Document:

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                                                                   EXHIBIT 10(q)

                                                              Loan No.:_________

                           LOAN AND SECURITY AGREEMENT

         THIS LOAN AND SECURITY AGREEMENT ("Agreement") is entered into as of
the 30th of December, 1999, by and among HELLER FINANCIAL LEASING, INC., a
Delaware corporation ("Secured Party"), whose address is Commercial Equipment
Finance Division, 500 West Monroe Street, Chicago, Illinois 60661, and SOUTH
HAMPTON REFINING CO., a Texas corporation, ("South Hampton"), and GULF STATE
PIPE LINE COMPANY, INC., a Texas corporation, ("Gulf State"). South Hampton and
Gulf State are referred to herein collectively as "Debtors," and each may be
individually referred to as a "Debtor"). Debtors have a common business address
of 7752 FM 418, P.O. Box 1636, Silsbee, Texas 77656.

                                   WITNESSETH:

         1. The Loan. Subject to the prior satisfaction of all of the conditions
precedent contained in the Loan Documents (as defined herein), Secured Party
agrees to make available to Debtors and Debtors agree to borrow from Secured
Party, on or before December 31, 1999, up to an aggregate principal amount of
$3,500,000 (the "Loan"). Subject to the foregoing, the Loan will be funded in
one advance (the "Advance") on the date of this Agreement and will be evidenced
by a promissory note in the form of Exhibit A attached hereto (the "Note"). The
Advance will be used solely to partially fund the acquisition (the "Coin
Acquisition") of 92% of Productos Quimicos Coin, S.A., de C.V. ("Coin"). The
Advance shall be on and subject to the terms and conditions set forth in this
Agreement and the other Loan Documents and shall otherwise be at Secured Party's
sole discretion.

         2. Conditions to the Advance.

                  (a) Prior to the Advance, the following conditions shall have
         been satisfied in the opinion of the Secured Party:

                           (i) This Agreement and all other Loan Documents
                  (herein so called and being the Note, a Guaranty from Arabian
                  Shield Development Company, a Delaware corporation ("Arabian
                  Shield"), American Shield Refining Company, a Delaware
                  corporation ("American Shield"), and Texas Oil and Chemical
                  Co. II, Inc., a Texas corporation ("Texas Oil II")
                  (collectively, "Guarantors"), a Pledge Agreement from each of
                  South Hampton and Texas Oil II, covering all of the stock of
                  Gulf State in the case of South Hampton, and all of the stock
                  of South Hampton in the case of Texas Oil II, the Ground Lease
                  (as defined below), the Sublease (as defined below) and each
                  and every other document required by Secured Party to be
                  executed in connection with the Loan, together with all
                  amendments, supplements, modifications and other changes
                  thereto, in each case being in form and substance satisfactory
                  to Secured Party) shall have been duly authorized and executed
                  by Debtors (and by Guarantors, as applicable) and delivered to
                  Secured Party.

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                           (ii) Each Debtor shall have delivered to Secured
                  Party its respective good standing certificates, certificates
                  of existence, certificates of incumbency and duly certified
                  resolutions of its board of directors (in form and substance
                  satisfactory to Secured Party) authorizing it to enter into
                  and perform the transactions contemplated by the Loan
                  Documents.

                           (iii) Secured Party shall have received an opinion
                  from counsel to Debtors and Guarantors, in form and substance
                  satisfactory to Secured Party.

                           (iv) The representations and warranties contained in
                  this Agreement and the other Loan Documents shall be true and
                  correct on the date of the Advance as if made on such date, no
                  Event of Default (as defined in this Agreement), or event
                  which with the passage of time or giving of notice would
                  constitute an Event of Default (as defined in this Agreement)
                  shall have occurred and be continuing, and no material adverse
                  change shall have occurred with respect to Debtors' business
                  or assets (including, without limitation, the Collateral, as
                  defined in this Agreement) since October 31, 1999.

                           (v) Evidence of insurance which complies with the
                  requirements of the Loan Documents shall have been delivered
                  to Secured Party.

                           (vi) Receipt by Secured Party of a $17,500 commitment
                  fee (all commitment fees described herein are in addition to
                  any Earnest Money (as defined herein)).

                           (vii) UCC-1 Financing Statements covering the
                  Collateral shall have been duly authorized and executed by the
                  Debtors and delivered to Secured Party.

                           (viii) The results of a UCC search showing all
                  financing statements and other documents or instruments on
                  file against each Debtor and each Guarantor in the office of
                  the Secretary of State of the State of Texas and such other
                  jurisdictions as Secured Party may request, each such search
                  to be as of a date no more than 10 days prior to the date
                  hereof;

                           (ix) Receipt by Secured Party of a certificate from
                  Debtors in favor of and satisfactory to Secured Party stating
                  that no Debtor is presently involved in any litigation other
                  than such litigation previously disclosed to Secured Party in
                  writing.

                           (x) Receipt by Secured Party of $35,000 as earnest
                  money ("Earnest Money"). Debtors agree that regardless of
                  whether Secured Party makes any Advance, the Earnest Money
                  will be applied (i) to all legal fees and expenses incurred by
                  Secured Party in connection with documentation, negotiation
                  and closing the loan contemplated by this Agreement and (ii)
                  to Secured Party's environmental appraisal costs and expenses.
                  If any Earnest Money remains after payment of the foregoing
                  (such remainder, if any, being the "Balance"), and if the
                  Advance is made by Secured

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                  Party to South Hampton, then the Balance will be applied by
                  Secured Party as a credit against the $17,500 commitment fee
                  described in subparagraph (vi) preceding. Debtors understand
                  and agree that if the transactions contemplated by this
                  Agreement fail to consummate by March 31, 2000, for any reason
                  directly or indirectly related to Debtors' inability or
                  refusal to close on the exact terms and conditions set forth
                  in this Agreement, then all of the Earnest Money will be the
                  property of Secured Party without further action or notice.

                           (xi) A Ground Lease (herein so called), in form and
                  substance satisfactory to Secured Party, shall have been duly
                  authorized and executed by South Hampton and delivered to
                  Secured Party, covering the approximately 105 acres of land
                  comprising South Hampton's refinery (the "Real Property").

                           (xii) The machinery and equipment Collateral and the
                  value thereof (determined independently) shall be satisfactory
                  to Secured Party in its sole discretion.

                           (xiii) Secured Party shall be satisfied that there
                  has been no material adverse change in the financial condition
                  of either Debtor or any Guarantor.

                           (xiv) A Sub-Ground Lease (the "Sublease"), in form
                  and substance satisfactory to Secured Party, shall have been
                  duly authorized and executed by Secured Party and delivered to
                  South Hampton.

         3. The Note and Interest Rate. The $3,500,000 Advance shall be
evidenced by the Note. The unpaid principal amount of the Note shall bear
interest at the rate set forth in the Note. Amounts advanced and repaid may not
be reborrowed.

         4. Payment and Prepayments. The amount of unpaid principal and accrued
interest on the Notes shall be paid as set forth in each respective Note. South
Hampton may not prepay the Note in whole or in part at any time prior to
December 30, 2000. After December 30, 2000 and upon 30 days written notice to
Secured Party, may voluntarily prepay the Loan in whole, but not in part, by
advising Secured Party in writing at least 30 days prior to prepayment and by
paying to Secured Party at the time of such prepayment (i) any and all other
sums due under any of the Loan Documents (as defined herein) and (ii) the
Prepayment Fee (as defined herein). As used herein, "Prepayment Fee" shall mean
an amount equal to the Applicable Percentage (as defined herein) multiplied by
the principal balance prepaid. The term "Applicable Percentage" shall mean (a)
3% if the prepayment occurs on or before December 30, 2001, (b) 2% if the
prepayment occurs after December 30, 2001 and on or before December 30, 2002,
and (c) 1% if the prepayment occurs after December 30, 2002 and before the
stated maturity of the Note. The Prepayment Fee shall also be due and owing upon
involuntary prepayment as a result of Secured Party's exercise of any remedies
provided in this Agreement or any of Loan Documents.

         5. Secure Payment. To secure payment of indebtedness as evidenced by
the $3,500,000 Promissory Note of even date herewith made by Debtors, payable to
the order of Secured Party (the "Note"), and any obligations arising under this
Agreement, and also to secure any other indebtedness

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or liability of Debtors to Secured Party, direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter arising and no
matter how acquired by Secured Party, including all future advances or loans
which may be made at the option of Secured Party (all the foregoing hereinafter
called the "Indebtedness"), Debtors hereby grant and convey to Secured Party a
first priority continuing lien and security interest in the property described
on the schedule attached hereto and made a part hereof by this reference (the
"Schedule"), together with all insurance related thereto, and all proceeds
(including insurance proceeds) thereof, if any, and all substitutions,
modifications, replacements, attachments, additions, improvements, and
accessions thereto, and all intellectual property rights of ownership and/or
use, or other ownership or rights to use of proprietary information, as owner,
licensee, or otherwise relating to any of the foregoing (all of the foregoing
hereinafter called the "Collateral").

         6. Representations, Warranties and Covenants. Debtors hereby each
represent, warrant and covenant as follows:

                  (a) Perform Obligations. Debtors shall pay as and when due all
         Indebtedness secured by this Agreement and perform all of the
         obligations contained in this Agreement according to its terms. Debtors
         shall use the loan proceeds for business uses and not for personal,
         family, household, or agricultural uses.

                  (b) Perfection. This Agreement and all necessary Uniform
         Commercial Code filings together create a valid, perfected and first
         priority continuing lien and security interest in the Collateral,
         securing the payment and performance of the Indebtedness, and all
         filings and other actions necessary or desirable to create, perfect and
         protect such security interest have been or will be duly taken.

                  (c) Collateral Free and Clear. The Collateral is and shall
         remain free and clear of all liens, claims, charges, encumbrances and
         other security interests of any kind ("Liens") (other than the security
         interest granted hereby). Debtors shall defend the title to the
         Collateral against all persons and against all claims and demands
         whatsoever.

                  (d) Possession and Operating Order of the Collateral. Debtors
         shall retain possession of the Collateral at all times and shall not
         sell, exchange, assign, loan, deliver, lease, mortgage, or otherwise
         dispose of the Collateral or any part thereof (other than sales of
         motor vehicles or equipment that are worn out, obsolete or no longer
         useful to Debtors' business so long as such assets are promptly
         replaced with similar assets having substantially the same business
         utility and at least the same value and provided that such replacement
         assets are subject to the Lien in favor of the Secured Party) without
         the prior written consent of Secured Party. Debtors shall at all times
         keep the Collateral at the location[s] specified on the Schedule
         (except for removals thereof in the usual course of business for
         temporary periods). At Debtors' sole cost and expense, Debtors shall
         keep the Collateral in good repair and condition and shall not misuse,
         abuse, waste or otherwise allow it to deteriorate, except for normal
         wear and tear. Secured Party may verify any Collateral in any
         reasonable manner which Secured Party may consider appropriate, and
         Debtors shall furnish all reasonable

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         assistance and information and perform any acts which Secured Party may
         reasonably request in connection therewith.

                  (e) Insurance. Debtors shall insure the Collateral against
         loss by fire (including extended coverage), theft and other hazards,
         for its full insurable value including replacement costs, with a
         deductible not to exceed $50,000 per occurrence and without
         co-insurance. In addition, Debtors shall obtain liability insurance
         covering liability for bodily injury, including death and property
         damage, in an amount of at least $5,000,000 per occurrence or such
         greater amount as may comply with general industry standards, or in
         such other amounts as Secured Party may otherwise require. All policies
         of insurance required hereunder shall be in such form, amounts, and
         with such companies as Secured Party may approve; shall provide for at
         least 30 days prior written notice to Secured Party prior to any
         modification or cancellation thereof; shall name Secured Party as loss
         payee or additional insured, as applicable, and shall be payable to
         Debtors and Secured Party as their interests may appear; shall waive
         any claim for premium against Secured Party; and shall provide that no
         breach of warranty or representation or act or omission of Debtors
         shall terminate, limit or affect the insurers' liability to Secured
         Party. Certificates of insurance or policies evidencing the insurance
         required hereunder along with satisfactory proof of the payment of the
         premiums therefor shall be delivered to Secured Party. Debtors shall
         give immediate written notice to Secured Party and to insurers of loss
         or damage to the Collateral and shall promptly file proofs of loss with
         insurers. Debtors hereby irrevocably appoint Secured Party as Debtors'
         attorney-in-fact, coupled with an interest, for the purpose of
         obtaining, adjusting and canceling any such insurance and endorsing
         settlement drafts. Debtors hereby assign to Secured Party, as
         additional security for the Indebtedness, all sums which may become
         payable under such insurance.

         In the event Debtors fail to provide Secured Party with evidence of the
         insurance coverage required by this Agreement, Secured Party may
         purchase insurance at Debtors' expense to protect Secured Party's
         interests in the Collateral. This insurance may, but need not, protect
         Debtors' interests. The coverage purchased by Secured Party may not pay
         any claim made by Debtors or any claim that is made against Debtors in
         connection with the Collateral. Debtors may later cancel any insurance
         purchased by Secured Party, but only after providing Secured Party with
         evidence that Debtors have obtained insurance as required by this
         Agreement. If Secured Party purchases insurance for the Collateral,
         Debtors will be responsible for the costs of that insurance, including
         interest and other charges imposed by Secured Party in connection with
         the placement of the insurance, until the effective date of the
         cancellation or expiration of the insurance. The costs of the insurance
         may be added to the Indebtedness. The costs of the insurance may be
         more than the cost of insurance Debtors are able to obtain on their
         own.

                  (f) If Collateral Attaches to Real Estate. If the Collateral
         or any part thereof has been attached to or is to be attached to real
         estate, an accurate description of the real estate and the name and
         address of the record owner is set forth on the Schedule. Debtors
         shall, on demand of Secured Party, furnish Secured Party with a
         disclaimer or waiver of any interest in any such Collateral
         satisfactory to Secured Party and signed by all persons having an

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         interest in the real estate. Notwithstanding the foregoing, the
         Collateral shall remain personal property and shall not be affixed to
         realty without the prior written consent of Secured Party.

                  (g) Reporting Covenants.

                           (i) As soon as available and in any event within 120
                  days after the close of each fiscal year of Arabian Shield and
                  Texas Oil II (collectively, the "Reporting Guarantors"),
                  Debtors shall cause Reporting Guarantors to furnish to Secured
                  Party copies of the consolidated balance sheets of Reporting
                  Guarantors and their subsidiaries as of the close of such
                  fiscal year and consolidated statements of income,
                  shareholders' equity and the statements of cash flow of
                  Reporting Guarantors and their subsidiaries for such fiscal
                  year, in each case setting forth in comparative form the
                  figures for the preceding fiscal year, all in reasonable
                  detail and accompanied by an unqualified opinion thereon of an
                  independent public accounting firm of recognized national
                  standing selected by Reporting Guarantors and satisfactory to
                  Secured Party in its sole discretion to the effect that such
                  financial statements have been prepared in accordance with
                  generally accepted accounting principles ("GAAP") and that the
                  examination of such accounts in connection with such financial
                  statements has been made in accordance with generally accepted
                  auditing standards.

                           (ii) As soon as available and in any event within 45
                  days after the close of each fiscal quarter of Reporting
                  Guarantors, Debtors shall cause Reporting Guarantors to
                  furnish to Secured Party copies of the consolidated and
                  consolidating balance sheets of Reporting Guarantors and their
                  subsidiaries as of the close of such fiscal quarter,
                  consolidated and consolidating statements of income and
                  consolidated statements of cash flow of Reporting Guarantors
                  and their subsidiaries for the portion of the year then ended,
                  in each case setting forth in comparative form the figures for
                  the preceding year.

                           (iii) Debtors shall notify Secured Party in writing
                  of any Event of Default (as defined herein) and of any
                  "default" or "event of default" under any indebtedness or
                  performance obligations to any other person or entity
                  immediately upon Debtors becoming aware of such event or
                  events.

                           (iv) Debtors shall provide to Secured Party, and will
                  cause Guarantors to provide, promptly following any request by
                  Secured Party, such other financial information and reports
                  concerning Debtors or Guarantors, or any or some of them, as
                  Secured Party may from time to time request, in each case
                  being in such form and detail as Secured Party may require.

                           (v) Debtors will cause the Guarantors to deliver all
                  reports, financial information, and other information required
                  to be delivered by the

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                           Guarantors to Secured Party under the terms of the
                           Guaranty or any other agreement between Secured Party
                           and the Guarantors.

                  (h) Authorization. Each Debtor is now, and will at all times
         remain, a corporation duly organized, validly existing and in good
         standing under the laws of the respective jurisdiction of its
         formation. Each Debtor is now, and will at all times remain, duly
         licensed, qualified to do business and in good standing as a foreign
         corporation in every jurisdiction where failure to be so licensed or
         qualified and in good standing would have a material adverse effect on
         its respective business, properties or assets. The execution and
         delivery of this Agreement and the other Loan Documents (to the extent
         not inconsistent herewith) have been duly authorized by each Debtor and
         each Guarantor and constitute the legal, valid and binding obligations
         of each Debtor, enforceable against each Debtor, jointly and severally,
         in accordance with their respective terms. Each Debtor shall preserve
         and maintain its existence and shall not wind up its affairs or
         otherwise dissolve. Each Debtor shall not, without 30 days prior
         written notice to Secured Party, (1) change its respective name or so
         change its structure such that any financing statement or other record
         notice becomes misleading or (2) change its principal place of business
         or chief executive or accounting offices from the address stated
         herein.

                  (i) Litigation. Except as disclosed by Debtors in writing
         prior to the Advance, there are no judgments outstanding against or
         affecting Debtors, their officers, directors or affiliates or any part
         of the Collateral and there are no actions, charges, claims, demands,
         suits, proceedings, or investigations pending or threatened against
         Debtors or otherwise affecting any part of the Collateral
         ("Litigation"). Debtors shall furnish to Secured Party all information
         regarding any material Litigation as Secured Party shall reasonably
         request and in any event shall promptly notify Secured Party in writing
         of any Litigation against it which if decided against it would
         materially and adversely affect the finances or operations of Debtors.
         For the purposes of this subsection 6(i), any claim (or claims in the
         aggregate, if relating to the same event) which exceeds $1,000,000 and
         are not fully covered by in-force insurance shall be deemed material.

                  (j) No Conflicts. No Debtor is in violation of any material
         term or provision of its respective by-laws, or of any material
         agreement or instrument, decree, order, or any statute, rule, or
         governmental regulation applicable to it. The execution, delivery and
         performance of the Loan Documents do not and will not violate,
         constitute a default under, or otherwise conflict with any such term or
         provision or result in the creation of any security interest, lien,
         charge, or encumbrance upon any of the properties or assets of each
         Debtor, except for the security interest created hereunder.

                  (k) Compliance with Laws. Debtors shall use and maintain the
         Collateral in accordance with all applicable laws, regulations,
         ordinances, and codes and shall otherwise comply in all material
         respects with all applicable laws, rules, and regulations and duly
         observe all valid requirements of all governmental authorities, and all
         statutes, rules and regulations relating to its business as now in
         effect and which may be imposed in the future.

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                  (l) Taxes. Each Debtor has timely filed all tax returns
         (federal, state, local, and foreign) required to be filed by it and has
         paid or established reserves for all taxes, assessments, fees, and
         other governmental charges in respect of its properties, assets, income
         and franchises. Each Debtor shall promptly file, pay and discharge all
         taxes, assessments, license fees (related to the Collateral) and other
         governmental charges prior to the date on which penalties are attached
         thereto, establish adequate reserves for the payments of such taxes,
         assessments, and other governmental charges and make all required
         withholding and other tax deposits, and, upon request, provide Secured
         Party with receipts or other proof that any or all of such taxes,
         assessments, license fees or governmental charges have been paid in a
         timely fashion; provided, however, that nothing contained herein shall
         require the payment of any tax, assessment, or other governmental
         charge so long as its validity is being diligently contested in good
         faith and by appropriate proceedings diligently conducted and each
         Debtor has established cash reserves therefor in accordance with GAAP.
         Should any stamp, excise, or other tax, including mortgage, conveyance,
         deed, intangible, or recording taxes become payable in connection with
         or respect of any of the Loan Documents, Debtors shall pay the same
         (including interest and penalties, if any) and shall hold Secured Party
         harmless with respect thereto.

                  (m) Environmental Laws/Compliance. Except as disclosed by
         Debtor in writing prior to the Advance, no Debtor (1) has received any
         claim, summons, complaint, order, or other notice that it is not in
         compliance with, or that any public authority is investigating its
         compliance with, any federal, state, and local laws, rules,
         regulations, orders, and decrees relating to pollution, hazardous
         substances, waste, disposal or the protection of human health or
         safety, plant life or animal life, natural resources or the
         environment, all as amended from time to time (collectively,
         "Environmental Laws"), (2) has any knowledge of any material violation
         of any Environmental Laws on or about its assets or property, and (3)
         is under any current clean up or other remediation program or order.
         Except as disclosed by Debtor in writing prior to the Advance, each
         Debtor has obtained all environmental, health and safety permits
         necessary for the operation of its business. Except as disclosed by
         Debtor in writing prior to the Advance, Debtors are and shall remain in
         compliance, in all respects, with the terms and conditions of all
         permits and with all applicable Environmental Laws. Debtors shall
         provide Secured Party, promptly following receipt, copies of any
         correspondence, notice, complaint, order, or other document that any
         Debtor receives asserting or alleging a circumstance or condition which
         requires or may require a cleanup, removal, remedial action or other
         response by or on the part of any Debtor under any Environmental Laws,
         or which seeks damages or civil, criminal or punitive penalties from
         any Debtor for an alleged violation of any Environmental Laws. Debtors
         will promptly notify Secured Party of any release, spill or material
         change in the nature or extent of any hazardous substances or
         contaminants used, transported or stored by Debtors or any subsidiary
         of any Debtor, and will allow no material change in the use,
         transportation or storage thereof or in Debtors' operations that would
         increase in any material amount the risk of violation of any
         Environmental Laws, without the prior written approval of Secured
         Party.

                  (n) Regulations. No proceeds of the loans or any other
         financial accommodation hereunder will be used, directly or indirectly,
         for the purpose of purchasing or carrying any

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         margin security, as that term is defined in Regulations T, U, X of the
         Board of Governors of the Federal Reserve System.

                  (o) Books and Records. Debtors shall maintain, at all times,
         true and complete books and records in accordance with GAAP and
         consistent with those applied in the preparation of their respective
         financial statements. At all reasonable times, upon reasonable notice,
         and during normal business hours, Debtors shall permit Secured Party or
         its agents to audit, examine and make extracts from or copies of any of
         its books, ledgers, reports, correspondence, and other records relating
         to the Collateral.

                  (p) Setoff. Without limiting any other right of Secured Party,
         whenever Secured Party has the right to declare any Indebtedness to be
         immediately due and payable (whether or not it has so declared),
         Secured Party is hereby authorized at any time and from time to time to
         the fullest extent permitted by law, but shall not be obligated to, set
         off and apply against any and all Indebtedness, any and all monies then
         or thereafter owed to any Debtor by Secured Party, whether or not the
         obligation to pay such monies owed by Secured Party is then due. An
         election by Secured Party to exercise its right of setoff shall be
         effective immediately upon such election even though any charge
         therefor is made or entered on Secured Party's records subsequent
         thereto.

                  (q) Standard of Care; Notice of Claims. Debtors acknowledges
         and agrees that Secured Party shall not be liable for any acts or
         omissions nor for any error of judgment or mistake of fact or law other
         than as a sole and direct result of Secured Party's gross negligence or
         willful misconduct. Debtors shall give Secured Party written notice of
         any action or inaction by Secured Party or any agent or attorney of
         Secured Party that may give rise to a claim against Secured Party or
         any agent or attorney of Secured Party or that may be a defense to
         payment of the Indebtedness or performance hereunder for any reason,
         including commission of a tort (subject, in any event, to the first
         sentence of this paragraph) or violation of any contractual duty or
         duty implied by law. Debtors agree that unless such notice is fully
         given as promptly as possible (and in any event within 30 days) after
         any Debtor has knowledge, or with the exercise of reasonable diligence
         should have had knowledge, of any such action or inaction, no Debtor
         shall assert, and each Debtor shall be deemed to have waived, any claim
         or defense arising therefrom.

                  (r) Indemnity. Each Debtor shall indemnify, defend and hold
         Secured Party, its parent, affiliates, officers, directors, agents,
         employees, consultants, persons engaged by Secured Party to evaluate or
         monitor the Collateral, auditors and attorneys harmless from and
         against any loss, cost, expense (including reasonable attorneys' fees
         and costs and any consultants' or other experts' fees and expenses),
         damage, penalty, fine, claim, lien, suit, judgment or liability of
         every kind and nature arising directly or indirectly out of (i) any
         Loan Document, (ii) the ownership, possession, lease, operation, use,
         condition, sale, return, or other disposition of the Collateral, except
         to the extent the loss, expense, damage or liability arises solely and
         directly from Secured Party's gross negligence or willful misconduct,
         (iii) any Environmental Laws, and (iv) the enforcement by Secured Party
         of its rights or remedies

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         hereunder. Any payments required to be made hereunder shall constitute
         additional Indebtedness secured by the Collateral and shall be due and
         payable on demand.

                  (s) Payments Set Aside. If any payment is made to Secured
         Party or Secured Party enforces its security interest or exercises its
         right of set off, and such payment or part, or any proceeds of such
         enforcement or set off are subsequently invalidated, declared to be
         fraudulent or preferential, set aside and/or required to be repaid to a
         trustee, receiver or any other party under any bankruptcy law, state or
         federal law, common law or equitable cause, then to the extent of such
         recovery, the Indebtedness or part thereof originally intended to be
         satisfied, and all liens, security interests, rights and remedies
         therefor, shall be revived and continued in full force and effect as if
         such payment had not been made or such enforcement or set off had not
         occurred.

                  (t) Expenses and Attorneys' Fees. Debtors shall be liable for
         all charges, costs, taxes, expenses and reasonable attorneys' fees
         incurred by Secured Party: (i) in perfecting, defending, protecting or
         terminating its security interest in the Collateral, or any part
         thereof; (ii) subject to the limitations in this Agreement, in the
         negotiation, execution, delivery, administration, amendment or
         enforcement of the Loan Documents or the collection of any amounts due
         under any Note or other Loan Document; (iii) in any lawsuit or other
         legal proceeding in any way connected with any of the Loan Documents,
         including any contract or tort or other actions, any arbitration or
         other alternative dispute resolution proceeding, all appeals and
         judgment enforcement actions and any bankruptcy proceeding (including
         any relief from stay and/or adequate protection motions, cash
         collateral disputes, assumption/rejection motions and disputes or
         objections to any proposed disclosure statement or reorganization plan)
         and (iv) subject to the limitations in this Agreement, in appraising
         the Collateral and performing Secured Party's credit review, due
         diligence, and inspection of Collateral.

                  (u) Complete Information. No representation or warranty made
         by any Debtor in any Loan Document and no other document or statement
         now or hereafter furnished to Secured Party by or on behalf of any
         Debtor contains or will contain any misstatement of a material fact or
         omit to state any material fact which would make the statements
         contained therein misleading. Except as expressly set forth in writing
         and delivered to Secured Party prior to the Advance, there is no fact
         known to any Debtor that has or could have a materially adverse affect
         on the business, operation, condition (financial or otherwise),
         performance, properties or prospects of any Debtor or any Debtor's
         ability to timely pay all of the Indebtedness and perform all of its
         other obligations contained in or secured by this Agreement.

                  (v) Collateral Documentation. Debtors shall deliver to Secured
         Party prior to the Advance, satisfactory documentation regarding the
         Collateral to be financed, including such invoices, canceled checks
         evidencing payments, or other documentation as may be reasonably
         requested by Secured Party. Additionally, Debtors shall satisfy Secured
         Party that Debtors' business and financial information is as has been
         represented and there has been no material change in either Debtor's
         business, financial condition, or operations.

                                       10
<PAGE>   11

                  (w) Year 2000 Compliance. Each Debtor has made an assessment
         of the microchip and computer-based systems and the software used in
         its business and based upon such assessment believes that it will be
         "Year 2000 Compliant" by January 1, 2000. For purposes of this
         paragraph, "Year 2000 Compliant" means that all software, embedded
         microchips and other processing capabilities utilized by, and material
         to the business operations or financial condition of, each Debtor are
         able to interpret, store, transmit, receive and manipulate data on and
         involving all calendar dates correctly and without causing any abnormal
         ending scenarios in relation to dates in and after the Year 2000.

                  (x) No Additional Indebtedness. No Debtor will incur, create,
         assume, guarantee or permit to exist any indebtedness or liability,
         whether for borrowed money, for the deferred purchase price of
         property, as a contingent liability or otherwise, other than the
         Revolving Facility (defined herein) and the financing by South Hampton
         of insurance premiums. After the Coin Acquisition, the Debtors will not
         permit Coin to incur, create, assume, guarantee or permit to exist any
         indebtedness or liability, whether for borrowed money, for the deferred
         purchase price of property, as a contingent liability or otherwise,
         other than indebtedness of Coin for borrowed money existing on the date
         hereof and any refinancings (but not increases) of such indebtedness.

                  (y) No Liens. Debtors will not permit any Liens to exist as to
         the Collateral, the Real Property or any other assets of Debtors, other
         than (i) Liens on accounts receivable and inventory to secure the
         Revolving Facility, and (ii) Liens in favor of Secured Party. After the
         Coin Acquisition, the Debtors will not permit any Liens to exist on any
         property or assets of Coin, except for Liens granted to secure
         indebtedness of Coin permitted under Section 6(x) above, so long as
         such Liens only encumber the assets currently encumbered by such Liens.

                  (z) Real Property Lien. At Secured Party's request, South
         Hampton will grant to Secured Party a first priority deed of trust Lien
         on the South Hampton Refinery (as defined on the Schedule). The deed of
         trust evidencing such Lien shall be in form and substance satisfactory
         to Secured Party. Debtors will pay all fees and expenses incurred in
         connection therewith, including without limitation reasonable
         attorneys' fees and fees and expenses incurred in connection with any
         environmental appraisals, title policies and reports and other due
         diligence deemed necessary or advisable by Secured Party.

                  (aa) Distributions and Dividends. Debtors shall not upstream
         funds or make distributions of any kind, including loans, payables or
         intercompany advances, unless, at the time of such upstreaming, making
         or advancing no Event of Default exists and EBITDA (as defined below)
         for the trailing 12-month period is greater than $4,000,000, provided,
         however, that such prohibition shall not apply to ordinary course of
         business transactions among Texas Oil II, South Hampton, Gulf State and
         Coin. EBITDA shall mean, for Texas Oil II, South Hampton, Gulf State
         and Coin, on a consolidated basis, for any period, the sum of (i) net
         income before income tax and franchise taxes, plus (ii) depreciation,
         plus (iii) amortization, plus (iv) interest expense. In addition,
         Debtors shall not pay dividends or any other payments of any kind to
         their respective shareholders in or for any fiscal quarter, other than
         such dividends or payments which do not exceed (in aggregate) the
         lesser of

                                       11
<PAGE>   12

         (i) $150,000 or (ii) 50% of EBITDA minus interest expense for the
         quarter that the dividends are paid; provided that no such dividends or
         payments shall be allowed if Debtors and Guarantors are not in
         compliance with the Loan Documents or an Event of Default exists or
         would result from the making of such dividend or payment.

                  (bb) Working Capital Facility. South Hampton shall maintain a
         working capital credit facility in an amount not less than $2,000,000,
         with terms and conditions and from a lender acceptable to Secured Party
         in its reasonable discretion (the "Revolving Facility"), and Secured
         Party acknowledges that the current working capital facility maintained
         with Southwest Bank of Texas, N.A. is acceptable.

                  (cc) Revolving Facility Covenants. South Hampton agrees to
         comply with all of the terms, conditions and covenants in the documents
         evidencing or relating to the Revolving Facility.

         7. Events of Default. If any one of the following events (each of which
is herein called an "Event of Default") shall occur: (a) any Debtor or Guarantor
fails to pay any part of the Indebtedness when, or (b) any warranty or
representation of any Debtor or Guarantor in any Loan Document is materially
untrue, misleading or inaccurate, or (c) any Debtor or Guarantor defaults in the
performance of the covenants contained in Section 6(g) (other than subsection
(iii) thereof) and such default shall continue for 30 days after Debtor shall
have received notice thereof, or (d) any Debtor or Guarantor defaults in the
performance of any other covenant contained in this Agreement or any other Loan
Document, or (e) any Debtor or Guarantor breaches or defaults in the payment or
performance of any debt or other obligation owed by it to Secured Party or any
affiliate of Secured Party, and Secured Party has (without being obligated to do
so) declared such event, an Event of Default hereunder, or (f) any Debtor or
Guarantor breaches or defaults in the payment or performance of any other debt
or other obligation, whether now or hereafter existing, including without
limitation payment and performance of such obligations under the Revolving
Facility, or (g) there shall be any change in (i) the beneficial ownership and
control, directly or indirectly, of any outstanding voting securities or other
interests entitled (without regard to the occurrence of any contingency) to
elect or appoint members of the board of directors or other managing body of any
Debtor or Guarantor (other than Arabian Shield) or (ii) the beneficial ownership
and control, directly or indirectly, through a transaction or series of related
transactions of the majority of the outstanding voting securities or other
interests entitled (without regard to the occurrence of any contingency) to
elect or appoint members of the board of directors or other managing body of
Arabian Shield (a "change of control") and Secured Party notifies Arabian Shield
that, in Secured Party's judgment, such change of control is detrimental to
Secured Party's interests, such Event of Default to become effective 10 days
after such notice is given, or there is any merger, consolidation, dissolution,
liquidation, winding up or sale or other transfer of all or substantially all of
the assets of any Debtor or Guarantor pursuant to which there is a change of
control or cessation of any Debtor or Guarantor or the business of either, or
(h) any money judgment (including any civil and criminal penalties and fines) is
entered or filed against any Debtor or Guarantor in excess of $1,000,000, or (i)
any Debtor or Guarantor shall file a voluntary petition in bankruptcy, shall
apply for or permit the appointment by consent or acquiescence of a receiver,
conservator, administrator, custodian or trustee for itself or all or a
substantial part of its property, shall make an assignment for the benefit of
creditors or shall

                                       12
<PAGE>   13

be unable, fail or admit in writing its inability to pay its debts generally as
such debts become due, or (j) there shall have been filed against any Debtor or
Guarantor an involuntary petition in bankruptcy or any Debtor or Guarantor shall
suffer or permit the involuntary appointment of a receiver, conservator,
administrator, custodian or trustee for all or a substantial part of its
property or the issuance of a warrant of attachment, diligence, execution or
similar process against all or any substantial part of its property; unless, in
each case, such petition, appointment or process is fully bonded against,
vacated or dismissed within 30 days from its effective date, but no later than
10 days prior to any proposed disposition of any assets pursuant to any such
proceeding, or (k) if there is a material adverse change in the business or
financial condition or prospects of any Debtor or Guarantor, then, and in any
such event, Secured Party shall have the right to exercise any one or more of
the remedies hereinafter provided, or (j) if the Kingdom of Saudi Arabia's
Ministry of Finance or other governmental agency declares a default or demands
payment of the $11,000,000 note of Arabian Shield owing to the Kingdom of Saudi
Arabia and payment is not made within 90 days, or any legal action is filed or
other judicial proceeding is taken to collect such note.

         8. Remedies. Upon the occurrence of an Event of Default, in addition to
all rights and remedies of a secured party under the Uniform Commercial Code,
Secured Party may, at its option, at any time (a) declare the Indebtedness to be
immediately due and payable; (b) without demand or legal process, enter the
premises where the Collateral may be found and take possession of and remove the
Collateral, all without charge to or liability on the part of Secured Party; or
(c) require Debtors to assemble the Collateral, render it unusable, and crate,
pack, ship, and deliver the Collateral to Secured Party in such manner and at
such place as Secured Party may require, all at Debtors' sole cost and expense.
DEBTORS HEREBY EXPRESSLY WAIVE THEIR RIGHTS, IF ANY, TO (1) PRIOR NOTICE OF
REPOSSESSION AND (2) A JUDICIAL OR ADMINISTRATIVE HEARING PRIOR TO SUCH
REPOSSESSION. Secured Party may, at its option, ship, store and repair the
Collateral so removed and sell any or all of the Collateral at a public or
private sale or sales. Unless the Collateral is perishable or threatens to
decline speedily in value or is of a type customarily sold on a recognized
market, Secured Party will give Debtors reasonable notice of the time and place
of any public sale thereof or of the time after which any private sale or any
other intended disposition thereof is to be made, it being understood and agreed
that Secured Party may be a buyer at any such sale and no Debtor may, either
directly or indirectly, be a buyer at any such sale. The requirements, if any,
for reasonable notice will be met if such notice is mailed postage prepaid to
Debtors at their address shown above, at least five days before the time of sale
or disposition. After any such sale or disposition, Debtors shall be liable for
any deficiency of any Indebtedness remaining unpaid, with interest thereon at
the rate set forth in the Note.

         9. Cumulative Remedies/Marshaling. All remedies of Secured Party
hereunder and under the other Loan Documents are cumulative, are in addition to
any other remedies provided for by law or in equity, or under any other
provision of any of the Loan Documents, or under the provisions of any other
document, instrument or other writing executed by Debtors or any third party in
favor of Secured Party, all of which may, to the extent permitted by law, be
exercised concurrently or separately, and the exercise of any one remedy shall
not be deemed an election of such remedy or to preclude the exercise of any
other remedy. No failure on the part of Secured Party to exercise, and no delay
in exercising any right or remedy, shall operate as a waiver thereof or in any
way modify or be deemed to modify the terms of this Agreement or any other Loan
Document or the Indebtedness,

                                       13
<PAGE>   14

nor shall any single or partial exercise by Secured Party of any right or remedy
preclude any other or further exercise of the same or any other right or remedy.
Secured Party shall not be under any obligation to marshal any assets in favor
of Debtors, any Guarantor or any other person or against or in payment of any or
all of the Indebtedness.

          10. Assignment. Secured Party may transfer or assign all or any part
of the Indebtedness and the Loan Documents without releasing Debtors or the
Collateral, and upon such transfer or assignment the assignee or holder shall be
entitled to all the rights, powers, privileges and remedies of Secured Party to
the extent assigned or transferred. The obligations of Debtors shall not be
subject, as against any such assignee or transferee, to any defense, set-off, or
counter-claim available to Debtors against Secured Party and any such defense,
set-off, or counter-claim may be asserted only against Secured Party.

          11. Time is of the Essence. Time and manner of performance by Debtors
of their duties and obligations under the Loan Documents is of the essence. If
any Debtor shall fail to comply with any provision of any of the Loan Documents,
Secured Party shall have the right, but shall not be obligated, to take action
to address such non-compliance, in whole or in part, and all moneys spent and
expenses and obligations incurred or assumed by Secured Party shall be paid by
Debtors upon demand and shall be added to the Indebtedness. Any such action by
Secured Party shall not constitute a waiver of any Debtor's default.

          12. ENFORCEMENT. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS AND JUDICIAL DECISIONS OF THE STATE OF
ILLINOIS, WITHOUT REGARD TO THAT STATE'S PRINCIPLES OF CONFLICTS OF LAWS.
DEBTORS HEREBY SUBMIT TO THE PERSONAL JURISDICTION OF ANY STATE OR FEDERAL COURT
LOCATED WITHIN COOK COUNTY, ILLINOIS, AND IRREVOCABLY AGREES THAT, SUBJECT TO
SECURED PARTY'S ELECTION (AND WITHOUT LIMITING SECURED PARTY'S RIGHT TO COMMENCE
AN ACTION IN ANY OTHER JURISDICTION), ALL ACTIONS OR PROCEEDINGS ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS SHALL BE
LITIGATED IN SUCH COURTS. EACH DEBTOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH
ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF
THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND
IRREVOCABLY AGREES TO BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS OR THE INDEBTEDNESS, SUBJECT TO ANY
RIGHTS OF APPEAL WHICH ANY DEBTOR MAY HAVE UNDER ILLINOIS LAW. WITHOUT LIMITING
ANY OTHER MANNER OF SERVICE AVAILABLE TO SECURED PARTY, EACH DEBTOR EXPRESSLY
WAIVES PERSONAL SERVICE OF PROCESS IN CONNECTION WITH ANY SUCH ACTION OR
PROCEEDING AND CONSENTS TO SERVICE BY CERTIFIED MAIL, POSTAGE PREPAID, DIRECTED
TO THE LAST KNOWN ADDRESS OF DEBTORS, WHICH SERVICE SHALL BE DEEMED COMPLETED
WITHIN 10 DAYS AFTER THE DATE OF MAILING THEREOF.

         13. Further Assurance; Notice. Debtors shall at their expense, execute
and deliver such documents and do such further acts as Secured Party may from
time to time reasonably require to assure and confirm the rights created or
intended to be created hereunder, to carry out the intention or facilitate the
performance of the terms of the Loan Documents or to assure the validity,
perfection, priority or enforceability of any security interest created
hereunder. Debtors agree to execute any instrument or instruments necessary or
expedient for filing, recording, perfecting, notifying, foreclosing, and/or
liquidating of Secured Party's interest in the Collateral upon request of, and
as

                                       14
<PAGE>   15

determined by, Secured Party, and Debtors hereby specifically authorize Secured
Party to prepare and file Uniform Commercial Code financing statements and other
documents and to execute same for and on behalf of Debtors as Debtors'
attorney-in-fact, irrevocably and coupled with an interest, for such purposes.
All notices required or otherwise given by either party shall be in writing and
shall be delivered by hand, by registered or certified first class United States
mail, return receipt requested, or by overnight courier to the other party at
its address stated herein or at such other address as the other party may from
time to time designate by written notice. All notices shall be deemed given when
received, when delivery is refused or when returned for failure to be called
for. Each provision of this Agreement shall remain in full force and effect
until all of the Indebtedness is fully, finally and indefeasibly satisfied and,
notwithstanding anything in this Agreement or implied by law to the contrary,
the agreements of Debtors and Secured Party set forth in Section 6(q) shall
survive the full, final and indefeasible satisfaction of the Indebtedness.

          14. WAIVER OF JURY TRIAL. DEBTORS AND SECURED PARTY HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING IN CONNECTION WITH ANY OF THE LOAN DOCUMENTS. DEBTORS AND SECURED PARTY
ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS
RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THE
LOAN DOCUMENTS, AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR
RELATED FUTURE DEALINGS. DEBTORS AND SECURED PARTY FURTHER WARRANT AND REPRESENT
THAT EACH HAS REVIEWED THIS WAIVER WITH THEIR LEGAL COUNSEL AND THAT EACH
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL.

          15. Joint and Several Obligation. If this Agreement is executed by
more than one person as Debtor, each such Debtor hereby acknowledges it is
jointly and severally liable for and unconditionally guarantees the prompt and
full payment and performance of all obligations of each other Debtor hereunder
and under the other Loan Documents.

          16. Complete Agreement. The Loan Documents embody the entire agreement
among the parties hereto superseding all prior commitments, agreements,
representations, and understandings, whether written or oral relating to the
subject matter hereof, and may not be contradicted or varied by evidence of
prior, contemporaneous, or subsequent oral agreements or discussions of the
parties hereto. The Loan Documents may not be altered, modified or terminated in
any manner except by a writing duly signed by the parties thereto. Debtors and
Secured Party intend the Loan Documents to be valid and binding and no
provisions hereof and thereof which may be deemed unenforceable shall in any way
invalidate any other provisions of the Loan Documents, all of which shall remain
in full force and effect. The Loan Documents shall be binding upon the
respective successors, legal representatives, and assigns of the parties. This
Agreement may be executed in multiple counterparts, each of which will be deemed
an original, but which together shall constitute the same document.

         17. Publication. Secured Party shall (at Secured Party's sole expense)
have the right to secure printed publicity concerning the transactions
contemplated by this Agreement through newspapers, brochures, and other media.

                            [signature page follows]

                                       15
<PAGE>   16

         IN WITNESS WHEREOF, Secured Party and Debtors have each signed this
Agreement as of the day and year first above written.

                                       HELLER FINANCIAL LEASING, INC.

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

                                       SOUTH HAMPTON REFINING CO.

                                       By:
                                          --------------------------------------
                                          Nicholas N. Carter
                                          President

                                       GULF STATE PIPELINE COMPANY, INC.

                                       By:
                                          --------------------------------------
                                          Nicholas N. Carter
                                          President

                           LOAN AND SECURITY AGREEMENT
                                 SIGNATURE PAGE

<PAGE>   17

                                   SCHEDULE 1

                                   Collateral

      The Collateral shall, in part, consist of all present and future
machinery, equipment, storage tanks, truck and rail loading terminal and
equipment, transportation equipment, and all other equipment including all
improvements, attachments, substitutions, additions, replacements, and proceeds
thereof (cash and non-cash) now owned or hereafter acquired which is located at
7752 FM 418, Silsbee, Texas 77656 and such other locations as such assets may be
located.

Record Owner: South Hampton Refining Co.

Legal Description of Real Estate to which certain Collateral is attached:
[See attached]

<PAGE>   18

                                    EXHIBIT A

                                  Form of Note

<PAGE>   19
                                                              Loan No.:________

                                 PROMISSORY NOTE

$3,500,000.00                                                  December 30, 1999

     FOR VALUE RECEIVED, SOUTH HAMPTON REFINING CO., a Texas corporation, and
GULF STATE PIPE LINE COMPANY, INC., a Texas corporation ("Makers"), jointly and
severally, promise to pay to the order of HELLER FINANCIAL LEASING, INC., a
Delaware corporation (together with any holder of this Note, "Payee"), at its
office located at 500 West Monroe Street, Chicago, Illinois 60661, or at such
other place as Payee may from time to time designate, the principal sum of THREE
MILLION FIVE HUNDRED THOUSAND and 00/100 Dollars ($3,500,000.00), together with
interest thereon at a fixed rate equal to 10.55% per annum. Principal and
interest shall be payable in 47 consecutive monthly installments commencing
February 1, 2000 and continuing on the same day of each consecutive calendar
month thereafter until this Note is fully paid, each such installment in the
amount of EIGHTY-NINE THOUSAND SIX HUNDRED NINETY-SIX and 37/100 Dollars
($89,696.37); provided, however, that in any and all events the final
installment payment hereunder shall be in the amount of the entire then
outstanding principal balance hereunder, plus all accrued and unpaid interest,
charges and other amounts owing hereunder or under the Security Agreement
(defined below). All payments shall be applied first to interest and then to
principal. Interest shall be computed on the basis of a 360 day year comprised
of 30-day months.

     Notwithstanding the foregoing, if at any time implementation of any
provision hereof shall cause the interest contracted for or charged herein or
collectable hereunder to exceed the applicable lawful maximum rate, then the
interest shall be limited to such applicable lawful maximum.

     This Note is secured by, among other things, the collateral described in
the Loan and Security Agreement dated as of the date hereof between Makers and
Payee (the "Loan and Security Agreement;" and together with all related
documents and instruments, the "Loan Documents"), and other Loan Documents, to
which reference is made for a statement of the nature and extent of protection
and security afforded, certain rights of Payee and certain rights and
obligations of Makers, including Makers' rights, if any, to prepay the principal
balance hereof; provided, however, that in addition to any other sum payable
hereunder, under the Loan and Security Agreement or any of the other Loan
Documents, in the event of a prepayment of the principal balance hereunder,
whether voluntary, following acceleration or otherwise, Makers shall pay to
Payee together with such prepayment a Breakage Fee (defined below), which
Breakage Fee, together with the amounts payable under Section 4 of the Loan and
Security Agreement, if any, represents liquidated damages to Payee for the loss
of its bargain and not a penalty. As used herein, the term "Breakage Fee" shall
mean the amount, if any, by which (A) the present value, in the aggregate, of
the then remaining installments of principal and interest due hereunder, absent
the prepayment, using a discount rate equal to (i) the yield to maturity as of
the date two (2) days prior to the date of the prepayment on United States
Treasury securities with a final maturity approximately equal to the remaining
term hereof, absent the prepayment, as published in The Wall Street Journal,
plus (ii) one percent (1.00%), exceeds (B) the then outstanding principal
balance hereunder, absent the prepayment.

     Time is of the essence hereof. If payment of any installment or any other
sum due under this Note or the Loan Documents is not paid when due, Makers
jointly and severally agree to pay a late charge equal to the lesser of (i) five
cents (5 cent) per dollar on, and in addition to, the amount of each such
payment, or (ii) the maximum amount Payee is permitted to charge by law. In the
event of the occurrence of an Event of Default (as defined in the Loan and
Security Agreement), then the entire unpaid principal balance hereof with
accrued and unpaid interest thereon, together with all other sums payable under
this Note or the Loan Documents, shall, at the option of Payee and without
notice or demand, become immediately due and payable, such accelerated balance
bearing interest until paid at the rate of five and 00/100 percent (5.00%) per
annum above the fixed rate set forth in the first paragraph of this Note.

<PAGE>   20

     Makers and all endorsers, guarantors or any others who may at any time
become liable for the payment hereof hereby consent to any and all extensions of
time, renewals, waivers and modifications of, and substitutions or release of
security or of any party primarily or secondarily liable on, or with respect to,
this Note or any of the Loan Documents or any of the terms and provisions
thereof that may be made, granted or consented to by Payee, and agree that suit
may be brought and maintained against any one or more of them, at the election
of Payee, without joinder of the others as parties thereto, and that Payee shall
not be required to first foreclose, proceed against, or exhaust any security
herefor, in order to enforce payment of this Note by any one or more of them.
Makers and all endorsers, guarantors or any others who may at any time become
liable for the payment hereof hereby severally waive presentment, demand for
payment, notice of nonpayment, protest, notice of protest, notice of dishonor,
and all other notices in connection with this Note, filing of suit and diligence
in collecting this Note or enforcing any of the security herefor, and, without
limiting any provision of any of the Loan Documents, agree to pay, if permitted
by law, all expenses incurred in collection, including reasonable attorneys'
fees, and hereby waive all benefits of valuation, appraisement and exemption
laws.

     If there be more than one Maker, all the obligations, promises, agreements
and covenants of Maker under this Note are joint and several.

     THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS AND DECISIONS OF THE STATE OF ILLINOIS WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. AT PAYEE'S ELECTION AND WITHOUT LIMITING PAYEE'S
RIGHT TO COMMENCE AN ACTION IN ANY OTHER JURISDICTION, MAKERS HEREBY SUBMIT TO
THE EXCLUSIVE JURISDICTION AND VENUE OF ANY COURT (FEDERAL, STATE OR LOCAL)
HAVING SITUS WITHIN THE STATE OF ILLINOIS, EXPRESSLY WAIVES PERSONAL SERVICE OF
PROCESS AND CONSENTS TO SERVICE BY CERTIFIED MAIL, POSTAGE PREPAID, DIRECTED TO
THE LAST KNOWN ADDRESS OF MAKERS, WHICH SERVICE SHALL BE DEEMED COMPLETED WITHIN
TEN (10) DAYS AFTER THE DATE OF MAILING THEREOF.

     MAKERS HEREBY WAIVE THEIR RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS NOTE. THIS WAIVER IS INFORMED AND
FREELY MADE. MAKERS ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO
ENTER INTO A BUSINESS RELATIONSHIP, THAT PAYEE HAS ALREADY RELIED ON THE WAIVER
IN MAKING THE LOAN EVIDENCED BY THIS NOTE, AND THAT PAYEE WILL CONTINUE TO RELY
ON THE WAIVER IN ITS RELATED FUTURE DEALINGS. MAKERS FURTHER WARRANT AND
REPRESENT THAT THEY HAVE REVIEWED THIS WAIVER WITH LEGAL COUNSEL AND THAT THEY
KNOWINGLY AND VOLUNTARILY WAIVE THEIR JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL.

                                   MAKERS:

                                   SOUTH HAMPTON REFINING CO.

                                   By:
                                      ----------------------------------------
                                       Nicholas N. Carter
                                       President

                                   GULF STATE PIPELINE COMPANY, INC.

                                   By:
                                      ----------------------------------------
                                       Nicholas N. Carter
                                       President

<PAGE>   21
                                                          Loan No. _____________

                                    GUARANTY

         For valuable consideration, the receipt whereof is hereby acknowledged,
and to induce HELLER FINANCIAL LEASING, INC., a Delaware corporation ("Lender"),
to make loans or advances, or extend credit or financial accommodations to SOUTH
HAMPTON REFINING CO. and GULF STATE PIPE LINE COMPANY, INC. ("Debtors"), or to
continue the same, but without requiring Lender to do so, the undersigned,
ARABIAN SHIELD DEVELOPMENT COMPANY, a Delaware corporation (hereinafter called
"Guarantor"), promises to pay to Lender, on demand, in lawful money of the
United States, the due and punctual payment and performance of all indebtedness
of Debtors to Lender no matter how acquired by Lender. The word "indebtedness"
is used herein in its most comprehensive sense and includes any and all loans or
performance obligations, notes, security agreements and liabilities of Debtors
to Lender including those existing, now or hereafter made, entered into,
incurred, created or owing, however arising, whether due or not due, absolute or
contingent, liquidated or unliquidated, determined or undetermined, and whether
Debtors may be liable individually or jointly with others, or whether recovery
upon such indebtedness may be or hereafter become barred by any statute of
limitations, or whether such indebtedness may be or hereafter become otherwise
unenforceable, including without limitation indebtedness of Debtors to Lender
under that certain Loan and Security Agreement of even date herewith by and
among Debtors and Lender (the "Loan Agreement"). This is a guaranty of payment
and performance and not of collection. Guarantor's obligations hereunder shall
be unconditional (and shall not be subject to any defense, setoff, counterclaim
or recoupment whatsoever) irrespective of the genuineness, validity, regularity
or enforceability of the indebtedness or any conduct of Debtors and/or Lender
which might constitute a legal or equitable discharge of a surety, guarantor or
guaranty.

         This is an absolute, unconditional and continuing guaranty relating to
the indebtedness, including that arising under successive transactions which
shall either continue the indebtedness or from time to time renew it after it
has been satisfied or create new indebtedness. This Guaranty shall not apply to
any indebtedness created after actual receipt by Lender of written notice of its
revocation as to future transactions, except that indebtedness committed to
prior to such date but consummated and actually created subsequent to such date
shall be covered hereby.

         The obligations hereunder are joint and several, independent of the
obligations of Debtors or the obligations of any other person(s) or guarantor(s)
who may be liable to Lender in whole or in part for the indebtedness, and a
separate action or actions may be brought and prosecuted against Guarantor or
any of them whether action is brought against Debtors alone or whether Debtors
be joined in any such action or actions; and Guarantor waives the benefit of any
statute of limitations affecting its liability hereunder or the enforcement
thereof.

         Guarantor authorizes Lender, without notice or consent and without
affecting, impairing or discharging in whole or in part its liability hereunder,
from time to time to (a) renew, modify, amend, compromise, extend, accelerate,
discharge or otherwise change the

<PAGE>   22

time for payment of, or otherwise change the terms or provisions of the
indebtedness or any part thereof, including increasing or decreasing the rate of
interest thereon; (b) take and hold collateral for the payment of this Guaranty
or the indebtedness guaranteed, and exchange, enforce, waive, and release any
such collateral; (c) apply such collateral and direct the order or manner of
sale thereof as Lender in its discretion may determine; or (d) release or
substitute in whole or in part any one or more of the endorsers, Guarantor or
anyone else who may be partially or wholly liable for any part of the
indebtedness. Lender may without notice assign this Guaranty in whole or in
part.

         Guarantor waives any right to require Lender to (a) proceed against or
exhaust remedies against Debtors; (b) proceed against or exhaust any collateral
given by Debtors or Guarantor; (c) pursue any other remedy in Lender's power
whatsoever; or (d) proceed against any other person(s) or guarantor(s) who may
be liable to Lender in whole or in part for the indebtedness. Guarantor waives
any defense arising by reason of any disability or other defense of Debtors or
by reason of the cessation or modification from any cause whatsoever of the
liability of Debtors. Guarantor waives diligence, all presentments, demands for
performance, notices of non-performance, default, protests, notices of protest,
notices of dishonor, notices of acceptance of this Guaranty and of the
existence, creation, or incurring of new, changed, modified, increased or
additional indebtedness, and all other notices of every and any kind. GUARANTOR
HEREBY WAIVES ANY AND ALL NOTICE OF LENDER'S INTENT TO ACCELERATE THE
INDEBTEDNESS AND FURTHER WAIVES ANY NOTICE OF ACCELERATION.

         Lender shall have a claim and a right of setoff against all moneys,
securities and other property of Guarantor now or hereafter in the possession of
Lender whether held in a special account for safekeeping or otherwise, and such
right of setoff may be exercised without demand upon Guarantor or notice by
Lender. No right of setoff shall be deemed to have been waived by any act or
conduct on the part of Lender or by any neglect to exercise such right of setoff
or by any delay in so doing, and every right of setoff shall continue in full
force and effect until such right of setoff is specifically waived or released
by an instrument in writing executed by Lender.

         Guarantor waives and agrees not to assert any claim Guarantor may now
or later have against Debtors until such time as the indebtedness is fully,
finally and indefeasibly paid to Lender. Guarantor agrees that this paragraph is
intended to benefit Debtors and is relied upon by Lender. As used in this
paragraph, the term 'claim' is defined in the Bankruptcy Code, Section 101.
Guarantor further hereby irrevocably waives and releases any right of
subrogation (whether contractual, under Section 509 of the Bankruptcy Code or
otherwise), reimbursement, contribution, exoneration, or other similar right, or
indemnity, or any right of recourse to collateral for any of the indebtedness
until such time as the indebtedness is fully, finally and indefeasibly paid to
Lender.

         Guarantor agrees to pay reasonable attorneys' fees and all other costs
and expenses which may be incurred by Lender in the enforcement of this Guaranty
or otherwise relating to this Guaranty including, without limitation, in
connection with any lawsuit, arbitration or other alternative dispute resolution
proceeding, appeal, judgment enforcement action, bankruptcy proceeding
(including, without limitation, any relief from stay and/or adequate

                                       2
<PAGE>   23

protection motions, cash collateral disputes, assumption/rejection motions and
disputes or objections to any proposed disclosure statement or reorganization
plan) or other legal proceeding in any way related to this Guaranty. Guarantor
acknowledges and agrees that the preceding sentence shall survive and not be
merged with any judgment in connection with any exercise of any right or remedy
by Lender in connection with this Guaranty. Guarantor further agrees that all
reasonable attorneys' fees, costs and expenses incurred in pursuing or enforcing
rights and/or any collateral or security shall constitute so much additional
indebtedness hereby guaranteed.

         Guarantor hereby expressly agrees to deliver any and all information
required to be delivered by Guarantor under Section 6(g) of the Loan Agreement,
and Guarantor hereby expressly affirms the representations contained in, and
agrees to comply with the agreements and covenants set forth in, 6(h), 6(i),
6(j), 6(k), 6(l), 6(m), 6(u) and 6(w) of the Loan Agreement to the same extent
as if such provisions were contained herein and Guarantor were the "Debtor"
named therein.

         Guarantor further agrees that this Guaranty shall continue to be
effective or be reinstated, as the case may be, if at any time payment, or any
part thereof, on the indebtedness is rescinded or must otherwise be restored by
Lender upon the bankruptcy or reorganization of Debtors or otherwise.

         Any indebtedness of Debtors now or hereafter held by or owing to
Guarantor is hereby subordinated to Lender and such indebtedness, if requested
by Lender, shall be collected, enforced, and received by Guarantor as trustee
for Lender and promptly paid over to Lender.

         In this Guaranty, the singular shall include the plural, the plural
shall include the singular, and the use of any gender shall be applicable to all
genders. If any Guarantor is a corporation, by executing and delivering this
Guaranty, it and the officers thereof signing on its behalf represent and
warrant that the execution and delivery of this Guaranty has been duly
authorized by all necessary and appropriate corporate and shareholder action.

         In case any one or more of the provisions contained in this Guaranty
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.

         Guarantor agrees to notify Lender promptly upon learning that a "change
of control" (as defined in the Loan Agreement) with respect to Guarantor has
occurred or is imminent.

         Guarantor consents and agrees that, without notice to or by Guarantor
and without affecting or impairing in any way the obligations or liability of
Guarantor hereunder, Lender may, from time to time before or after revocation of
this Guaranty, exercise any right or remedy it may have with respect to any or
all of the indebtedness or any property securing any or all of the indebtedness
or any guaranty thereof, including, without limitation, judicial foreclosure,
nonjudicial foreclosure, exercise of a power of sale, and taking a deed,
assignment or transfer in lieu of foreclosure as to any such property, and
Guarantor expressly

                                       3
<PAGE>   24

waives any defense based upon the exercise of any such right or remedy,
notwithstanding the effect thereof upon any of Guarantor's rights, including,
without limitation, any destruction of Guarantor's right of subrogation against
Debtors and any destruction of Guarantor's right of contribution or other right
against any other guarantor of any or all of the indebtedness or against any
other person by operation of any statutes or rules of law now or hereafter in
effect, or otherwise.

         THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS AND JUDICIAL DECISIONS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO
THAT STATE'S PRINCIPLES OF CONFLICTS OF LAWS. GUARANTOR HEREBY SUBMITS TO THE
PERSONAL JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN COOK COUNTY,
ILLINOIS, AND IRREVOCABLY AGREES THAT, SUBJECT TO LENDER'S ELECTION (AND WITHOUT
LIMITING LENDER'S RIGHT TO COMMENCE AN ACTION IN ANY OTHER JURISDICTION), ALL
ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS GUARANTY SHALL BE
LITIGATED IN SUCH COURTS. GUARANTOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH
ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF
THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND
IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION
WITH THIS GUARANTY, SUBJECT TO SUCH RIGHT OF APPEAL AS GUARANTOR MAY BE ENTITLED
UNDER ILLINOIS LAW. WITHOUT LIMITING ANY OTHER MANNER OF SERVICE AVAILABLE TO
LENDER, GUARANTOR EXPRESSLY WAIVES PERSONAL SERVICE OF PROCESS IN CONNECTION
WITH ANY SUCH ACTION OR PROCEEDING AND CONSENTS TO SERVICE BY CERTIFIED MAIL,
POSTAGE PREPAID, DIRECTED TO THE LAST KNOWN ADDRESS OF GUARANTOR, WHICH SERVICE
SHALL BE DEEMED COMPLETED WITHIN TEN (10) DAYS AFTER THE DATE OF MAILING
THEREOF.

        [Remainder of page intentionally blank. Signature pages follow.]

                                       4
<PAGE>   25

         IN WITNESS WHEREOF, the undersigned Guarantor, and each of them (if
there be more than one), has executed and delivered this Guaranty independent of
each other and not relying upon or in consideration of the execution hereof
by any other of them, on this 30th day of December, 1999.

                                        GUARANTOR:

                                        ARABIAN SHIELD DEVELOPMENT COMPANY

                                        By:
                                           -------------------------------------
                                           Hatem El-Khalidi
                                           President and Chief Executive Officer

                                    GUARANTY
                                 SIGNATURE PAGE

<PAGE>   26

                                                          Loan No.______________

                                    GUARANTY

     For valuable consideration, the receipt whereof is hereby acknowledged, and
to induce HELLER FINANCIAL LEASING, INC., a Delaware corporation ("Lender"), to
make loans or advances, or extend credit or financial accommodations to SOUTH
HAMPTON REFINING CO. and GULF STATE PIPE LINE COMPANY, INC. ("Debtors"), or to
continue the same, but without requiring Lender to do so, the undersigned,
AMERICAN SHIELD REFINING COMPANY, a Delaware corporation (hereinafter called
"Guarantor"), promises to pay to Lender, on demand, in lawful money of the
United States, the due and punctual payment and performance of all indebtedness
of Debtors to Lender no matter how acquired by Lender. The word "indebtedness"
is used herein in its most comprehensive sense and includes any and all loans or
performance obligations, notes, security agreements and liabilities of Debtors
to Lender including those existing, now or hereafter made, entered into,
incurred, created or owing, however arising, whether due or not due, absolute or
contingent, liquidated or unliquidated, determined or undetermined, and whether
Debtors may be liable individually or jointly with others, or whether recovery
upon such indebtedness may be or hereafter become barred by any statute of
limitations, or whether such indebtedness may be or hereafter become otherwise
unenforceable, including without limitation indebtedness of Debtors to Lender
under that certain Loan and Security Agreement of even date herewith by and
among Debtors and Lender (the "Loan Agreement"). This is a guaranty of payment
and performance and not of collection. Guarantor's obligations hereunder shall
be unconditional (and shall not be subject to any defense, setoff, counterclaim
or recoupment whatsoever) irrespective of the genuineness, validity, regularity
or enforceability of the indebtedness or any conduct of Debtors and/or Lender
which might constitute a legal or equitable discharge of a surety, guarantor or
guaranty.

     This is an absolute, unconditional and continuing guaranty relating to the
indebtedness, including that arising under successive transactions which shall
either continue the indebtedness or from time to time renew it after it has been
satisfied or create new indebtedness. This Guaranty shall not apply to any
indebtedness created after actual receipt by Lender of written notice of its
revocation as to future transactions, except that indebtedness committed to
prior to such date but consummated and actually created subsequent to such date
shall be covered hereby.

     The obligations hereunder are joint and several, independent of the
obligations of Debtors or the obligations of any other person(s) or guarantor(s)
who may be liable to Lender in whole or in part for the indebtedness, and a
separate action or actions may be brought and prosecuted against Guarantor or
any of them whether action is brought against Debtors alone or whether Debtors
be joined in any such action or actions; and Guarantor waives the benefit of any
statute of limitations affecting its liability hereunder or the enforcement
thereof.

     Guarantor authorizes Lender, without notice or consent and without
affecting, impairing or discharging in whole or in part its liability hereunder,
from time to time to (a) renew, modify, amend, compromise, extend, accelerate,
discharge or otherwise change the

<PAGE>   27
time for payment of, or otherwise change the terms or provisions of the
indebtedness or any part thereof, including increasing or decreasing the rate of
interest thereon; (b) take and hold collateral for the payment of this Guaranty
or the indebtedness guaranteed, and exchange, enforce, waive, and release any
such collateral; (c) apply such collateral and direct the order or manner of
sale thereof as Lender in its discretion may determine; or (d) release or
substitute in whole or in part any one or more of the endorsers, Guarantor or
anyone else who may be partially or wholly liable for any part of the
indebtedness. Lender may without notice assign this Guaranty in whole or in
part.

     Guarantor waives any right to require Lender to (a) proceed against or
exhaust remedies against Debtors; (b) proceed against or exhaust any collateral
given by Debtors or Guarantor; (c) pursue any other remedy in Lender's power
whatsoever; or (d) proceed against any other person(s) or guarantor(s) who may
be liable to Lender in whole or in part for the indebtedness. Guarantor waives
any defense arising by reason of any disability or other defense of Debtors or
by reason of the cessation or modification from any cause whatsoever of the
liability of Debtors. Guarantor waives diligence, all presentments, demands for
performance, notices of non_performance, default, protests, notices of protest,
notices of dishonor, notices of acceptance of this Guaranty and of the
existence, creation, or incurring of new, changed, modified, increased or
additional indebtedness, and all other notices of every and any kind. GUARANTOR
HEREBY WAIVES ANY AND ALL NOTICE OF LENDER'S INTENT TO ACCELERATE THE
INDEBTEDNESS AND FURTHER WAIVES ANY NOTICE OF ACCELERATION.

     Lender shall have a claim and a right of setoff against all moneys,
securities and other property of Guarantor now or hereafter in the possession of
Lender whether held in a special account for safekeeping or otherwise, and such
right of setoff may be exercised without demand upon Guarantor or notice by
Lender. No right of setoff shall be deemed to have been waived by any act or
conduct on the part of Lender or by any neglect to exercise such right of setoff
or by any delay in so doing, and every right of setoff shall continue in full
force and effect until such right of setoff is specifically waived or released
by an instrument in writing executed by Lender.

     Guarantor waives and agrees not to assert any claim Guarantor may now or
later have against Debtors until such time as the indebtedness is fully, finally
and indefeasibly paid to Lender. Guarantor agrees that this paragraph is
intended to benefit Debtors and is relied upon by Lender. As used in this
paragraph, the term 'claim' is defined in the Bankruptcy Code, Section 101.
Guarantor further hereby irrevocably waives and releases any right of
subrogation (whether contractual, under Section 509 of the Bankruptcy Code or
otherwise), reimbursement, contribution, exoneration, or other similar right, or
indemnity, or any right of recourse to collateral for any of the indebtedness
until such time as the indebtedness is fully, finally and indefeasibly paid to
Lender.

     Guarantor agrees to pay reasonable attorneys' fees and all other costs and
expenses which may be incurred by Lender in the enforcement of this Guaranty or
otherwise relating to this Guaranty including, without limitation, in connection
with any lawsuit, arbitration or other alternative dispute resolution
proceeding, appeal, judgment enforcement action, bankruptcy proceeding
(including, without limitation, any relief from stay and/or adequate

                                       2

<PAGE>   28

protection motions, cash collateral disputes, assumption/rejection motions and
disputes or objections to any proposed disclosure statement or reorganization
plan) or other legal proceeding in any way related to this Guaranty. Guarantor
acknowledges and agrees that the preceding sentence shall survive and not be
merged with any judgment in connection with any exercise of any right or remedy
by Lender in connection with this Guaranty. Guarantor further agrees that all
reasonable attorneys' fees, costs and expenses incurred in pursuing or enforcing
rights and/or any collateral or security shall constitute so much additional
indebtedness hereby guaranteed.

     Guarantor hereby expressly agrees to deliver any and all information
required to be delivered by Guarantor under Section 6(g) of the Loan Agreement,
and Guarantor hereby expressly affirms the representations contained in, and
agrees to comply with the agreements and covenants set forth in, 6(h), 6(i),
6(j), 6(k), 6(l), 6(m), 6(u) and 6(w) of the Loan Agreement to the same extent
as if such provisions were contained herein and Guarantor were the "Debtor"
named therein.

     Guarantor further agrees that this Guaranty shall continue to be effective
or be reinstated, as the case may be, if at any time payment, or any part
thereof, on the indebtedness is rescinded or must otherwise be restored by
Lender upon the bankruptcy or reorganization of Debtors or otherwise.

     Any indebtedness of Debtors now or hereafter held by or owing to Guarantor
is hereby subordinated to Lender and such indebtedness, if requested by Lender,
shall be collected, enforced, and received by Guarantor as trustee for Lender
and promptly paid over to Lender.

     In this Guaranty, the singular shall include the plural, the plural shall
include the singular, and the use of any gender shall be applicable to all
genders. If any Guarantor is a corporation, by executing and delivering this
Guaranty, it and the officers thereof signing on its behalf represent and
warrant that the execution and delivery of this Guaranty has been duly
authorized by all necessary and appropriate corporate and shareholder action.

     In case any one or more of the provisions contained in this Guaranty should
be invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby.

     Guarantor consents and agrees that, without notice to or by Guarantor and
without affecting or impairing in any way the obligations or liability of
Guarantor hereunder, Lender may, from time to time before or after revocation of
this Guaranty, exercise any right or remedy it may have with respect to any or
all of the indebtedness or any property securing any or all of the indebtedness
or any guaranty thereof, including, without limitation, judicial foreclosure,
nonjudicial foreclosure, exercise of a power of sale, and taking a deed,
assignment or transfer in lieu of foreclosure as to any such property, and
Guarantor expressly
                                       3

<PAGE>   29
 waives any defense based upon the exercise of any such right or remedy,
notwithstanding the effect thereof upon any of Guarantor's rights, including,
without limitation, any destruction of Guarantor's right of subrogation against
Debtors and any destruction of Guarantor's right of contribution or other right
against any other guarantor of any or all of the indebtedness or against any
other person by operation of any statutes or rules of law now or hereafter in
effect, or otherwise.

     THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS AND JUDICIAL DECISIONS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO
THAT STATE'S PRINCIPLES OF CONFLICTS OF LAWS. GUARANTOR HEREBY SUBMITS TO THE
PERSONAL JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN COOK COUNTY,
ILLINOIS, AND IRREVOCABLY AGREES THAT, SUBJECT TO LENDER'S ELECTION (AND WITHOUT
LIMITING LENDER'S RIGHT TO COMMENCE AN ACTION IN ANY OTHER JURISDICTION), ALL
ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS GUARANTY SHALL BE
LITIGATED IN SUCH COURTS. GUARANTOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH
ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF
THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND
IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION
WITH THIS GUARANTY, SUBJECT TO SUCH RIGHT OF APPEAL AS GUARANTOR MAY BE ENTITLED
UNDER ILLINOIS LAW. WITHOUT LIMITING ANY OTHER MANNER OF SERVICE AVAILABLE TO
LENDER, GUARANTOR EXPRESSLY WAIVES PERSONAL SERVICE OF PROCESS IN CONNECTION
WITH ANY SUCH ACTION OR PROCEEDING AND CONSENTS TO SERVICE BY CERTIFIED MAIL,
POSTAGE PREPAID, DIRECTED TO THE LAST KNOWN ADDRESS OF GUARANTOR, WHICH SERVICE
SHALL BE DEEMED COMPLETED WITHIN TEN (10) DAYS AFTER THE DATE OF MAILING
THEREOF.

        [Remainder of page intentionally blank. Signature pages follow.]

                                       4

<PAGE>   30

     IN WITNESS WHEREOF, the undersigned Guarantor, and each of them (if there
be more than one), has executed and delivered this Guaranty independent of each
other and not relying upon or in consideration of the execution hereof by any
other of them, on this 30th day of December, 1999.

                                       GUARANTOR:

                                       AMERICAN SHIELD REFINING COMPANY

                                       By:
                                          --------------------------------------
                                          Hatem El-Khalidi
                                          President and Chief Executive Officer

                                    GUARANTY
                                 SIGNATURE PAGE
<PAGE>   31

                                                          Loan No. _____________

                                    GUARANTY

         For valuable consideration, the receipt whereof is hereby acknowledged,
and to induce HELLER FINANCIAL LEASING, INC., a Delaware corporation ("Lender"),
to make loans or advances, or extend credit or financial accommodations to SOUTH
HAMPTON REFINING CO. and GULF STATE PIPE LINE COMPANY, INC. ("Debtors"), or to
continue the same, but without requiring Lender to do so, the undersigned, TEXAS
OIL AND CHEMICAL CO. II, INC., a Texas corporation (hereinafter called
"Guarantor"), promises to pay to Lender, on demand, in lawful money of the
United States, the due and punctual payment and performance of all indebtedness
of Debtors to Lender no matter how acquired by Lender. The word "indebtedness"
is used herein in its most comprehensive sense and includes any and all loans or
performance obligations, notes, security agreements and liabilities of Debtors
to Lender including those existing, now or hereafter made, entered into,
incurred, created or owing, however arising, whether due or not due, absolute or
contingent, liquidated or unliquidated, determined or undetermined, and whether
Debtors may be liable individually or jointly with others, or whether recovery
upon such indebtedness may be or hereafter become barred by any statute of
limitations, or whether such indebtedness may be or hereafter become otherwise
unenforceable, including without limitation indebtedness of Debtors to Lender
under that certain Loan and Security Agreement of even date herewith by and
among Debtors and Lender (the "Loan Agreement"). This is a guaranty of payment
and performance and not of collection. Guarantor's obligations hereunder shall
be unconditional (and shall not be subject to any defense, setoff, counterclaim
or recoupment whatsoever) irrespective of the genuineness, validity, regularity
or enforceability of the indebtedness or any conduct of Debtors and/or Lender
which might constitute a legal or equitable discharge of a surety, guarantor or
guaranty.

         This is an absolute, unconditional and continuing guaranty relating to
the indebtedness, including that arising under successive transactions which
shall either continue the indebtedness or from time to time renew it after it
has been satisfied or create new indebtedness. This Guaranty shall not apply to
any indebtedness created after actual receipt by Lender of written notice of its
revocation as to future transactions, except that indebtedness committed to
prior to such date but consummated and actually created subsequent to such date
shall be covered hereby.

         The obligations hereunder are joint and several, independent of the
obligations of Debtors or the obligations of any other person(s) or guarantor(s)
who may be liable to Lender in whole or in part for the indebtedness, and a
separate action or actions may be brought and prosecuted against Guarantor or
any of them whether action is brought against Debtors alone or whether Debtors
be joined in any such action or actions; and Guarantor waives the benefit of any
statute of limitations affecting its liability hereunder or the enforcement
thereof.

         Guarantor authorizes Lender, without notice or consent and without
affecting, impairing or discharging in whole or in part its liability hereunder,
from time to time to (a) renew, modify, amend, compromise, extend, accelerate,
discharge or otherwise change the

<PAGE>   32

time for payment of, or otherwise change the terms or provisions of the
indebtedness or any part thereof, including increasing or decreasing the rate of
interest thereon; (b) take and hold collateral for the payment of this Guaranty
or the indebtedness guaranteed, and exchange, enforce, waive, and release any
such collateral; (c) apply such collateral and direct the order or manner of
sale thereof as Lender in its discretion may determine; or (d) release or
substitute in whole or in part any one or more of the endorsers, Guarantor or
anyone else who may be partially or wholly liable for any part of the
indebtedness. Lender may without notice assign this Guaranty in whole or in
part.

         Guarantor waives any right to require Lender to (a) proceed against or
exhaust remedies against Debtors; (b) proceed against or exhaust any collateral
given by Debtors or Guarantor; (c) pursue any other remedy in Lender's power
whatsoever; or (d) proceed against any other person(s) or guarantor(s) who may
be liable to Lender in whole or in part for the indebtedness. Guarantor waives
any defense arising by reason of any disability or other defense of Debtors or
by reason of the cessation or modification from any cause whatsoever of the
liability of Debtors. Guarantor waives diligence, all presentments, demands for
performance, notices of non-performance, default, protests, notices of protest,
notices of dishonor, notices of acceptance of this Guaranty and of the
existence, creation, or incurring of new, changed, modified, increased or
additional indebtedness, and all other notices of every and any kind. GUARANTOR
HEREBY WAIVES ANY AND ALL NOTICE OF LENDER'S INTENT TO ACCELERATE THE
INDEBTEDNESS AND FURTHER WAIVES ANY NOTICE OF ACCELERATION.

         Lender shall have a claim and a right of setoff against all moneys,
securities and other property of Guarantor now or hereafter in the possession of
Lender whether held in a special account for safekeeping or otherwise, and such
right of setoff may be exercised without demand upon Guarantor or notice by
Lender. No right of setoff shall be deemed to have been waived by any act or
conduct on the part of Lender or by any neglect to exercise such right of setoff
or by any delay in so doing, and every right of setoff shall continue in full
force and effect until such right of setoff is specifically waived or released
by an instrument in writing executed by Lender.

         Guarantor waives and agrees not to assert any claim Guarantor may now
or later have against Debtors until such time as the indebtedness is fully,
finally and indefeasibly paid to Lender. Guarantor agrees that this paragraph is
intended to benefit Debtors and is relied upon by Lender. As used in this
paragraph, the term 'claim' is defined in the Bankruptcy Code, Section 101.
Guarantor further hereby irrevocably waives and releases any right of
subrogation (whether contractual, under Section 509 of the Bankruptcy Code or
otherwise), reimbursement, contribution, exoneration, or other similar right, or
indemnity, or any right of recourse to collateral for any of the indebtedness
until such time as the indebtedness is fully, finally and indefeasibly paid to
Lender.

         Guarantor agrees to pay reasonable attorneys' fees and all other costs
and expenses which may be incurred by Lender in the enforcement of this Guaranty
or otherwise relating to this Guaranty including, without limitation, in
connection with any lawsuit, arbitration or other alternative dispute resolution
proceeding, appeal, judgment enforcement action, bankruptcy proceeding
(including, without limitation, any relief from stay and/or adequate

                                       2
<PAGE>   33

protection motions, cash collateral disputes, assumption/rejection motions and
disputes or objections to any proposed disclosure statement or reorganization
plan) or other legal proceeding in any way related to this Guaranty. Guarantor
acknowledges and agrees that the preceding sentence shall survive and not be
merged with any judgment in connection with any exercise of any right or remedy
by Lender in connection with this Guaranty. Guarantor further agrees that all
reasonable attorneys' fees, costs and expenses incurred in pursuing or enforcing
rights and/or any collateral or security shall constitute so much additional
indebtedness hereby guaranteed.

         Guarantor hereby expressly agrees to deliver any and all information
required to be delivered by Guarantor under Section 6(g) of the Loan Agreement,
and Guarantor hereby expressly affirms the representations contained in, and
agrees to comply with the agreements and covenants set forth in, 6(h), 6(i),
6(j), 6(k), 6(l), 6(m), 6(u) and 6(w) of the Loan Agreement to the same extent
as if such provisions were contained herein and Guarantor were the "Debtor"
named therein.

         Guarantor further agrees that this Guaranty shall continue to be
effective or be reinstated, as the case may be, if at any time payment, or any
part thereof, on the indebtedness is rescinded or must otherwise be restored by
Lender upon the bankruptcy or reorganization of Debtors or otherwise.

         Any indebtedness of Debtors now or hereafter held by or owing to
Guarantor is hereby subordinated to Lender and such indebtedness, if requested
by Lender, shall be collected, enforced, and received by Guarantor as trustee
for Lender and promptly paid over to Lender.

         In this Guaranty, the singular shall include the plural, the plural
shall include the singular, and the use of any gender shall be applicable to all
genders. If any Guarantor is a corporation, by executing and delivering this
Guaranty, it and the officers thereof signing on its behalf represent and
warrant that the execution and delivery of this Guaranty has been duly
authorized by all necessary and appropriate corporate and shareholder action.

         In case any one or more of the provisions contained in this Guaranty
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.

         Guarantor consents and agrees that, without notice to or by Guarantor
and without affecting or impairing in any way the obligations or liability of
Guarantor hereunder, Lender may, from time to time before or after revocation of
this Guaranty, exercise any right or remedy it may have with respect to any or
all of the indebtedness or any property securing any or all of the indebtedness
or any guaranty thereof, including, without limitation, judicial foreclosure,
nonjudicial foreclosure, exercise of a power of sale, and taking a deed,
assignment or transfer in lieu of foreclosure as to any such property, and
Guarantor expressly waives any defense based upon the exercise of any such right
or remedy, notwithstanding the effect thereof upon any of Guarantor's rights,
including, without limitation, any destruction of Guarantor's right of
subrogation against Debtors and any destruction of Guarantor's right

                                       3
<PAGE>   34
of contribution or other right against any other guarantor of any or all of the
indebtedness or against any other person by operation of any statutes or rules
of law now or hereafter in effect, or otherwise.

         THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS AND JUDICIAL DECISIONS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO
THAT STATE'S PRINCIPLES OF CONFLICTS OF LAWS. GUARANTOR HEREBY SUBMITS TO THE
PERSONAL JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN COOK COUNTY,
ILLINOIS, AND IRREVOCABLY AGREES THAT, SUBJECT TO LENDER'S ELECTION (AND WITHOUT
LIMITING LENDER'S RIGHT TO COMMENCE AN ACTION IN ANY OTHER JURISDICTION), ALL
ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS GUARANTY SHALL BE
LITIGATED IN SUCH COURTS. GUARANTOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH
ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF
THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND
IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION
WITH THIS GUARANTY, SUBJECT TO SUCH RIGHT OF APPEAL AS GUARANTOR MAY BE ENTITLED
UNDER ILLINOIS LAW. WITHOUT LIMITING ANY OTHER MANNER OF SERVICE AVAILABLE TO
LENDER, GUARANTOR EXPRESSLY WAIVES PERSONAL SERVICE OF PROCESS IN CONNECTION
WITH ANY SUCH ACTION OR PROCEEDING AND CONSENTS TO SERVICE BY CERTIFIED MAIL,
POSTAGE PREPAID, DIRECTED TO THE LAST KNOWN ADDRESS OF GUARANTOR, WHICH SERVICE
SHALL BE DEEMED COMPLETED WITHIN TEN (10) DAYS AFTER THE DATE OF MAILING
THEREOF.

        [Remainder of page intentionally blank. Signature pages follow.]

                                       4
<PAGE>   35

         IN WITNESS WHEREOF, the undersigned Guarantor, and each of them (if
there be more than one), has executed and delivered this Guaranty independent of
each other and not relying upon or in consideration of the execution hereof by
any other of them, on this 30th day of December, 1999.

                                       GUARANTOR:

                                       TEXAS OIL AND CHEMICAL CO. II, INC.

                                       By:
                                          --------------------------------------
                                          Nicholas N. Carter
                                          President

                                    GUARANTY
                                 SIGNATURE PAGE

<PAGE>   36
                                                          Loan No. _____________

                                    GUARANTY

         For valuable consideration, the receipt whereof is hereby acknowledged,
and to induce HELLER FINANCIAL LEASING, INC., a Delaware corporation ("Lender"),
to make loans or advances, or extend credit or financial accommodations to SOUTH
HAMPTON REFINING CO. and GULF STATE PIPELINE COMPANY, INC. ("Debtors"), or to
continue the same, but without requiring Lender to do so, the undersigned,
[___________________] (hereinafter called "Guarantor"), promises to pay to
Lender, on demand, in lawful money of the United States, the due and punctual
payment and performance of all indebtedness of Debtors to Lender no matter how
acquired by Lender. The word "indebtedness" is used herein in its most
comprehensive sense and includes any and all loans or performance obligations,
notes, security agreements and liabilities of Debtors to Lender including those
existing, now or hereafter made, entered into, incurred, created or owing,
however arising, whether due or not due, absolute or contingent, liquidated or
unliquidated, determined or undetermined, and whether Debtors may be liable
individually or jointly with others, or whether recovery upon such indebtedness
may be or hereafter become barred by any statute of limitations, or whether such
indebtedness may be or hereafter become otherwise unenforceable, including
without limitation indebtedness of Debtors to Lender under that certain Loan and
Security Agreement of even date herewith by and among Debtors and Lender (the
"Loan Agreement"). This is a guaranty of payment and performance and not of
collection. Guarantor's obligations hereunder shall be unconditional (and shall
not be subject to any defense, setoff, counterclaim or recoupment whatsoever)
irrespective of the genuineness, validity, regularity or enforceability of the
indebtedness or any conduct of Debtors and/or Lender which might constitute a
legal or equitable discharge of a surety, guarantor or guaranty.

         This is an absolute, unconditional and continuing guaranty relating to
the indebtedness, including that arising under successive transactions which
shall either continue the indebtedness or from time to time renew it after it
has been satisfied or create new indebtedness. This Guaranty shall not apply to
any indebtedness created after actual receipt by Lender of written notice of its
revocation as to future transactions, except that indebtedness committed to
prior to such date but consummated and actually created subsequent to such date
shall be covered hereby.

         The obligations hereunder are joint and several, independent of the
obligations of Debtors or the obligations of any other person(s) or guarantor(s)
who may be liable to Lender in whole or in part for the indebtedness, and a
separate action or actions may be brought and prosecuted against Guarantor or
any of them whether action is brought against Debtors alone or whether Debtors
be joined in any such action or actions; and Guarantor waives the benefit of any
statute of limitations affecting its liability hereunder or the enforcement
thereof.

         Guarantor authorizes Lender, without notice or consent and without
affecting, impairing or discharging in whole or in part its liability hereunder,
from time to time to (a) renew, modify, amend, compromise, extend, accelerate,
discharge or otherwise change the

<PAGE>   37

time for payment of, or otherwise change the terms or provisions of the
indebtedness or any part thereof, including increasing or decreasing the rate of
interest thereon; (b) take and hold collateral for the payment of this Guaranty
or the indebtedness guaranteed, and exchange, enforce, waive, and release any
such collateral; (c) apply such collateral and direct the order or manner of
sale thereof as Lender in its discretion may determine; or (d) release or
substitute in whole or in part any one or more of the endorsers, Guarantor or
anyone else who may be partially or wholly liable for any part of the
indebtedness. Lender may without notice assign this Guaranty in whole or in
part.

         Guarantor waives any right to require Lender to (a) proceed against or
exhaust remedies against Debtors; (b) proceed against or exhaust any collateral
given by Debtors or Guarantor; (c) pursue any other remedy in Lender's power
whatsoever; or (d) proceed against any other person(s) or guarantor(s) who may
be liable to Lender in whole or in part for the indebtedness. Guarantor waives
any defense arising by reason of any disability or other defense of Debtors or
by reason of the cessation or modification from any cause whatsoever of the
liability of Debtors. Guarantor waives diligence, all presentments, demands for
performance, notices of non-performance, default, protests, notices of protest,
notices of dishonor, notices of acceptance of this Guaranty and of the
existence, creation, or incurring of new, changed, modified, increased or
additional indebtedness, and all other notices of every and any kind. GUARANTOR
HEREBY WAIVES ANY AND ALL NOTICE OF LENDER'S INTENT TO ACCELERATE THE
INDEBTEDNESS AND FURTHER WAIVES ANY NOTICE OF ACCELERATION.

         Lender shall have a claim and a right of setoff against all moneys,
securities and other property of Guarantor now or hereafter in the possession of
Lender whether held in a special account for safekeeping or otherwise, and such
right of setoff may be exercised without demand upon Guarantor or notice by
Lender. No right of setoff shall be deemed to have been waived by any act or
conduct on the part of Lender or by any neglect to exercise such right of setoff
or by any delay in so doing, and every right of setoff shall continue in full
force and effect until such right of setoff is specifically waived or released
by an instrument in writing executed by Lender.

         Guarantor waives and agrees not to assert any claim Guarantor may now
or later have against Debtors until such time as the indebtedness is fully,
finally and indefeasibly paid to Lender. Guarantor agrees that this paragraph is
intended to benefit Debtors and is relied upon by Lender. As used in this
paragraph, the term 'claim' is defined in the Bankruptcy Code, Section 101.
Guarantor further hereby irrevocably waives and releases any right of
subrogation (whether contractual, under Section 509 of the Bankruptcy Code or
otherwise), reimbursement, contribution, exoneration, or other similar right, or
indemnity, or any right of recourse to collateral for any of the indebtedness
until such time as the indebtedness is fully, finally and indefeasibly paid to
Lender.

         Guarantor agrees to pay reasonable attorneys' fees and all other costs
and expenses which may be incurred by Lender in the enforcement of this Guaranty
or otherwise relating to this Guaranty including, without limitation, in
connection with any lawsuit, arbitration or other alternative dispute resolution
proceeding, appeal, judgment enforcement action, bankruptcy proceeding
(including, without limitation, any relief from stay and/or adequate

                                       2
<PAGE>   38

protection motions, cash collateral disputes, assumption/rejection motions and
disputes or objections to any proposed disclosure statement or reorganization
plan) or other legal proceeding in any way related to this Guaranty. Guarantor
acknowledges and agrees that the preceding sentence shall survive and not be
merged with any judgment in connection with any exercise of any right or remedy
by Lender in connection with this Guaranty. Guarantor further agrees that all
reasonable attorneys' fees, costs and expenses incurred in pursuing or enforcing
rights and/or any collateral or security shall constitute so much additional
indebtedness hereby guaranteed.

         Guarantor hereby expressly agrees to deliver any and all information
required to be delivered by Guarantor under Section 6(g) of the Loan Agreement,
and Guarantor hereby expressly affirms the representations contained in, and
agrees to comply with the agreements and covenants set forth in, 6(h), 6(i),
6(j), 6(k), 6(l), 6(m), 6(u) and 6(w) of the Loan Agreement to the same extent
as if such provisions were contained herein and Guarantor were the "Debtor"
named therein.

         Guarantor further agrees that this Guaranty shall continue to be
effective or be reinstated, as the case may be, if at any time payment, or any
part thereof, on the indebtedness is rescinded or must otherwise be restored by
Lender upon the bankruptcy or reorganization of Debtors or otherwise.

         Any indebtedness of Debtors now or hereafter held by or owing to
Guarantor is hereby subordinated to Lender and such indebtedness, if requested
by Lender, shall be collected, enforced, and received by Guarantor as trustee
for Lender and promptly paid over to Lender.

         In this Guaranty, the singular shall include the plural, the plural
shall include the singular, and the use of any gender shall be applicable to all
genders. If any Guarantor is a corporation, by executing and delivering this
Guaranty, it and the officers thereof signing on its behalf represent and
warrant that the execution and delivery of this Guaranty has been duly
authorized by all necessary and appropriate corporate and shareholder action.

         In case any one or more of the provisions contained in this Guaranty
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.

         Guarantor consents and agrees that, without notice to or by Guarantor
and without affecting or impairing in any way the obligations or liability of
Guarantor hereunder, Lender may, from time to time before or after revocation of
this Guaranty, exercise any right or remedy it may have with respect to any or
all of the indebtedness or any property securing any or all of the indebtedness
or any guaranty thereof, including, without limitation, judicial foreclosure,
nonjudicial foreclosure, exercise of a power of sale, and taking a deed,
assignment or transfer in lieu of foreclosure as to any such property, and
Guarantor expressly waives any defense based upon the exercise of any such right
or remedy, notwithstanding the effect thereof upon any of Guarantor's rights,
including, without limitation, any destruction of Guarantor's right of
subrogation against Debtors and any destruction of Guarantor's right

                                       3
<PAGE>   39
of contribution or other right against any other guarantor of any or all of the
indebtedness or against any other person by operation of any statutes or rules
of law now or hereafter in effect, or otherwise.

         THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS AND JUDICIAL DECISIONS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO
THAT STATE'S PRINCIPLES OF CONFLICTS OF LAWS. GUARANTOR HEREBY SUBMITS TO THE
PERSONAL JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN COOK COUNTY,
ILLINOIS, AND IRREVOCABLY AGREES THAT, SUBJECT TO LENDER'S ELECTION (AND WITHOUT
LIMITING LENDER'S RIGHT TO COMMENCE AN ACTION IN ANY OTHER JURISDICTION), ALL
ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS GUARANTY SHALL BE
LITIGATED IN SUCH COURTS. GUARANTOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH
ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF
THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND
IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION
WITH THIS GUARANTY, SUBJECT TO SUCH RIGHT OF APPEAL AS GUARANTOR MAY BE ENTITLED
UNDER ILLINOIS LAW. WITHOUT LIMITING ANY OTHER MANNER OF SERVICE AVAILABLE TO
LENDER, GUARANTOR EXPRESSLY WAIVES PERSONAL SERVICE OF PROCESS IN CONNECTION
WITH ANY SUCH ACTION OR PROCEEDING AND CONSENTS TO SERVICE BY CERTIFIED MAIL,
POSTAGE PREPAID, DIRECTED TO THE LAST KNOWN ADDRESS OF GUARANTOR, WHICH SERVICE
SHALL BE DEEMED COMPLETED WITHIN TEN (10) DAYS AFTER THE DATE OF MAILING
THEREOF.

         IN WITNESS WHEREOF, the undersigned Guarantor, and each of them (if
there be more than one), has executed and delivered this Guaranty independent of
each other and not relying upon or in consideration of the execution hereof by
any other of them, on this _______ day of December, 1999.

                                       GUARANTOR:

                                       -----------------------------------------

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

                                       4
<PAGE>   40
                                PLEDGE AGREEMENT

         THIS PLEDGE AGREEMENT dated as of December 30, 1999, is by and between
TEXAS OIL AND CHEMICAL CO. II, INC., a Texas corporation (the "Pledgor") whose
address is 7752 FM 418, P.O. Box 1636, Silsbee, Texas 77656, and HELLER
FINANCIAL LEASING, INC., a Delaware corporation (the "Secured Party"), whose
address is 500 West Monroe Street, Chicago, Illinois 60661.

                                R E C I T A L S:

         A. South Hampton Refining Co. and Gulf State Pipe Line Company, Inc.
("Debtors") and Secured Party have entered into that certain Loan and Security
Agreement of even date herewith (such Loan and Security Agreement, as the same
may be amended or modified from time to time, being hereinafter referred to as
the "Loan Agreement"; terms defined in the Loan Agreement and not otherwise
defined herein being used as defined therein).

         B. Secured Party has conditioned its obligations under the Loan
Agreement upon the execution and delivery of this Agreement by Pledgor.

         NOW THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

                                    ARTICLE I

                          Security Interest and Pledge

         Section 1.1. Security Interest and Pledge. As collateral security for
the prompt payment in full when due of the obligations of the Debtors described
in the Loan Agreement (whether at stated maturity, by acceleration, or
otherwise) and other Loan Documents and all present and future obligations of
Pledgor under this Agreement and all other Loan Documents (collectively, the
"Obligations"), Pledgor hereby pledges and grants to Secured Party a first
priority security interest in the following property (such property being
hereinafter sometimes called the "Collateral"):

          (a) all of Pledgor's shares of stock, now owned or hereafter acquired,
     in the corporation described on Schedule 1 attached hereto (the "Company"),
     as evidenced on the date hereof by the certificates described on Schedule 1
     attached hereto; and

          (b) all proceeds, revenues, distributions, dividends, stock dividends,
     securities, and other property, rights, and interests that Pledgor receives
     or is at any time entitled to receive on account of the Collateral
     described in clause (a) above.

                                        1

<PAGE>   41

                                   ARTICLE II

                         Representations and Warranties

         Pledgor represents and warrants to Secured Party that:

         Section 2.1. Title. Pledgor owns, and with respect to Collateral
acquired after the date hereof, Pledgor will own, legally and beneficially, the
Collateral free and clear of any Lien, security interest, pledge, claim, or
other encumbrance or any right or option on the part of any third Person to
purchase or otherwise acquire the Collateral or any part thereof, except for the
security interest granted hereunder. The Collateral is not subject to any
restriction on transfer or assignment except for compliance with applicable
federal and state securities laws and regulations promulgated thereunder.
Pledgor has the unrestricted right to pledge the Collateral as contemplated
hereby. All of the Collateral has been duly and validly issued and is fully paid
and nonassessable.

         Section 2.2. Organization and Authority. Pledgor is a corporation duly
organized, validly existing, and in good standing under the laws of its state of
incorporation. Pledgor has the corporate power and authority to execute,
deliver, and perform this Agreement, and the execution, delivery, and
performance of this Agreement by Pledgor have been duly authorized by all
necessary corporate action on the part of Pledgor and do not and will not
violate or conflict with the articles of incorporation or bylaws of Pledgor or
any law, rule, or regulation or any order, writ, injunction, or decree of any
court, governmental authority, or arbitrator and do not and will not conflict
with, result in a breach of, or constitute a default under the provisions of any
indenture, mortgage, deed of trust, security agreement, or other instrument or
agreement binding on Pledgor or any of its property.

         Section 2.3. Principal Place of Business. The principal place of
business and chief executive office of Pledgor, and the office where Pledgor
keeps its books and records, is located at the address of Pledgor shown at the
beginning of this Agreement.

         Section 2.4. Litigation. Except as previously disclosed to Secured
Party in writing, there is no litigation, investigation, or governmental
proceeding pending or threatened against Pledgor or any of its properties which
if adversely determined would have a material adverse effect on the Collateral
or the financial condition, operations, or business of Pledgor.

         Section 2.5. Percentage of Stock. The Collateral constitutes all of the
issued and outstanding shares of common capital stock of the Company.

         Section 2.6. First Priority Perfected Security Interest. This Agreement
creates in favor of Secured Party a first priority perfected security interest
in the Collateral. There are no conditions precedent to the effectiveness of
this Agreement that have not been fully and permanently satisfied.

                                        2

<PAGE>   42

                                   ARTICLE III

                       Affirmative and Negative Covenants

         Pledgor covenants and agrees with Secured Party that:

         Section 3.1. Delivery. Prior to or concurrently with the execution and
delivery of this Agreement, Pledgor shall deliver to Secured Party all
certificate(s) identified on Schedule 1 attached hereto, accompanied by undated
stock powers duly executed in blank.

         Section 3.2. Encumbrances. Pledgor shall not create, permit, or suffer
to exist, and shall defend the Collateral against, any Lien, security interest,
or other encumbrance on the Collateral except the pledge and security interest
of Secured Party hereunder, and shall defend Pledgor's rights in the Collateral
and Secured Party's security interest in the Collateral against the claims of
all Persons.

         Section 3.3. Sale of Collateral. Pledgor shall not sell, assign, or
otherwise dispose of the Collateral or any part thereof without the prior
written consent of Secured Party.

         Section 3.4. Distributions. If Pledgor shall become entitled to receive
or shall receive any stock certificate (including, without limitation, any
certificate representing a stock dividend or a distribution in connection with
any reclassification, increase, or reduction of capital or issued in connection
with any reorganization), option or rights, whether as an addition to, in
substitution of, or in exchange for any Collateral or otherwise, Pledgor agrees
to accept the same as Secured Party's agent and to hold the same in trust for
Secured Party, and to deliver the same forthwith to Secured Party in the exact
form received, with the appropriate endorsement of Pledgor when necessary and/or
appropriate undated stock powers duly executed in blank, to be held by Secured
Party as additional Collateral for the Obligations, subject to the terms hereof.
Any sums paid upon or in respect of the Collateral upon the liquidation or
dissolution of the issuer thereof shall be paid over to Secured Party to be held
by it as additional Collateral for the Obligations subject to the terms hereof;
and in case any distribution of capital shall be made on or in respect of the
Collateral or any property shall be distributed upon or with respect to the
Collateral pursuant to any recapitalization or reclassification of the capital
of the issuer thereof or pursuant to any reorganization of the issuer thereof,
the property so distributed shall be delivered to the Secured Party to be held
by it, as additional Collateral for the Obligations, subject to the terms
hereof. All sums of money and property so paid or distributed in respect of the
Collateral that are received by Pledgor shall, until paid or delivered to
Secured Party, be held by Pledgor in trust as additional security for the
Obligations.

         Section 3.5. Further Assurances. At any time and from time to time,
upon the request of Secured Party, and at the sole expense of Pledgor, Pledgor
shall promptly execute and deliver all such further instruments and documents
and take such further action as Secured Party may deem necessary or desirable to
preserve and perfect its security interest in the Collateral and carry out the
provisions and purposes of this Agreement, including, without limitation, the
execution and filing of such financing statements as Secured Party may require.
A carbon, photographic, or other reproduction of this Agreement or of any
financing statement covering the Collateral or any part thereof shall be

                                        3
<PAGE>   43

sufficient as a financing statement and may be filed as a financing statement.
Subject to the right of Pledgor to receive cash dividends under Section 4.3
hereof, in the event any Collateral is ever received by Pledgor, Pledgor shall
promptly transfer and deliver to Secured Party such Collateral so received by
Pledgor (together with any necessary endorsements in blank or undated stock
powers duly executed in blank), which Collateral shall thereafter be held by
Secured Party pursuant to the terms of this Agreement. Secured Party shall at
all times have the right to exchange any certificates representing Collateral
for certificates of smaller or larger denominations for any purpose consistent
with this Agreement.

         Section 3.6. Inspection Rights. Pledgor shall permit Secured Party and
its representatives to examine, inspect, and copy Pledgor's books and records at
any reasonable time and as often as Secured Party may desire.

         Section 3.7. Taxes. Pledgor agrees to pay or discharge prior to
delinquency all taxes, assessments, levies, and other governmental charges
imposed on it or its property, except Pledgor shall not be required to pay or
discharge any tax, assessment, levy, or other governmental charge if (i) the
amount or validity thereof is being contested by Pledgor in good faith by
appropriate proceedings diligently pursued, (ii) such proceedings do not involve
any risk of sale, forfeiture, or loss of the Collateral or any interest therein,
and (iii) adequate reserves therefor have been established in conformity with
GAAP.

         Section 3.8. Notification. Pledgor shall promptly notify Secured Party
of (i) any Lien, security interest, encumbrance, or claim made or threatened
against the Collateral, (ii) any material change in the Collateral, including,
without limitation, any material decrease in the value of the Collateral, and
(iii) the occurrence or existence of any Event of Default or the occurrence or
existence of any condition or event that, with the giving of notice or lapse of
time or both, would be an Event of Default.

         Section 3.9. Books and Records; Information. Pledgor shall keep
accurate and complete books and records of the Collateral and Pledgor's business
and financial condition in accordance with GAAP. Pledgor shall from time to time
at the request of Secured Party deliver to Secured Party such information
regarding the Collateral and Pledgor as Secured Party may request. Pledgor shall
mark its books and records to reflect the security interest of Secured Party
under this Agreement.

         Section 3.10. Compliance with Agreements. Pledgor shall comply in all
material respects with all agreements, contracts, and instruments binding on it
or affecting its properties or business.

         Section 3.11. Compliance with Laws. Pledgor shall comply in all
material respects with all applicable laws, rules, regulations, and orders of
any court or governmental authority.

         Section 3.12. Additional Securities. Pledgor shall not consent to or
approve the issuance of any additional shares of any class of capital stock of
the issuer of the Collateral, or any securities convertible into, or
exchangeable for, any such shares or any warrants, options, rights, or other
commitments entitling any Person to purchase or otherwise acquire any such
shares.

                                        4
<PAGE>   44

                                   ARTICLE IV

                       Rights of Secured Party and Pledgor

         Section 4.1. Power of Attorney. Pledgor hereby irrevocably constitutes
and appoints Secured Party and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead and in the name of Pledgor or in its
own name, from time to time in Secured Party's discretion, to take any and all
action and to execute any and all documents and instruments which may be
necessary or desirable to accomplish the purposes of this Agreement and, without
limiting the generality of the foregoing, hereby gives Secured Party the power
and right on behalf of Pledgor and in its own name to do any of the following
(subject to the rights of Pledgor under Sections 4.2 and 4.3 hereof), without
notice to or the consent of Pledgor:

               (i) to demand, sue for, collect, or receive in the name of
          Pledgor or in its own name, any money or property at any time payable
          or receivable on account of or in exchange for any of the Collateral
          and, in connection therewith, endorse checks, notes, drafts,
          acceptances, money orders, or any other instruments for the payment of
          money under the Collateral;

               (ii) to pay or discharge taxes, Liens, security interests, or
          other encumbrances levied or placed on or threatened against the
          Collateral; and

               (iii) (A) to direct account debtors and any other parties liable
          for any payment under any of the Collateral to make payment of any and
          all monies due and to become due thereunder directly to Secured Party
          or as Secured Party shall direct; (B) to receive payment of and
          receipt for any and all monies, claims, and other amounts due and to
          become due at any time in respect of or arising out of any Collateral;
          (C) to sign and endorse any drafts, assignments, proxies, stock
          powers, verifications, notices, and other documents relating to the
          Collateral; (D) to commence and prosecute any suit, actions or
          proceedings at law or in equity in any court of competent jurisdiction
          to collect the Collateral or any part thereof and to enforce any other
          right in respect of any Collateral; (E) to defend any suit, action, or
          proceeding brought against Pledgor with respect to any Collateral; (F)
          to settle, compromise, or adjust any suit, action, or proceeding
          described above and, in connection therewith, to give such discharges
          or releases as Secured Party may deem appropriate; (G) to exchange any
          of the Collateral for other property upon any merger, consolidation,
          reorganization, recapitalization, or other readjustment of the issuer
          thereof and, in connection therewith, deposit any of the Collateral
          with any committee, depositary, transfer agent, registrar, or other
          designated agency upon such terms as Secured Party may determine; (H)
          to add or release any guarantor, indorser, surety, or other party to
          any of the Collateral or the Obligations; (I) to renew, extend, or
          otherwise change the terms and conditions of any of the Collateral or
          Obligations; (J) to insure any of the Collateral; and (K) to sell,
          transfer, pledge, make any agreement with respect to or otherwise deal
          with any of the Collateral as fully and completely as though Secured
          Party were the absolute owner thereof for all purposes, and to do, at
          Secured Party's option and Pledgor's expense, at any time, or from
          time to time, all acts

                                        5
<PAGE>   45

          and things which Secured Party deems necessary to protect, preserve,
          or realize upon the Collateral and Secured Party's security interest
          therein.

         This power of attorney is a power coupled with an interest and shall be
irrevocable. Secured Party shall be under no duty to exercise or withhold the
exercise of any of the rights, powers, privileges, and options expressly or
implicitly granted to Secured Party in this Agreement, and shall not be liable
for any failure to do so or any delay in doing so. Secured Party shall not be
liable for any act or omission or for any error of judgment or any mistake of
fact or law in its individual capacity or in its capacity as attorney-in-fact
except acts or omissions resulting from its willful misconduct. This power of
attorney is conferred on Secured Party solely to protect, preserve, and realize
upon its security interest in the Collateral.

         Section 4.2. Voting Rights. Unless and until an Event of Default shall
have occurred and be continuing, Pledgor shall be entitled to exercise any and
all voting rights pertaining to the Collateral or any part thereof for any
purpose not inconsistent with the terms of this Agreement or the Loan Agreement.
Secured Party shall execute and deliver to the Pledgor all such proxies and
other instruments as Pledgor may reasonably request for the purpose of enabling
Pledgor to exercise the voting rights which it is entitled to exercise pursuant
to this Section.

         Section 4.3. Dividends. Unless and until an Event of Default shall have
occurred and be continuing, Pledgor shall be entitled to receive and retain any
dividends on the Collateral paid in cash out of earned surplus to the extent and
only to the extent that such dividends are permitted by the Loan Agreement.

         Section 4.4. Performance by Secured Party. If Pledgor fails to perform
or comply with any of its agreements contained herein, Secured Party itself may,
at its sole discretion, cause or attempt to cause performance or compliance with
such agreement and the expenses of Secured Party, together with interest thereon
at the maximum nonusurious per annum rate permitted by applicable law, shall be
payable by Pledgor to Secured Party on demand and shall constitute Obligations
secured by this Agreement. Notwithstanding the foregoing, it is expressly agreed
that Secured Party shall not have any liability or responsibility for the
performance of any obligation of Pledgor under this Agreement.

         Section 4.5. Setoff; Property Held by Secured Party. Secured Party
shall have the right to set off and apply against the Obligations, at any time
and without notice to Pledgor, any and all deposits (general or special, time or
demand, provisional or final) or other sums at any time credited by or owing
from Secured Party to Pledgor whether or not the Obligations are then due. As
additional security for the Obligations, Pledgor hereby grants Secured Party a
security interest in all money, instruments, and other property of Pledgor now
or hereafter held by Secured Party, including, without limitation, property held
in safekeeping. In addition to Secured Party's right of setoff and as further
security for the Obligations, Pledgor hereby grants Secured Party a security
interest in all deposits (general or special, time or demand, provisional or
final) and other accounts of Pledgor now or hereafter maintained with Secured
Party and all other sums at any time credited by or owing from Secured Party to
Pledgor. The rights and remedies of Secured Party hereunder are in addition to

                                        6

<PAGE>   46

other rights and remedies (including, without limitation, other rights of
setoff) which Secured Party may have.

         Section 4.6. Secured Party's Duty of Care. Other than the exercise of
reasonable care in the physical custody of the Collateral while held by Secured
Party hereunder, Secured Party shall have no responsibility for or obligation or
duty with respect to all or any part of the Collateral or any matter or
proceeding arising out of or relating thereto, including, without limitation,
any obligation or duty to collect any sums due in respect thereof or to protect
or preserve any rights against prior parties or any other rights pertaining
thereto, it being understood and agreed that Pledgor shall be responsible for
preservation of all rights in the Collateral. Without limiting the generality of
the foregoing, Secured Party shall be conclusively deemed to have exercised
reasonable care in the custody of the Collateral if Secured Party takes such
action, for purposes of preserving rights in the Collateral, as Pledgor may
reasonably request in writing, but no failure or omission or delay by Secured
Party in complying with any such request by Pledgor, and no refusal by Secured
Party to comply with any such request by Pledgor, shall be deemed to be a
failure to exercise reasonable care.

         Section 4.7. Assignment by Secured Party. Secured Party may at any time
and from time to time assign the Obligations and any portion thereof and/or the
Collateral and any portion thereof, and the assignee shall be entitled to all of
the rights and remedies of Secured Party under this Agreement in relation
thereto.

                                    ARTICLE V

                                     Default

         Section 5.1. Rights and Remedies. If any Event of Default shall occur,
Secured Party shall have the following rights and remedies:

               (i) In addition to all other rights and remedies granted to
          Secured Party in this Agreement and in any other instrument or
          agreement securing, evidencing, or relating to the Obligations,
          Secured Party shall have all of the rights and remedies of a secured
          party under the Uniform Commercial Code as adopted by the State of
          Illinois. Without limiting the generality of the foregoing, Secured
          Party may (A) without demand or notice to Pledgor, collect, receive,
          or take possession of the Collateral or any part thereof, (B) sell or
          otherwise dispose of the Collateral, or any part thereof, in one or
          more parcels at public or private sale or sales, at Secured Party's
          offices or elsewhere, for cash, on credit, or for future delivery,
          and/or (C) bid and become a purchaser at any sale free of any right or
          equity of redemption in Pledgor, which right or equity is hereby
          expressly waived and released by Pledgor. Upon the request of Secured
          Party, Pledgor shall assemble the Collateral and make it available to
          Secured Party at any place designated by Secured Party that is
          reasonably convenient to Pledgor and Secured Party. Pledgor agrees
          that Secured Party shall not be obligated to give more than five (5)
          days written notice of the time and place of any public sale or of the
          time after which any private sale may take place and that such notice
          shall constitute reasonable notice of such matters. Secured Party
          shall not be obligated to make any sale of the Collateral regardless
          of notice of sale having been given. Secured Party may adjourn any
          public or

                                        7
<PAGE>   47

          private sale from time to time by announcement at the time and place
          fixed therefor, and such sale may, without further notice, be made at
          the time and place to which it was so adjourned. Pledgor shall be
          liable for all expenses of retaking, holding, preparing for sale, or
          the like, and all attorneys' fees and other expenses incurred by
          Secured Party in connection with the collection of the Obligations and
          the enforcement of Secured Party's rights under this Agreement, all of
          which expenses and fees shall constitute additional Obligations
          secured by this Agreement. Secured Party may apply the Collateral
          against the Obligations in such order and manner as Secured Party may
          elect in its sole discretion. Pledgor shall remain liable for any
          deficiency if the proceeds of any sale or disposition of the
          Collateral are insufficient to pay the Obligations. Pledgor waives all
          rights of marshalling in respect of the Collateral.

                 (ii) Secured Party may cause any or all of the Collateral held
         by it to be transferred into the name of Secured Party or the name or
         names of Secured Party's nominee or nominees.

                (iii) Secured Party may collect or receive all money or property
         at any time payable or receivable on account of or in exchange for any
         of the Collateral, but shall be under no obligation to do so.

                 (iv) Secured Party shall have the right, but shall not be
         obligated to, exercise or cause to be exercised all voting, consensual,
         and other powers of ownership pertaining to the Collateral, and Pledgor
         shall deliver to Secured Party, if requested by Secured Party,
         irrevocable proxies with respect to the Collateral in form satisfactory
         to Secured Party.

                  (v) Pledgor hereby acknowledges and confirms that Secured
         Party may be unable to effect a public sale of any or all of the
         Collateral by reason of certain prohibitions contained in the
         Securities Act of 1933, as amended, and applicable state securities
         laws and may be compelled to resort to one or more private sales
         thereof to a restricted group of purchasers who will be obligated to
         agree, among other things, to acquire any shares of the Collateral for
         their own respective accounts for investment and not with a view to
         distribution or resale thereof. Pledgor further acknowledges and
         confirms that any such private sale may result in prices or other terms
         less favorable to the seller than if such sale were a public sale and,
         notwithstanding such circumstances, agrees that any such private sale
         shall be deemed to have been made in a commercially reasonable manner,
         and Secured Party shall be under no obligation to take any steps in
         order to permit the Collateral to be sold at a public sale. Secured
         Party shall be under no obligation to delay a sale of any of the
         Collateral for any period of time necessary to permit any issuer
         thereof to register such Collateral for public sale under the
         Securities Act of 1933, as amended, or under applicable state
         securities laws.

                 (vi) On any sale of the Collateral, Secured Party is hereby
         authorized to comply with any limitation or restriction with which
         compliance is necessary, in the view of Secured Party's counsel, in
         order to avoid any violation of applicable law or in order to obtain
         any required approval of the purchaser or purchasers by any applicable
         governmental authority.

                                        8
<PAGE>   48

                                   ARTICLE VI

                                  Miscellaneous

         Section 6.1. Expenses; Indemnification. Pledgor agrees to pay on demand
all costs and expenses incurred by Secured Party in connection with the
preparation, negotiation, and execution of this Agreement and any and all
amendments, modifications, and supplements hereto. Pledgor agrees to pay and to
hold Secured Party harmless from and against all fees and all excise, sales,
stamp, and other taxes payable in connection with this Agreement or the
transactions contemplated hereby. Pledgor hereby indemnifies Secured Party and
each affiliate thereof and their respective officers, directors, employees,
attorneys, and agents from, and holds each of them harmless against, any and all
losses, liabilities, claims, damages, penalties, judgments, costs, and expenses
(including attorneys' fees) to which any of them may become subject which
directly or indirectly arise from or relate to (i) the negotiation, execution,
delivery, performance, administration, or enforcement of this Agreement, (ii)
any of the transactions contemplated by this Agreement, (iii) any breach by
Pledgor of any representation, warranty, covenant, or other agreement contained
in this Agreement, or (iv) any investigation, litigation, or other proceeding,
including, without limitation, any threatened investigation, litigation, or
other proceeding relating to any of the foregoing. Without limiting any
provision of this Agreement or any other instrument, or agreement securing,
evidencing, or relating to the Obligations or any part thereof, it is the
express intention of the parties hereto that each person or entity to be
indemnified under this Section shall be indemnified from and held harmless
against any and all losses, liabilities, claims, damages, penalties, judgments,
costs, and expenses (including attorneys' fees) arising out of or resulting from
the sole or contributory negligence of the person or entity to be indemnified.

         Section 6.2. No Waiver; Cumulative Remedies. No failure on the part of
Secured Party to exercise and no delay in exercising, and no course of dealing
with respect to, any right, power, or privilege under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power, or privilege under this Agreement preclude any other or further
exercise thereof or the exercise of any other right, power, or privilege. The
rights and remedies provided for in this Agreement are cumulative and not
exclusive of any rights and remedies provided by law.

         Section 6.3. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of Pledgor and Secured Party and their respective
heirs, successors, and assigns, except that Pledgor may not assign any of its
rights or obligations under this Agreement without the prior written consent of
Secured Party.

         Section 6.4. AMENDMENT; ENTIRE AGREEMENT. THIS AGREEMENT EMBODIES THE
FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDES ANY AND ALL
PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER
WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE
CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO ORAL

                                        9
<PAGE>   49

AGREEMENTS AMONG THE PARTIES HERETO. The provisions of this Agreement may be
amended or waived only by an instrument in writing signed by the parties hereto.

         Section 6.5. Notices. All notices and other communications provided for
in this Agreement shall be given or made by telex, telegraph, telecopy, cable,
or in writing and telexed, telecopied, telegraphed, cabled, mailed by certified
mail return receipt requested, or delivered to the intended recipient at the
"Address for Notices" specified below its name on the signature pages hereof;
or, as to any party at such other address as shall be designated by such party
in a notice to the other party given in accordance with this Section. Except as
otherwise provided in this Agreement, all such communications shall be deemed to
have been duly given when transmitted by telex or telecopy, subject to telephone
confirmation of receipt, or delivered to the telegraph or cable office, subject
to telephone confirmation of receipt, or when personally delivered or, in the
case of a mailed notice, when duly deposited in the mails, in each case given or
addressed as aforesaid.

         Section 6.6. Applicable Law; Venue; Service of Process. This Agreement
shall be governed by and construed in accordance with the laws of the State of
Illinois and the applicable laws of the United States of America. Any action or
proceeding against Pledgor under or in connection with this Agreement or any
other instrument or agreement securing, evidencing, or relating to the
Obligations or any part thereof may be brought in any state or federal court in
Cook County, Illinois. Pledgor hereby irrevocably (i) submits to the
nonexclusive jurisdiction of such courts, and (ii) waives any objection it may
now or hereafter have as to the venue of any such action or proceeding brought
in such court or that such court is an inconvenient forum. Pledgor agrees that
service of process upon it may be made by certified or registered mail, return
receipt requested, at its address specified or determined in accordance with the
provisions of Section 6.5 of this Agreement. Nothing in this Agreement or any
other instrument or agreement securing, evidencing, or relating to the
Obligations or any part thereof shall affect the right of Secured Party to serve
process in any other manner permitted by law or shall limit the right of Secured
Party to bring any action or proceeding against Pledgor or with respect to any
of its property in courts in other jurisdictions. Any action or proceeding by
Pledgor against Secured Party shall be brought only in a court located in Cook
County, Illinois.

         Section 6.7. Headings. The headings, captions, and arrangements used in
this Agreement are for convenience only and shall not affect the interpretation
of this Agreement.

         Section 6.8. Survival. All representations and warranties made in this
Agreement shall survive the execution and delivery of this Agreement, and no
investigation by Secured Party shall affect the representations and warranties
of Pledgor herein or the right of Secured Party to rely upon them.

         Section 6.9. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

         Section 6.10. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such

                                       10
<PAGE>   50

prohibition or unenforceability without invalidating the remaining provisions of
this Agreement, and any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction.

         Section 6.11. Construction. Pledgor and Secured Party acknowledge that
each of them has had the benefit of legal counsel of its own choice and has been
afforded an opportunity to review this Agreement with its legal counsel and that
this Agreement shall be construed as if jointly drafted by Pledgor and Secured
Party.

         Section 6.12. Obligations Absolute. The obligations of Pledgor under
this Agreement shall be absolute and unconditional and shall not be released,
discharged, reduced, or in any way impaired by any circumstance whatsoever,
including, without limitation, any amendment, modification, extension, or
renewal of this Agreement, the Obligations, or any document or instrument
evidencing, securing, or otherwise relating to the Obligations, or any release,
subordination, or impairment of collateral, or any waiver, consent, extension,
indulgence, compromise, settlement, or other action or inaction in respect of
this Agreement, the Obligations, or any document or instrument evidencing,
securing, or otherwise relating to the Obligations, or any exercise or failure
to exercise any right, remedy, power, or privilege in respect of the
Obligations.

         Section 6.13. WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, PLEDGOR HEREBY IRREVOCABLY AND EXPRESSLY WAIVES ALL RIGHT TO A
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED UPON
CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS OF SECURED PARTY IN THE
NEGOTIATION, ADMINISTRATION, OR ENFORCEMENT THEREOF.

        [Remainder of page intentionally blank. Signature pages follow.]

                                       11
<PAGE>   51

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

                                        PLEDGOR:

                                        TEXAS OIL AND CHEMICAL CO. II, INC.

                                        By:
                                           ----------------------------------
                                           Nicholas N. Carter
                                           President

                                        Address for Notices:

                                        7752 FM 418
                                        P.O. Box 1636
                                        Silsbee, Texas 77656

                                        Fax No.:    (409) 385-2453
                                        Attention:  Nicholas N. Carter

                                PLEDGE AGREEMENT
                                 SIGNATURE PAGE

<PAGE>   52

                                        SECURED PARTY:

                                        HELLER FINANCIAL LEASING, INC.

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

                                        Address for Notices:
                                        Commercial Equipment Finance Group
                                        500 West Monroe Street
                                        Chicago, Illinois 60661

                                        Fax:   (312) 441-7519

                                PLEDGE AGREEMENT
                                 SIGNATURE PAGE

<PAGE>   53

                                   SCHEDULE 1

         All shares of stock in South Hampton Refining Co., now existing and
hereafter issued, presently evidenced by Stock Certificate No. 15, evidencing
1000 shares of common stock.

<PAGE>   54
                                PLEDGE AGREEMENT

         THIS PLEDGE AGREEMENT dated as of December 30, 1999, is by and between
SOUTH HAMPTON REFINING CO., a Texas corporation (the "Pledgor") whose address is
7752 FM 418, P.O. Box 1636, Silsbee, Texas 77656, and HELLER FINANCIAL LEASING,
INC., a Delaware corporation (the "Secured Party"), whose address is 500 West
Monroe Street, Chicago, Illinois 60661.

                                R E C I T A L S:

         A. Pledgor and Gulf State Pipe Line Company, Inc. ("Debtors") and
Secured Party have entered into that certain Loan and Security Agreement of even
date herewith (such Loan and Security Agreement, as the same may be amended or
modified from time to time, being hereinafter referred to as the "Loan
Agreement"; terms defined in the Loan Agreement and not otherwise defined herein
being used as defined therein).

         B. Secured Party has conditioned its obligations under the Loan
Agreement upon the execution and delivery of this Agreement by Pledgor.

         NOW THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

                                    ARTICLE I

                          Security Interest and Pledge

         Section 1.1. Security Interest and Pledge. As collateral security for
the prompt payment in full when due of the obligations of the Debtors described
in the Loan Agreement (whether at stated maturity, by acceleration, or
otherwise) and other Loan Documents and all present and future obligations of
Pledgor under this Agreement and all other Loan Documents (collectively, the
"Obligations"), Pledgor hereby pledges and grants to Secured Party a first
priority security interest in the following property (such property being
hereinafter sometimes called the "Collateral"):

               (a) all of Pledgor's shares of stock, now owned or hereafter
          acquired, in the corporation described on Schedule 1 attached hereto
          (the "Company"), as evidenced on the date hereof by the certificates
          described on Schedule 1 attached hereto; and

               (b) all proceeds, revenues, distributions, dividends, stock
          dividends, securities, and other property, rights, and interests that
          Pledgor receives or is at any time entitled to receive on account of
          the Collateral described in clause (a) above.

<PAGE>   55

                                   ARTICLE II

                         Representations and Warranties

         Pledgor represents and warrants to Secured Party that:

         Section 2.1. Title. Pledgor owns, and with respect to Collateral
acquired after the date hereof, Pledgor will own, legally and beneficially, the
Collateral free and clear of any Lien, security interest, pledge, claim, or
other encumbrance or any right or option on the part of any third Person to
purchase or otherwise acquire the Collateral or any part thereof, except for the
security interest granted hereunder. The Collateral is not subject to any
restriction on transfer or assignment except for compliance with applicable
federal and state securities laws and regulations promulgated thereunder.
Pledgor has the unrestricted right to pledge the Collateral as contemplated
hereby. All of the Collateral has been duly and validly issued and is fully paid
and nonassessable.

         Section 2.2. Organization and Authority. Pledgor is a corporation duly
organized, validly existing, and in good standing under the laws of its state of
incorporation. Pledgor has the corporate power and authority to execute,
deliver, and perform this Agreement, and the execution, delivery, and
performance of this Agreement by Pledgor have been duly authorized by all
necessary corporate action on the part of Pledgor and do not and will not
violate or conflict with the articles of incorporation or bylaws of Pledgor or
any law, rule, or regulation or any order, writ, injunction, or decree of any
court, governmental authority, or arbitrator and do not and will not conflict
with, result in a breach of, or constitute a default under the provisions of any
indenture, mortgage, deed of trust, security agreement, or other instrument or
agreement binding on Pledgor or any of its property.

         Section 2.3. Principal Place of Business. The principal place of
business and chief executive office of Pledgor, and the office where Pledgor
keeps its books and records, is located at the address of Pledgor shown at the
beginning of this Agreement.

         Section 2.4. Litigation. Except as previously disclosed to Secured
Party in writing, there is no litigation, investigation, or governmental
proceeding pending or threatened against Pledgor or any of its properties which
if adversely determined would have a material adverse effect on the Collateral
or the financial condition, operations, or business of Pledgor.

         Section 2.5. Percentage of Stock. The Collateral constitutes all of the
issued and outstanding shares of common capital stock of the Company.

         Section 2.6. First Priority Perfected Security Interest. This Agreement
creates in favor of Secured Party a first priority perfected security interest
in the Collateral. There are no conditions precedent to the effectiveness of
this Agreement that have not been fully and permanently satisfied.

                                        2

<PAGE>   56

                                   ARTICLE III

                       Affirmative and Negative Covenants

         Pledgor covenants and agrees with Secured Party that:

         Section 3.1. Delivery. Prior to or concurrently with the execution and
delivery of this Agreement, Pledgor shall deliver to Secured Party all
certificate(s) identified on Schedule 1 attached hereto, accompanied by undated
stock powers duly executed in blank.

         Section 3.2. Encumbrances. Pledgor shall not create, permit, or suffer
to exist, and shall defend the Collateral against, any Lien, security interest,
or other encumbrance on the Collateral except the pledge and security interest
of Secured Party hereunder, and shall defend Pledgor's rights in the Collateral
and Secured Party's security interest in the Collateral against the claims of
all Persons.

         Section 3.3. Sale of Collateral. Pledgor shall not sell, assign, or
otherwise dispose of the Collateral or any part thereof without the prior
written consent of Secured Party.

         Section 3.4. Distributions. If Pledgor shall become entitled to receive
or shall receive any stock certificate (including, without limitation, any
certificate representing a stock dividend or a distribution in connection with
any reclassification, increase, or reduction of capital or issued in connection
with any reorganization), option or rights, whether as an addition to, in
substitution of, or in exchange for any Collateral or otherwise, Pledgor agrees
to accept the same as Secured Party's agent and to hold the same in trust for
Secured Party, and to deliver the same forthwith to Secured Party in the exact
form received, with the appropriate endorsement of Pledgor when necessary and/or
appropriate undated stock powers duly executed in blank, to be held by Secured
Party as additional Collateral for the Obligations, subject to the terms hereof.
Any sums paid upon or in respect of the Collateral upon the liquidation or
dissolution of the issuer thereof shall be paid over to Secured Party to be held
by it as additional Collateral for the Obligations subject to the terms hereof;
and in case any distribution of capital shall be made on or in respect of the
Collateral or any property shall be distributed upon or with respect to the
Collateral pursuant to any recapitalization or reclassification of the capital
of the issuer thereof or pursuant to any reorganization of the issuer thereof,
the property so distributed shall be delivered to the Secured Party to be held
by it, as additional Collateral for the Obligations, subject to the terms
hereof. All sums of money and property so paid or distributed in respect of the
Collateral that are received by Pledgor shall, until paid or delivered to
Secured Party, be held by Pledgor in trust as additional security for the
Obligations.

         Section 3.5. Further Assurances. At any time and from time to time,
upon the request of Secured Party, and at the sole expense of Pledgor, Pledgor
shall promptly execute and deliver all such further instruments and documents
and take such further action as Secured Party may deem necessary or desirable to
preserve and perfect its security interest in the Collateral and carry out the
provisions and purposes of this Agreement, including, without limitation, the
execution and filing of such financing statements as Secured Party may require.
A carbon, photographic, or other reproduction of this Agreement or of any
financing statement covering the Collateral or any part thereof shall be

                                       3
<PAGE>   57

sufficient as a financing statement and may be filed as a financing statement.
Subject to the right of Pledgor to receive cash dividends under Section 4.3
hereof, in the event any Collateral is ever received by Pledgor, Pledgor shall
promptly transfer and deliver to Secured Party such Collateral so received by
Pledgor (together with any necessary endorsements in blank or undated stock
powers duly executed in blank), which Collateral shall thereafter be held by
Secured Party pursuant to the terms of this Agreement. Secured Party shall at
all times have the right to exchange any certificates representing Collateral
for certificates of smaller or larger denominations for any purpose consistent
with this Agreement.

         Section 3.6. Inspection Rights. Pledgor shall permit Secured Party and
its representatives to examine, inspect, and copy Pledgor's books and records at
any reasonable time and as often as Secured Party may desire.

         Section 3.7. Taxes. Pledgor agrees to pay or discharge prior to
delinquency all taxes, assessments, levies, and other governmental charges
imposed on it or its property, except Pledgor shall not be required to pay or
discharge any tax, assessment, levy, or other governmental charge if (i) the
amount or validity thereof is being contested by Pledgor in good faith by
appropriate proceedings diligently pursued, (ii) such proceedings do not involve
any risk of sale, forfeiture, or loss of the Collateral or any interest therein,
and (iii) adequate reserves therefor have been established in conformity with
GAAP.

         Section 3.8. Notification. Pledgor shall promptly notify Secured Party
of (i) any Lien, security interest, encumbrance, or claim made or threatened
against the Collateral, (ii) any material change in the Collateral, including,
without limitation, any material decrease in the value of the Collateral, and
(iii) the occurrence or existence of any Event of Default or the occurrence or
existence of any condition or event that, with the giving of notice or lapse of
time or both, would be an Event of Default.

         Section 3.9. Books and Records; Information. Pledgor shall keep
accurate and complete books and records of the Collateral and Pledgor's business
and financial condition in accordance with GAAP. Pledgor shall from time to time
at the request of Secured Party deliver to Secured Party such information
regarding the Collateral and Pledgor as Secured Party may request. Pledgor shall
mark its books and records to reflect the security interest of Secured Party
under this Agreement.

         Section 3.10. Compliance with Agreements. Pledgor shall comply in all
material respects with all agreements, contracts, and instruments binding on it
or affecting its properties or business.

         Section 3.11. Compliance with Laws. Pledgor shall comply in all
material respects with all applicable laws, rules, regulations, and orders of
any court or governmental authority.

         Section 3.12. Additional Securities. Pledgor shall not consent to or
approve the issuance of any additional shares of any class of capital stock of
the issuer of the Collateral, or any securities convertible into, or
exchangeable for, any such shares or any warrants, options, rights, or other
commitments entitling any Person to purchase or otherwise acquire any such
shares.

                                        4
<PAGE>   58

                                   ARTICLE IV

                     Rights of Secured Party and Pledgor

         Section 4.1. Power of Attorney. Pledgor hereby irrevocably constitutes
and appoints Secured Party and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead and in the name of Pledgor or in its
own name, from time to time in Secured Party's discretion, to take any and all
action and to execute any and all documents and instruments which may be
necessary or desirable to accomplish the purposes of this Agreement and, without
limiting the generality of the foregoing, hereby gives Secured Party the power
and right on behalf of Pledgor and in its own name to do any of the following
(subject to the rights of Pledgor under Sections 4.2 and 4.3 hereof), without
notice to or the consent of Pledgor:

               (i) to demand, sue for, collect, or receive in the name of
          Pledgor or in its own name, any money or property at any time payable
          or receivable on account of or in exchange for any of the Collateral
          and, in connection therewith, endorse checks, notes, drafts,
          acceptances, money orders, or any other instruments for the payment of
          money under the Collateral;

               (ii) to pay or discharge taxes, Liens, security interests, or
          other encumbrances levied or placed on or threatened against the
          Collateral; and

               (iii) (A) to direct account debtors and any other parties liable
          for any payment under any of the Collateral to make payment of any and
          all monies due and to become due thereunder directly to Secured Party
          or as Secured Party shall direct; (B) to receive payment of and
          receipt for any and all monies, claims, and other amounts due and to
          become due at any time in respect of or arising out of any Collateral;
          (C) to sign and endorse any drafts, assignments, proxies, stock
          powers, verifications, notices, and other documents relating to the
          Collateral; (D) to commence and prosecute any suit, actions or
          proceedings at law or in equity in any court of competent jurisdiction
          to collect the Collateral or any part thereof and to enforce any other
          right in respect of any Collateral; (E) to defend any suit, action, or
          proceeding brought against Pledgor with respect to any Collateral; (F)
          to settle, compromise, or adjust any suit, action, or proceeding
          described above and, in connection therewith, to give such discharges
          or releases as Secured Party may deem appropriate; (G) to exchange any
          of the Collateral for other property upon any merger, consolidation,
          reorganization, recapitalization, or other readjustment of the issuer
          thereof and, in connection therewith, deposit any of the Collateral
          with any committee, depositary, transfer agent, registrar, or other
          designated agency upon such terms as Secured Party may determine; (H)
          to add or release any guarantor, indorser, surety, or other party to
          any of the Collateral or the Obligations; (I) to renew, extend, or
          otherwise change the terms and conditions of any of the Collateral or
          Obligations; (J) to insure any of the Collateral; and (K) to sell,
          transfer, pledge, make any agreement with respect to or otherwise deal
          with any of the Collateral as fully and completely as though Secured
          Party were the absolute owner thereof for all purposes, and to do, at
          Secured Party's option and Pledgor's expense, at any time, or from
          time to time, all acts

                                        5
<PAGE>   59

          and things which Secured Party deems necessary to protect, preserve,
          or realize upon the Collateral and Secured Party's security interest
          therein.

         This power of attorney is a power coupled with an interest and shall be
irrevocable. Secured Party shall be under no duty to exercise or withhold the
exercise of any of the rights, powers, privileges, and options expressly or
implicitly granted to Secured Party in this Agreement, and shall not be liable
for any failure to do so or any delay in doing so. Secured Party shall not be
liable for any act or omission or for any error of judgment or any mistake of
fact or law in its individual capacity or in its capacity as attorney-in-fact
except acts or omissions resulting from its willful misconduct. This power of
attorney is conferred on Secured Party solely to protect, preserve, and realize
upon its security interest in the Collateral.

         Section 4.2. Voting Rights. Unless and until an Event of Default shall
have occurred and be continuing, Pledgor shall be entitled to exercise any and
all voting rights pertaining to the Collateral or any part thereof for any
purpose not inconsistent with the terms of this Agreement or the Loan Agreement.
Secured Party shall execute and deliver to the Pledgor all such proxies and
other instruments as Pledgor may reasonably request for the purpose of enabling
Pledgor to exercise the voting rights which it is entitled to exercise pursuant
to this Section.

         Section 4.3. Dividends. Unless and until an Event of Default shall have
occurred and be continuing, Pledgor shall be entitled to receive and retain any
dividends on the Collateral paid in cash out of earned surplus to the extent and
only to the extent that such dividends are permitted by the Loan Agreement.

         Section 4.4. Performance by Secured Party. If Pledgor fails to perform
or comply with any of its agreements contained herein, Secured Party itself may,
at its sole discretion, cause or attempt to cause performance or compliance with
such agreement and the expenses of Secured Party, together with interest thereon
at the maximum nonusurious per annum rate permitted by applicable law, shall be
payable by Pledgor to Secured Party on demand and shall constitute Obligations
secured by this Agreement. Notwithstanding the foregoing, it is expressly agreed
that Secured Party shall not have any liability or responsibility for the
performance of any obligation of Pledgor under this Agreement.

         Section 4.5. Setoff; Property Held by Secured Party. Secured Party
shall have the right to set off and apply against the Obligations, at any time
and without notice to Pledgor, any and all deposits (general or special, time or
demand, provisional or final) or other sums at any time credited by or owing
from Secured Party to Pledgor whether or not the Obligations are then due. As
additional security for the Obligations, Pledgor hereby grants Secured Party a
security interest in all money, instruments, and other property of Pledgor now
or hereafter held by Secured Party, including, without limitation, property held
in safekeeping. In addition to Secured Party's right of setoff and as further
security for the Obligations, Pledgor hereby grants Secured Party a security
interest in all deposits (general or special, time or demand, provisional or
final) and other accounts of Pledgor now or hereafter maintained with Secured
Party and all other sums at any time credited by or owing from Secured Party to
Pledgor. The rights and remedies of Secured Party hereunder are in addition to

                                       6
<PAGE>   60

other rights and remedies (including, without limitation, other rights of
setoff) which Secured Party may have.

         Section 4.6. Secured Party's Duty of Care. Other than the exercise of
reasonable care in the physical custody of the Collateral while held by Secured
Party hereunder, Secured Party shall have no responsibility for or obligation or
duty with respect to all or any part of the Collateral or any matter or
proceeding arising out of or relating thereto, including, without limitation,
any obligation or duty to collect any sums due in respect thereof or to protect
or preserve any rights against prior parties or any other rights pertaining
thereto, it being understood and agreed that Pledgor shall be responsible for
preservation of all rights in the Collateral. Without limiting the generality of
the foregoing, Secured Party shall be conclusively deemed to have exercised
reasonable care in the custody of the Collateral if Secured Party takes such
action, for purposes of preserving rights in the Collateral, as Pledgor may
reasonably request in writing, but no failure or omission or delay by Secured
Party in complying with any such request by Pledgor, and no refusal by Secured
Party to comply with any such request by Pledgor, shall be deemed to be a
failure to exercise reasonable care.

         Section 4.7. Assignment by Secured Party. Secured Party may at any time
and from time to time assign the Obligations and any portion thereof and/or the
Collateral and any portion thereof, and the assignee shall be entitled to all of
the rights and remedies of Secured Party under this Agreement in relation
thereto.

                                    ARTICLE V

                                     Default

         Section 5.1. Rights and Remedies. If any Event of Default shall occur,
Secured Party shall have the following rights and remedies:

               (i) In addition to all other rights and remedies granted to
          Secured Party in this Agreement and in any other instrument or
          agreement securing, evidencing, or relating to the Obligations,
          Secured Party shall have all of the rights and remedies of a secured
          party under the Uniform Commercial Code as adopted by the State of
          Illinois. Without limiting the generality of the foregoing, Secured
          Party may (A) without demand or notice to Pledgor, collect, receive,
          or take possession of the Collateral or any part thereof, (B) sell or
          otherwise dispose of the Collateral, or any part thereof, in one or
          more parcels at public or private sale or sales, at Secured Party's
          offices or elsewhere, for cash, on credit, or for future delivery,
          and/or (C) bid and become a purchaser at any sale free of any right or
          equity of redemption in Pledgor, which right or equity is hereby
          expressly waived and released by Pledgor. Upon the request of Secured
          Party, Pledgor shall assemble the Collateral and make it available to
          Secured Party at any place designated by Secured Party that is
          reasonably convenient to Pledgor and Secured Party. Pledgor agrees
          that Secured Party shall not be obligated to give more than five (5)
          days written notice of the time and place of any public sale or of the
          time after which any private sale may take place and that such notice
          shall constitute reasonable notice of such matters. Secured Party
          shall not be obligated to make any sale of the Collateral regardless
          of notice of sale having been given. Secured Party may adjourn any
          public or

                                        7
<PAGE>   61

          private sale from time to time by announcement at the time and place
          fixed therefor, and such sale may, without further notice, be made at
          the time and place to which it was so adjourned. Pledgor shall be
          liable for all expenses of retaking, holding, preparing for sale, or
          the like, and all attorneys' fees and other expenses incurred by
          Secured Party in connection with the collection of the Obligations and
          the enforcement of Secured Party's rights under this Agreement, all of
          which expenses and fees shall constitute additional Obligations
          secured by this Agreement. Secured Party may apply the Collateral
          against the Obligations in such order and manner as Secured Party may
          elect in its sole discretion. Pledgor shall remain liable for any
          deficiency if the proceeds of any sale or disposition of the
          Collateral are insufficient to pay the Obligations. Pledgor waives all
          rights of marshalling in respect of the Collateral.

               (ii) Secured Party may cause any or all of the Collateral held by
          it to be transferred into the name of Secured Party or the name or
          names of Secured Party's nominee or nominees.

               (iii) Secured Party may collect or receive all money or property
          at any time payable or receivable on account of or in exchange for any
          of the Collateral, but shall be under no obligation to do so.

               (iv) Secured Party shall have the right, but shall not be
          obligated to, exercise or cause to be exercised all voting,
          consensual, and other powers of ownership pertaining to the
          Collateral, and Pledgor shall deliver to Secured Party, if requested
          by Secured Party, irrevocable proxies with respect to the Collateral
          in form satisfactory to Secured Party.

               (v) Pledgor hereby acknowledges and confirms that Secured Party
          may be unable to effect a public sale of any or all of the Collateral
          by reason of certain prohibitions contained in the Securities Act of
          1933, as amended, and applicable state securities laws and may be
          compelled to resort to one or more private sales thereof to a
          restricted group of purchasers who will be obligated to agree, among
          other things, to acquire any shares of the Collateral for their own
          respective accounts for investment and not with a view to distribution
          or resale thereof. Pledgor further acknowledges and confirms that any
          such private sale may result in prices or other terms less favorable
          to the seller than if such sale were a public sale and,
          notwithstanding such circumstances, agrees that any such private sale
          shall be deemed to have been made in a commercially reasonable manner,
          and Secured Party shall be under no obligation to take any steps in
          order to permit the Collateral to be sold at a public sale. Secured
          Party shall be under no obligation to delay a sale of any of the
          Collateral for any period of time necessary to permit any issuer
          thereof to register such Collateral for public sale under the
          Securities Act of 1933, as amended, or under applicable state
          securities laws.

               (vi) On any sale of the Collateral, Secured Party is hereby
          authorized to comply with any limitation or restriction with which
          compliance is necessary, in the view of Secured Party's counsel, in
          order to avoid any violation of applicable law or in order to obtain
          any required approval of the purchaser or purchasers by any applicable
          governmental authority.

                                        8
<PAGE>   62

                                   ARTICLE VI

                                  Miscellaneous

         Section 6.1. Expenses; Indemnification. Pledgor agrees to pay on demand
all costs and expenses incurred by Secured Party in connection with the
preparation, negotiation, and execution of this Agreement and any and all
amendments, modifications, and supplements hereto. Pledgor agrees to pay and to
hold Secured Party harmless from and against all fees and all excise, sales,
stamp, and other taxes payable in connection with this Agreement or the
transactions contemplated hereby. Pledgor hereby indemnifies Secured Party and
each affiliate thereof and their respective officers, directors, employees,
attorneys, and agents from, and holds each of them harmless against, any and all
losses, liabilities, claims, damages, penalties, judgments, costs, and expenses
(including attorneys' fees) to which any of them may become subject which
directly or indirectly arise from or relate to (i) the negotiation, execution,
delivery, performance, administration, or enforcement of this Agreement, (ii)
any of the transactions contemplated by this Agreement, (iii) any breach by
Pledgor of any representation, warranty, covenant, or other agreement contained
in this Agreement, or (iv) any investigation, litigation, or other proceeding,
including, without limitation, any threatened investigation, litigation, or
other proceeding relating to any of the foregoing. Without limiting any
provision of this Agreement or any other instrument, or agreement securing,
evidencing, or relating to the Obligations or any part thereof, it is the
express intention of the parties hereto that each person or entity to be
indemnified under this Section shall be indemnified from and held harmless
against any and all losses, liabilities, claims, damages, penalties, judgments,
costs, and expenses (including attorneys' fees) arising out of or resulting from
the sole or contributory negligence of the person or entity to be indemnified.

         Section 6.2. No Waiver; Cumulative Remedies. No failure on the part of
Secured Party to exercise and no delay in exercising, and no course of dealing
with respect to, any right, power, or privilege under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power, or privilege under this Agreement preclude any other or further
exercise thereof or the exercise of any other right, power, or privilege. The
rights and remedies provided for in this Agreement are cumulative and not
exclusive of any rights and remedies provided by law.

         Section 6.3. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of Pledgor and Secured Party and their respective
heirs, successors, and assigns, except that Pledgor may not assign any of its
rights or obligations under this Agreement without the prior written consent of
Secured Party.

         Section 6.4. AMENDMENT; ENTIRE AGREEMENT. THIS AGREEMENT EMBODIES THE
FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDES ANY AND ALL
PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER
WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE
CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO ORAL

                                        9
<PAGE>   63

AGREEMENTS AMONG THE PARTIES HERETO. The provisions of this Agreement may be
amended or waived only by an instrument in writing signed by the parties hereto.

         Section 6.5. Notices. All notices and other communications provided for
in this Agreement shall be given or made by telex, telegraph, telecopy, cable,
or in writing and telexed, telecopied, telegraphed, cabled, mailed by certified
mail return receipt requested, or delivered to the intended recipient at the
"Address for Notices" specified below its name on the signature pages hereof;
or, as to any party at such other address as shall be designated by such party
in a notice to the other party given in accordance with this Section. Except as
otherwise provided in this Agreement, all such communications shall be deemed to
have been duly given when transmitted by telex or telecopy, subject to telephone
confirmation of receipt, or delivered to the telegraph or cable office, subject
to telephone confirmation of receipt, or when personally delivered or, in the
case of a mailed notice, when duly deposited in the mails, in each case given or
addressed as aforesaid.

         Section 6.6. Applicable Law; Venue; Service of Process. This Agreement
shall be governed by and construed in accordance with the laws of the State of
Illinois and the applicable laws of the United States of America. Any action or
proceeding against Pledgor under or in connection with this Agreement or any
other instrument or agreement securing, evidencing, or relating to the
Obligations or any part thereof may be brought in any state or federal court in
Cook County, Illinois. Pledgor hereby irrevocably (i) submits to the
nonexclusive jurisdiction of such courts, and (ii) waives any objection it may
now or hereafter have as to the venue of any such action or proceeding brought
in such court or that such court is an inconvenient forum. Pledgor agrees that
service of process upon it may be made by certified or registered mail, return
receipt requested, at its address specified or determined in accordance with the
provisions of Section 6.5 of this Agreement. Nothing in this Agreement or any
other instrument or agreement securing, evidencing, or relating to the
Obligations or any part thereof shall affect the right of Secured Party to serve
process in any other manner permitted by law or shall limit the right of Secured
Party to bring any action or proceeding against Pledgor or with respect to any
of its property in courts in other jurisdictions. Any action or proceeding by
Pledgor against Secured Party shall be brought only in a court located in Cook
County, Illinois.

         Section 6.7. Headings. The headings, captions, and arrangements used in
this Agreement are for convenience only and shall not affect the interpretation
of this Agreement.

         Section 6.8. Survival. All representations and warranties made in this
Agreement shall survive the execution and delivery of this Agreement, and no
investigation by Secured Party shall affect the representations and warranties
of Pledgor herein or the right of Secured Party to rely upon them.

         Section 6.9. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

         Section 6.10. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such

                                       10

<PAGE>   64

prohibition or unenforceability without invalidating the remaining provisions of
this Agreement, and any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction.

         Section 6.11. Construction. Pledgor and Secured Party acknowledge that
each of them has had the benefit of legal counsel of its own choice and has been
afforded an opportunity to review this Agreement with its legal counsel and that
this Agreement shall be construed as if jointly drafted by Pledgor and Secured
Party.

         Section 6.12. Obligations Absolute. The obligations of Pledgor under
this Agreement shall be absolute and unconditional and shall not be released,
discharged, reduced, or in any way impaired by any circumstance whatsoever,
including, without limitation, any amendment, modification, extension, or
renewal of this Agreement, the Obligations, or any document or instrument
evidencing, securing, or otherwise relating to the Obligations, or any release,
subordination, or impairment of collateral, or any waiver, consent, extension,
indulgence, compromise, settlement, or other action or inaction in respect of
this Agreement, the Obligations, or any document or instrument evidencing,
securing, or otherwise relating to the Obligations, or any exercise or failure
to exercise any right, remedy, power, or privilege in respect of the
Obligations.

         Section 6.13. WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, PLEDGOR HEREBY IRREVOCABLY AND EXPRESSLY WAIVES ALL RIGHT TO A
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED UPON
CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS OF SECURED PARTY IN THE
NEGOTIATION, ADMINISTRATION, OR ENFORCEMENT THEREOF.

        [Remainder of page intentionally blank. Signature pages follow.]

                                       11

<PAGE>   65

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

                                        PLEDGOR:

                                        SOUTH HAMPTON REFINING CO.

                                        By:
                                           ------------------------------------
                                           Nicholas N. Carter
                                           President

                                        Address for Notices:

                                        7752 FM 418
                                        P.O. Box 1636
                                        Silsbee, Texas 77656

                                        Fax No.:   (409) 385-2453
                                        Attention: Nicholas N. Carter

                                PLEDGE AGREEMENT
                                 SIGNATURE PAGE

<PAGE>   66

                                        SECURED PARTY:

                                        HELLER FINANCIAL LEASING, INC.

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

                                        Address for Notices:
                                        Commercial Equipment Finance Group
                                        500 West Monroe Street
                                        Chicago, Illinois 60661

                                        Fax:   (312) 441-7519

                                PLEDGE AGREEMENT
                                 SIGNATURE PAGE

<PAGE>   67

                                   SCHEDULE 1

         All shares of stock in Gulf State Pipe Line Company, Inc., now existing
or hereafter issued, presently evidenced by Stock Certificate No. 2, evidencing
1000 shares of common stock.

<PAGE>   68
                                  GROUND LEASE

                                 by and between

                    SOUTH HAMPTON REFINING CO., as Landlord

                                      and

                   HELLER FINANCIAL LEASING, INC., as Tenant

<PAGE>   69

                                  GROUND LEASE

         THIS GROUND LEASE ("Lease") is made and executed as of the 30th day of
December, 1999, by and between SOUTH HAMPTON REFINING CO., a Texas corporation
("Landlord"), and HELLER FINANCIAL LEASING, INC., a Delaware corporation
("Tenant"), with reference to the following:

                                R E C I T A L S:

         A.       Landlord is the owner of that certain parcel of land
containing approximately 105 acres located in Silsbee, Texas and legally
described on Exhibit A attached hereto and made a part hereof, together with
any and all easements, licenses, tenements, hereditaments and appurtenances no
or hereafter belonging or pertaining to said real property (said real property
and interests herein referred collectively to as the "Premises").

         B.       Landlord desires to lease to Tenant, and Tenant desires to
lease from Landlord, the Premises.

         C.       Simultaneously with the execution of this Lease, Landlord has
obtained a loan (the "Loan") from Tenant in the stated principal amount of
Three Million Five Hundred Thousand Dollars ($3,500,000.00) secured by, among
other things, the equipment, fixtures and other personalty owned by Landlord
and currently or at any subsequent time located or positioned on the Premises
(the "Equipment"). Such Loan is being made and granted pursuant to and as
described in that certain Loan and Security Agreement of even date herewith
(the "Loan Agreement") between Tenant, as Lender, and Landlord, as Borrower.

         D.       In lieu of granting a security interest in the Premises
pursuant to a deed of trust or mortgage instrument, Landlord hereby makes and
grants this Lease as additional security for the Loan.

         E.       Simultaneously with the execution of this Lease, Landlord has
made and entered into a Hazardous Substances Indemnity Agreement (herein so
called) of even date herewith providing environmental indemnities and
protections to the Tenant.

         1.       Premises. In consideration of the mutual covenants herein
contained and subject to and in consideration of the execution, delivery and
performance of each of Landlord and Tenant of the Loan Agreement and Hazardous
Substances Indemnity Agreement, Landlord hereby leases to Tenant, and Tenant
hereby leases from Landlord, the Premises, upon and subject to the terms and
conditions of this Lease.

         2.       Lease Term. The term of this Lease (the "Term") shall
commence on December 30, 1999 (the "Lease Commencement Date") and shall
continue until December 31, 2049 (the "Termination Date"), unless earlier
terminated pursuant to the provisions hereof. As used herein, the

<PAGE>   70

term "Lease Year" shall mean each calendar year or portion thereof within the
Term. The first Lease Year, however, shall commence on the Commencement Date
and shall end on December 31 of the calendar year immediately succeeding the
calendar year in which the Commencement Date shall occur.

         3.       Base Rent. Tenant shall pay to Landlord, in lawful money of
the United States of America, annual rent (the "Base Rent") of One Dollar
($1.00). Landlord hereby acknowledges payment of Base Rent for the entire Term.

         4.       Possession of Premises. Tenant does not have the initial
intention to take actual possession of the Premises and instead chooses to
utilize its leasehold interest as additional security under the Loan Agreement.
If there is a default under the terms of the Loan Agreement, Tenant may at its
option upon written demand obtain actual possession of the Premises at which
time Landlord shall deliver possession of the Premises free and clear of all
interests (possessory or otherwise) other than those expressly consented to by
Tenant.

         5.       Taxes and Assessments. During the Term of this Lease,
Landlord shall pay to the public officers charged with the collection thereof,
as the same become due and payable and before any fine, penalty, interest or
other charge may be added thereto for the nonpayment thereof, all real estate
taxes, license and permit fees, charges for public utilities of any kind, and
obligations for any and all other governmental charges, general and special,
ordinary and extraordinary, unforeseen as well as foreseen, of any kind and
nature whatsoever, as well as assessments for sidewalks, streets, sewers, water
or any other public improvements and any other improvements or benefits which,
during the Term hereof, shall be made, assessed, levied or imposed upon or
become due and payable in connection with, or a lien upon, the Premises, or any
part thereof or improvements thereon, or upon this Lease (all of which taxes,
assessments and other governmental charges are hereinafter referred to as
"Impositions"). Landlord shall automatically furnish to Tenant, within thirty
(30) days after the date upon which any such Imposition is due, official
receipts of the proper taxing or other authority, or other proof reasonably
satisfactory to Tenant, evidencing the full payment thereof. Landlord shall
promptly send to Tenant copies of any notices for any such taxes, assessments
or charges received by Landlord.

         6.       Indemnification by Landlord. In addition to the indemnities
and protections granted by Landlord to Tenant pursuant to the Hazardous
Substances Indemnity Agreement, Landlord hereby agrees to and shall defend,
protect, indemnify and save harmless Tenant and all of Tenant's partners,
officers, directors, shareholders, affiliates, agents, employees,
representatives, contractors and invitees from and against all liabilities,
obligations, claims, demands, damages, penalties, fines, losses, suits, causes
of action, costs and expenses (including, without limitation, reasonable
attorneys' fees and expenses) imposed upon or incurred by or asserted against
Tenant or any other such indemnified persons or parties by reason of (a)
ownership of the Premises or any interest therein, or receipt of any rent or
other sum therefrom, (b) any accident, occurrence, injury to or death of
persons (including workmen) or loss of or damage to property occurring on or
about the Premises (or any part thereof) or any buildings, improvements,
fixtures, equipment or personalty thereon or the adjoining sidewalks,

                                      -2-

<PAGE>   71

curbs, vaults and vault space, if any, or the adjoining streets or ways, (c) any
use, non-use or condition of the Premises (or any part thereof) or the adjoining
sidewalks, curbs, vaults or vault space, if any, or the adjoining streets or
ways, (d) any failure on the part of Landlord to perform or comply with any of
the terms of this Lease, (e) performance of any labor or services or the
furnishing of any materials or other property in respect of the Premises or any
part thereof, or (f) any matters related to any and all Impositions, and from
any and all liens and penalties imposed as a result of a delinquency in payment
thereof. In case any action, suit or proceeding is brought against Tenant or any
other such indemnified persons or parties by reason of any such occurrence,
Landlord, upon Tenant's request, will at Landlord's sole expense resist and
defend such action, suit or proceeding, or cause the same to be resisted and
defended by counsel designated by Tenant and approved by Tenant in advance in
writing. The obligations of Landlord under this Paragraph 6 arising by reason of
any such occurrence taking place during the Term of this Lease shall survive any
expiration or earlier termination of this Lease.

         7.       Use of Premises. Landlord acknowledges, represents and
warrants that the current use of the Premises complies with all applicable
statutes, rules, orders, ordinances, requirements and regulations of any
governmental authority having jurisdiction over the Premises and covenants that
the same will hold true throughout the term of this Lease.

         8.       Utilities. As long as it is in possession of the Premises,
Landlord alone shall be responsible for and shall pay all charges for all
water, gas, heat, light, electricity, telephone, sewer, sprinkler, cable and
other utilities and services used or desired by Landlord on or from the
Premises, together with any taxes, penalties, surcharges or the like pertaining
thereto and any maintenance charges for all utilities. Tenant has no
responsibility to provide any such utilities or services, nor any other
services, and Tenant shall not be liable in any respect (including for damages
to either person or property) in the event of any failure in the provision of
any such utilities or services or in the event of any cessation thereof nor
shall any such failure or cessation be construed as an eviction of Landlord or
relieve Landlord from fulfillment of any covenant in this Lease. If Tenant or
any successor in interest to Tenant shall take possession of the Premises,
Landlord shall ensure that adequate utilities are provided to the Premises.

         9.       Responsibility for Other Expenses. As long as it is in
possession of the Premises, Landlord alone shall be responsible for and shall
pay all other expenses that are incident to or have a direct relationship with
the ownership, operation and maintenance of the Premises.

         10.      Maintenance and Repairs. Landlord covenants that it shall
keep the Premises and all buildings, improvements, fixtures and equipment
located on and/or used in connection with the Premises in good condition and
shall make or cause to be made all necessary repairs, alterations and/or
replacements thereto. All such repairs, alterations or replacements shall be of
good quality and Landlord shall cause the Premises and all buildings,
improvements, fixtures and equipment to be maintained in a manner consistent
with its condition, quality and class on the date hereof. Landlord shall not
use, or permit or suffer to be used, the Premises or any part thereof for any
disorderly or unlawful purpose and shall not commit or permit any waste or
deterioration of the Premises.

                                      -3-
<PAGE>   72

         11.      Alterations and Additions. Landlord, at its own expense,
shall have the right to make alterations and additions to the Premises and the
buildings thereon (if any), provided that: (a) no substantial portion of any
buildings may be demolished or removed without the prior written consent of
Tenant; and (b) the general character of the Premises shall not be changed as a
result of any such alterations or additions nor shall the fair market value of
the Premises be reduced as a result of any such alterations or additions below
the value of the Premises which existed immediately before such alterations or
additions. All such work shall be done in a good and workmanlike manner and
shall consist of new materials unless otherwise agreed to by Tenant.

         12.      Insurance. At all times through the Term of this Lease,
Landlord shall obtain and maintain the insurance in the form and substance,
required to be obtained and maintained pursuant to the Loan Agreement.

         13.      Damage or Destruction. In the event of damage to or
destruction of the buildings or improvements, if any, situated on the Premises
by fire or other casualty, Landlord will give Tenant immediate notice thereof.
Tenant shall have the option upon the receipt of notice from Landlord to
immediately terminate the Lease and the rights and obligations of the parties
hereunder, except rights and obligations arising prior to such damage or
destruction, shall terminate as of the date of such damage or destruction and
the parties hereto shall look solely to the insurance award for compensation
for their respective interests in the Premises. If Tenant does not elect to
terminate the Lease, Landlord will promptly, at Landlord's sole expense and
whether or not the insurance proceeds (if any) payable or received by virtue of
such event are sufficient for the following purpose, repair, restore or rebuild
(as applicable) the same to the same or improved condition and utility (except
as may be otherwise agreed between Landlord and Tenant) so that upon the
completion of such repairs, restoration or rebuilding (as the case may be), the
fair market value of the said buildings and improvements shall be at least
substantially equal to the fair market value thereof as existed immediately
prior to the occurrence of such fire or other casualty. Landlord's obligations
to be performed hereunder shall continue during the period of any such repair
and restoration.

         14.      Condemnation.

                  (a) Entire Premises. In the event that all right, title and
interest of Landlord and Tenant in and to the Premises is acquired by authority
of any governmental agency in the exercise of its power of eminent domain, the
rights and obligations of the parties hereunder, except rights and obligations
arising prior to such taking, shall terminate as of the date of such taking and
the parties hereto shall look solely to the condemnation award for compensation
for their respective interests in the Premises, as hereinafter provided.

                  (b) Partial Taking. In the event that less than all of the
right, title and interest of Landlord in the Premises is acquired by authority
of any governmental agency in the exercise of its power of eminent domain,
Tenant, upon consideration of the utility of the Premises, shall have the
option, which may be exercised in its sole discretion, whether or not to
terminate this Lease. If Tenant so chooses to terminate the Lease, this Lease
shall terminate as of the date of such taking and

                                      -4-
<PAGE>   73

the parties hereto shall look solely to the condemnation award for compensation
for their respective interests in the Premises. If Tenant determines that the
operation on the Premises can so continue, this Lease shall continue as to the
remainder of the Premises, and Tenant, subject to the rights of any Leasehold
Mortgagee (hereinafter defined), shall use the condemnation proceeds to repair
and restore the improvements on the Premises.

                  (c)      Condemnation Award. Any condemnation award resulting
from a total taking shall be allocated and paid first to the Leasehold
Mortgagee, if any, in accordance with the terms and provisions of the Leasehold
Mortgage (hereinafter defined), then to the Tenant in consideration of the
repayment of the Loan, and if any amount of the condemnation award remains
after full repayment of the Loan, then to the Landlord.

         15.      Default.

                  (a)      Landlord Default. In addition to other Defaults
defined throughout this Lease, it shall constitute a "Default" by Landlord
under this Lease if (a) Landlord shall fail to pay any sum or payment to Tenant
required herein as and when due hereunder, or (b) failure or default shall be
made in the performance of any of the other covenants, agreements, conditions
or undertakings herein contained to be kept, observed and performed by the
Landlord and such failure or default shall continue for fifteen (15) days after
notice thereof in writing to the Landlord (provided however, if such failure
cannot reasonably be cured within such 15-day period, but Landlord commences to
cure such failure within such 15-day period and thereafter diligently pursues
such cure to completion, then such failure shall not be a Default hereunder
unless the same is not fully cured within an additional 30 days following the
expiration of the aforesaid 15-day period), or (c) Landlord shall generally not
pay its debts as they become due or shall admit in writing its inability to pay
its debts, or Landlord shall file a petition in voluntary bankruptcy under the
Federal Bankruptcy Act or similar law, state or federal, whether now or
hereafter existing, or Landlord shall file an answer admitting insolvency or
inability to pay Landlord's debts, or Landlord shall fail to obtain a vacation
or stay of involuntary proceedings in bankruptcy or insolvency within sixty
(60) days after the filing of same (as hereinafter provided), or Landlord shall
be adjudicated a bankrupt, or a trustee or receiver shall be appointed for
Landlord or for all of Landlord's property or the major part thereof, or any
court shall have taken jurisdiction of the property of Landlord or the major
part thereof in any involuntary proceeding for reorganization, dissolution,
liquidation or winding up of Landlord, and such trustee or receiver shall not
be discharged or such jurisdiction relinquished or vacated or stayed on appeal
or otherwise removed within sixty (60) days after such appointment; provided
that in the event of such occurrence, Landlord and Tenant intend and agree that
the transactions evidenced by the Loan Agreement and surrounding loan documents
shall be regarded as a loan from Tenant to Landlord that is secured by the
Premises, and Landlord hereby grants Tenant a security interest in the Premises
as described in Paragraph 16(e) herein and this Lease shall be deemed to be a
security agreement and financing statement within the meaning of Article 9 of
the Uniform Commercial Code of any applicable law, or (d) Landlord shall make
an assignment for the benefit of Landlord's creditors, or (e) Landlord shall
vacate or abandon the Premises, or (f) Landlord shall fail to discharge any
lien or encumbrance placed upon the Premises in violation of the terms and
conditions of this Lease within fifteen (15) days after

                                      -5-
<PAGE>   74

such lien or encumbrance is filed against the Premises, or (g) Landlord shall
commit an event of default or default under the terms of the Loan Agreement,
the Sub-Ground Lease (as defined herein) or the Hazardous Substances Indemnity
Agreement.

                  (b) Tenant Default. It is hereby acknowledged and agreed by
Landlord that Tenant has undertaken no obligations under this Lease and,
accordingly, by its actions or omissions can not commit a default under the
terms of this Lease.

         16.      Remedies for Landlord Default. Upon the occurrence of a
Default by Landlord under this Lease, Tenant, at Tenant's sole option and
without further notice or demand to Landlord, may, in addition to all other
rights and remedies provided in this Lease or at law or in equity, elect to
pursue any one or more of the following rights or remedies without any notice
or demand whatsoever:

                  (a)      Foreclose on the Equipment pursuant to the terms of
the Loan Agreement.

                  (b)      Terminate this Lease and Landlord's right of
possession of the Premises (in which event Landlord shall immediately surrender
the Premises to Landlord, and, if Landlord fails to do so, Tenant may, without
prejudice to any other remedy that Tenant may have or be entitled for
possession, enter upon and take possession of the Premises and expel or remove
Landlord and any other person who may be occupying such Premises or any part
thereof, by force if necessary, without being liable for prosecution or any
claim of damages therefor), and Tenant shall thereupon be entitled to recover
from Landlord all damages for all loss and damage which Tenant may suffer by
reason of such termination, whether through inability to relet the Premises, or
otherwise, including any loss of Rent and other benefits which Tenant would
have received under this Lease for the remainder of the Lease Term.

                  (c)      Terminate Landlord's right of possession of the
Premises without terminating this Lease (in which event Tenant may enter upon
and take possession of the Premises and expel or remove Landlord and any other
person or persons who may be occupying such Premises or any part thereof, by
force if necessary, without being liable for prosecution or any claim for
damages therefor), and in which event Tenant may, but shall not be obligated
to, relet the Premises, or any part thereof, for the account of Landlord, for
such rent and such term and upon such terms and conditions as are acceptable to
Tenant in Tenant's sole discretion.

                  (d)      Enter upon the Premises, by force if necessary,
without being liable for prosecution or any claim for damages therefor, and do
whatever Landlord is obligated to do under the terms of this Lease, and
Landlord agrees to reimburse Tenant on demand for any expenses which Tenant may
incur in thus effecting compliance with Landlord's obligations under this
Lease, and Landlord further agrees that Tenant shall not be liable for any
damage resulting to Landlord from such action, whether caused by the negligence
of Tenant or otherwise.

                                      -6-
<PAGE>   75

         In the event Tenant may elect to regain possession of the Premises by
a forcible detainer proceeding, Landlord hereby specifically waives any
statutory notice which may be required prior to such proceeding, and Landlord
agrees that Landlord's execution of this Lease is, in part, consideration for
such waiver. If Landlord shall fail to make any payments or cure any event of
default hereunder within the time herein permitted, Tenant, without being under
any obligation to do so and without thereby waiving such event of default, may
make such payments or remedy such other event of default for the account of
Landlord (and enter the Premises for such purpose) and thereupon Landlord shall
be obligated to, and hereby agrees, to pay Tenant, upon demand, all costs,
expenses and disbursements (including reasonable attorneys' fees) incurred by
Tenant in taking such remedial action. In the event that Tenant shall have
taken possession of the Premises pursuant to the authority herein granted, then
Tenant shall have the right to keep in place and use all of the furniture,
fixtures and equipment at the Premises, including that which is owned by or
leased to Landlord, at all times prior to any foreclosure thereon by Tenant or
repossession thereof by any lessor thereof or third party having a lien
thereon; and Tenant shall also have the right to remove from such Premises
(without the necessity of obtaining a distress warrant, writ of sequestration
or other legal process) all or any portion of such furniture, fixtures,
equipment and other property located thereon and to place same in storage in
any premises within the county in which the Premises are located, and, in such
event, Landlord shall be liable to Tenant for any and all costs incurred by
Tenant in connection with such removal and storage; and Tenant shall also have
the right to relinquish possession of all or any portion of such furniture,
fixtures, equipment and other property to any person ("Claimant") claiming to
be entitled to possession thereof who presents to Tenant a copy of any
instrument represented to Tenant by Claimant to have been executed by Landlord
(or any predecessor of Landlord) granting Claimant the right under such
circumstances to take possession of such furniture, fixtures, equipment or
other property, without the necessity on the part of Tenant to inquire into the
authenticity of said instrument's copy or Landlord's or Landlord's
predecessor's signature thereon and without the necessity of Tenant making any
nature of investigation or inquiry as to the validity of the factual or legal
basis upon which Claimant purports to act; AND LANDLORD AGREES TO INDEMNIFY AND
HOLD TENANT HARMLESS FROM ALL COST, LOSS, EXPENSE, DAMAGE AND LIABILITY
INCIDENT TO LANDLORD'S RELINQUISHMENT OF POSSESSION OF ALL OR ANY PORTION OF
SUCH FURNITURE, FIXTURES, EQUIPMENT OR OTHER PROPERTY TO CLAIMANT, AND LANDLORD
STIPULATES AND AGREES THAT THE RIGHTS HEREIN GRANTED TO TENANT ARE COMMERCIALLY
REASONABLE. In the event of termination or repossession of the Premises as a
result of an event of default by Landlord hereunder, Tenant shall not have any
obligation to relet or to attempt to relet the Premises, or any portion
thereof, or to collect rental after reletting; and, in the event of reletting,
Tenant may relet the whole or any portion of the Premises for any period to any
tenant and for any use and purpose. For the purposes of any reletting of the
Premises, the Tenant is hereby authorized to repair, alter and improve the
Premises to the extent necessary or desirable in the Tenant's judgment. If and
when the Premises are relet and if a sufficient sum is not realized from such
reletting after payment of all the Tenant's expenses of reletting (including,
without limitation, costs of repairs, alterations, improvements, additions,
legal fees and brokerage commissions) to satisfy the payment of Rent due under
this Lease for any month, Landlord shall pay to Tenant any such deficiency
monthly upon demand. Landlord agrees that the Tenant may file suit to recover
any sums due to Tenant under this

                                      -7-
<PAGE>   76

Lease and that such suit or recovery of any amount due Tenant pursuant hereto
shall not be any defense to any subsequent action brought for any amount not
previously reduced by judgment in favor of Tenant. If Tenant elects to
terminate Landlord's right to possession of the Premises only, without
terminating this Lease, Tenant may, at Tenant's sole option, enter upon the
Premises, removing Landlord's signs and other evidences of tenancy, and take
and hold possession thereof; provided, however, that such entry and possession
shall not terminate this Lease nor release Landlord, in whole or in part, from
Landlord's from any obligation of Landlord under this Lease. Landlord shall pay
on demand and reimburse Tenant for payment of Tenant's reasonable attorneys'
fees, expenses and court costs in negotiation, at trial, and on appeal incurred
by Tenant to enforce any obligation of Landlord under this Lease, or to defend
any claim brought by Landlord against Tenant or by any person claiming by,
through or under Landlord, or in curing any event of default by Landlord, or in
connection with any action or proceeding arising out of or occasioned by any
lien or claim of lien on the Premises, or in defending or otherwise
participating in any legal proceeding initiated by Landlord or against
Landlord, or in connection with the investigation of a response to any request
for consent or other amendments to this Lease by Landlord.

         It is acknowledged and agreed that Base Rent for the entire term has
been paid in advance.

                  (e)      Power of Sale. In the event of a Default, Tenant and
Trustee (as defined herein) shall have all the rights available to a deed of
trust trustee or a beneficiary of a deed of trust under the laws of the State
of Texas, including, without limitation, all rights granted a trustee or
beneficiary under the laws of the State of Texas including Section 51.002 of
the Texas Property Code, as amended or a successor statute (collectively, the
"Deed of Trust Law"). In accordance therewith, to secure the full and timely
performance and discharge of Landlord's obligations under the Lease, Landlord
hereby grants, bargains, sells and conveys in trust with power of sale, the
Premises unto Michael W. Hillard, Esq. as a deed of trust trustee (the
"Trustee"). Tenant may appoint in writing, a substitute trustee without notice,
filing or recordation, who shall succeed to all the estates, rights, powers
and duties of the aforenamed Trustee.

                  (f)      Tenant's Remedies Cumulative. Each right, power and
remedy of Tenant provided for in this Lease or now or hereafter existing at law
or in equity or by statute or otherwise shall be cumulative and concurrent and
shall be in addition to every other right, power or remedy provided for in this
Lease or now or hereafter existing at law or in equity or by statute or
otherwise, and the exercise or beginning of the exercise by Tenant of any one
or more of the rights, powers or remedies provided for in this Lease or now or
hereafter existing at law or in equity or by statute or otherwise shall not
preclude the simultaneous or later exercise by Tenant of any or all such other
rights, powers or remedies.

         17.      Leasehold Mortgages.

                  (a)      Tenant shall have the right, at any time and from
time to time, without the consent of the Landlord, to grant one or more
mortgages, collateral assignments or security interests in Tenant's leasehold
interest under the Lease. Said mortgage or collateral device and any subsequent

                                      -8-
<PAGE>   77

or additional mortgages or collateral devices granted by Tenant are hereinafter
referred to individually and, to the extent that more than one such mortgage or
security device(s) may be in force at any one time, collectively, as the
"Leasehold Mortgage." The holder(s) of such Leasehold Mortgage at any point in
time are hereinafter referred to, individually and collectively, as the
"Leasehold Mortgagee."

                  (b)      Landlord shall not be obligated to subordinate or
subject Landlord's interest to the lien and charge of any Leasehold Mortgage.

                  (c)      If the holder of any Leasehold Mortgage shall have
registered with Landlord by written notice specifying the name and address of
such Leasehold Mortgagee, Landlord thereafter shall give to such Leasehold
Mortgagee a copy of each notice of default for which provision is made under
Section 10 hereof at the same time as and whenever such notice shall be given
by Landlord to Tenant, such copy to be addressed to such Leasehold Mortgagee at
the address last furnished to Landlord as provided hereinabove. In the event of
any such registration, Landlord shall not be entitled to serve a notice of
cancellation and termination upon Tenant unless a copy of any prior notice of
default shall have been given to such Leasehold Mortgagee as hereinabove
provided and the time as hereinafter specified for the curing of such default
shall have expired without the same having been cured. The performance by any
such Leasehold Mortgagee of any condition or agreement on the part of Tenant to
be performed hereunder will be deemed to have been performed with the same
force and effect as though performed by Tenant.

                  (d)      Landlord will accept performance by any Leasehold
Mortgagee, within the following periods, of any term, covenant or condition on
Tenant's part to be performed hereunder, with the same force and effect as
though timely performed by Tenant:

                           (ii)     As to any rent and all other charges
         payable hereunder, within thirty (30) days after notice from Landlord
         to Leasehold Mortgagee that such default was not cured within the time
         period given to Tenant; and

                           (iii)    As to all other defaults hereunder, within
         ninety (90) days more than the applicable time period provided herein
         to the Tenant to remedy such default provided that Landlord shall
         notify Leasehold Mortgagee of Tenant's failure to remedy such default
         within the applicable time period or, if within such period such
         default cannot be cured, or cannot be cured within entry into
         possession, so long as Leasehold Mortgagee commences to so cure within
         such period and diligently and continuously proceeds therewith,
         including, without limitation, diligent efforts to obtain possession,
         to the completion of such cure.

         If any default of the Tenant is not curable by the Leasehold
Mortgagee, including, without limitation, any matter personal to the Tenant,
such default shall be deemed cured if the Leasehold Mortgagee (i) cures all
curable defaults within the aforesaid time periods, and (ii) agrees in writing
to assume and perform all of the terms and conditions of this Lease from and
after the date of such non-curable default.

                                      -9-
<PAGE>   78

                  (e)      Landlord shall not exercise its right to terminate
this Lease, as hereinabove provided, during the time that any such Leasehold
Mortgagee, who, having registered with Landlord pursuant to subsection (c)
above, shall require to complete its remedies under such Leasehold Mortgagee,
provided, however:

                           (i)      That such Leasehold Mortgagee proceeds,
         promptly and with due diligence, with the remedies under its mortgage
         on the leasehold estate and thereafter prosecutes and completes the
         same with all due diligence; and

                           (ii)     That such Leasehold Mortgagee shall pay to
         Landlord the rent and all other charges required to be paid by Tenant
         hereunder which have accrued and which shall become due and payable
         during said period of time.

                  (f)      Landlord shall also be obligated to give any notice
of cancellation and termination of this Lease to any such Leasehold Mortgagee
who shall have registered with Landlord pursuant to subparagraph (c) above,
simultaneously with such notice given to Tenant. No such notice to Tenant shall
be effective with respect to a cancellation or termination of this Lease unless
the Leasehold Mortgagee shall also have been so notified as aforesaid.
Leasehold Mortgagee shall then have the right to notify Landlord in writing,
within sixty (60) days after receipt by Leasehold Mortgagee of such notice of
cancellation and termination, that (i) Leasehold Mortgagee, or any designee or
nominee which Leasehold Mortgagee may designate or name in such notice, elects
to lease the Premises from the date of cancellation or termination of this
Lease (as specified in the notice of cancellation and termination) for the
remainder of the term of this Lease, at the rent and other payments and charges
herein reserved, and otherwise upon identical terms, covenants and conditions
as are herein set forth, with the same relative priority in time and in right
as this Lease and having the benefit of and vesting in the Leasehold Mortgagee,
its designee or nominee, of all of the rights, title, interest, powers and
privileges of the Tenant hereunder and (ii) Leasehold Mortgagee further
obligates itself, within sixty (60) days after delivery to Landlord of such
election: (a) to cure the default (other than a default personal to Tenant
which is not curable by Leasehold Mortgagee as above described) upon which such
cancellation or termination was based, or in respect to any default not capable
of curing within such sixty (60) days, or which cannot be cured without entry
into possession, to proceed and effect cure with due diligence, including,
without limitation, diligent efforts to obtain possession; (b) to pay to
Landlord all rent and other payments and charges due under this Lease up to and
including the date of commencement of the term of such new lease; and (c) to
pay to Landlord all expenses and reasonable attorney's fees incurred by
Landlord in connection with any such default and with the preparation,
execution and delivery of such new lease.

         Upon compliance by Leasehold Mortgagee, its designee or nominee,
within such time, Landlord shall thereupon execute and deliver such new lease
to Leasehold Mortgagee, its designee or nominee, having the same relative
priority in time and in right as this Lease and having the benefit of all of
the right, title, interest, powers and privileges of the Tenant hereunder in
and to the Premises, hereunder, including specifically assignment of Landlord's
interest in and to any then existing subleases which became a direct lease
between Landlord and the subtenant at the time of cancellation

                                     -10-
<PAGE>   79

or termination of this Lease. Landlord hereby agree with respect to any such
sublease so assigned, that it will not modify or amend any of the terms and
provision thereof, during the period between the expiration or termination of
this Lease and the execution and delivery of the new lease.

         Upon the execution and delivery of the new lease, the leasehold estate
shall automatically vest in the Leasehold Mortgagee until the expiration of the
term (including any renewal term) of the new lease, unless the new lease shall
thereafter sooner be terminated and Landlord shall execute and deliver and
permit to be recorded such documents as may be reasonably required by the
Leasehold Mortgagee to confirm the foregoing. Subject to such new lease having
been effectuated with the Leasehold Mortgagee, its designee or nominee,
Landlord further agree that, during the period following the term of this Lease
until the date of the execution and delivery of the new lease, it will do
nothing which will give rise to any liens thereon, but Landlord shall have all
of the right, power and privilege to operate, maintain and control the Premises
in the manner required hereby on the part of the Tenant and shall pay over to
the Leasehold Mortgagee on that date of such execution and delivery the net
income, if any, after payment of all amounts accrued which would be required to
be paid as rent to Landlord or otherwise as expenses on the Premises as if this
Lease had remained in full force and effect until the execution and delivery of
the new lease, derived from the Premises from the date of termination of this
Lease.

         Landlord shall deliver physical possession of the Premises to either
the Leasehold Mortgagee, its designee or nominee at such time as the new lease
is executed. In the event, however, that any the time the new lease is executed
the Tenant hereunder shall be in possession of the Premises, Landlord, at the
request and expense of the Leasehold Mortgagee, its designee or nominee, as the
new tenant, will take all commercially reasonable and appropriate steps to
remove the Tenant from the Premises, but shall not be liable to such new tenant
for any damages resulting from any default of the Tenant in vacating the said
premises, or from any failure to vacate them, and there shall be no abatement
of rent by reason thereof.

         In no event shall the Leasehold Mortgagee, its designee or nominee, be
under any obligation or liability whatsoever beyond the period for which it is
the tenant under any such new lease.

                  (g)      Landlord shall not amend or modify this Lease
without the consent of any Leasehold Mortgagee to the extent such consent is
required by the terms of the applicable mortgage. Landlord further acknowledges
that all determinations with respect to rebuilding in the event of a casualty
or condemnation and the control of and rights to the proceeds with respect
thereto shall be vested in the Leasehold Mortgagee with priority over the
rights of Landlord hereunder.

                  (h)      There shall be no merger of this Lease nor the
leasehold estate created by this Lease with the fee estate or any part thereof
by reason of fact that the same person, firm, corporation or other entity may
acquire or own or hold, directly or indirectly:

                           (i) this Lease or the leasehold estate created by
                  this Lease or any interest in this Lease or in any such
                  leasehold estate; and

                                     -11-
<PAGE>   80

                           (ii)     the fee estate in the Premises or any part
                  thereof or any interest in such estate, and no such merger
                  shall occur unless and until all corporations, firms and
                  other entities, including any Leasehold Mortgagee, having any
                  interest in (x) this Lease or the leasehold estate created by
                  this Lease and (y) the fee estate in the Premises or any part
                  thereof or any interest in such fee estate shall join in a
                  written instrument effecting such merger and shall duly
                  record the same.

         18.      Landlord Mortgages. Landlord shall not grant any mortgage,
deed of trust or security interest in Landlord's interest in and to the
Premises. Any action in violation of this paragraph shall be an automatic
Default under the Lease.

         19.      Assignment and Subletting.

                  (a)      By Tenant. Tenant shall have the right, without
Landlord's consent, to assign, mortgage, pledge, encumber, hypothecate or
otherwise transfer or permit the transfer of this Lease or Tenant's interest
(or any part thereof) in this Lease, in whole or in part, by operation of law,
court decree or otherwise, this Lease in whole or in part. No assignment or
subletting by Tenant shall in any way affect the terms, conditions, covenants,
agreements and provisions herein set forth, any and all assignments or
subleases shall be subject at all times to this Lease and to the prior right,
title and interest of Landlord in and to the Premises, and any and all assigns
and subtenants shall be bound by all of the provisions of this Lease.

                  (b)      By Landlord. Landlord shall not, without Tenant's
prior written consent, assign, mortgage, pledge, encumber, hypothecate or
otherwise transfer or permit the transfer of this Lease or Landlord's interest
(or any part thereof) in this Lease or any of Landlord's rights or obligations
hereunder, in whole or in part, by operation of law, court decree or otherwise,
nor shall Landlord sublease the Premises or any part thereof without the prior
written consent of Tenant. Any attempted assignment, subletting, encumbrance or
other transfer by Landlord in violation of the terms and covenants of this
Paragraph 19 shall automatically be a Default under the terms of this Lease
subject to the remedies described herein. Any assignee or sublessee which is
approved and permitted pursuant hereto must expressly accept and assume in
writing all of the obligations of Landlord hereunder. The consent of Tenant to
any such assignment, sublease or other transfer may be withheld by Tenant in
Tenant's sole and arbitrary discretion. Tenant may further impose conditions on
the granting of consent to any such assignment, sublease or other transfer as
Tenant may, in Tenant's sole and arbitrary discretion, desire. If the Landlord
desires to assign or otherwise transfer this Lease or any right or interest
hereunder or to enter into any sublease of the Premises, then Landlord shall
deliver written notice of such intent to the Tenant, together with a copy of the
proposed instrument of assignment, transfer or sublease, at least thirty (30)
days prior to the effective date of the proposed assignment or transfer or
commencement date of the term of the proposed sublease. In the event of any
approved sublease or assignment or other transfer hereunder, the Landlord shall
not be released or discharged from any liability or obligation (whether past,
present or future) under this Lease, including any renewal term of this Lease,
it being agreed that upon any such assignment, transfer or subletting, Landlord
shall not be relieved of any obligations hereunder and shall continue to have

                                     -12-
<PAGE>   81

liability under this Lease with respect to the Premises throughout the Term. If
the rental rate agreed upon between Landlord and any proposed subtenant under
any proposed sublease of the Premises (or any part thereof) is greater than the
rental rate that Landlord must pay Tenant hereunder for that portion of the
Premises that is subject to such proposed sublease, or if any consideration
shall be received by Landlord in connection with any such proposed assignment,
sublease or other transfer (in addition to rental as provided in any such
proposed sublease), then all of such excess rental or such consideration, as
the case may be (or both), shall be owed by Landlord to Tenant hereunder and
shall be paid by Landlord to Tenant, which payment shall, in the case of excess
rentals, be made immediately upon receipt thereof by Landlord. For purposes of
this Paragraph 19, an assignment, sublease or transfer shall be considered to
include any change in the majority ownership or control of Landlord (if
Landlord is a corporation, a partnership or any other form of entity) and shall
further include any change in the ownership or control of Landlord through
merger, consolidation, sale of assets or stock, reorganization or otherwise.
All subleases, assignments or other transfers approved and permitted pursuant
hereto shall be subject and subordinate to this Lease (including any amendment
hereto or modification, extension, renewal or replacement hereof and further
including any new lease given in substitution for this Lease) and all of the
terms and covenants hereof, and any default under the terms of a sublease,
assignment or other transfer which violates any of the provisions of this Lease
(as this Lease may have then been modified, amended, extended, renewed or
replaced) or any such substitute lease shall be deemed a Default hereunder. The
covenants and agreements set forth in this Paragraph 19 shall run with the land
comprising the Premises and shall bind Landlord and Landlord's heirs, executors,
administrators, personal representatives, representatives in any bankruptcy
proceeding, successors and assigns. Any assignee, sublessee or transferee of
Landlord's interest in this Lease, by assuming Landlord's obligations hereunder,
shall assume liability to Tenant for all amounts paid to persons other than
Tenant by such successors in contravention of this Paragraph 19. Upon the
occurrence of a Default by Landlord hereunder, if the Premises or any part
thereof are then assigned, transferred or sublet, Tenant, in addition to any
other remedy herein provided or provided by law, may at Tenant's option collect
directly from any such assignee, transferee or subtenant all rents and/or other
consideration and amounts becoming due to Landlord under such assignment,
transfer or sublease and apply such rent against any sums due to Tenant from
Landlord hereunder, and no such collection shall be construed to constitute a
novation or a release of Landlord from the further performance of Landlord's
obligations hereunder.

                  20.      Successors and Assigns. This Lease shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns.

                  21.      Relationship of Landlord and Tenant. It is expressly
understood that Tenant shall not be construed to be a partner or associate of
Landlord in the conduct of its business, and that the relationship between the
parties hereto is and shall at all times remain that of landlord and tenant.

                  22.      Covenants of Landlord. Landlord covenants that it is
seized in fee simple of, and has good and marketable title to, the Premises and
that the same is free and clear of all liens, leases, encumbrances, easements,
encroachments, covenants, conditions, and restrictions except for the items

                                     -13-
<PAGE>   82

set forth in Exhibit B attached hereto and made a part hereof; that Landlord
has the full right and power to make this Lease.

                  23.      Surrender of Possession. Tenant, if it so choices to
take possession of the Premises pursuant to Paragraph 4 herein, on or before
the last day of the Term or upon the earlier termination of this Lease, shall
peaceably and quietly leave, surrender and yield up unto Landlord the Premises.

                  24.      Brokerage Commissions. Each of Landlord and Tenant
represents and warrants to the other that it has employed no broker or agent in
connection with this Lease, and each party hereto shall indemnify and hold the
other harmless from and against any claim, liability or damage against or to
the other arising from or in respect of a breach of the foregoing
representation and warranty.

                  25.      Limitation on Tenant's Liability. Landlord expressly
covenants and agrees that neither Tenant nor any officer, director,
shareholder, partner, venturer, affiliate, agent, employee or representative of
Tenant (the "Affiliated Parties") shall have any personal liability for any
obligations (if any) of Tenant arising under this Lease and that Landlord will
not institute, prosecute or attempt to enforce in any court or otherwise any
action for specific performance or to recover or collect from Tenant nor any
Affiliated Parties or from any assignee to Tenant at any time succeeding to the
interest of Tenant under this Lease, or at any time owning, or who had
previously owned, the leasehold estate of Tenant, any moneys claimed for
damages for breach of any agreement or covenant herein including any covenant
to pay rent or other monetary sums. If Tenant defaults in the performance of
any of Tenant's obligations under this Lease or otherwise, Landlord shall look
solely to Tenant's interest in the Premises and not to any other assets,
interests or rights of Tenant or any Affiliated Parties for satisfaction of
Landlord's remedies on account thereof, it being hereby agreed that Tenant's
liability under this Lease shall be limited to Tenant's interest in the
Premises and Landlord agrees to look solely to Tenant's interest in the
Premises to satisfy any obligation of Tenant under this Lease. The foregoing is
an express covenant and agreement on the part of Landlord and constitutes a
material inducement to the execution of this Lease by Tenant and a condition of
Tenant's obligations hereunder.

                  26.      Estoppel Certificates.

                           (a)      By Landlord. Landlord shall, at any time
and from time to time, at the request of Tenant, execute, acknowledge and
deliver to Tenant a certificate by Landlord certifying (i) that this Lease is
unmodified and in full force and effect (or, if there have been modifications,
the extent to which this Lease is in full force and effect as modified and
stating the modifications), (ii) whether there then exist any offsets or
defenses against the enforcement by Tenant of any of the provisions of this
Lease (and, if so, specifying the same), (iii) the dates, if any, to which the
Base Rent and other amounts payable hereunder have been paid in advance, (iv)
the address to which notices to Landlord should be sent pursuant to this Lease,
and (v) any other information as may be reasonably requested by Tenant. Any
such certificate may be relied upon by any prospective Leasehold Mortgage or
assignee of Tenant's interest hereunder.

                                     -14-
<PAGE>   83

                           (b)      By Tenant. Tenant shall, at any time and
from time to time not to exceed once per Lease Year, at the request of
Landlord, execute, acknowledge and deliver to Landlord a certificate by Tenant
certifying that to the best of its knowledge, (i) that this Lease is unmodified
and in full force and effect (or, if there have been modifications, the extent
to which this Lease is in full force and effect as modified and stating the
modifications), (ii) whether there then exist any offsets or defenses against
the enforcement by Landlord of any of the provisions of this Lease (and if so,
specifying the same) , (iii) the dates, if any, to which the Base Rent and
other amounts payable hereunder have been paid in advance and (iv) the address
to which notices to Tenant should be sent pursuant to this Lease.

         27.      Recordation. A memorandum of this Lease in form and content
acceptable to Tenant, shall be recorded among the land records of the county in
which the Premises is located, and the costs of recordation shall be borne by
Landlord.

         28.      Gender and Number. Words of any gender used in this Lease
shall be deemed to include any other gender, and words in the singular number
shall be deemed to include the plural (and vice-versa), when the context so
requires.

         29.      Titles. The titles and article or paragraph headings
contained in this Lease are inserted only for convenience, and shall not be
construed as a part of this Lease or as limiting the scope of the particular
provisions to which they refer.

         30.      Notices. All notices to be given under this Lease shall be in
writing and shall be sent by personal delivery using an independent courier
service providing proof of delivery, by overnight national or regional courier
providing proof of delivery or by certified or registered mail, postage prepaid
return receipt requested, addressed as follows:

                  A.       If to Landlord:

                           South Hampton Refining Co.
                           and Address:     7752 FM 418
                                            P.O. Box 1636
                                            Silsbee, Texas 77656
                           Attn: Nicholas N. Carter

or to such other person or such other address designated by notice sent by
Landlord to Tenant.

                  B.       If to Tenant:

                           Heller Financial Leasing, Inc.
                           500 West Monroe Street
                           Chicago, Illinois  60661
                           Attention:  CEFD - Control Region Credit Manager

                                     -15-
<PAGE>   84

or to such other address as is designated by Tenant in a notice to Landlord.

All notices shall be deemed given when received, when delivery is refused or
when the same is returned for failure to be called for.

         31.      Partial Invalidity. If any provisions of this Lease or the
application thereof to any person or circumstance shall to any extent be
invalid or unenforceable, the remainder of this Lease, or the application of
such provision to persons or circumstances other than those as to which it is
invalid or unenforceable, shall not be affected thereby, and each provision of
this Lease shall be valid and enforceable to the fullest extent permitted by
law.

         32.      Waiver. The failure of Landlord or Tenant to insist upon
strict performance of any of the covenants or conditions of this Lease or to
exercise any option herein conferred in any one or more instances shall not be
construed as a waiver or relinquishment for the failure of the same or any
similar covenant, condition or option, but the same shall be and remain in full
force and effect.

         33.      Financing Requirements. In the event that any lender
providing a Leasehold Mortgage hereunder requires, as a condition of such
financing, that modifications to this Lease be obtained, and provided that such
modifications are reasonable, do not decrease the rentals and other sums
required to be paid by Tenant hereunder, and do not require Landlord to
subordinate its interest in the Premises to the Leasehold Mortgage, Tenant
shall submit such required modifications to Landlord, and Landlord shall enter
into and execute a written amendment hereto incorporating such required
modifications within thirty (30) days after the same have been submitted to
Landlord by Tenant.

         34.      Entire Agreement. This instrument contains all the agreements
made between the parties hereto with respect to the lease by Landlord of the
Premises as contemplated hereby, and may be modified only by an agreement in
writing, signed by all the parties hereto or their respective successors in
interest.

         35.      Subordination.

                  (a)      Landlord hereby subordinates to the rights to Tenant
under the Loan Agreement any and all security interest or landlord's lien that
Landlord may have or hereafter acquire with respect to the Equipment, whether
set forth in this Lease, provided by applicable law or otherwise, and any and
all right or distraint, levy or execution against the Equipment for any rent or
other sums due or to become due under this Lease.

                  (b)      Landlord agrees that, as between Landlord and
Tenant, to the maximum extent permitted by applicable law, the Equipment shall
not become part of the Premises and Tenant may enter the Premises at any time
to remove the Equipment in the exercise of its rights and remedies under the
Loan Agreement.

                                     -16-
<PAGE>   85

         36.      Termination.

                  (a)      This Lease shall automatically terminate upon the
termination of the Loan Agreement.

                  (b)      Tenant shall have the right to terminate this Lease,
whether pursuant to the terms of this Lease, the Loan Agreement or otherwise at
any time upon not less than ten (10) day's prior written notice to Landlord.

                  (c)      Other than the rights, if any, granted pursuant to
the terms of the Loan Agreement, Landlord shall not have any right to terminate
this Lease at any time during the Term hereof.

         37.      Duties of Landlord. Landlord hereby acknowledges and agrees
that in addition to its capacity as Landlord pursuant to this Lease, it is also
acting as the Subtenant pursuant to the Sub-Ground Lease of even date herewith
between Tenant, as landlord, and Landlord, as subtenant (the "Sub-Ground
Lease"). To the extent that the duties of the Landlord pursuant to this Lease
overlap, coincide with or even exceed its duties as Subtenant pursuant to the
Sub-Ground Lease, Landlord agrees to fulfill its duties and obligations in one
capacity or the other and failure to do so will act as a Default under the
terms of this Lease, the Sub-Ground Lease and the Loan Agreement.

         38.      No Breach of Sub-Ground Lease. With respect to Landlord's
obligations under this Lease, Landlord shall not do or permit to be done by any
employee, agent or representative of Landlord any act or thing that may
constitute a breach or violation of any term, covenant or condition of the
Sub-Ground Lease, whether or not such act or thing is permitted under the
provisions of this Lease.

         39.      Survival of Landlord's Obligations. Landlord's covenants and
obligations under this Lease which are not performed or capable of being
performed during the term of this Lease shall survive the expiration or earlier
termination of this Lease.

                    [REMAINDER OF PAGE INTENTIONALLY BLANK.]

                                     -17-
<PAGE>   86

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

                                        LANDLORD:

                                        SOUTH HAMPTON REFINING CO.

                                        By:
                                             -----------------------------------
                                                       Nicholas N. Carter
                                                       President

                                        TENANT:

                                        HELLER FINANCIAL LEASING, INC.

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

                                     -18-
<PAGE>   87
                                SUB-GROUND LEASE

                                 by and between

                    SOUTH HAMPTON REFINING CO., as Subtenant

                                       and

                  HELLER FINANCIAL LEASING, INC., as Sublessor

<PAGE>   88

                                SUB-GROUND LEASE

     THIS SUB-GROUND LEASE ("Sublease") is made and executed as of the 30th day
of December, 1999, by and between SOUTH HAMPTON REFINING CO., a Texas
corporation ("Subtenant"), and HELLER FINANCIAL LEASING, INC., a Delaware
corporation ("Sublessor"), with reference to the following:

                                R E C I T A L S:

     A. Subtenant is the owner of that certain parcel of land containing
approximately 105 acres located in Silsbee, Texas and legally described on
Exhibit A attached hereto and made a part hereof (the "Premises").

     B. Pursuant to a Ground Lease of even date herewith (the "Ground Lease"),
Sublessor has leased from Subtenant, and Subtenant has leased to Sublessor, the
Premises.

     C. Simultaneously with the execution of this Sublease, Subtenant has
obtained a loan (the "Loan") from Sublessor in the stated principal amount of
Three Million Five Hundred Thousand Dollars ($3,500,000.00) secured by, among
other things, the equipment, fixtures and other personalty owned by Subtenant
and currently or at any subsequent time located or positioned on the Premises
(the "Equipment"). Such Loan is being made and granted pursuant to and as
described in that certain Loan and Security Agreement of even date herewith (the
"Loan Agreement") between Sublessor, as Lender, and Subtenant, as Borrower.

     D. In lieu of granting a security interest in the Premises pursuant to a
deed of trust or mortgage instrument, Subtenant has made and granted the Ground
Lease to Sublessor as additional security for the Loan.

     E. Simultaneously with the execution of this Sublease, Subtenant has made
and entered into a Hazardous Substances Indemnity Agreement (herein so called)
of even date herewith providing environmental indemnities and protections to the
Sublessor.

     F. Sublessor desires to sublease to Subtenant, and Subtenant desires to
sublease from Sublessor, the Premises.

     1. Premises. In consideration of the mutual covenants herein contained and
subject to and in consideration of the execution, delivery and performance by
Subtenant of the Loan Agreement and Hazardous Substances Indemnity Agreement,
Sublessor hereby subleases to Subtenant, and Subtenant hereby subleases from
Sublessor, the Premises, upon and subject to the terms and conditions of this
Sublease, and subject to the rights and interests of third parties under any
existing liens, ground leases, easements and encumbrances affecting the Premises
(or any part thereof), and all zoning regulations, rules, ordinances, building
restrictions and other laws and regulations now in effect or hereafter adopted
by any governmental authority having jurisdiction over the Premises or any part
thereof.

SUBLEASE - Page 1
<PAGE>   89

     2. Sublease Term. The term of this Sublease (the "Term") shall commence on
December 30, 1999 (the "Lease Commencement Date") and shall terminate on the
date on which the Ground Lease terminates (the "Termination Date"), unless
earlier terminated pursuant to the provisions hereof. As used herein, the term
"Lease Year" shall mean each calendar year or portion thereof within the Term.
The first Lease Year, however, shall commence on the Commencement Date and shall
end on December 31 of the calendar year immediately succeeding the calendar year
in which the Commencement Date shall occur.

     3. Base Rent. Subtenant shall pay to Sublessor, in lawful money of the
United States of America, annual rent (the "Base Rent") of One Dollar ($1.00).
Sublessor hereby acknowledges payment of Base Rent for the entire Term.

     4. Taxes and Assessments.

         (a) Payment by Subtenant. During the Term of this Sublease, Subtenant
shall pay to the public officers charged with the collection thereof, as the
same become due and payable and before any fine, penalty, interest or other
charge may be added thereto for the nonpayment thereof, all real estate taxes,
license and permit fees, charges for public utilities of any kind, and
obligations for any and all other governmental charges, general and special,
ordinary and extraordinary, unforeseen as well as foreseen, of any kind and
nature whatsoever, as well as assessments for sidewalks, streets, sewers, water
or any other public improvements and any other improvements or benefits which,
during the Term hereof, shall be made, assessed, levied or imposed upon or
become due and payable in connection with, or a lien upon, the Premises, or any
part thereof or improvements thereon, or upon this Sublease (all of which taxes,
assessments and other governmental charges are hereinafter referred to as
"Impositions"). Subtenant shall automatically furnish to Sublessor, within
thirty (30) days after the date upon which any such Impositon is due, official
receipts of the proper taxing or other authority, or other proof reasonably
satisfactory to Sublessor, evidencing the full payment thereof. Subtenant shall
promptly send to Sublessor copies of any notices for any such taxes, assessments
or charges received by Subtenant.

         (b) Escrow of Impositions. Sublessor may, at Sublessor's sole option,
provide Subtenant with a statement of estimated Impositions for the then
upcoming Lease Year (based upon Sublessor's reasonable estimate of anticipated
Impositions for such Lease Year), and, following Sublessor's request therefor,
Subtenant shall, beginning the first day of the next calendar month following
such request and continuing thereafter throughout the Term (unless and until
otherwise thereafter excused by Sublessor), pay in equal monthly installments
one-twelfth (1/12) of the aforesaid estimated Impositions for each Lease Year;
provided, that if Sublessor determines at any time or from time to time that the
Impositions are to be greater than the aforesaid estimated amount, then
Sublessor may from time to time or at any time during any such Lease Year
deliver to Subtenant Sublessor's revised estimate of the amount of Impositions,
and Subtenant shall pay to Sublessor, within twenty (20) days following
Subtenant's receipt of notification of the revised amount, the difference
between the previous estimate and the revised estimate for the expired portion
of the then current Lease Year, and the monthly installments of estimated
Impositions payable shall be increased for the months following Subtenant's
receipt of the revised estimate to one-twelfth (1/12) of the revised estimate of
Impositions; provided further, that not more than one hundred eighty (180) days
following the last

SUBLEASE - Page 2

<PAGE>   90

day of each Lease Year during the Term, Sublessor will, as applicable, provide
Subtenant with a written comparison of the amount of the estimated Impositions
paid for the Lease Year just ended to Impositions actually incurred for such
Lease Year, and if the amount of the estimated Impositions paid by Subtenant for
such prior Lease Year: (A) exceeds the amount Subtenant should have paid based
on the actual amount of the Impositions, Sublessor will give Subtenant a credit
against current payments of Impositions (or, if such credit exceeds the amount
of Impositions payable during the remainder of the Term, refund the excess), or
(B) is less than the amount Subtenant should have paid based on the actual
amount of the Impositions, Subtenant shall pay Sublessor the difference within
twenty (20) days following Subtenant's receipt of such written comparison.

     5. Indemnification by Subtenant. In addition to the indemnities and
protections granted by Subtenant to Sublessor pursuant to the Hazardous
Substances Indemnity Agreement, Subtenant hereby agrees to and shall defend,
protect, indemnify and save harmless Sublessor and all of Sublessor's partners,
officers, directors, shareholders, affiliates, agents, employees,
representatives, contractors and invitees from and against all liabilities,
obligations, claims, demands, damages, penalties, fines, losses, suits, causes
of action, costs and expenses (including, without limitation, reasonable
attorneys' fees and expenses) imposed upon or incurred by or asserted against
Sublessor or any other such indemnified persons or parties by reason of (a)
ownership of the Premises or any interest therein, or receipt of any rent or
other sum therefrom, (b) any accident, occurrence, injury to or death of persons
(including workmen) or loss of or damage to property occurring on or about the
Premises (or any part thereof) or the adjoining sidewalks, curbs, vaults and
vault space, if any, or the adjoining streets or ways, (c) any use, non-use or
condition of the Premises (or any part thereof) or any buildings, improvements,
fixtures, equipment or personalty thereon or the adjoining sidewalks, curbs,
vaults or vault space, if any, or the adjoining streets or ways, (d) any failure
on the part of Subtenant to perform or comply with any of the terms of this
Sublease, (e) performance of any labor or services or the furnishing of any
materials or other property in respect of the Premises or any part thereof, or
(f) any matters related to any and all Impositions, and from any and all liens
and penalties imposed as a result of a delinquency in payment thereof. In case
any action, suit or proceeding is brought against Sublessor or any other such
indemnified persons or parties by reason of any such occurrence, Subtenant, upon
Sublessor's request, will at Subtenant's sole expense resist and defend such
action, suit or proceeding, or cause the same to be resisted and defended by
counsel designated by Subtenant and approved by Sublessor in advance in writing.
The obligations of Subtenant under this Paragraph 5 arising by reason of any
such occurrence taking place during the Term of this Sublease shall survive any
expiration or earlier termination of this Sublease.

     6. Use of Premises. Subtenant acknowledges, represents and warrants that
the current use of the Premises complies and hereby covenants that Subtenant's
occupancy and use of the Premises shall at all times during the Term continue to
comply with all applicable statutes, rules, orders, ordinances, requirements and
regulations of any governmental authority having jurisdiction over the Premises.
Without limiting the generality of the foregoing, throughout the Term, Subtenant
shall also procure and maintain in effect each and every permit, license,
certificate or other authorization required in connection with any building or
improvement now or hereafter erected on the Premises or any part thereof or in
connection with any activities or operations of Subtenant upon or in connection
with the Premises.

SUBLEASE - Page 3

<PAGE>   91

     7. Utilities. Subtenant alone shall be responsible for obtaining and
maintaining, and shall pay all charges for, all water, gas, heat, light,
electricity, telephone, sewer, sprinkler, cable and other utilities and services
used or desired by Subtenant on or from the Premises, together with any taxes,
penalties, surcharges or the like pertaining thereto and any maintenance charges
for all utilities. Sublessor has no responsibility to provide any such utilities
or services, nor any other services, and Sublessor shall not be liable in any
respect (including for damages to either person or property) in the event of any
failure in the provision of any such utilities or services or in the event of
any cessation thereof nor shall any such failure or cessation be construed as an
eviction of Subtenant or relieve Subtenant from fulfillment of any covenant in
this Sublease.

     8. Maintenance and Repairs. Subtenant covenants that it shall keep the
Premises and all buildings, improvements, fixtures and equipment located on
and/or used in connection with the Premises in good condition and shall make or
cause to be made all necessary repairs, alterations and/or replacements thereto.
All such repairs, alterations or replacements shall be of good quality and
Subtenant shall cause the Premises and all such buildings, improvements,
fixtures and equipment to be maintained in a manner consistent with its
condition, quality and class on the date hereof. Subtenant shall not use, or
permit or suffer to be used, the Premises or any part thereof for any disorderly
or unlawful purpose and shall not commit or permit any waste or deterioration of
the Premises.

     9. Alterations and Additions. Subtenant, at its own expense, shall have the
right to make alterations and additions to the Premises and the buildings
thereon (if any), provided that: (a) no substantial portion of any buildings may
be demolished or removed without the prior written consent of Sublessor; and (b)
the general character of the Premises shall not be changed as a result of any
such alterations or additions nor shall the fair market value of the Premises be
reduced as a result of any such alterations or additions below the value of the
Premises which existed immediately before such alterations or additions. All
such work shall be done in a good and workmanlike manner and shall consist of
new materials unless otherwise agreed to by Sublessor.

     10. Insurance. At all times through the Term of this Sublease, Subtenant
shall obtain and maintain the insurance in the form and substance required to be
obtained and maintained pursuant to the Loan Agreement.

     11. Damage or Destruction. In the event of damage to or destruction of the
buildings or improvements, if any, situated on the Premises by fire or other
casualty, Subtenant will give Sublessor immediate notice thereof. Sublessor
shall have the option upon the receipt of notice from Subtenant to immediately
terminate the Sublease and the rights and obligations of the parties hereunder,
except rights and obligations arising prior to such damage or destruction, shall
terminate as of the date of such damage or destruction and the parties hereto
shall look solely to the insurance award for compensation for their respective
interests in the Premises. If Sublessor does not elect to terminate the
Sublease, Subtenant will promptly, at Subtenant's sole expense and whether or
not the insurance proceeds (if any) payable or received by virtue of such event
are sufficient for the following purpose, repair, restore or rebuild (as
applicable) the same to the same or improved condition and utility (except as
may be otherwise agreed between Sublessor and Subtenant) so that upon the
completion of such repairs, restoration or rebuilding (as the case may be), the
fair market value of the said

SUBLEASE - Page 4

<PAGE>   92

buildings and improvements shall be at least substantially equal to the fair
market value thereof as existed immediately prior to the occurrence of such fire
or other casualty. Subtenant's obligation to pay Basic Rent and other charges
and to perform all obligations of Subtenant hereunder shall continue during the
period of any such repair and restoration.

     12. Condemnation. In the event that the right, title and interest of
Sublessor and Subtenant, or any portion thereof, in and to the Premises is
acquired by authority of any governmental agency in the exercise of its power of
eminent domain, the terms and provisions of the Ground Lease shall govern and
control.

     13. Default.

         (a) Subtenant Default. In addition to other Defaults defined throughout
this Sublease, it shall constitute a "Default" by Subtenant under this Lease if
(a) Subtenant shall fail to pay any installment of Rent or any other sum or
payment to Sublessor required herein as and when due hereunder, or (b) failure
or default shall be made in the performance of any of the other covenants,
agreements, conditions or undertakings herein contained to be kept, observed and
performed by the Subtenant and such failure or default shall continue for
fifteen (15) days after notice thereof in writing to the Subtenant (provided
however, if such failure cannot reasonably be cured within such 15-day period,
but Subtenant commences to cure such failure within such 15-day period and
thereafter diligently pursues such cure to completion, then such failure shall
not be a Default hereunder unless the same is not fully cured within an
additional 30 days following the expiration of the aforesaid 15-day period), or
(c) Subtenant shall generally not pay its debts as they become due or shall
admit in writing its inability to pay its debts, or Subtenant shall file a
petition in voluntary bankruptcy under the Federal Bankruptcy Act or similar
law, state or federal, whether now or hereafter existing, or Subtenant shall
file an answer admitting insolvency or inability to pay Subtenant's debts, or
Subtenant shall fail to obtain a vacation or stay of involuntary proceedings in
bankruptcy or insolvency within sixty (60) days after the filing of same (as
hereinafter provided), or Subtenant shall be adjudicated a bankrupt, or a
trustee or receiver shall be appointed for Subtenant or for all of Subtenant's
property or the major part thereof, or any court shall have taken jurisdiction
of the property of Subtenant or the major part thereof in any involuntary
proceeding for reorganization, dissolution, liquidation or winding up of
Subtenant, and such trustee or receiver shall not be discharged or such
jurisdiction relinquished or vacated or stayed on appeal or otherwise removed
within sixty (60) days after such appointment; provided that in the event of
such occurrence, Sublessor and Subtenant intend and agree that the transactions
evidenced by the Loan Agreement and surrounding loan documents shall be regarded
as a loan from Subtenant to Sublessor that is secured by the Premises, and
Subtenant hereby grants Sublessor a security interest in the Premises as
described in Paragraph 14(b) herein and this Sublease shall be deemed to be a
security agreement and financing statement within the meaning of Article 9 of
the Uniform Commercial Code of any applicable law, or (d) Subtenant shall make
an assignment for the benefit of Subtenant's creditors, or (e) Subtenant shall
vacate or abandon the Premises, or (f) Subtenant shall fail to discharge any
lien or encumbrance placed upon the Premises in violation of the terms and
conditions of this Lease within fifteen (15) days after such lien or encumbrance
is filed against the Premises, or (g) Subtenant shall commit an event of default
or default under the terms of the Loan Agreement, the Ground Lease or the
Hazardous Substances Indemnity Agreement.

SUBLEASE - Page 5

<PAGE>   93

         (b) Sublessor Default. It is hereby acknowledged and agreed by
Subtenant that Sublessor has undertaken no obligations under this Sublease and,
accordingly, by its actions or omissions can not commit a default under the
terms of this Sublease.

     14. Remedies for Subtenant Default.

         (a) Termination of Sublease or Foreclosure on Equipment. Following the
occurrence of a Default by Subtenant, Sublessor, at its election, may, in
addition to any and all other rights or remedies available to Sublessor at law
or in equity, elect to either (i) foreclose on the Equipment pursuant to the
terms of the Loan Agreement or (ii) terminate this Sublease by delivery of
written notice to Subtenant (a "Default Termination Notice"). In the event of
termination, all rights of Subtenant hereunder and in the Premises shall
terminate, and Sublessor shall be permitted to re-enter and take possession of
the Premises, or to institute such other appropriate proceedings as Sublessor
may be legally entitled to employ. It is acknowledged and agreed that Base Rent
for the entire term has been paid in advance.

         (b) Power of Sale. In the event of a Default, Sublessor and Trustee (as
defined herein) shall have all the rights available to a deed of trust trustee
or a beneficiary of a deed of trust under the laws of the State of Texas,
including, without limitation, all rights granted a trustee or beneficiary under
the laws of the State of Texas including Section 51.002 of the Texas Property
Code, as amended or a successor statute (collectively, the "Deed of Trust Law").
In accordance therewith, to secure the full and timely performance and discharge
of Subtenant's obligations under the Sublease, Subtenant hereby grants,
bargains, sells and conveys in trust with power of sale, the Premises unto
Michael W. Hillard, Esq. as a deed of trust trustee (the "Trustee"). Sublessor
may appoint in writing, a substitute trustee without notice , filing or
recordation, who shall succeed to all the estates, rights, powers and duties of
the aforenamed Trustee.

         (c) Sublessor's Remedies Cumulative. Each right, power and remedy of
Sublessor provided for in this Sublease or now or hereafter existing at law or
in equity or by statute or otherwise shall be cumulative and concurrent and
shall be in addition to every other right, power or remedy provided for in this
Sublease or now or hereafter existing at law or in equity or by statute or
otherwise, and the exercise or beginning of the exercise by Sublessor of any one
or more of the rights, powers or remedies provided for in this Sublease or now
or hereafter existing at law or in equity or by statute or otherwise shall not
preclude the simultaneous or later exercise by Sublessor of any or all such
other rights, powers or remedies.

     15. Leasehold Mortgages. Subtenant shall not have the right to grant
mortgages, collateral assignments or security interests in Subtenant's leasehold
interest under the Sublease. Any attempted actions prohibited by this paragraph
shall constitute an automatic Default by Subtenant.

     16. Assignment and Subletting.

         (a) By Subtenant. Subtenant shall not, without Sublessor's prior
written consent, assign, mortgage, pledge, encumber, hypothecate or otherwise
transfer or permit the transfer of this

SUBLEASE - Page 6

<PAGE>   94

Sublease or Subtenant's interest (or any part thereof) in this Sublease or any
of Subtenant's rights or obligations hereunder, in whole or in part, by
operation of law, court decree or otherwise, nor shall Subtenant sublease the
Premises or any part thereof without the prior written consent of Sublessor. Any
attempted assignment, subletting, encumbrance or other transfer by Subtenant in
violation of the terms and covenants of this Paragraph 16 shall automatically be
a Default under the terms of this Sublease subject to the remedies described
herein. Any assignee or sublessee which is approved and permitted pursuant
hereto must expressly accept and assume in writing all of the obligations of
Subtenant hereunder. The consent of Sublessor to any such assignment, sublease
or other transfer may be withheld by Sublessor in Sublessor's sole and arbitrary
discretion. Sublessor may further impose conditions on the granting of consent
to any such assignment, sublease or other transfer as Sublessor may, in
Sublessor's sole and arbitrary discretion, desire. If the Subtenant desires to
assign or otherwise transfer this Sublease or any right or interest hereunder or
to enter into any sublease of the Premises, then Subtenant shall deliver written
notice of such intent to the Sublessor, together with a copy of the proposed
instrument of assignment, transfer or sublease, at least thirty (30) days prior
to the effective date of the proposed assignment or transfer or commencement
date of the term of the proposed sublease. In the event of any approved sublease
or assignment or other transfer hereunder, the Subtenant shall not be released
or discharged from any liability or obligation (whether past, present or future)
under this Sublease, including any renewal term of this Sublease, it being
agreed that upon any such assignment, transfer or subletting, Subtenant shall
not be relieved of any obligations hereunder and shall continue to have
liability under this Sublease with respect to the Premises throughout the Term.
If the rental rate agreed upon between Subtenant and any proposed subtenant
under any proposed sublease of the Premises (or any part thereof) is greater
than the rental rate that Subtenant must pay Sublessor hereunder for that
portion of the Premises that is subject to such proposed sublease, or if any
consideration shall be received by Subtenant in connection with any such
proposed assignment, sublease or other transfer (in addition to rental as
provided in any such proposed sublease), then all of such excess rental or such
consideration, as the case may be (or both), shall be owed by Subtenant to
Sublessor hereunder and shall be paid by Subtenant to Sublessor, which payment
shall be made immediately upon receipt thereof by Subtenant. For purposes of
this Paragraph 16, an assignment, sublease or transfer shall be considered to
include any change in the majority ownership or control of Subtenant (if
Subtenant is a corporation, a partnership or any other form of entity) and shall
further include any change in the ownership or control of Subtenant through
merger, consolidation, sale of assets or stock, reorganization or otherwise. All
subleases, assignments or other transfers approved and permitted pursuant hereto
shall be subject and subordinate to this Sublease (including any amendment
hereto or modification, extension, renewal or replacement hereof and further
including any new lease given in substitution for this Sublease) and all of the
terms and covenants hereof, and any default under the terms of a sublease,
assignment or other transfer which violates any of the provisions of this
Sublease (as this Sublease may have then been modified, amended, extended,
renewed or replaced) or any such substitute lease shall be deemed a Default
hereunder. The covenants and agreements set forth in this Paragraph 16 shall run
with the land comprising the Premises and shall bind Subtenant and Subtenant's
heirs, executors, administrators, personal representatives, representatives in
any bankruptcy proceeding, successors and assigns. Any assignee, sublessee or
transferee of Subtenant's interest in this Sublease, by assuming Subtenant's
obligations hereunder, shall assume liability to Sublessor for all amounts paid
to persons other than Sublessor by such successors in contravention of this
Paragraph 16. Upon the occurrence of a Default by Subtenant hereunder, if the
Premises or any part thereof or interest hereunder are then

SUBLEASE - Page 7

<PAGE>   95

assigned, transferred or sublet, Sublessor, in addition to any other remedy
herein provided or provided by law, may at Sublessor's option collect directly
from any such assignee, transferee or subtenant all rents becoming due to
Subtenant under such assignment, transfer or sublease and apply such rent and/or
other consideration and amounts against any sums due to Sublessor from Subtenant
hereunder, and no such collection shall be construed to constitute a novation or
a release of Subtenant from the further performance of Subtenant's obligations
hereunder.

         (b) By Sublessor. Sublessor shall have the right to transfer or assign
this Sublease or Sublessor's interest hereunder as security or absolutely and
Subtenant agrees to attorn to the lawful transferee thereof, but any such
transfer or assignment shall be at all times subject to the terms and conditions
of this Sublease and the rights of Subtenant hereunder.

     17. Successors and Assigns. This Sublease shall be binding upon and shall
inure to the benefit of the parties hereto and their respective permitted
successors and assigns.

     18. Relationship of Sublessor and Subtenant. It is expressly understood
that Subtenant shall not be construed to be a partner or associate of Sublessor
in the conduct of its business, and that the relationship between the parties
hereto is and shall at all times remain that of sublessor and subtenant.

     19. Surrender of Possession. Subtenant, on or before the last day of the
Term or upon the earlier termination of this Sublease, shall peaceably and
quietly leave, surrender and yield up unto Sublessor the Premises, in good order
and condition except for reasonable wear and tear and damage by the elements.

     20. Brokerage Commissions. Each of Sublessor and Subtenant represents and
warrants to the other that it has employed no broker or agent in connection with
this Sublease, and each party hereto shall indemnify and hold the other harmless
from and against any claim, liability or damage against or to the other arising
from or in respect of a breach of the foregoing representation and warranty.

     21. Limitation on Sublessor's Liability. Subtenant expressly covenants and
agrees that neither Sublessor nor any officer, director, shareholder, partner,
venturer, affiliate, agent, employee or representative of Sublessor (the
"Affiliated Parties") shall have any personal liability for any obligations (if
any) of Sublessor arising under this Sublease and that Subtenant will not
institute, prosecute or attempt to enforce in any court or otherwise any action
for specific performance or to recover or collect from Sublessor nor any
Affiliated Parties or from any assignee to Sublessor at any time succeeding to
the interest of Sublessor under this Sublease, or at any time owning, or who had
previously owned, the estate of Sublessor, any moneys claimed for damages for
breach of any agreement or covenant herein. If Sublessor defaults in the
performance of any of Sublessor's obligations under this Sublease or otherwise,
Subtenant shall look solely to Sublessor's interest in the Premises and not to
any other assets, interests or rights of Sublessor or any Affiliated Parties for
satisfaction of Subtenant's remedies on account thereof, it being hereby agreed
that Sublessor's liability under this Sublease shall be limited to Sublessor's
interest in the Premises and Subtenant agrees to look solely to Sublessor's
interest in the Premises to satisfy any obligation of Sublessor

SUBLEASE - Page 8

<PAGE>   96

under this Sublease. The foregoing is an express covenant and agreement on the
part of Subtenant and constitutes a material inducement to the execution of this
Sublease by Sublessor and a condition of Sublessor's obligations hereunder.

     22. Estoppel Certificates.

         (a) By Sublessor. Sublessor shall, at any time and from time to time
not to exceed once per Lease Year, at the request of Subtenant, execute,
acknowledge and deliver to Subtenant a certificate by Sublessor certifying (i)
that this Sublease is unmodified and in full force and effect (or, if there have
been modifications, the extent to which this Sublease is in full force and
effect as modified and stating the modifications), (ii) whether there then exist
any offsets or defenses against the enforcement by Subtenant of any of the
provisions of this Sublease (and, if so, specifying the same), (iii) the dates,
if any, to which the Base Rent and other amounts payable hereunder have been
paid in advance, and (iv) the address to which notices to Sublessor should be
sent pursuant to this Sublease.

         (b) By Subtenant. Subtenant shall, at any time and from time to time,
at the request of Sublessor, execute, acknowledge and deliver to Sublessor a
certificate by Subtenant certifying that to the best of its knowledge, (i) that
this Sublease is unmodified and in full force and effect (or, if there have been
modifications, the extent to which this Sublease is in full force and effect as
modified and stating the modifications), (ii) whether there then exist any
offsets or defenses against the enforcement by Sublessor of any of the
provisions of this Sublease (and if so, specifying the same), (iii) the dates,
if any, to which the Base Rent and other amounts payable hereunder have been
paid in advance, (iv) the address to which notices to Subtenant should be sent
pursuant to this Sublease and (v) any other information as may be reasonably
requested by Sublessor. Any such certificate may be relied upon by any
prospective Sublessor Mortgagee or assignee of Sublessor's interest hereunder.

     23. Recordation. Neither this Sublease nor a memorandum hereof shall be
recorded in any land records (of the county in which the Premises is located or
otherwise). Any attempted recordation of this Sublease or of a memorandum or
short form hereof by Subtenant shall automatically constitute a Default by
Subtenant.

     24. Gender and Number. Words of any gender used in this Sublease shall be
deemed to include any other gender, and words in the singular number shall be
deemed to include the plural (and vice-versa), when the context so requires.

     25. Titles. The titles and article or paragraph headings contained in this
Sublease are inserted only for convenience, and shall not be construed as a part
of this Sublease or as limiting the scope of the particular provisions to which
they refer.

     26. Notices. All notices to be given under this Sublease shall be in
writing and shall be sent by personal delivery using an independent courier
service providing proof of delivery, by overnight national or regional courier
providing proof of delivery or by certified or registered mail, postage prepaid
return receipt requested, addressed as follows:

SUBLEASE - Page 9

<PAGE>   97

<TABLE>

<S>                        <C>

                  A.       If to Sublessor:

                           Heller Financial Leasing, Inc.
                           500 West Monroe Street
                           Chicago, Illinois  60661
                           Attention: CEFC - Control Region Credit Manager
</TABLE>

or to such other person or such other address designated by notice sent by
Sublessor to Subtenant.

<TABLE>

<S>                        <C>
                  B.       If to Subtenant:

                           South Hampton Refining Co.
                           7752 FM 418, P.O.
                           Box 1636
                           Silsbee, Texas 77656
                           Attn: Nicholas N. Carter
</TABLE>

or to such other address as is designated by Subtenant in a notice to Sublessor.

All notices shall be deemed given when received, when delivery is refused or
when the same is returned for failure to be called for.

     27. Partial Invalidity. If any provisions of this Sublease or the
application thereof to any person or circumstance shall to any extent be invalid
or unenforceable, the remainder of this Sublease, or the application of such
provision to persons or circumstances other than those as to which it is invalid
or unenforceable, shall not be affected thereby, and each provision of this
Sublease shall be valid and enforceable to the fullest extent permitted by law.

     28. Waiver. The failure of Sublessor or Subtenant to insist upon strict
performance of any of the covenants or conditions of this Sublease or to
exercise any option herein conferred in any one or more instances shall not be
construed as a waiver or relinquishment for the future of the same or any
similar covenant, condition or option, but the same shall be and remain in full
force and effect.

     29. Entire Agreement. This instrument contains all the agreements made
between the parties hereto with respect to the sublease of the Premises as
contemplated hereby, and may be modified only by an agreement in writing, signed
by all the parties hereto or their respective successors in interest.

     30. Net Lease.

         (a) Fully Net Lease. This Sublease is intended, and is hereby declared,
to be a fully net lease, it being the intention of the parties hereto that
Sublessor shall have and enjoy the Rent herein reserved to Sublessor without
deduction therefrom. It is the parties' further intention that Subtenant shall
pay all expenses of owning, operating and maintaining the Premises. Nothing
herein contained, however, shall be construed so as to require the Subtenant to
pay or be liable for any gift,

SUBLEASE - Page 10

<PAGE>   98

inheritance, estate, franchise, income, profit, capital or similar tax, or any
other tax in lieu of any of the foregoing, imposed upon the Sublessor, or any
successor or assign of Sublessor, unless such tax shall be imposed or levied
upon or with respect to rents payable to Sublessor herein in lieu of real estate
taxes upon the Premises.

         (b) No Reduction of Rent. No abatement, diminution or reduction of the
Rent or other charges payable by the Subtenant under this Sublease shall be
claimed by or allowed to Subtenant for any inconvenience, interruption,
cessation or loss of business or otherwise caused directly or indirectly (a) by
any present or future laws, rules, requirements, orders, directions, ordinances
or regulations of the United States of America or of the State, County or City
government or any other municipal, governmental or lawful authority whatsoever,
or (b) by damage to or destruction of any portion of or all of the improvements
by fire, the elements or any other cause whatsoever, or (c) by priorities,
rationing, or curtailment of labor or materials, or (d) by war or any matter or
things resulting therefrom, or (e) by any other cause or causes, except as
otherwise specifically and expressly provided in this Sublease.

     31. Subordination. This Sublease is subject and subordinate in all respects
to the Ground Lease. In the event of any inconsistency between this Sublease and
the Ground Lease, the Ground Lease shall govern and control.

     32. Termination of Ground Lease. If for any reason the term of the Ground
Lease shall terminate prior to the expiration date of this Sublease, this
Sublease shall thereupon be automatically deemed terminated concurrently with
such termination of the Ground Lease and Sublessor shall not be liable to
Subtenant by reason thereof.

     33. No Breach of Ground Lease. With respect to Subtenant's obligations
under this Sublease, Subtenant shall not do or permit to be done by any
employee, agent or representative of Subtenant any act or thing that may
constitute a breach or violation of any term, covenant or condition of the
Ground Lease, whether or not such act or thing is permitted under the provisions
of this Sublease.

     34. Duties of Subtenant. Subtenant hereby acknowledges and agrees that in
addition to its capacity as Subtenant pursuant to this Sublease, it is also
acting as the Landlord pursuant to the Ground Lease. To the extent that the
duties of the Subtenant pursuant to this Sublease overlap, coincide with or even
exceed its duties as Landlord pursuant to the Ground Lease, Subtenant agrees to
fulfill its duties and obligations in one capacity or the other and failure to
do so will act as a Default under the terms of this Sublease, the Ground Lease
and the Loan Agreement.

     35. Survival of Subtenant's Obligations. Subtenant's covenants and
obligations under this Sublease which are not performed or capable of being
performed during the term of this Sublease shall survive the expiration or
earlier termination of this Sublease.

                    [REMAINDER OF PAGE INTENTIONALLY BLANK.]

SUBLEASE - Page 11

<PAGE>   99

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

                                  SUBTENANT:

                                  SOUTH HAMPTON REFINING CO.

                                  By:
                                     -----------------------------------------
                                     Nicholas N. Carter
                                     President

                                  SUBLESSOR:

                                  HELLER FINANCIAL LEASING, INC.

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

                                SUB-GROUND LEASE
                                 SIGNATURE PAGE
<PAGE>   100
                     HAZARDOUS MATERIALS INDEMNITY AGREEMENT

         This HAZARDOUS MATERIALS INDEMNITY AGREEMENT (this "AGREEMENT") is made
as of December 30, 1999 by SOUTH HAMPTON REFINING CO. a Texas corporation
("SOUTH HAMPTON"), in favor of HELLER FINANCIAL LEASING, INC., a Delaware
corporation ("HELLER").

                                    RECITALS

         A. South Hampton is the owner in fee simple of that certain parcel of
land containing approximately 105 acres located in Silsbee, Texas, and more
particularly described in Exhibit "A" attached hereto (the "Land").

         B. Pursuant to the terms and provisions of that certain Ground Lease of
even date herewith (the "Ground Lease"), South Hampton has leased the Land to
Heller.

         C. Pursuant to that certain Sub-Ground Lease of even date herewith
("Sub-Ground Lease"), Heller has subleased the Land to South Hampton.

         D. Heller, as a condition to entering into and lending under that
certain Loan and Security Agreement dated as of the date hereof by and between
Heller, South Hampton and Gulf State Pipe Line Company, Inc. (the "Loan
Agreement") and performing the other Loan Documents (as defined in the Loan
Agreement), has requested that South Hampton enter into this Agreement to
indemnify Heller against liabilities arising from Hazardous Materials (as
hereinafter defined) used or located on, or affecting the Land and any
buildings, machinery and equipment located thereon (together, the "Property"),
and that South Hampton acknowledges and agrees that its execution and delivery
of this Agreement and its performance of the covenants contained herein are
material inducements for Heller's agreement to enter into the Loan Documents.

                                   AGREEMENTS

         NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, South Hampton hereby represents, warrants, covenants and agrees as
follows:

         1. NO HAZARDOUS MATERIALS ON PROPERTY. South Hampton represents,
warrants and certifies, to the best of its knowledge after all appropriate
inquiry, and covenants that, except as disclosed in writing to Heller, there are
no, nor will there be, for as long as the Ground Lease shall be in effect, any
Hazardous Materials generated, released, stored, buried or deposited over,
beneath, in or upon the Property or on or beneath the surface of adjacent
property, except as such Hazardous Materials may be generated, used, stored or
transported in connection with the permitted uses of the Property and then only
to the extent permitted by law after obtaining all necessary permits and
licenses therefor. "HAZARDOUS MATERIALS" shall mean and include any pollutants,
flammables, explosives, petroleum (including crude oil) or any fraction thereof,
radioactive materials, hazardous wastes, dangerous or toxic substances or
related materials, including substances defined as or included in the definition
of toxic or hazardous substances, wastes or materials under any federal, state
or local laws, ordinances, regulations or guidances which relate to pollution,
the environment

<PAGE>   101

or the protection of public health and safety, or limiting, prohibiting or
otherwise regulating the presence, sale, recycling, generation, manufacture,
use, transportation, disposal, release, storage, treatment of, or response or
exposure to, toxic or hazardous substances, wastes or materials. Such laws,
ordinances and regulations, now or hereafter in effect, and as the same may be
amended from time to time, are hereinafter collectively referred to as the
"HAZARDOUS MATERIALS LAWS."

         2. COMPLIANCE WITH LAWS. For as long as the Ground Lease is in effect,
South Hampton shall, and shall cause its respective employees, agents, tenants
(other than Heller), contractors and subcontractors and any other persons from
time to time present on or occupying the Property to, keep and maintain the
Property in compliance with, and not cause or knowingly permit the Property to
be in violation of, any applicable Hazardous Materials Laws. None of South
Hampton or any of its respective employees, agents, tenants (other than Heller),
contractors or subcontractors or any other persons occupying or present on the
Property shall generate, use, store, manufacture or dispose of on, under or
about the Property or transport to or from the Property any Hazardous Materials,
except such Hazardous Materials as may be generated, used, stored or transported
in connection with the permitted uses of the Property and then only to the
extent permitted by law after obtaining all necessary permits and licenses
therefor.

         3. HAZARDOUS MATERIALS CLAIMS. South Hampton shall immediately advise
Heller in writing of: (a) any notices received by South Hampton (whether such
notices are from the Environmental Protection Agency, or any other federal,
state or local governmental agency or regional office thereof) of the violation
or potential violation of any applicable Hazardous Materials Laws occurring on,
under or about the Property; (b) any and all enforcement, cleanup, removal or
other governmental or regulatory actions instituted, completed or threatened
against South Hampton or the Property pursuant to any Hazardous Materials Laws;
and (c) all claims made or threatened in writing by any third party against
South Hampton or the Property relating to damage, contribution, cost recovery,
compensation, loss or injury resulting from any Hazardous Materials.

         4. OTHER HAZARDOUS MATERIALS. South Hampton hereby represents, warrants
and certifies to the best of its knowledge after all appropriate inquiry, that
there are no underground storage tanks located on, under or about the Property
that are subject to the notification requirements under Section 9002 of the
Solid Waste Disposal Act, as now or hereafter amended (42 U.S.C. Section 6991).

         5. INDEMNIFICATION. South Hampton shall indemnify, defend and save
harmless Heller and its officers, directors, shareholders, agents, attorneys,
representatives and employees, their successors and assigns (individually and
collectively "INDEMNITEE"), from and against any and all claims, demands, causes
of action, damages, costs, expenses, lawsuits and liabilities, at law or in
equity, of every kind or nature whatsoever, directly or indirectly arising out
of or attributable to the generation, use, storage, release, threatened release,
discharge, disposal or presence of Hazardous Materials on, under or about the
Property (whether occurring prior to or during or after the term of the Ground
Lease or otherwise and regardless of by whom caused, whether by South Hampton or
any predecessor in title or any owner of land adjacent to the Property or any
other third party, or any employee, agent, tenant, contractor or subcontractor
of South Hampton or any predecessor in title or any such adjacent land owner or
any third person) including, without limitation:

                                        2
<PAGE>   102

               (a) Claims of third parties (including governmental agencies) for
          injury to or death of any person or for damage to or destruction of
          any property;

               (b) Claims for response costs, clean-up costs, costs and expenses
          of removal and restoration, including fees of attorneys and experts,
          and costs of determining the existence of Hazardous Materials and
          reporting same to any governmental agency;

               (c) Any and all other claims for expenses or obligations,
          including attorneys' fees, costs, and other expenses related to
          Hazardous Materials and the Property;

               (d) Any and all penalties threatened, sought or imposed on
          account of a violation of any Hazardous Materials Laws;

               (e) All fees of any reasonable consultants, attorneys, and
          engineering firms retained in connection with monitoring the
          obligations of South Hampton under this Agreement; and

               (f) Any loss occasioned by diminution in the value of the
          Property which may result from any of the foregoing.

         6. DEFENSE OR SETTLEMENT OF CLAIMS.

               (a) To assert an indemnity claim under this Agreement, Indemnitee
          shall notify South Hampton in writing as soon as reasonably practical
          under the circumstances stating the facts which entitle Indemnitee to
          make a claim for indemnification.

               (b) South Hampton shall, at its own cost, expense and risk:

                    (i) defend all suits, actions, or other legal or
               administrative proceedings that may be threatened, brought or
               instituted against an Indemnitee on account of any matter or
               matters described in Section 5 above;

                    (ii) pay or satisfy any judgment, decree or settlement that
               may be rendered against or agreed to by an Indemnitee in any such
               suit, action or other legal or administrative proceeding;

                    (iii) reimburse Indemnitee for any and all reasonable
               expenses, including, without limitation, all reasonable legal
               expenses incurred in connection with any of the matters described
               in Section 5 above or in connection with enforcing this
               Agreement; and

                    (iv) reimburse Indemnitee for any loss occasioned by the
               diminution in the value of the Property caused by the presence of
               Hazardous Materials or the breach of any representation, warranty
               or obligation of Indemnitor hereunder.

                                      3
<PAGE>   103

               (c) Any law firm selected by South Hampton to defend an
          indemnified claim shall be subject to the approval of Indemnitee which
          approval shall not be unreasonably withheld or delayed; provided that
          upon thirty (30) days prior written notice, Indemnitee may elect to
          defend, using a law firm selected by such Indemnitee, any such claim,
          loss, action, legal or administrative proceeding at the cost and
          expense of South Hampton if, in the reasonable judgment of Indemnitee:
          (i) the defense is not proceeding or being conducted in a satisfactory
          manner or (ii) there is a conflict of interest between any of the
          parties to such lawsuit, action, legal or administrative proceeding.

               (d) If Indemnitee exercises its right to designate counsel
          pursuant to the preceding clause, all costs and expenses thereof shall
          be paid by South Hampton within ten (10) days following written demand
          by such Indemnitee.

               (e) In the event South Hampton shall pay to Indemnitee any claim
          under this Agreement, then South Hampton shall be subrogated to any
          rights of such Indemnitee relating thereto, and such Indemnitee will
          cooperate with South Hampton at the cost and expense of South Hampton,
          in enforcing such rights; provided, that such subrogation shall not be
          in derogation of any rights of the Indemnitee under this Agreement,
          and shall not be construed to limit the obligations of Indemnitor
          hereunder.

         7. BINDING EFFECT. All the covenants and agreements of South Hampton
contained in this Agreement shall apply to and bind its respective successors
and assigns and shall inure to the benefit of each Indemnitee and its successors
and assigns.

         8. SEPARATE INDEMNIFICATION. South Hampton agrees that this Agreement
is separate, independent of and in addition to the undertakings of South Hampton
pursuant to the Loan Documents. A separate action may be brought to enforce the
provisions hereof. The obligations of South Hampton hereunder shall not be
affected by any exculpatory provisions contained in any of the Loan Documents.
This Agreement, and all rights and obligations hereunder, shall survive
performance and repayment of the obligations evidenced by the Loan Documents,
any transfer of the Property, and transfer of all of Heller's rights in the Loan
Documents and the Property. South Hampton agrees that a default under this
Agreement shall constitute a default under the Loan Agreement, enabling Heller
to exercise its remedies under the Loan Documents.

         9. GOVERNING LAW. This Agreement shall be construed in accordance with
and governed by the laws of the State of Illinois.

         10. AMENDMENTS. This Agreement may not be modified, amended, waived or
terminated, except by a written instrument executed by the parties hereto.

         11. PARTIES IN INTEREST. Except as expressly set forth herein, nothing
in this Agreement, whether express or implied, is intended to confer any rights
or remedies under or by reason of this Agreement on any persons other than the
parties to it and their respective successors and assigns, nor is anything in
this Agreement intended to relieve or discharge the obligation or liability of
any third

                                       4
<PAGE>   104

persons to any party to this Agreement, nor shall any provision give any third
persons any right of subrogation or action over or against any party to this
Agreement.

         12. COUNTERPARTS. This Agreement may be executed in two or more
counterparts.

         13. VENUE. SOUTH HAMPTON AGREES THAT ALL ACTIONS OR PROCEEDINGS ARISING
DIRECTLY OR OTHERWISE IN CONNECTION WITH, OUT OF, RELATED TO OR FROM THIS
AGREEMENT MAY BE LITIGATED, ONLY IN COURTS HAVING A SITUS WITHIN THE COUNTY OF
COOK, STATE OF ILLINOIS. SOUTH HAMPTON HEREBY CONSENTS AND SUBMITS TO THE
JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT LOCATED WITHIN SAID COUNTY AND
STATE AND IRREVOCABLY APPOINTS AND DESIGNATES C T CORPORATION SYSTEM, WHOSE
ADDRESS IS SOUTH HAMPTON REFINING CO., C/O C T CORPORATION SYSTEM, 208 S.
LASALLE STREET, CHICAGO, ILLINOIS 60604, AS ITS DULY AUTHORIZED AGENT FOR
SERVICE OF PROCESS AND AGREES THAT SERVICE UPON SUCH PARTY SHALL CONSTITUTE
PERSONAL SERVICE OF PROCESS UPON SOUTH HAMPTON. IN THE EVENT SERVICE IS
UNDELIVERABLE BY REASON OF AGENT'S CESSATION OF BUSINESS IN CHICAGO, ILLINOIS,
SOUTH HAMPTON SHALL, WITHIN TEN (10) DAYS AFTER HELLER'S REQUEST, APPOINT A
SUBSTITUTE AGENT (IN CHICAGO, ILLINOIS) AND WITHIN SUCH PERIOD NOTIFY HELLER OF
SUCH APPOINTMENT. IF SUCH SUBSTITUTE AGENT IS NOT TIMELY APPOINTED, HELLER IN
ITS SOLE DISCRETION, SHALL HAVE THE RIGHT TO DESIGNATE A SUBSTITUTE AGENT UPON
FIVE (5) DAYS NOTICE TO SOUTH HAMPTON. SOUTH HAMPTON HEREBY WAIVES ALL RIGHTS TO
TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION BROUGHT AGAINST SOUTH HAMPTON BY
HELLER UNDER THIS AGREEMENT IN ACCORDANCE WITH THIS PARAGRAPH.

         14. JURY TRIAL WAIVER. SOUTH HAMPTON AND HELLER BY THEIR ACCEPTANCE OF
THIS AGREEMENT, HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY IN ANY
ACTION OR PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT MATTER OF THIS
AGREEMENT AND THE BUSINESS RELATIONSHIP THAT IS BEING ESTABLISHED. THIS WAIVER
IS KNOWINGLY, INTENTIONALLY AND VOLUNTARILY MADE BY SOUTH HAMPTON AND HELLER,
AND SOUTH HAMPTON ACKNOWLEDGES THAT NEITHER HELLER NOR ANY PERSON ACTING ON
BEHALF OF HELLER HAS MADE ANY REPRESENTATIONS OF FACT TO INCLUDE THIS WAIVER OF
TRIAL BY JURY OR HAS TAKEN ANY ACTIONS WHICH IN ANY WAY MODIFY OR NULLIFY ITS
EFFECT. SOUTH HAMPTON AND HELLER ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL
INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT SOUTH HAMPTON AND HELLER
HAVE ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH
OF THEM WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS.
SOUTH HAMPTON AND HELLER FURTHER ACKNOWLEDGE THAT THEY HAVE BEEN REPRESENTED (OR
HAVE HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF THIS AGREEMENT AND
IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL.

         [Remainder of page intentionally blank. Signature page follow.]

                                       5
<PAGE>   105

         South Hampton has executed this Agreement or has caused the same to be
executed as of the date first set forth above.

                                        SOUTH HAMPTON REFINING CO.,
                                        a Texas corporation

                                        By:
                                           ---------------------------------
                                           Nicholas N. Carter
                                           President

                     HAZARDOUS MATERIALS INDEMNITY AGREEMENT
                                 SIGNATURE PAGE
<PAGE>   106

                          AGREEMENT OF NEGATIVE PLEDGE
                          AND PROMISE NOT TO INCUR DEBT

         THIS AGREEMENT OF NEGATIVE PLEDGE AND PROMISE NOT TO INCUR DEBT (this
"Agreement") dated as of December 30, 1999, is by and between PRODUCTOS QUIMICOS
COIN, S.A., DE C.V. , a Mexico company (the "Pledgor"), and HELLER FINANCIAL
LEASING, INC., a Delaware corporation ("Heller").

                                R E C I T A L S:

         A. South Hampton Refining Co., a Texas corporation, Gulf State Pipe
Line Company, Inc., a Texas corporation, and Heller are parties to that certain
Loan and Security Agreement dated as of the date hereof (such Loan and Security
Agreement, as the same may be amended, supplemented or modified from time to
time, the "Loan Agreement").

         B. Heller has conditioned its obligation to lend under the Loan
Agreement upon the execution and delivery by the Pledgor of this Agreement.

                               A G R E E M E N T:

         NOW THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

         1. Definitions. All capitalized terms used and not otherwise defined
herein shall have their respective meanings as set forth in the Loan Agreement.

         2. Representations. Pledgor hereby represents and warrants to Heller
that Pledgor owns all of its assets and properties free and clear of all Liens,
except for Liens granted to secure indebtedness permitted hereunder.

         3. Negative Pledge. Unless and until the Indebtedness has been repaid
in full, and Heller no longer has any commitment to lend under the Loan
Agreement, Pledgor agrees that it will not (a) sell, assign, transfer, lease,
convey or otherwise dispose of any of its assets or properties, or (b) directly
or indirectly (i) create, incur, or suffer or permit to be created or incurred
or to exist any Lien upon any of its assets or properties, except for Liens
granted to secure indebtedness permitted hereunder, so long as such Liens only
encumber the assets currently encumbered by such Liens, or (ii) enter into or
permit to exist any contractual arrangement or agreement which directly or
indirectly prohibits the Pledgor from disposing of or creating or incurring any
Lien upon any of its assets or properties, other than any agreement executed, or
lien created, in favor of Heller.

         4. Promise Not to Incur Debt. Unless and until the Indebtedness has
been repaid in full, and Heller no longer has any commitment to lend under the
Loan Agreement, Pledgor agrees that it

AGREEMENT OF NEGATIVE PLEDGE AND PROMISE NOT TO INCUR DEBT - PAGE 1

<PAGE>   107

will not incur, create, assume, guarantee or permit to exist any indebtedness or
liability, whether for borrowed money, for the deferred purchase price of
property, as a contingent liability or otherwise, other than indebtedness of
Pledgor for borrowed money existing on the date hereof and any refinancings (but
not increases) of such indebtedness.

         5. GOVERNING LAW. THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS
AND LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE LOCAL
LAW OF THE STATE OF ILLINOIS EXCLUDING ANY CONFLICTS OF LAW RULE OR PRINCIPLE
THAT MIGHT OTHERWISE REFER CONSTRUCTION OR INTERPRETATION OF THIS AGREEMENT TO
THE SUBSTANTIVE LAW OF ANOTHER JURISDICTION.

         6. Venue. PLEDGOR AGREES THAT ALL ACTIONS OR PROCEEDINGS ARISING
DIRECTLY OR OTHERWISE IN CONNECTION WITH, OUT OF, RELATED TO OR FROM THIS
AGREEMENT MAY BE LITIGATED, ONLY IN COURTS HAVING A SITUS WITHIN THE COUNTY OF
COOK, STATE OF ILLINOIS. PLEDGOR HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION
OF ANY LOCAL, STATE OR FEDERAL COURT LOCATED WITHIN SAID COUNTY AND STATE AND
IRREVOCABLY APPOINTS AND DESIGNATES C T CORPORATION SYSTEM, WHOSE ADDRESS IS,
PRODUCTOS QUIMICOS COIN, S.A., DE C.V., C/O C T CORPORATION SYSTEM, 208 S.
LASALLE STREET, CHICAGO, ILLINOIS 60604, AS ITS DULY AUTHORIZED AGENT FOR
SERVICE OF PROCESS AND AGREES THAT SERVICE UPON SUCH PARTY SHALL CONSTITUTE
PERSONAL SERVICE OF PROCESS UPON PLEDGOR. IN THE EVENT SERVICE IS UNDELIVERABLE
BY REASON OF AGENT'S CESSATION OF BUSINESS IN CHICAGO, ILLINOIS, PLEDGOR SHALL,
WITHIN TEN (10) DAYS AFTER HELLER'S REQUEST, APPOINT A SUBSTITUTE AGENT (IN
CHICAGO, ILLINOIS) AND WITHIN SUCH PERIOD NOTIFY HELLER OF SUCH APPOINTMENT. IF
SUCH SUBSTITUTE AGENT IS NOT TIMELY APPOINTED, HELLER IN ITS SOLE DISCRETION,
SHALL HAVE THE RIGHT TO DESIGNATE A SUBSTITUTE AGENT UPON FIVE (5) DAYS NOTICE
TO PLEDGOR. PLEDGOR HEREBY WAIVES ALL RIGHTS TO TRANSFER OR CHANGE THE VENUE OF
ANY LITIGATION BROUGHT AGAINST PLEDGOR BY HELLER UNDER THIS AGREEMENT IN
ACCORDANCE WITH THIS PARAGRAPH.

         7. Jury Trial Waiver. PLEDGOR AND HELLER BY THEIR ACCEPTANCE OF THIS
AGREEMENT, HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY IN ANY ACTION
OR PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT MATTER OF THIS AGREEMENT
AND THE BUSINESS RELATIONSHIP THAT IS BEING ESTABLISHED. THIS WAIVER IS
KNOWINGLY, INTENTIONALLY AND VOLUNTARILY MADE BY PLEDGOR AND HELLER, AND PLEDGOR
ACKNOWLEDGES THAT NEITHER HELLER NOR ANY PERSON ACTING ON BEHALF OF HELLER HAS
MADE ANY REPRESENTATIONS OF FACT TO INCLUDE THIS WAIVER OF TRIAL BY JURY OR HAS
TAKEN ANY ACTIONS WHICH IN ANY WAY MODIFY OR NULLIFY ITS EFFECT. PLEDGOR AND
HELLER ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A
BUSINESS RELATIONSHIP, THAT PLEDGOR AND

AGREEMENT OF NEGATIVE PLEDGE AND PROMISE NOT TO INCUR DEBT - PAGE 2

<PAGE>   108
HELLER HAVE ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT AND
THAT EACH OF THEM WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE
DEALINGS. PLEDGOR AND HELLER FURTHER ACKNOWLEDGE THAT THEY HAVE BEEN REPRESENTED
(OR HAVE HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF THIS AGREEMENT
AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL.

         8. Amendments. This instrument may be amended only by an instrument in
writing executed jointly by the Pledgor and Heller.

         9. Multiple Counterparts. This Agreement may been executed in a number
of identical counterparts, each of which shall be deemed an original for all
purposes and all of which constitute, collectively, one agreement; but, in
making proof of this Agreement, it shall not be necessary to produce or account
for more than one such counterpart.

         10. Parties Bound; Assignment. The obligations and agreements of the
Pledgor hereunder shall be binding upon its successors and assigns. The Pledgor
shall not, without the prior written consent of Heller, assign any rights,
duties, or obligations under this Agreement. In the event of an assignment of
all or part of the Indebtedness, the rights and benefits hereunder, to the
extent applicable to the part of the Indebtedness so assigned, may be
transferred therewith.

         11. Effective Date. This Agreement is effective simultaneously with the
acquisition of 92% of the capital stock of the Pledgor by Texas Oil II.

                 [BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK]

AGREEMENT OF NEGATIVE PLEDGE AND PROMISE NOT TO INCUR DEBT - PAGE 3

<PAGE>   109

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

                                   PLEDGOR:

                                   PRODUCTOS QUIMICOS COIN, S.A., DE C.V.

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

                                   HELLER:

                                   HELLER FINANCIAL LEASING, INC.

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

           AGREEMENT OF NEGATIVE PLEDGE AND PROMISE NOT TO INCUR DEBT
                                 SIGNATURE PAGE<PAGE>   1
                                                                   EXHIBIT 10(r)

                                 LOAN AGREEMENT

         THIS LOAN AGREEMENT, dated as of September 30, 1999 (this "Agreement"),
is between SOUTH HAMPTON REFINING CO., a Texas corporation ("Borrower"), and
SOUTHWEST BANK OF TEXAS, N.A., a national banking association ("Lender").

                                R E C I T A L S :

         Borrower has requested that Lender extend credit to Borrower in the
form of revolving credit advances and letters of credit which shall not exceed
an aggregate principal amount of $2,250,000.00 at any time outstanding. Lender
is willing to make such extensions of credit to Borrower upon the terms and
conditions hereinafter set forth.

         NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:

                                   ARTICLE I.

                                   Definitions

         Section 1.1. Definitions. As used in this Agreement, the following
terms have the following meanings:

                  "Advance" means an advance of funds by Lender to Borrower
         pursuant to Article II.

                  "Advance Request Form" means a certificate, in substantially
         the form of Exhibit "D" hereto, properly completed and signed by
         Borrower requesting an Advance.

                  "Arbitration Agreement" means the Arbitration Agreement
         executed by Borrower and Guarantor in substantially the form of Exhibit
         "G" hereto, as the same may be amended, supplemented, or modified.

                  "Authorized Representative" means any officer or employee of
         Borrower who has been designated in writing by Borrower to Lender to be
         an Authorized Representative.

                  "Borrowing Base" means, at any particular time, an amount
         equal to the sum of (a) eighty percent (80%) of
         Eligible Accounts plus (b) the lesser of (i) fifty percent (50%) of
         Eligible Inventory or (ii) $750,000.00.

<PAGE>   2

                  "Borrowing Base Certificate" means a certificate in the form
         of Exhibit "E" hereto, fully completed and executed by Borrower.

                  "Business Day" means any day on which commercial banks are not
         authorized or required to close in Houston, Texas.

                  "Capital Expenditures" means all expenditures for assets
         which, in accordance with GAAP, are required to be capitalized and so
         shown on the consolidated balance sheet of Guarantor and its
         Subsidiaries.

                  "Closing Date" means the date on which this Agreement has been
         executed and delivered by the parties hereto and the conditions set
         forth in Section 5.1 have been satisfied.

                  "Collateral" has the meaning specified in Section 4.1.

                  "Commitment" means the obligation of Lender to make Advances
         and issue Letters of Credit hereunder in an aggregate principal amount
         at any time outstanding up to but not exceeding $2,250,000.00.

                  "Current Assets" means, at any particular time, all amounts
         which, in conformity with GAAP, would be included as current assets on
         a consolidated balance sheet of Guarantor and its Subsidiaries.

                  "Current Liabilities" means, at any particular time, all
         amounts which, in conformity with GAAP, would be included as current
         liabilities on a consolidated balance sheet of Guarantor and its
         Subsidiaries; provided, however, that the maturities of the
         indebtedness evidenced by the Note shall not constitute Current
         Liabilities.

                  "Current Ratio" means the ratio of Current Assets to Current
         Liabilities.

                  "Debt" means for any Person (a) all indebtedness, whether or
         not represented by bonds, debentures, notes, securities, or other
         evidences of indebtedness, for the repayment of money borrowed, (b) all
         indebtedness representing deferred payment of the purchase price of
         property or assets, (c) all indebtedness under any lease which, in
         conformity with GAAP, is required to be capitalized for balance sheet
         purposes, (d) all indebtedness under guaranties, endorsements,
         assumptions, or other contingent obligations, in respect of, or to
         purchase or otherwise acquire, indebtedness of others, (e) all
         indebtedness secured by a Lien existing on property owned, subject to
         such Lien, whether or not the indebtedness secured
         thereby shall have been assumed by the owner thereof, and (f) any
         obligation to redeem or repurchase any of such Person's capital stock,
         warrants, or stock equivalents.

                                      -2-
<PAGE>   3

                  "Default Rate" means the lesser of (a) the sum of the Prime
         Rate in effect from day to day plus five percent (5.0%) or (b) the
         Maximum Rate.

                  "EBITDA" means for Guarantor and its Subsidiaries, on a
         consolidated basis, the sum of (a) Net Income, plus (b) depreciation,
         amortization and other non cash charges, plus (c) interest expense,
         plus (d) taxes.

                  "Eligible Accounts" means the aggregate of all accounts
         receivable of Borrower that are acceptable to Lender in its sole
         discretion and satisfy the following conditions: (a) are due and
         payable within sixty (60) days; (b) have been outstanding less than
         ninety (90) days past the original date of invoice; (c) have arisen in
         the ordinary course of business from services performed by Borrower to
         or for the account debtor or the sale by Borrower of goods in which
         Borrower had sole ownership where such goods have been shipped or
         delivered to the account debtor; (d) represent complete bona fide
         transactions which require no further act under any circumstances on
         the part of Borrower to make such accounts receivable payable by the
         account debtor; (e) the goods the sale of which gave rise to such
         accounts receivable were shipped or delivered to the account debtor on
         an absolute sale basis and not on consignment, a sale or return basis,
         a guaranteed sale basis, a bill and hold basis, or on the basis of any
         similar understanding; (f) the goods the sale of which gave rise to
         such accounts receivable were not, at the time of sale thereof, subject
         to any Lien, except the security interest in favor of Lender created by
         the Loan Documents; (g) are not subject to any provisions prohibiting
         assignment or requiring notice of or consent to such assignment; (h)
         are subject to a perfected, first priority security interest in favor
         of Lender and are not subject to any other Lien; (i) are not subject to
         setoff, counterclaim, defense, allowance, dispute, or adjustment other
         than normal discounts for prompt payment, and the goods of sale which
         gave rise to such accounts receivable have not been returned, rejected,
         repossessed, lost, or damaged; (j) the account debtor is not insolvent
         or the subject of any bankruptcy or insolvency proceeding and has not
         made an assignment for the benefit of creditors, suspended normal
         business operations, dissolved, liquidated, terminated its existence,
         ceased to pay its debts as they become due, or suffered a receiver or
         trustee to be appointed for any of its assets or affairs; (k) are not
         evidenced by chattel paper or any instrument of any kind; (l) (i)are
         owed by a Person or Persons that are citizens of or organized under the
         laws of the United States or any State thereof, (ii) are owed by a
         Person listed on Exhibit "H"

                                      -3-
<PAGE>   4

         hereto, (iii) are owed by a Person that is a citizen of or organized
         under the laws of Canada or any province thereof and the unsecured debt
         of such Person is rated at least BBB- by Standard & Poor's Ratings
         Group ("S&P") or Baa3 by Moody's Investors Service, Inc. ("Moody's"),
         or (iv) are owed by a Person that is a citizen of or organized under
         the laws of Canada or any province thereof and such Person is a
         Subsidiary of a Person whose unsecured debt is rated at least BBB- by
         S&P or Baa3 by Moody's, and in any case, are not owed by any Person
         organized under the laws of a jurisdiction located outside of the
         United States of America or Canada; (m) if any accounts receivable are
         owed by the United States of America or any department, agency, or
         instrumentality thereof, the Federal Assignment of Claims Act shall
         have been complied with; and (n) are not owed by an affiliate of
         Borrower. No account receivable owed by an account debtor to Borrower
         shall be included as an Eligible Account if more than twenty percent
         (20%) of the balances then outstanding on accounts receivable owed by
         such account debtor and its affiliates to Borrower have remained unpaid
         for more than eighty-nine (89) days from the dates of their original
         invoices. The amount of any Eligible Accounts owed by an account debtor
         to Borrower shall be reduced by the amount of all "contra accounts" and
         other obligations owed by Borrower to such account debtor. In the event
         that at any time the accounts receivable from any account debtor and
         its affiliates to Borrower exceed twenty percent (20%) of the accounts
         receivable of Borrower, the accounts receivable from such account
         debtor and its affiliates shall not constitute Eligible Accounts to the
         extent to which such accounts receivable exceed twenty percent (20%) of
         the accounts receivable of Borrower.

                  "Eligible Inventory" means, at any time, all inventory of
         natural gasoline and finished plant products then owned by (and in the
         possession or under the control of) Borrower and held for sale or
         disposition in the ordinary course of Borrower's business, in which
         Lender has a perfected, first priority security interest, valued at the
         lower of actual cost or fair market value. Eligible Inventory shall not
         include (a) inventory that has been shipped or delivered to a customer
         on consignment, a sale or return basis, or on the basis of any similar
         understanding (b) inventory with respect to which a claim exists
         disputing Borrower's title to or right to possession of such inventory,
         (c) inventory that is not in good condition or does not comply with any
         applicable laws, rules, or regulations or the standards imposed by any
         governmental authority with respect to its manufacture, use, or sale,
         and (d) inventory that Lender, in its sole discretion, has determined
         to be unmarketable.

                  "Environmental Laws" means any and all federal, state and
         local laws, regulations, and requirements pertaining to

                                      -4-
<PAGE>   5

         health, safety, or the environment, including, without limitation, the
         Comprehensive Environmental Response, Compensation and Liability Act of
         1980, 42 U.S.C. Section 9601 et seq.,the Resource Conservation and
         Recovery Act of 1976, 42 U.S.C. Section 6901 et seq., the Occupational
         Safety and Health Act, 29 U.S.C. Section 651 et seq., the Clean Water
         Act, 33 U.S.C. Section 1251 et seq., the Toxic Substances Control Act,
         15 U.S.C. Section 2601 et seq., and all similar laws, regulations, and
         requirements of any governmental authority or agency having
         jurisdiction over Borrower or any Subsidiary or any of their respective
         properties or assets, as such laws, regulations, and requirements may
         be amended or supplemented from time to time.

                  "ERISA" means the Employee Retirement Income Security Act of
         1974, as amended from time to time, and the regulations and published
         interpretations thereunder.

                  "Event of Default" has the meaning specified in Section 10.1.

                  "Field Audits" means audits, verifications and inspections of
         the accounts receivable and inventory of Borrower, conducted by an
         independent third Person selected by Lender.

                  "GAAP" means generally accepted accounting principles, applied
         on a consistent basis, as set forth in Opinions of the Accounting
         Principles Board of the American Institute of Certified Public
         Accountants or in statements of the Financial Accounting Standards
         Board or their respective successors and which are applicable in the
         circumstances as of the date in question. Accounting principles are
         applied on a "consistent basis" when the accounting principles observed
         in a current period are comparable in all material respects to those
         accounting principles applied in a preceding period.

                  "Guarantor" means Texas Oil & Chemical Co. II, Inc., a Texas
         corporation, and its successors and assigns.

                  "Guaranty" means the Guaranty Agreement executed by Guarantor
         in favor of Lender in substantially the form of Exhibit "C" hereto, as
         the same may be amended, supplemented or modified from time to time.

                  "Hazardous Substance" means any substance, product, waste,
         pollutant, material, chemical, contaminant, constituent, or other
         material which is or becomes listed, regulated, or addressed under any
         Environmental Law, including, without limitation, asbestos, petroleum,
         and polychlorinated biphenyls.

                                      -5-
<PAGE>   6

                  "Letter of Credit" means any letter of credit issued by Lender
         for the account of Borrower pursuant to Article II.

                  "Letter of Credit Liabilities" means, at any time, the
         aggregate face amounts of all outstanding Letters of Credit.

                  "Lien" means any lien, mortgage, security interest, tax lien,
         financing statement, pledge, charge, hypothecation, assignment,
         preference, priority, or other encumbrance of any kind or nature
         whatsoever (including, without limitation, any conditional sale or
         title retention agreement), whether arising by contract, operation of
         law, or otherwise.

                  "Loan Documents" means this Agreement and all promissory
         notes, security agreements, deeds of trust, assignments, letters of
         credit, guaranties, and other instruments, documents, and agreements
         executed and delivered pursuant to or in connection with this
         Agreement, as such instruments, documents, and agreements may be
         amended, modified, renewed, extended, or supplemented from time to
         time.

                  "Material Adverse Effect" means a material adverse effect on
         (a) the business, operations, property or condition (financial or
         otherwise) of the Borrower and its Subsidiaries, taken as a whole, or
         any Obligated Party and its Subsidiaries, taken as a whole, (b) the
         ability of Borrower to pay the Obligations or the ability of Borrower
         or any Obligated Party to perform its respective obligations under this
         Agreement or any of the other Loan Documents, or (c) the validity or
         enforceability of this Agreement or any of the other Loan Documents, or
         the rights or remedies of Lender hereunder or thereunder.

                  "Maximum Rate" means the maximum rate of nonusurious interest
         permitted from day to day by applicable law, including Chapter 303 of
         the Texas Finance Code (the "Code") (and as the same may be
         incorporated by reference in other Texas statutes). To the extent that
         Chapter 303 of the Code is relevant to Lender for the purposes of
         determining the Maximum Rate, Lender elects to determine such
         applicable legal rate pursuant to the "weekly ceiling," from time to
         time in effect, as referred to and defined in Chapter 303 of the Code;
         subject, however, to the limitations on such applicable ceiling
         referred to and defined in the Code, and further subject to any right
         Lender may have subsequently, under applicable law, to change the
         method of determining the Maximum Rate.

                  "Net Income" means, with respect to Guarantor and its
         Subsidiaries for any period, the consolidated net income (or loss) of
         Guarantor and its Subsidiaries for such period, calculated in
         accordance with GAAP.

                                      -6-
<PAGE>   7

                  "No Default Certificate" means a certificate in the form of
         Exhibit "F" hereto, fully completed and executed by Borrower.

                  "Note" means the promissory note executed by Borrower payable
         to the order of Lender, in substantially the form of Exhibit "A"
         hereto, and all extensions, renewals, and modifications thereof and all
         substitutions therefor.

                  "Obligated Party" means Guarantor and any other Person who is
         or becomes party to any agreement pursuant to which such Person
         guarantees or secures payment and performance of the Obligations or any
         part thereof.

                  "Obligations" means all obligations, indebtedness, and
         liabilities of Borrower to Lender, now existing or hereafter arising,
         whether direct, indirect, related, unrelated, fixed, contingent,
         liquidated, unliquidated, joint, several, or joint and several,
         including, without limitation, the obligations, indebtedness, and
         liabilities of Borrower under this Agreement and the other Loan
         Documents (including, without limitation, all of Borrower's contingent
         reimbursement obligations in respect of Letters of Credit), and all
         interest accruing thereon and all attorneys' fees and other expenses
         incurred in the enforcement or collection thereof.

                  "Person" means any individual, corporation, limited liability
         company, business trust, association, company, partnership, joint
         venture, governmental authority, or other entity.

                  "Prime Rate" means that variable rate of interest per annum
         established by Lender from time to time as its prime rate which shall
         vary from time to time. Such rate is set by Lender as a general
         reference rate of interest, taking into account such factors as Lender
         may deem appropriate, it being understood that many of Lender's
         commercial or other loans are priced to relation to such rate, that it
         is not necessarily the lowest or best rate charged to any customer and
         that Lender may make various commercial or other loans at rates of
         interest having no relationship to such rate.

                  "Regulatory Change" means, with respect to Lender, any change
         after the date of this Agreement in United States federal, state, or
         foreign laws or regulations (including Regulation D of the Board of
         Governors of the Federal Reserve System, or any interpretations,
         directives, or requests applying to a class of banks including Lender)
         of or under any United States federal or state, or any foreign, laws or
         regulations (whether or not having the force of law) by any court or
         governmental or monetary authority charged with the interpretation or
         administration thereof.

                                      -7-
<PAGE>   8

                  "Security Agreement" means the Security Agreement executed by
         Borrower in favor of Lender in substantially the form of Exhibit "B"
         hereto, as the same may be amended, supplemented or modified.

                  "Subordinated Debt" means Debt of Guarantor and its
         Subsidiaries, the payment of which is subordinated to the payment of
         the Obligations upon terms, and by a document, in form and substance
         satisfactory to Lender in its sole discretion.

                  "Subsidiary" means any Person of which or in which the
         Borrower and its other Subsidiaries own or control, directly or
         indirectly, fifty percent (50%) or more of (a) the combined voting
         power of all classes having general voting power under ordinary
         circumstances to elect a majority of the directors or equivalent body
         of such Person, if it is a corporation, (b) the capital interest or
         profits interest of such Person, if it is a partnership, limited
         liability company, joint venture or similar entity, or (c) the
         beneficial interest of such Person, if it is a trust, association or
         other unincorporated association or organization.

                  "Tangible Net Worth" means, at any particular time, all
         amounts which, in conformity with GAAP, would be included as
         stockholders' equity on a consolidated balance sheet of Guarantor and
         its Subsidiaries, plus Subordinated Debt; provided, however, there
         shall be excluded therefrom (a) any amount at which shares of capital
         stock of Guarantor appear as an asset on Guarantor's or any
         Subsidiary's balance sheet, (b) goodwill, including any amounts,
         however designated, that represent the excess of the purchase price
         paid for assets or stock over the value assigned thereto, (c) patents,
         trademarks, trade names, and copyrights, (d) deferred expenses, (e)
         loans and advances to any stockholder, director, officer, or employee
         of Guarantor or any Subsidiary or any affiliate, and (f) all other
         assets which are properly classified as intangible assets.

                  "Termination Date" means 11:00 a.m., Houston, Texas time on
         May 31, 2001, or such earlier date on which the Commitment terminates
         as provided in this Agreement.

                  "Unmatured Event of Default" means the occurrence of an event
         or the existence of a condition which, with the giving of notice or the
         passage of time would constitute an Event of Default.

         Section 1.2. Other Definitional Provisions. All definitions contained
in this Agreement are equally applicable to the singular and plural forms of the
terms defined. The words "hereof", "herein", and "hereunder" and words of
similar import

                                      -8-
<PAGE>   9

referring to this Agreement refer to this Agreement as a whole and not to any
particular provision of this Agreement. Unless otherwise specified, all Article
and Section references pertain to this Agreement. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP. Terms
used herein that are defined in the Uniform Commercial Code as adopted by the
State of Texas, unless otherwise defined herein, shall have the meanings
specified in the Uniform Commercial Code as adopted by the State of Texas.

                                   ARTICLE II.

                         Advances and Letters of Credit

         Section 2.1. Advances. Subject to the terms and conditions of this
Agreement, Lender agrees to make one or more Advances to Borrower from time to
time from the date hereof to and including the Termination Date in an aggregate
principal amount at any time outstanding up to but not exceeding the Commitment;
provided that the aggregate amount of all Advances at any time outstanding shall
not exceed the lesser of (a) the Commitment minus the outstanding Letter of
Credit Liabilities or (b) the Borrowing Base minus the outstanding Letter of
Credit Liabilities. Lender shall have no obligation to make any Advance if an
Event of Default or an Unmatured Event of Default has occurred and is
continuing. Subject to the foregoing limitations, and the other terms and
provisions of this Agreement, Borrower may borrow, repay, and reborrow
hereunder.

         Section 2.2. The Note. The obligation of Borrower to repay the Advances
shall be evidenced by the Note executed by Borrower, payable to the order of
Lender, in the principal amount of the Commitment.

         Section 2.3. Repayment of Advances. Borrower shall repay the unpaid
principal amount of all Advances on the earlier of (a) the Termination Date or
(b) such other dates on which the Advances are or may be required to be paid
pursuant to this Agreement.

         Section 2.4. Interest. The unpaid principal amount of the Advances
shall bear interest prior to maturity at a varying rate per annum equal from day
to day to the lesser of (a) the Maximum Rate or (b) the sum of the Prime Rate in
effect from day to day plus one-half of one percent (.50%), and each change in
the rate of interest charged on the Advances shall become effective, without
notice to Borrower, on the effective date of each change in the Prime Rate or
the Maximum Rate, as the case may be; provided, however, if at any time the rate
of interest specified in clause (b) preceding shall exceed the Maximum Rate,
thereby causing the interest on the Advances to be limited to the Maximum Rate,
then any subsequent reduction in the Prime Rate shall not reduce the
rate of interest on the Advances below the Maximum Rate until the

                                      -9-
<PAGE>   10

aggregate amount of interest actually accrued on the Advances equals the amount
of interest which would have accrued on the Advances if the interest rate
specified in clause (b) preceding had at all times been in effect. Accrued and
unpaid interest on the Advances shall be payable on the first day of each month
commencing on November 1, 1999, and on the earlier of the Termination Date or
any other date on which the principal amount of the Advances is paid (whether as
a result of optional or mandatory prepayment or acceleration). If an Event of
Default has occurred and is continuing, all principal of the Advances and all
past due interest thereon shall bear interest at the Default Rate.

         Section 2.5. Requests for Advances. Borrower shall give Lender notice
of each requested Advance by delivery to Lender of an Advance Request Form
executed by an Authorized Representative, properly completed and containing the
information required therein. Borrower may transmit Advance Request Forms by
fax, provided that Borrower holds Lender harmless with respect to actions taken
by Lender based upon Advance Request Forms sent by fax. Prior to making any
Advance, Lender may require that Borrower deliver a Borrowing Base Certificate
dated a recent date acceptable to Lender. Assuming that each Advance Request
Form or request for Advance is in proper form, if Lender receives an Advance
Request Form or request for Advance prior to 1:00 p.m. on any Business Day,
Lender will make the requested Advance on the same Business Day, and if Lender
receives an Advance Request Form or request for Advance after 1:00 p.m., Lender
will make the requested Advance on the next Business Day.

         Section 2.6. Use of Proceeds. The proceeds of Advances shall be used
for working capital purposes.

         Section 2.7. Mandatory Prepayment. If at any time the outstanding
principal amount of the Advances plus the Letter of Credit Liabilities exceeds
the Borrowing Base, Borrower shall immediately prepay the outstanding Advances
by the amount of the excess plus accrued and unpaid interest on the amount so
prepaid or, if no (or insufficient) Advances are outstanding, Borrower shall
immediately pledge to Lender cash or cash equivalent investments in an amount
equal to the excess as security for the Obligations.

         Section 2.8. Unused Commitment Fee; Reduction or Termination of
Commitment. Borrower agrees to pay to Lender a commitment fee on the average
daily unused portion of the Commitment, from and including the Closing Date to
and including the Termination Date, at the rate of one-fourth of one percent
(.25%) per annum based on a 365 day year and the actual number of days elapsed,
payable on the first day of each month, commencing on November 1, 1999, and on
the Termination Date. For the purpose of calculating the commitment fee
hereunder, the Commitment shall be deemed utilized by the amount of all
outstanding Advances and

                                      -10-
<PAGE>   11

Letter of Credit Liabilities. Borrower shall have the right at any time to
terminate in whole or from time to time to irrevocably reduce in part the
Commitment upon at least three (3) Business Days prior notice to Lender
specifying the effective date thereof, whether a termination or reduction is
being made, and the amount of any partial reduction; provided, however, the
Commitment shall never be reduced below an amount equal to the outstanding
Letter of Credit Liabilities. Simultaneously with giving such notice, Borrower
shall prepay the amount by which the unpaid principal amount of the Advances
plus the outstanding Letter of Credit Liabilities exceeds the Commitment (after
giving effect to such notice) plus accrued and unpaid interest on the principal
amount so prepaid. The Commitment may not be reinstated after it has been
terminated or reduced.

         Section 2.9. Facility Fee. Borrower agrees to pay to Lender a facility
fee in the amount of $11,250.00 on the Closing Date. Such facility fee shall be
fully earned when paid.

         Section 2.10. Letters of Credit. Subject to the terms and conditions of
this Agreement, Lender agrees to issue one or more Letters of Credit for the
account of Borrower from time to time from the date hereof to and including the
Termination Date; provided, however, that the outstanding Letter of Credit
Liabilities shall not at any time exceed the least of (a) $500,000.00, (b) an
amount equal to the Commitment minus the outstanding Advances, or (c) the
Borrowing Base minus the outstanding Advances. Each Letter of Credit shall have
an expiration date which shall not be more than one hundred eighty (180) days
from the date of issuance of such Letter of Credit, shall have an expiration
date which is at least one (1) Business Day prior to the Termination Date, shall
be payable in United States dollars, shall support a transaction that is entered
into in the ordinary course of Borrower's business, and shall otherwise be
satisfactory in form and substance to Lender. No Letter of Credit shall require
any payment by Lender to the beneficiary thereunder pursuant to a drawing prior
to the third Business Day following presentment of a draft and any related
documents to Lender.

         Section 2.11. Procedure for Issuing Letters of Credit. Each Letter of
Credit shall be issued upon receipt by Lender of written notice from an
Authorized Representative requesting the issuance of such Letter of Credit,
which notice shall be received by Lender at least three (3) Business Days prior
to the requested date of issuance of such Letter of Credit. Such notice shall be
accompanied by Lender's standard application for issuance of Letters of Credit
(commercial or standby) as then in effect and such other documents and
instruments as Lender may require. Such notice and application (both front and
back sides) may be sent by fax, provided that Borrower holds Lender harmless
with respect to actions taken by Lender based upon notices and applications sent
by fax. Each request for a Letter of Credit shall constitute a

                                      -11-
<PAGE>   12

representation by Borrower to Lender as to each of the matters set forth in the
Borrowing Base Certificate, including representations that (a) the sum of (i)
the outstanding Advances plus (ii) the Letter of Credit Liabilities plus (iii)
the face amount of the requested Letter of Credit does not exceed the lesser of
the Borrowing Base or the Commitment, and (b) no Event of Default exists. Prior
to Issuing any Letter of Credit, Lender may request a Borrowing Base Certificate
from Borrower dated of a recent date acceptable to Lender evidencing that the
statements contained in the preceding sentence are correct.

         Section 2.12. Payments Constitute Advances. Each payment by Lender
pursuant to a drawing under a Letter of Credit shall constitute and be deemed an
Advance by Lender to Borrower under the Note and this Agreement as of the day
and time such payment is made by Lender and in the amount of such payment.

         Section 2.13. Letter of Credit Fees. Borrower shall pay to Lender a
letter of credit fee payable on the date each Letter of Credit is issued in an
amount equal to the greater of (a) one and one-fourth percent (1.25%) per annum
of the stated amount of such Letter of Credit for the period during which such
Letter of Credit will remain outstanding, based on a 360 day year and the actual
number of days elapsed, and (b) $300.00. In addition, Borrower shall pay to
Lender (a) at the time of issuance of any Letter of Credit, all out-of-pocket
costs incurred by Lender in connection with the issuance of such Letter of
Credit (b) upon the payment of any Letter of Credit, all applicable payment
fees, and (c) upon the amendment (including the extension) of any Letter of
Credit, all applicable amendment fees.

         Section 2.14. Obligations Absolute. The obligations of Borrower under
this Agreement and the other Loan Documents, including without limitation the
obligation of Borrower to reimburse Lender for payment of drawings under any
Letter of Credit, shall be absolute, unconditional and irrevocable, and shall be
performed strictly in accordance with the terms of this Agreement and the other
Loan Documents under all circumstances, including (a) any lack of validity or
enforceability of any Letter of Credit or any other Loan Document, (b) the
existence of any claim, set-off, counterclaim, defense or other rights which
Borrower, any Obligated Party or any other Person may have at any time against
any beneficiary of any Letter of Credit, Lender, or any other Person, whether in
connection with this Agreement or any other Loan Document or any unrelated
transaction, (c) if any statement, draft or other document presented under any
Letter of Credit proves to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein is untrue or inaccurate in any respect
whatsoever, (d) payment by Lender under any Letter of Credit against
presentation of a draft or other document which does not comply with the terms
of such Letter of Credit in a manner which is not material, (e) any amendment or
waiver of, or any

                                      -12-
<PAGE>   13

consent to departure from, any Loan Document or (f) any other circumstance or
happening whatsoever, whether or not similar to any of the foregoing.

         Section 2.15. Limitation of Liability. Borrower assumes all risks of
the acts or omissions of any beneficiary of any Letter of Credit with respect to
its use of such Letter of Credit. Neither Lender or any of its officers,
employees or directors shall have any responsibility or liability to Borrower or
any other Person for (a) the failure of any draft to bear any reference or
adequate reference to any Letter of Credit, or the failure of any documents to
accompany any draft at negotiation, or the failure of any Person to surrender or
to take up any Letter of Credit or to send documents apart from drafts as
required by the terms of any Letter of Credit, or the failure of any Person to
note the amount of any instrument on any Letter of Credit, each of which
requirements, if contained in any Letter of Credit itself, it is agreed may be
waived by Lender, (b) errors, omissions, interruptions or delays in transmission
or delivery of any messages, (c) the validity, sufficiency or genuineness of any
draft or other document, or any endorsement thereon, even if any such draft,
document or endorsement should in fact prove to be in any and all respects
invalid, insufficient, fraudulent or forged or any statement therein is untrue
or inaccurate in any respect, (d) the payment by the Lender to the beneficiary
of any Letter of Credit against presentation of any draft or other document that
does not comply with the terms of the Letter of Credit in a respect which is not
material or (e) any other circumstance whatsoever in making or failing to make
any payment under a Letter of Credit. Lender may accept documents that appear on
their face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary. Notwithstanding the
foregoing, Lender shall be liable to Borrower to the extent of any direct, but
not consequential, damages suffered by Borrower which Borrower proves in a final
nonappealable judgment were caused by (i) Lender's willful misconduct or gross
negligence in determining whether documents presented under any Letter of Credit
complied with the terms thereof or (ii) Lender's willful failure to pay under
any Letter of Credit after presentation to it of documents strictly complying
with the terms and conditions of such Letter of Credit.

         Section 2.16. Provisions Regarding Electronic Issuance of Letters of
Credit. Lender may adopt procedures pursuant to which Borrower may request the
issuance of Letters of Credit by electronic means and Lender may issue Letters
of Credit based on such electronic requests. Such procedures may include the
entering by Borrower into the Letter of Credit Applications electronically. All
the procedures, actions and documents referred to in the two preceding sentences
are referred to as "Electronic Applications". Borrower holds Lender harmless
with respect to actions taken by Lender based upon Electronic Applications.
Borrower further agrees

                                      -13-
<PAGE>   14

to be bound by all the terms and provisions contained in the Letter of Credit
Applications, including, without limitation, the terms and provisions of the
Letter of Credit Applications contained on the reverse side of the paper copies
thereof, including the release and indemnification provisions contained therein.

                                  ARTICLE III.

                                    Payments

         Section 3.1. Method of Payment. All payments of principal, interest,
and other amounts to be made by Borrower under this Agreement, the Note or any
other Loan Documents shall be made to Lender at its designated office, without
setoff, deduction, or counterclaim in immediately available funds. Whenever any
payment under this Agreement, the Note or any other Loan Document shall be
stated to be due on a day that is not a Business Day, such payment may be made
on the next Business Day, and interest shall continue to accrue during such
extension.

         Section 3.2. Voluntary Prepayment.  Borrower may prepay the Note in
whole at any time or from time to time in part without premium or penalty but
with accrued interest to the date of prepayment on the amount so prepaid.

         Section 3.3. Computation of Interest. Interest on the indebtedness
evidenced by the Note shall be computed on the basis of a year of 360 days and
the actual number of day elapsed (including the first day but excluding the last
day) unless such calculation would result in a usurious rate, in which case
interest shall be calculated on the basis of a year of 365 or 366 days, as the
case may be.

         Section 3.4. Additional Costs in Respect of Letters of Credit. If as a
result of any Regulatory Change there shall be imposed, modified, or deemed
applicable any tax, reserve, special deposit, or similar requirement against or
with respect to or measured by reference to Letters of Credit issued or to be
issued hereunder or Lender's Commitment to issue Letters of Credit hereunder,
and the result shall be to increase the cost to Lender of issuing or maintaining
any Letter of Credit or its Commitment to issue Letters of Credit hereunder or
reduce any amount receivable by Lender hereunder in respect of any Letter of
Credit (which increase in cost, or reduction in amount receivable, shall be the
result of Lender's reasonable allocation of the aggregate of such increases or
reductions resulting from such event), then, upon demand by Lender, Borrower
agrees to pay to Lender from time to time as specified by Lender, such
additional amounts as shall be sufficient to compensate Lender for such
increased costs or reductions in amount. A statement as to such increased costs
or reductions in amount incurred by Lender, submitted by Lender to

                                      -14-
<PAGE>   15

Borrower, shall be conclusive as to the amount thereof, provided that the
determination thereof is made on a reasonable basis.

                                   ARTICLE IV.

                                   Collateral

         Section 4.1. Collateral. To secure full and complete payment and
performance of the Obligations, Borrower shall execute and deliver or cause to
be executed and delivered the documents described below covering the property
and collateral described therein and in this Section 4.1 (which, together with
any other property and collateral which may now or hereafter secure the
Obligations or any part thereof, is sometimes herein called the "Collateral"):

                  (a) Borrower shall grant to Lender a first priority security
         interest in all of its accounts receivable and inventory, and all
         documents, instruments and general intangibles related thereto or
         arising therefrom, whether now owned or hereafter acquired, and all
         products and proceeds thereof, pursuant to the Security Agreement.

                  (b) Borrower shall execute and cause to be executed such
         further documents and instruments, including without limitation,
         Uniform Commercial Code financing statements, as Lender, in its sole
         discretion, deems necessary or desirable to evidence and perfect its
         liens and security interests in the Collateral.

         Section 4.2. Setoff. Upon the occurrence of an Event of Default, Lender
shall have the right to set off and apply against the Obligations in such a
manner as Lender may determine, at any time and without notice to Borrower, any
and all deposits (general or special, time or demand, provisional or final) or
other sums at any time credited by or owing from Lender to Borrower whether or
not the Obligations are then due. In addition to Lender's right of setoff and as
further security for the Obligations, Borrower hereby grants to Lender a
security interest in all deposits (general or special, time or demand,
provisional or final) and other accounts of Borrower now or hereafter on deposit
with or held by Lender and all other sums at any time credited by or owing from
Lender to Borrower. The rights and remedies of Lender hereunder are in addition
to other rights and remedies (including, without limitation, to the rights of
setoff) which Lender may have.

         Section 4.3. Guaranty Agreement. Guarantor shall unconditionally and
irrevocably guarantee payment and performance of the Obligations by execution
and delivery of the Guaranty Agreement.

                                      -15-
<PAGE>   16

                                   ARTICLE V.

                              Conditions Precedent

         Section 5.1. Initial Extension of Credit. The obligation of Lender to
make the initial Advance or issue the initial Letter of Credit is subject to the
condition precedent that prior thereto Lender shall have received all of the
documents set forth below in form and substance satisfactory to Lender.

                  (a) Certificate - Borrower. A certificate of the Secretary of
         Borrower or another officer of Borrower acceptable to Lender certifying
         (i) resolutions of the board of directors of Borrower which authorize
         the execution, delivery and performance by Borrower of this Agreement
         and the other Loan Documents to which Borrower is or is to be a party,
         and (ii) the names of the officers of Borrower authorized to sign this
         Agreement and each of the other Loan Documents to which Borrower is or
         is to be a party together with specimen signatures of such officers.

                  (b) Organizational Documents - Borrower. The articles of
         incorporation and bylaws of Borrower certified by the Secretary of
         Borrower or another officer of Borrower acceptable to Lender.

                  (c) Governmental Certificates - Borrower. Certificates of the
         appropriate government officials of the state of incorporation of
         Borrower as to the existence and good standing of Borrower.

                  (d) Certificate - Guarantor. A certificate of the Secretary of
         Guarantor or another officer of Guarantor acceptable to Lender
         certifying (i) resolutions of the Board of Directors of Guarantor which
         authorize the execution, delivery and performance by Guarantor of the
         Guaranty and the other Loan Documents to which Guarantor is or is to be
         a party, and (ii) the names of the officers of Guarantor authorized to
         sign the Guaranty and each of the other Loan Documents to which
         Guarantor is or is to be party together with specimen signatures of
         such officers.

                  (e) Organizational Documents - Guarantor. The articles of
         incorporation and bylaws of Guarantor certified by the Secretary of
         Guarantor or another officer of Guarantor acceptable to Lender.

                  (f) Governmental Certificates - Guarantor. Certificates of the
         appropriate government officials of the state of incorporation of
         Guarantor as to the existence and good standing of Guarantor.

                                      -16-
<PAGE>   17

                  (g) Note. The Note executed by Borrower.

                  (h) Security Agreement. The Security Agreement executed by
         Borrower.

                  (i) Financing Statements. Uniform Commercial Code financing
         statements executed by Borrower.

                  (j) Guaranty Agreement. The Guaranty Agreement executed by
         Guarantor.

                  (k) Facility Fee. The facility fee referred to in Section 2.9.

                  (l) Insurance Policies. Copies of all insurance policies
         required by Section 7.5, together with loss payable endorsements in
         favor of Lender with respect to all insurance policies covering
         Collateral.

                  (m) UCC Search. A Uniform Commercial Code search showing all
         financing statements and other documents or instruments on file against
         Borrower in Harris County, Texas and Hardin County, Texas and the
         office of the Secretary of State of Texas.

                  (n) Field Audit. A Field Audit dated as of a current date.

                  (o) Environmental Reports. Such environmental reports and
         other analysis of environmental matters as Lender may request.

                  (p) Opinion of Counsel. An opinion of Bernsen, Goodson, Mann &
         Rothman, L.L.P., legal counsel to Borrower and Guarantor.

                  (q) Attorneys' Fees and Expenses. Evidence that the costs and
         expenses (including reasonable attorneys' fees) referred to in Section
         11.1, to the extent incurred, have been paid in full by Borrower.

                  (r) Additional Documentation. Such additional approvals,
         opinions or documents as Lender may reasonably request.

         Section 5.2. All Extensions of Credit. The obligation of Lender to make
any Advance or issue any Letter of Credit (including the initial Advance and the
initial Letter of Credit) is subject to receipt by Lender of the items required
by Section 2.5 or 2.11, as applicable, and such additional approvals, opinions
or documents as Lender may reasonably request.

                                      -17-
<PAGE>   18

                                   ARTICLE VI.

                         Representations and Warranties

         To induce Lender to enter into this Agreement, Borrower represents and
warrants to Lender that:

         Section 6.1. Corporate Existence. Borrower, Guarantor and each
Subsidiary (a) are corporations duly organized, validly existing, and in good
standing under the laws of their respective jurisdictions of incorporation, (b)
have all requisite corporate power and authority to own their assets and carry
on their business as now being or as proposed to be conducted and (c) are
qualified to do business in all jurisdictions necessary and where failure to so
qualify would have a Material Adverse Effect. Borrower has the corporate power
and authority to execute, deliver and perform its obligations under this
Agreement and the other Loan Documents to which it is or may become a party.

         Section 6.2. Financial Statements. Borrower has delivered to Lender
audited consolidated financial statements of Guarantor and its Subsidiaries as
at and for the fiscal year ended December 31, 1998, and unaudited consolidated
financial statements of Guarantor and its Subsidiaries (including Borrower) for
the seven (7) month period ended July 31, 1999. Such financial statements are
true and correct, have been prepared in accordance with GAAP, and fairly and
accurately present, on a consolidated basis, the financial condition of
Guarantor and its Subsidiaries as of the respective dates indicated therein and
the results of operations for the respective periods indicated therein. Neither
Guarantor nor any of its Subsidiaries has any material contingent liabilities,
liabilities for taxes, material forward or long-term commitments, or unrealized
or anticipated losses from any unfavorable commitments not reflected in such
financial statements. There has been no Material Adverse Effect since the
effective date of the most recent financial statements referred to in this
Section.

         Section 6.3. Corporate Action; No Breach. The execution, delivery, and
performance by Borrower of this Agreement and the other Loan Documents to which
Borrower is or may become a party have been duly authorized by all requisite
action on the part of Borrower and do not and will not violate or conflict with
the articles of incorporation or bylaws of Borrower or any law, rule or
regulation or any order, writ, injunction, or decree of any court, governmental
authority, or arbitrator, and do not and will not conflict with, result in a
breach of, or constitute a default under, or result in the imposition of any
Lien (except as provided in this Agreement) upon any of the revenues or assets
of Borrower or any Subsidiary pursuant to the provisions of any indenture,
mortgage, deed of trust, security agreement, franchise, permit,

                                      -18-
<PAGE>   19

license, or other instrument or agreement by which Borrower or any Subsidiary or
any of their respective properties is bound.

         Section 6.4. Operation of Business. Borrower, Guarantor and each
Subsidiary possess all licenses, permits, franchises, patents, copyrights,
trademarks, and tradenames, or rights thereto, to conduct their respective
businesses substantially as now conducted and as presently proposed to be
conducted.

         Section 6.5. Litigation and Judgments. There is no action, suit,
investigation, or proceeding before or by any court, governmental authority, or
arbitrator pending, or to the knowledge of Borrower, threatened against or
affecting Borrower, Guarantor or any Subsidiary, that would, if adversely
determined, have a Material Adverse Effect. There are no outstanding judgments
against Borrower, Guarantor or any Subsidiary.

         Section 6.6. Rights in Properties; Liens. Borrower, Guarantor and each
Subsidiary have good and indefeasible title to or valid leasehold interests in
their respective properties and assets, real and personal, including the
properties, assets and leasehold interests reflected in the financial statements
described in Section 6.2, and none of the properties, assets or leasehold
interests of Borrower, Guarantor or any Subsidiary is subject to any Lien,
except as permitted by this Agreement.

         Section 6.7. Enforceability. This Agreement constitutes, and the other
Loan Documents to which Borrower is party, when delivered, shall constitute the
legal, valid, and binding obligations of Borrower, enforceable against Borrower
in accordance with their respective terms, except as enforceability thereof may
be limited by bankruptcy, insolvency, or other laws of general application
relating to the enforcement of creditor's rights.

         Section 6.8. Approvals. No authorization, approval, or consent of, and
no filing or registration with, any court, governmental authority, or third
party is or will be necessary for the execution, delivery, or performance by
Borrower of this Agreement and the other Loan Documents to which Borrower is or
may become a party or the validity or enforceability thereof.

         Section 6.9. Debt. Borrower and its Subsidiaries have no Debt except
Debt to Lender and other Debt permitted pursuant to Section 8.1.

         Section 6.10. Use of Proceeds; Margin Securities. None of Borrower,
Guarantor or any Subsidiary is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulations T, U, or X of the Board
of Governors of the Federal Reserve System), and no part of the proceeds of any
extension of credit under this Agreement will be

                                      -19-
<PAGE>   20

used to purchase or carry any such margin stock or to extend credit to others
for the purpose of purchasing or carrying margin stock.

         Section 6.11. ERISA. Borrower, Guarantor and each Subsidiary have
complied with all applicable minimum funding requirements and all other
applicable and material requirements of ERISA, and there are no existing
conditions that would give rise to liability thereunder. No Reportable Event (as
defined in Section 4043 of ERISA) has occurred in connection with any employee
benefit plan that might constitute grounds for the termination thereof by the
Pension Benefit Guaranty Corporation or for the appointment by the appropriate
United States District Court of a trustee to administer such plan.

         Section 6.12. Taxes. Borrower, Guarantor and each Subsidiary have filed
all tax returns (federal, state, and local) required to be filed, including all
income, franchise, employment, property, and sales taxes, and have paid all of
their liabilities for taxes, assessments, governmental charges, and other levies
that are due and payable, and Borrower knows of no pending investigation of
Borrower, Guarantor or any Subsidiary by any taxing authority or of any pending
but unassessed tax liability of Borrower, Guarantor or any Subsidiary.

         Section 6.13. Disclosure. There is no fact known to Borrower which has
a Material Adverse Effect, or which might in the future have a Material Adverse
Effect that has not been disclosed in writing to Lender.

         Section 6.14. Subsidiaries. Borrower has no Subsidiaries other than
Gulf State Pipe Line Company, Inc. Borrower owns one hundred percent (100%) of
the issued and outstanding stock of such Subsidiary.

         Section 6.15. Compliance with Laws. None of Borrower, Guarantor or any
Subsidiary is in violation in any material respect of any law, rule, regulation,
order, or decree of any court, governmental authority, or arbitrator.

         Section 6.16. Compliance with Agreements. None of Borrower, Guarantor
or any Subsidiary is in violation in any material respect of any material
document, agreement, contract or instrument to which it is a party or by which
it or its properties are bound.

         Section 6.17. Environmental Matters. Except as disclosed in Guarantors
audited financial statements dated December 31, 1998, (a) Borrower, Guarantor
and each Subsidiary, and their respective properties are in compliance with all
applicable Environmental Laws and none of Borrower, Guarantor or any Subsidiary
is subject to any liability or obligation for remedial action thereunder; (b)
there is no pending or threatened investigation or inquiry by any governmental
authority of Borrower, Guarantor or any Subsidiary, or

                                      -20-
<PAGE>   21

any of their respective properties pertaining to any Hazardous Substance; (c)
except in the ordinary course of business and in compliance with all
Environmental Laws, there are no Hazardous Substances located on or under any of
the properties of Borrower, Guarantor or any Subsidiary; and (d) except in the
ordinary course of business and in compliance with all Environmental Laws, none
of Borrower, Guarantor or any Subsidiary has caused or permitted any Hazardous
Substance to be disposed of on or under or released from any of its properties.
Borrower, Guarantor and each Subsidiary have obtained all permits, licenses, and
authorizations which are required under and by all Environmental Laws.

         Section 6.18. Year 2000. All material software, hardware and critical
systems used by Borrower, Guarantor and their Subsidiaries in the conduct of
Borrower's, Guarantor's and such Subsidiaries' business ("Borrower's Computer
Items") will record, store, process and present calendar dates falling on or
after January 1, 2000, and all information pertaining to such dates, in the same
manner and with the same functionality as Borrower's Computer Items record,
store, process and present calendar dates falling on or before December 31,
1999, and all information pertaining to such dates. Borrower's Computer Items
have all appropriate capability and compatibility for handling century-aware or
year 2000 compliant data. The data related user interface functions, data fields
and data related program instructions and functions of Borrower's Computer Items
include the indication of the century.

         Section 6.19. Solvency. Borrower and its Subsidiaries, on a
consolidated basis, are not insolvent, Borrower's and its Subsidiaries' assets,
on a consolidated basis, exceed their liabilities, and Borrower will not be
rendered insolvent by the execution and performance of this Agreement and the
Loan Documents.

         Section 6.20. Investment Company Act. None of Borrower, Guarantor or
any Subsidiary is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.

                                  ARTICLE VII.

                              Affirmative Covenants

         Borrower covenants and agrees that, as long as the Obligations or any
part thereof are outstanding or Lender has any Commitment hereunder, Borrower
will perform and observe the covenants set forth below, unless Lender shall
otherwise consent in writing.

         Section 7.1. Reporting Requirements. Borrower will deliver to Lender:

                                      -21-
<PAGE>   22

                  (a) Annual Financial Statements - Guarantor. As soon as
         available, and in any event within one hundred fifty (150) days after
         the end of each fiscal year of Borrower, beginning with the fiscal year
         ending December 31, 1999, a copy of the annual audited financial
         statements of Guarantor and its Subsidiaries for such fiscal year
         containing, on a consolidated basis, balance sheets, statements of
         income, statements of stockholders' equity and statements of cash flows
         as at the end of such fiscal year and for the 12-month period then
         ended, in each case setting forth in comparative form the figures for
         the preceding fiscal year, all in reasonable detail, prepared in
         accordance with GAAP, and audited and certified without qualification
         by independent certified public accountants of recognized standing
         acceptable to Lender, and containing a footnote to the effect that at
         least ninety-five percent (95%) of the reported financial results are
         attributable to Borrower.

                  (b) Quarterly Financial Statements - Guarantor. As soon as
         available, and in any event within seventy-five (75) days after the end
         of each quarter of each fiscal year of Guarantor, a copy of the
         financial statements of Guarantor and its Subsidiaries as of the end of
         such fiscal quarter and for the portion of the fiscal year then ended,
         containing, on a consolidated basis, balance sheets, statements of
         income, statements of stockholders' equity and cash flows in each case
         setting forth in comparative form the figures for the corresponding
         period of the preceding fiscal year, all in reasonable detail and
         certified by an officer of Guarantor acceptable to Lender to have been
         prepared in accordance with GAAP and to fairly and accurately present
         the financial condition and results of operations of Guarantor and its
         Subsidiaries, on a consolidated basis, at the date and for the periods
         indicated therein, and containing a footnote to the effect that at
         least ninety-five percent (95%) of the reported financial results are
         attributable to Borrower.

                  (c) No Default Certificate. Concurrently with the delivery of
         each of the financial statements referred to in Sections 7.1(a) and
         7.1(b), a No Default Certificate as of the date of such financial
         statements executed by an officer of Borrower acceptable to Lender
         containing detailed calculations of the covenants contained in Article
         IX.

                  (d) Borrowing Base Certificate. As soon as available, and in
         any event within five (5) days after the end of each month of each
         fiscal year of Borrower, a Borrowing Base Certificate as of the last
         day of such month certified by an officer of Borrower acceptable to
         Lender.

                  (e) Monthly Accounts Receivable Reports. As soon as available,
         and in any event within five (5) days after the end

                                      -22-
<PAGE>   23

         of each month of each fiscal year of Borrower, accounts receivable
         reports for Borrower as of the last day of such month certified by an
         officer of Borrower acceptable to Lender, and showing all accounts
         receivable by customer name, amount owing to Borrower and the age of
         the receivable.

                  (f) Inventory Report. As soon as available, and in any event
         within five (5) days after the end of each month of each fiscal year of
         Borrower, an inventory report as of the end of such month certified by
         an officer of Borrower acceptable to Lender, and showing all inventory
         by product type, volume and value.

                  (g) Notice of Litigation. Promptly after the commencement
         thereof, notice of all actions, suits and proceedings before any court
         or governmental department, commission, board, agency or
         instrumentality, domestic or foreign, affecting Borrower, Guarantor or
         any Subsidiary which could have a Material Adverse Effect.

                  (h) Judgments. Within five (5) days of the rendering thereof,
         notice of any judgment against Borrower, Guarantor or any Subsidiary in
         an amount which is more than $25,000.00.

                  (i) Notice of Default. As soon as possible and in any event
         within five (5) days after the occurrence of each Event of Default and
         each event which, with the giving of notice or lapse of time or both,
         would constitute an Event of Default, a written notice setting forth
         the details of such Event of Default or event and the action which
         Borrower has taken and proposes to take with respect thereto.

                  (j) Notice of Material Adverse Effect. As soon as possible,
         and in any event within five (5) days after Borrower becomes aware
         thereof, notice of the occurrence of any event or the existence of any
         condition which might reasonably be expected to have a Material Adverse
         Effect.

                  (k) General Information. Promptly, such other information
         concerning Borrower, Guarantor or any Subsidiary as Lender may from
         time to time reasonably request.

         Section 7.2. Maintenance of Existence; Conduct of Business. Borrower
will preserve and maintain, and will cause Guarantor and each Subsidiary to
preserve and maintain, its corporate existence and all of its leases,
privileges, licenses, permits, franchises, qualifications and rights that are
necessary or desirable in the ordinary conduct of its business.

         Section 7.3. Maintenance of Properties. Borrower will maintain, and
will cause Guarantor and each Subsidiary to maintain, its assets and properties
in good condition and repair.

                                      -23-
<PAGE>   24

         Section 7.4. Taxes and Claims. Borrower will pay or discharge, and will
cause Guarantor and each Subsidiary to pay or discharge, at or before maturity
or before becoming delinquent (a) all taxes, levies, assessments, and
governmental charges imposed on it or its income or profits or any of its
property, and (b) all lawful claims for labor, material, and supplies, which, if
unpaid, might become a Lien upon any of its property; provided, however, that
none of Borrower, Guarantor, or any Subsidiary shall be required to pay or
discharge any tax, levy, assessment, or governmental charge with respect to
which no Lien has been filed of record and which is being contested in good
faith by appropriate proceedings diligently pursued, and for which adequate
reserves have been established.

         Section 7.5. Insurance. Borrower will maintain, and will cause
Guarantor and each Subsidiary to maintain, with financially sound and reputable
insurance companies workmen's compensation insurance, liability insurance, and
insurance on its property, assets and business at least in such amounts and
against such risks as are usually insured against by Persons engaged in similar
businesses. Each insurance policy covering Collateral shall name Lender as
lender loss payee and provide that such policy will not be cancelled without
thirty (30) days prior written notice to Lender.

         Section 7.6. Inspection; Field Audits. At any reasonable time and from
time to time, Borrower will permit, and will cause Guarantor and each Subsidiary
to permit, representatives of the Lender:

                  (a) To examine and make copies of the books and records of,
         and visit and inspect the properties or assets of Borrower, Guarantor
         and any Subsidiary and to discuss the business, operations, and
         financial condition of any such Persons with their respective officers
         and employees and with their independent certified public accountants;
         and

                  (b) At the expense of Borrower, to conduct Field Audits once
         during each fiscal year of Borrower.

         Section 7.7. Keeping Books and Records. Borrower will maintain, and
will cause Guarantor and each Subsidiary to maintain, proper books of record and
account in which full, true, and correct entries in conformity with GAAP shall
be made of all dealings and transactions in relation to its business and
activities.

         Section 7.8. Compliance with Laws. Borrower will comply, and will cause
Guarantor and each Subsidiary to comply, in all material respects with all
applicable laws, rules, regulations, and orders of any court, governmental
authority, or arbitrator.

                                      -24-
<PAGE>   25

         Section 7.9. Compliance with Agreements. Borrower will comply, and will
cause Guarantor and each Subsidiary to comply, in all material respects with all
material agreements, contracts, and instruments binding on it or affecting its
properties or business.

         Section 7.10. Further Assurances. Borrower will execute and deliver,
and will cause Guarantor and each Subsidiary to execute and deliver, such
further instruments as may be requested by Lender to carry out the provisions
and purposes of this Agreement and the other Loan Documents and to preserve and
perfect the Liens of Lender in the Collateral.

         Section 7.11. ERISA. Borrower will comply, and will cause Guarantor and
each Subsidiary to comply, with all minimum funding requirements, and all other
material requirements, of ERISA, if applicable, so as not to give rise to any
liability thereunder.

         Section 7.12. Continuity of Operations. Borrower will continue to
conduct, and will cause each of its Subsidiaries to continue to conduct, its
primary businesses as conducted as of the Closing Date and to continue its
operations in such businesses.

         Section 7.13. Year 2000. Within thirty (30) days of any request
therefor by Lender, Borrower will deliver to Lender a statement from a Person
acceptable to Lender to the effect that Borrower's Computer Items comply with
the representations contained in Section 6.18.

                                  ARTICLE VIII.

                               Negative Covenants

         Borrower covenants and agrees that, as long as the Obligations or any
part thereof are outstanding or Lender has any Commitment hereunder, Borrower
will perform and observe the covenants set forth below, unless Lender shall
otherwise consent in writing.

         Section 8.1. Debt. Borrower will not incur, create, assume or permit to
exist, and will not permit any Subsidiary to incur, create, assume, or permit to
exist, any Debt, except (a) Debt to Lender, (b) Debt existing on the Closing
Date which has been specifically approved by Lender, (c) Debt incurred in
connection with obtaining insurance, (d) current liabilities for taxes and
assessments incurred in the ordinary course of business, and (e) long term debt
to fund plant expansion which has been specifically approved by Lender prior to
the incurrence thereof.

         Section 8.2. Limitation on Liens. Borrower will not incur, create,
assume or permit to exist, and will not permit any Subsidiary to incur, create,
assume or permit to exist, any Lien upon any of its accounts receivable or
inventory, or any documents,

                                      -25-
<PAGE>   26

instruments and general intangibles related thereto or arising therefrom,
whether now owned or hereafter acquired, except Liens in favor of Lender.

         Section 8.3. Mergers, Acquisitions, Dissolutions and Disposition of
Assets. Borrower will not, and will not permit Guarantor or any Subsidiary to,
(a) become a party to a merger, consolidation, partnership or joint venture or
purchase or otherwise acquire all or a substantial part of the assets of any
Person or any shares or other evidence of beneficial ownership of any Person,
(b) dissolve or liquidate, (c) sell, lease, assign, transfer or otherwise
dispose of substantially all of its assets, except dispositions of plant
products (inventory) in the ordinary course of business, (d) create any new
Subsidiary, or (e) enter into any agreement to do any of the foregoing. Borrower
will not, and will not permit any Subsidiary to, sell, lease, assign, transfer
or otherwise dispose of any of its assets, except (a) sales of plant products
(inventory) in the ordinary course of business, and (b) sales of obsolete or
worn out equipment in the ordinary course of business.

         Section 8.4. Restricted Payments. Borrower will not declare or pay any
dividends or make any other payment or distribution (in cash, property, or
obligations) on account of its capital stock, or redeem, purchase, retire, or
otherwise acquire any of its capital stock, except for (a) dividends payable in
the form of common stock, and (b) if no Event of Default or Unmatured Event of
Default has occurred and is continuing, dividends payable in cash with respect
to any fiscal quarter of Borrower which do not, in the aggregate, exceed the
lesser of (i) $150,000.00 or (ii) fifty percent (50%) of EBITDA minus interest
expense for the quarter with respect to which such dividends are paid.

         Section 8.5. Loans and Advances. Borrower will not make, and will not
permit Guarantor or any Subsidiary to make, any advance, loan or extension of
credit to any Person, including any employee, officer or director of Borrower,
Guarantor or any Subsidiary, except (a) loans and advances which exist on the
Closing Date and which have been specifically approved by Lender, (b) loans and
advances which do not exceed an aggregate principal amount of $100,000.00
outstanding at any time, and (c) loans and advances which have been specifically
approved by Lender prior to the funding thereof.

         Section 8.6. Bonuses. Borrower will not pay, and will not permit
Guarantor or any Subsidiary to pay, to any Person any bonus or other form of
cash compensation in addition to salary, unless (a) such bonuses do not exceed
an aggregate amount of $200,000.00 with respect to any fiscal quarter of
Borrower, (b) immediately preceding the payment of any such bonus, no Event of
Default or Unmatured Event of Default exists, and (c) immediately following
the payment of any such bonus Borrower would be in compliance with

                                      -26-
<PAGE>   27

Section 9.3 for the fiscal quarter with respect to which such bonus was paid and
no Event of Default or Unmatured Event of Default would arise as a result of the
payment of such bonus.

         Section 8.7. Investments. Borrower will not make, and will not permit
Guarantor or any Subsidiary to make, any loan, extension of credit or capital
contribution to or investment in, or purchase, or permit Guarantor or any
Subsidiary to purchase, any stock, bonds, notes, debentures, or other securities
of any Person, except (a) readily marketable direct obligations of the United
States of America or obligations fully guaranteed by the United States of
America, (b) fully insured certificates of deposit with maturities of one year
or less from the date of acquisition of Lender or any commercial bank operating
in the United States having capital and surplus in excess of $150,000,000.00,
(c) commercial paper of a domestic issuer if at the time of purchase such paper
is rated in one of the two highest rating categories of Standard and Poor's
Corporation or Moody's Investors Service, (d) investments in hydrocarbon
commodity options which do not exceed an aggregate amount of $150,000.00 at any
time, and (e) investments made through Lender or its affiliates and approved by
Lender.

         Section 8.8. Compliance with Environmental Laws. Except in the ordinary
course of business and in accordance with all applicable Environmental Laws,
Borrower will not, and will not permit Guarantor or any Subsidiary to, (a) use
(or permit any tenant to use) any of their respective properties or assets for
the handling, processing, storage, transportation, or disposal of any Hazardous
Substance, (b) generate any Hazardous Substance, (c) conduct any activity which
is likely to cause a release or threatened release of any Hazardous Substance,
or (d) otherwise conduct any activity or use any of their respective properties
or assets in any manner that is likely to violate any Environmental Law.

         Section 8.9. Accounting. Borrower will not make, and will not permit
Guarantor or any Subsidiary to make, any change in accounting treatment or
reporting practices, except as required by GAAP.

         Section 8.10. Change of Business. Borrower will not enter into, or
permit any Subsidiary to enter into, any type of business which is materially
different from the business in which Borrower or such Subsidiary is presently
engaged.

                                      -27-
<PAGE>   28

                                   ARTICLE IX.

                               Financial Covenants

         Borrower covenants and agrees that, as long as the Obligations or any
part thereof are outstanding or Lender has any Commitment hereunder, Borrower
will cause Guarantor to observe and perform the following financial covenants
set forth below, unless Lender shall otherwise consent in writing.

         Section 9.1. Current Ratio. Guarantor will at all times maintain a
Current Ratio of not less than 1.10 to 1.00. The Current Ratio shall be
calculated and tested quarterly as of the last day of each fiscal quarter of
Guarantor.

         Section 9.2. Tangible Net Worth. Guarantor will maintain Tangible Net
Worth (a) in an amount not less than $5,600,000.00 from the Closing Date through
September 29, 1999, and (b) as of the last day of each fiscal quarter of
Guarantor, commencing with the fiscal quarter ending on September 30, 1999, in
an amount not less than the sum of (i) $5,600,000.00 plus (ii) fifty percent
(50%) of Net Income of Guarantor subsequent to June 30, 1999. Tangible Net Worth
shall be calculated and tested quarterly as of the last day of each fiscal
quarter of Guarantor.

         Section 9.3. EBITDA. Guarantor will at all times maintain EBITDA of not
less than $1,500,000.00. EBITDA shall be calculated and tested quarterly as of
the last day of each fiscal quarter of Guarantor, on a cumulative basis for the
four quarters ended as of such day.

         Section 9.4. Capital Expenditures. Guarantor will not permit the
aggregate Capital Expenditures of Guarantor and its Subsidiaries to exceed
$2,000,000.00 during any fiscal year.

                                   ARTICLE X.

                                     Default

         Section 10.1. Events of Default. Each of the following shall be deemed
an "Event of Default":

                  (a) Borrower shall fail to pay when due the Obligations or any
         part thereof.

                  (b) Any representation or warranty made or deemed made by
         Borrower or any Obligated Party (or any of their respective officers)
         in any Loan Document or in any certificate, report, notice, or
         financial statement furnished at any time in connection with this
         Agreement shall be false, misleading, or erroneous in any material
         respect when made or deemed to have been made.

                                      -28-
<PAGE>   29

                  (c) Borrower or any Obligated Party shall fail to perform,
         observe, or comply with any covenant, agreement, or term contained in
         this Agreement or any other Loan Document and such failure shall
         continue for a period of seven (7) days.

                  (d) Borrower, any Subsidiary, or any Obligated Party shall
         commence a voluntary proceeding seeking liquidation, reorganization, or
         other relief with respect to itself or its debts under any bankruptcy,
         insolvency, or other similar law now or hereafter in effect or seeking
         the appointment of a trustee, receiver, liquidator, custodian, or other
         similar official of it or a substantial part of its property or shall
         consent to any such relief or to the appointment of or taking
         possession by any such official in an involuntary case or other
         proceeding commenced against it or shall make a general assignment for
         the benefit of creditors or shall generally fail to pay its debts as
         they become due or shall take any corporate action to authorize any of
         the foregoing.

                  (e) An involuntary proceeding shall be commenced against
         Borrower, any Subsidiary, or any Obligated Party seeking liquidation,
         reorganization, or other relief with respect to it or its debts under
         any bankruptcy, insolvency, or other similar law now or hereafter in
         effect or seeking the appointment of a trustee, receiver, liquidator,
         custodian or other similar official for it or a substantial part of its
         property, and such involuntary proceeding shall remain undismissed and
         unstayed for a period of thirty (30) days.

                  (f) Borrower, any Subsidiary, or any Obligated Party shall
         fail to discharge within a period of thirty (30) days after the
         commencement thereof any final, non-appealable attachment,
         sequestration, or similar proceeding or proceedings involving an
         aggregate amount in excess of $100,000.00 against any of its assets or
         properties.

                  (g) Borrower, any Subsidiary, or any Obligated Party shall
         fail to satisfy and discharge promptly any final, non-appealable
         judgement or judgements against it for the payment of money in an
         aggregate amount in excess of $100,000.00.

                  (h) Borrower, any Subsidiary, or any Obligated Party shall
         fail to pay when due any principal of or interest on any Debt (other
         than the Obligations), or the maturity of any such Debt shall have been
         accelerated, or any such Debt shall have been required to be prepaid
         prior to the stated maturity thereof, or any event shall have occurred
         that permits (or, with the giving of notice or lapse of time or both,
         would

                                      -29-
<PAGE>   30

         permit) any holder or holders of such Debt or any Person acting on
         behalf of such holder or holders to accelerate the maturity thereof or
         require any such prepayment.

                  (i) This Agreement or any other Loan Document shall cease to
         be in full force and effect or shall be declared null and void or the
         validity or enforceability thereof shall be contested or challenged by
         Borrower, any Subsidiary, any Obligated Party or any of their
         respective shareholders, or Borrower or any Obligated Party shall deny
         that it has any further liability or obligation under any of the Loan
         Documents, or any lien or security interest created by the Loan
         Documents shall for any reason cease to be a valid, first priority
         perfected security interest in and lien upon any of the Collateral
         purported to be covered thereby.

                  (j)      Guarantor shall fail to own at least one hundred
         percent (100%) of the outstanding voting stock of Borrower.

         Section 10.2. Remedies Upon Default. If any Event of Default shall
occur, Lender may do any one or more of the following: (a) declare the
outstanding principal of and accrued and unpaid interest on the Note and the
Obligations or any part thereof to be immediately due and payable, and the same
shall thereupon become immediately due and payable, without notice, demand,
presentment, notice of dishonor, notice of acceleration, notice of intent to
accelerate, notice of intent to demand, protest, or other formalities of any
kind, all of which are hereby expressly waived by Borrower, (b) terminate the
Commitment without notice to Borrower, (c) foreclose or otherwise enforce any
Lien granted to the Lender to secure payment and performance of the Obligations,
and (d) exercise any and all rights and remedies afforded by the laws of the
State of Texas or any other jurisdiction by any of the Loan Documents, by equity
or otherwise; provided, however, that upon the occurrence of an Event of Default
under Section 10.1(d) or Section 10.1(e), the Commitment shall automatically
terminate, and the outstanding principal of and accrued and unpaid interest on
the Note and the other Obligations shall become immediately due and payable
without notice, demand, presentment, notice of dishonor, notice of acceleration,
notice of intent to accelerate, notice of intent to demand, protest, or other
formalities of any kind, all of which are hereby expressly waived by Borrower.

         Section 10.3. Performance by Lender. If Borrower shall fail to perform
any covenant, duty, or agreement contained in any of the Loan Documents, Lender
may perform or attempt to perform such covenant, duty, or agreement on behalf of
Borrower. In such event, Borrower shall, at the request of Lender, promptly pay
any amount expended by Lender in such performance or attempted performance to
Lender, together with interest thereon at the Default Rate from the date of such
expenditure until paid. Notwithstanding the foregoing, it is expressly agreed
that Lender shall not have any

                                      -30-
<PAGE>   31

liability or responsibility for the performance of any obligation of Borrower
under this Agreement or any other Loan Document.

                                   ARTICLE XI.

                                  Miscellaneous

         Section 11.1. Expenses of Lender. Borrower hereby agrees to pay Lender
on demand (a) all reasonable costs and expenses incurred by Lender in connection
with the preparation, negotiation, and execution of this Agreement and the other
Loan Documents and any and all amendments, modifications, renewals, extensions,
and supplements thereof and thereto, including, without limitation, the fees and
expenses of Lender's legal counsel, (b) all reasonable costs and expenses
incurred by Lender in connection with the enforcement of this Agreement or any
other Loan Document, including, without limitation, the fees and expenses of
Lender's legal counsel, and (c) all other reasonable costs and expenses incurred
by Lender in connection with this Agreement or any other Loan Document,
including, without limitation, all costs, expenses, taxes, assessments, filing
fees, and other charges levied by an governmental authority or otherwise payable
in respect of this Agreement or any other Loan Document or in obtaining any
insurance policy, audit or appraisal in respect of the Collateral.

         SECTION 11.2. INDEMNIFICATION. BORROWER HEREBY INDEMNIFIES LENDER AND
EACH AFFILIATE THEREOF AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES,
ATTORNEYS, AND AGENTS FROM, AND HOLDS EACH OF THEM HARMLESS AGAINST, ANY AND ALL
LOSSES, LIABILITIES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS,
COSTS, AND EXPENSES (INCLUDING ATTORNEYS' FEES) (COLLECTIVELY, "CLAIMS") TO
WHICH ANY OF THEM MAY BECOME SUBJECT WHICH DIRECTLY OR INDIRECTLY ARISE FROM OR
RELATE TO (A) THE NEGOTIATION, EXECUTION, DELIVERY, PERFORMANCE, ADMINISTRATION,
OR ENFORCEMENT OF ANY OF THE LOAN DOCUMENTS, (B) ANY OF THE TRANSACTIONS
CONTEMPLATED BY THE LOAN DOCUMENTS, (C) ANY BREACH BY BORROWER OF ANY
REPRESENTATION, WARRANTY, COVENANT, OR OTHER AGREEMENT CONTAINED IN ANY OF THE
LOAN DOCUMENTS, (D) THE PRESENCE, RELEASE, THREATENED RELEASE, DISPOSAL,
REMOVAL, OR CLEANUP OF ANY HAZARDOUS SUBSTANCE LOCATED ON, ABOUT, WITHIN, OR
AFFECTING ANY OF THE PROPERTIES OR ASSETS OF BORROWER OR ANY SUBSIDIARY, (E) ANY
ACT OR OMISSION OF LENDER BASED UPON ANY FAX OR ELECTRONIC TRANSMISSION, OR (F)
ANY MATTER RELATED TO ANY LETTER OF CREDIT, INCLUDING, WITH RESPECT TO ALL OF
THE ABOVE, ANY CLAIM WHICH ARISES AS A RESULT OF THE NEGLIGENCE OF LENDER;
PROVIDED, HOWEVER, THAT BORROWER'S INDEMNIFICATION OBLIGATIONS UNDER THIS
SECTION 11.2 SHALL NOT APPLY TO THE EXTENT THAT THE CLAIMS ARISE AS A RESULT OF
THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF LENDER.

         Section 11.3. Limitation of Liability. Neither Lender nor any
affiliate, officer, director, employee, attorney, or agent of Lender shall have
any liability with respect to, and Borrower

                                      -31-
<PAGE>   32

hereby waives, releases, and agrees not to sue any of them upon, any claim for
any special, indirect, incidental, or consequential damages suffered or incurred
by Borrower in connection with, arising out of, or in any way related to, this
Agreement or any of the other Loan Documents, or any of the transactions
contemplated by this Agreement or any of the other Loan Documents. Borrower
hereby waives, releases, and agrees not to sue Lender or any of Lender's
affiliates, officers, directors, employees, attorneys, or agents for punitive
damages in respect of any claim in connection with, arising out of, or in any
way related to, this Agreement or any of the other Loan Documents, or any of the
transactions contemplated by this Agreement or any of the other Loan Documents.

         Section 11.4. No Waiver; Cumulative Remedies. No failure on the part of
Lender to exercise and no delay in exercising, and no course of dealing with
respect to, any right, power, or privilege under this Agreement shall operate as
a waiver thereof, nor shall any single or partial exercise of any right, power,
or privilege under this Agreement preclude any other or further exercise thereof
or the exercise of any other right, power, or privilege. The rights and remedies
provided for in this Agreement and the other Loan Documents are cumulative and
not exclusive of any rights and remedies provided by law.

         Section 11.5. Successors and Assigns. This Agreement is binding upon
and shall inure to the benefit of Lender and Borrower and their respective
successors and assigns, except that Borrower may not assign or transfer any of
its rights or obligations under this Agreement without prior written consent of
Lender.

         Section 11.6. Survival. All representations and warranties made in this
Agreement or any other Loan Document or in any document, statement, or
certificate furnished in connection with this Agreement shall survive the
execution and delivery of this Agreement and the other Loan Documents, and no
investigation by Lender or any closing shall affect the representations and
warranties or the right of Lender to rely upon them. Without prejudice to the
survival of any other obligation of Borrower hereunder, the obligations of
Borrower under Sections 11.1 and 11.2 shall survive repayment of the Note and
termination of the Commitment and the Letters of Credit.

         Section 11.7. Amendment. The provisions of this Agreement and the other
Loan Documents to which Borrower is a party may be amended or waived only by an
instrument in writing signed by the parties hereto.

         Section 11.8. Maximum Interest Rate. No provision of this Agreement or
of any other Loan Documents shall require the payment or the collection of
interest in excess of the maximum permitted by applicable law. If any excess of
interest in such respect is hereby provided for, or shall be adjudicated to be
so provided, in

                                      -32-
<PAGE>   33

any other Loan Documents or otherwise in connection with this loan transaction,
the provisions of this Section shall govern and prevail and neither Borrower nor
the sureties, guarantors, successors, or assigns of Borrower shall be obligated
to pay the excess amount of such interest or any other excess sum paid for the
use, forbearance, or detention of sums loaned pursuant hereto. In the event
Lender ever receives, collects, or applies as interest any such sum, such amount
which would be in excess of the maximum amount permitted by applicable law shall
be applied as a payment and reduction of the principal of the indebtedness
evidenced by the Note; and, if the principal of the Note has been paid in full,
any remaining excess shall forthwith be paid to Borrower. In determining whether
or not the interest paid or payable exceeds the Maximum Rate, Borrower and
Lender shall, to the extent permitted by applicable law, (a) characterize any
non-principal payment as an expense, fee, or premium rather than as interest,
(b) exclude voluntary prepayments and the effects thereof, and (c) amortize,
prorate, allocate, and spread in equal or unequal parts the total amount of
interest throughout the entire contemplated term of the indebtedness evidenced
by the Note so that interest for the entire term does not exceed the Maximum
Rate.

         Section 11.9. Notices. All notices and other communications provided
for in this Agreement and the other Loan Documents shall be in writing and may
be telexed, telecopied (faxed), mailed by certified mail return receipt
requested, or delivered to the intended recipient at the addresses specified
below or at such other address as shall be designated by any party listed below
in a notice to the other parties listed below given in accordance with this
Section.

If to Borrower:            South Hampton Refining Co.
                           7752 FM 418
                           P.O. Box 1636
                           Silsbee, Texas 77656
                           Attention: Nick Carter
                           Telephone No.: 409-385-1400
                           Fax No.: 409-385-2453

If to Guarantor:           Texas Oil and Chemical Company II, Inc.
                           7752 FM 418
                           P.O. Box 1636
                           Silsbee, Texas 77656
                           Attention: Nick Carter
                           Telephone No.: 409-385-1400
                           Fax No.: 409-385-2453

                                      -33-
<PAGE>   34

If to Lender:              Southwest Bank of Texas, N.A.
                           Five Post Oak Park
                           4400 Post Oak Parkway
                           Houston, Texas 77027
                           Attention: A. Stephen Kennedy
                           Telephone No.: 713-235-8870
                           Fax No.: 713-439-5925

                  Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given when transmitted by telex
or telecopy (fax), subject to confirmation of receipt, when personally delivered
or, in the case of a mailed notice, when duly deposited in the mails, in each
case given or addressed as aforesaid; provided, however, that notices to Lender
pursuant to Article II shall not be effective until received by Lender.

         Section 11.10. Applicable Law; Venue; Service of Process. This
Agreement shall be governed by and construed in accordance with the laws of the
State of Texas and the applicable laws of the United States of America. This
Agreement has been entered into in Harris County, Texas and it shall be
performable for all purposes in Harris County, Texas. Except as provided in the
Arbitration Agreement, any action or proceeding against Borrower under or in
connection with any of the Loan Documents may be brought in any state or federal
court in Harris County, Texas, and Borrower hereby irrevocably submits to the
nonexclusive jurisdiction of such courts and waives any objection it may now or
hereafter have as to the venue of any such action or proceeding brought in any
such court or that any such court is an inconvenient forum. Borrower agrees that
service of process upon it may be made by certified or registered mail, return
receipt requested, at its office specified in this Agreement. Except as provided
in the Arbitration Agreement, nothing herein or in any of the other Loan
Documents shall affect the right of Lender to serve process in any other manner
permitted by law or shall limit the right of Lender to bring any action or
proceeding against Borrower or with respect to any of its property in courts in
other jurisdictions. Except as provided in the Arbitration Agreement, any action
or proceeding by Borrower against Lender shall be brought only in a court
located in Harris County, Texas.

         Section 11.11. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

         Section 11.12. Severability. Any provision of this Agreement held by a
court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Agreement and the effect thereof shall be
confined to the provision held to be invalid or illegal.

                                      -34-
<PAGE>   35

         Section 11.13. Headings. The headings, captions, and arrangements used
in this Agreement are for convenience only and shall not affect the
interpretation of this Agreement.

         Section 11.14. Non-Application of Chapter 346 of Texas Finance Code.
The provisions of Chapter 346 of the Texas Finance Code are specifically
declared by the parties hereto not to be applicable to this Agreement or any of
the other Loan Documents or to the transactions contemplated hereby.

         Section 11.15. Consent to Participations. Lender shall have the right
at any time and from time to time to sell or transfer one or more participation
interests in the Notes and the indebtedness evidenced thereby to one or more
purchasers ("Purchasers"), whether related or unrelated to Lender. Lender may
provide to any one or more Purchasers or potential Purchasers any information,
financial statements, data or knowledge Lender may have about Borrower or about
any other matter relating to the Obligations, and Borrower waives any rights to
privacy it may have with respect to such matters. Borrower further waives any
and all notices of sale of participation interests and notices of repurchases of
participation interests. Borrower agrees that the owners of any participation
interests will be considered as the absolute owners of their interests in the
Obligations and will have all the rights granted under the participation
agreements or other agreements governing the sale of their participation
interests. Borrower waives all rights of offset or counterclaim that it may now
or later have against Lender or against any Purchaser and agrees that either
Lender or any Purchaser may enforce Borrower's obligations under the Loan
Documents irrespective of the failure or insolvency of any owner of any interest
in the Obligations. Borrower further agrees that any Purchaser may enforce its
interests irrespective of any claims or defenses that Borrower may have against
Lender.

         SECTION 11.16. ENTIRE AGREEMENT. THIS AGREEMENT, THE NOTE, AND THE
OTHER LOAN DOCUMENTS REFERRED TO HEREIN EMBODY THE FINAL, ENTIRE AGREEMENT AMONG
THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND THEREOF AND
SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND
UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF
AND THEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES
HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO.

                                      -35-
<PAGE>   36

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

                                       BORROWER:

                                       SOUTH HAMPTON REFINING CO.

                                       By:
                                          --------------------------------
                                          Nick Carter
                                          President

                                       LENDER:

                                       SOUTHWEST BANK OF TEXAS, N.A.

                                       By:
                                          --------------------------------
                                          A. Stephen Kennedy
                                          Vice President

                                      -36-
<PAGE>   37

                                LIST OF EXHIBITS

Exhibits                                         Document
--------                                         --------

   A                                             Note

   B                                             Security Agreement

   C                                             Guaranty

   D                                             Advance Request Form

   E                                             Borrowing Base Certificate

   F                                             No Default Certificate

   G                                             Arbitration Agreement

   H                                             Account Debtors

                                      -37-
<PAGE>   38

                                 PROMISSORY NOTE

$2,250,000.00                     Houston, Texas              September 30, 1999

         FOR VALUE RECEIVED, the undersigned, SOUTH HAMPTON REFINING CO., a
Texas corporation ("Maker"), hereby promises to pay to the order of SOUTHWEST
BANK OF TEXAS, N.A., a national banking association ("Payee"), at its offices at
Five Post Oak Park, 4400 Post Oak Parkway, Houston, Harris County, Texas, in
lawful money of the United States of America, the principal sum of TWO MILLION
TWO HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS ($2,250,000.00), or so much
thereof as may be advanced and outstanding hereunder, together with interest on
the outstanding principal balance from day to day remaining, at a varying rate
per annum which shall from day to day be equal to the lesser of (a) the Maximum
Rate (hereinafter defined) or (b) the Prime Rate (hereinafter defined) of Payee
in effect from day to day plus one-half of one percent (.50%), and each change
in the rate of interest charged hereunder shall become effective, without notice
to Maker, on the effective date of each change in the Prime Rate or the Maximum
Rate, as the case may be; provided, however, if at any time the rate of interest
specified in clause (b) preceding shall exceed the Maximum Rate, thereby causing
the interest rate hereon to be limited to the Maximum Rate, then any subsequent
reduction in the Prime Rate shall not reduce the rate of interest hereon below
the Maximum Rate until the total amount of interest accrued hereon equals the
amount of interest which would have accrued hereon if the rate specified in
clause (b) preceding had at all times been in effect.

         Principal of and interest on this Note shall be due and payable as
follows:

                  (a) Accrued and unpaid interest on this Note shall be payable
         monthly, on the first (1st) day of each month commencing on November 1,
         1999 and upon the maturity of this Note, however such maturity may be
         brought about; and

                  (b) All outstanding principal of this Note and all accrued
         interest thereon shall be due and payable on May 31, 2001.

         Principal of this Note shall be subject to mandatory prepayment at the
times described in the Agreement (hereinafter defined). If an Event of Default
(hereinafter defined) has occurred and is existing, the principal hereof and any
past due interest hereon shall bear interest at the Default Rate (hereinafter
defined).

         Interest on the indebtedness evidenced by this Note shall be computed
on the basis of a year of 360 days and the actual number

<PAGE>   39

of days elapsed (including the first day but excluding the last day) unless such
calculation would result in a usurious rate in which case interest shall be
calculated on the basis of a year of 365 or 366 days, as the case may be.

         As used in this Note, the following terms shall have the respective
meanings indicated below:

                  "Agreement" means that certain Loan Agreement dated as of
         September 30, 1999 between Maker and Payee, as the same may be amended
         or modified from time to time.

                  "Default Rate" means the lesser of (a) the sum of the Prime
         Rate plus five percent (5.0%), or (b) the Maximum Rate.

                  "Event of Default" shall have the meaning given to such term
         in the Agreement.

                  "Maximum Rate" means the maximum rate of nonusurious interest
         permitted from day to day by applicable law, including Chapter 303 of
         the Texas Finance Code (the "Code")(and as the same may be incorporated
         by reference in other Texas statutes). To the extent that Chapter 303
         of the Code is relevant to any holder of this Note for the purposes of
         determining the Maximum Rate, each such holder elects to determine such
         applicable legal rate pursuant to the "weekly ceiling," from time to
         time in effect, as referred to and defined in Chapter 303 of the Code;
         subject, however, to the limitations on such applicable ceiling
         referred to and defined in the Code, and further subject to any right
         such holder may have subsequently, under applicable law, to change the
         method of determining the Maximum Rate.

                  "Prime Rate" shall mean that variable rate of interest per
         annum established by Payee from time to time as its prime rate which
         shall vary from time to time. Such rate is set by Payee as a general
         reference rate of interest, taking into account such factors as Payee
         may deem appropriate, it being understood that many of Payee's
         commercial or other loans are priced in relation to such rate, that it
         is not necessarily the lowest or best rate charged to any customer and
         that Payee may make various commercial or other loans at rates of
         interest having no relationship to such rate.

         This Note (a) is the Note provided for in the Agreement and (b) is
secured as provided in the Agreement. Maker may prepay the principal of this
Note upon the terms and conditions specified in the Agreement. Maker may borrow,
repay, and reborrow hereunder upon the terms and conditions specified in the
Agreement.

         Notwithstanding anything to the contrary contained herein, no
provisions of this Note shall require the payment or permit the

                                      -2-
<PAGE>   40

collection of interest in excess of the Maximum Rate. If any excess of interest
in such respect is herein provided for, or shall be adjudicated to be so
provided, in this Note or otherwise in connection with this loan transaction,
the provisions of this paragraph shall govern and prevail, and neither Maker nor
the sureties, guarantors, successors or assigns of Maker shall be obligated to
pay the excess amount of such interest, or any other excess sum paid for the
use, forbearance or detention of sums loaned pursuant hereto. If for any reason
interest in excess of the Maximum Rate shall be deemed charged, required or
permitted by any court of competent jurisdiction, any such excess shall be
applied as a payment and reduction of the principal of indebtedness evidenced by
this Note; and, if the principal amount hereof has been paid in full, any
remaining excess shall forthwith be paid to Maker. In determining whether or not
the interest paid or payable exceeds the Maximum Rate, Maker and Payee shall, to
the extent permitted by applicable law, (a) characterize any non-principal
payment as an expense, fee, or premium rather than as interest, (b) exclude
voluntary prepayments and the effects thereof, and (c) amortize, prorate,
allocate, and spread in equal or unequal parts the total amount of interest
throughout the entire contemplated term of the indebtedness evidenced by this
Note so that the interest for the entire term does not exceed the Maximum Rate.

         If default occurs in the payment of principal or interest under this
Note, or upon the occurrence of any other Event of Default, as such term is
defined in the Agreement, the holder hereof may, at its option, (a) declare the
entire unpaid principal of and accrued interest on this Note immediately due and
payable without notice, demand or presentment, all of which are hereby waived,
and upon such declaration, the same shall become and shall be immediately due
and payable, (b) foreclose or otherwise enforce all liens or security interests
securing payment hereof, or any part hereof, (c) offset against this Note any
sum or sums owed by the holder hereof to Maker and (d) take any and all other
actions available to Payee under this Note, the Agreement, the Loan Documents
(as such term is defined in the Agreement) at law, in equity or otherwise.
Failure of the holder hereof to exercise any of the foregoing options shall not
constitute a waiver of the right to exercise the same upon the occurrence of a
subsequent Event of Default.

         If the holder hereof expends any effort in any attempt to enforce
payment of all or any part or installment of any sum due the holder hereunder,
or if this Note is placed in the hands of an attorney for collection, or if it
is collected through any legal proceedings, Maker agrees to pay all costs,
expenses, and fees incurred by the holder, including all reasonable attorneys'
fees.

         THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF TEXAS AND THE APPLICABLE LAWS OF THE

                                      -3-
<PAGE>   41

UNITED STATES OF AMERICA. THIS NOTE IS PERFORMABLE IN HARRIS COUNTY, TEXAS.

         Maker and each surety, guarantor, endorser, and other party ever liable
for payment of any sums of money payable on this Note jointly and severally
waive notice, presentment, demand for payment, protest, notice of protest and
non-payment or dishonor, notice of acceleration, notice of intent to accelerate,
notice of intent to demand, diligence in collecting, grace, and all other
formalities of any kind, and consent to all extensions without notice for any
period or periods of time and partial payments, before or after maturity, and
any impairment of any collateral securing this Note, all without prejudice to
the holder. The holder shall similarly have the right to deal in any way, at any
time, with one or more of the foregoing parties without notice to any other
party, and to grant any such party any extensions of time for payment of any of
said indebtedness, or to release or substitute part or all of the collateral
securing this Note, or to grant any other indulgences or forbearances
whatsoever, without notice to any other party and without in any way affecting
the personal liability of any party hereunder.

                                    SOUTH HAMPTON REFINING CO.

                                    By:
                                       -----------------------------------------
                                                                     Nick Carter
                                       President

                                      -4-
<PAGE>   42
                               SECURITY AGREEMENT

         THIS SECURITY AGREEMENT dated as of September 30, 1999 (this
"Agreement"), is by and between SOUTH HAMPTON REFINING CO., a Texas corporation
(the "Debtor") and SOUTHWEST BANK OF TEXAS, N.A., a national banking association
("Secured Party").

                                R E C I T A L S:

         A. Debtor and Secured Party have entered into that certain Loan
Agreement dated as of September 30, 1999 (such Loan Agreement, as the same may
be amended or modified from time to time, is referred to herein as the "Loan
Agreement").

         B. Secured Party has conditioned its obligations under the Loan
Agreement upon, among other things, the execution and delivery of this Agreement
by Debtor.

         NOW THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

                                    ARTICLE I

                                Security Interest

         Section 1.01. Security Interest. Debtor hereby grants to Secured Party
a security interest in the following property, whether now owned or existing or
hereafter arising or acquired and wherever arising or located (such property
being hereinafter sometimes called the "Collateral"):

               (a) all of its accounts, accounts receivable, contract rights and
          general intangibles, and all instruments, documents, chattel paper and
          funds on deposit with Secured Party arising therefrom, whether now
          owned or hereafter acquired, including, without limitation, all lease
          receivables and note receivables, all cash, notes, drafts and
          acceptances arising therefrom, all returned and repossessed goods
          arising from or relating to any such accounts, or other proceeds of
          any sale, lease or other disposition of inventory, and all proceeds
          (including insurance proceeds) and products thereof; and

               (b) all of its inventory, whether now owned or hereafter
          acquired, including, without limitation, all of its inventory of
          natural gasoline and finished plant products and other tangible
          personal property held for sale or lease or furnished or to be
          furnished under contracts for service or used or consumed in Debtor's
          trade or business and all additions,

<PAGE>   43

          accessions, substitutions, attachments and replacements thereto and
          all contracts with respect thereto and all documents of title
          evidencing or representing any part thereof and all products and
          proceeds (including insurance proceeds) thereof.

         Section 1.02. Obligations. The Collateral shall secure the following
obligations, indebtedness, and liabilities (all such obligations, indebtedness,
and liabilities being hereinafter sometimes called the "Obligations"):

               (a) the obligations and indebtedness of Debtor to Secured Party
          evidenced by that certain promissory note in the original principal
          amount of $2,250,000.00 dated September 30, 1999, executed by Debtor
          and payable to the order of Secured Party;

               (b) the obligations and indebtedness of Debtor to Secured Party
          under the Loan Agreement;

               (c) all future advances by Secured Party to Debtor;

               (d) all costs and expenses, including, without limitation, all
          attorneys' fees and legal expenses, incurred by Secured Party to
          preserve and maintain the Collateral, collect the obligations herein
          described, and enforce this Agreement;

               (e) all other obligations, indebtedness, and liabilities of
          Debtor to Secured Party, now existing or hereafter arising, regardless
          of whether such obligations, indebtedness, and liabilities are
          similar, dissimilar, related, unrelated, direct, indirect, fixed,
          contingent, primary, secondary, joint, several, or joint and several;
          and

               (f) all extensions, renewals, and modifications of any of the
          foregoing.

                                   ARTICLE II

                         Representations and Warranties

         To induce Secured Party to enter into this Agreement and the Loan
Agreement, Debtor represents and warrants to Secured Party that:

         Section 2.01. Title. Except for the security interest granted herein,
Debtor owns, and with respect to Collateral acquired after the date hereof
Debtor will own, the Collateral free and clear of any lien, security interest,
or other encumbrance.

                                       -2-
<PAGE>   44

         Section 2.02. Accounts. Unless Debtor has given Secured Party written
notice to the contrary, whenever the security interest granted hereunder
attaches to an account, Debtor shall be deemed to have represented and warranted
to Secured Party as to each and all of its accounts that (a) each account is
genuine and is in all respects what it purports to be, (b) each account
represents the legal, valid, and binding obligation of the account debtor
evidencing indebtedness unpaid and owed by such account debtor arising out of
the performance of labor or services by Debtor or the sale or lease of goods by
Debtor, (c) the amount of each account represented as owing is the correct
amount actually and unconditionally owing except for normal trade discounts
granted in the ordinary course of business, and (d) no account is subject to any
offset, counterclaim, or other defense.

         Section 2.03. Financing Statements. No financing statement, security
agreement, or other lien instrument covering all or any part of the Collateral
is on file in any public office, except as may have been filed in favor of
Secured Party.

         Section 2.04. Principal Place of Business. The principal place of
business and chief executive office of Debtor, and the office where Debtor keeps
its books and records, is located at the address of Debtor listed in the Loan
Agreement.

         Section 2.05. Location of Collateral. All inventory of Debtor is
located at 7752 FM 418, Silsbee, Texas and FM 92 North, Silsbee, Texas.

                                   ARTICLE III

                                    Covenants

         Debtor covenants and agrees with Secured Party that until the
Obligations are paid and performed in full:

         Section 3.01. Maintenance. Debtor shall not use or permit the
Collateral to be used in violation of any law or inconsistently with the terms
of any policy of insurance. Debtor shall not use or permit the Collateral to be
used in any manner or for any purpose that would impair the value of the
Collateral or expose the Collateral to unusual risk.

         Section 3.02. Encumbrances. Debtor shall not create, permit, or suffer
to exist, and shall defend the Collateral against any lien, security interest,
or other encumbrance on the Collateral except the security interest of Secured
Party hereunder, and shall defend Debtor's rights in the Collateral and Secured
Party's security interest in the Collateral against the claims of all persons
and entities.

                                      -3-

<PAGE>   45

         Section 3.03. Modification of Collateral. Debtor shall do nothing to
impair the rights of Secured Party in the Collateral. Without the prior written
consent of Secured Party, Debtor shall not grant any extension of time for any
payment with respect to the Collateral, or compromise, compound, or settle any
of the Collateral, or release in whole or in part any person or entity liable
for payment with respect to the Collateral, or allow any credit or discount for
payment with respect to the Collateral other than normal trade discounts granted
in the ordinary course of business, or release any lien, security interest, or
assignment securing the Collateral, or otherwise amend or modify any of the
Collateral.

         Section 3.04. Disposition of Collateral. Debtor shall not sell, lease,
or otherwise dispose of the Collateral or any part thereof without the prior
written consent of Secured Party, except Debtor may sell plant products
(inventory) in the ordinary course of business.

         Section 3.05. Further Assurances. At any time and from time to time,
upon the request of Secured Party, and at the sole expense of Debtor, Debtor
shall promptly execute and deliver all such further instruments and documents
and take such further action as Secured Party may deem necessary or desirable to
preserve and perfect its security interest in the Collateral and carry out the
provisions and purposes of this Agreement, including, without limitation, the
execution and filing of such financing statements as Secured Party may require.
A carbon, photographic, or other reproduction of this Agreement or of any
financing statement covering the Collateral or any part thereof shall be
sufficient as a financing statement and may be filed as a financing statement.
Debtor shall promptly endorse and deliver to Secured Party all documents,
instruments, and chattel paper that it now owns or may hereafter acquire.

         Section 3.06. Risk of Loss; Insurance. Debtor shall be responsible for
any loss of or damage to the Collateral. Debtor shall maintain insurance on the
Collateral as provided in the Loan Agreement.

         Section 3.07. Inspection Rights. Debtor shall permit Secured Party and
its representatives to examine or inspect the Collateral wherever located and to
examine, inspect, and copy Debtor's books and records at any reasonable time and
as often as Secured Party may desire.

         Section 3.08. Notification. Debtor shall promptly notify Secured Party
of (a) any lien, security interest, encumbrance, or claim made or threatened
against the Collateral, and (b) any material change in the Collateral,
including, without limitation, any material damage to or loss of the Collateral.

                                      -4-
<PAGE>   46

         Section 3.09. Corporate Changes. Debtor shall not change its name,
identity, or corporate structure in any manner that might make any financing
statement filed in connection with this Agreement misleading. Debtor shall not
change its principal place of business, chief executive office, or the place
where it keeps its books and records unless it shall have given Secured Party
thirty (30) days prior written notice thereof and shall have taken all action
deemed necessary or desirable by Secured Party to cause its security interest in
the Collateral to be perfected with the priority required by this Agreement.

         Section 3.10. Books and Records; Information. Debtor shall keep
accurate and complete books and records of the Collateral and Debtor's business
and financial condition in accordance with generally accepted accounting
principles consistently applied. Debtor shall from time to time at the request
of Secured Party deliver to Secured Party such information regarding the
Collateral and Debtor as Secured Party may request, including, without
limitation, lists and descriptions of the Collateral and evidence of the
identity and existence of the Collateral. Debtor shall mark its books and
records to reflect the security interest of Secured Party under this Agreement.

         Section 3.11. Location of Collateral. Debtor shall not move any of its
inventory from the location described in Section 2.05 without the prior written
consent of Secured Party.

                                   ARTICLE IV

                             Rights of Secured Party

         Section 4.01. Power of Attorney. Debtor hereby irrevocably constitutes
and appoints Secured Party and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the name of Debtor or in its own name, upon the
occurrence of an Event of Default, to take any and all action and to execute any
and all documents and instruments which Secured Party at any time and from time
to time deems necessary or desirable to accomplish the purposes of this
Agreement and, without limiting the generality of the foregoing, Debtor hereby
gives Secured Party the power and right on behalf of Debtor and in its own name
to do any of the following, without notice to or the consent of Debtor:

               (a) to demand, sue for, collect, or receive in the name of Debtor
          or in its own name, any money or property at any time payable or
          receivable on account of or in exchange for any of the Collateral and,
          in connection therewith, endorse checks, notes, drafts, acceptances,
          money orders, documents of title, or any other instruments for the
          payment of money under the Collateral or any policy of insurance;

                                      -5-

<PAGE>   47

               (b) to pay or discharge taxes, liens, security interests, or
          other encumbrances levied or placed on or threatened against the
          Collateral;

               (c) to send requests for verification to account debtors and
          other obligors;

               (d) to notify post office authorities to change the address for
          delivery of mail of Debtor to an address designated by Secured Party
          and to receive, open, and dispose of mail addressed to Debtor; and

               (e) (i) to direct account debtors and any other parties liable
          for any payment under any of the Collateral to make payment of any and
          all monies due and to become due thereunder directly to Secured Party
          or as Secured Party shall direct; (ii) to receive payment of and
          receipt for any and all monies, claims, and other amounts due and to
          become due at any time in respect of or arising out of any Collateral;
          (iii) to sign and endorse any invoices, freight or express bills,
          bills of lading, storage or warehouse receipts, drafts against
          debtors, assignments, proxies, stock powers, verifications, and
          notices in connection with accounts and other documents relating to
          the Collateral; (iv) to exchange any of the Collateral for other
          property upon any merger, consolidation, reorganization,
          recapitalization, or other readjustment of the issuer thereof and, in
          connection therewith, deposit any of the Collateral with any
          committee, depositary, transfer agent, registrar, or other designated
          agency upon such terms as Secured Party may determine; (v) to insure,
          and to make, settle, compromise, or adjust claims under any insurance
          policy covering any of the Collateral; and (vi) to sell, transfer,
          pledge, make any agreement with respect to or otherwise deal with any
          of the Collateral as fully and completely as though Secured Party were
          the absolute owner thereof for all purposes, and to do, at Secured
          Party's option and Debtor's expense, at any time, or from time to
          time, all acts and things which Secured Party deems necessary to
          protect, preserve, or realize upon the Collateral and Secured Party's
          security interest therein.

         This power of attorney is a power coupled with an interest and shall be
irrevocable. Secured Party shall be under no duty to exercise or withhold the
exercise of any of the rights, powers, privileges, and options expressly or
implicitly granted to Secured Party in this Agreement, and shall not be liable
for any failure to do so or any delay in doing so. Secured Party shall not be
liable for any act or omission or for any error of judgment or any mistake of
fact or law in its individual capacity or in its capacity as attorney-in-fact
except acts or omissions resulting from its willful misconduct. This power of
attorney is conferred on Secured Party solely to protect, preserve, and realize
upon its security interest in the Collateral. Secured Party shall not be

                                      -6-

<PAGE>   48

responsible for any decline in the value of the Collateral and shall not be
required to take any steps to preserve rights against prior parties or to
protect, preserve, or maintain any security interest or lien given to secure the
Collateral.

         Section 4.02. Performance by Secured Party. If Debtor fails to perform
or comply with any of its agreements contained herein, Secured Party itself may,
at its sole discretion, cause or attempt to cause performance or compliance with
such agreement and the expenses of Secured Party, together with interest thereon
at the maximum nonusurious per annum rate permitted by applicable law, shall be
payable by Debtor to Secured Party on demand and shall constitute Obligations
secured by this Agreement. Notwithstanding the foregoing, it is expressly agreed
that Secured Party shall not have any liability or responsibility for the
performance of any obligation of Debtor under this Agreement.

         Section 4.03. Assignment by Secured Party. Secured Party may from time
to time assign the Obligations and any portion thereof or the Collateral and any
portion thereof, and the assignee shall be entitled to all of the rights and
remedies of Secured Party under this Agreement in relation thereto.

                                    ARTICLE V

                                     Default

         Section 5.01. Events of Default. The term "Event of Default" shall mean
an Event of Default as defined in the Loan Agreement.

         Section 5.02. Rights and Remedies. Upon the occurrence of an Event of
Default, Secured Party shall have the following rights and remedies:

               (a) Secured Party may declare the Obligations or any part thereof
          immediately due and payable, without notice, demand, presentment,
          notice of dishonor, notice of acceleration, notice of intent to
          accelerate, notice of intent to demand, protest, or other formalities
          of any kind, all of which are hereby expressly waived by Debtor;
          provided, however, that upon the occurrence of an Event of Default
          under Section 10.1(d) or Section 10.1(e) of the Loan Agreement, the
          Obligations shall become immediately due and payable without notice,
          demand, presentment, notice of dishonor, notice of acceleration,
          notice of intent to accelerate, notice of intent to demand, protest,
          or other formalities of any kind, all of which are hereby expressly
          waived by Debtor.

               (b) In addition to all other rights and remedies granted to
          Secured Party in this Agreement and in any other instrument or
          agreement securing, evidencing, or relating to the Obligations or any
          part thereof, Secured Party shall have all

                                      -7-

<PAGE>   49

          of the rights and remedies of a secured party under the Uniform
          Commercial Code as adopted by the State of Texas. Without limiting the
          generality of the foregoing, Secured Party may (i) without demand or
          notice to Debtor, collect, receive, or take possession of the
          Collateral or any part thereof and for that purpose Secured Party may
          enter upon any premises on which the Collateral is located and remove
          the Collateral therefrom or render it inoperable, and/or (ii) sell,
          lease, or otherwise dispose of the Collateral, or any part thereof, in
          one or more parcels at public or private sale or sales, at Secured
          Party's offices or elsewhere, for cash, on credit, or for future
          delivery. Upon the request of Secured Party, Debtor shall assemble the
          Collateral and make it available to Secured Party at any place
          designated by Secured Party that is reasonably convenient to Debtor
          and Secured Party. Debtor agrees that Secured Party shall not be
          obligated to give more than five (5) days written notice of the time
          and place of any public sale or of the time after which any private
          sale may take place and that such notice shall constitute reasonable
          notice of such matters. Debtor shall be liable for all expenses of
          retaking, holding, preparing for sale, or the like, and all attorneys'
          fees, legal expenses, and all other costs and expenses incurred by
          Secured Party in connection with the collection of the Obligations and
          the enforcement of Secured Party's rights under this Agreement.
          Secured Party may apply the Collateral against the Obligations in such
          order and manner as Secured Party may elect in its sole discretion.
          Debtor shall remain liable for any deficiency if the proceeds of any
          sale or disposition of the Collateral are insufficient to pay the
          Obligations in full. Debtor waives all rights of marshalling in
          respect of the Collateral.

               (c) Secured Party may cause any or all of the Collateral held by
          it to be transferred into the name of Secured Party or the name or
          names of Secured Party's nominee or nominees.

                                   ARTICLE VI

                                  Miscellaneous

         Section 6.01. No Waiver; Cumulative Remedies. No failure on the part of
Secured Party to exercise and no delay in exercising, and no course of dealing
with respect to, any right, power, or privilege under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power, or privilege under this Agreement preclude any other or further
exercise thereof or the exercise of any other right, power, or privilege. The
rights and remedies provided for in this Agreement are cumulative and not
exclusive of any rights and remedies provided by law.

                                      -8-
<PAGE>   50

         Section 6.02. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of Debtor and Secured Party and their respective
heirs, successors, and assigns, except that Debtor may not assign any of its
rights or obligations under this Agreement without the prior written consent of
Secured Party.

         Section 6.03. Amendment. The provisions of this Agreement may be
amended or waived only by an instrument in writing signed by the parties hereto.

         Section 6.04. Notices. All notices and other communications provided
for in this Agreement shall be given as provided in the Loan Agreement.

         Section 6.05. Applicable Law; Venue; Service of Process. This Agreement
shall be governed by and construed in accordance with the laws of the State of
Texas and the applicable laws of the United States of America. This Agreement
has been entered into in Harris County, Texas, and it shall be performable for
all purposes in Harris County, Texas. The venue of, and provisions regarding
service of process in connection with any action or proceeding hereunder shall
be determined as provided in the Loan Agreement.

         Section 6.06. Headings. The headings, captions, and arrangements used
in this Agreement are for convenience only and shall not affect the
interpretation of this Agreement.

         Section 6.07. Survival of Representations and Warranties. All
representations and warranties made in this Agreement or in any certificate
delivered pursuant hereto shall survive the execution and delivery of this
Agreement, and no investigation by Secured Party shall affect the
representations and warranties or the right of Secured Party to rely upon them.

         Section 6.08. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.

         Section 6.09. Waiver of Bond. In the event Secured Party seeks to take
possession of any or all of the Collateral by judicial process, Debtor hereby
irrevocably waives any bonds and any surety or security relating thereto that
may be required by applicable law as an incident to such possession, and waives
any demand for possession prior to the commencement of any such suit or action.

         Section 6.10. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Agreement, and any such
prohibition or

                                      -9-
<PAGE>   51

unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

         Section 6.12. ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS (AS DEFINED IN THE LOAN AGREEMENT) EMBODY THE FINAL, ENTIRE AGREEMENT
AMONG THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS,
AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL,
RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED OR
VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR
DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE
PARTIES HERETO.

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

                                        DEBTOR:

                                        SOUTH HAMPTON REFINING CO.

                                        By:
                                           ----------------------------------
                                           Nick Carter
                                           President

                                        SECURED PARTY:

                                        SOUTHWEST BANK OF TEXAS, N.A.

                                        By:
                                           ----------------------------------
                                             A. Stephen Kennedy
                                             Vice President

                                      -10-
<PAGE>   52
                               GUARANTY AGREEMENT

         WHEREAS, the execution of this Guaranty Agreement is a condition to
SOUTHWEST BANK OF TEXAS, N.A., a national banking association ("Lender") making
certain loans to SOUTH HAMPTON REFINING CO., a Texas corporation ("Borrower"),
pursuant to that certain Loan Agreement dated as of September 30, 1999, between
Borrower and Lender (such Loan Agreement, as it may hereafter be amended or
modified from time to time, is hereinafter referred to as the "Loan Agreement");

         NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the undersigned, TEXAS OIL & CHEMICAL CO. II,
INC., a Texas corporation (the "Guarantor"), hereby irrevocably and
unconditionally guarantees to Lender the full and prompt payment and performance
of the Guaranteed Indebtedness (hereinafter defined). This Guaranty Agreement
shall be upon the following terms:

         1. The term "Guaranteed Indebtedness", as used herein means all of the
"Obligations", as defined in the Loan Agreement. The term "Guaranteed
Indebtedness" shall include any and all post-petition interest and expenses
(including attorneys' fees) whether or not allowed under any bankruptcy,
insolvency, or other similar law. As of the date of this Guaranty Agreement, the
Obligations include, but are not limited to, that certain promissory note in the
original principal amount of $2,250,000.00, dated as of September 30, 1999,
executed by Borrower and payable to the order of Lender, and all renewals,
extensions and modifications thereof.

         2. This instrument shall be an absolute, continuing, irrevocable, and
unconditional guaranty of payment and performance, and not a guaranty of
collection, and Guarantor shall remain liable on its obligations hereunder until
the payment and performance in full of the Guaranteed Indebtedness. No set-off,
counterclaim, recoupment, reduction, or diminution of any obligation, or any
defense of any kind or nature which Borrower may have against Lender or any
other party, or which Guarantor may have against Borrower, Lender, or any other
party, shall be available to, or shall be asserted by, Guarantor against Lender
or any subsequent holder of the Guaranteed Indebtedness or any part thereof or
against payment of the Guaranteed Indebtedness or any part thereof.

         3. If Guarantor becomes liable for any indebtedness owing by Borrower
to Lender by endorsement or otherwise, other than under this Guaranty Agreement,
such liability shall not be in any manner impaired or affected hereby, and the
rights of Lender hereunder shall be cumulative of any and all other rights that
Lender may ever have against Guarantor. The exercise by Lender of any right or
remedy hereunder or under any other instrument, or at law or in

<PAGE>   53

equity, shall not preclude the concurrent or subsequent exercise of any other
right or remedy.

         4. In the event of default by Borrower in payment or performance of the
Guaranteed Indebtedness, or any part thereof, when such Guaranteed Indebtedness
becomes due, whether by its terms, by acceleration, or otherwise, Guarantor
shall promptly pay the amount due thereon to Lender without notice or demand in
lawful currency of the United States of America and it shall not be necessary
for Lender, in order to enforce such payment by Guarantor, first to institute
suit or exhaust its remedies against Borrower or others liable on such
Guaranteed Indebtedness, or to enforce any rights against any collateral which
shall ever have been given to secure such Guaranteed Indebtedness. Until the
Guaranteed Indebtedness is paid in full and a period of ninety (90) days has
passed following such payment, Guarantor waives any and all rights it may now or
hereafter have under any agreement or at law or in equity (including, without
limitation, any law subrogating the Guarantor to the rights of Lender) to assert
any claim against or seek contribution, indemnification or any other form of
reimbursement from Borrower or any other party liable for payment of any or all
of the Guaranteed Indebtedness for any payment made by Guarantor under or in
connection with this Guaranty Agreement or otherwise.

         5. If acceleration of the time for payment of any amount payable by
Borrower under the Guaranteed Indebtedness is stayed upon the insolvency,
bankruptcy, or reorganization of Borrower, all such amounts otherwise subject to
acceleration under the terms of the Guaranteed Indebtedness shall nonetheless be
payable by Guarantor hereunder forthwith on demand by Lender.

         6. Guarantor hereby agrees that its obligations under this Guaranty
Agreement shall not be released, discharged, diminished, impaired, reduced, or
affected for any reason or by the occurrence of any event, including, without
limitation, one or more of the following events, whether or not with notice to
or the consent of Guarantor: (a) the taking or accepting of collateral as
security for any or all of the Guaranteed Indebtedness or the release,
surrender, exchange, or subordination of any collateral now or hereafter
securing any or all of the Guaranteed Indebtedness; (b) any partial release of
the liability of Guarantor hereunder, or the full or partial release of any
other guarantor from liability for any or all of the Guaranteed Indebtedness;
(c) any disability of Borrower, or the dissolution, insolvency, or bankruptcy of
Borrower, Guarantor, or any other party at any time liable for the payment of
any or all of the Guaranteed Indebtedness; (d) any renewal, extension,
modification, waiver, amendment, or rearrangement of any or all of the
Guaranteed Indebtedness or any instrument, document, or agreement evidencing,
securing, or otherwise relating to any or all of the Guaranteed Indebtedness;
(e) any adjustment, indulgence, forbearance, waiver, or compromise

                                      -2-
<PAGE>   54

that may be granted or given by Lender to Borrower, Guarantor, or any other
party ever liable for any or all of the Guaranteed Indebtedness; (f) any
neglect, delay, omission, failure, or refusal of Lender to take or prosecute any
action for the collection of any of the Guaranteed Indebtedness or to foreclose
or take or prosecute any action in connection with any instrument, document, or
agreement evidencing, securing, or otherwise relating to any or all of the
Guaranteed Indebtedness; (g) the unenforceability or invalidity of any or all of
the Guaranteed Indebtedness or of any instrument, document, or agreement
evidencing, securing, or otherwise relating to any or all of the Guaranteed
Indebtedness; (h) any payment by Borrower or any other party to Lender is held
to constitute a preference under applicable bankruptcy or insolvency law or if
for any other reason Lender is required to refund any payment or pay the amount
thereof to someone else (i) the settlement or compromise of any of the
Guaranteed Indebtedness; (j) the non-perfection of any security interest or lien
securing any or all of the Guaranteed Indebtedness; (k) any impairment of any
collateral securing any or all of the Guaranteed Indebtedness; (1) the failure
of Lender to sell any collateral securing any or all of the Guaranteed
Indebtedness in a commercially reasonable manner or as otherwise required by
law; (m) any change in the corporate existence, structure, or ownership of
Borrower; or (n) any other circumstance which might otherwise constitute a
defense available to, or discharge of, Borrower or Guarantor.

         7. Guarantor represents and warrants to Lender as follows:

               (a) Guarantor is a corporation duly organized, validly existing
          and in good standing under the laws of the state of its incorporation,
          is qualified to do business in all jurisdictions in which the nature
          of the business conducted by it makes such qualification necessary and
          where failure to so qualify would have a material adverse effect on
          its business, financial condition, or operations.

               (b) Guarantor has the corporate power, authority and legal right
          to execute, deliver, and perform its obligations under this Guaranty
          Agreement and this Guaranty Agreement constitutes the legal, valid,
          and binding obligation of Guarantor, enforceable against Guarantor in
          accordance with its respective terms, except as limited by bankruptcy,
          insolvency, or other laws of general application relating to the
          enforcement of creditor's rights.

               (c) The execution, delivery, and performance by Guarantor of this
          Guaranty Agreement have been duly authorized by all requisite action
          on the part of Guarantor and do not and will not violate or conflict
          with the articles of incorporation or bylaws of Guarantor or any law,
          rule, or regulation or any order, writ, injunction or decree of any
          court, governmental authority or agency, or arbitrator and do not and
          will not

                                      -3-
<PAGE>   55

          conflict with, result in a breach of, or constitute a default under,
          or result in the imposition of any lien upon any assets of Guarantor
          pursuant to the provisions of any indenture, mortgage, deed of trust,
          security agreement, franchise, permit, license, or other instrument or
          agreement to which Guarantor or its properties is bound.

               (d) No authorization, approval, or consent of, and no filing or
          registration with, any court, governmental authority, or third party
          is necessary for the execution, delivery or performance by Guarantor
          of this Guaranty Agreement or the validity or enforceability thereof.

               (e) The value of the consideration received and to be received by
          Guarantor as a result of Borrower and Lender entering into the Loan
          Agreement and Guarantor executing and delivering this Guaranty
          Agreement is reasonably worth at least as much as the liability and
          obligation of Guarantor hereunder, and such liability and obligation
          and the Loan Agreement have benefited and may reasonably be expected
          to benefit Guarantor directly or indirectly.

         8. Guarantor covenants and agrees that, as long as the Guaranteed
Indebtedness or any part thereof is outstanding or Lender has any commitment
under the Loan Agreement:

               (a) Guarantor will deliver to Lender the financial statements of
          Guarantor described in the Loan Agreement at the times required by the
          Loan Agreement.

               (b) Guarantor will furnish promptly to Lender written notice of
          the occurrence of any default under this Guaranty Agreement or an
          Event of Default under the Loan Agreement of which Guarantor has
          knowledge.

               (c) Guarantor will furnish promptly to Lender such additional
          information concerning Guarantor as Lender may request.

               (d) Guarantor will maintain the covenants contained in Article IX
          of the Loan Agreement.

         9. Upon the occurrence of an Event of Default (as defined in the Loan
Agreement) Lender shall have the right to set off and apply against this
Guaranty Agreement or the Guaranteed Indebtedness or both, at any time and
without notice to Guarantor, any and all deposits (general or special, time or
demand, provisional or final) or other sums at any time credited by or owing
from Lender to Guarantor whether or not the Guaranteed Indebtedness is then due
and irrespective of whether or not Lender shall have made any demand under this
Guaranty Agreement. In addition to Lender's right of setoff and as further
security for

                                      -4-
<PAGE>   56

this Guaranty Agreement and the Guaranteed Indebtedness, Guarantor hereby grants
Lender a security interest in all deposits (general or special, time or demand,
provisional or final) and all other accounts of Guarantor now or hereafter on
deposit with or held by Lender and all other sums at any time credited by or
owing from Lender to Guarantor. The rights and remedies of Lender hereunder are
in addition to other rights and remedies (including, without limitation, other
rights of setoff) which Lender may have.

         10. No amendment or waiver of any provision of this Guaranty Agreement
or consent to any departure by the Guarantor therefrom shall in any event be
effective unless the same shall be in writing and signed by Lender. No failure
on the part of Lender to exercise, and no delay in exercising, any right, power,
or privilege hereunder shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, power, or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, power, or
privilege. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.

         11. This Guaranty Agreement is for the benefit of Lender and its
successors and assigns, and in the event of an assignment of the Guaranteed
Indebtedness, or any part thereof, the rights and benefits hereunder, to the
extent applicable to the indebtedness so assigned, may be transferred with such
indebtedness. This Guaranty Agreement is binding not only on Guarantor, but on
Guarantor's successors and assigns.

         12. Guarantor recognizes that Lender is relying upon this Guaranty
Agreement and the undertakings of Guarantor hereunder in making extensions of
credit to Borrower under the Loan Agreement and further recognizes that the
execution and delivery of this Guaranty Agreement is a material inducement to
Lender in entering into the Loan Agreement. Guarantor hereby acknowledges that
there are no conditions to the full effectiveness of this Guaranty Agreement.

         13. This Guaranty Agreement is executed and delivered as an incident to
a lending transaction negotiated, consummated, and performable in Harris County,
Texas, and shall be governed by and construed in accordance with the laws of the
State of Texas. Except as provided in the Arbitration Agreement among Borrower,
Guarantor, Lender and others (the "Arbitration Agreement"), any action or
proceeding against Guarantor under or in connection with this Guaranty Agreement
may be brought in any state or federal court in Harris County, Texas, and
Guarantor hereby irrevocably submits to the nonexclusive jurisdiction of such
courts, and waives any objection it may now or hereafter have as to the venue of
any such action or proceeding brought in such court. Guarantor agrees that
service of process upon it may be made by certified or registered mail, return
receipt requested, at its address specified

                                      -5-
<PAGE>   57

in the Loan Agreement. Except as provided in the Arbitration Agreement, nothing
herein shall affect the right of Lender to serve process in any other matter
permitted by law or shall limit the right of Lender to bring any action or
proceeding against Guarantor or with respect to any of Guarantor's property in
courts in other jurisdictions. Except as provided in the Arbitration Agreement,
any action or proceeding by Guarantor against Lender shall be brought only in a
court located in Harris County, Texas.

         14. Guarantor shall pay on demand all attorneys' fees and all other
costs and expenses incurred by Lender in connection with the preparation,
administration, enforcement, or collection of this Guaranty Agreement.

         15. Guarantor hereby waives promptness, diligence, notice of any
default under the Guaranteed Indebtedness, demand of payment, notice of
acceptance of this Guaranty Agreement, presentment, notice of protest, notice of
dishonor, notice of the incurring by Borrower of additional indebtedness, and
all other notices and demands with respect to the Guaranteed Indebtedness and
this Guaranty Agreement.

         16. The Loan Agreement, and all of the terms thereof, are incorporated
herein by reference, the same as if stated verbatim herein, and Guarantor agrees
that Lender may exercise any and all rights granted to it under the Loan
Agreement and the other Loan Documents (as defined in the Loan Agreement)
without affecting the validity or enforceability of this Guaranty Agreement. Any
notices given hereunder shall be given in the manner provided by and to the
addresses set forth in the Loan Agreement.

         17. Guarantor hereby represents and warrants to Lender that Guarantor
has adequate means to obtain from Borrower on a continuing basis information
concerning the financial condition and assets of Borrower and that Guarantor is
not relying upon Lender to provide (and Lender shall have no duty to provide)
any such information to Guarantor either now or in the future.

         18. THIS GUARANTY AGREEMENT EMBODIES THE FINAL, ENTIRE AGREEMENT OF
GUARANTOR AND LENDER WITH RESPECT TO GUARANTOR'S GUARANTY OF THE GUARANTEED
INDEBTEDNESS AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE
SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OR OTHER
EXTRINSIC EVIDENCE OF ANY NATURE. THERE ARE NO ORAL AGREEMENTS BETWEEN GUARANTOR
AND LENDER. THIS GUARANTY AGREEMENT MAY NOT BE AMENDED EXCEPT IN WRITING BY
GUARANTOR AND LENDER.

                                      -6-
<PAGE>   58

         DATED AND EXECUTED as of September 30, 1999.

                                        GUARANTOR:

                                        TEXAS OIL & CHEMICAL CO. II, INC.

                                        By:
                                           ----------------------------------
                                           Nick Carter
                                           President

                                      -7-
<PAGE>   59
                              ADVANCE REQUEST FORM

TO:      Southwest Bank of Texas, N.A.
         Five Post Oak Park
         4400 Post Oak Parkway
         Houston, Texas 77027
         Attention: A. Stephen Kennedy

Ladies and Gentlemen:

         The undersigned is an authorized representative of SOUTH HAMPTON
REFINING CO. (the "Borrower"), and is authorized to make and deliver this
certificate pursuant to that certain Loan Agreement dated as of September 30,
1999 between the Borrower and Southwest Bank of Texas, N.A. (the "Lender").
(Such Loan Agreement, as it may be amended is referred to as the "Loan
Agreement"). All terms defined in the Loan Agreement shall have the same meaning
herein.

         Borrower hereby requests an Advance (the "Requested Advance") in the
amount of $______________________ in accordance with the Loan Agreement.

         In connection with the foregoing and pursuant to the terms and
provisions of the Loan Agreement, the undersigned hereby certifies that the
following statements are true and correct:

               (a) The representations and warranties contained in Article VI of
          the Loan Agreement and in each of the other Loan Documents are true
          and correct on and as of the date hereof with the same force and
          effect as if made on and as of such date.

               (b) No Event of Default has occurred and is continuing or would
          result from the Requested Advance, and no event has occurred and is
          continuing or would result from the Requested Advance that, with the
          giving of notice or lapse of time or both, would be an Event of
          Default. Borrower acknowledges that if an Event of Default exists
          Lender is not obligated to fund the Requested Advance.

               (c) Since the date of the financial statements of Borrower most
          recently delivered to Lender pursuant to the Loan Agreement, there has
          been no Material Adverse Effect.

               (d) The amount of the Requested Advance, when added to the
          principal amount of all Advances outstanding, will not exceed the
          lesser of (i) the Borrowing Base minus the outstanding Letter of
          Credit Liabilities or (ii) the Commitment minus the outstanding Letter
          of Credit Liabilities.

<PAGE>   60

               (e) Check one:

                                    The available amount under the Commitment
               --------------       has not changed since the available amount
                                    shown on the Borrowing Base Certificate most
                                    recently delivered to Lender which was dated
                                    as of ________________. The available amount
                                    shown on such Borrowing Base Certificate was
                                    $_________________.

                                    The available amount under the Commitment
               --------------       has changed since the available amount shown
                                    on the Borrowing Base Certificate last
                                    delivered to Lender, and attached hereto as
                                    Exhibit "A" is a Borrowing Base Certificate
                                    dated as of _________________, which shows
                                    the available amount under the Commitment as
                                    of such date. The information contained in
                                    such Borrowing Base Certificate is true and
                                    correct.

                           Advance Request Information

<TABLE>
<S>                                                            <C>
         1.       Available Amount [as shown on most
                  recent Borrowing Base Certificate
                  referred to above or Borrowing Base
                  Certificate attached hereto] ................ $
                                                                 -----------
         2.       Amount of Requested Advance  ................ $
                                                                  ----------
</TABLE>

Dated as of:
             ---------------------

                                        BORROWER:

                                        SOUTH HAMPTON REFINING CO.

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

                                       -2-
<PAGE>   61

                                   Exhibit "A"

                    Borrowing Base Certificate, If Applicable

                                       -3-
<PAGE>   62
                           BORROWING BASE CERTIFICATE

TO:      Southwest Bank of Texas, N.A.
         Five Post Oak Park
         4400 Post Oak Parkway
         Houston, Texas 77027
         Attention: A. Stephen Kennedy

Ladies and Gentlemen:

         The undersigned is an authorized representative of SOUTH HAMPTON
REFINING CO. (the "Borrower"), and is authorized to make and deliver this
certificate pursuant to that certain Loan Agreement dated as of September 30,
1999 between the Borrower and Southwest Bank of Texas, N.A. (the "Lender").
(Such Loan Agreement, as it may be amended is referred to as the "Loan
Agreement"). All terms defined in the Loan Agreement shall have the same meaning
herein.

         Pursuant to the terms and provisions of the Loan Agreement, the
undersigned hereby certifies that the following statements and information are
true, complete and correct:

               (a) The representations and warranties contained in Article VI of
          the Loan Agreement and in each of the other Loan Documents are true
          and correct on and as of the date hereof with the same force and
          effect as if made on and as of such date.

               (b) No Event of Default has occurred and is continuing, and no
          event has occurred and is continuing that, with the giving of notice
          or lapse of time or both, would be an Event of Default. Borrower
          acknowledges that if an Event of Default exists Lender is not
          obligated to fund any request for an Advance.

               (c) Since the date of the financial statements of Borrower most
          recently delivered to Lender pursuant to the Loan Agreement, there has
          been no Material Adverse Effect.

               (d) The amount of the outstanding Advances does not exceed the
          lesser of (i) the Borrowing Base minus the outstanding Letter of
          Credit Liabilities or (ii) the Commitment minus the outstanding Letter
          of Credit Liabilities.

               (e) The total Eligible Accounts and Eligible Inventory referred
          to below represent the Eligible Accounts and Eligible Inventory that
          qualifies for purposes of determining the Borrowing Base under the
          Loan Agreement. Borrower represents and warrants that the information
          and calculations set forth below regarding the Eligible Accounts and
          Eligible Inventory and the Borrowing Base are true and correct in all
          material respects.

<PAGE>   63

                          Calculation of Borrowing Base

<TABLE>
<S>                                                                 <C>
         1.       Total Accounts .................................. $
                                                                    -------------
         2.       Ineligible Accounts

                  (a) more than 90 days past invoice date ......... $
                                                                    -------------
                  (b) accounts from officers, employees
                           subsidiaries or affiliates ............. $
                                                                    -------------
                  (c) conditional accounts ........................ $
                                                                    -------------
                  (d) foreign accounts ............................ $
                                                                    -------------
                  (e) accounts subject to dispute,
                           counterclaim, setoff or retainage ...... $
                                                                    -------------
                  (f) pre-billings or unearned income ............. $
                                                                    -------------
                  (g) accounts of insolvent or bankrupt
                           account debtors ........................ $
                                                                    -------------
                  (h) accounts of U.S. government ................. $
                                                                    -------------
                  (i) terms in excess of 30 days past
                           invoice date ........................... $
                                                                    -------------
                  (j) more than 20% over 89 days .................. $
                                                                    -------------
                  (k) more than 20% concentration ................. $
                                                                    -------------
                  Total ........................................... $
                                                                    -------------
         3.       Eligible Accounts
                   [line (1) minus line (2)] ...................... $
                                                                    -------------
         4.       80% of line (3) ................................. $
                                                                    -------------
         5.       Eligible Inventory .............................. $
                                                                    -------------
         6.       50% of line (5) ................................. $
                                                                    -------------
         7.       Lesser of line (6) or $750,000.00 ............... $
                                                                    -------------
         8.       Borrowing Base [sum of line (4) plus
                   line (7)] ...................................... $
                                                                    -------------
         9.       Commitment ...................................... $2,250,000.00

         10.      Lesser of line (8) or line (9) .................. $
                                                                    -------------
         11.      Amount of outstanding Advances .................. $
                                                                    -------------
         12.      Letter of Credit Liabilities .................... $
                                                                    -------------
         13.      Sum of line (11) plus line (12) ................. $
                                                                    -------------
         14.      Available Amount [line (10) minus
                   line (13)] ..................................... $
                                                                    -------------
</TABLE>

               (f) Attached hereto as Schedule 1 is a list of Borrower's
          accounts receivable, designating Eligible Accounts, and showing all
          accounts receivable by customer name, the amount owing to Borrower and
          the age of each receivable.

                                      -2-
<PAGE>   64

               (g) Attached hereto as Schedule 2 is a list of Borrower's
          inventory, designating Eligible Inventory and showing all inventory by
          product type, volume and value.

Date:
     ---------------------

                                             BORROWER:

                                             SOUTH HAMPTON REFINING CO.

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

                                      -3-
<PAGE>   65

                    Schedule 1 - List of Accounts Receivable

                                      -4-
<PAGE>   66

                     Schedule 2 - List of Eligible Inventory

                                      -5-
<PAGE>   67

                             NO DEFAULT CERTIFICATE

TO:      Southwest Bank of Texas, N.A.
         Five Post Oak Park
         4400 Post Oak Parkway
         Houston, Texas 77027
         Attention: A. Stephen Kennedy

Ladies and Gentlemen:

         The undersigned is an authorized representative of SOUTH HAMPTON
REFINING CO. (the "Borrower"), and is authorized to make and deliver this
certificate pursuant to that certain Loan Agreement dated as of September 30,
1999 between the Borrower and Southwest Bank of Texas, N.A. (the "Lender").
(Such Loan Agreement, as it may be amended is referred to as the "Loan
Agreement"). All terms defined in the Loan Agreement shall have the same meaning
herein.

         Pursuant to the terms and provisions of the Loan Agreement, the
undersigned hereby certify that the following statements and information are
true, complete and correct:

               (a) The representations and warranties contained in Article VI of
          the Loan Agreement and in each of the other Loan Documents are true
          and correct on and as of the date hereof with the same force and
          effect as if made on and as of such date.

               (b) No Event of Default has occurred and is continuing, and no
          event has occurred and is continuing that, with the giving of notice
          or lapse of time or both, would be an Event of Default.

               (c) Together with this certificate, and as required by the Loan
          Agreement, Borrower has delivered to Lender the most current quarterly
          financial statements of Guarantor dated _________________________ (the
          "Current Financial Statements"). Since the date of the Current
          Financial Statements, there has been no Material Adverse Effect.

               (d) The amount of the outstanding Advances plus the Letter of
          Credit Liabilities does not exceed the lesser of the Borrowing Base or
          the Commitment.

               (e) Set forth below are calculations showing Guarantor's status
          of compliance with the covenants contained in Article IX of the Loan
          Agreement. Borrower represents and warrants that the information and
          calculations set forth below are true and correct in all respects.

<PAGE>   68

                         Calculations Showing Compliance

                                 With Article IX

         Section 9.1 - Current Ratio:

<TABLE>
<S>                                                            <C>
         Calculation:

                  1.       Current Assets                      $
                                                               --------------
                  2.       Current Liabilities                 $
                                                               --------------
                  3.       Current Ratio [line (1)
                           divided by line (2)]                $
                                                               --------------

         Required:

         Not less than 1.10 to 1.00

         Section 9.2 - Tangible Net Worth:

         Calculation:

                  1.       Stockholders' equity                $
                                                               --------------
                  2.       Subordinated Debt                   $
                                                               --------------
                  3.       Line (1) plus line (2)              $
                                                               --------------
                  4.       Intangible Assets
                                                               $
                           ------------                        --------------
                                                               $
                           ------------                        --------------
                                                               $
                           ------------                        --------------
                              Total                            $
                                                               --------------
                  5.       Tangible Net Worth [line
                           (3) minus line (4)]                 $
                                                               --------------
</TABLE>

         Required:

         $5,600,000.00 plus fifty percent (50%) of Net Income subsequent to June
         30, 1999.

         $5,600,000.00 plus $________________ = $_______________

                                       -2-
<PAGE>   69

         Section 9.3 - EBITDA

         EBITDA

<TABLE>
<S>                                                           <C>
         1.       Net Income
                  (a)      This quarter                       $
                                                              --------------
                  (b)      First preceding quarter            $
                                                              --------------
                  (c)      Second preceding quarter           $
                                                              --------------
                  (d)      Third preceding quarter            $
                                                              --------------
                  (e)           Total                         $
                                                              --------------
         2.       Non Cash Charges
                  (a)      This quarter                       $
                                                              --------------
                  (b)      First preceding quarter            $
                                                              --------------
                  (c)      Second preceding quarter           $
                                                              --------------
                  (d)      Third preceding quarter            $
                                                              --------------
                  (e)           Total                         $
                                                              --------------
         3.       Interest Expense
                  (a)      This quarter                       $
                                                              --------------
                  (b)      First preceding quarter            $
                                                              --------------
                  (c)      Second preceding quarter           $
                                                              --------------
                  (d)      Third preceding quarter            $
                                                              --------------
                  (e)           Total                         $
                                                              --------------
         4.       Cash Taxes
                  (a)      This quarter                       $
                                                              --------------
                  (b)      First preceding quarter            $
                                                              --------------
                  (c)      Second preceding quarter           $
                                                              --------------
                  (d)      Third preceding quarter            $
                                                              --------------
                  (e)           Total                         $
                                                              --------------
         5.       EBITDA - Sum of line 1(e) plus
                  line 2(e) plus line 3(e)
                  plus line 4(e)                              $
                                                              --------------
         Section 9.3 - Capital Expenditures

         Calculation:

         Capital Expenditures to Date                         $
                                                              --------------
         Required:

         Not more than $2,000,000.00
</TABLE>

Date:
     ------------------------
                                             BORROWER:

                                             SOUTH HAMPTON REFINING CO.

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

                                       -3-
<PAGE>   70
                              ARBITRATION AGREEMENT

         Re:      Loan in the principal amount of $2,250,000.00 dated
                  September 30, 1999, from SOUTHWEST BANK OF TEXAS,
                  N.A. to SOUTH HAMPTON REFINING CO., and all
                  renewals, increases, extensions, modifications and
                  substitutions thereof.

In consideration of the premises and the mutual agreements herein, the
undersigned agree as follows:

Binding Arbitration. Notwithstanding any provision in any Documents (defined
below) to the contrary, upon the request of any of the undersigned (collectively
called the "parties" and individually called a "party"), whether made before or
after the institution of any legal proceeding, any action, dispute, claim or
controversy of any kind (for example, whether in contract or in tort, under
statutory or common law, or legal or equitable) now existing or hereafter
arising between or among the parties in any way arising out of, pertaining to or
in connection with (1) the referenced Loan, any related agreements, documents,
or instruments (collectively, the "Documents") or any transaction contemplated
thereby, before or after maturity, or (2) any aspect of the past or present
relationships of the parties to the Documents shall be resolved by mandatory and
binding arbitration in accordance with the terms of this Arbitration Agreement.
The occurrence of any of the foregoing matters shall be referred to as a
"Dispute." Any party to this Arbitration Agreement may bring by summary
proceedings (for example, a plea in abatement or motion to stay further
proceedings) an action in court to compel arbitration of any Dispute.

Governing Rules. Notwithstanding any provision in any Documents to the contrary,
all Disputes between the parties shall be resolved by mandatory and binding
arbitration administered by the American Arbitration Association (the "AAA")
pursuant to the Federal Arbitration Act (Title 9 of the United States Code) in
accordance with this Arbitration Agreement and the Commercial Arbitration Rules
of the AAA. If Title 9 of the United States Code is inapplicable to any such
claim or controversy for any reason, such arbitration shall be conducted
pursuant to the Texas General Arbitration Act and in accordance with this
Arbitration Agreement and the Commercial Arbitration Rules of the AAA. To the
extent that any inconsistency exists between this Arbitration Agreement and such
statutes and rules, this Arbitration Agreement shall control. Judgment upon the
award rendered by the arbitrators may be entered in and enforced by any court
having jurisdiction and in accordance with the practice of such court; provided,
however, that nothing contained herein shall be deemed to be a waiver by any
party that is a bank of the protections afforded to it under 12 U.S.C.Section
91, Texas Banking Code art. 342-609 or 342-705, or any other protection provided
banks by the laws of Texas or the United States.

<PAGE>   71

No Waiver; Preservation of Remedies. No provision of, nor the exercise of any
rights under, this Arbitration Agreement shall limit the right of any party to
employ other remedies, including, without limitation, (1) foreclosing against
any real or personal property collateral or other security by the exercise of a
power of sale under a deed of trust, mortgage, or other security agreement or
instrument, or applicable law, (2) exercising self-help remedies (including
without limitation set-off rights), or (3) obtaining provisional or ancillary
remedies such as, without limitation, injunctive relief, sequestration,
attachment, garnishment, or the appointment of a receiver from a court having
jurisdiction before, during, or after the pendency of any arbitration. The
institution and maintenance of an action for judicial relief, pursuit of
provisional or ancillary remedies, or exercise of self-help remedies shall not
constitute a waiver of the right of any party, including without limitation, the
plaintiff, to submit any Dispute to arbitration nor render inapplicable the
compulsory arbitration provisions hereof.

In Disputes involving indebtedness or other monetary obligations, each party
agrees that the other party may proceed against all liable persons, jointly and
severally, or against one or more of them, being less than all, without
impairing rights against other liable persons. Nor shall a party be required to
join any principal obligor or any other liable persons (including, without
limitation, sureties or guarantors) in any proceeding against a particular
person. A party may release or settle with one or more liable persons as the
party deems fit without releasing or impairing rights to proceed against any
persons not so released.

Arbitration Proceeding. All statutes of limitation that would otherwise be
applicable shall apply to any arbitration proceeding. Any attorney-client
privilege and other protection against disclosure of confidential information,
including, without limitation, any protection afforded the work product of any
attorney, that could otherwise be claimed by any party shall be available to and
may be claimed by any such party in any arbitration proceeding. No party waives
any attorney-client privilege or any other protection against disclosure of
confidential information by reason of anything contained in or done pursuant to
or in connection with this Arbitration Agreement. Any arbitration proceeding
shall be conducted in Harris County, Texas by a panel of three arbitrators each
having substantial experience and recognized expertise in the field or fields of
the matter(s) in dispute.

Other Matters. This Arbitration Agreement constitutes the entire agreement of
the parties with respect to its subject matter and supersedes all prior
discussions, arrangements, negotiations, and other communications on dispute
resolution. The provisions of this Arbitration Agreement shall survive any
termination, amendment or expiration of the Documents unless the parties
otherwise expressly agree in writing. This Arbitration Agreement may be amended,
changed or modified only by the express provisions of a writing

                                      -2-
<PAGE>   72

which specifically refers to this Arbitration Agreement and which is signed by
all parties. If any provision of this Arbitration Agreement shall be
unenforceable, unlawful or invalid in any respect, then such provision shall be
deemed severable from the remaining provisions and the enforceability,
lawfulness and validity of the remaining provisions will not be affected or
impaired. This Arbitration Agreement shall inure to the benefit of and bind the
heirs, representatives, trustees, successors and assigns of the parties. The
captions or headings in this Arbitration Agreement are for convenience only and
shall not be dispositive in interpreting or construing any of this Arbitration
Agreement.

         DATED AND EXECUTED as of September 30, 1999.

                                             BORROWER:

                                             SOUTH HAMPTON REFINING CO.

                                             By:
                                                -------------------------------
                                                Nick Carter
                                                President

                                             GUARANTOR:

                                             TEXAS OIL & CHEMICAL CO. II, INC.

                                             By:
                                                -------------------------------
                                                Nick Carter
                                                President

                                             LENDER:

                                             SOUTHWEST BANK OF TEXAS, N.A.

                                             By:
                                                -------------------------------
                                                A. Stephen Kennedy
                                                Vice President

                                      -3-
<PAGE>   73

                        TEXAS OIL & CHEMICAL CO. II, INC.

                            CERTIFICATE OF SECRETARY

         I, Connie Cook, certify that I am the duly elected, qualified and
acting Secretary of TEXAS OIL & CHEMICAL CO. II, INC., a Texas corporation (the
"Corporation"), and that I am authorized to execute and deliver this
certificate, and I do hereby further certify as follows:

         1. Resolutions. The following resolutions have been duly adopted at a
meeting (duly convened where a quorum of directors was present) of, or by the
unanimous written consent of, the Board of Directors of the Corporation, and
none of such resolutions have been amended or revoked, and all of such
resolutions are now in full force and effect:

                  "WHEREAS, it is proposed that South Hampton Refining Co., a
         Texas corporation ("Borrower"), borrow $2,250,000.00 from Southwest
         Bank of Texas, N.A. ("Lender") pursuant to a Loan Agreement (the "Loan
         Agreement"); and

                  "WHEREAS, it is proposed that, as security for full and
         complete performance and payment of the indebtedness of Borrower
         pursuant to the Loan Agreement, the Corporation execute and deliver to
         Lender a Guaranty Agreement (the "Guaranty"), pursuant to which the
         Corporation will guarantee all obligations of Borrower to Lender, now
         existing or hereafter arising;

                  "WHEREAS, the proposed Guaranty and Loan Agreement have been
         submitted to, and reviewed by, each of the directors of the
         Corporation;

                  "NOW, THEREFORE, RESOLVED, that in the judgment of the
         directors of the Corporation (a) the value of the consideration
         received and to be received by the Corporation, as a result of Borrower
         and Lender entering into the Loan Agreement is reasonably worth at
         least as much, as the liability and obligation of the Corporation under
         the Guaranty and (b) such liability and obligation may reasonably be
         expected to benefit, directly or indirectly, the Corporation; and
         further

                  "RESOLVED, that the form and content of the Loan Agreement in
         substantially the form submitted to each director are hereby approved,
         and further

                  RESOLVED, that the form and content of the Guaranty as
         exhibited to each director and with such changes as are hereinafter
         authorized, are hereby approved; and further

<PAGE>   74

                  "RESOLVED that the President or any Vice President of the
         Corporation is hereby authorized, on behalf of the Corporation, to
         execute and deliver to Lender the Guaranty in substantially the form
         approved by these resolutions, with such amendments or changes thereto
         as the officer so acting may approve, such approval to be conclusively
         evidenced by his execution and delivery of the same; and further

                  "RESOLVED, that the President or any Vice President of the
         Corporation is hereby authorized, on behalf of the Corporation, to
         execute such other instruments and documents, including the Arbitration
         Agreement, and to take such other actions as the officer so acting
         deems necessary or desirable to effectuate the transactions
         contemplated by these resolutions; and further

                  "RESOLVED, that the Secretary and any Assistant Secretary of
         the Corporation is hereby authorized on behalf of the Corporation to
         certify and attest any documents which he may deem necessary or
         appropriate to consummate the transactions contemplated by these
         resolutions provided that such attestation shall not be required for
         the validity of any document; and further

                  "RESOLVED, that any and all actions taken by any of the
         officers or representatives of the Corporation, for and on behalf and
         in the name of the Corporation, with the Lender prior to the adoption
         of these resolutions, including, but not limited to, the negotiation of
         the Guaranty and the Loan Agreement, are hereby ratified, confirmed,
         and approved in all respects for all purposes."

         2. Incumbency. The, following named persons are duly elected or
appointed, acting, and qualified officers of the Corporation holding at the date
hereof the offices set forth opposite their respective names, and the signatures
appearing opposite their respective names are their genuine signatures.

<TABLE>
<CAPTION>

             NAME                             TITLE                                  SPECIMEN SIGNATURE
             ----                             -----                                  ------------------

         <S>                                 <C>                                     <C>
          Nick Carter                        President                               ------------------

          Connie Cook                        Secretary                               ------------------
</TABLE>

         3. By-Laws. Attached hereto is a true and complete copy of the By-Laws
of the Corporation, which By-Laws have not been amended (except as reflected in
any attachments hereto) or revoked and are now in full force and effect.

         4. Articles of Incorporation. Attached hereto is a true and complete
copy of the Articles of Incorporation of the Corporation, which Articles of
Incorporation have not been amended (except as

                                       -2-
<PAGE>   75

reflected in any attachments hereto) or revoked and are now in full force and
effect.

         IN WITNESS WHEREOF, I have duly executed this certificate as of
_________________________ _____, 1999.

                                             -----------------------------------
                                             Secretary

         I, Nick Carter, President of the Corporation, do hereby certify that
Connie Cook is the duly elected and qualified Secretary of the Corporation and
the signature appearing opposite his name is his genuine signature.

         DATED:   As of _________________________ _____, 1999.

                                             -----------------------------------
                                             President

                                      -3-
<PAGE>   76

                           SOUTH HAMPTON REFINING CO.

                            CERTIFICATE OF SECRETARY

         I, Connie Cook, hereby certify that I am the duly elected, qualified,
and acting Secretary of SOUTH HAMPTON REFINING CO., a Texas corporation (the
"Corporation"), and that I am authorized to execute and deliver this
certificate, and I do hereby further certify as follows:

         1. Resolutions. The following resolutions have been duly adopted at a
meeting (duly convened where a quorum of directors was present) of, or by the
unanimous written consent of, the Board of Directors of the Corporation, and
such resolutions have not been amended or revoked, and are now in full force and
effect:

                  "RESOLVED, that the form and content of the Loan Agreement
         (the "Loan Agreement") to be entered into by the Corporation and
         Southwest Bank of Texas, N.A. (the "Bank"), in the form of drafts
         exhibited to each director, with such changes as are hereinafter
         authorized, and the transactions contemplated thereby, including the
         borrowing by the Corporation from the Bank of $2,250,000.00 in the form
         of a revolving credit loan, such borrowing to be evidenced by a
         promissory note (the "Note") in the principal amount of $2,250,000.00,
         made by the Corporation and payable to the order of the Bank, are
         hereby approved; and further

                  "RESOLVED, that the form and content of the following
         documents:

                           (1) The Note;

                           (2) The Security Agreement (herein so called),
                  pursuant to which Corporation grants to the Bank a security
                  interest in, among other things, all of its accounts
                  receivable and inventory; and

                           (3) The Arbitration Agreement (herein so called)
                  pursuant to which the Corporation agrees to arbitrate all
                  disputes between itself and the Bank;

         as exhibited to each director and with such changes as are hereinafter
         authorized, are hereby approved; and further

                  "RESOLVED, that the President or any Vice President of the
         Corporation is hereby authorized, on behalf of the

<PAGE>   77

         Corporation, to execute and deliver to the Bank the Loan Agreement, the
         Note, the Security Agreement and the Arbitration Agreement in
         substantially the form approved by these resolutions, with such
         amendments or changes thereto as the officer so acting may approve,
         such approval to be conclusively evidenced by his execution and
         delivery of the same; and further

                  "RESOLVED, that the President or any Vice President of the
         Corporation is hereby authorized, on behalf of the Corporation, to
         execute such other instruments and documents, and to take such other
         actions as the officer so acting deems necessary or desirable to
         effectuate the transactions contemplated by these resolutions; and
         further

                  "RESOLVED, that the Secretary or any Assistant Secretary of
         the Corporation is hereby authorized, on behalf of the Corporation, to
         certify and attest any documents which he may deem necessary or
         appropriate to consummate the transactions contemplated by these
         resolutions; provided that such attestation shall not be required for
         the validity of any such documents; and further

                  "RESOLVED, that any and all actions taken by any of the
         officers or representatives of the Corporation, for and on behalf and
         in the name of the Corporation, with the Bank prior to the adoption of
         these resolutions, including, but not limited to, the negotiation of
         the Loan Agreement, the Note, the Security Agreement and the
         Arbitration Agreement, are hereby ratified, confirmed, and approved in
         all respects for all purposes."

         2. Incumbency. The following named persons are duly elected or
appointed, acting, and qualified officers of the Corporation holding at the date
hereof the offices set forth opposite their respective names, and the signatures
appearing opposite their respective names are their genuine signatures:

<TABLE>
<CAPTION>

             NAME                             TITLE                        SPECIMEN SIGNATURE
             ----                             -----                        ------------------

          <S>                               <C>                        <C>
          Nick Carter                       President                  ---------------------------

          Connie Cook                       Secretary                  ---------------------------
</TABLE>

         3. By-Laws. Attached hereto is a true and complete copy of the By-Laws
of the Corporation, which By-Laws have not been amended (except as reflected in
any attachments hereto) or revoked and are now in full force and effect.

                                      -2-

<PAGE>   78

         4. Articles of Incorporation. Attached hereto is a true and complete
copy of the Articles of Incorporation of the Corporation, which Articles of
Incorporation have not been amended (except as reflected in any attachments
hereto) or revoked and are now in full force and effect.

         IN WITNESS WHEREOF, I have duly executed this certificate as of
_________________________ _____, 1999.

                                             -----------------------------------
                                             Secretary

         I, Nick Carter, President of the Corporation, do hereby certify that
Connie Cook is the duly elected and qualified Secretary of the Corporation and
the signature appearing opposite his name is his genuine signature.

         DATED:   As of _________________________ _____, 1999.

                                             -----------------------------------
                                             President

                                      -3-
<PAGE>   79

                   UNIFORM COMMERCIAL CODE FINANCING STATEMENT
                                    (UCC-1 )

FOR FILING OFFICER ONLY:

Return copy or recorded original to:

A. Stephen Kennedy
Southwest Bank of Texas, N.A.
Five Post Oak Park
4400 Post Oak Parkway
Houston, Texas 77027

THIS FINANCING STATEMENT IS PRESENTED TO A FILING OFFICER FOR FILING PURSUANT TO
THE UNIFORM COMMERCIAL CODE:

1.       Debtor - Name and Mailing Address:

         South Hampton Refining Co.
         P.O. Box 1636
         Silsbee, Texas  77656

2.       Secured Party - Name and Mailing Address:

         Southwest Bank of Texas, N.A.
         Five Post Oak Park
         4400 Post Oak Parkway
         Houston, Texas 77027

3.       This Financing Statement covers the following types (or items) of
         property of Debtor, whether now owned or existing or hereafter arising
         or acquired and wherever located:

         See Exhibit "A" attached hereto.

4.       Proceeds of Collateral are also covered.

5.       Number of additional sheets presented: One.

SIGNATURE OF DEBTOR:                               SIGNATURE OF SECURED PARTY:

SOUTH HAMPTON REFINING CO.                         SOUTHWEST BANK OF TEXAS, N.A.

By:                                                By:
   -----------------------                            -------------------------
     Nick Carter                                          A. Stephen Kennedy
     President                                            Vice President

<PAGE>   80

                                   Exhibit "A"

                  (a) all of its accounts, accounts receivable, contract rights
         and general intangibles, and all instruments, documents, chattel paper
         and funds on deposit with Secured Party arising therefrom, whether now
         owned or hereafter acquired, including, without limitation, all lease
         receivables and note receivables, all cash, notes, drafts and
         acceptances arising therefrom, all returned and repossessed goods
         arising from or relating to any such accounts, or other proceeds of any
         sale, lease or other disposition of inventory, and all proceeds
         (including insurance proceeds) and products thereof; and

                  (b) all of its inventory, whether now owned or hereafter
         acquired, including, without limitation, all of its inventory of
         natural gasoline and finished plant products and other tangible
         personal property held for sale or lease or furnished or to be
         furnished under contracts for service or used or consumed in Debtor's
         trade or business and all additions, accessions, substitutions,
         attachments and replacements thereto and all contracts with respect
         thereto and all documents of title evidencing or representing any part
         thereof and all products and proceeds (including insurance proceeds)
         thereof.

                                      -2-

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