two agreements have been consummated:  (i) the
Agreement and Plan of Merger dated as of October 31, 2004, by and among
Valero L.P., Riverwalk Logistics, L.P., Valero GP, LLC, VLI Sub A LLC, and
Kaneb Services LLC; and (ii)  the Agreement and Plan of Merger dated as of
October 31, 2004, by and among Valero L.P., Riverwalk Logistics, L.P.,
Valero GP, LLC, VLI Sub B LLC, Kaneb Pipe Line Partners L.P., and Kaneb Pipe
Line Company LLC; and

 

7.2.7                        The
CPUC and the WPSC shall have approved the transaction contemplated by this
Agreement.

 

ARTICLE VIII

SELLERS’ REPRESENTATIONS AND WARRANTIES 

 

Sellers hereby warrant and
represent to Purchaser that, except as set forth on the schedules attached
hereto:

 

8.1                               Organization.  STOP
is a limited partnership duly organized, validly existing and in good standing
under the laws of the State of Delaware and is in good standing and duly
qualified to do business in each state in which the character of the Assets or
the nature of its business relating to the Assets requires it to be so
qualified, except for states as to which the failure to be so qualified or in
good standing would not have a material adverse affect on the Assets.  KPOP is a limited partnership duly organized,
validly existing and in good standing under the laws of the State of Delaware
and is in good standing and is duly qualified to do business in each state in
which the character of the Assets or the nature of its business relating to the
Assets requires it to be so
qualified, except for states as to which the failure to be so qualified or in
good standing would not have a material adverse affect on the Assets.  Shore is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Delaware and is in good standing and is duly qualified to do business in each
state in which the character of the Assets or the nature of its business
relating to the Assets requires it to be so qualified, except for states as to
which the failure to be so qualified or in good standing would not have a
material adverse affect on the Assets.

 

8.2                               Authority; Enforceability. 
Sellers have the partnership or limited liability company (as
applicable) power and authority to execute and deliver this Agreement and each
agreement and instrument delivered or to be delivered by Sellers pursuant
hereto, and to carry out its obligations hereunder and thereunder.  The execution, delivery and performance of
this Agreement and each agreement and instrument delivered or to be delivered
pursuant hereto by Sellers, and the consummation of the transactions provided
for hereby and thereby, have been duly authorized and approved by all requisite
partnership or limited liability company (as 

 

16

 

applicable)
action of Sellers and no other act or proceeding on the part of Sellers or their
Affiliates is necessary to authorize the execution, delivery or performance of
this Agreement or of such other agreements and instruments, or the transactions
contemplated hereby or thereby; and each of this Agreement and such agreements
and instruments is, or upon its execution and delivery will be,  legal, valid, binding and enforceable against
Sellers in accordance with its respective terms, subject to the effects of
bankruptcy, insolvency, reorganization, moratorium, and other laws of general
application relating to creditors’ rights and equitable remedies.

 

8.3                               No Breach.  The
execution and delivery of this Agreement and each agreement and instrument
delivered or to be delivered pursuant hereto by Sellers, and the consummation
of the transactions provided for hereby and thereby and the compliance by Sellers
with any of the provisions hereof or thereof does not and will not violate, or
conflict with, or result in a breach of, any provisions of the constituent
documents of Sellers.

 

8.4                               Actions and Proceedings.  There
is no legal action pending, or, to Sellers’ Knowledge, threatened, against
Sellers or any of their Affiliates involving the ownership or operation of any
of the Assets that would be material to the Assets, and Sellers have not
received written notice from any applicable Governmental Authority of any
pending or threatened condemnation against all or any material part of the Real
Property.

 

8.5                               Brokers.  All
negotiations relating to this Agreement, the agreements and instruments
delivered pursuant hereto, and the transactions contemplated hereby and thereby
have been carried on without the intervention of any person acting on behalf of
Sellers or their Affiliates in such manner as to give rise to any valid claim
against Purchaser for any broker’s or finder’s fee or similar compensation in
connection with the transactions contemplated hereby or thereby.

 

8.6                               Compliance with Laws; Permits.

 

8.6.1                        To Sellers’ Knowledge, Sellers are in
material compliance with all applicable Laws in connection with the ownership
and operation of the Assets and, to Sellers’ Knowledge, except as has already
been disclosed to Purchaser or is known by Purchaser, no event has occurred or
condition exists on the Assets that would constitute a violation of or require
any remediation or clean up under any Environmental Law as the Assets are
currently operated by Sellers; Sellers
have provided Purchaser with copies of all material excess emissions reports
and Title V compliance certifications for the past five (5) years for all
terminals included in the Assets; and

 

8.6.2                        Attachment II lists all material Permits currently held by
Sellers with respect to the Assets.

 

8.7                               Employee Matters.

 

8.7.1                        Other than the CBA, Sellers are not party to
any collective bargaining agreement or similar agreement with respect to
employees of Sellers employed at the Assets; and

 

17

 

8.7.2                        There is no labor strike, slowdown, work stoppage or
lockout in effect or, to Sellers’ Knowledge, threatened against or otherwise
affecting the employees of Sellers involved in the operations at the Assets.

 

8.8                               Material Contracts; Notice of Defaults.
 All contracts (but specifically
excluding any RP Agreements) that are material to the ownership or operation of
the Assets or that would impose a material obligation or liability on Purchaser
are set forth on Schedule 8.8. 
To Sellers’ Knowledge, there is no existing material default under, or
event or circumstance which with notice or lapse of time would give rise to a
material default on the part of Sellers or any other party under, any of the
material contracts (but specifically excluding any RP Agreements).  No Seller has received written notice of any
continuing or uncured default on the part of such Seller with respect to any
material contract (but specifically excluding any RP Agreements), which default
or defaults would, singly or in the aggregate, materially adversely affect the
ownership, operation or value of such Seller’s interest in any of the Assets.

 

ARTICLE IX

PURCHASER’S REPRESENTATIONS AND WARRANTIES

 

Purchaser hereby warrants
and represents to Sellers that:

 

9.1                               Organization. 
Purchaser is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Delaware.

 

9.2                               Authority; Enforceability. 
Purchaser has the partnership power and authority to execute and deliver
this Agreement and each agreement and instrument delivered or to be delivered
by Purchaser pursuant hereto, and to carry out its obligations hereunder and
thereunder.  The execution, delivery and
performance of this Agreement and each agreement and instrument delivered or to
be delivered pursuant hereto by Purchaser, and the consummation of the
transactions provided for hereby and thereby, have been duly authorized and
approved by all requisite partnership action of Purchaser, and no other act or
proceeding on the part of Purchaser or its Affiliates is necessary to authorize
the execution, delivery or performance of this Agreement or of such other
agreements and instruments, or of the transactions contemplated hereby or
thereby; and each of this Agreement and such agreements and instruments is, or
upon its execution and delivery will be, legal, valid, binding and enforceable
against Purchaser in accordance with its respective terms, subject to the
effects of bankruptcy, insolvency, reorganization, moratorium, and other laws
of general application relating to creditor’s rights and equitable remedies.

 

9.3                               No Breach.  The
execution and delivery of this Agreement and each agreement and instrument
delivered or to be delivered pursuant hereto by Purchaser, and the consummation
of the transactions provided for hereby and thereby and the compliance by
Purchaser with any of the provisions hereof or thereof does not and will not
violate, or conflict with, or result in a breach of, any provisions of the
constituent documents of Purchaser.

 

18

 

 

9.4                               Brokers.  All
negotiations relating to this Agreement, the agreements and instruments
delivered pursuant hereto, and the transactions contemplated hereby and thereby
have been carried on without the intervention of any person acting on behalf of
Purchaser or its Affiliates in such manner as to give rise to any valid claim
against Sellers for any broker’s or finder’s fee or similar compensation in
connection with the transactions contemplated hereby or thereby.

 

9.5                               Financing. 
Purchaser has obtained a financing commitment for, and will have
available to it at the Closing immediately available funds necessary to
consummate, the transactions contemplated by this Agreement.

 

ARTICLE X

 

CHANGES IN REPRESENTATIONS AND
WARRANTIES

 

If either Sellers or Purchaser discovers on or before the Closing that
any representation or warranty made by it was or becomes not true and correct
in any material respect, it shall so notify the other party in writing.  The representations and warranties made in
this Agreement shall be deemed to be modified by any matter contained in such
notice.  In the case of any such change
in the representations or warranties by Sellers, if the cumulative changes so
made would adversely affect the fair market value of the Assets by 0.5% or more
of the Purchase Price, Purchaser may object thereto by written notice to
Sellers within ten days after receipt of the notice.  If such objection notice is not given within
the ten day period, or the cumulative changes do not have such adverse
effect, then such change shall not give rise to any right or remedy.  If such objection notice is timely given and
the effect of the cumulative changes on the fair market value of the Assets
exceeds such amount, and Sellers determine that they cannot cure such adverse
effect prior to the Closing by using commercially reasonable efforts, then the
parties shall negotiate in good faith a reduction of the Purchase Price to
fairly reflect the impact of the change on the fair market value of the Assets.  In the event that the parties are unable to
agree on a reduction of the Purchase Price prior to the Closing, then the
parties agree to submit the matter to binding arbitration under the Commercial
Arbitration Rules of the American Arbitration Association for resolution
after the Closing.

 

ARTICLE XI

 

TITLE MATTERS

 

11.1                        Definition of Permitted Encumbrances.  As used herein, the term “Permitted Encumbrances” means any or all of the
following:

 

11.1.1                  All liens and encumbrances
that will be released at Closing.

 

11.1.2                  Liens for current Taxes or
assessments not yet due or delinquent on the Closing Date or, if delinquent,
that are being contested in good faith in the ordinary course of business;

 

19

 

11.1.3                  Materialmen’s, mechanic’s, repairman’s,
employee’s, contractor’s, operator’s and other similar liens or charges arising
in the ordinary course of business for amounts not yet delinquent;

 

11.1.4.               All rights to consent by, required
notices to, filings with, or other actions by governmental agencies in
connection with the sale or conveyance of the Real Property if the same are
customarily obtained subsequent to such sale or conveyance;

 

11.1.5                  Easements, rights of way, servitudes,
covenants, conditions, restrictions, reservations and other rights on, over or
with respect to any of the Real Property which do not materially interfere with
the current use or operations on the properties; and

 

11.1.6                  Any encumbrances which do not,
individually or in the aggregate, materially interfere with the current use or
ownership of the Real Property subject thereto or affected thereby.

 

11.2                        Title Commitments. 
Sellers have caused or shall cause Fidelity National Title Insurance
Company (“Title Company”), whose address is
Fidelity National Title Insurance Company – National Title Services, 1900 West
Loop South, Suite 650, Houston, Texas, 77027, Attn: Rhonda Obaugh, to
issue standard commitments for title insurance (“Title
Commitments”) for the fee-owned portions of those tracts of Real
Property listed on Attachment V.  The
Title Commitments shall commit the Title Company to issue to Purchaser an owner
title insurance policy on the basic form of policy then commonly in use by the
Title Company in the applicable state.  Seller
shall pay the basic premium for such policies in the amounts listed on Attachment
V.  If Purchaser requires: (a) any “comprehensive,”
“extended coverage” or similar endorsement (if available), (b) the
deletion of any exception from the policies, or (c) the issuance of any
other endorsements to the policies, any additional premium charged therefor
shall be borne by Purchaser. Sellers shall be under no obligation to make any
additional payments, assume any additional liabilities or take any additional
actions beyond those required in this Agreement in order to facilitate the
issuance of any endorsements or the making of any modifications to the
policies.  The issuance of any such endorsements or
deletions shall not be a condition to Closing.

 

11.3                        Title Objections.

 

11.3.1                  Within fifteen (15) days after
receiving the Title Commitments, but in no event earlier than ten (10) days
after the Effective Date of this Agreement, Purchaser shall notify Sellers in
writing of any encumbrance or defect to the fee-owned portions of the Real
Property listed on Attachment V (excluding Permitted Encumbrances) that,
in Purchaser’s judgment, are unacceptable (the “Title
Objections”). Purchaser may not object to any Permitted
Encumbrances.  The notice of Purchaser’s
Title Objections (the “Title Objections Notice”)
shall include (i) a description of the alleged Title Objections, and (ii) the
Real Property affected.

 

11.3.2                  Seller shall elect, in its sole
discretion, to do one of the following with regard to such Title
Objections:  (i) cause such encumbrance
or defect to be removed, (ii)

 

20

 

indemnify the Title Company against liability from such Title Objection
so that the Title Company insures around such encumbrance or defect, or (iii) indemnify
the Purchaser against any Losses arising from such Title Objection.  Sellers shall notify Purchaser of their
election at least five days prior to Closing.

 

11.3.3                  Purchaser’s sole and exclusive remedy
with regard to objections regarding the state of title of the Real Property
shall be the procedure set forth in this Article XI.  Purchaser’s sole and exclusive remedy for any
Title Objections shall be the remedy set forth in Section 11.3.2 above.

 

ARTICLE XII

 

INDEMNIFICATION

 

12.1                        Indemnification Obligations.  Sellers and Purchaser (“Indemnitor(s)”) each shall release, defend, indemnify and
hold harmless the other and its or their Affiliates, as well as the partners, officers,
directors and employees of any of them (“Indemnitee(s)”),
from and against each and every Loss, which results from, arises out of or is
attributable in any way to any of the following:

 

12.1.1                  any liability or obligation expressly assumed
or retained by the Indemnitor pursuant to this Agreement;

 

12.1.2                  any breach of a representation or warranty made
by the Indemnitor in this Agreement or in documents delivered by the Indemnitor
at the Closing; or

 

12.1.3
any breach of the obligations, covenants or agreements made by the Indemnitor
in this Agreement or in documents delivered by the Indemnitor at the Closing.

 

12.2                        Procedures.

 

12.2.1                  In the event that any officer or registered
agent of Indemnitee receives actual notice of any written claim by a Third
Party giving rise to a right of indemnification of such Indemnitee hereunder,
the Indemnitee shall, within sixty (60) days after receipt of such notice, give
written notice thereof to the Indemnitor setting forth the facts and
circumstances giving rise to such claim for indemnification and shall tender
the defense of such claim to the Indemnitor. 
If the Indemnitee fails to give such notice and tender such defense
within such 60-day period, the Indemnitee shall be solely responsible for any
Loss with respect to such claim to the extent the Loss is attributable to such
failure; but failure to give such notice and tender such defense within such 60-day
period shall not result in a forfeiture or waiver of any rights to
indemnification for any Loss with respect to such claim to the extent the Loss
is not attributable to such failure.

 

12.2.2                  The Indemnitor shall be solely responsible
for selecting the attorneys to defend any matter subject to indemnification
and/or taking all actions necessary or appropriate to

 

21

 

resolve,
defend, and/or settle such matters, and shall be entitled to contest, on its
own behalf and on the Indemnitee’s behalf, the existence or amount of any
obligation, cost, expense, debt or liability giving rise to such claim.  The Indemnitor shall keep the Indemnitee
fully and timely informed as to actions taken on such matters.  The Indemnitee shall cooperate fully with the
Indemnitor and its counsel and shall provide them reasonable access to the
Indemnitee’s employees, consultants, agents, attorneys, accountants, and files
to the extent necessary or appropriate to defend or resolve the matter, the
Indemnitor reimbursing the Indemnitee with respect to the cost of any such
access.  The Indemnitee shall have the
right, but not the duty, to participate with attorneys of its own choosing, at
its own expense, in the defense of any Loss for which the Indemnitor is
obligated to defend and indemnify it, and to approve any settlement that
affects it, without relieving the Indemnitor of any obligations hereunder.

 

12.3                        Certain Limitations. 
Notwithstanding anything to the contrary in this Article XII
or elsewhere in this Agreement, the Indemnitor shall not have any obligation
with respect to Losses subject to indemnification by the Indemnitor hereunder
as a result of a breach(es) of the representations or warranties set forth in
any of Sections 8.4, 8.6, 8.7 or 8.8 (i) unless the cumulative, aggregate
amount of all such Losses exceeds or is reasonably expected to exceed $500,000,
in which case only the excess shall be subject to indemnification under this Article XII,
(ii) unless written notice of such Loss, in reasonable detail, is
delivered to the Indemnitor within 12 months of Closing, and (iii) to the
extent the cumulative, aggregate amount of all such Losses that such Indemnitor
has paid or would be obligated to pay exceeds $10,000,000.  For purposes of the $10,000,000 limitation
set forth in clause (iii) of the preceding sentence, Sellers shall be
deemed to be one “Indemnitor” such that the maximum aggregate amount of Losses
with respect to which Sellers collectively shall be obligated to indemnify all
Indemnitees shall be limited to such $10,000,000.  To the extent Losses are incurred as a result
of claims of a Third Party and such Third Party is determined to be entitled to
consequential, special, punitive or indirect damages, the Indemnitee shall be
entitled to indemnification from such damages notwithstanding the exclusion of
such damages generally from the definition of “Losses.”  For purposes of determining if a breach of a
representation or warranty qualified by materiality in this Agreement has
occurred, the materiality qualifier shall apply; provided that for purposes of
calculating the Loss incurred or suffered by the Indemnitee, the materiality
qualifier shall not apply.

 

12.4                        Exclusive Remedy.  Except
as otherwise provided in Article XIX, the indemnification provided for in
this Article XII be the
exclusive remedy in any action seeking damages or any other form of monetary
relief brought by any party to this Agreement against another party to this Agreement
with respect to any provision of this Agreement, the transactions contemplated
by this Agreement and/or any document or instrument delivered in connection
with or pursuant to this Agreement, provided that nothing herein shall be
construed to limit the right of a party, in a proper case, to seek injunctive
relief for a breach of this Agreement or any such other document or instrument.  Purchaser hereby waives, to the fullest
extent permitted under applicable law, any and all other rights, claims and
causes of action, known or unknown, it or any indemnified person may have
against Sellers relating to this Agreement or the transactions pursuant to this
Agreement.  Any indemnity payment under
this Article XII shall be treated as an adjustment to the Purchase Price
for tax purposes unless a final determination (which shall include the
execution of a Form 870-AD or successor form) with respect to the
indemnified party or any of its Affiliates

 

22

 

causes any such payment not
to be treated as an adjustment to the Purchase Price for U.S. Federal income
tax purposes.

 

ARTICLE XIII

 

RECORDS & ACCESS

 

13.1                        Access to Records.  The
records relating to the Assets will be made available to Purchaser and its
representatives at the places where they are normally kept during regular
business hours for inspection and review through the Closing Date.  Prior
to Closing, Sellers shall have the right to copy any records relating to the Assets.

 

13.2                        Preservation of Records.  Purchaser
and Sellers shall not destroy or otherwise dispose of any records acquired,
removed, or retained hereunder for a period of seven years following the
Closing Date or such longer period as required by applicable regulations, laws,
statutes, or court orders, except upon 30 day’s prior written notice to the
other party (upon receipt of such notice, the other party (the “receiving party”) may elect that such records be
transferred to the receiving party at the sole cost and expense of the
receiving party).  During such seven year
period, Sellers and Purchaser shall make such records available to the other
party or its authorized representatives (at such other party’s sole expense)
upon reasonable request for any business, legal or technical need in a manner
which does not unreasonably interfere with the record holder’s business
operations.

 

13.3                        Access
to Assets After Closing. Purchaser shall afford duly authorized
representatives of Sellers reasonable access to the Assets and the employees
after the Closing Date with respect to any legal, technical or operational
matter relating to (a) Sellers’ obligations under this Agreement, (b) the
operation of the Assets before the Closing, and (c) Sellers’ removal of
any Excluded Property from the Assets; provided in each case that Sellers give
Purchaser reasonable prior notice, and provided further that such access does
not unreasonably interfere with Purchaser’s normal operations.  It is understood and agreed that Sellers
shall remove all Excluded Property from the Assets prior to the Closing, or, if
necessary, as soon as practicable thereafter.

 

ARTICLE XIV

 

SELLERS’ INTERIM OPERATIONS; CASUALTY; CONDEMNATION

 

14.1                  Interim Operations.  From
and after the Effective Date until the Closing Date, Sellers will comply with
the provisions of the FTC’s Order to Hold Separate and Maintain Assets dated June 14,
2005 (the “FTC Hold Separate Order”) and the
Order to Hold Separate and Maintain Assets filed with the U.S. District Court
for the Northern District of California on June 15, 2005 (the “CAG Hold Separate Order,” and, together with the FTC Hold
Separate Order, the “Hold Separate Orders”)
and, except as otherwise expressly contemplated or permitted

 

23

 

hereby, or to the extent
required under the Hold Separate Orders, or otherwise with the prior written
consent of Purchaser (which consent shall not be unreasonably delayed or
withheld):

 

14.1.1                  Sellers shall conduct their business relating
to the Assets in all material respects in the ordinary course of business and
shall use commercially reasonable efforts to:

 

(i)                                     preserve intact the Assets and the operation
thereof and keep available its key employees involved in the operation of the
Assets;

 

(ii)                                  maintain in effect all material Permits,
including all material Permits that are required for Sellers to carry on the operations
of the Assets; and

 

(iii)                               maintain (including performing scheduled
maintenance) and repair all of the material Assets in a manner consistent with
past practices.

 

14.2                        Interim Insurance Arrangements. Sellers shall use commercially reasonable
efforts to maintain in effect the insurance policies listed on Part I of Schedule 14.2
(the “Interim Policies”) with regard to the
Assets from the Effective Date through the Closing (the
“Interim Period”) under the same terms
and conditions as were in effect before the Effective Date. Subject to the
balance of this paragraph, Sellers shall cause Purchaser to be listed as an
additional insured on the Interim Policies during the Interim Period. In order
to partially compensate Sellers for the premiums payable under the Interim
Polices during the Interim Period: (i) if the Closing occurs on or before October 1,
2005, the Purchase Price shall be increased by $261,530; or (ii) if the
Closing occurs after October 1, 2005, the Purchase Price shall be
increased by $261,530, plus an amount equal to 50% of the premium paid by
Sellers to maintain such Interim Policies in effect from October 1, 2005
until Closing, provided that if Sellers cannot extend such Interim Policies on
a commercially reasonable basis past October 1, 2005, Sellers will instead
cause Purchaser to be named as an additional insured with regard to the Assets on
the Valero excess liability policies listed on Part II of Schedule 14.2
for such remaining portion of the Interim Period.

 

14.3                        Casualty or Condemnation.

 

14.3.1                  Sellers shall give Purchaser prompt notice of
(i) any fire or other casualty materially affecting a material portion of the
Assets (a “Casualty”) between the Effective Date
and the Closing Date and (ii) any actual, pending or proposed condemnation
of a material portion of the Assets, as to which Sellers have received written
notice from the condemning authority (“Taking”).

 

14.3.2                  In the event the Assets suffer a Casualty
subsequent to the Effective Date, but prior to the Closing Date, Purchaser’s
obligation to close hereunder shall not be affected, and Sellers shall elect
either (i) to repair or make adequate provision for the repair (with
an appropriate reduction or reimbursement of the Purchase Price for any
post-Closing interruption of the operation of the Assets resulting from the post-Closing
portion of such repairs, if such repairs are not completed before Closing,
provided that Purchaser does nothing to delay the expeditious completion of such
repairs by the applicable party post-Closing) of such Assets prior 

 

24

 

to
Closing, or (ii) to provide Purchaser with a credit against the Purchase
Price in an amount agreed upon by Sellers and Purchaser to represent the
reduction in the value of the Assets by reason of the Casualty, taking into
account any repairs actually made by Sellers to such Assets prior to the
Closing Date.

 

14.3.3                  In the event of a Taking, Purchaser’s
obligation to close hereunder shall not be affected, but all sums of money (or
other consideration) awarded as damages or otherwise received on account of
such Taking shall be applied as a credit to Purchaser to the Purchase Price,
and all claims for any such award shall be assigned to Purchaser.

 

14.4                        Access
to Properties.  Upon advance
notice to Sellers, Sellers hereby consent to Purchaser conducting, at Purchaser’s
sole risk and expense, on-site visual inspections of the Assets.  In connection with any such on-site visual inspections,
Purchaser agrees not to interfere with the normal operation of the Assets in
any material respect and agrees to comply with all requirements and safety
policies of the operator of which Purchaser has notice.  In connection with the granting of such
access, Purchaser represents that it is adequately insured and, except to the
extent caused by a Seller’s gross negligence or willful misconduct, waives,
releases and agrees to indemnify, defend and save and hold harmless Sellers and
Sellers’ respective representatives against all claims for injury to, or death
of, persons or for damage to property or other claims arising in any way from
the access afforded to Purchaser hereunder or the activities of Purchaser.  This waiver, release and indemnity by
Purchaser shall survive termination of this Agreement.

 

ARTICLE XV

 

PUBLICITY

 

At all times prior to the
Closing, no party will make any press release or other public statement
concerning this Agreement or the transactions contemplated hereby, except upon
mutual agreement, or as required by law. 
No public statement or third-party disclosure will be made without
advance notice to and prior approval of the other party, except as required by
law.  No such approval will be unreasonably
withheld or delayed.

 

ARTICLE XVI

 

EMPLOYEE MATTERS

 

16.1                        Sellers’ Employees. 
Purchaser agrees to offer employment to each of Sellers’ employees employed
with respect to the Assets, a list of such employees is set forth on Schedule 16.1.
 Any
such employee who accepts employment with Purchaser and who is not covered by a
collective bargaining agreement is referred to herein as a “Transferred Employee.” Any such employee who accepts
employment with Purchaser and who is covered by a collective bargaining
agreement is referred to herein as a “Transferred Union
Employee”.  Purchaser further
agrees that it will take no employment action, including, without limitation,
any plant

 

25

 

closing,
mass layoff, change of conditions of employment, or employment loss within the
meaning of the WARN Act, for a period of at least ninety (90) days after
Closing, which causes Losses to any Seller under the Worker Adjustment
Retraining Notification Act, 29 U.S.C. Sec. 2101 et. seq.  Purchaser shall employ each Transferred
Employee for a period of at least 12 months beginning on the Closing Date
(unless earlier terminated for cause or unless Purchaser pays salary and
severance as provided in Section 16.3).

 

16.2                        Benefits.

 

16.2.1                  Purchaser shall cause benefits to be provided
to each Transferred Employee for a period of at least 12 months beginning on
the Closing Date (unless earlier terminated for cause).  These benefits, as well as the compensation
applicable to each Transferred Employee, shall be, in the aggregate,
substantially comparable to those offered by Sellers to such employees prior to
the Closing Date, which benefits are described on Schedule 16.2.  Purchaser shall ensure that all of its
benefit plans, other than Purchaser’s 401(k) plan, in which the Transferred
Employees participate after Closing recognize the years of service with Sellers
and/or its Affiliates (together with any predecessors thereof that previously
employed any such Transferred Employees and as to which Sellers recognize such
years of service) prior to the Closing for eligibility, vesting and benefit
determination purposes, but Purchaser shall have no obligation to recognize
such years of service for benefit accrual purposes.  Purchaser shall ensure that its 401(k)
plan shall recognize years of service with Sellers and/or its Affiliates
(together with any predecessors thereof that previously employed any such
Transferred Employees and as to which Sellers recognize such years of service)
prior to the Closing for eligibility and vesting under such 401(k) plan but not
for calculating the employer matching contribution under such 401(k) plan.

 

16.2.2                  With respect to each Transferred Employee who
elects to participate in Purchaser’s welfare plans, Purchaser shall waive any
pre-existing condition exclusions to coverage, any evidence of insurability
provisions, any active at work requirement and any waiting period or service
requirements that did not exist or had been waived or otherwise satisfied under
Sellers’ welfare plans, provided the Transferred Employee enrolls within 30
days after the Closing.  For each
Transferred Employee who enrolls in Purchaser’s health plan, Purchaser shall
also apply towards any deductible requirements and out-of-pocket maximum limits
under its health plans applicable to the year of Closing, any amounts paid by
such Transferred Employee toward such requirements and limits under Sellers’
health plans.  Sellers will provide the
necessary information to Purchaser within 30 days after the end of the calendar
month following the calendar month in which the Closing occurs.

 

16.2.3                  Purchaser shall honor the Transferred
Employees’ accrued vacation entitlement.

 

16.2.4                  Purchaser agrees to accept as a direct
rollover employees’ account balances from Sellers’ savings plans for any Transferred
Employee who so elects.  Purchaser shall
hold Sellers harmless from any claims by employees for adverse Tax treatment to
the extent relating to improper roll-overs performed by or on behalf of
Purchaser in connection with this Agreement.

 

26

 

16.3                        Severance.  Purchaser
shall provide Transferred Employees terminated by Purchaser or any of its
Affiliates without cause within one-year after the Closing (a) severance at
least equal to the amount payable under Sellers’ severance plan attached hereto
as Attachment VI, based on the Transferred Employees’ rate of pay as of
the Closing, together with (b) an amount equal to the salary or wages that
such terminated Transferred Employee would have received (based on his or her salary
or wages on the date of termination) through the 12-month anniversary of the
Closing Date had he not been terminated.

 

16.4                        Transferred
Union Employees.  Purchaser agrees
to continue to recognize United Steelworkers Union Local 2-0286 (the “Union”) as the exclusive representative for the employees in
the bargaining unit covered by the collective bargaining agreement referenced
on Schedule 8.7 (the “CBA”).  Subject to any limitations imposed by
applicable Law or applicable memoranda or letters of understanding, Purchaser
shall maintain the CBA in full force and effect during its current term, except
for changes permitted under the CBA, applicable memoranda or letters of
understanding or mutually agreed to between Purchaser and the Union, and except
that Purchaser shall not be required to continue any employee benefits
currently provided to the Transferred Union Employees, but shall be entitled to
establish such benefits as may be allowed by the CBA.  Purchaser
shall employ each Transferred Union Employee for a period of at least 12 months
beginning on the Closing Date (unless earlier terminated for cause or unless
Purchaser pays salary and severance as provided in this Section 16.4).  Provided that it will not violate the terms
of the CBA, Purchaser shall provide Transferred Union Employees terminated by
Purchaser or any of its Affiliates without cause within one year after the
Closing (a) severance payable under the CBA, plus an amount to make the
aggregate severance at least equal to the amount payable under Sellers’
severance plan attached hereto as Attachment VI, based on the
Transferred Employees’ rate of pay as of the Closing, together with (b) an
amount equal to the salary or wages that such terminated Transferred Union Employee
would have received (based on his or her salary or wages on the date of
termination) through the 12-month anniversary of the Closing Date had he not
been terminated.

 

ARTICLE XVII

 

TRANSFER OF PERMITS AND ASSIGNMENT OF CONTRACTS

 

17.1                        Permits and Contracts.  Each
of Sellers and Purchaser agrees to use its commercially reasonable efforts to
obtain the transfer of the Permits, Contracts and RP Agreements from Sellers to
Purchaser prior to Closing.  If there are
prohibitions against, or conditions to, the conveyance of any Permits, Contracts
or RP Agreements, without the prior written consent of third parties either as
a result of the provisions thereof or the requirements of applicable Law, and
such written consents are not obtained on or prior to the Closing, then (i) any
provision contained in this Agreement to the contrary withstanding, the
transfer of title to, or interest in, such Permits, Contracts or RP Agreements
pursuant to this Agreement shall not become effective unless and until such
consent requirement is satisfied, waived or no longer applies, (ii) until
such consent requirement is satisfied, waived or no longer applies, Seller
shall (without infringing on the legal rights of any third party, breaching any
such Permit, Contract or RP Agreement, or violating any Law) provide Purchaser
with the equivalent benefits of the

 

27

 

Permit, Contract or RP
Agreement, by subcontract, sublease or otherwise, on the condition that
Purchaser shall cooperate and assist in such efforts and shall bear all
economic burdens and other obligations and liabilities of Seller regarding this
post-Closing period under the Permit, Contract or RP Agreement, notwithstanding
the fact that the same has not been transferred to Purchaser, and (iii) Closing shall not be delayed
pending satisfaction, waiver or expiration of such consent requirement.  When and if such consent requirement is so
satisfied, waived or no longer applies, to the extent permitted by applicable
Law, the assignment of such Permits, Contracts or RP Agreements shall become
effective automatically as of the Closing Date, without further action on the
part of Sellers or Purchaser and without payment of further consideration.  After Closing, Sellers shall reasonably cooperate
with Purchaser, at Purchaser’s request and expense, to procure the transfer of
any Permits, Contracts or RP Agreements not transferred to Purchaser at Closing.

 

17.2                        Acquisition Contracts with Prior
Owners.
 Sellers agree to use commercially reasonable
efforts to obtain consent to assignment of Sellers’ rights under the
acquisition contracts with prior owners listed on Schedule 8.8 at Closing.  If consent is obtained, Sellers will convey
such rights to Purchaser at Closing.

 

ARTICLE XVIII

 

COVENANTS

 

18.1                        Cooperation.  Each of the
parties shall assist and cooperate with one another to effect promptly, and
shall give any notices to, make any filings with, and use its respective
reasonable best efforts to obtain, all consents, approvals, and authorizations
of, or any exemptions by, all Governmental Authorities in connection with the
transactions contemplated by this Agreement. 
Each of the parties shall as promptly as practicable use its best
efforts to (i) prepare and furnish all necessary applications, information
and documentation (including furnishing all information requested by any
Governmental Authorities); (ii) take all other actions that may be
necessary to demonstrate to the FTC and CAG that Purchaser is an acceptable
purchaser of the Assets, and that Purchaser will effectively compete in the
marketplace using the Assets; and (iii) obtain FTC and CAG approval of
Purchaser as an acceptable purchaser of the Assets and assist in causing the
FTC Order and the California Consent Decree to become final without adverse
modification.  Without limiting the
generality of the foregoing, Purchaser shall do whatever is necessary, proper
or advisable to assist and cooperate with Sellers in obtaining necessary
consents, approvals or orders of all Governmental Authorities necessary to
consummate the transactions contemplated by this Agreement.

 

18.2                        Transition.  In addition to the specific obligations
created by the Transition Services Agreement, to the extent consistent with applicable
Laws, each of the parties shall reasonably cooperate with each other and shall
cause its officers, employees, agents and representatives to reasonably
cooperate with each other for a period of 60 days after Closing to ensure the
orderly transition of the Assets and the Assumed Liabilities to Purchaser and
to minimize the disruption to the respective businesses of the parties hereto
(including the parties’ relationships with customers and suppliers) resulting
from the transactions contemplated hereby.

 

28

 

18.3                        Access to Financial Information.

 

(a)                                  Purchaser shall use reasonable commercial efforts to obtain written
confirmation from the staff of the United States Securities and Exchange
Commission that neither Purchaser nor its Affiliates are required to disclose
historical financial statement information regarding or relating to the Assets,
for any period prior to the Closing Date, as required under Rule 3-05 of
Regulation S-X promulgated under the Securities Exchange Act of 1934.

 

(b)                                 To the extent Purchaser is unable to obtain the written
confirmation contemplated in Section 18.3(a), then upon the written
request of Purchaser, at Purchaser’s sole cost and expense and only to the
extent necessary to comply with the disclosure obligations of Purchaser or its
Affiliates under Rule 3-05 of Regulation S-X, Sellers shall use reasonable
commercial efforts to provide Purchaser and its representatives (including its
legal counsel and independent auditors) reasonable access during normal
business hours to such historical financial information as may then be in
Sellers’ possession or control or to which Sellers’ have rights of access that
is necessary to allow Purchaser to prepare the historical financial statements
required by Rule 3-05 of Regulation S-X, and to enable the audit thereof.

 

(c)                                  The obligations of Sellers to disclose or provide reasonable access
to any such historical financial information shall terminate three (3) years
after the Effective Date.  Sellers shall
have no liability whatsoever to Purchaser or any other person for information
provided or disclosed hereunder, or the accuracy or sufficiency thereof or in
connection with any claim arising out of such information.  Purchaser acknowledges that Sellers make no
representation or warranty with respect to any such information and expressly
disclaim any implied or constructive representation or warranty.  Purchaser shall reimburse Sellers for any
actual costs incurred by Sellers in performing the obligations under this Section 18.3
and shall indemnify Sellers for any and all Losses incurred by Sellers with
respect to such matter.

 

18.4                        Amendments.  Without limiting the other provisions of this
Article XVIII, and subject to Article XIX, each of the parties agrees
to make any and all amendments or modifications to this Agreement and the
Transition Services Agreement as are required by the FTC or the CAG in order to
obtain FTC and CAG approval of this Agreement and of Purchaser as an acceptable
purchaser of the Assets, provided that any such amendments are not,
individually or in the aggregate, materially adverse to Sellers taken as a
whole (or any one of them), or Pacific Energy Partners, L.P. and its Affiliates,
taken as a whole.

 

ARTICLE XIX

 

TERMINATION;
DEFAULT; REMEDIES

 

19.1                        Termination
for Adverse Conditions. 
Notwithstanding anything contained herein to the contrary, this
Agreement may be terminated and the transactions contemplated hereby abandoned
at any time prior to Closing by Sellers if (i) either the FTC or CAG
conditions its approval of this Agreement or the transaction contemplated
hereby in a manner that is materially adverse to STOP, KPOP or Shore; or (ii) the
FTC or CAG staff advise the parties that Purchaser is not an acceptable
purchaser of the Assets or that the Agreement is not acceptable, and despite
the parties’ good faith efforts to modify such agreement, negotiations with the
FTC

 

29

 

or CAG staff have terminated without a mutually acceptable
resolution.  Notwithstanding anything
contained herein to the contrary, this Agreement may be terminated and the
transactions contemplated hereby abandoned at any time prior to Closing by
Purchaser if the FTC or CAG conditions its approval of this Agreement or the
transaction contemplated hereby in a manner that is materially adverse to
Pacific Energy Partners, L.P. and its Affiliates, taken as a whole.

 

19.2                        FTC
Mandated Termination or Rescission.  If the FTC, at the time it determines to make
final the FTC Order, notifies Sellers (or any one of them) that Purchaser is
not an acceptable acquirer of the Assets or that the manner in which the
divestiture was accomplished is not acceptable, then Sellers shall have the
right to effect the rescission of this Agreement upon written notice to
Purchaser of such notice received from the FTC. 
Within three business days after receipt of any such notice, Sellers
shall return the Earnest Money L/C to Purchaser unless a Purchaser Default
caused such notification.

 

19.3                        Purchaser
Default.  In the event of material
non-performance, default or breach of this Agreement by Purchaser that results
in the failure to consummate this Agreement (a “Purchaser
Default”), then Sellers may, at their sole option and as their sole
remedy, take any of the following courses of action:

 

19.3.1                  terminate this
Agreement and draw upon the Earnest Money L/C as liquidated damages, as
follows:

 

IF PURCHASER DEFAULTS IN
ITS OBLIGATIONS UNDER THIS AGREEMENT RESULTING IN A FAILURE TO CLOSE THE
TRANSACTION ON OR BEFORE THE OUTSIDE CLOSING DATE, THEN PURCHASER AGREES THAT
SELLERS WILL INCUR DAMAGES BY REASON OF SUCH DEFAULT WHICH ARE IMPRACTICAL AND
EXTREMELY DIFFICULT TO ASCERTAIN OR QUANTIFY. 
PURCHASER AND SELLERS, IN A REASONABLE EFFORT TO ASCERTAIN SELLERS’
DAMAGES, HAVE AGREED BY PLACING THEIR INITIALS BELOW THAT AN AMOUNT EQUAL TO
THE FULL AMOUNT OF THE EARNEST MONEY L/C SHALL BE DEEMED TO CONSTITUTE A
REASONABLE ESTIMATE OF SELLERS’ DAMAGES UNDER APPLICABLE LAW, INCLUDING CALIFORNIA
CODE OF CIVIL PROCEDURE SECTION 1671. 
ACCORDINGLY, IF PURCHASER SO DEFAULTS IN ITS OBLIGATIONS UNDER THIS
AGREEMENT, SELLERS SHALL HAVE THE RIGHT TO DRAW DOWN THE FULL AMOUNT OF THE
EARNEST MONEY L/C AS LIQUIDATED DAMAGES.

 

 

	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Initials for
  Seller

  	
   

  	
   

  	
  Initials for
  Purchaser;

  	
   

  

 

or

 

19.3.2                  enforce
specific performance of this Agreement and the transaction provided for herein
according to the terms hereof by all means available at law or in equity.

 

30

 

19.4                        Election
of Remedies.  In the event Sellers
elect first to enforce this Agreement by specific performance and at any time
during pursuit of enforcement elects not to pursue specific performance, then
Sellers shall be entitled to pursue their remedies under this Article XIX as
if it had elected to do so as above set forth, and such subsequent election to
pursue its courses of action under this Article XIX shall be deemed to be
an election of remedies at that time and not before.

 

19.5                        Sellers’
Default.  In the event of
non-performance, default or breach of this Agreement by Sellers that results in
the failure to consummate this Agreement, then Purchaser may, at its sole
option, as its exclusive remedy, enforce specific performance of this Agreement
and the transaction provided for herein according to the terms hereof by all
means available at law or in equity.

 

ARTICLE XX

BULK SALES

 

Sellers and Purchaser hereby
waive compliance with any applicable bulk sales or similar laws.

 

ARTICLE XXI

ASSIGNMENT

 

Provided that Purchaser
remains liable for all of its obligations under this Agreement, Purchaser may
assign at Closing to up to three (3) of its Affiliates title to all or a
portion of the Assets with at least ten (10) days prior notice to
Sellers.  Except as provided in the
immediately preceding sentence, this
Agreement may not be assigned by any party, in whole or in part without the
prior written consent of the other party, which consent shall not be
unreasonably withheld.  This Agreement
shall inure to the benefit of, and be binding upon, the parties hereto and
their respective heirs, legal representatives, successors and permitted
assigns. This agreement is not intended to, and does not create, any rights in
any third parties.

 

ARTICLE XXII

 

PAYMENTS

 

22.1                        Terms of Payment. 
Unless otherwise specified herein, any payment to be made hereunder
shall be made in U.S. dollars by wire transfer of immediately available funds,
without discount or deduction, or by such other means as the parties may agree.

 

22.2                        Interest.  Any
amount not paid by any party when due hereunder shall bear interest from the
date upon which payment was due through the date of payment at a rate equal

 

31

 

to one percent (1%) above
the prime rate of interest as announced by Chase Manhattan Bank N.A. in New
York City from time to time.

 

ARTICLE XXIII

 

NOTICES

 

23.1                        Notices.  All
notices or other communications required hereunder shall be in writing, shall
be addressed as specified below and shall be deemed to have been given:  (a) at the time of delivery when
delivered personally; (b) upon receipt when sent by Federal Express, or
similar recognized overnight service; or (c) upon completion of successful
transmission (with electronic confirmation of receipt) when sent by facsimile
(unless transmission is completed outside recipient’s normal working hours, in
which case such notice shall be deemed given at the start of recipient’s next
business day), immediately followed by U.S. posting, postage prepaid.

 

Sellers:

 

Valero L.P.

c/o Richard
Lashway

Director -
Corporate Development, Economic Analysis

Valero Energy
Corporation

One Valero Way

San Antonio,
Texas  78249-1616

Phone: (210)
345-2901

Fax:     (210)
345-2270

 

Purchaser:

5900
Cherry Avenue

Long
Beach, California 90805-4408

Attn:  General Counsel

Phone:  (562) 728-2800

Fax:  (562) 728-2823

 

Any
Party may change its address or facsimile number by providing written notice to
the others in accordance with the foregoing.

 

ARTICLE XXIV

GENERAL; ADDITIONAL COVENANTS

 

24.1                        Entire Agreement.  This
Agreement, including all of the Attachments, Exhibits and Schedules hereto,
constitutes the entire understanding between the parties with respect to the
subject matter contained herein and supersedes any prior understandings,
negotiations or

 

32

 

agreements,
whether written or oral, between them respecting such subject matter (other
than the Confidentiality Agreement dated May 10, 2005, between Valero L.P.
and Purchaser, which shall continue in full force and effect).

 

24.2                        Construction. 
Words of any gender used in this Agreement shall be construed to include
any other gender, and words in the singular number shall include the plural,
and vice versa, unless the context requires otherwise. The use of the phrase “including,”
or phrases of similar import, shall be deemed to include the phrase “without
limitation”.

 

24.3                        Captions.  The
captions used in connection with the Articles and Sections of this Agreement
are for convenience only and shall not be deemed to enlarge, limit or otherwise
modify the meaning or interpretation of the language of this Agreement.  Any references to “Articles”, “Sections”, “Attachments”,
“Exhibits”, and “Schedules” are to Articles, Sections, Attachments, Exhibits,
and Schedules of this Agreement. Each Attachment, Exhibit, and Schedule referred
to herein is incorporated into this Agreement by such reference; provided that
to the extent of any conflict or inconsistency between any of the Attachments,
Exhibits or Schedules and this Agreement, this Agreement will prevail.

 

24.4                        Severability.  If
any provision of this Agreement is held illegal, invalid or unenforceable, such
illegality, invalidity or unenforceability will not affect any other provision
hereof.  This Agreement shall in such
circumstances be deemed modified to the extent necessary to render enforceable
the provisions hereof.

 

24.5                        No Waiver.  The
failure of any party to insist upon strict performance of any of the terms or
conditions of this Agreement will not constitute a waiver of any of its rights
hereunder.

 

24.6                        Parties in Interest; No Third
Party Beneficiary.  This Agreement shall inure to the benefit of
and be binding upon Purchaser and Sellers and their respective successors and
assigns.  Except as otherwise provided
herein, nothing in this Agreement will be construed as conferring upon any
person or entity other than Purchaser and Sellers, and their respective
successors in interest, any right, remedy or claim under or by reason of this
Agreement.

 

24.7                        Governing Law; Choice of Forum.  This Agreement shall be governed by
and construed in accordance with the laws of the State of Texas applicable to
agreements made and to be performed entirely in the State of Texas.  Any claims arising from or related to this
Agreement (whether in contract, tort or otherwise) shall be governed by the
laws of the State of Texas.  The parties
irrevocably submit to the exclusive jurisdiction of the United States District
Court for the Western District of Texas for any such claims, except for those
matters over which that Court does not have subject matter jurisdiction.  Where the United States District County for
the Western District of Texas does not have subject matter jurisdiction, the
parties irrevocably submit to the exclusive jurisdiction of a state district
court sitting in Bexar County, Texas.

 

24.8                        Best Efforts; Time of Essence. 
Except as otherwise specifically provided herein, Purchaser and Sellers
shall each use its best efforts to satisfy the conditions to Closing and

 

33

 

otherwise
consummate the transactions contemplated by this Agreement as promptly as
practical.  Time is of the essence with
respect to the Closing of this Agreement.

 

24.9                        Counterparts.  This
Agreement may be executed in any number of counterparts and any party hereto
may execute any such counterpart, each of which when executed by both parties
and delivered shall be deemed to be an original.

 

24.10                 Extensions of Time; Waiver.  It
is agreed that any party to this Agreement may extend time for performance by
any other party hereto or waive the performance of any obligation of any other
party hereto or waive any inaccuracies in the representations and warranties of
any other party, but any such waiver shall be in writing, and shall not
constitute or be construed as a waiver of any other obligation, condition,
representation or warranty under this Agreement.

 

24.11                 Further Assurances. 
Purchaser and Sellers shall take such additional action, and shall
cooperate with one another, as may be reasonably necessary to effectuate the
terms of this Agreement and any agreement or instrument delivered pursuant
hereto.

 

24.12                 No Presumption Against Drafter. 
Purchaser and Sellers have each fully participated in the negotiation
and drafting of this Agreement.  If an
ambiguity, question of intent or question of interpretation arises, this
Agreement must be construed as if drafted jointly, and there must not be any
presumption, inference or conclusion drawn against any party by virtue of the
fact that its representative has authored this Agreement or any of its terms.

 

24.13                 Amendments 
This Agreement cannot
be altered, amended, changed or modified in any respect or particular unless
each such alteration, amendment, change or modification shall have been agreed
to by each of the parties hereto and reduced to writing in its entirety and
signed and delivered by each party.

 

 

[Remainder
of page intentionally left blank]

 

34

 

IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed as of the Effective Date.

 

	
  SELLERS:

  
	
   

  
	
  SUPPORT TERMINALS OPERATING
  PARTNERSHIP, L.P.,

  
	
  a Delaware limited
  partnership

  
	
   

  
	
  By:

  	
  Support Terminal Services, Inc.,
  its general partner

  
	
   

  
	
   

  	
  By:

  	
   

  	
   /s/ Curtis V.
  Anastasio

  	
   

  
	
   

  	
   

  	
  Curtis V. Anastasio,

  
	
   

  	
   

  	
  President and Chief
  Executive Officer

  
	
   

  
	
   

  
	
  KANEB PIPE LINE OPERATING
  PARTNERSHIP, L.P.,

  
	
  a Delaware limited
  partnership

  
	
   

  
	
  By:

  	
  Kaneb Pipe Line Company
  LLC, its general partner

  
	
   

  
	
   

  	
  By:

  	
   

  	
   /s/ Curtis V.
  Anastasio

  	
   

  
	
   

  	
   

  	
  Curtis V. Anastasio,

  
	
   

  	
   

  	
  President and Chief
  Executive Officer

  
	
   

  
	
   

  
	
  SHORE TERMINALS LLC,

  
	
  a Delaware limited
  liability company

  
	
   

  
	
  By:

  	
  Kaneb Pipe Line Operating
  Partnership, L.P., its sole member

  
	
   

  
	
   

  	
  By:

  	
  Kaneb Pipe Line Company
  LLC, its general partner

  
	
   

  
	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
    /s/ Curtis V.
  Anastasio

  	
   

  
	
   

  	
   

  	
   

  	
  Curtis V. Anastasio,

  
	
   

  	
   

  	
   

  	
  President and Chief
  Executive Officer

  
	
   

  
	
   

  
	
  PURCHASER:

  
	
   

  
	
  PACIFIC
  ENERGY GROUP LLC,

  
	
  a
  Delaware limited liability company

  
	
   

  
	
   

  
	
  By:

  	
   

  	
  /s/ Irvin Toole, Jr.

  	
   

  
	
   

  	
  Irvin Toole, Jr.,

  
	
   

  	
  President and Chief Executive Officer

  
												

 

35Exhibit 10.1

 

	
   

  	
  Date:

  

 

Incentive Stock Option Granted

 

by

 

THE J. JILL
GROUP, INC.

(hereinafter
called the “Company”)

 

to

 

 

(hereinafter
called the “Holder”)

 

under
the

 

2001 INCENTIVE AND
NON-STATUTORY STOCK OPTION PLAN

 

WITNESSETH:

 

For valuable
consideration, the receipt of which is hereby acknowledged, the Company hereby
grants to the Holder the following option:

 

FIRST:  Subject to the terms and conditions
hereinafter set forth, the Holder is hereby given the right and option to
purchase from the Company an aggregate of
                
shares of Common Stock of the Company, par value $.01 per share, at the time
and in the manner hereinafter stated.  Schedule A
attached hereto and hereby incorporated herein sets forth, with respect to this
option:  (i) its expiration date, (ii) its
exercise price per share, (iii) its vesting rate, and (iv) certain
other terms and conditions applicable to this option and incorporated herein.

 

This option is
and shall be subject in every respect to the provisions of The J. Jill Group, Inc.
2001 Incentive and Non-Statutory Stock Option Plan (the “Plan”), as amended
from time to time, which is incorporated herein by reference and made a part
hereof.  In the event of any conflict or
inconsistency between the terms hereof and those of the Plan, the latter shall
prevail.  References herein to the
Committee shall mean the Committee as defined in the Plan.

 

This option
shall be exercised by the delivery of written notice to the Company (the “Notice”)
setting forth the number of shares with respect to which the option is to be
exercised and the address to which the certificates for such shares are to be
mailed, together with payment for such shares by one or more of the following
methods: (i) in cash, by certified or bank check or other instrument
acceptable to the Committee; (ii) by the Holder’s delivering to the
Company

 

 

a properly
executed exercise notice together with irrevocable instructions to a broker to
promptly deliver to the Company cash or a check payable and acceptable to the
Company to pay the purchase price; provided
that in the event the Holder chooses to pay the purchase price as so provided,
the Holder and the broker shall comply with such procedures and enter into such
agreements of indemnity and other agreements as the Committee shall prescribe
as a condition of such payment procedure; and provided
further that the Company need not act upon such exercise notice
until the Company receives full payment of the exercise price; or (iii) by
any other means (including, without limitation, by delivery of a promissory
note of the Holder payable on such terms as are specified by the Committee; provided, however, that the interest rate
borne by such note shall not be less than the lowest applicable federal rate,
as defined in Section 1247(d) of the Internal Revenue Code) which the
Committee determines are consistent with the purpose of the Plan and with
applicable laws and regulations.

 

If the Holder
of this option is an executive officer, director or beneficial owner of more than
ten percent (10%) of the Common Stock of the Company, any shares of stock
issuable upon exercise of this option may not be sold or transferred (except
that such shares may be issued upon exercise of this option) by such Holder for
a period of six months following the grant of this option.

 

SECOND:  The Company, in its discretion, may file a
registration statement on Form S-8 under the Securities Act of 1933 to
register shares of Common Stock reserved for issuance under the Plan.  At any time at which such a registration
statement is not in effect, it shall be a condition precedent to any exercise
of this option that the Holder (or if any other individual or individuals are
exercising this option, such individual or individuals) shall deliver to the
Company an investment letter in form and substance satisfactory to the Company
and its counsel which shall contain, among other matters, a statement in
writing that the option is then being exercised only with a view to investment
in, and not with a view to the distribution of, the shares with respect to
which the option is then being exercised; that the Holder and/or the Holder’s
attorneys, accountants, and/or analysts (or the individual or individuals
exercising this option and/or his or their attorneys, accountants and/or
analysts) have fully investigated the Company and the business and financial
conditions concerning it and have knowledge of the Company’s then current
corporate activities and financial condition; and that the Holder believes that
the nature and amount of the shares being purchased by him/her are consistent
with his/her investment objectives, abilities and resources.

 

THIRD:  As promptly as practicable after receipt of
the Notice and payment described in paragraph FIRST and, if required as a condition
to exercise, the investment letter described in paragraph SECOND, the Company
shall deliver or cause to be delivered to the Holder (or if any other
individual or individuals are exercising this option, to such individual or
individuals) at the address specified in the Notice a certificate or
certificates for the number of shares with respect to which the option is then
being exercised, registered in the name or names of the individual or
individuals exercising the option, either alone or jointly with another person
or persons with rights of survivorship, as the individual or individuals
exercising the option shall prescribe in writing to the Company at or prior to
such purchase; provided, however, that such delivery shall be deemed effected
for all purposes when the Company or a stock transfer agent shall have
deposited such certificate or certificates in the United States mail, addressed
to the Holder (or such individual or individuals) at the address so specified;
and provided further that if any law or

 

2

 

regulation or
order of the Securities and Exchange Commission or other body having
jurisdiction in the premises shall require the Company or the Holder (or the
individual or individuals exercising this option) to take any action in
connection with the shares then being purchased, the date for the delivery of
the certificates for such shares shall be extended until such action shall be
taken and completed, it being understood that the Company shall have no
obligation to take and complete any such action.

 

FOURTH:  The existence of this option shall not affect
in any way the right or power of the Company or its stockholders to make or
authorize any or all adjustments, recapitalizations, reorganizations or other
changes in the Company’s capital structure or its business, or any merger or
consolidation of the Company, or any issue of Common Stock, or any issue of
bonds, debentures, preferred or prior preference stock ahead of or affecting
the Common Stock or the rights thereof, or the dissolution or liquidation of
the Company, or any sale or transfer of all or any part of its assets or
business, or any other corporate act or proceeding, whether of a similar
character or otherwise.

 

If the Company
shall effect a subdivision or consolidation of shares or other capital
readjustment, the payment of a stock dividend, or other increase or reduction
of the number of shares of the Common Stock outstanding, without receiving
compensation therefor in money, services or property, then the number, class,
and per share price of shares of stock subject to this option shall be
appropriately adjusted in such a manner as to entitle the Holder to receive
upon exercise of this option, for the same aggregate consideration, the same
total number and class of shares as the Holder would have received as a result
of the event requiring the adjustment had the Holder exercised this option in
full immediately prior to such event.

 

After a merger
of one or more corporations into the Company, or after a merger or
consolidation of the Company and one or more corporations in which (i) the
Company shall be the surviving corporation, and (ii) the stockholders of
the Company immediately prior to such merger or consolidation own after such merger
or consolidation shares representing at least fifty percent of the voting power
of the Company, the Holder shall, at no additional cost, be entitled upon
exercise of this option to receive in lieu of the number of shares as to which
this option shall then be so exercisable, the number and class of shares of
stock or other securities, cash or property to which the Holder would have been
entitled pursuant to the terms of the agreement of merger or consolidation if,
immediately prior to such merger or consolidation, the Holder had been the
holder of record of a number of shares of Common Stock equal to the number of
shares as to which this option shall be so exercised.

 

If the Company
is merged into or consolidated with another corporation under circumstances
where the Company is not the surviving corporation, or if there is a merger or
consolidation where the Company is the surviving corporation but the
stockholders of the Company immediately prior to such merger or consolidation
do not own after such merger or consolidation shares representing at least
fifty percent of the voting power of the Company, or if the Company is
liquidated, or sells or otherwise disposes of substantially all its assets to
another corporation while this option remains outstanding, (i) subject to
the provisions of clause (iii) below, after the effective date of such
merger, consolidation, liquidation, sale or other disposition, as the case may
be, the Holder of this option shall be entitled, upon exercise of this option,
to receive, in lieu of shares of Common Stock, shares of such stock or such
other

 

3

 

securities,
cash or property as the holders of shares of Common Stock received pursuant to
the terms of the merger, consolidation, liquidation, sale or other disposition;
(ii) the Committee may accelerate the time for exercise of this option, so
that from and after a date prior to the effective date of such merger,
consolidation, liquidation, sale or other disposition, as the case may be,
specified by the Committee, exercisable in full; or (iii) this option may
be cancelled by the Committee as of the effective date of any such merger,
consolidation, liquidation, sale or other disposition provided that (x) notice
of such cancellation shall be given to the Holder and (y) the Holder shall have
the right to exercise this option to the extent that the same is then
exercisable or, if the Committee shall have accelerated the time for exercise
of this option pursuant to clause (ii) above, in full during the 30-day
period preceding the effective date of such merger, consolidation, liquidation,
sale or other disposition.

 

Except as
hereinbefore expressly provided, the issue by the Company of shares of stock of
any class, or securities convertible into shares of stock of any class, for
cash or property or for labor or services, either upon direct sale or upon the
exercise of rights or warrants to subscribe therefor, or upon conversion of
shares or obligations of the Company convertible into such shares or other
securities, shall not affect, and no adjustment by reason thereof shall be made
with respect to, the number or price of shares of Common Stock then subject to
this option.

 

FIFTH:  No person shall, by virtue of the granting of
this option to the Holder, be deemed to be a holder of any shares purchasable
under this option or to be entitled to the rights or privileges of a holder of
such shares unless and until this option has been exercised with respect to
such shares and they have been issued pursuant to that exercise of this option.

 

The Company
shall, at all times while any portion of this option is outstanding, reserve
and keep available, out of shares of its authorized and unissued stock or
reacquired shares, a sufficient number of shares of its Common Stock to satisfy
the requirements of this option; shall comply with the terms of this option
promptly upon exercise of the option rights; and shall pay all fees or expenses
necessarily incurred by the Company in connection with the issuance and delivery
of shares pursuant to the exercise of this option.

 

SIXTH:  This option is not transferable by the Holder
otherwise than by will or under the laws of descent and distribution; the
granting of this option shall not impose upon the Company any obligation to
employ or to continue to employ the Holder; and the right of the Company to
terminate the employment of the Holder shall not be diminished or affected by
reason of the fact that this option has been granted to such Holder.

 

This option is
exercisable, during the Holder’s lifetime, only by the Holder, and by the
Holder only while the Holder is an employee of the Company, except that in the
event the employment of the Holder terminates for any reason, other than for
cause as determined by the Company and other than in the event of death or
retirement in good standing from the employ of the Company for reasons of age
or disability under the then established rules of the Company, the Holder
shall have the right to exercise this option within thirty (30) days after the
date the Holder ceases to be an employee of the Company (but not later than the
expiration date of this option) with respect to the shares which were
purchasable by the Holder by exercise of this option at the time of such
cessation of employment.  As used in this
paragraph, “cause” shall mean (i) any material breach by the Holder of any
agreement to which the Holder and the

 

4

 

Company are
both parties, (ii) any act or omission to act by the Holder which may have
a material and adverse effect on the Company’s business or on the Holder’s
ability to perform services for the Company, including, without limitation, the
commission of any crime (other than ordinary traffic violations), or (iii) any
material misconduct or material neglect of duties by the Holder in connection
with the business or affairs of the Company or any affiliate of the Company.

 

In the event of the retirement of the Holder in good standing from the
employ of the Company for reasons of age or disability under the then
established rules of the Company, this option shall terminate on the
earlier of its expiration date and a date ninety (90) days after the Holder’s
retirement.  After such retirement the
Holder shall have the right, at any time prior to such termination, to exercise
this option to the extent the Holder was entitled to exercise such option
immediately prior to such retirement.

 

In the event
of the death of the Holder while the Holder is in the employ of the Company and
before the expiration date of this option, this option shall terminate on the
earlier of its expiration date and a date one (1) year after his
death.  After the death of the Holder,
the Holder’s executors, administrators or any person or persons to whom the
Holder’s option may be transferred by will or by the laws of descent and
distribution shall have the right, at any time prior to such termination, to
exercise such option to the extent the Holder was entitled to exercise such
option at the time of the Holder’s death.

 

An employment
relationship between the Company and the Holder shall be deemed to exist during
any period in which the Holder is employed by the Company or by any parent or
subsidiary corporation of the Company.

 

SEVENTH:  Any notice to be given to the Company
hereunder shall be deemed sufficient if addressed to the Company and delivered
by hand or by mail to the Treasurer of the Company, 4 Batterymarch Park,
Quincy, Massachusetts 02169-7468 or such other address as the Company may
hereafter designate.

 

Any notice to
be given to the Holder hereunder shall be deemed sufficient if addressed to and
delivered in person to the Holder or when deposited in the mail, postage
prepaid, addressed to the Holder at the Holder’s address furnished to the Company.

 

EIGHTH:  This option is subject to all laws,
regulations and orders of any governmental authority which may be applicable
thereto and, notwithstanding any of the provisions hereof, the Holder agrees
that the Holder will not exercise the option granted hereby nor will the
Company be obligated to issue or sell any shares of stock hereunder if the
exercise thereof or the issuance or sale of such shares, as the case may be,
would constitute a violation by the Holder or the Company of any such law,
regulation or order or any provision thereof. 
The Company shall not be obligated to take any affirmative action in
order to cause the exercise of this option or the issuance of shares pursuant
hereto to comply with any such law, regulation, order or provision.

 

NINTH: 
This option shall be governed by, and construed and enforced in
accordance with, the substantive laws of The Commonwealth of Massachusetts.

 

5

 

IN WITNESS
WHEREOF, the Company has caused this instrument to be executed in its name and
on its behalf as of the date first above written.

 

[Seal]

 

 

	
  ATTEST:

  	
  THE J. JILL GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Secretary

  	
   

  	
  Its

  
					

 

6

 

SCHEDULE A TO INCENTIVE
STOCK OPTION

THE J. JILL
GROUP, INC.

 

	
  Date of Grant:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Name of
  Holder:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  City,
  State, Zip:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Social Security Number:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Maximum number of shares for which this
  option is exercisable:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Exercise (purchase) price per share:

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Expiration date of option:

  	
   

  	
   

  	
   

  
					

 

Vesting Rate:  The right and option to purchase any or all
of the shares subject to this option shall be vested in full as of the date of
grant.

 

Other
terms and conditions: 
The Holder agrees that for a period of up to one hundred eighty (180)
days from the effective date of any registration of securities of the Company
(upon request of the Company or the underwriters managing any underwritten
offering of the Company’s securities), he will not sell, make any short sale or
loan of, grant any option for the purchase of, or otherwise dispose of any
shares of Common Stock held by him without the prior written consent of the
Company or such underwriters, as the case may be.

 

The
undersigned Holder acknowledges receipt of the stock option of which this Schedule A
is a part.

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Holder’s Signature

  

 

A-1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00088-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00088-of-00352.parquet"}]]